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As Of Filer Filing As/For/On Docs:Pgs Issuer Agent
6/27/08 Classmates Media CORP S-4 5:299 Merrill Corp/New/- FA
Classmates Online/Inc
Juno Online Services Inc
Mypoints Com Inc
United Online Inc
Opobox/Inc
Juno Internet Services/Inc
United Online Communications/Inc
United Online Advertising Network/Inc
Classmates Yearbooks/Inc
Classmates International/Inc
UOL Advertising/Inc
United Online Web Services/Inc
Netzero Inc
Document/Exhibit Description Pages Size
1: S-4 Registration of Securities Issued in a HTML 1,988K
Business-Combination Transaction
2: EX-23.1 Consent of Experts or Counsel HTML 9K
3: EX-23.2 Consent of Experts or Counsel HTML 9K
4: EX-99.2 Miscellaneous Exhibit HTML 12K
5: EX-99.3 Miscellaneous Exhibit HTML 15K
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TABLE OF CONTENTS
TABLE OF CONTENTS 2
As filed with the Securities and Exchange Commission on June 27, 2008
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
UNITED ONLINE, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 7370 | 77-0575839 | ||
| (State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification Number) |
21301 Burbank Boulevard
Woodland Hills, California 91367
(818) 287-3000
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)
Mark R. Goldston
Chairman, President and Chief Executive Officer
21301 Burbank Boulevard
Woodland Hills, California 91367
(818) 287-3000
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
| Brian J. McCarthy, Esq. David C. Eisman, Esq. Skadden, Arps, Slate, Meagher & Flom LLP 300 South Grand Avenue Los Angeles, California 90071 (213) 687-5000 |
Michael J. Soenen Chairman, President and Chief Executive Officer FTD Group, Inc. 3113 Woodcreek Drive Downers Grove, Illinois 60515 (630) 719-7800 |
Howard A. Sobel, Esq. John Giouroukakis, Esq. Latham & Watkins LLP 885 Third Avenue New York, New York 10022 (212) 906-1200 |
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effectiveness of this registration statement and the satisfaction or waiver of all other conditions under the merger agreement described herein.
If the securities being registered on this form are to be offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. o
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "larger accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ý | Accelerated filer o | Non-accelerated filer o (Do not check if a smaller reporting company) |
Smaller reporting company o |
CALCULATION OF REGISTRATION FEE
| Title of Each Class of Securities to be Registered(1) |
Amount to be Registered |
Proposed Maximum Offering Price Per Unit |
Proposed Maximum Aggregate Offering Price |
Amount of Registration Fee |
|||||
|---|---|---|---|---|---|---|---|---|---|
| Common Stock, $0.0001 par value per share (together with the associated preferred share purchase rights)(2) | 12,919,077(3) | N/A | $134,875,163.88(4) | $5,300.60 | |||||
| 13% Senior Secured Notes due 2013 | $100,000,000 | 100% | $100,000,000 | $3,930.00 | |||||
| Guarantees related to the 13% Senior Secured Notes due 2013 | N/A | N/A | N/A | N/A(5) | |||||
| TOTAL | — | — | $234,875,163.88 | $9,230.60 | |||||
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
TABLE OF ADDITIONAL REGISTRANTS
| Name of Additional Registrant* |
State or Other Jurisdiction of Incorporation or Formation |
Primary Standard Industrial Classification Code Number |
I.R.S. Employer Identification No. |
|||
|---|---|---|---|---|---|---|
| Classmates International, Inc. | Delaware | 7370 | 20-0173707 | |||
| Classmates Media Corporation | Delaware | 7389 | 26-0657253 | |||
| Classmates Online, Inc. | Washington | 7370 | 91-1724074 | |||
| Classmates Yearbooks, Inc. | Delaware | 7370 | 42-1594711 | |||
| Juno Internet Services, Inc. | Delaware | 7370 | 13-4127465 | |||
| Juno Online Services, Inc. | Delaware | 7370 | 13-3914547 | |||
| MyPoints.com, Inc. | Delaware | 7370 | 94-3255692 | |||
| NetZero, Inc. | Delaware | 7370 | 95-4644384 | |||
| Opobox, Inc. | Delaware | 7370 | 04-3572710 | |||
| United Online Advertising Network, Inc. | Delaware | 7370 | 83-0427758 | |||
| United Online Communications, Inc. | Delaware | 7370 | 83-0427759 | |||
| United Online Web Services, Inc. | Delaware | 7370 | 20-0922351 | |||
| UOL Advertising, Inc. | Delaware | 7370 | 95-4841365 |
The information in this proxy statement/prospectus is not complete and may be changed. UOL may not sell these securities until the registration statement filed with the Securities and Exchange Commission, of which this document is a part, is declared effective. This proxy statement/prospectus is not an offer to sell these securities and neither FTD nor UOL is soliciting an offer to buy these securities in any jurisdiction where the offer, solicitation or sale is not permitted or would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. Any representation to the contrary is a criminal offense.
Subject to completion, dated June 27, 2008
PROPOSED MERGER—YOUR VOTE IS VERY IMPORTANT
The board of directors of FTD Group, Inc. has approved a merger, combining FTD and United Online, Inc. (UOL).
FTD and UOL have entered into an agreement and plan of merger pursuant to which an indirect wholly owned subsidiary of UOL will merge with and into FTD, with FTD thereupon becoming an indirect wholly owned subsidiary of UOL.
In the proposed merger, FTD stockholders will receive 0.4087 of a share of UOL common stock, $3.31 principal amount of UOL 13% Senior Secured Notes due 2013 and $7.34 in cash for each share of FTD common stock, subject to adjustment as described under "The Merger Agreement—Change in Cash Merger Consideration Upon Receipt of Additional Financing or a Classmates IPO" beginning on page 98 of this proxy statement/prospectus. The exchange ratio for shares of UOL common stock to be received by FTD stockholders is fixed and will not be adjusted to reflect stock price changes prior to the closing. Upon the closing of the merger, FTD's former stockholders will own approximately % of the then outstanding UOL common stock, based on the number of shares of UOL outstanding on , 2008 and of FTD outstanding on , 2008. The value of the merger consideration to be received in exchange for each share of FTD common stock will fluctuate with the market price of UOL common stock.
Based on the closing sale price for UOL common stock on April 29, 2008, the last trading day before public announcement of the merger, the 0.4087 of a share of UOL common stock, $3.31 principal amount of UOL 13% Senior Secured Notes and $7.34 in cash represented approximately $15.08 in value for each share of FTD common stock. Based on the closing sale price for UOL common stock on , 2008, the latest practicable trading date before the printing of this proxy statement/prospectus, the 0.4087 of a share of UOL common stock, $3.31 principal amount of UOL 13% Senior Secured Notes and $7.34 in cash represented approximately $ in value for each share of FTD common stock.
UOL common stock is listed on the NASDAQ Global Select Market under the symbol "UNTD." FTD common stock is listed on the New York Stock Exchange under the symbol "FTD." We urge you to obtain current market quotations for the shares of UOL and FTD.
Your vote is very important. The merger cannot be completed unless FTD stockholders holding a majority of the outstanding shares of FTD common stock as of the record date adopt the merger agreement. FTD is holding a special meeting of its stockholders to vote on the proposal to adopt the merger agreement. Information about the FTD special meeting and the proposed merger is contained in this proxy statement/prospectus. UOL has also entered into a voting and support agreement with affiliates of Leonard Green & Partners, L.P., which collectively owned approximately % of the outstanding shares of FTD common stock as of the record date, pursuant to which such affiliates have agreed, subject to the terms and conditions of the voting and support agreement, to vote the shares of FTD common stock they own as of the record date in favor of the adoption of the merger agreement. Information about the voting and support agreement is also contained in this proxy statement/prospectus. We urge you to read this proxy statement/prospectus carefully. You should also carefully consider the risk factors beginning on page 35 of this proxy statement/prospectus.
Whether or not you plan to attend the FTD special meeting, please submit your proxy as soon as possible to make sure that your shares are represented at the FTD special meeting.
The board of directors of FTD recommends that FTD stockholders vote FOR the proposal to adopt the merger agreement and FOR the proposal to approve any motion to adjourn or postpone the FTD special meeting to a later date or dates if necessary to solicit additional proxies.
MICHAEL J. SOENEN
Chairman, President and Chief Executive Officer
FTD Group, Inc.
, 2008
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in connection with the merger or determined if this proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.
This proxy statement/prospectus is dated , 2008, and is first being mailed to FTD stockholders on or about , 2008.
FTD Group, Inc.
3113 Woodcreek Drive
Downers Grove, Illinois 60515
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD
ON , 2008
To the Stockholders of FTD Group, Inc.:
A special meeting of stockholders of FTD Group, Inc. will be held at our principal executive office, 3113 Woodcreek Drive, Downers Grove, Illinois 60515, on , 2008 at , local time, for the following purposes:
1. To adopt the Agreement and Plan of Merger, dated as of April 30, 2008, by and among United Online, Inc., UNOLA Corp. and FTD Group, Inc., as the same may be amended from time to time.
2. To approve any motion to adjourn or postpone the FTD special meeting to a later date or dates, if necessary, to solicit additional proxies if there are insufficient votes at the time of the FTD special meeting to approve the proposal to adopt the merger agreement.
3. To transact such other business as may properly come before the FTD special meeting or any adjournment or postponement thereof.
The accompanying proxy statement/prospectus further describes the matters to be considered at the FTD special meeting. A copy of the merger agreement has been included as Annex A to this proxy statement/prospectus.
The FTD board of directors has set , 2008 as the record date for the FTD special meeting. Only holders of record of shares of FTD common stock at the close of business on , 2008 will be entitled to notice of and to vote at the FTD special meeting and any adjournments or postponements thereof. To ensure your representation at the FTD special meeting, please complete and return the enclosed proxy card or submit your proxy by telephone or through the Internet. Please vote promptly whether or not you expect to attend the FTD special meeting. Submitting a proxy now will not prevent you from being able to vote at the FTD special meeting by attending in person and casting a vote.
The board of directors of FTD recommends that you vote FOR the proposal to adopt the merger agreement and FOR the proposal to approve any motion to adjourn or postpone the FTD special meeting to a later date or dates if necessary to solicit additional proxies.
By Order of the Board of Directors,
JON R. BURNEY
Secretary
FTD Group, Inc.
, 2008
PLEASE VOTE YOUR SHARES PROMPTLY. YOU CAN FIND INSTRUCTIONS FOR VOTING ON THE ENCLOSED PROXY CARD. IF YOU HAVE QUESTIONS ABOUT THE PROPOSALS OR ABOUT VOTING YOUR SHARES, PLEASE CONTACT MACKENZIE PARTNERS, INC. BY TELEPHONE AT (800) 322-2885 (TOLL FREE) OR VIA EMAIL AT PROXY@MACKENZIEPARTNERS.COM.
i
ii
iii
COMPARISON OF STOCKHOLDER RIGHTS |
193 |
||
FUTURE FTD STOCKHOLDER PROPOSALS AND NOMINATIONS |
213 |
||
LEGAL MATTERS |
213 |
||
EXPERTS |
213 |
||
WHERE YOU CAN FIND MORE INFORMATION |
214 |
||
| Annexes |
|
|
|---|---|---|
| Annex A | Agreement and Plan of Merger | |
Annex B |
Voting and Support Agreement |
|
Annex C |
Opinion of Goldman, Sachs & Co. |
|
Annex D |
Section 262 of the Delaware General Corporation Law |
iv
This proxy statement/prospectus incorporates important business and financial information about UOL and FTD from documents that each company has filed with the Securities and Exchange Commission, which we refer to as the SEC, but that has not been included in or delivered with this proxy statement/prospectus. For a listing of documents incorporated by reference into this proxy statement/prospectus, please see the section entitled "Where You Can Find More Information" beginning on page 214 of this proxy statement/prospectus.
UOL will provide you with copies of this information relating to UOL (excluding all exhibits unless UOL has specifically incorporated by reference an exhibit in this proxy statement/prospectus), without charge, upon written or oral request to:
United Online, Inc.
21301 Burbank Boulevard
Woodland Hills, California 91367
Attn: Investor Relations
(818) 287-3000
FTD will provide you with copies of this information relating to FTD (excluding all exhibits unless FTD has specifically incorporated by reference an exhibit in this proxy statement/prospectus), without charge, upon written or oral request to:
FTD Group, Inc.
3113 Woodcreek Drive
Downers Grove, Illinois 60515
Attn: Investor Relations
(630) 719-7800
In order to receive timely delivery of the documents, you must make your requests no later than , 2008.
QUESTIONS AND ANSWERS ABOUT THE MERGER
The following questions and answers briefly address some commonly asked questions about the FTD special meeting. They may not include all the information that is important to FTD stockholders. We urge stockholders to read carefully this entire proxy statement/prospectus, including the annexes and the other documents referred to herein.
Q: What is the proposed transaction?
Q: Why am I receiving these materials?
We are delivering this document to you as both a proxy statement of FTD and a prospectus of UOL. It is a proxy statement because the FTD board of directors is soliciting proxies from its stockholders. It is a prospectus because UOL will issue shares of its common stock and its 13% Senior Secured Notes due 2013, which we refer to as the UOL notes, as part of the merger consideration in the merger as described under "The Merger Agreement—Merger Consideration" beginning on page 97 of this proxy statement/prospectus.
Q: What will FTD stockholders receive in the merger?
However, prior to the date this proxy statement/prospectus is mailed to FTD stockholders, the merger consideration may be adjusted as described under "The Merger Agreement—Change in Cash Merger Consideration Upon Receipt of Additional Financing or a Classmates IPO" beginning on page 98 of this proxy statement/prospectus in the event that (1) UOL obtains additional financing prior to the earlier of the date this proxy statement/prospectus is mailed to FTD stockholders or August 13, 2008 or (2) an initial public offering of Classmates Media Corporation, a wholly owned subsidiary of UOL, is consummated prior to the date this proxy statement/prospectus is mailed to FTD stockholders and UOL has not proceeded with the additional financing. While UOL is pursuing additional financing, there can be no assurances that
1
any additional financing will be obtained. While it remains UOL's strategy to complete the initial public offering of Classmates Media Corporation, because UOL believes that capital markets have not improved significantly since the Classmates Media Corporation registration statement on Form S-1 was withdrawn in December 2007 and there is limited visibility as to when capital markets might improve significantly, UOL has concluded that it is unlikely that the Classmates Media Corporation initial public offering will be completed before 2009. Accordingly, this proxy statement/prospectus assumes that there will be no adjustment to the merger consideration. In the event that either of the above described circumstances occur, this proxy statement/prospectus will be amended accordingly prior to being mailed to FTD stockholders.
Q: When does FTD expect to complete the merger?
Q: How does the FTD board of directors recommend that I vote?
Q: What do I need to do now?
Q: How do I vote?
You may also cast your vote in person at the FTD special meeting.
If your shares are held in "street name," through a broker, bank or other nominee, that institution will send you separate instructions describing the procedure for voting your shares. "Street name" stockholders who wish to vote at the meeting will need to obtain a proxy form from the institution that holds their shares.
Q: When and where is the FTD special meeting of stockholders?
2
Q: If my shares are held in "street name" by a broker, bank or other nominee, will my broker, bank or other nominee vote my shares for me?
Q: What constitutes a quorum?
Q: What vote is required to approve the Merger Proposal?
Q: Is there any stockholder already committed to vote in favor of the Merger Proposal?
Q: Are there any risks related to the merger or any risks relating to owning UOL common stock or UOL notes?
Q: What if I do not vote on the Merger Proposal?
Q: May I change my vote after I have delivered my proxy or voting instruction card?
3
If you choose any of the first three methods, you must take the described action no later than the beginning of the FTD special meeting.
If your shares are held in an account at a broker, bank or other nominee, you should contact your broker, bank or other nominee to change your vote.
Q: What are the material U.S. federal income tax consequences of the merger?
FTD stockholders that are not "United States persons" for United States federal income tax purposes should not generally be subject to United States federal income tax in respect of the merger consideration received in exchange for the FTD common stock surrendered pursuant to the merger.
FTD stockholders are urged to consult their own tax advisors regarding the United States federal income tax considerations of the merger, as well as the effects of state, local, and non-United States tax laws.
For a more complete summary of the tax considerations of the merger, see the section entitled "The Merger—Material United States Federal Income Tax Consequences of the Merger" beginning on page 88 of this proxy statement/prospectus.
Q: Do I have appraisal rights?
Q: What does it mean if I get more than one proxy card or voting instruction card?
Q: Should I send in my FTD stock certificates now?
4
Q: What happens if I sell my shares before the FTD special meeting?
Q: What if I hold FTD stock options or restricted shares of FTD common stock?
At the closing of the merger, each restricted share of FTD common stock (except as described under "The Merger—Interests of Executive Officers and Directors of FTD in the Merger" beginning on page 83 of this proxy statement/prospectus) will be converted into the right to receive the merger consideration. See "The Merger Agreement—Treatment of FTD Stock Options and Restricted Stock" beginning on page 99 of this proxy statement/prospectus.
Q: What happens if the merger is not consummated?
Q: Who should I contact if I have any questions about the proxy materials or voting power?
5
The following is a summary that highlights information contained in this proxy statement/prospectus. This summary may not contain all of the information that may be important to you. For a more complete description of the merger agreement and the merger contemplated by the merger agreement, we encourage you to read carefully this entire proxy statement/prospectus, including the attached annexes. In addition, we encourage you to read the information incorporated by reference into this proxy statement/prospectus, which includes important business and financial information about UOL and FTD that has been filed with the SEC. You may obtain the information incorporated by reference into this proxy statement/prospectus without charge by following the instructions in the section entitled "Where You Can Find More Information" beginning on page 214 of this proxy statement/prospectus.
Information about the Companies
United Online, Inc.
21301 Burbank Boulevard
Woodland Hills, California 91367
(818) 287-3000
UOL, a Delaware corporation headquartered in Woodland Hills, California, commenced operations in 2001 following the merger of dial-up Internet access providers NetZero, Inc. and Juno Online Services, Inc.
UOL is a leading provider of consumer Internet and media services through a variety of brands including Classmates, MyPoints, NetZero and Juno. UOL's business consists of two segments: Classmates Media and Communications. Classmates Media services are online social networking and online loyalty marketing. UOL's primary Communications services are Internet access and email. UOL's Web properties, in aggregate, attract a significant number of Internet users each month among its base of more than 50 million registered accounts. UOL's large online audience enables UOL to offer a broad array of Internet marketing products and services for advertisers.
Historically, UOL's operations were focused on providing value-priced dial-up Internet access services in the United States and Canada. In 2004, UOL's dial-up Internet access revenues began to decline and UOL began diversifying its business to include other Internet consumer offerings in an effort to provide new growth opportunities for UOL. In November 2004, UOL acquired Classmates Online, Inc., which we refer to as Classmates, a provider of online social networking services, and in April 2006, UOL acquired MyPoints.com, Inc., which we refer to as MyPoints, a provider of online loyalty marketing services. UOL's strategy is to continue to leverage UOL's resources and core competencies to further expand UOL's businesses beyond dial-up Internet access services, through internal development and acquisitions (such as the proposed merger with FTD), while managing UOL's declining dial-up Internet access services primarily for profitability and cash flow.
FTD Group, Inc.
3113 Woodcreek Drive
Downers Grove, Illinois 60515
(630) 719-7800
FTD, a Delaware corporation headquartered in Downers Grove, Illinois, is a leading provider of floral and specialty gift products and services to consumers and retail florists, as well as other retail locations offering floral products, in the United States, Canada, the United Kingdom and the Republic of Ireland. The business utilizes the highly recognized FTD and Interflora brands, both supported by the Mercury Man logo, which is displayed in approximately 45,000 floral shops worldwide. FTD conducts its business through three operating segments: the consumer segment, the florist segment and the international segment.
6
The consumer segment operates primarily through the www.ftd.com Website in the United States and Canada. As a result of FTD's same-day delivery capability and broad product selection, FTD's consumer segment is one of the largest direct marketers of floral arrangements and specialty gifts in the United States, generating 2.9 million orders from consumers in the nine-month period ended March 31, 2008.
The florist segment provides a comprehensive suite of products and services that enable FTD members to send and deliver floral orders. This suite of products and services is also designed to promote revenue growth and enhance the operating efficiencies of FTD members in the United States and Canada.
The international segment was formed as a result of the acquisition of Interflora on July 31, 2006. The international segment generated 1.7 million orders from consumers in the nine-month period ended March 31, 2008. Interflora also provides products and services to its network of members in the United Kingdom and the Republic of Ireland.
FTD's consumer and florist businesses are highly complementary, as floral orders generated by the consumer business are delivered by the network of members. FTD's management believes that FTD's strong brand name recognition, complementary florist and consumer businesses, extensive customer database of floral and specialty gift consumers, network of FTD and Interflora members and international footprint provide FTD with competitive advantages.
UNOLA Corp.
21301 Burbank Boulevard
Woodland Hills, California 91367
(818) 287-3000
UNOLA Corp., an indirect wholly owned subsidiary of UOL, is a Delaware corporation formed on April 25, 2008, for the purpose of effecting the merger. Upon completion of the merger, UNOLA Corp. will merge with and into FTD, and FTD will become an indirect wholly owned subsidiary of UOL.
UNOLA Corp. has not conducted any activities other than those incidental to its formation and the matters contemplated by the merger agreement, including the preparation of applicable regulatory filings in connection with the merger.
UOL and FTD agreed to the acquisition of FTD by UOL under the terms of the merger agreement that is described in this proxy statement/prospectus. Pursuant to the merger agreement, UNOLA Corp., a newly formed, indirect wholly owned subsidiary of UOL, will merge with and into FTD, with FTD surviving the merger as an indirect wholly owned subsidiary of UOL. We have attached the merger agreement as Annex A to this proxy statement/prospectus. We encourage you to read carefully the merger agreement in its entirety because it is the legal document that governs the merger.
At the closing of the merger, each outstanding share of FTD common stock will be converted into the right to receive $7.34 in cash, 0.4087 of a share of UOL common stock and $3.31 principal amount of UOL notes. For a description of the material terms of the UOL notes, see "Description of Senior Secured Notes Due 2013" beginning on page 135 of this proxy statement/prospectus. The exchange ratio for shares of UOL common stock to be received by FTD stockholders is fixed and will not be adjusted to reflect stock price changes prior to the closing. However, prior to the date this proxy statement/prospectus is mailed to FTD stockholders, the merger consideration may be adjusted as described under "The Merger Agreement—Change in Cash Merger Consideration Upon Receipt of
7
Additional Financing or a Classmates IPO" beginning on page 98 of this proxy statement/prospectus in the event that (1) UOL obtains additional financing prior to the earlier of the date this proxy statement/prospectus is mailed to the stockholders of FTD and August 13, 2008 or (2) an underwritten initial public offering of Classmates Media Corporation, a wholly owned subsidiary of UOL, is consummated prior to the date this proxy statement/prospectus is mailed to FTD stockholders and UOL has not proceeded with the additional financing. While UOL is pursuing additional financing, there can be no assurances that any additional financing will be obtained. While it remains UOL's strategy to complete the initial public offering of Classmates Media Corporation, because UOL believes that capital markets have not improved significantly since the Classmates Media Corporation registration statement on Form S-1 was withdrawn in December 2007 and there is limited visibility as to when capital markets might improve significantly, UOL has concluded that it is unlikely that the Classmates Media Corporation initial public offering will be completed before 2009. Accordingly, this proxy statement/prospectus assumes that there will be no adjustment to the merger consideration. In the event that either of those circumstances occur, this proxy statement/prospectus will be amended accordingly prior to being mailed to FTD stockholders.
The merger agreement provides that prior to the effective time of the merger the FTD board of directors will adopt resolutions or take such actions as required to permit any outstanding options that are not exercisable or vested to become exercisable and vested immediately prior to the effective time of the merger, and to cause all unvested restricted shares of FTD common stock to become vested immediately prior to the effective time of the merger. At the closing of the merger, each outstanding option to purchase shares of FTD common stock will be cancelled in exchange for the same merger consideration payable to FTD stockholders for shares of FTD common stock, reduced ratably by the exercise price of the unexercised options in the same proportion that the value of the cash, fraction of a share of UOL common stock and UOL notes, as applicable, comprising the merger consideration bear to each other, subject to adjustment of the merger consideration as described under "The Merger Agreement—Change in Cash Merger Consideration Upon Receipt of Additional Financing or a Classmates IPO" beginning on page 98 of this proxy statement/prospectus prior to the date this proxy statement/prospectus is mailed to FTD stockholders, in proportion to the value that the cash, UOL common stock and UOL notes comprise the merger consideration. As a result of this formula, if, at the effective time of the merger, the exercise price of an option is greater than the aggregate value of the merger consideration, such option will be cancelled and the holder of such option will not receive any merger consideration in exchange for such option.
At the closing of the merger, each restricted share of FTD common stock (except as described under "The Merger—Interests of Executive Officers and Directors of FTD in the Merger" beginning on page 83 of this proxy statement/prospectus) will be converted into the right to receive the merger consideration.
UOL will not issue fractional shares of UOL common stock in connection with the merger. Instead, each holder of FTD common stock who would otherwise be entitled to receive a fraction of a share of UOL common stock will receive, in lieu thereof, cash (without interest) in an amount equal to such fraction multiplied by the last reported sales price of UOL common stock at the end of regular trading hours on the NASDAQ Global Select Market on the closing date of the merger.
UOL also will not issue any UOL notes in connection with the merger with a principal amount of less than $1.00. Instead, each holder of FTD common stock who would otherwise be entitled to receive a UOL note with a principal amount of less than $1.00 will receive, in lieu thereof, cash (without interest) in an amount equal to the principal amount of such UOL note.
For a full description of the merger consideration, see "The Merger Agreement—Merger Consideration," "The Merger Agreement—Change in Cash Merger Consideration Upon Receipt of Additional Financing or a Classmates IPO," "The Merger Agreement—Treatment of FTD Stock
8
Options and Restricted Stock" beginning on pages 97, 98 and 99, respectively, and "Description of Senior Secured Notes Due 2013" beginning on page 135 of this proxy statement/prospectus.
In evaluating the merger agreement and the merger, you should carefully read this proxy statement/prospectus and especially consider the factors discussed in the section entitled "Risk Factors" beginning on page 35.
The FTD special meeting will be held at FTD's principal executive office, 3113 Woodcreek Drive, Downers Grove, Illinois 60515, on , 2008 at , local time. At the FTD special meeting, FTD stockholders will be asked to adopt the merger agreement.
Only holders of record of FTD's common stock at the close of business on , 2008, the record date, are entitled to notice of and to vote at the FTD special meeting. As of the record date, there were shares of FTD common stock outstanding and entitled to vote at the FTD special meeting.
Adoption of the merger agreement requires the affirmative vote of a majority of the outstanding shares of FTD common stock entitled to vote on the record date. Pursuant to a voting and support agreement, affiliates of Leonard Green, who collectively owned approximately % of the shares of FTD common stock outstanding on the record date, have agreed, subject to the terms and conditions of the voting and support agreement, to vote the shares of FTD common stock they own as of the record date in favor of the Merger Proposal and in favor of any other matter necessary for the consummation of the transactions contemplated in the merger agreement. For a more complete description of the voting and support agreement, see "The Voting and Support Agreement" beginning on page 125 of this proxy statement/prospectus. The voting and support agreement is also attached as Annex B to this proxy statement/prospectus.
Recommendation of the FTD Board of Directors
After careful consideration, the FTD board of directors has unanimously determined that the merger agreement, the merger and the other transactions contemplated thereby are advisable, fair to, and in the best interests of, FTD and its stockholders and recommends that holders of FTD common stock vote FOR the Merger Proposal and FOR the Adjournment Proposal.
For a more complete description of FTD's reasons for the merger and the recommendation of the FTD board of directors, see "The Merger—Recommendation of the FTD Board of Directors; FTD's Reasons for the Merger" beginning on page 70 of this proxy statement/prospectus.
Opinion of FTD's Financial Advisor
Goldman, Sachs & Co., which we refer to as Goldman, Sachs, rendered its oral opinion on April 29, 2008, which was subsequently confirmed in writing on April 30, 2008, to the FTD board of directors that, as of April 30, 2008, and based upon and subject to the factors and assumptions set forth therein, the consideration to be received by the holders of the outstanding shares of FTD
9
common stock, taken in the aggregate, pursuant to the merger agreement was fair from a financial point of view to such holders.
The full text of the written opinion of Goldman, Sachs, dated April 30, 2008, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached hereto as Annex C. Goldman, Sachs provided its opinion for the information and assistance of the FTD board of directors in connection with the board's consideration of the merger. The Goldman, Sachs opinion does not constitute a recommendation as to how any holder of shares of FTD common stock should vote with respect to the adoption of the merger agreement or any other matter. Pursuant to an engagement letter between FTD and Goldman, Sachs, FTD has agreed to pay Goldman, Sachs a transaction fee of approximately $5,000,000, all of which is contingent upon consummation of the merger.
Ownership of UOL Following the Merger
Based on the number of shares of FTD common stock outstanding as of the record date, UOL expects to issue approximately shares of UOL common stock in the merger. Based on the number of shares of FTD common stock and the number of shares of UOL common stock outstanding on the record date for the FTD special meeting, upon the closing of the merger, FTD's former stockholders will own approximately % of the then outstanding UOL common stock.
Share Ownership of FTD Directors and Executive Officers
At the close of business on the record date, directors and executive officers of FTD owned and were entitled to vote approximately shares of FTD common stock, collectively representing approximately % of the shares of FTD common stock outstanding on that date (and together with the shares held by affiliates of Leonard Green, approximately %).
At the close of business on the record date, affiliates of Leonard Green beneficially owned shares of FTD common stock, representing approximately % of the outstanding shares of FTD on that date. Affiliates of Leonard Green have entered into a voting and support agreement with UOL pursuant to which they have agreed, subject to the terms of the agreement, to vote the shares of FTD common stock they own as of the record date in favor of the Merger Proposal and in favor of any other matter necessary for the consummation of the transactions contemplated in the merger agreement. For more information regarding the voting and support agreement, see "The Voting and Support Agreement," beginning on page 125 of this proxy statement/prospectus.
Interests of Directors and Executive Officers of FTD in the Merger
You should be aware that some of FTD's directors and executive officers have interests in the merger that are different from, or are in addition to, the interests of FTD stockholders generally. These interests relate to (i) new employment agreements entered into between certain executive officers and Florists' Transworld Delivery, Inc., a wholly owned subsidiary of FTD, which we refer to as FTDI, which provide for, among other things, increased compensation, including an employment agreement and a confidentiality and non-competition agreement entered into between FTDI and Michael J. Soenen, the current chief executive officer and president of FTD; (ii) transaction bonuses for certain executive officers payable upon consummation of the merger; (iii) the grant of restricted stock unit awards to certain executive officers and the acceleration of outstanding FTD stock options and restricted stock awards granted to certain executive officers; and (iv) indemnification and insurance for FTD's directors and executive officers.
10
For a further discussion of the interests of FTD's directors and executive officers in the merger, see "The Merger—Interests of Executive Officers and Directors of FTD in the Merger," beginning on page 83 of this proxy statement/prospectus.
Listing of UOL Common Stock and Delisting and Deregistration of FTD Common Stock
Application will be made to have the shares of UOL common stock issued in the merger approved for listing on the NASDAQ Global Select Market. If the merger is completed, FTD common stock will be delisted from the New York Stock Exchange and will be deregistered under the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act, and FTD will no longer file periodic reports with the SEC.
Under the Delaware General Corporation Law, holders of shares of FTD common stock have the right to receive an appraisal of the fair value of their shares of FTD common stock in connection with the merger. To exercise appraisal rights, an FTD stockholder:
A copy of Section 262 of the Delaware General Corporation Law is also attached as Annex D to this proxy statement/prospectus.
Conditions to Completion of the Merger
A number of conditions must be satisfied (or, if permissible, waived) before the merger will be completed. These include, among others:
11
To the extent permitted by applicable law, each of UOL, UNOLA Corp. and FTD may waive the conditions to the performance of its respective obligations under the merger agreement and complete the merger even though one or more of these conditions have not been met. Neither UOL nor FTD can give any assurance that all of the conditions to the merger will be either satisfied or waived or that the merger will occur.
The merger is subject to antitrust laws. Under the HSR Act, and the rules promulgated under the HSR Act by the FTC, the merger may not be completed until notifications have been given and information furnished to the FTC and to the Antitrust Division of the Department of Justice, referred to as the Antitrust Division, and the specified waiting period has been terminated or has expired. FTD and UOL each filed notification and report forms under the HSR Act with the FTC and the Antitrust Division on May 28, 2008. On June 6, 2008, the FTC granted early termination of the applicable waiting periods under the HSR Act in connection with the merger. Under the terms of the merger agreement, neither UOL nor any of its subsidiaries (including UNOLA Corp. and the surviving corporation) would be required to take or refrain from taking any action that would (i) limit the ownership or operation of all or any material portion of the business or assets of FTD and its subsidiaries taken as a whole or compel the disposal of or separate holding of all or any material portion of the business or assets of UOL and its subsidiaries taken as a whole, or impose any material limitation on the ability of UOL and its subsidiaries taken as a whole to conduct its business or own such assets, or (ii) impose material limitations on the ability of UOL or UNOLA Corp. to consummate the merger or the transactions contemplated by the merger agreement.
12
The merger agreement contains detailed provisions that prohibit FTD and its subsidiaries and their representatives from:
The merger agreement does not, however, prohibit the FTD board of directors from considering and recommending to FTD's stockholders an unsolicited bona fide written acquisition proposal from a third party if specified conditions are met. Additionally, in response to an unsolicited bona fide written acquisition proposal from a third party that the FTD board of directors concludes is or could reasonably be expected to lead to a superior proposal, FTD may, if specified conditions are met, furnish information or draft agreements to the third party making such acquisition proposal.
Termination of the Merger Agreement
Under circumstances specified in the merger agreement, the merger agreement may be terminated and the merger abandoned at any time prior to the effective time (whether before or after the adoption of the merger agreement by FTD's stockholders) if:
Under circumstances specified in the merger agreement, UOL may terminate the merger agreement and abandon the merger at any time prior to the effective time (whether before or after the adoption of the merger agreement by FTD's stockholders) if:
13
merger agreement (or the FTD board of directors fails to include such recommendation in this proxy statement/prospectus) due to an intervening event or a superior proposal; or
Under circumstances specified in the merger agreement, FTD may terminate the merger agreement and abandon the merger at any time prior to the effective time (whether before or after the adoption of the merger agreement by FTD's stockholders) if FTD has received, at any time prior to the adoption of the merger agreement by FTD's stockholders, a superior proposal in accordance with the terms of the merger agreement and the FTD board of directors determines in good faith, after consultation with its outside legal counsel, that such action is necessary in order to comply with its fiduciary duties imposed by Delaware law, provided that it complies with the provisions of the merger agreement, including the no solicitation provision discussed above, and simultaneously with such termination FTD has paid UOL the termination fee described below.
Under the terms of the merger agreement, FTD must pay to UOL an amount equal to the reasonably documented out-of-pocket fees and expenses actually incurred by UOL and its affiliates on or prior to the termination of the merger agreement in an amount up to $3.75 million within one business day after such termination (which in each case shall be the sole and exclusive remedy of UOL and UNOLA Corp. under the merger agreement) if:
The merger agreement provides that FTD must pay UOL a termination fee of $11.75 million (which in each case shall be the sole and exclusive remedy of UOL and UNOLA Corp. under the merger agreement) if:
14
provision discussed below under "The Merger Agreement—No Solicitation by FTD," and its obligations in the merger agreement relating to its recommendation and the holding of an FTD stockholder meeting;
Material United States Federal Income Tax Consequences of the Merger
FTD stockholders that are "United States persons" for United States federal income tax purposes are generally subject to the following United States federal income tax considerations:
FTD stockholders that are not "United States persons" for United States federal income tax purposes are generally subject to the following United States federal income tax considerations:
15
FTD stockholders are urged to consult their own tax advisors regarding the United States federal income tax considerations of the merger, as well as the effects of state, local, and non-United States tax laws.
For a more complete summary of the tax considerations of the merger, see the section entitled "The Merger—Material United States Federal Income Tax Consequences of the Merger" beginning on page 88 of this proxy statement/prospectus.
In accordance with accounting principles generally accepted in the United States, which we refer to as GAAP, UOL will account for the merger using the purchase method of accounting for business combinations.
Comparison of Rights of UOL Stockholders and FTD Stockholders
FTD stockholders, whose rights are currently governed by the FTD second amended and restated certificate of incorporation, the FTD amended and restated bylaws and the Delaware General Corporation Law, will, upon the closing of the merger, become stockholders of UOL and their rights will be governed by the UOL amended and restated certificate of incorporation, the UOL amended and restated bylaws, the rights agreement between UOL and Computershare Trust Company, N.A. (successor in interest to U.S. Stock Transfer Corporation), as amended, and the Delaware General Corporation Law.
16
SELECTED SUMMARY HISTORICAL FINANCIAL DATA OF UOL
The following selected consolidated financial data should be read in conjunction with UOL's consolidated financial statements and related notes and Management's Discussion and Analysis of Financial Condition and Results of Operations included in UOL's Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 and in its Annual Report on Form 10-K for the year ended December 31, 2007, which are incorporated by reference into this proxy statement/prospectus.
The following table presents the consolidated statement of operations data for the quarters ended March 31, 2008 and 2007 and the consolidated balance sheet data at March 31, 2008, which are derived from UOL's unaudited condensed consolidated financial statements included in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2008. The table also presents the consolidated statements of operations data for the years ended December 31, 2007, 2006 and 2005, and the consolidated balance sheet data at December 31, 2007 and 2006. Such financial data are derived from UOL's audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2007. Additionally, the table presents the consolidated statements of operations data for the year ended December 31, 2004, the six months ended December 31, 2003 and the year ended June 30, 2003 and the consolidated balance sheet data at December 31, 2004 and 2003 and June 30, 2003, which financial data are derived from UOL's audited consolidated financial statements that are not included or incorporated by reference into this proxy statement/prospectus.
In UOL's opinion, such unaudited consolidated financial statements include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of UOL's financial position and results of operations for such periods. Interim results for the quarter ended March 31, 2008 are not necessarily indicative of, and are not projections for, the results to be expected for the full fiscal year ending December 31, 2008.
The selected historical financial data below should be read in conjunction with the consolidated financial statements and accompanying notes that are incorporated by reference into this proxy statement/prospectus.
The following amounts are in thousands, except per share data:
| |
Quarter Ended March 31, |
|
|
|
|
|
|
|||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| |
Year Ended December 31, |
Six Months Ended December 31, 2003(4) |
|
|||||||||||||||||||||
| |
Year Ended June 30, 2003(5) |
|||||||||||||||||||||||
| |
2008 |
2007 |
2007(1) |
2006(2) |
2005 |
2004(3) |
||||||||||||||||||
| |
(unaudited) |
|
|
|
|
|
|
|||||||||||||||||
| Consolidated Statements of Operations Data: | ||||||||||||||||||||||||
| Revenues | $ | 121,811 | $ | 129,851 | $ | 513,503 | $ | 522,654 | $ | 525,061 | $ | 448,617 | $ | 185,738 | $ | 277,295 | ||||||||
| Operating income | $ | 20,363 | $ | 22,124 | $ | 92,301 | $ | 74,019 | $ | 86,560 | $ | 79,493 | $ | 32,639 | $ | 21,721 | ||||||||
| Net income | $ | 13,002 | $ | 13,028 | $ | 57,777 | $ | 42,272 | $ | 47,127 | $ | 117,480 | $ | 33,327 | $ | 27,792 | ||||||||
| Net income per share—basic | $ | 0.19 | $ | 0.20 | $ | 0.87 | $ | 0.66 | $ | 0.77 | $ | 1.91 | $ | 0.52 | $ | 0.45 | ||||||||
| Net income per share—diluted | $ | 0.19 | $ | 0.19 | $ | 0.83 | $ | 0.64 | $ | 0.74 | $ | 1.81 | $ | 0.48 | $ | 0.41 | ||||||||
| |
|
December 31, |
|
||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| |
March 31, 2008 |
June 30, 2003 |
|||||||||||||||||||
| |
2007 |
2006 |
2005 |
2004(3) |
2003 |
||||||||||||||||
| |
(unaudited) |
|
|
|
|
|
|
||||||||||||||
| Consolidated Balance Sheets Data: | |||||||||||||||||||||
| Total assets | $ | 545,858 | $ | 552,393 | $ | 503,019 | $ | 521,188 | $ | 519,852 | $ | 307,879 | $ | 280,676 | |||||||
| Noncurrent liabilities | $ | 20,548 | $ | 20,486 | $ | 10,983 | $ | 45,863 | $ | 81,207 | $ | — | $ | — | |||||||
| Cash dividends per share declared and paid | $ | 0.20 | $ | 0.80 | $ | 0.80 | $ | 0.60 | $ | — | $ | — | $ | — | |||||||
17
SELECTED SUMMARY HISTORICAL FINANCIAL DATA OF FTD
The following table sets forth the selected historical data for FTD, Inc., the predecessor of FTD, which is referred to as the "Predecessor," as of and for the fiscal year ended June 30, 2003 and for the period from July 1, 2003 through February 23, 2004, FTD's selected historical data for the period from February 24, 2004 through June 30, 2004, as of June 30, 2004, and as of and for the fiscal years ended June 30, 2005, 2006 and 2007 and as of and for the nine months ended March 31, 2007 and 2008. On February 24, 2004, FTD completed a going private merger transaction with an affiliate of Leonard Green, in which a wholly owned subsidiary of FTD merged with and into the Predecessor, with the Predecessor continuing as the surviving corporation, which transaction we refer to as the "2004 Going Private Transaction." The results of operations presented herein for all periods prior to the completion of the 2004 Going Private Transaction are the results of operations of the Predecessor, which results are not comparable to the results of operations of FTD for all periods subsequent to the completion of the 2004 Going Private Transaction. The selected consolidated statements of operations data for the fiscal years ended June 30, 2005, 2006 and 2007 and the selected consolidated balance sheet data as of June 30, 2006 and 2007 have been derived from FTD's audited consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended June 30, 2007, and which are incorporated by reference into this proxy statement/prospectus. The selected consolidated statements of operations data for the period from July 1, 2003 through February 23, 2004 and the period from February 24, 2004 through June 30, 2004 and the selected consolidated balance sheet data as of June 30, 2003, 2004 and 2005 have been derived from FTD's and the Predecessor's, as the case may be, audited consolidated financials statements which are not included or incorporated by reference in this proxy statement/prospectus. The selected consolidated financial information as of and for the nine-month periods ended March 31, 2007 and 2008 is derived from FTD's unaudited consolidated financial statements included in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, and incorporated by reference into this proxy statement/prospectus. In FTD's opinion, such unaudited consolidated financial statements include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of FTD's financial position and results of operations for such periods. Interim results for the nine months ended March 31, 2008 are not necessarily indicative of, and are not projections for, the results to be expected for the full fiscal year ending June 30, 2008.
The selected historical financial data below should be read in conjunction with the consolidated financial statements and accompanying notes that are incorporated by reference into this proxy statement/prospectus. The following amounts are presented in thousands, except per share data.
| |
|
|
|
|
|
|
Predecessor Basis of Accounting(1) |
||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| |
Nine Months Ended March 31, 2008 |
Nine Months Ended March 31, 2007 |
Fiscal Year Ended June 30, 2007 |
Fiscal Year Ended June 30, 2006 |
Fiscal Year Ended June 30, 2005 |
Period from February 24, 2004 through June 30, 2004 |
Period from July 1, 2003 through February 23, 2004 |
Fiscal Year Ended June 30, 2003 |
|||||||||||||||||
| Statements of Operations: | |||||||||||||||||||||||||
| Total revenues | $ | 471,221 | $ | 443,210 | $ | 613,012 | $ | 465,133 | $ | 437,795 | $ | 151,381 | $ | 245,679 | $ | 363,343 | |||||||||
| Income from operations | 56,472 | 54,837 | 78,120 | 61,056 | 39,646 | (2) | 13,018 | (3) | 701 | (4) | 36,799 | ||||||||||||||
| Net income (loss) | 26,415 | 21,165 | 31,912 | 25,543 | (22,600 | ) | (4,497 | ) | (1,602 | )(5) | 9,289 | (6) | |||||||||||||
Net income (loss) per share—basic |
$ |
0.90 |
$ |
0.75 |
$ |
1.12 |
$ |
0.89 |
$ |
(1.15 |
) |
$ |
(0.34 |
) |
|||||||||||
| Net income (loss) per share—diluted | $ | 0.89 | $ | 0.72 | $ | 1.08 | $ | 0.86 | $ | (1.15 | ) | $ | (0.34 | ) | |||||||||||
Cash dividends declared per common share |
$ |
0.4875 |
$ |
0.1625 |
$ |
0.3250 |
$ |
— |
$ |
— |
$ |
— |
|||||||||||||
Other Data: |
|||||||||||||||||||||||||
| Consumer segment orders | 2,937 | 3,147 | 4,590 | 4,508 | 4,073 | 1,517 | 2,063 | 3,166 | |||||||||||||||||
| Consumer segment revenues | $ | 192,040 | $ | 197,084 | $ | 287,621 | $ | 275,773 | $ | 247,108 | $ | 88,296 | $ | 128,507 | $ | 190,958 | |||||||||
| Florist segment revenues | $ | 136,686 | $ | 137,522 | $ | 181,995 | $ | 189,360 | $ | 190,687 | $ | 63,085 | $ | 117,172 | $ | 172,385 | |||||||||
| International segment consumer orders | 1,707 | 1,367 | (8) | 1,785 | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||
| International segment revenues | $ | 142,495 | $ | 108,604 | (8) | $ | 143,396 | (8) | N/A | N/A | N/A | N/A | N/A | ||||||||||||
18
| |
As of March 31, |
As of June 30, |
||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| |
2008 |
2007 |
2007 |
2006 |
2005 |
2004 |
2003(1) |
|||||||||||||||
| Balance Sheet Data: | ||||||||||||||||||||||
| Working capital (deficit)(7) | $ | (50,046 | ) | $ | (67,823 | ) | $ | (39,617 | ) | $ | (33,785 | ) | $ | (23,096 | ) | $ | (13,195 | ) | $ | (24,113 | ) | |
| Total assets | $ | 763,785 | $ | 779,384 | $ | 748,900 | $ | 570,737 | $ | 571,314 | $ | 579,888 | $ | 204,371 | ||||||||
| Noncurrent liabilities | $ | 376,587 | $ | 399,119 | $ | 393,420 | $ | 282,520 | $ | 300,592 | $ | 319,469 | $ | 16,905 | ||||||||
| Preferred stock subject to mandatory redemption | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 152,079 | $ | — | ||||||||
| Total equity | $ | 280,752 | $ | 249,553 | $ | 261,778 | $ | 217,736 | $ | 205,747 | $ | 35,462 | $ | 122,323 | ||||||||
19
SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS OF UOL
On April 30, 2008, UOL and FTD entered into a merger agreement pursuant to which an indirect wholly owned subsidiary of UOL will merge with and into FTD, with FTD thereupon becoming an indirect wholly owned subsidiary of UOL. In the proposed merger, FTD stockholders will receive 0.4087 of a share of UOL common stock, $3.31 principal amount of UOL notes and $7.34 in cash for each share of FTD stock, subject to adjustment as described under "The Merger Agreement—Change in Cash Merger Consideration Upon Receipt of Additional Financing or a Classmates IPO" beginning on page 98 of this proxy statement/prospectus. The total value of the merger consideration is approximately $15.08 per share of FTD common stock, based on the closing price of UOL common stock of $10.83 on April 29, 2008, the last trading day before public announcement of the merger.
The purchase price, including transaction costs, is allocated to FTD's underlying net liabilities assumed, based on their respective estimated fair values. The excess of the purchase price over the estimated fair values of FTD's net liabilities assumed is recorded as goodwill. Based on a preliminary analysis, identifiable, definite-lived intangible assets acquired will be amortized on a straight-line basis over estimated lives ranging from two to six years. The acquired trademarks and trade names have been determined to be indefinite-lived intangible assets. In accordance with Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible Assets, goodwill and identifiable indefinite-lived intangible assets will not be amortized but will be reviewed for impairment on an annual basis or when events occur or circumstances change that would more likely than not indicate that goodwill and identifiable indefinite-lived intangible assets might be permanently impaired. The purchase price allocation may change when UOL completes its final analysis of the fair values of FTD's net liabilities assumed. The impact of the allocation of the purchase price to goodwill and other identifiable intangible assets could be material to UOL's future operating results.
The unaudited pro forma condensed combined balance sheet at March 31, 2008 gives effect to the acquisition of FTD as if it had occurred on March 31, 2008 and combines the historical unaudited consolidated balance sheets of UOL and FTD. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2007 and the quarter ended March 31, 2008 give effect to the acquisition of FTD as if it had occurred on January 1, 2007 and combines the historical consolidated statements of operations of UOL and FTD.
The unaudited pro forma condensed combined financial statements are based on estimates and assumptions set forth in the notes to these financial statements. These estimates and assumptions are preliminary and have been made solely for purposes of developing the unaudited pro forma condensed combined financial statements. The unaudited pro forma condensed combined financial statements are presented for illustrative purposes only and are not necessarily indicative of the consolidated financial position or results of operations of future periods or the results that actually would have been realized had the merger occurred on the dates indicated above. The unaudited pro forma condensed combined financial statements are based upon the respective historical consolidated financial statements of UOL and FTD and the related notes to those financial statements as of and for the periods indicated (see Note 1) and should be read in conjunction with those financial statements and the related notes. Certain reclassifications have been made to conform FTD's historical financial statements to the presentation of UOL's historical financial statements (see Notes 2(m) - 2(o) and 2(q) - 2(u)).
20
UOL
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
MARCH 31, 2008
(in thousands)
| |
UOL |
FTD |
Pro Forma Adjustments |
Pro Forma |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Assets | |||||||||||||||
| Current assets: | |||||||||||||||
| Cash and cash equivalents | $ | 118,097 | $ | 33,997 | $ | 105,918 | (a) | $ | 82,829 | ||||||
| (221,752) | (c) | ||||||||||||||
| 46,569 | (e) | ||||||||||||||
| Short-term investments | 105,918 | — | (105,918) | (a) | — | ||||||||||
| Accounts receivable, net | 25,228 | 38,958 | — | 64,186 | |||||||||||
| Inventories, net | — | 4,356 | (4,356) | (m) | — | ||||||||||
| Deferred tax assets, net | 6,389 | — | 3,130 | (c) | 15,164 | ||||||||||
| 5,645 | (n) | ||||||||||||||
| Deferred financing costs | — | — | 3,502 | (e) | 3,502 | ||||||||||
| Other current assets | 14,186 | 11,844 | (5,645) | (n) | 24,741 | ||||||||||
| 4,356 | (m) | ||||||||||||||
| Total current assets | 269,818 | 89,155 | (168,551 | ) | 190,422 | ||||||||||
| Property and equipment, net | 37,129 | 22,506 | 12,674 | (o) | 72,309 | ||||||||||
| Computer software, net | 12,674 | (12,674) | (o) | — | |||||||||||
| Deferred tax assets, net | 58,575 | — | (58,575) | (p) | — | ||||||||||
| Deferred financing costs | 15,383 | (e) | 15,383 | ||||||||||||
| Goodwill | 132,240 | 417,645 | (417,645) | (c) | 659,845 | ||||||||||
| 527,605 | (c) | ||||||||||||||
| Intangible assets, net | 38,129 | 198,577 | (198,577) | (c) | 381,329 | ||||||||||
| 343,200 | (c) | ||||||||||||||
| Other assets | 9,967 | 23,228 | (2,714) | (c) | 25,686 | ||||||||||
| (4,795) | (c) | ||||||||||||||
| Total assets | $ | 545,858 | $ | 763,785 | $ | 35,331 | $ | 1,344,974 | |||||||
Liabilities and Stockholders' Equity |
|||||||||||||||
| Current liabilities: | |||||||||||||||
| Accounts payable | $ | 36,642 | $ | 70,547 | $ | — | $ | 107,189 | |||||||
| Accrued liabilities | 17,992 | 29,856 | 6,836 | (c) | 69,234 | ||||||||||
| 14,550 | (c) | ||||||||||||||
| Member redemption liability | 18,837 | — | — | 18,837 | |||||||||||
| Deferred revenue | 68,028 | — | 68,028 | ||||||||||||
| Dividends payable | — | 4,801 | 4,801 | ||||||||||||
| Current maturities of long-term debt | — | 1,242 | 291,196 | (d) | 10,022 | ||||||||||
| 13,108 | (c) | ||||||||||||||
| (305,546) | (e) | ||||||||||||||
| 10,022 | (e) | ||||||||||||||
| Capital leases | 9 | — | — | 9 | |||||||||||
| Total current liabilities | 141,508 | 106,446 | 30,166 | 278,120 | |||||||||||
| Member redemption liability | 4,918 | — | — | 4,918 | |||||||||||
| Deferred revenue | 4,785 | — | — | 4,785 | |||||||||||
| Senior secured credit facilities | — | — | 360,978 | (e) | 360,978 | ||||||||||
| Seller note | — | — | 100,000 | (c) | 100,000 | ||||||||||
| Senior secured credit facility | — | 121,079 | (121,079) | (d) | — | ||||||||||
| Senior subordinated notes | — | 170,117 | (170,117) | (d) | — | ||||||||||
| Deferred tax liabilities, net | — | 80,072 | 41,852 | (c) | 63,349 | ||||||||||
| (58,575) | (p) | ||||||||||||||
| Other liabilities | 10,845 | 5,319 | — | 16,164 | |||||||||||
| Total liabilities | 162,056 | 483,033 | 183,225 | 828,314 | |||||||||||
| Stockholders' equity: | |||||||||||||||
| Common stock | 7 | 298 | (298) | (c) | 8 | ||||||||||
| 1 | (c) | ||||||||||||||
| Additional paid-in capital | 404,891 | 237,142 | (237,142) | (c) | 537,748 | ||||||||||
| 132,857 | (c) | ||||||||||||||
| Accumulated other comprehensive income | 304 | 9,655 | (9,655) | (c) | 304 | ||||||||||
| Retained earnings (accumulated deficit) | (21,400 | ) | 33,657 | (33,657) | (c) | (21,400 | ) | ||||||||
| Total stockholders' equity | 383,802 | 280,752 | (147,894 | ) | 516,660 | ||||||||||
| Total liabilities and stockholders' equity | $ | 545,858 | $ | 763,785 | $ | 35,331 | $ | 1,344,974 | |||||||
21
UOL
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
QUARTER ENDED MARCH 31, 2008
(in thousands, except per share amounts)
| |
UOL |
FTD |
Pro Forma |
Pro Forma |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues: | |||||||||||||||
| Products | $ | — | $ | 149,726 | $ | — | $ | 149,726 | |||||||
| Services | 121,811 | 42,261 | — | 164,072 | |||||||||||
| Total revenues | 121,811 | 191,987 | — | 313,798 | |||||||||||
Operating expenses: |
|||||||||||||||
| Cost of revenues | 27,839 | 119,041 | 721 | (t) | 147,770 | ||||||||||
| 169 | (u) | ||||||||||||||
| Sales and marketing | 36,781 | 29,575 | 49 | (h) | 70,207 | ||||||||||
| 27 | (i) | ||||||||||||||
| 3,970 | (r) | ||||||||||||||
| (152) | (s) | ||||||||||||||
| 126 | (t) | ||||||||||||||
| (169) | (u) | ||||||||||||||
| Technology and development | 12,902 | — | 138 | (h) | 17,348 | ||||||||||
| 27 | (i) | ||||||||||||||
| 4,281 | (s) | ||||||||||||||
| General and administrative | 20,884 | 23,912 | 187 | (h) | 35,411 | ||||||||||
| 184 | (i) | ||||||||||||||
| (810) | (q) | ||||||||||||||
| (3,970) | (r) | ||||||||||||||
| (4,129) | (s) | ||||||||||||||
| (847) | (t) | ||||||||||||||
| Amortization of intangible assets | 2,836 | — | 6,150 | (g) | 9,796 | ||||||||||
| 810 | (q) | ||||||||||||||
| Restructuring charges | 206 | — | — | 206 | |||||||||||
| Total operating expenses | 101,448 | 172,528 | 6,762 | 280,738 | |||||||||||
| Operating income | 20,363 | 19,459 | (6,762 | ) | 33,060 | ||||||||||
Interest income |
1,808 |
399 |
(1,407) |
(b) |
800 |
||||||||||
| Interest expense | (166 | ) | (5,456 | ) | (5,254) | (f) | (10,876 | ) | |||||||
| Other income (expense), net | — | (23 | ) | — | (23 | ) | |||||||||
| Income before income taxes | 22,005 | 14,379 | (13,423 | ) | 22,961 | ||||||||||
| Provision for income taxes | 9,003 | 5,086 | (172) | (b) | 9,111 | ||||||||||
| (4,806) | (v) | ||||||||||||||
| Net income | $ | 13,002 | $ | 9,293 | $ | (8,445 | ) | $ | 13,850 | ||||||
| Basic net income per share | $ | 0.19 | $ | 0.17 | |||||||||||
| Diluted net income per share | $ | 0.19 | $ | 0.17 | |||||||||||
| Shares used to calculate basic net income per share | 68,145 | 12,397 | (j) | 80,542 | |||||||||||
| Shares used to calculate diluted net income per share | 69,727 | 12,403 | (l) | 82,130 | |||||||||||
22
UOL
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2007
(in thousands, except per share amounts)
| |
UOL |
FTD |
Pro Forma |
Pro Forma |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues: | |||||||||||||||
| Products | $ | — | $ | 478,579 | $ | — | $ | 478,579 | |||||||
| Services | 513,503 | 153,356 | — | 666,859 | |||||||||||
| Total revenues | 513,503 | 631,935 | — | 1,145,438 | |||||||||||
| Operating expenses: | |||||||||||||||
| Cost of revenues | 117,203 | 374,760 | 2,915 | (t) | 495,579 | ||||||||||
| 701 | (u) | ||||||||||||||
| Sales and marketing | 163,424 | 92,594 | 224 | (h) | 269,194 | ||||||||||
| 96 | (i) | ||||||||||||||
| 13,880 | (r) | ||||||||||||||
| (661) | (s) | ||||||||||||||
| 338 | (t) | ||||||||||||||
| (701) | (u) | ||||||||||||||
| Technology and development | 51,044 | — | 550 | (h) | 69,626 | ||||||||||
| 96 | (i) | ||||||||||||||
| 17,936 | (s) | ||||||||||||||
| General and administrative | 73,312 | 81,835 | 1,016 | (h) | 118,220 | ||||||||||
| 610 | (i) | ||||||||||||||
| (4,145) | (q) | ||||||||||||||
| (13,880) | (r) | ||||||||||||||
| (17,275) | (s) | ||||||||||||||
| (3,253) | (t) | ||||||||||||||
| Amortization of intangible assets | 12,800 | — | 23,695 | (g) | 40,640 | ||||||||||
| 4,145 | (q) | ||||||||||||||
| Restructuring charges | 3,419 | — | — | 3,419 | |||||||||||
| Total operating expenses | 421,202 | 549,189 | 26,287 | 996,678 | |||||||||||
| Operating income | 92,301 | 82,746 | (26,287 | ) | 148,760 | ||||||||||
| Interest income | 7,555 | 1,867 | (6,534) | (b) | 2,888 | ||||||||||
| Interest expense | (1,164 | ) | (25,534 | ) | (17,984) | (f) | (44,682 | ) | |||||||
| Other income (expense), net | — | (18 | ) | — | (18 | ) | |||||||||
| Income before income taxes | 98,692 | 59,061 | (50,805 | ) | 106,948 | ||||||||||
| Provision for income taxes | 40,915 | 21,577 | (401) | (b) | 44,383 | ||||||||||
| (17,708) | (v) | ||||||||||||||
| Net income | $ | 57,777 | $ | 37,484 | $ | (32,695 | ) | $ | 62,566 | ||||||
| Basic net income per share | $ | 0.87 | $ | 0.79 | |||||||||||
| Diluted net income per share | $ | 0.83 | $ | 0.77 | |||||||||||
| Shares used to calculate basic net income per share | 66,768 | 12,347 | (j) | 79,115 | |||||||||||
| Shares used to calculate diluted net income per share | 69,287 | 12,432 | (k) | 81,719 | |||||||||||
23
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS OF UOL
NOTE 1: BASIS OF PRO FORMA PRESENTATION
The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2007 combines the consolidated statement of operations for the year ended December 31, 2007 for UOL with the unaudited condensed consolidated statement of operations for the twelve months ended December 31, 2007 for FTD. FTD's unaudited condensed consolidated statement of operations for the twelve months ended December 31, 2007 was derived by adding (a) the unaudited condensed consolidated statement of income and comprehensive income of FTD contained in FTD's Quarterly Report on Form 10-Q for the six months ended December 31, 2007, which is incorporated by reference into this proxy statement/ prospectus, and (b) the audited consolidated statement of operations and comprehensive income of FTD contained in FTD's Annual Report on Form 10-K for the year ended June 30, 2007, which is incorporated by reference into this proxy statement/prospectus, and subtracting (c) the unaudited condensed consolidated statement of income and comprehensive income of FTD contained in FTD's Quarterly Report on Form 10-Q for the six months ended December 31, 2006, which is incorporated by reference into this proxy statement/prospectus. The unaudited pro forma condensed combined statement of operations for the quarter ended March 31, 2008 combines the unaudited condensed consolidated statement of operations for the quarter ended March 31, 2008 for UOL with the unaudited condensed consolidated statement of operations for the quarter ended March 31, 2008 for FTD. In addition, the unaudited pro forma condensed combined balance sheet at March 31, 2008 combines the unaudited condensed consolidated balance sheet of UOL at March 31, 2008 with the unaudited condensed consolidated balance sheet of FTD at March 31, 2008.
| Purchase price: | ||||
| Cash ($7.34 per FTD share) | $ | 221,752 | ||
| UOL notes ($3.31 per FTD share) | 100,000 | |||
| UOL common stock (0.4087 UOL shares at $10.76 per FTD share) | 132,858 | |||
| Estimated transaction costs incurred by UOL | 9,550 | |||
| Total purchase price | $ | 464,160 | ||
24
| Description |
Estimated Fair Value |
Estimated Amortizable Life |
|||||
|---|---|---|---|---|---|---|---|
| Net liabilities assumed: | |||||||
| Cash and cash equivalents | $ | 33,997 | |||||
| Accounts receivable | 38,958 | ||||||
| Inventories | 4,356 | ||||||
| Other current assets | 11,844 | ||||||
| Property and equipment | 22,506 | ||||||
| Computer software | 12,674 | ||||||
| Deferred tax assets, net | 3,130 | ||||||
| Other assets | 18,433 | ||||||
| Accounts payable | (70,547 | ) | |||||
| Accrued liabilities | (44,406 | ) | |||||
| Senior secured credit facility and senior subordinated notes | (305,546 | ) | |||||
| Dividends payable | (4,801 | ) | |||||
| Deferred tax liabilities, net | (121,924 | ) | |||||
| Other liabilities | (5,319 | ) | |||||
| Total net liabilities assumed | (406,645 | ) | |||||
Intangible assets acquired: |
|||||||
| Customer contracts and relationships | 119,100 | 2-6 years | |||||
| Technology | 34,200 | 5 years | |||||
| Trademarks and trade names | 189,900 | Indefinite | |||||
| Total intangible assets acquired | 343,200 | ||||||
Goodwill |
527,605 |
||||||
| Total purchase price | $ | 464,160 | |||||
The estimated fair values of assets and liabilities are based, in part, on a preliminary valuation. The final valuation and related allocation of the purchase price at acquisition closing may be different from the allocation based on this preliminary valuation.
An adjustment of $3,130 has been made to deferred tax assets, net, to reflect the current tax benefits associated with the payment at acquisition closing of transaction bonuses, transaction expenses, debt premium associated with the repayment of FTD's existing debt prior to maturity, and tax benefits related to the disqualified disposition of stock options of FTD, offset by the current tax liabilities associated with reflecting the differences between the financial statement carrying amounts of intangible assets and their tax bases.
An adjustment of $2,714 has been made to other assets to reclassify the transaction costs capitalized by UOL through March 31, 2008 as part of the purchase price.
An adjustment of $4,795 has been made to other assets to reflect the elimination of FTD's deferred financing costs associated with their existing debt.
An adjustment of $6,836 has been made to accrued liabilities for the remaining estimated transaction costs to be incurred by UOL.
An adjustment of $14,550 has been made to accrued liabilities to reflect $5,750 in transaction bonuses and $8,800 in transaction expenses incurred directly by FTD.
25
An adjustment of $13,108 has been made to FTD's existing debt to reflect the premium at March 31, 2008 associated with repayment prior to maturity.
An adjustment of $41,852 has been made to noncurrent deferred tax liabilities, net, to primarily reflect the differences between the financial statement carrying amounts of intangible assets and their tax bases.
| Repayment of existing FTD debt: | |||||
| Long-term debt reclassified to current maturities (see Note 2(d)) | $ | 291,196 | |||
| Current maturities | 1,242 | ||||
| Premium for early debt repayment | 13,108 | ||||
| Total repayment of existing FTD debt | $ | 305,546 | |||
Draw down of new senior secured credit facilities: |
|||||
| Senior secured credit facility, Term Loan A, current | $ | 8,750 | |||
| Senior secured credit facility, Term Loan B, current | 2,000 | ||||
| Discount on Term Loan B, current | (728 | ) | |||
| Senior secured credit facilities, current | 10,022 | ||||
Senior secured credit facility, Term Loan A, long-term |
166,250 |
||||
| Senior secured credit facility, Term Loan B, long-term | 198,000 | ||||
| Discount on Term Loan B, long-term | (3,272 | ) | |||
| Senior secured credit facilities, long-term | 360,978 | ||||
| Total senior secured credit facilities | $ | 371,000 | |||
26
agreement, estimated pro forma interest expense and the related pro forma adjustments are as follows:
Year Ended December 31, 2007:
| Debt Facility |
Balance (in thousands) |
Applicable Base Rate |
Underlying Interest Rate (including applicable borrowing margin) |
Estimated Interest Expense (in thousands) |
|||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Term Loan A | $ | 175,000 | Three-month LIBOR as of March 31, 2008 | 6.19 | % | $ | 10,626 | ||||
| Term Loan B | $ | 200,000 | Three-month LIBOR as of March 31, 2008 | 7.19 | % | 14,323 | |||||
| UOL notes | $ | 100,000 | 13.0 | % | 13,000 | ||||||
| Amortization of deferred financing costs | 3,502 | ||||||||||
| Accretion of discount on Term Loan B | 728 | ||||||||||
| Annual commitment and administrative fees | 835 | ||||||||||
| Total estimated interest expense | $ | 43,014 | |||||||||
| Description |
Estimated Interest Expense (in thousands) |
||||
|---|---|---|---|---|---|
| Interest expense on new financing | $ | 43,014 | |||
| Less: Interest expense incurred related to existing FTD debt | (23,536 | ) | |||
| Less: Amortization of deferred financing costs related to existing FTD debt | (951 | ) | |||
| Less: Annual commitment and administrative fees related to existing FTD debt | (543 | ) | |||
Pro forma adjustment |
$ |
17,984 |
|||
A 1/8% change in interest rates would increase estimated interest expense by an additional $0.46 million which is $0.29 million after tax, or $0.00 per share, for the year ended December 31, 2007.
27
Quarter Ended March 31, 2008:
| Debt Facility |
Balance (in thousands) |
Applicable Base Rate |
Underlying Interest Rate (including applicable borrowing margin) |
Estimated Interest Expense (in thousands) |
|||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Term Loan A | $ | 175,000 | Three-month LIBOR as of March 31, 2008 | 6.19 | % | $ | 2,572 | ||||
| Term Loan B | $ | 200,000 | Three-month LIBOR as of March 31, 2008 | 7.19 | % | 3,558 | |||||
| UOL notes | $ | 100,000 | 13.0 | % | 3,250 | ||||||
| Amortization of deferred financing costs | 875 | ||||||||||
| Accretion of discount on Term Loan B | 181 | ||||||||||
| Annual commitment and administrative fees | 147 | ||||||||||
| Total estimated interest expense | $ | 10,583 | |||||||||
| Description |
Estimated Interest Expense (in thousands) |
||||
|---|---|---|---|---|---|
| Interest expense on new financing | $ | 10,583 | |||
| Less: Interest expense incurred related to existing FTD debt | (5,001 | ) | |||
| Less: Amortization of deferred financing costs related to existing FTD debt | (271 | ) | |||
| Less: Annual commitment and administrative fees related to existing FTD debt | (57 | ) | |||
Pro forma adjustment |
$ |
5,254 |
|||
A 1/8% change in interest rates would increase estimated interest expense by an additional $0.11 million which is $70,000 after tax, or $0.00 per share, for the three months ended March 31, 2008.
| Description |
Quarter Ended March 31, 2008 |
Year Ended December 31, 2007 |
||||||
|---|---|---|---|---|---|---|---|---|
| Estimated amortization expense based on the preliminary valuation of FTD's intangible assets | $ | 6,960 | $ | 27,840 | ||||
| Less: FTD's historical amortization expense | (810 | ) | (4,145 | ) | ||||
Pro forma adjustments |
$ |
6,150 |
$ |
23,695 |
||||
28
29
COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE DATA
The following table sets forth certain historical, pro forma combined and pro forma combined equivalent per share data for UOL common stock and FTD common stock. The pro forma combined and pro forma combined equivalent basic net income per share, diluted net income per share and cash dividends per share data reflect the merger as if it had occurred on January 1, 2007. The pro forma combined and pro forma combined equivalent net book value per share data reflects the merger as if it had occurred on March 31, 2008.
The pro forma data in the tables assumes that the merger is accounted for using the purchase method of accounting and represents a current estimate based on available information of the combined company's results of operations for the periods presented. As of the date of this document, UOL has not completed the detailed valuation studies necessary to arrive at the final estimates of the fair market value of the FTD assets to be acquired and liabilities to be assumed and the related allocations of purchase price. However, UOL has made certain adjustments to the historical book values of the assets and liabilities of FTD as of March 31, 2008 to reflect certain preliminary estimates of the fair values necessary to prepare the unaudited pro forma combined and pro forma combined equivalent data. The fair value adjustments included in the unaudited pro forma combined data and pro forma combined equivalent data represent management's estimate of these adjustments based upon currently available information. The preliminary purchase price allocation assigned value to certain identifiable intangible assets of FTD, including the trademarks and trade names, customer contracts and relationships, and technology. Actual results may differ from the pro forma results once UOL has completed the detailed valuation studies necessary to finalize the purchase price allocation and identified any necessary conforming accounting policy changes for FTD. Accordingly, the final purchase price allocation, which will be determined subsequent to the closing of the merger, may differ materially from the preliminary allocation used to calculate the pro forma data included in this section, although these amounts represent UOL management's best estimates as of the date of this document.
The pro forma combined data and pro forma combined equivalent data is provided for illustrative purposes only and does not purport to represent what the actual consolidated results of operations or the consolidated financial position of UOL would have been had the merger occurred on the dates assumed, nor are they necessarily indicative of the future consolidated results of operations or consolidated financial position.
30
The table below should be read in conjunction with the audited and unaudited consolidated financial statements of UOL and FTD and the notes thereto referred to in the footnotes to the table.
| |
Quarter Ended March 31, 2008 |
Year Ended December 31, 2007 |
|||||
|---|---|---|---|---|---|---|---|
| UOL historical data: | |||||||
| Basic net income per share | $ | 0.19 | $ | 0.87 | |||
| Diluted net income per share | $ | 0.19 | $ | 0.83 | |||
| Cash dividends per share | $ | 0.20 | $ | 0.80 | |||
| Net book value per share(1) | $ | 5.60 | |||||
FTD historical data: |
|||||||
| Basic net income per share | $ | 0.31 | (2) | $ | 1.29 | (3) | |
| Diluted net income per share | $ | 0.31 | (2) | $ | 1.27 | (3) | |
| Cash dividends per share | $ | 0.1625 | (2) | $ | 0.65 | (3) | |
| Net book value per share(1) | $ | 9.41 | |||||
Pro forma combined data(4): |
|||||||
| Basic net income per share(5) | $ | 0.17 | $ | 0.79 | |||
| Diluted net income per share(5) | $ | 0.17 | $ | 0.77 | |||
| Cash dividends per share | $ | 0.10 | $ | 0.40 | |||
| Net book value per share(1) | $ | 6.39 | |||||
Pro forma combined equivalent data(6): |
|||||||
| Basic net income per share | $ | 0.07 | $ | 0.32 | |||
| Diluted net income per share | $ | 0.07 | $ | 0.31 | |||
| Cash dividends per share | $ | 0.04 | $ | 0.16 | |||
| Net book value per share(1) | $ | 2.61 | |||||
31
32
RATIO OF EARNINGS TO FIXED CHARGES
UOL's ratio of earnings to fixed charges for each of the periods presented is as follows (in thousands):
| |
Pro Forma |
|
|
|
|
|
|
|
||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| |
Quarter Ended March 31, 2008 |
|
Quarter Ended March 31, 2008 |
Year Ended December 31, |
Six Months Ended December 31, 2003 |
|
||||||||||||||||||||||
| |
Year Ended December 31, 2007 |
Year Ended June 30, 2003 |
||||||||||||||||||||||||||
| |
2007 |
2006 |
2005 |
2004 |
||||||||||||||||||||||||
| Fixed Charges: | ||||||||||||||||||||||||||||
| Interest expense | $ | 9,653 | $ | 39,291 | $ | — | $ | 3 | $ | 53 | $ | 4,663 | $ | 356 | $ | 1 | $ | 86 | ||||||||||
| Accretion of discount related to indebtedness | 181 | 728 | — | — | — | — | — | — | — | |||||||||||||||||||
| Amortization of debt issuance costs | 875 | 3,502 | — | — | 1,541 | 1,244 | 28 | — | — | |||||||||||||||||||
| Interest factor attributable to rent expense | 874 | 3,641 | 564 | 2,442 | 2,178 | 2,145 | 1,419 | 429 | 1,089 | |||||||||||||||||||
| Total fixed charges | $ | 11,583 | $ | 47,162 | $ | 564 | $ | 2,445 | $ | 3,772 | $ | 8,052 | $ | 1,803 | $ | 430 | $ | 1,175 | ||||||||||