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Company Description / Spin-Off Details

United Online Inc. (Parent)

Provider of consumer products and services over the internet. It offers floral related products and services forconsumer and retail florists. Services provided also include online social networking, online loyalty marketing,

internet access and email.

FTD Companies Inc. (Spin-Off)

FTD will be a leading provider of floral, gift and related products and services to consumers and retail florists,

as well as to other retail locations offering floral, gift and related products and services, in the US, Canada, the

UK, and the Republic of Ireland. The business will operate with FTD and Interflora brands, both supported bythe Mercury Man logo.

Spin-Off Details

Announced August 1, 2012

Form-10 Filing April 30, 2013

Record / Distribution Date TBA

Spin-Off Ratio 1:1

Expected Completion 3Q13

Tax Status Tax-Free

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Key Data

Ticker UNTD

Target Price 8.50

Price ($ as of June 14, 2013) 7.13

Market Cap ($ million) 660

Enterprise Value ($ million) 772

Primary Exchange Nasdaq

Bloomberg Symbol UNTD US

Dividend ($) / Yield (%) 0.4 / 5.6

Net Debt ($ million) 112

Revenue FY12 ($ million) 871

Shares (million) 93

Market Float (million) 88

52 Week Range ($) 3.89 - 7.23

Fiscal Year Ending December 31Index Member Not part of S&P 500

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4.00

5.00

6.00

7.00

8.00

$

ROR: 68%

Price Performance since Spin-Off Announcement

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Deal Overview

On August 1, 2012, UNTD announced plans to conduct a tax free spin-off of its FTD business into a separate

company, FTD Companies, Inc.

The spin-off ratio is 1:1, implying that each UNTD shareholder will receive one FTD share for each UNTD

share held as on the record date.

Expected completion in 3Q13.

Post spin-off, UNTD will not hold any stake in FTD.

Current UNTD chairman has stated that he does not find it appealing enough to lead either the stub or spin. He

will leave the company as of the date of the spin. CEO post spin-off yet to be announced.

Deal Rationale

Shareholders were concerned with UNTDs declining share price following the weak performance of its social

network and internet access services.

Following pressure from investors, UNTD decided to separate the FTD business in order to provide significant

operational and strategic flexibility for these businesses.

The spin-off will separate high growth FTD assets from weak social network and internet access assets.

Spin-off signals a departure from earlier strategy of diversifying to cushion falling market share of dial-up

internet service.

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Drivers

UNTD - Content & Media Segment Turning Around

Paid membership losses slowing down for Classmates.com.

Spin-off will result in greater focus on the segment.

UNTD - To be Debt Free post Spin

FTD segment balance sheet suggests that UNTDs entire debt will be taken over by FTD.

No interest burden would bolster turnaround activities.

FTD - Robust Performance Continues

1Q13 was the best quarter in terms of revenue and EBITDA, since acquisition by UNTD.

Average order value remains strong.

FTD - Efficient Business Model Ensures Strong Cashflow

Upfront payment for deliveries, before payment to floral network vendors.

Not required to maintain significant physical inventory; suppliers maintain substantially all inventory.

FTD - Compelling Valuation

Closest peer 1-800-FLOWERS trades at ~6.8x FY14 EBITDA. It is smaller and does not have an international

presence. FTD scores well in these aspects and deserves higher valuation.

FTD would be worth ~88% ofUNTDs (consolidated) current market cap, even if valued at par with 1-800-

FLOWERS current EV/EBITDA multiple of 8.1x. We expect the markets to value FTD at a higher multiple

given its stronger fundamentals.

This indicates steep conglomerate discount.

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Valuation

1) FTD

We are positive on FTDs business fundamentals and believe these are much better than that of its closest peer 1-

800-FLOWERS, warranting a higher valuation multiple. We value FTD at 8.5x FY14 EBITDA, higher than 6.8x

FY14 EBITDA for 1-800-FLOWERS.

$ million

EBITDA 95

Multiple (x) 8.5

EV 806

Less: Net Debt 177

Implied Equity 629

Source: Spin-Off Research

UNTD (parent)Market Cap $660

million

($7.13 per share)

FTD

Esti. Equity Value $629million

($6.80 per share)

UNTD StubEsti. Equity Value

$164 million

($1.75 per share)

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Valuation

$ million Method Metric Multiple Target EV

Content & Media EV/EBITDA 24 5.0 122

Communications EV/EBITDA 26 4.0 103

Corporate EV/EBITDA (21) 6.0 (126)

Enterprise Value 99

Add: Net Cash 65

Equity Value 164

FTD Equity Value 629

Total Equity Value 793

Shares (million) 93

Target Price ($) 8.50

Source: Spin-Off Research

2) UNTD (consolidated)

We value UNTD on a sum of the parts basis. Following are our key assumptions:

1) Content & Media segment is valued at 5.0x FY14 EBITDA, significantly lower than peers following lower

growth profile

2) Communications segment is valued at 4.0x FY14 EBITDA, lower than peer group median

3) FTD Companies valued as above

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Peer Review

Content & Media

EV/EBITDA

Company Ticker Mkt Cap ($ million) FY13 FY14

Facebook FB 61,989 15.6 12.2

LinkedIn LNKD 20,341 53.5 36.1

Groupon GRPN 4,701 11.8 9.8

AOL AOL 2,887 5.9 5.5

Zynga ZNGA 2,739 18.0 10.3

Yelp YELP 2,031 85.2 39.3

Valueclick VCLK 2,007 7.8 6.9

Median 15.6 10.3

Source: Bloomberg

Internet

EV/EBITDA

Company Ticker Mkt Cap ($ million) FY13 FY14

Cincinnati Bell CBB 759 7.8 8.2

Consolidated Communications CNSL 755 5.8 5.7

Earthlink ELNK 599 4.5 4.6

General Communcations GNCMA 384 5.3 4.9

Ntelos Holdings NTLS 337 5.1 4.8

Median 5.3 4.9

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Top-line

Consolidated top-line driven by FTD segment, the companys largest segment.

Consolidated revenues declined 3% YOY to $871 million in FY12, dragged by lower revenue from Content

& Media segment (-17% YOY) and Communications segment (-17% YOY). This was partially offset by higher FTD segment revenues (+4% YOY), following higher consumer orders.

Post spin-off, UNTD (stub) revenues expected to be dragged by sluggish Content & Media and

Communications segment.

NetZero 4G mobile broadband business meaningful contributions expected only in FY14.

In 1Q13, FTD segment revenue and adjusted OIBDA reached their highest levels since FTD was acquired

by UNTD in August 2008.

FTD, post spin-off, expected to continue robust top-line growth, aided by higher orders.

60%

22%18%

65%

21%

14%

70%

18%12%

0%

10%

20%

30%

40%

50%

60%

70%

80%

FTD Content & Media Communications

%o

ftotalrevenue

Segment-wise Share in Total Revenue

FY10 FY11 FY12

0

1

2

3

4

5

6

7

8

9

10

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

FY10 FY11 FY12

$

Thousands

UNTD (stub) segments

Communications Pay Accounts Content & Media Pay Accounts

Communications ARPU Content & Media ARPU

Financial Overview

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Operating Profitability

Consolidated adjusted OIBDA continues to decline despite robust FTD OIBDA.

Significantly lower adjusted OIBDA at both Content & Media segment and Communications segment.

0%

10%

20%

30%

40%

50%

60%

0

10

20

30

40

50

60

70

80

90

100

FY11 FY12

$million

Segment Revenue and OIBDA Margin

FTD Content & Media Communications

FTD Content & Media Communications

Financial Overview

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As of 31st December 2012, UNTD had a cash balance of $136 million and ~50% of this belonged to FTD.

This suggests UNTD stub will have ~$65-70 million in cash.

FTDs has a debt balance of $244 million, the same as UNTD consolidated. This suggests UNTD stub will be

debt free post spin.

FTD segment has contributed the most of the consolidated entitys operating cash flows. It contributed a

whopping 79% in FY12, significantly higher than 39% contributed in FY11 and FY10.

Post spin, the stub could generate positive operating cash flows, albeit at a declining rate, given continued pay

accounts decline at both segments.

FTD on the other hand is expected to post higher operating cash flows going forward.

Balance Sheet

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Dividend and Dividend Yield

UNTD has been regularly paying out quarterly dividends.

Current dividend yield stands at ~6%.

Dividend payout post spin is discretionary and is subject to determination by UNTDs Board of Directors

each quarter following its review of financial performance and other factors.

FTD to position itself as a growth company.

May not pay dividends in the medium term.

Dividend payments expected to resume eventually, given its track record of dividend payments to UNTD.

Common Stock Repurchases

In January 2013, UNTDs Board of Directors approved and ratified the extension of its share repurchase

program through December 31, 2013. There were no repurchases under the program during the year ended

December 31, 2012. The authorization remaining under the repurchase program was $80.0 million as of

December 31, 2012.

Dividend and Share Buybacks