Quarterly Net Growth of 288,000 Classmates Media Segment Pay

Accounts

Classmates Media Segment Revenues Increase 19% vs. Q2 2007

Operating Income and Adjusted OIBDA Near High End of Guidance

Despite Expensing $3.9 Million in Deferred Transaction-Related Costs

Relating to Proposed IPO of Classmates Media Corporation

WOODLAND HILLS, Calif.–(EMWNews)–United Online, Inc. (Nasdaq: UNTD), a leading provider of consumer

Internet and media services, today reported financial results for its

second quarter ended June 30, 2008.

“United Online posted another strong quarter,

highlighted by revenues above our guidance range and adjusted OIBDA near

the high end of guidance despite expensing $3.9 million in deferred

transaction-related costs relating to the proposed IPO of our

wholly-owned subsidiary, Classmates Media Corporation,”

commented Mark R. Goldston, chairman, president and chief executive

officer.

Goldston continued, “Our strong quarter again

reflects impressive growth in the Classmates Media segment, where pay

accounts at June 30, 2008 grew 41% versus June 30, 2007 and increased a

net 288,000 during the second quarter. We have launched several feature

enhancements during 2008 that are contributing to increased traffic and

user-generated content on our social networking Web sites, underscored

by growth in active accounts in the Classmates Media segment from 13.9

million in Q1 2008 to 15.1 million in Q2 2008. Our Communications

segment, meanwhile, achieved record adjusted OIBDA as a percentage of

segment revenues in the second quarter, exceeding 40% for the first time.”

“In addition to being well positioned to grow

our Classmates Media segment and operate our Communications segment for

profitability and cash flows, the proposed acquisition of FTD Group,

Inc. (NYSE: FTD) will significantly increase and diversify our revenues

and profitability,” Goldston said. “We

are pleased to announce that we have executed definitive documentation

for the $375 million term loan and $50 million revolver led by Wells

Fargo Bank, National Association, and Wells Fargo Bank has informed us

that they have completed their syndication of these loans. The term loan

and revolver, along with our recently announced $60 million commitment

from Silicon Valley Bank, represent all of the debt needed to consummate

the acquisition of FTD. While the closing of these loan facilities

remains subject to various conditions, we are optimistic that we will

have all of the financing in place necessary to close the

FTD acquisition.”

Q2 2008 GAAP and Non-GAAP Results

Include Expensing of $3.9 Million in Deferred Transaction-Related Costs

Relating to Proposed IPO of Classmates Media Corporation

In 2007, United Online commenced the process for an initial public

offering (“IPO”) of

Classmates Media Corporation (“CMC”).

While it remains the company’s strategy to

complete an IPO of CMC, the company believes the capital markets have

not improved significantly since CMC withdrew its Form S-1 registration

statement in December 2007 and, as previously disclosed, the company has

concluded that it is unlikely that the proposed IPO will be completed

before 2009. As a result, in the second quarter ended June 30, 2008 the

company expensed $3.9 million in deferred transaction-related costs

relating to the proposed IPO. Accordingly, GAAP operating income,

adjusted OIBDA⁽¹⁾, segment income from

operations, segment adjusted OIBDA⁽¹⁾, GAAP net

income, and adjusted net income⁽²⁾ in the

quarter ended June 30, 2008, as presented in the following tables,

include the $3.9 million ($2.5 million, or $0.03 per diluted share, net

of tax) of expenses. The expensing of the $3.9 million in deferred

transaction-related costs is included in the results of the Classmates

Media segment and reflects costs that had been paid by the company in

previous quarters.

Summary Results for Second Quarter

Ended June 30, 2008:

The following table summarizes key financial results for the second

quarter ended June 30, 2008:

		(in millions, except per share and account figures)
Financial Highlights		Q2 2008				Q2 2007				% Change
Classmates Media revenues		$	57.0			$	47.7			19	%
Communications revenues			65.3				83.7			(22	%)
Consolidated revenues		$	122.3			$	131.4			(7	%)
GAAP operating income(a)		$	22.0			$	24.7			(11	%)
Adjusted OIBDA(1)(a)		$	37.6			$	36.3			3	%
Adjusted OIBDA as a % of
consolidated revenues(a)			30.7	%			27.7	%
GAAP net income(a)		$	13.7			$	16.2			(15	%)
GAAP diluted net income per share(a)		$	0.19			$	0.23			(17	%)
Adjusted net income(2)(a)		$	21.3			$	19.4			9	%
Adjusted diluted net income per share(2)(a)		$	0.29			$	0.27			7	%
Net growth in total pay accounts(3)			161,000				134,000			20	%

• Classmates Media segment revenues were a record $57.0 million, an

  increase of 19% versus the year-ago quarter.

• Communications segment revenues were $65.3 million, a decline of 22%

  versus the year-ago quarter.

• GAAP operating income was $22.0 million^(a), a

  decrease of 11% versus the year-ago quarter.

• Adjusted OIBDA⁽¹⁾ was $37.6 million^(a),

  an increase of 3% versus the year-ago quarter.

• Adjusted OIBDA⁽¹⁾ expanded to 30.7%^(a)

  of consolidated revenues from 27.7% of consolidated revenues in

  the year-ago quarter.

• GAAP diluted net income per share was $0.19^(a),

  a decrease of 17% compared to the year-ago quarter, which reflects the

  $3.9 million ($2.5 million net of tax, or $0.03 per diluted share) of

  expenses relating to the proposed IPO of CMC, and a higher effective

  tax rate in the 2008 quarter than in the year-ago period due to the

  re-measurement of certain deferred tax assets in the quarter ended

  June 30, 2007 that reduced the effective tax rate in that period.

• Adjusted diluted net income per share⁽²⁾ was

  $0.29^(a), an increase of 7% compared to the

  year-ago quarter.

• Pay accounts⁽³⁾ increased by a net 161,000,

  versus a net increase of 134,000 pay accounts in the year-ago quarter.

  Total pay accounts were 5.7 million at June 30, 2008.

(a) GAAP operating income, adjusted OIBDA⁽¹⁾,

adjusted OIBDA as a % of consolidated revenues, GAAP net income, GAAP

diluted net income per share, adjusted net income⁽²⁾,

and adjusted diluted net income per share⁽²⁾ in

the quarter ended June 30, 2008 were impacted by the $3.9 million ($2.5

million net of tax, or $0.03 per diluted share) of expenses relating to

the proposed IPO of CMC.

Scott H. Ray, executive vice president and chief financial officer,

commented, “Our disciplined approach to

financial management, combined with solid execution of our marketing and

product initiatives during the quarter, were key drivers of our strong

results and helped the company deliver increased adjusted OIBDA both in

absolute terms and as a percentage of consolidated revenues in the

second quarter versus the year-ago period.”

Cash Flows, Balance Sheet and Dividend

Highlights For Second Quarter Ended June 30, 2008:

• Cash flows from operations were $36.1 million, an increase of 1%

  versus the year-ago quarter.

• Free cash flow⁽⁴⁾ was $31.9 million, an

  increase of 3% versus the year-ago quarter.

• Cash, cash equivalents and short-term investments at June 30, 2008

  increased to a combined $240.0 million from $224.0 million at March

  31, 2008, representing a net increase of $16.0 million during the

  quarter ended June 30, 2008.

• The company paid $14.9 million in cash dividends during the quarter.

• The company’s board of directors recently

  declared a regular quarterly cash dividend of $0.20 per share for the

  14th consecutive quarter. The dividend is payable on August 29, 2008

  to shareholders of record on August 14, 2008. As previously announced,

  following the closing of the proposed acquisition of FTD Group, Inc. (“FTD”),

  the company expects to decrease its regular quarterly cash dividend

  from $0.20 per share to $0.10 per share.

Segment Results for Second Quarter

Ended June 30, 2008:

Classmates Media:

		(in millions, except percentages)
Financial Highlights		Q2 2008				Q2 2007				% Change
Billable services revenues		$	34.1			$	25.6			33	%
Advertising revenues			22.9				22.1			3	%
Segment revenues		$	57.0			$	47.7			19	%
as a % of consolidated revenues			46.6	%			36.3	%
Segment income from operations(b)		$	7.9			$	6.1			30	%
Segment adjusted OIBDA(1)(b)		$	10.6			$	7.0			52	%
as a % of segment revenues(b)			18.7	%			14.6	%

• Segment revenues were a record $57.0 million, an increase of 19%

  versus the year-ago quarter, primarily due to continuing strong growth

  in segment pay accounts.

• The segment represented 46.6% of consolidated revenues in the second

  quarter, versus 36.3% in the year-ago quarter.

• Segment adjusted OIBDA⁽¹⁾ was $10.6 million^(b),

  an increase of 52% versus the year-ago quarter.

• Segment adjusted OIBDA⁽¹⁾ increased to 18.7%^(b)

  as a percentage of segment revenues versus 14.6% of segment

  revenues in the year-ago quarter.

• Pay accounts⁽³⁾ increased by a net 288,000,

  up from net growth of 277,000 pay accounts in the year-ago quarter.

  Pay accounts as of June 30, 2008 were 3.8 million, a 41% increase from

  June 30, 2007 and a sequential quarter increase of 8% versus March 31,

  2008.

• The segment represented 66.5% of total pay accounts⁽³⁾

  at June 30, 2008, compared to 63.3% at March 31, 2008 and 53.0% at

  June 30, 2007.

• Segment active accounts⁽³⁾ were 15.1 million,

  an increase of 29% versus 11.7 million in the year-ago quarter, and a

  sequential increase of 9% versus 13.9 million in the quarter ended

  March 31, 2008.

(b) Segment income from operations, segment adjusted OIBDA⁽¹⁾

and segment adjusted OIBDA as a % of segment revenues in the quarter

ended June 30, 2008 were impacted by the $3.9 million of expenses

relating to the proposed IPO of CMC.

Communications:

		(in millions, except percentages)
Financial Highlights		Q2 2008				Q2 2007				% Change
Billable services revenues		$	56.1			$	71.5			(21	%)
Advertising revenues			9.1				12.2			(25	%)
Segment revenues		$	65.3			$	83.7			(22	%)
as a % of consolidated revenues			53.4	%			63.7	%
Segment income from operations		$	21.1			$	27.0			(22	%)
Segment adjusted OIBDA(1)		$	26.9			$	29.4			(8	%)
as a % of segment revenues			41.3	%			35.1	%

• Segment revenues were $65.3 million, a decrease of 22% versus the

  year-ago quarter, primarily driven by a decrease in segment pay

  accounts.⁽³⁾

• The segment represented 53.4% of consolidated revenues in the second

  quarter, versus 63.7% in the year-ago quarter.

• Segment adjusted OIBDA⁽¹⁾ was $26.9 million,

  a decrease of 8% versus the year-ago quarter and up slightly from

  $26.8 million in the quarter ended March 31, 2008.

• Segment adjusted OIBDA⁽¹⁾ increased to a

  record 41.3% of segment revenues during the second quarter of 2008,

  reflecting the company’s continuing efforts

  in expense management and driving profitability and cash flows.

• Pay accounts⁽³⁾ declined by a net 127,000

  versus a net decline of 143,000 pay accounts in the year-ago quarter.

  Segment pay accounts at June 30, 2008 were 1.9 million.

• The segment represented 33.5% of total pay accounts⁽³⁾

  at June 30, 2008, compared to 36.7% at March 31, 2008 and 47.0% at

  June 30, 2007.

Business Outlook:

The following forward-looking information includes certain projections

made by management as of the date of this press release. The company

does not intend to revise or update this information and may not provide

this type of information in the future. Due to a variety of factors,

actual results may differ significantly from those projected. Factors

include, without limitation, the factors referenced later in this

announcement under the caption “Cautionary Information Regarding

Forward-Looking Statements.” These and other factors are discussed in

more detail in the company’s filings with the Securities and Exchange

Commission.

Below is the company’s initial guidance for the quarter ending September

30, 2008 and updated guidance for the year ending December 31, 2008,

which excludes the impact of the proposed acquisition of FTD. The

company currently anticipates that the proposed FTD acquisition will

close during the third quarter of 2008.

Third-Quarter 2008 Guidance:

Third-Quarter 2008 (in millions)		Guidance
Revenues		$117.0 ─ $121.0
Adjusted OIBDA(1)		$34.0 ─ $38.0

Full-Year 2008 Guidance:

Full-Year 2008 (in millions)		Guidance		Prior Guidance
Adjusted OIBDA(1)		$149.0 ─ $154.0		$147.0 ─ $152.0

United Online has increased its 2008 guidance for operating income and

adjusted OIBDA⁽¹⁾, despite expensing $3.9

million in deferred transaction-related costs in the quarter ended June

30, 2008 relating to the proposed IPO of CMC. The company continues to

anticipate a decline in total revenues in 2008 when compared to 2007, as

continued decreases in Communications segment revenues are expected to

be partially offset by continued increases in Classmates Media segment

revenues.

The table below reconciles the company’s

guidance for operating income, a GAAP measure, to adjusted OIBDA⁽¹⁾.

Third-Quarter and Full-Year 2008		Q3 2008		FY 2008		Prior FY 2008
(in millions)		Guidance		Guidance		Guidance
GAAP Operating Income		$16.9 ─ $20.9		$82.3 ─ $87.3		$81.2 ─ $86.2
Depreciation		5.0		20.3		19.6
Amortization of intangible assets		2.2		9.3		10.2
Stock-based compensation		9.8		36.4		35.3
Restructuring charges		0.1		0.7		0.7
United Online, Inc. Investors: Erik Randerson, CFA, 818-287-3350 [email protected] or Press: Scott Matulis, 818-287-3388 [email protected] Major Newsire & Press Release Distribution with Basic Starting at only $19 and Complete OTCBB / Financial Distribution only $89 Get Unlimited Organic Website Traffic to your Website  TheNFG.com now offers Organic Lead Generation & Traffic Solutions