Juno 2014 Annual Report Download

Download and view the complete annual report

Please find the complete 2014 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 166

  • 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

Use these links to rapidly review the document
TABLE OF CONTENTS
PART IV
UNITED ONLINE, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Table of Contents






(Exact name of Registrant as specified in its charter)

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer Identification No.)



(Address of principal executive office)
(Zip Code)

(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
 
Common Stock, par value $0.0001 per
share
The Nasdaq Stock Market LLC
(Nasdaq Global Select Market)
Securities registered pursuant to Section 12(g) of the Act: 
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No ý
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No ý
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ý No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files). Yes ý No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. o

ý 


o 


Table of contents

  • Page 1
    ... EXCHTNGE TCT OF 1934 For the Fiscal Year Ended December 31, 2014 Or o TRTNSITION REPORT PURSUTNT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHTNGE TCT OF 1934 For the transition period from to Commission file number 000-33367 UNITED ONLINE, INC. (Exact name of Registrant as specified in its...

  • Page 2
    ... company) Smaller reporting company o Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No ý At June 30, 2014, the aggregate market value of voting stock held by non-affiliates of the Registrant, based on the last reported sales price...

  • Page 3
    ... 15. Signatures Business Risk Factors Unresolved Staff Comments Properties Legal Proceedings Mine Safety Disclosures 4 12 28 28 28 28 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Selected Financial Data Management's Discussion and...

  • Page 4
    ... section entitled "Risk uactors" in this Annual Report on uorm 10-K and additional factors that accompany the related forward-looking statements in this Annual Report on uorm 10-K and our other filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on...

  • Page 5
    ...: Segment Services and Products Communications Internet access services and devices, including dial-up, mobile broadband, DSL, email, Internet security, web hosting, and voice services Social networking services and products and a loyalty marketing service Content & Media We generate revenues...

  • Page 6
    ...In addition, our Communications services generate advertising revenues from search placements, display advertisements and online market research associated with our Internet access and email services. Internet Access Services. Our Internet access services consist of dial-up, mobile broadband and, to...

  • Page 7
    ... newer pay accounts. Competition -The U.S. market for broadband and consumer voice services is highly competitive and forecasted to grow over the next several years. We compete with numerous providers of broadband services and voice services, as well as other dial-up Internet access providers. Our...

  • Page 8
    ... features. We expect the features available to free users and paid subscription holders to continue to change from time to time. Premium features currently include, among others: • Access to our Classmates® Guestbook, which alerts members when another member visits his or her Classmates profile...

  • Page 9
    ... information to receive direct email marketing and other loyalty promotions. Members earn points for responding to email offers, shopping online at the MyPoints website (www.mypoints.com), taking market research companies' surveys, playing online games with MyPoints partners, searching the Internet...

  • Page 10
    ... for cash, gift cards, or products and services from participating vendors. Some 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...

  • Page 11
    ...license from third parties a number of our software applications and components, including applications for our billing, customer support, advertising, and database systems, our client and server applications, and portions of our dial-up Internet access accelerator services. These licenses generally...

  • Page 12
    ... officers of the Registrant. Tvailable Information Our corporate website is www.unitedonline.com. On this website, we make available, free of charge, our annual, quarterly and current reports (including all amendments to such reports), changes in the stock ownership of our directors and executive...

  • Page 13
    ..., including, without limitation, www.unitedonline.com, www.classmates.com, www.stayfriends.de, www.stayfriends.se, www.trombi.com, www.stayfriends.at, www.stayfriends.ch , and www.mypoints.com, we do not incorporate these websites or their contents into this Annual Report on Form 10-K. ITEM 1T. RISK...

  • Page 14
    ... of our businesses in a number of ways, including reduced demand, more aggressive pricing for similar services and products by our competitors, decreased spending by advertisers, increased credit risks, increased credit card failures, a loss of customers, and increased use of discounted pricing for...

  • Page 15
    ... may include, without limitation, claims by private parties in connection with consumer protection and other laws, claims that we infringe third-party patents, trademarks, copyrights, or other intellectual property or proprietary rights, securities laws claims, claims involving marketing practices...

  • Page 16
    ..., results of operations, and cash flows. Our business is subject to online security risks and a security breach or inappropriate access to, or use of, our networks, computer systems or services or those of third-party vendors could expose us to liability, claims and a loss of revenue. The success of...

  • Page 17
    ... take will be effective in preventing these types of activities. We also cannot assure you that the security measures of our third-party vendors, including network providers, providers of customer and billing support services, and other vendors, will be adequate. In addition, the coverage and limits...

  • Page 18
    ...of our business segments are complex and diverse, and must efficiently integrate with third-party systems, such as credit card processors. Key systems include, without limitation, billing, website and database management, customer support, telecommunications network management, advertisement serving...

  • Page 19
    ... for a public company, and the time, cost and difficulties related to the implementation of such controls, policies and procedures or the remediation of any deficiencies. • • In addition, an acquisition of a foreign business involves risks in addition to those set forth above, including risks...

  • Page 20
    ... the marketer's website. Third parties may also block, impose restrictions on, or start to charge for, the delivery of emails through their email systems. Due to the importance of email to our businesses, any disruption or restriction on the distribution of emails or increase in the associated costs...

  • Page 21
    ... charges in the past, including a $55.4 million goodwill impairment charge in the year ended December 31, 2013 with respect to our Classmates reporting unit. Given the current economic and competitive environment and the uncertainties regarding the impact on our businesses, we cannot assure you...

  • Page 22
    ... income or other taxes, on certain transactions conducted over the Internet. Our costs may increase as a result of our activities related to advertisers and other third parties, and advertisers and other third parties may choose to not do business with us or limit their business activities, in order...

  • Page 23
    ... to fund our operations, for acquisitions of businesses, services or technologies, or for other purposes. Additional financing may not be available in a timely manner, on terms favorable to us, or at all. The current volatility of, and disruption in, the securities and credit markets may restrict...

  • Page 24
    ... expected to continue to decline due to the continued maturation of the market for dial-up and DSL Internet access. Consumers continue to migrate to broadband access, primarily due to the faster connection and download speeds provided by broadband access. Advanced applications such as online gaming...

  • Page 25
    .... We have been testing various marketing initiatives, including offering discounts on our devices, but we cannot assure you that such initiatives will increase the number of accounts. The free version of the mobile broadband service is limited to a set term and these accounts are automatically...

  • Page 26
    ... 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 27
    ... which affects the timing of subscription expirations, as well as the degree of credit card failures. To maintain or reduce the level of churn, we must continually add new pay accounts both to replace pay accounts who churn and to grow our business beyond our current pay account base. We expect that...

  • Page 28
    ... of discounted pricing plans has resulted in our becoming dependent on offering such plans in order to obtain new pay accounts and retain existing pay accounts and may result in our having to reduce our standard pricing, which would adversely impact our financial results. RISKS RELTTING TO THE FTD...

  • Page 29
    ... of Contents fair market value of the shares of common stock of FTD held by United Online, Inc. on the distribution date over United Online, Inc.'s tax basis in such shares. In connection with the FTD Spin-Off Transaction, FTD indemnified us for certain liabilities and we indemnified FTD for certain...

  • Page 30
    ..." since September 23, 1999. The following table sets forth, for the quarters indicated, the high and low sales prices per share of our common stock as reported on the NASDAQ. The stock prices in the table below, on or prior to November 1, 2013, the date of the FTD Spin-Off Transaction, have not been...

  • Page 31
    ... during the year ended December 31, 2014. Measurement points are the last trading day of each of the Company's fiscal years ended December 31, 2009, 2010, 2011, 2012, 2013, and 2014. The graph assumes that $100 was invested on December 31, 2009 in the common stock of United Online, Inc., the...

  • Page 32
    Table of Contents of any dividends. The stock price performance on the following graph is not necessarily indicative of future stock price performance. Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 United Online, Inc. Nasdaq Composite First Trust DJ Internet Index Fund $ 100.00 $ 97.69 $ 86.14 $...

  • Page 33
    ... that are not included in this Annual Report on Form 10-K. The following amounts are in thousands, except per share data: 2014 Year Ended December 31, 2013(1)(2)(3) 2012(4) 2011 2010 Consolidated Statements of Operations Data: Revenues Cost of revenues Operating income (loss) Income (loss) from...

  • Page 34
    ... Internet access services and devices, including dial-up, mobile broadband, DSL, email, Internet security, web hosting, and voice services Social networking services and products and a loyalty marketing service Content & Media FTD Spin-Off Transaction On November 1, 2013, United Online...

  • Page 35
    ... include customers who previously purchased prepaid mobile broadband service and, at any time during the period, reached 90 consecutive days of inactivity. A number of such accounts nevertheless will be included in our pay account totals at any given measurement date. Subscribers who cancel one pay...

  • Page 36
    ...We monitor the number of active accounts among our membership base. Communications segment active accounts include all Communications segment pay accounts as of the date presented combined with the number of free dial-up Internet access and email accounts that logged on to our services at least once...

  • Page 37
    ...pay accounts are recorded on the consolidated balance sheets as deferred revenue. We offer alternative payment methods to credit cards for certain Communications pay service plans. These alternative payment methods currently include payment by money order or payment through a local telephone company...

  • Page 38
    ...the number of responses received) is accumulated and the related revenues are recorded. Our loyalty marketing service also generates revenues from the sale of gift cards. Our Communications products revenues are generated from the sale of mobile broadband service devices and mobile phones, including...

  • Page 39
    ... units each constitute a business or group of businesses for which discrete financial information is available and is regularly reviewed by segment management. The goodwill related to our acquired businesses is specific to each reporting unit and the goodwill amounts are assigned as such. Testing...

  • Page 40
    ... 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 other specified activities. The...

  • Page 41
    ... Services Revenues Communications services revenues consist of amounts charged to pay accounts for dial-up Internet access, mobile broadband, DSL, email, Internet security, web hosting, voice services, and other services. Content & Media services revenues primarily consist of amounts charged to pay...

  • Page 42
    ..., including the related shipping and handling fees, and from reselling third-party merchandise. Advertising and Other Revenues Our Communications services generate advertising revenues from search placements, display advertisements and online market research associated with our Internet access and...

  • Page 43
    ..., services and products include advertising and promotion expenses; fees paid to distribution partners, thirdparty advertising networks and co-registration partners to acquire new pay and free accounts; personnel and overhead-related expenses for marketing, merchandising, customer service, and sales...

  • Page 44
    ..., Liquidity and Capital Resources, Contractual Obligations, and Other Commitments included in this Item 7, as well as Quantitative and Qualitative Disclosures About Market Risk and the Consolidated Financial Statements and Notes thereto included elsewhere in this Annual Report on Form 10-K. 43

  • Page 45
    ... and amortization of intangible assets, was as follows (in thousands): Communications Year Ended December 31, 2014 2013 2012 Content & Media Year Ended December 31, 2014 2013 2012 Revenues Operating expenses: Cost of revenues Sales and marketing Technology and development General and administrative...

  • Page 46
    ... in cost of revenues associated with our Communications segment. Sales and Marketing Year Ended December 31, Change 2014 2013 $ % (in thousands, except percentages) Sales and marketing Sales and marketing expenses as a percentage of total segment sales and marketing expenses: Communications Content...

  • Page 47
    .... These decreases were partially offset by a $0.8 million increase in technology and development expenses associated with our Communications segment. General and Tdministrative Year Ended December 31, Change 2014 2013 $ % (in thousands, except percentages) General and administrative General and...

  • Page 48
    ...August 2013. For the June 30, 2014 earnout period, no contingent consideration was earned. We do not currently expect any contingent consideration will be earned for the remaining earnout period ending June 30, 2015. Restructuring and Other Exit Costs Year Ended December 31, Change 2014 2013 $ % (in...

  • Page 49
    ... gains related to forward currency exchange contracts, partially offset by a decrease in gains associated with foreign exchange remeasurement. Provision for Income Taxes Year Ended December 31, 2014 2013 (in thousands, except percentages) Provision for income taxes Effective income tax rate...

  • Page 50
    ... in customer support and billing-related costs due to a decrease in the number of dial-up Internet access pay accounts. In addition, costs associated with our email and Internet security services decreased by $0.4 million. Included in the cost associated with our mobile broadband services was...

  • Page 51
    ... subscriber base for mobile broadband services and a $0.5 million decrease in marketing costs associated with our dial-up services due to a decrease in demand for dial-up Internet access. Communications Technology and Development Year Ended December 31, Change 2014 2013 $ % (in thousands, except...

  • Page 52
    ... due to a $3.0 million decrease in costs related to the sale of gift cards, a $2.8 million decrease in cost of points earned by members of our loyalty marketing services as a result of lower revenues, a $0.8 million decrease in hosting and software-related fees, a $0.8 million decrease in personnel...

  • Page 53
    ...-related costs due to our MyPoints restructuring initiatives, a $1.6 million decrease in costs to acquire new social networking members and a $0.2 million decrease in costs to acquire new loyalty marketing members. Content & Media Technology and Development Year Ended December 31, Change 2014 2013...

  • Page 54
    ... reporting unit. Corporate Revenues Year Ended December 31, Change 2014 2013 $ % (in thousands, except percentages) Corporate revenues $ 100 $ 145 $ (45) (31)% Corporate revenues for the years ended December 31, 2014 and 2013 were related to transition services provided to FTD in connection...

  • Page 55
    ... in professional services and consulting fees and $0.4 million recorded for costs related to the mutual agreement to terminate the employment of an executive officer in the year ended December 31, 2014. Unallocated Corporate Restructuring and Other Exit Costs Year Ended December 31, Change 2014 2013...

  • Page 56
    ... Content & Media segment, a $1.6 million decrease in sales and marketing expenses associated with our Communications segment and a $0.2 million decrease in depreciation expense. Technology and Development Year Ended December 31, Change 2013 2012 $ % (in thousands, except percentages) Technology and...

  • Page 57
    ... other exit costs for the year ended December 31, 2013 included $2.3 million of employee termination costs and $0.2 million of contract termination costs recorded in our Content & Media segment. Consolidated restructuring and other exit costs for the year ended December 31, 2012 primarily consisted...

  • Page 58
    ... the Classmates reporting unit. A goodwill and intangible asset impairment charge totaling $26.9 million was recorded in the quarter ended December 31, 2012 due to a material reduction in the fair value of the MyPoints reporting unit. Interest Income Year Ended December 31, Change 2013 2012 $ % (in...

  • Page 59
    ... the year ended December 31, 2012. Communications Segment Results Communications Revenues Year Ended December 31, Change 2013 2012 $ % (in thousands, except percentages and TRPU) Services Products Advertising Total Communications revenues ARPU Average number of dial-up Internet access pay accounts...

  • Page 60
    ... sales and marketing expenses was due to a $1.0 million decrease in advertising, promotion, customer support and distribution costs primarily related to our dial-up Internet access services and a $0.8 million decrease in marketing costs associated with the promotion of our mobile broadband service...

  • Page 61
    ...our loyalty marketing services as a result of lower revenues per advertising customer, as well as a decrease in loyalty marketing active accounts. The decrease in Content & Media products revenues was related to the discontinuation of third-party merchandise sales in the year ended December 31, 2013...

  • Page 62
    ... in online marketing costs to acquire new social networking members primarily due to our cost-cutting efforts and a $3.7 million decrease in personnel and overhead-related costs due to our restructuring initiatives. Content & Media Technology and Development Year Ended December 31, Change 2013 2012...

  • Page 63
    ... reporting unit. Corporate Revenues Year Ended December 31, Change 2013 2012 $ % (in thousands, except percentages) Corporate revenues $ 145 $ - $ 145 N/A Corporate revenues for the year ended December 31, 2013 were related to transition services provided to FTD in connection with the FTD...

  • Page 64
    ... was included in transaction-related costs, as well as full and accelerated vesting of Mr. Goldston's outstanding nonvested restricted stock units and unvested stock options resulting in an increase in stock-based compensation for the year ended December 31, 2013, compared to the year ended December...

  • Page 65
    ... tax benefits from equity awards in the year ended December 31, 2014, compared to the year ended December 31, 2013. 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...

  • Page 66
    ...taxes due on vested restricted stock units; the repurchase of our common stock under the Program; future capital expenditures; and future acquisitions of intangible assets, including rights, content and intellectual property, and may have a material adverse effect on our business, financial position...

  • Page 67
    ... adjusted for non-cash items and changes in working capital, including, but not limited to, depreciation and amortization, stock-based compensation, impairment of goodwill, intangible assets and long-lived assets, and deferred taxes. The decrease in net cash provided by operating activities was...

  • Page 68
    ..., including the expected dates of adoption and estimated effects on our financial condition, results of operations and cash flows. Inflation Inflation did not have a material impact on our consolidated revenues and results of operations during the years ended December 31, 2014, 2013 and 2012...

  • Page 69
    ... of business, principally risk associated with interest rate and foreign currency exchange rate fluctuations. Interest Rate Risk While we do not currently maintain any short-term investments, we do invest in money market funds and time deposits, which are classified as cash and cash equivalents in...

  • Page 70
    ... and procedures are effective in recording, processing, summarizing, and reporting, within the time periods specified in the SEC's rules and forms, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and are effective in ensuring that...

  • Page 71
    ... and process in the income tax provision area. • • Upon completion of our testing of the design and operating effectiveness of these new control procedures, management concluded that the previouslyidentified material weakness was remediated as of December 31, 2014. Changes in Internal Control...

  • Page 72
    ...The information required by Item 11 is included in our definitive proxy statement relating to our 2015 annual meeting of stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2014 and is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP...

  • Page 73
    ... schedules have been omitted because the information required to be set forth therein is not applicable, not required or is shown in the consolidated financial statements or notes related thereto. 3. (b) Exhibits: Exhibits See the Exhibit Index following the signature page to this Annual Report...

  • Page 74
    ... hereof. Pursuant to the requirements 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/ FRANCIS LOBO Francis Lobo /s/ EDWARD K. ZINSER Edward...

  • Page 75
    Table of Contents Signature Title Date /s/ DENNIS HOLT Dennis Holt /s/ ANDREW D. MILLER Andrew D. Miller /s/ HOWARD G. PHANSTIEL Howard G. Phanstiel /s/ CAROL A. SCOTT Carol A. Scott Director 74 March 2, 2015 Chairman and Director March 2, 2015 Director March 2, 2015 Director March 2, 2015

  • Page 76
    ...between United Online, Inc. and FTD Companies, Inc., dated as of October 31, 2013 Amended and Restated Certificate of Incorporation (As Amended Effective October 31, 2013) Amended and Restated Bylaws (As Amended Effective December 17, 2013) Form of Indemnification Agreement 2001 Stock Incentive Plan...

  • Page 77
    ...) Form of Notice of Grant and Stock Option Agreement for Amended and Restated 2010 Incentive Compensation Plan (officer with employment agreement) Amended and Restated United Online, Inc. Severance Benefit Plan (As Amended Effective May 1, 2014) Employment Agreement between the Registrant and...

  • Page 78
    ...between Classmates, Inc. (f/k/a Classmates Online, Inc.) and Harold A. Zeitz General Release and Agreement between Classmates, Inc. and Harold A. Zeitz, dated May 14, 2014 Offer Letter between the Registrant and Edward K. Zinser, effective May 14, 2014 Employment Agreement between the Registrant and...

  • Page 79
    ...2014 Management Bonus Plan 2014 Management Bonus Plan (CFO and CPO) Office Lease between LNR Warner Center, LLC and NetZero, Inc. Office Lease between LNR Warner Center IV, LLC and United Online, Inc., dated as of May 14, 2014...13/2014 2/28/2011 3/4/2013 10.41 * 10-K 10.42 000-33367 3/13/2014 10...

  • Page 80
    ... FTD Companies, Inc., dated as of October 31, 2013 Tax Sharing Agreement by and between United Online, Inc. and FTD Companies, Inc., dated as of October 31, 2013 List of Subsidiaries Consent of Independent Registered Public Accounting Firm Power of Attorney (see signature page to this Annual Report...

  • Page 81
    .... Date Filed 101.SCH 101.CAL 101.LAB 101.PRE 101.DEF * XBRL Taxonomy Extension Schema Document XBRL Taxonomy Calculation Linkbase Document XBRL Taxonomy Label Linkbase Document XBRL Taxonomy Presentation Linkbase Document XBRL Taxonomy Extension Definition Document X X X X X Management contract...

  • Page 82
    Table of Contents UNITED ONLINE, INC. INDEX TO CONSOLIDTTED FINTNCITL STTTEMENTS Page Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Comprehensive Income (Loss) Consolidated Statements of ...

  • Page 83
    ... the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial...

  • Page 84
    ... Member redemption liability Deferred revenue Deferred tax liabilities, net Other liabilities Total liabilities Commitments and contingencies (see Note 12) Stockholders' equity: Preferred stock, $0.0001 par value; 5,000 shares authorized; no shares issued or outstanding at December 31, 2014 and 2013...

  • Page 85
    ... UNITED ONLINE, INC. CONSOLIDTTED STTTEMENTS OF OPERTTIONS (in thousands, except per share amounts) 2014 Year Ended December 31, 2013 2012 Revenues Operating expenses: Cost of revenues Sales and marketing Technology and development General and administrative Amortization of intangible assets...

  • Page 86
    Table of Contents UNITED ONLINE, INC. CONSOLIDTTED STTTEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) 2014 Year Ended December 31, 2013 2012 Net income (loss) Other comprehensive income (loss): Cash flow hedges: Changes in net gains (losses) on derivatives, net of tax provision (benefit) of ...

  • Page 87
    ... stock purchase plan 229 Vesting of restricted stock units 233 Repurchases of common stock - Dividends and dividend equivalents paid on shares outstanding and restricted stock units - Stock-based compensation - Tax benefits from equity awards - Other comprehensive loss - Spin off of FTD Companies...

  • Page 88
    ... at December 31, 2013 13,746 Issuance of common stock through employee stock purchase plan 142 Vesting of restricted stock units 401 Repurchases of common stock - Stock-based compensation - Tax shortfalls from equity awards - Other comprehensive loss - Net loss - Balance at December 31, 2014 14,289...

  • Page 89
    ... outstanding shares and restricted stock units Excess tax benefits from equity awards Cash paid for contingent consideration Net cash used for financing activities from continuing operations Effect of foreign currency exchange rate changes on cash and cash equivalents Net cash provided by (used for...

  • Page 90
    ... number of Internet users and the Company offers a broad array of Internet marketing services for advertisers. On November 1, 2013, United Online, Inc. consummated the separation of FTD Companies, Inc. (together with its subsidiaries, "FTD") from United Online, Inc. through a tax-free distribution...

  • Page 91
    ... credit based upon an evaluation of the customer's financial condition and, generally, collateral is not required. The Company maintains an allowance for doubtful accounts receivable based upon the expected collectibility of accounts receivable and, to date, such losses have been within management...

  • Page 92
    ... we expect to realize from the sale of certain inventory. The Company recorded charges totaling $1.1 million, $0.6 million and a $1.2 million for the markdown of mobile broadband service inventory-related balances during the years ended December 31, 2014, 2013, and 2012, respectively. Property and...

  • Page 93
    ... or losses to technology and development expenses when the hedged transactions are recorded in earnings. The Company excludes the change in the time value of the forward foreign currency exchange contracts from its assessment of their hedge effectiveness. Gains or losses related to the change in...

  • Page 94
    ... earnings before interest, taxes, depreciation, and amortization ("EBITDA") by selected revenue and EBITDA multiples based on market statistics of identified public companies comparable to the respective reporting unit. uinite-Lived Intangible Assets and Other Long-Lived Assets-The Company accounts...

  • Page 95
    ... 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 other specified activities. The...

  • Page 96
    ... accounts are recorded on the consolidated balance sheets as deferred revenue. The Company offers alternative payment methods to credit cards for certain Communications pay service plans. These alternative payment methods currently include payment by money order or payment through a local telephone...

  • Page 97
    ...customer. As the earning activities take place, activity measurement data (examples include the number of emails delivered and the number of responses received) is accumulated and the related revenues are recorded. The Company's loyalty marketing service also generates revenues from the sale of gift...

  • Page 98
    ... services and products 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 service, and sales...

  • Page 99
    ...) 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 100
    ... income taxes of the United Online tax reporting group for which FTD is severally liable, and the Company will indemnify FTD for these taxes. The Company and FTD generally will be jointly responsible for any taxes that arise from the failure of the FTD Spin-Off Transaction to qualify as tax-free...

  • Page 101
    ... Effective January 1, 2014, the Company adopted the FASB Accounting Standards Update ("ASU") No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, as codified in ASC Topic No. 740, Income Taxes...

  • Page 102
    ... in accounting principle. The Company does not expect this update to have a material impact on its consolidated financial statements. 2. SEGMENT INFORMTTION Segment revenues and segment income (loss) from operations were as follows (in thousands): Year Ended December 31, 2014 Communications Content...

  • Page 103
    ... Contents UNITED ONLINE, INC. NOTES TO CONSOLIDTTED FINTNCITL STTTEMENTS (Continued) 2. SEGMENT INFORMTTION (Continued) Year Ended December 31, 2013 Communications Content & Media Total Services revenues Products revenues Advertising and other revenues Total segment revenues Segment income (loss...

  • Page 104
    ...35,129 995 36,124 - (15,802) (6,502) (25,717) (11,897) Year Ended December 31, 2014 2013 2012 Communications Content & Media Unallocated corporate Total depreciation expense Amortization of intangible assets was attributable to the Content & Media segment. $ 3,006 $ 3,354 $ 4,755 9,666 10,496 10...

  • Page 105
    ... Contents UNITED ONLINE, INC. NOTES TO CONSOLIDTTED FINTNCITL STTTEMENTS (Continued) 2. SEGMENT INFORMTTION (Continued) Geographic information for long-lived assets, which consist of property and equipment and other assets, was as follows (in thousands): December 31, 2014 2013 United States Germany...

  • Page 106
    ... (in thousands): December 31, 2014 2013 Employee compensation and related liabilities Reserve for legal settlement Income taxes payable Separation payments for an executive officer Non-income taxes payable Accrued restructuring and other exit costs Customer deposits Other Total Other Liabilities...

  • Page 107
    ... The MyPoints reporting unit typically generates higher revenues and operating income in the quarter ending December 31 when compared to the other quarters. In the quarter ended December 31, 2012, revenues and operating income were substantially lower than expected. The Company lowered its forecast...

  • Page 108
    ...160,385 $ (150,938) $ 9,447 Gross Value December 31, 2013 Tccumulated Tmortization Net Pay accounts and free accounts Customer contracts and relationships Trademarks and trade names Software and technology Rights, content and intellectual property Total $ 103,357 $ (99,109) $ 4,248 7,900 (7,900...

  • Page 109
    ... next 12 months. Gains Recognized in Earnings on Derivatives (Tmount Excluded from Effectiveness Testing) Year Ended December 31, 2014 2013 2012 Derivatives Designated as Cash Flow Hedging Instruments Location Forward foreign currency exchange contracts F-27 Other income, net $ 118 $ 100 $ 258

  • Page 110
    ... in Earnings on Derivatives Year Ended December 31, 2014 2013 2012 Derivatives Not Designated as Hedging Instruments Location Forward foreign currency exchange contracts Other income, net $ 369 $ 44 $ (75) For additional information related to derivative instruments, see Note 1, "Description...

  • Page 111
    ... Tssets: Money market funds Time deposits Derivative assets Total Liabilities: Derivative liabilities Total Classmates Goodwill $ 37,715 $ - $ 37,715 - 10,971 10,971 - 45 45 $ 37,715 $ 11,016 $ 48,731 49 $ 49 $ 49 49 During the quarter ended September 30, 2013, the Company recorded a preliminary...

  • Page 112
    ... applied margin and other cost assumptions consistent with the reporting unit's historical trends. 7. STOCKHOLDERS' EQUITY Preferred Stock United Online, Inc. has 5.0 million shares of preferred stock authorized with a par value of $0.0001. At December 31, 2014 and 2013, United Online, Inc. had no...

  • Page 113
    ... fair market value equal to the amount of the minimum statutory employee withholding taxes due, which is accounted for as a repurchase of common stock. We then pay the minimum statutory employee withholding taxes in cash. The amounts remitted in the years ended 2014, 2013, and 2012 were $2.8 million...

  • Page 114
    ...13, 2013 (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 termination...

  • Page 115
    ...been included in the following line items within the consolidated statements of operations (in thousands): Year Ended December 31, 2014 2013 2012 Operating expenses: Cost of revenues Sales and marketing Technology and development General and administrative Total stock-based compensation Tax benefit...

  • Page 116
    Table of Contents UNITED ONLINE, INC. NOTES TO CONSOLIDTTED FINTNCITL STTTEMENTS (Continued) 8. STOCK-BTSED COMPENSTTION PLTNS (Continued) The weighted-average grant date fair value of restricted stock units granted during the years ended December 31, 2014, 2013 and 2012 was $11.26, $11.71 and $9.62...

  • Page 117
    ... closing market price of United Online, Inc.'s common stock at the date of grant. At December 31, 2014, total unrecognized compensation cost related to the 2010 Employee Stock Purchase Plan was $1.1 million and was expected to be recognized over a weightedaverage period of 0.7 years. 9. INCOME TTXES...

  • Page 118
    Table of Contents UNITED ONLINE, INC. NOTES TO CONSOLIDTTED FINTNCITL STTTEMENTS (Continued) 9. INCOME TTXES (Continued) The provision for income taxes from continuing operations was comprised of the following (in thousands): Year Ended December 31, 2014 2013 2012 Current: Federal State Foreign ...

  • Page 119
    ...deferred tax assets will actually be realized is subjective and requires management's judgment and evaluation of both positive and negative evidence, including taxable income in prior carryback years, future reversals of existing taxable temporary differences, applicable tax planning strategies, and...

  • Page 120
    ... UNITED ONLINE, INC. NOTES TO CONSOLIDTTED FINTNCITL STTTEMENTS (Continued) 9. INCOME TTXES (Continued) $48.2 million for net unrealizable deferred tax assets, excluding indefinite-lived assets, was recorded at December 31, 2014. Subsequent to the FTD Spin-Off Transaction in the quarter ended...

  • Page 121
    ... to the U.S., the Company would not expect to owe additional U.S. income taxes due to the utilization of net operating loss and foreign tax credit carryovers. For the years ended December 31, 2014, 2013 and 2012, net income tax benefits (shortfalls) attributable to stock-based compensation from...

  • Page 122
    ... UNITED ONLINE, INC. NOTES TO CONSOLIDTTED FINTNCITL STTTEMENTS (Continued) 10. NET INCOME (LOSS) PER COMMON SHTRE The following table sets forth the computation of basic and diluted net income (loss) per common share (in thousands, except per share amounts): 2014 Year Ended December 31, 2013 2012...

  • Page 123
    ... and relocation costs, respectively. In the year ended December 31, 2014, the Company recorded employee termination costs totaling $1.2 million in unallocated corporate expenses and $0.4 million in the Communications segment. These restructuring charges were a result of management's decision to...

  • Page 124
    ...by the Company in connection with certain of these letters of credit and were included in other current assets and other assets in the consolidated balance sheets. Commitments under letters of credit at December 31, 2014 were scheduled to expire as follows (in thousands): Total 2015 2016 Year Ending...

  • Page 125
    ... Telecom Systems LLC filed a complaint in the United States District Court for the Central District of California, Southern Division, against Juno Online Services, Inc. and NetZero, Inc. alleging infringement of certain patents relating to the commercial operation of their dial-up internet services...

  • Page 126
    ...Classmates, Inc. and FTD.COM Inc. In addition, the Multistate Work Group did not propose a limit on the amount of such restitution. The parties continued settlement discussions and offers and in June 2014, Classmates, Inc. and FTD.COM, Inc. proposed to the Multistate Work Group to resolve the matter...

  • Page 127
    ...the ongoing matters relating to the Multistate Work Group. The Separation Agreement also provides for the allocation of liabilities and expenses between the Company and FTD Companies, Inc. with respect to these matters. It also establishes procedures with respect to claims subject to indemnification...

  • Page 128
    ...affect the Company's business, financial condition, results of operations, or cash flows. 13. SUPPLEMENTTL CTSH FLOW INFORMTTION The following table sets forth supplemental cash flow disclosures (in thousands): Year Ended December 31, 2014 2013 2012 Cash paid for interest Cash paid for income taxes...

  • Page 129
    ... acquisition. The effect of increased engagement with the Classmates website and members contributed to a purchase price in excess of the fair value of Yearbook App's net liabilities assumed and intangible assets acquired, and, as a result, the Company has recorded goodwill in connection with this...

  • Page 130
    ... paid in full in August 2013. There was no contingent consideration earned for the earnout period ended June 30, 2014, and the Company does not currently expect any contingent consideration will be earned for the earnout period ending June 30, 2015. The total cost of the schoolFeed acquisition was...

  • Page 131
    ... charge recorded by its Classmates reporting unit during the quarter ended September 30, 2013. The Company's priorperiod financial statements were revised in connection with the filing of the Company's Amendment No. 1 to the Annual Report on Form 10-K/A for the year ended December 31, 2013, as...

  • Page 132
    ..., except per share data) March 31 Year ended December 31, 2013: Revenues Cost of revenues Operating income (loss) Income (loss) from continuing operations Income (loss) from discontinued operations, net of income tax Net income (loss) Net income (loss) attributable to common stockholders Basic net...

  • Page 133
    ... Charged to Income Tax Provision Tax Valuation Tllowance Credited to Income Tax Provision Balance at Beginning of Period Balance at End of Period Valuation allowance for deferred tax assets: Year ended December 31, 2014 Year ended December 31, 2013 Year ended December 31, 2012 (a) $ $ $ 46,988...

  • Page 134

  • Page 135
    ... Employee Stock Purchase Plan is intended to promote the interests of United Online, Inc., a Delaware corporation, by providing eligible employees with the opportunity to acquire a proprietary interest in the Corporation through participation in an employee stock purchase plan designed to qualify...

  • Page 136
    ... the Plan shall commence on the day immediately following the Spin-Off Date. If the Spin-Off Date is prior to October 31, 2013, the initial offering period shall have a duration equal to 24 months plus the number of whole months between the Spin-Off Date through and including October 31, 2013, with...

  • Page 137
    ... by the Plan Administrator (including a stock purchase agreement and a payroll deduction authorization or other authorized form of contribution allowable for that offering period) and file such forms with the Plan Administrator (or its designate) on or before his or her scheduled Entry Date. VI...

  • Page 138
    .... Unless the Plan Administrator determines otherwise prior to the start of the applicable offering period, the amounts collected from the Participant shall not be required to be held in any segregated account or trust fund and may be commingled with the general assets of the Corporation and used for...

  • Page 139
    ... the Plan Administrator determines otherwise prior to the start date of the applicable offering period and subject to the limitations of Article VIII below, each purchase right granted for an offering period shall provide the Participant with the right to purchase up to 1,963 shares of Common Stock...

  • Page 140
    ...event of certain changes in the Corporation's capitalization. However, the Plan Administrator shall have the discretionary authority, exercisable prior to the start of any offering period under the Plan, to increase or decrease the limitations to be in effect for the number of shares purchasable per...

  • Page 141
    ...the applicable (x) or (y) time period will be treated as a new Employee for purposes of subsequent participation in the Plan and must accordingly re-enroll in the Plan (by making a timely filing of the prescribed enrollment forms) on or before his or her scheduled Entry Date into the offering period...

  • Page 142
    ...period measured from the Participant's Entry Date into the offering period in which the shares were purchased and (ii) the end of the one (1)-year measured from the actual purchase date of those shares. Such limitation shall apply both to transfers to different accounts with the same ESPP broker and...

  • Page 143
    ... of any Stock Exchange (or the Nasdaq Stock Market, if applicable) on which the Common Stock is listed for trading and all other applicable requirements established by law or regulation. B. Unless sooner terminated by the Board, the Plan shall terminate upon the earliest of (i) the last business day...

  • Page 144
    ...OF THE PLIN A. The Board may alter or amend the Plan at any time to become effective as of the start date of the next offering period thereafter under the Plan. In addition, the Board may suspend or terminate the Plan at any time to become effective immediately following the close of any subsequent...

  • Page 145
    Schedule I Corporations Participating in the United Online, Inc. 2010 Employee Stock Purchase Plan Juno Internet Services, Inc. NetZero, Inc. United Online Advertising Network, Inc. Memory Lane, Inc. MyPoints.com, Inc. CMC Services, Inc.

  • Page 146
    ... of Board members), (ii) a sale, transfer or other disposition of all or substantially all of the Corporation's assets, (iii) the closing of any transaction or series of related transactions pursuant to which any person or any group of persons comprising a "group" within the meaning of Rule 13d...

  • Page 147
    ... Date under the Plan shall be the Effective Date. Fair Market Value per share of Common Stock on any relevant date shall be the closing price per share of Common Stock at the K. close of regular trading hours (i.e., before after-hours trading begins) on the date in question on the Stock Exchange...

  • Page 148
    ... Schedule A. P. Q. R. Plan shall mean the United Online, Inc. 2010 Employee Stock Purchase Plan, as set forth in this document. Plan Idministrator shall mean the committee of two (2) or more Board members appointed by the Board to administer the Plan. Purchase Date shall mean the last business...

  • Page 149
    ..., contingent upon the effectiveness of my second signature on this Release on the Separation Date as set forth in Section 16 below: (i) an additional separation payment equal to the annual bonus for the 2014 fiscal year that I would have received under the 2014 Management Bonus Plan ("2014 MBP") on...

  • Page 150
    ... (including the Company's Severance Benefit Plan and Summary Plan Description, amended effective May 1, 2014), and (2) all of my outstanding stock option, restricted stock unit and/or other equity awards that are unvested as of February 16, 2015 (after giving effect to the awards regularly scheduled...

  • Page 151
    ... transferred any claims relating to my employment to any other person or entity. If requested by the Company, I agree to cooperate with the Company and provide the necessary or appropriate information: (a) in connection with the preparation of any Securities and Exchange Commission filing related to...

  • Page 152
    ... the Release Delivery Date in which to review and consider it. I understand and acknowledge that the Company has advised me to obtain advice concerning this Release from an attorney of my choice before signing this Release. I further represent that I have had sufficient time to review and consider...

  • Page 153
    ... Benefits at the times set forth in this Release. 16. I understand that, in order to receive the 2014 Bonus Payment and the COBRA Payment (as described above), I must sign this Release a second time after my employment with the Company has ended, on the Separation Date. I acknowledge that the...

  • Page 154
    ... I KNOW THAT I AM GIVING UP IMPORTANT RIGHTS; I HAVE OBTAINED SUFFICIENT INFORMATION TO INTELLIGENTLY EXERCISE MY OWN JUDGMENT; I HAVE BEEN ADVISED THAT I SHOULD CONSULT WITH AN ATTORNEY BEFORE SIGNING IT; AND I HAVE SIGNED IT KNOWINGLY AND VOLUNTARILY. Date delivered to employee: January 5, 2015...

  • Page 155
    ... HAS ENDED; AND I HAVE SIGNED THIS SECOND TIME IN ORDER TO RECEIVE THE 2014 BONUS PAYMENT AND COBRA PAYMENT AS SPECIFIED IN THE RELEASE. Executed this 16 th day of Feb, 2015. Robert J. Taragan /s/ Robert J. Taragan Employee's signature ACCEPTED AND AGREED BY THE COMPANY UNITED ONLINE, INC. DATED...

  • Page 156
    ..., 333-193067) of United Online, Inc. of our report dated March 2, 2015 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this norm 10-K. /s/ PRICEWATERHOUSECOOPERS LLP Los Angeles, California March...

  • Page 157
    QuickLinks Exhibit 23.1 CONSENT On INDEPENDENT REGISTERED PUBLIC ACCOUNTING nIRM

  • Page 158
    ... 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 I, Francis Lobo, certify thati 1. I have reviewed this Annual Report on Form 10-K of United Online, Inc.; 2. Based on my knowledge, this...

  • Page 159
    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 160
    ... 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 I, Edward K. Zinser, certify that: 1. I have reviewed this Annual Report on Form 10-K of United Online, Inc.; 2. Based on my knowledge, this...

  • Page 161
    QuickLinks Exhihit 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 162
    ... to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: (a) The Annual Report on Form 10-K of United Online, Inc. for the year ended December 31, 2014, as filed with the Securities and Exchange Commission fully complies with the...

  • Page 163
    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 164
    ... to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: (a) The Annual Report on Form 10-K of United Online, Inc. for the year ended December 31, 2014, as filed with the Securities and Exchange Commission fully complies with the...

  • Page 165
    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

  • Page 166