e10vq
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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þ |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2007
or
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o |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 001-32425
FTD
Group, Inc.
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction of
incorporation or organization)
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87-0719190
(I.R.S. Employer
Identification No.) |
3113 Woodcreek Drive
Downers Grove, IL 60515
(Address of principal executive offices)
(630) 719-7800
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES þ NO o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated
filer in Rule 12b-2 of the Securities Exchange Act of 1934. (Check one):
Large accelerated filer o Accelerated filer þ Non-accelerated filer o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Securities Exchange Act of 1934). YES o NO þ
As of May 1, 2007, there were 28,940,735 outstanding shares of the issuers Common Stock, par
value $0.01 per share.
FTD GROUP, INC.
QUARTERLY REPORT ON FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
FTD GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share amounts)
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March 31, 2007 |
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June 30, 2006 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
41,379 |
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$ |
10,954 |
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Accounts receivable, less allowance for doubtful accounts of $5,047 at March 31, 2007 and
$4,437 at June 30, 2006 |
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47,649 |
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26,044 |
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Inventories, net |
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3,998 |
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3,542 |
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Other current assets |
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9,812 |
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5,985 |
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Total current assets |
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102,838 |
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46,525 |
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Property and equipment: |
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Property and equipment, at cost |
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34,268 |
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25,265 |
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Less accumulated depreciation |
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9,702 |
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6,051 |
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Property and equipment, net |
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24,566 |
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19,214 |
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Other assets: |
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Computer software, net |
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13,509 |
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10,577 |
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Other noncurrent assets |
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21,172 |
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21,405 |
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Intangible assets, less accumulated amortization of $8,345 at March 31, 2007 and $5,993 at June 30, 2006 |
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14,228 |
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14,780 |
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Trademarks |
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186,504 |
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121,577 |
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Goodwill |
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416,567 |
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336,659 |
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Total other assets |
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651,980 |
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504,998 |
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Total assets |
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$ |
779,384 |
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$ |
570,737 |
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LIABILITIES AND STOCKHOLDERS EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
69,700 |
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$ |
45,273 |
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Notes payable |
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22,829 |
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Other accrued liabilities |
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32,054 |
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24,083 |
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Current maturities of long-term debt |
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1,430 |
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1,125 |
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Dividends payable |
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4,699 |
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Total current liabilities |
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130,712 |
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70,481 |
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Senior secured credit facility |
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140,820 |
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48,875 |
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Senior subordinated notes |
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170,117 |
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170,117 |
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Post-retirement benefits, accrued pension obligations and other liabilities |
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5,066 |
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2,368 |
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Deferred income taxes |
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83,116 |
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61,160 |
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Stockholders equity: |
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Common stock: $0.01 par value, 75,000,000 shares authorized; 29,482,182 shares issued as
of March 31, 2007 and June 30, 2006 |
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295 |
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295 |
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Additional paid-in capital |
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232,865 |
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233,362 |
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Retained earnings (accumulated deficit) |
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14,912 |
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(1,554 |
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Accumulated other comprehensive income |
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6,675 |
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200 |
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Treasury stock, at cost, 541,447 shares as of March 31, 2007 and 1,504,480 shares
as of June 30, 2006 |
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(5,194 |
) |
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(14,567 |
) |
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Total stockholders equity |
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249,553 |
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217,736 |
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Total liabilities and stockholders equity |
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$ |
779,384 |
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$ |
570,737 |
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SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
2
FTD GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
(In thousands, except per share amounts)
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Three Months Ended |
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Nine Months Ended |
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March 31, |
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March 31, |
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2007 |
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2006 |
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2007 |
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2006 |
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Revenues: |
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Products |
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$ |
143,483 |
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$ |
95,736 |
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$ |
333,184 |
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$ |
232,925 |
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Services |
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39,416 |
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32,849 |
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110,026 |
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90,714 |
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Total revenues |
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182,899 |
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128,585 |
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443,210 |
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323,639 |
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Costs of products sold and services provided: |
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Products |
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108,168 |
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69,637 |
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248,714 |
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167,292 |
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Services |
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3,435 |
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4,326 |
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12,630 |
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13,651 |
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Total costs of products sold and services provided |
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111,603 |
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73,963 |
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261,344 |
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180,943 |
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Gross profit: |
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Products |
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35,315 |
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26,099 |
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84,470 |
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65,633 |
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Services |
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35,981 |
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28,523 |
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97,396 |
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77,063 |
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Total gross profit |
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71,296 |
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54,622 |
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181,866 |
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142,696 |
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Operating expenses: |
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Advertising and selling |
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27,348 |
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22,743 |
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68,767 |
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62,284 |
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General and administrative |
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21,498 |
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15,048 |
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58,262 |
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38,444 |
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Total operating expenses |
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48,846 |
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37,791 |
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127,029 |
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100,728 |
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Income from operations |
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22,450 |
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16,831 |
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54,837 |
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41,968 |
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Other income and expenses: |
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Interest income |
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(489 |
) |
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(233 |
) |
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(1,126 |
) |
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(528 |
) |
Interest expense |
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6,444 |
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4,829 |
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21,679 |
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14,596 |
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Other expense (income), net |
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570 |
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(118 |
) |
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(725 |
) |
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(206 |
) |
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Total other expenses, net |
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6,525 |
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4,478 |
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19,828 |
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13,862 |
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Income before income tax |
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15,925 |
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12,353 |
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35,009 |
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28,106 |
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Income tax expense |
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6,310 |
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4,932 |
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13,844 |
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11,357 |
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Net income |
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$ |
9,615 |
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$ |
7,421 |
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$ |
21,165 |
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$ |
16,749 |
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Other comprehensive income: |
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Foreign currency translation adjustments |
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88 |
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12 |
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6,475 |
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142 |
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Comprehensive income |
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$ |
9,703 |
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$ |
7,433 |
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$ |
27,640 |
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$ |
16,891 |
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Net income per common share basic |
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$ |
0.34 |
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$ |
0.26 |
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$ |
0.75 |
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$ |
0.58 |
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Net income per common share diluted |
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$ |
0.32 |
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$ |
0.26 |
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$ |
0.72 |
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$ |
0.56 |
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Weighted average common shares outstanding: |
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Basic |
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28,462 |
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28,111 |
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28,343 |
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28,989 |
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Diluted |
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29,827 |
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29,031 |
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29,510 |
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30,025 |
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Cash dividends declared per common share |
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$ |
0.1625 |
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$ |
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$ |
0.1625 |
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$ |
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SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
3
FTD GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
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Nine Months Ended |
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March 31, |
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2007 |
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2006 |
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Cash flows from operating activities: |
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Net income |
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$ |
21,165 |
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$ |
16,749 |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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10,890 |
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|
7,740 |
|
Gain from sale of business and related transaction |
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(991 |
) |
Stock-based compensation expense |
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1,451 |
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|
458 |
|
Amortization and write off of deferred financing costs |
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2,512 |
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|
1,204 |
|
Provision for doubtful accounts |
|
|
2,088 |
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|
2,589 |
|
Deferred income taxes |
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|
2,706 |
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|
500 |
|
All other, net of acquisition |
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(3,419 |
) |
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(7,519 |
) |
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Net cash provided by operating activities |
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37,393 |
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|
20,730 |
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Cash flows from investing activities: |
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Acquisition of business, net of cash acquired |
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(96,717 |
) |
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Capital expenditures |
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(6,027 |
) |
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|
(7,370 |
) |
Proceeds from sale of business |
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|
3,500 |
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Net cash used in investing activities |
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|
(102,744 |
) |
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|
(3,870 |
) |
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Cash flows from financing activities: |
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Proceeds from issuance of long-term debt, net of financing costs |
|
|
148,536 |
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Repayments of long-term debt |
|
|
(57,750 |
) |
|
|
(11,096 |
) |
Excess tax benefit from stock-based compensation |
|
|
1,904 |
|
|
|
217 |
|
Proceeds from exercise of stock options |
|
|
2,315 |
|
|
|
209 |
|
Purchase of company stock |
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|
|
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|
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(14,999 |
) |
|
|
|
|
|
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|
Net cash provided by (used in) financing activities |
|
|
95,005 |
|
|
|
(25,669 |
) |
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|
|
Effect of foreign exchange rate changes on cash and cash equivalents |
|
|
771 |
|
|
|
142 |
|
|
|
|
|
|
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Net increase (decrease) in cash and cash equivalents |
|
|
30,425 |
|
|
|
(8,667 |
) |
Cash and cash equivalents at beginning of period |
|
|
10,954 |
|
|
|
8,890 |
|
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|
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Cash and cash equivalents at end of period |
|
$ |
41,379 |
|
|
$ |
223 |
|
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Supplemental disclosures of cash flow information |
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Cash paid for: |
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Interest |
|
$ |
20,994 |
|
|
$ |
16,131 |
|
|
|
|
|
|
|
|
Income taxes, net |
|
$ |
13,356 |
|
|
$ |
4,570 |
|
|
|
|
|
|
|
|
Non-cash disclosure: |
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|
|
Issuance of notes payable associated with the purchase of Interflora Holdings Limited |
|
$ |
23,313 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of treasury stock associated with the purchase of Interflora Holdings Limited |
|
$ |
3,206 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of notes receivable associated with the sale of Renaissance |
|
|
|
|
|
$ |
1,805 |
|
|
|
|
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|
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|
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
4
FTD Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1. Description of the Business
Basis of Presentation
These condensed consolidated financial statements have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission (SEC) and, therefore, do not include all
information and footnote disclosures normally included in audited financial statements. However,
in the opinion of management, all adjustments consisting only of normal recurring adjustments,
unless otherwise noted herein, necessary to present fairly the results of operations, financial
position and cash flows have been made. These condensed consolidated financial statements should
be read in conjunction with the consolidated financial statements and notes thereto included in FTD
Group, Inc.s Annual Report on Form 10-K for the year ended June 30, 2006. The results of
operations for any interim period are not necessarily indicative of the results of operations to be
expected for the full year.
As used in this Form 10-Q, the term Company refers to FTD Group, Inc. and its consolidated
subsidiaries, including FTD, Inc. taken as a whole. FTD, Inc. is a Delaware corporation that
commenced operations in 1994 and includes the operations of its principal operating subsidiaries,
Florists Transworld Delivery, Inc., (FTD or the Operating Company), FTD.COM, INC. (FTD.COM)
and Interflora British Unit.
On July 31, 2006, the Company completed its acquisition of Interflora Holdings Limited
(Interflora), the parent company of Interflora British Unit, a U.K. based provider of
floral-related products and services to consumers and retail floral locations in the U.K. and the
Republic of Ireland. Refer to Note 4 below. As a result of the Interflora acquisition, the
Company also acquired majority control of Interflora, Inc. Interflora, Inc. is an international
clearinghouse for flowers-by-wire order exchanges between its members. The results of operations
associated with Interflora and Interflora, Inc. are included in a new international segment.
All intercompany accounts and transactions have been eliminated in consolidation.
Certain amounts reported within total revenues and costs of products sold and services
provided have been reclassified between products and services in the fiscal year 2006 financial
statements to conform to current year presentation. Such reclassifications primarily related to
service fees in the consumer segment and did not affect reported total revenues or costs of
products sold and services provided.
Recently Issued Accounting Pronouncements
In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Standards (SFAS) No. 158, Employers Accounting for Defined Benefit Pension and Other
Postretirement Plans an amendment of FASB Statement No. 87, 88, 106 and 132(R), (SFAS 158),
effective for the Companys fiscal year ending June 30, 2007. SFAS 158 requires the balance sheet
recognition of the overfunded or underfunded status of a defined benefit postretirement plan as an
asset or liability along with a corresponding after-tax adjustment to accumulated other
comprehensive income included in stockholders equity. The Company does not expect the adoption of
SFAS 158 to have a material effect on the Companys consolidated financial statements.
In June 2006, the FASB issued Interpretation No. 48 (FIN 48), Accounting for Uncertainty in
Income Taxes an Interpretation of FASB Statement No. 109 (SFAS 109). FIN 48 clarifies the
accounting for uncertainty in income taxes recognized in an entitys financial statements in
accordance with SFAS 109 and prescribes that a company should use a more-likely-than-not
recognition threshold based on the technical merits of the tax position taken or expected to be
taken. Tax positions that meet the more-likely-than-not recognition threshold should be measured
in order to determine the tax benefit to be recognized in the financial statements. Additionally,
FIN 48 provides guidance on derecognition, classification, interest and penalties, accounting in
interim periods, disclosure and transition. FIN 48 is effective for the Companys fiscal year
ending June 30, 2008, with early adoption
5
permitted. The Company is currently evaluating the impact the adoption of FIN 48 will have on
the Companys consolidated financial statements.
Note 2. Secondary Offering
On March 12, 2007, the Company closed its underwritten secondary public offering of 6,000,000
shares of common stock. The underwriters exercised in full their over-allotment option for an
additional 900,000 shares of common stock at the public offering price of $17.50 per share, less
underwriting discounts. Of the shares sold, 6,285,900 shares were sold by affiliates of Leonard
Green & Partners, L.P. and 614,100 shares were sold by members of management. As a result of the
transaction, the total ownership of affiliates of Leonard Green & Partners, L.P. was reduced from
54.9% to 32.8% and therefore the Company is no longer a controlled company as defined under New
York Stock Exchange regulations.
In conjunction with the offering, the Company realized $1.7 million in proceeds from the
exercise of stock options by members of management and incurred $0.8 million in offering related
costs. These offering related costs have been recorded in other expense (income), net within the
Condensed Consolidated Statements of Income and Comprehensive Income.
Note 3. Dividend Declared
On February 20, 2007, the Companys Board of Directors approved a dividend policy and declared
its first quarterly cash dividend of $0.1625 per share. The dividend was paid on April 2, 2007 to
stockholders of record as of the close of business on March 19, 2007. On an annual basis, the cash
dividend is expected to be $0.65 per share. While the Company intends to continue to pay quarterly
dividends, the declaration and payment of dividends is subject to the determination of the Board of
Directors and continued compliance with the requirements of the Companys 2006 Credit Agreement and
the indenture governing the 7.75% Senior Subordinated Notes, among other considerations.
Note 4. Acquisition of Interflora Holdings Limited
On July 31, 2006, in connection with the Companys international expansion strategy, the
Company completed the acquisition of Interflora for a purchase price of approximately $122.8
million (£66 million) plus transaction related costs totaling $2.3 million. Approximately $98.6
million of the acquisition price was paid in cash at closing and $1.9 million of cash was acquired
in connection with the purchase. The consideration included approximately $23.3 million (£12.5
million) of notes payable, of which $21.6 million (£11.6 million) will be paid in May 2007 and the
remainder, $1.7 million (£0.9 million), is expected be paid in the first half of fiscal 2008. The
remainder of the purchase price ($3.2 million) was funded through the issuance of 216,374 shares of
common stock (consisting of treasury shares) to certain senior managers of Interflora. The Company
financed the acquisition with a new senior secured credit facility consisting of a $150.0 million
term loan and a $75.0 million revolving credit facility. The proceeds from the new facility were
also used to repay the Companys existing term loan. Refer to Note 6 below. In addition, the
Company entered into foreign currency forward exchange contracts totaling £61.8 million to hedge
the acquisition cost. A contract in the amount of £51.0 million was settled on July 28, 2006 and
resulted in a gain of $1.4 million, which has been recorded in other income, net within the
Condensed Consolidated Statements of Income and Comprehensive Income. The remaining forward
contracts include a contract for £10 million, expected to be settled during the fourth quarter of
fiscal year 2007 and a contract for £0.8 million, expected to be settled during the first quarter
of fiscal year 2009. The settlement of these contracts coincide with the due dates of the notes
payable related to the acquisition of Interflora. For the three-month and nine-month periods ended
March 31, 2007, other expense (income), net included $0.1 million and $1.4 million of income,
respectively, related to the mark-to-market adjustments on these forward contracts and the related
notes payable.
Financial results for Interflora are included herein beginning August 1, 2006. The pro forma
information below presents the results of operations as if the acquisition occurred on July 1, 2005
(in thousands, except per share amounts). Pro forma financial information related to Interflora,
Inc. has not been included herein, as the operating results of Interflora, Inc. are not considered
material to the Companys operating results.
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
March 31, |
|
|
March 31, |
|
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proforma revenues |
|
$ |
170,405 |
|
|
$ |
453,863 |
|
|
$ |
417,976 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proforma income from operations |
|
$ |
20,615 |
|
|
$ |
55,712 |
|
|
$ |
50,008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proforma net income |
|
$ |
8,798 |
|
|
$ |
21,335 |
|
|
$ |
19,105 |
|
|
|
|
|
|
|
|
|
|
|
Proforma net income per share basic |
|
$ |
0.31 |
|
|
$ |
0.75 |
|
|
$ |
0.65 |
|
|
|
|
|
|
|
|
|
|
|
Proforma net income per share diluted |
|
$ |
0.30 |
|
|
$ |
0.72 |
|
|
$ |
0.63 |
|
|
|
|
|
|
|
|
|
|
|
The allocation of the acquisition cost, which is substantially complete, is shown in the table
below (in thousands). Such allocation will be finalized when remaining fair value adjustments are
completed.
|
|
|
|
|
Goodwill |
|
$ |
76,024 |
|
Trademark |
|
|
61,764 |
|
Computer software |
|
|
4,372 |
|
Land and building |
|
|
2,942 |
|
Other intangible assets (customer list) |
|
|
1,711 |
|
Deferred tax liability |
|
|
(20,464 |
) |
Other assets acquired and liabilities assumed, net |
|
|
(1,211 |
) |
|
|
|
|
Total preliminary allocation of acquisition cost |
|
$ |
125,138 |
|
|
|
|
|
Goodwill and trademark assets are considered indefinite lived and therefore will not be
subject to amortization. Computer software will be amortized over 5 years; the customer list will
be amortized over 3 years.
The Company implemented a deferred compensation plan for certain members of Interflora
management. Under the terms of the plan, participants will be paid a cash bonus upon achieving a
specified annual earnings target if such target is achieved in any annual period within the next
seven years. The maximum payout under such plan is £2.9 million. During the three-month and
nine-month periods ended March 31, 2007, the Company recorded $0.3 million and $0.9 million of
expense, respectively, related to this deferred compensation plan.
Note 5. Goodwill and Other Intangibles
Goodwill resulting from the Interflora acquisition will be reported as part of the
international segment.
The changes in the carrying amount of goodwill, trademark and amortizable intangible assets,
the related accumulated amortization as of March 31, 2007 and estimated amortization expense are as
follows (in thousands):
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer |
|
|
Florist |
|
|
International |
|
|
|
|
|
|
Segment |
|
|
Segment |
|
|
Segment |
|
|
Total |
|
Goodwill: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2006 |
|
$ |
178,141 |
|
|
$ |
158,518 |
|
|
$ |
|
|
|
$ |
336,659 |
|
Acquisition of Interflora |
|
|
|
|
|
|
|
|
|
|
76,024 |
|
|
|
76,024 |
|
Impact of foreign exchange |
|
|
|
|
|
|
|
|
|
|
3,884 |
|
|
|
3,884 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2007 |
|
$ |
178,141 |
|
|
$ |
158,518 |
|
|
$ |
79,908 |
|
|
$ |
416,567 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademark: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2006 |
|
$ |
67,842 |
|
|
$ |
53,735 |
|
|
$ |
|
|
|
$ |
121,577 |
|
Acquisition of Interflora |
|
|
|
|
|
|
|
|
|
|
61,764 |
|
|
|
61,764 |
|
Impact of foreign exchange |
|
|
|
|
|
|
|
|
|
|
3,163 |
|
|
|
3,163 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2007 |
|
$ |
67,842 |
|
|
$ |
53,735 |
|
|
$ |
64,927 |
|
|
$ |
186,504 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2007 |
|
|
June 30, 2006 |
|
|
|
Gross Carrying |
|
|
Accumulated |
|
|
Net |
|
|
Gross Carrying |
|
|
Accumulated |
|
|
Net |
|
|
|
Amount |
|
|
Amortization |
|
|
Carrying Amount |
|
|
Amount |
|
|
Amortization |
|
|
Carrying Amount |
|
Amortizable Intangible
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer lists |
|
$ |
14,636 |
|
|
$ |
8,267 |
|
|
$ |
6,369 |
|
|
$ |
12,836 |
|
|
$ |
5,940 |
|
|
$ |
6,896 |
|
Non-compete agreements |
|
|
100 |
|
|
|
78 |
|
|
|
22 |
|
|
|
100 |
|
|
|
53 |
|
|
|
47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
14,736 |
|
|
$ |
8,345 |
|
|
$ |
6,391 |
|
|
$ |
12,936 |
|
|
$ |
5,993 |
|
|
$ |
6,943 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Also included within Intangible Assets on the balance sheet is a URL asset, valued at $7.8
million, which is an indefinite lived asset.
|
|
|
|
|
Estimated amortization expense (in thousands): |
|
|
|
|
For the remaining three-month period ending June 30, 2007 |
|
$ |
800 |
|
For the year ending June 30, 2008 |
|
$ |
3,181 |
|
For the year ending June 30, 2009 |
|
$ |
2,333 |
|
For the year ending June 30, 2010 |
|
$ |
77 |
|
Goodwill and other indefinite-lived intangible assets are tested for impairment at least
annually. The annual assessment occurs in the fourth quarter of each year. All intangible assets
are tested for impairment if events or circumstances indicate the carrying value may not be
recoverable.
Note 6. Financing Arrangements
On July 28, 2006, in connection with the Interflora acquisition, FTD, Inc. entered into a new
senior secured credit facility consisting of a $150.0 million term loan and a $75.0 million
revolving credit facility (the 2006 Credit Agreement). Borrowings under the 2006 Credit
Agreement bear interest based on a margin over, at FTD, Inc.s option, either the base rate or the
London Bank Offered Rate (LIBOR). The applicable margin for borrowings varies based on the
Companys consolidated leverage ratio, as defined in the 2006 Credit Agreement. The weighted
average interest rate at March 31, 2007 on the term loan was 7.36%. The Credit Agreement also
requires the Company to pay commitment fees on the unused portion of the revolving credit facility.
Commitment fees totaled $0.1 million and $0.2 million for the three-month and nine-month periods
ended March 31, 2007, respectively. The 2006 Credit Agreement also includes covenants that, among
other things, require that FTD, Inc. maintain a ratio of consolidated total debt to consolidated
earnings before interest, taxes, depreciation and amortization (subject to certain adjustments) of
no more than 5.75 to 1.00 and a fixed charge ratio of no less than 1.30 to 1.00. Such ratios
adjust quarterly in accordance with the terms of the 2006 Credit Agreement. FTD, Inc. was in
compliance with all debt covenants as of March 31, 2007.
On February 20, 2007, the Board of Directors of the Company approved, and the Company entered
into, an amendment to the 2006 Credit Agreement, which, among other things, amended certain
restrictions to allow the Company to make certain restricted junior payments, including dividend
payments.
The 2006 Credit Agreement imposes various restrictions on the Company, including restrictions
that limit FTD, Inc.s ability to incur liens or encumbrances, make investments or acquisitions,
incur additional debt, enter into sale
8
leaseback transactions, incur certain contingent
liabilities, make certain restricted junior payments and other similar distributions, enter into
mergers, consolidations and similar combinations, sell assets or engage in similar transfers, amend
certain material agreements, including the indenture governing the 7.75% Senior Subordinated Notes
(the Notes), make capital expenditures and engage in transactions with affiliates.
In conjunction with the Companys completion of a going private transaction on February 24,
2004, FTD, Inc. entered into a senior secured credit facility (the 2004 Credit Agreement). There
was $50.0 million in outstanding debt at June 30, 2006 under the 2004 Credit Agreement, which was
subsequently paid off on July 28, 2006. As a result of repaying amounts borrowed under the 2004
Credit Agreement, the Company wrote off $1.8 million of deferred financing costs, net of
accumulated amortization, during the first quarter of fiscal year 2007. This expense is recorded
in interest expense in the accompanying Condensed Consolidated Statements of Income and
Comprehensive Income. In connection with the 2006 Credit Agreement, the Company incurred $1.5
million of deferred financing costs, which were allocated, pro rata, to the six-year revolving
credit facility and the seven-year term loan and are being amortized using the effective interest
method.
At March 31, 2007, the Company had $142.3 million outstanding under the 2006 Credit Agreement
and $26.0 million in outstanding letters of credit, $24.5 million of which related to the notes
payable from the acquisition of Interflora, and, as a result, the revolving credit facility had
availability of approximately $49.0 million.
Note 7. Net Income Per Common Share
The computations of basic and diluted net income per common share for the three-month and
nine-month periods ended March 31, 2007 and 2006 are as follows (in thousands, except per share
amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
March 31, |
|
|
March 31, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
9,615 |
|
|
$ |
7,421 |
|
|
$ |
21,165 |
|
|
$ |
16,749 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding basic |
|
|
28,462 |
|
|
|
28,111 |
|
|
|
28,343 |
|
|
|
28,989 |
|
Effect of dilutive securities stock options |
|
|
1,365 |
|
|
|
920 |
|
|
|
1,167 |
|
|
|
1,036 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding diluted |
|
|
29,827 |
|
|
|
29,031 |
|
|
|
29,510 |
|
|
|
30,025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share of Common Stock basic |
|
$ |
0.34 |
|
|
$ |
0.26 |
|
|
$ |
0.75 |
|
|
$ |
0.58 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share of Common Stock diluted |
|
$ |
0.32 |
|
|
$ |
0.26 |
|
|
$ |
0.72 |
|
|
$ |
0.56 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three-month period ended March 31, 2007 all outstanding stock options were included in
the computation of diluted earnings per share because the average market price of the Companys
Common Stock during the period was greater than the exercise price of the options. For the
nine-month period ended March 31, 2007, there were 12,500 outstanding stock options which were not
included in the computation of diluted earnings per share because their effect was anti-dilutive.
For the three-month and nine-month periods ended March 31, 2006, there were 212,500 and 195,000
outstanding stock options, respectively, which were not included in the computation of diluted
earnings per share because their effect was anti-dilutive.
Note 8. Pension and Other Post-Retirement Benefit Plans
The Companys defined benefit pension plan and post-retirement benefit plan relate to a
limited number of employees and retirees. Such plans were frozen in 1997. The table below
provides the components of pension expense for the defined benefit plan for the three-month and
nine-month periods ended March 31, 2007 and 2006 (in thousands):
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaried Employees Pension Plan |
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
March 31, |
|
|
March 31, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost |
|
$ |
13 |
|
|
$ |
13 |
|
|
$ |
39 |
|
|
$ |
41 |
|
Interest cost |
|
|
26 |
|
|
|
28 |
|
|
|
78 |
|
|
|
83 |
|
Expected return on assets |
|
|
(23 |
) |
|
|
(22 |
) |
|
|
(69 |
) |
|
|
(67 |
) |
Amortization |
|
|
1 |
|
|
|
9 |
|
|
|
3 |
|
|
|
27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost |
|
$ |
17 |
|
|
$ |
28 |
|
|
$ |
51 |
|
|
$ |
84 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table provides the components of net periodic post-retirement benefit costs for
the three-month and nine-month periods ended March 31, 2007 and 2006 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retiree Medical Plan |
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
March 31, |
|
|
March 31, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest cost |
|
$ |
22 |
|
|
$ |
20 |
|
|
$ |
66 |
|
|
$ |
60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost |
|
$ |
22 |
|
|
$ |
20 |
|
|
$ |
66 |
|
|
$ |
60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 9. Stock-Based Compensation
The Company adopted SFAS 123 (R), Share-Based Payment (SFAS 123 (R)) on July 1, 2005 using
the modified prospective method and Black-Scholes as the option valuation model. No stock options
were granted during the three-month period ended March 31, 2007. The Company granted 1,380,217
options during the nine-month period ended March 31, 2007 to various employees and directors of the
Company. During the three-month and nine-month periods ended March 31, 2006, the Company granted
35,000 and 97,500 options, respectively. Outstanding non-qualified stock options have an
expiration date ten years from the date of grant and begin vesting as early as the date of grant,
dependent upon the individual agreements. All stock options were granted with an exercise price
equal to the fair market value of the Companys stock on the date of grant.
During the three-month and nine-month periods ended March 31, 2007 and 2006, 39,000 and
155,666 and 18,667 and 169,334 options, respectively, were forfeited. During the nine-month period
ended March 31, 2007, 746,659 options were exercised, 605,879 of which were exercised during the
quarter ended March 31, 2007. Of the 605,879 options exercised during the three-month period ended
March 31, 2007, 549,373 were exercised as part of the secondary offering discussed in Note 2. The
Company reissued shares of Treasury Stock in connection with the exercise of all vested stock
options during the three-month and nine-month periods ended March 31, 2007. During the nine-month
period ended March 31, 2006, the Company issued 30,391 shares of Common Stock in connection with
the exercise of vested stock options. In addition, during the three-month and nine-month periods
ended March 31, 2006, the Company reissued 8,408 and 39,520 shares, respectively, of Treasury Stock
in connection with the exercise of vested stock options.
Stock-based compensation expense was $0.5 million and $1.5 million, and $0.2 million and $0.5
million for the three-month and nine-month periods ended March 31, 2007, and 2006, respectively.
Stock-based compensation expense in any period may not be indicative of the expense for the entire
fiscal year.
Note 10. Commitments and Contingencies
The Company is involved in various claims and lawsuits and other matters arising in the normal
course of business. In the opinion of management of the Company, although the outcome of these
claims and suits are uncertain, they are not expected to have a material adverse effect on the
Companys financial condition, liquidity or results of operations.
10
Note 11. Segment Information
For purposes of managing the Company, management reviews segment financial performance to the
operating income level for each of its reportable segments. As such, interest income, interest
expense and tax expense are reviewed on a consolidated corporate basis. Revenue and expenses
earned and charged between segments are eliminated in consolidation.
The consumer segment is an Internet and telephone marketer of flowers and specialty gifts,
which sells products directly to consumers primarily through the www.ftd.com Web site and the
1-800-SEND-FTD toll-free telephone number.
The florist segment includes all services and products sold to FTD members and other retail
locations offering floral products. Services include clearinghouse, membership, technology access
and support and online services. Products include containers, technology systems and fresh
flowers.
The international segment is primarily comprised of Interflora, which has both a florist
business and consumer business. Interflora provides products and services to enable its members to
send and deliver floral orders and is also an Internet and telephone marketer of flowers and
specialty gift items to consumers, operating primarily through the www.interflora.co.uk Web site as
well as toll-free telephone numbers.
The corporate segment includes costs related to corporate headquarters, including accounting,
executive, legal, facilities, information technology and credit and collections. Costs related to
facilities, information technology and credit and collections are allocated to the consumer and
florist segments.
Of the Companys assets totaling $779.4 million at March 31, 2007, the assets of the Companys
consumer segment totaled approximately $266.0 million, the assets of the Companys international
segment totaled $197.2 million and the assets of the Companys florist segment and corporate
headquarters totaled $316.2 million.
The following tables report the Companys operating results by reportable segment for the
three-month and nine-month periods ended March 31, 2007 and 2006:
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2007 |
|
|
2006 |
|
|
|
Gross Segment |
|
|
Eliminations |
|
|
Consolidated |
|
|
Gross Segment |
|
|
Eliminations |
|
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer segment |
|
$ |
84,642 |
|
|
$ |
(4,426 |
) |
|
$ |
80,216 |
|
|
$ |
80,883 |
|
|
$ |
(5,203 |
) |
|
$ |
75,680 |
|
Florist segment |
|
|
49,290 |
|
|
|
(167 |
) |
|
|
49,123 |
|
|
|
52,979 |
|
|
|
(74 |
) |
|
|
52,905 |
|
International segment |
|
|
53,476 |
|
|
|
84 |
|
|
|
53,560 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
187,408 |
|
|
|
(4,509 |
) |
|
|
182,899 |
|
|
|
133,862 |
|
|
|
(5,277 |
) |
|
|
128,585 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Products Sold and
Services Provided: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer segment |
|
|
57,721 |
|
|
|
(741 |
) |
|
|
56,980 |
|
|
|
56,156 |
|
|
|
(747 |
) |
|
|
55,409 |
|
Florist segment |
|
|
17,465 |
|
|
|
(826 |
) |
|
|
16,639 |
|
|
|
18,849 |
|
|
|
(828 |
) |
|
|
18,021 |
|
International segment |
|
|
37,528 |
|
|
|
(37 |
) |
|
|
37,491 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
493 |
|
|
|
|
|
|
|
493 |
|
|
|
533 |
|
|
|
|
|
|
|
533 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
113,207 |
|
|
|
(1,604 |
) |
|
|
111,603 |
|
|
|
75,538 |
|
|
|
(1,575 |
) |
|
|
73,963 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer segment |
|
|
26,921 |
|
|
|
(3,685 |
) |
|
|
23,236 |
|
|
|
24,727 |
|
|
|
(4,456 |
) |
|
|
20,271 |
|
Florist segment |
|
|
31,825 |
|
|
|
659 |
|
|
|
32,484 |
|
|
|
34,130 |
|
|
|
754 |
|
|
|
34,884 |
|
International segment |
|
|
15,948 |
|
|
|
121 |
|
|
|
16,069 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
(493 |
) |
|
|
|
|
|
|
(493 |
) |
|
|
(533 |
) |
|
|
|
|
|
|
(533 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
74,201 |
|
|
|
(2,905 |
) |
|
|
71,296 |
|
|
|
58,324 |
|
|
|
(3,702 |
) |
|
|
54,622 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising and Selling: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer segment |
|
|
11,346 |
|
|
|
|
|
|
|
11,346 |
|
|
|
10,401 |
|
|
|
|
|
|
|
10,401 |
|
Florist segment |
|
|
14,821 |
|
|
|
(3,028 |
) |
|
|
11,793 |
|
|
|
16,044 |
|
|
|
(3,702 |
) |
|
|
12,342 |
|
International segment |
|
|
4,292 |
|
|
|
(83 |
) |
|
|
4,209 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
30,459 |
|
|
|
(3,111 |
) |
|
|
27,348 |
|
|
|
26,445 |
|
|
|
(3,702 |
) |
|
|
22,743 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and Administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer segment |
|
|
7,311 |
|
|
|
(786 |
) |
|
|
6,525 |
|
|
|
6,881 |
|
|
|
(735 |
) |
|
|
6,146 |
|
Florist segment |
|
|
2,052 |
|
|
|
|
|
|
|
2,052 |
|
|
|
2,377 |
|
|
|
|
|
|
|
2,377 |
|
International segment |
|
|
6,486 |
|
|
|
61 |
|
|
|
6,547 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
5,588 |
|
|
|
786 |
|
|
|
6,374 |
|
|
|
5,790 |
|
|
|
735 |
|
|
|
6,525 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
21,437 |
|
|
|
61 |
|
|
|
21,498 |
|
|
|
15,048 |
|
|
|
|
|
|
|
15,048 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss)
before Corporate Allocations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer segment |
|
|
8,264 |
|
|
|
(2,899 |
) |
|
|
5,365 |
|
|
|
7,445 |
|
|
|
(3,721 |
) |
|
|
3,724 |
|
Florist segment |
|
|
14,952 |
|
|
|
3,687 |
|
|
|
18,639 |
|
|
|
15,709 |
|
|
|
4,456 |
|
|
|
20,165 |
|
International segment |
|
|
5,170 |
|
|
|
143 |
|
|
|
5,313 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
(6,081 |
) |
|
|
(786 |
) |
|
|
(6,867 |
) |
|
|
(6,323 |
) |
|
|
(735 |
) |
|
|
(7,058 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
22,305 |
|
|
|
145 |
|
|
|
22,450 |
|
|
|
16,831 |
|
|
|
|
|
|
|
16,831 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Allocations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer segment |
|
|
1,151 |
|
|
|
|
|
|
|
1,151 |
|
|
|
849 |
|
|
|
|
|
|
|
849 |
|
Florist segment |
|
|
2,284 |
|
|
|
|
|
|
|
2,284 |
|
|
|
2,868 |
|
|
|
|
|
|
|
2,868 |
|
International segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
(3,435 |
) |
|
|
|
|
|
|
(3,435 |
) |
|
|
(3,717 |
) |
|
|
|
|
|
|
(3,717 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer segment |
|
|
7,113 |
|
|
|
(2,899 |
) |
|
|
4,214 |
|
|
|
6,596 |
|
|
|
(3,721 |
) |
|
|
2,875 |
|
Florist segment |
|
|
12,668 |
|
|
|
3,687 |
|
|
|
16,355 |
|
|
|
12,841 |
|
|
|
4,456 |
|
|
|
17,297 |
|
International segment |
|
|
5,170 |
|
|
|
143 |
|
|
|
5,313 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
(2,646 |
) |
|
|
(786 |
) |
|
|
(3,432 |
) |
|
|
(2,606 |
) |
|
|
(735 |
) |
|
|
(3,341 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
22,305 |
|
|
$ |
145 |
|
|
$ |
22,450 |
|
|
$ |
16,831 |
|
|
$ |
|
|
|
$ |
16,831 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
Amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer segment |
|
$ |
950 |
|
|
$ |
|
|
|
$ |
950 |
|
|
$ |
836 |
|
|
$ |
|
|
|
$ |
836 |
|
Florist segment |
|
|
799 |
|
|
|
|
|
|
|
799 |
|
|
|
821 |
|
|
|
|
|
|
|
821 |
|
International segment |
|
|
1,078 |
|
|
|
|
|
|
|
1,078 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
862 |
|
|
|
|
|
|
|
862 |
|
|
|
967 |
|
|
|
|
|
|
|
967 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
3,689 |
|
|
$ |
|
|
|
$ |
3,689 |
|
|
$ |
2,624 |
|
|
$ |
|
|
|
$ |
2,624 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended March 31, |
|
|
|
2007 |
|
|
2006 |
|
|
|
Gross Segment |
|
|
Eliminations |
|
|
Consolidated |
|
|
Gross Segment |
|
|
Eliminations |
|
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer segment |
|
$ |
209,451 |
|
|
$ |
(12,367 |
) |
|
$ |
197,084 |
|
|
$ |
193,836 |
|
|
$ |
(13,315 |
) |
|
$ |
180,521 |
|
Florist segment |
|
|
137,873 |
|
|
|
(351 |
) |
|
|
137,522 |
|
|
|
143,323 |
|
|
|
(205 |
) |
|
|
143,118 |
|
International segment |
|
|
108,422 |
|
|
|
182 |
|
|
|
108,604 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
455,746 |
|
|
|
(12,536 |
) |
|
|
443,210 |
|
|
|
337,159 |
|
|
|
(13,520 |
) |
|
|
323,639 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Products Sold and
Services Provided: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer segment |
|
|
142,335 |
|
|
|
(1,868 |
) |
|
|
140,467 |
|
|
|
134,073 |
|
|
|
(1,809 |
) |
|
|
132,264 |
|
Florist segment |
|
|
46,664 |
|
|
|
(2,497 |
) |
|
|
44,167 |
|
|
|
49,485 |
|
|
|
(2,524 |
) |
|
|
46,961 |
|
International segment |
|
|
75,280 |
|
|
|
(77 |
) |
|
|
75,203 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
1,507 |
|
|
|
|
|
|
|
1,507 |
|
|
|
1,718 |
|
|
|
|
|
|
|
1,718 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
265,786 |
|
|
|
(4,442 |
) |
|
|
261,344 |
|
|
|
185,276 |
|
|
|
(4,333 |
) |
|
|
180,943 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer segment |
|
|
67,116 |
|
|
|
(10,499 |
) |
|
|
56,617 |
|
|
|
59,763 |
|
|
|
(11,506 |
) |
|
|
48,257 |
|
Florist segment |
|
|
91,209 |
|
|
|
2,146 |
|
|
|
93,355 |
|
|
|
93,838 |
|
|
|
2,319 |
|
|
|
96,157 |
|
International segment |
|
|
33,142 |
|
|
|
259 |
|
|
|
33,401 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
(1,507 |
) |
|
|
|
|
|
|
(1,507 |
) |
|
|
(1,718 |
) |
|
|
|
|
|
|
(1,718 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
189,960 |
|
|
|
(8,094 |
) |
|
|
181,866 |
|
|
|
151,883 |
|
|
|
(9,187 |
) |
|
|
142,696 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising and Selling: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer segment |
|
|
25,087 |
|
|
|
|
|
|
|
25,087 |
|
|
|
22,768 |
|
|
|
|
|
|
|
22,768 |
|
Florist segment |
|
|
43,395 |
|
|
|
(8,353 |
) |
|
|
35,042 |
|
|
|
48,703 |
|
|
|
(9,187 |
) |
|
|
39,516 |
|
International segment |
|
|
8,834 |
|
|
|
(196 |
) |
|
|
8,638 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
77,316 |
|
|
|
(8,549 |
) |
|
|
68,767 |
|
|
|
71,471 |
|
|
|
(9,187 |
) |
|
|
62,284 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and Administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer segment |
|
|
18,690 |
|
|
|
(1,940 |
) |
|
|
16,750 |
|
|
|
15,407 |
|
|
|
(1,785 |
) |
|
|
13,622 |
|
Florist segment |
|
|
6,348 |
|
|
|
|
|
|
|
6,348 |
|
|
|
5,607 |
|
|
|
|
|
|
|
5,607 |
|
International segment |
|
|
15,231 |
|
|
|
318 |
|
|
|
15,549 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
17,675 |
|
|
|
1,940 |
|
|
|
19,615 |
|
|
|
17,430 |
|
|
|
1,785 |
|
|
|
19,215 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
57,944 |
|
|
|
318 |
|
|
|
58,262 |
|
|
|
38,444 |
|
|
|
|
|
|
|
38,444 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss)
before Corporate Allocations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer segment |
|
|
23,339 |
|
|
|
(8,559 |
) |
|
|
14,780 |
|
|
|
21,588 |
|
|
|
(9,721 |
) |
|
|
11,867 |
|
Florist segment |
|
|
41,466 |
|
|
|
10,499 |
|
|
|
51,965 |
|
|
|
39,528 |
|
|
|
11,506 |
|
|
|
51,034 |
|
International segment |
|
|
9,077 |
|
|
|
137 |
|
|
|
9,214 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
(19,182 |
) |
|
|
(1,940 |
) |
|
|
(21,122 |
) |
|
|
(19,148 |
) |
|
|
(1,785 |
) |
|
|
(20,933 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
54,700 |
|
|
|
137 |
|
|
|
54,837 |
|
|
|
41,968 |
|
|
|
|
|
|
|
41,968 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Allocations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer segment |
|
|
3,021 |
|
|
|
|
|
|
|
3,021 |
|
|
|
2,451 |
|
|
|
|
|
|
|
2,451 |
|
Florist segment |
|
|
7,007 |
|
|
|
|
|
|
|
7,007 |
|
|
|
8,364 |
|
|
|
|
|
|
|
8,364 |
|
International segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
(10,028 |
) |
|
|
|
|
|
|
(10,028 |
) |
|
|
(10,815 |
) |
|
|
|
|
|
|
(10,815 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer segment |
|
|
20,318 |
|
|
|
(8,559 |
) |
|
|
11,759 |
|
|
|
19,137 |
|
|
|
(9,721 |
) |
|
|
9,416 |
|
Florist segment |
|
|
34,459 |
|
|
|
10,499 |
|
|
|
44,958 |
|
|
|
31,164 |
|
|
|
11,506 |
|
|
|
42,670 |
|
International segment |
|
|
9,077 |
|
|
|
137 |
|
|
|
9,214 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
(9,154 |
) |
|
|
(1,940 |
) |
|
|
(11,094 |
) |
|
|
(8,333 |
) |
|
|
(1,785 |
) |
|
|
(10,118 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
54,700 |
|
|
$ |
137 |
|
|
$ |
54,837 |
|
|
$ |
41,968 |
|
|
$ |
|
|
|
$ |
41,968 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
Amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer segment |
|
$ |
2,883 |
|
|
$ |
|
|
|
$ |
2,883 |
|
|
$ |
2,293 |
|
|
$ |
|
|
|
$ |
2,293 |
|
Florist segment |
|
|
2,430 |
|
|
|
|
|
|
|
2,430 |
|
|
|
2,551 |
|
|
|
|
|
|
|
2,551 |
|
International segment |
|
|
2,783 |
|
|
|
|
|
|
|
2,783 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
2,794 |
|
|
|
|
|
|
|
2,794 |
|
|
|
2,896 |
|
|
|
|
|
|
|
2,896 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
10,890 |
|
|
$ |
|
|
|
$ |
10,890 |
|
|
$ |
7,740 |
|
|
$ |
|
|
|
$ |
7,740 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Information
This quarterly report on Form 10-Q contains various forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements
include statements regarding the Companys outlook, anticipated revenue growth and profitability;
anticipated benefits of its acquisition of Interflora Holdings Limited, anticipated benefits of
investments in new products, programs and offerings and opportunities and trends within both the
domestic and international floral businesses, including opportunities to expand these businesses
and capitalize on growth opportunities or increase penetration of service offerings. These
forward-looking statements are based on managements current expectations, assumptions, estimates
and projections about the Company and the Companys industry. Investors are cautioned that actual
results could materially differ from those contained in any forward-looking statements as a result
of: the Companys ability to acquire and retain FTD and Interflora members and continued
recognition by members of the value of the Companys products and services; the acceptance by
members of new or modified service offerings recently introduced; the Companys ability to sell
additional products and services to members; the Companys ability to expand existing marketing
partnerships and secure new marketing partners within the domestic and international consumer
businesses; the success of the Companys marketing campaigns; the ability to retain customers and
maintain average order value within the domestic and international consumer businesses; the ability
to manage foreign currency exchange rate risk; the Companys performance during key holiday selling
seasons such as Christmas, Valentines Day and Mothers Day; the existence of failures in the
Companys computer systems; competition from existing and potential new competitors; levels of
discretionary consumer purchases of flowers and specialty gifts; the Companys ability to manage or
reduce its level of expenses within both the domestic and international businesses; actual growth
rates for the markets in which the Company competes compared with forecasted growth rates; the
Companys ability to increase capacity and introduce enhancements to its Web sites; the Companys
ability to integrate Interflora and additional partners or acquisitions, if any are identified; and
other factors described in this Quarterly Report on Form 10-Q and in the Companys Annual Report on
Form 10-K, including under Item 1A Risk Factors, as well as other potential risks and
uncertainties, which are discussed in the Companys other reports and documents filed with the
Securities and Exchange Commission (SEC). The Company expressly disclaims any obligation to
update its forward-looking statements.
The following discussion should be read in conjunction with the consolidated financial
statements and notes to those statements that appear elsewhere in this Form 10-Q. The following
discussion contains forward-looking statements that reflect the Companys plans, estimates and
beliefs. The Companys actual results could differ materially from those discussed in the
forward-looking statements. Factors that could cause or contribute to any differences include, but
are not limited to, those discussed under the captions Forward-Looking Information, Risk
Factors and elsewhere in this Form 10-Q.
Overview
FTD Group, Inc. is a leading provider of floral-related products and services to consumers and
retail florists, as well as other retail locations offering floral products, in the U.S., Canada,
the U.K. 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. Throughout the fiscal year 2006, the Company conducted its business
through two operating segments, the consumer segment and the florist segment. Beginning in the
first quarter of fiscal year 2007, the Company began conducting business through a third operating
segment relating to its international operations, which includes the operations of Interflora
Holdings Limited (Interflora).
Please refer to the Overview section of Managements Discussion and Analysis of Financial
Condition and Results of Operations in FTD Group, Inc.s Annual Report on Form 10-K for the year
ended June 30, 2006, which was filed with the SEC on September 13, 2006 and to the Companys
Registration Statement on Form S-3. Except as discussed in this Item 2, the Company is not aware
of any material changes to such information.
Consumer Segment. The consumer segment is an Internet and telephone marketer of flowers and
specialty gifts, which sells products directly to consumers primarily through the www.ftd.com Web
site and the 1-800-SEND-FTD toll-free telephone number.
14
Florist Segment. The florist segment markets floral products and services to FTD members and
other retail locations offering floral products in the U.S. and Canada.
International Segment. The international segment, a new segment in fiscal year 2007, is
primarily comprised of Interflora, a U.K.-based provider of floral and gift products and services
to consumers and retail floral locations in the U.K. and the Republic of Ireland, which was
acquired by the Company on July 31, 2006.
Corporate Segment. The corporate segment includes costs related to corporate headquarters,
including accounting, executive, legal, facilities, information technology and credit and
collections. Costs related to facilities, information technology and credit and collections are
allocated to the consumer and florist segments.
Seasonality. In view of seasonal variations in the revenues and operating results of the
Companys florist, consumer and international business segments, the Company believes that
comparisons of its revenues and operating results for any period with those of the immediately
preceding period, or in some instances, the same period of the preceding fiscal year may be of
limited relevance in evaluating the Companys historical performance and predicting the Companys
future financial performance. The Companys working capital, cash and short-term borrowings also
fluctuate during the year as a result of the factors set forth below.
Revenues and operating results tend to be lower for the quarter ending September 30 because
none of the most popular floral and gift holidays, which include Valentines Day, Easter, Mothers
Day, Thanksgiving and Christmas, fall within that quarter. In addition, depending on the year, the
popular floral holidays of Easter and Mothers Day in the U.K. sometimes fall within the quarter
ending March 31 and sometimes fall within the quarter ending June 30. Easter and Mothers Day in
the U.K. both fell in the quarter ended March 31 for fiscal year 2007 and fiscal year 2006.
Three Months Ended March 31, 2007 compared to the Three Months Ended March 31, 2006
Total revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
March 31, |
|
|
|
|
|
|
2007 |
|
|
2006 |
|
|
% Change |
|
|
|
(in thousands) |
|
|
|
|
|
Consumer segment |
|
$ |
80,216 |
|
|
$ |
75,680 |
|
|
|
6.0 |
% |
Florist segment |
|
|
49,123 |
|
|
|
52,905 |
|
|
|
(7.1 |
%) |
International segment |
|
|
53,560 |
|
|
|
|
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
$ |
182,899 |
|
|
$ |
128,585 |
|
|
|
42.2 |
% |
|
|
|
|
|
|
|
|
|
|
Third quarter fiscal year 2007 consolidated revenue grew $54.3 million, or 42.2%, to
$182.9 million, compared to revenue of $128.6 million for the same period of fiscal year 2006. The
Company acquired Interflora on July 31, 2006 and reports its results within the Companys
international segment. The international segment accounted for $53.6 million of the increase in
revenue for the period. Growth in the Companys domestic consumer segment of $4.5 million offset
by a decline in the Companys domestic florist segment of $3.8 million contributed the remaining
$0.7 million increase.
The consumer segment achieved revenues of $80.2 million in the third quarter of fiscal year
2007, compared to revenues of $75.7 million in the same period of fiscal year 2006, representing a
6.0% increase. Growth was driven by a 4.1% increase in order volume, which totaled 1,243,000
during the third quarter of fiscal year 2007 compared to 1,194,000 orders in the same period of
fiscal year 2006. Average order value increased to $63.04 for the third quarter of fiscal year
2007, compared to $62.18 for the same period of fiscal year 2006. The percentage of Internet
orders increased to 91.6% from 91.3% in the third quarter of fiscal year 2006.
Florist segment revenues are comprised of products and service offerings to FTD members and
other retail locations offering floral products. The florist segment achieved revenues of $49.1
million in the third quarter of fiscal year 2007, compared to revenues of $52.9 million in the same
period of fiscal year 2006. The decline in florist segment revenues was due to decreased
clearinghouse order volume and a decrease in fresh flower sales,
15
resulting primarily from one mass market customer contract in the prior year that was not
renewed in the current year (due to unfavorable margins on the contract), and reduced container
sales.
The international segment achieved revenues of $53.6 million in the third quarter of fiscal
year 2007, driven by sales volume in Interfloras consumer and florist businesses. Consumer orders
in the international segment totaled 665,000 with an average order value of $66.87. Internet
orders comprised 73.4% of the total order volume.
Total gross profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
March 31, |
|
|
|
|
|
|
2007 |
|
|
2006 |
|
|
% Change |
|
|
|
(in thousands) |
|
|
|
|
|
Consumer segment |
|
$ |
23,236 |
|
|
$ |
20,271 |
|
|
|
14.6 |
% |
Florist segment |
|
|
32,484 |
|
|
|
34,884 |
|
|
|
(6.9 |
%) |
International segment |
|
|
16,069 |
|
|
|
|
|
|
|
N/A |
|
Corporate |
|
|
(493 |
) |
|
|
(533 |
) |
|
|
(7.5 |
%) |
|
|
|
|
|
|
|
|
|
|
Total gross profit |
|
$ |
71,296 |
|
|
$ |
54,622 |
|
|
|
30.5 |
% |
|
|
|
|
|
|
|
|
|
|
Gross profit increased by $16.7 million, or 30.5% to $71.3 million for the third quarter
of fiscal year 2007, compared to gross profit for the third quarter of fiscal year 2006 of $54.6
million. Total gross margin decreased to 39.0% for the third quarter of fiscal year 2007 from 42.5%
for the same period in fiscal year 2006. This change is primarily a result of the addition of the
international segment.
Gross profit associated with the consumer segment increased by $2.9 million, or 14.6%, to
$23.2 million for the third quarter of fiscal year 2007, compared to $20.3 million for the third
quarter of fiscal year 2006. Gross margin for the consumer segment increased to 29.0% for the third
quarter of fiscal year 2007, compared to 26.8% for the same period in fiscal year 2006, primarily
due to an increase in average order values, an increase in advertising revenue and savings in
product guarantee expense in the current fiscal year due to process improvements implemented since
the second quarter of fiscal year 2006.
Gross profit associated with the florist segment decreased by $2.4 million, or 6.9%, to $32.5
million for the third quarter of fiscal year 2007, compared to $34.9 million for the third quarter
of fiscal year 2006. Gross margin for the florist segment increased slightly to 66.1% for the third
quarter of fiscal year 2007, compared to 65.9% for the same period in fiscal year 2006, primarily
due to favorable mix and cost containment measures.
For the third quarter of fiscal year 2007, gross profit associated with the international
segment was $16.1 million and gross margin for the international segment was 30.0%.
Costs associated with corporate activities remained consistent at $0.5 million for the third
quarter of fiscal year 2007 and 2006. These costs are related to the development and maintenance
of internal corporate technology platforms supporting the florist and consumer segments.
Advertising and selling costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
March 31, |
|
|
|
|
|
|
2007 |
|
|
2006 |
|
|
% Change |
|
|
|
(in thousands) |
|
|
|
|
|
Consumer segment |
|
$ |
11,346 |
|
|
$ |
10,401 |
|
|
|
9.1 |
% |
Florist segment |
|
|
11,793 |
|
|
|
12,342 |
|
|
|
(4.4 |
%) |
International segment |
|
|
4,209 |
|
|
|
|
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
Total advertising and selling costs |
|
$ |
27,348 |
|
|
$ |
22,743 |
|
|
|
20.2 |
% |
|
|
|
|
|
|
|
|
|
|
Advertising and selling costs increased $4.6 million, or 20.2%, to $27.3 million for the
third quarter of fiscal year 2007, compared to $22.7 million for the third quarter of fiscal year
2006. As a percentage of revenue,
16
advertising and selling costs decreased to 15.0% for the third quarter of fiscal year 2007
compared to 17.7% for the third quarter of fiscal year 2006. This decrease is related to the
addition of the international segment which has lower advertising spending than the domestic
businesses.
Advertising and selling costs associated with the consumer segment increased $0.9 million, or
9.1%, to $11.3 million for the third quarter of fiscal year 2007, compared to $10.4 million for the
third quarter of fiscal year 2006. Advertising and selling costs as a percentage of revenue
associated with the consumer segment increased to 14.1% for the third quarter of fiscal year 2007
compared to 13.7% for the third quarter of fiscal year 2006. This increase was primarily due to a
higher mix of online search order volume and an increase in cost per order.
Advertising and selling costs associated with the florist segment decreased $0.5 million, or
4.4%, to $11.8 million for the third quarter of fiscal year 2007 compared to $12.3 million for the
third quarter of fiscal year 2006. Advertising and selling costs were impacted by marketing
programs in the period and a decrease in volume-based rebates associated with orders sent through
the FTD clearinghouse.
Advertising and selling costs associated with the international segment totaled $4.2 million,
or 7.9% of international segment revenue for the third quarter of fiscal year 2007.
General and administrative costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
March 31, |
|
|
|
|
|
|
2007 |
|
|
2006 |
|
|
% Change |
|
|
|
(in thousands) |
|
|
|
|
|
Consumer segment |
|
$ |
6,525 |
|
|
$ |
6,146 |
|
|
|
6.2 |
% |
Florist segment |
|
|
2,052 |
|
|
|
2,377 |
|
|
|
(13.7 |
%) |
International segment |
|
|
6,547 |
|
|
|
|
|
|
|
N/A |
|
Corporate |
|
|
6,374 |
|
|
|
6,525 |
|
|
|
(2.3 |
%) |
|
|
|
|
|
|
|
|
|
|
|
Total general and administrative costs |
|
$ |
21,498 |
|
|
$ |
15,048 |
|
|
|
42.9 |
% |
|
|
|
|
|
|
|
|
|
|
General and administrative costs increased by $6.5 million, or 42.9%, to $21.5 million
for the third quarter of fiscal year 2007, compared to $15.0 million for the third quarter of
fiscal year 2006.
General and administrative costs associated with the consumer segment increased by $0.4
million, or 6.2%, to $6.5 million for the third quarter of fiscal year 2007, compared to $6.1
million for the third quarter of fiscal year 2006. This increase is primarily due to increased
salaries and headcount. However, general and administrative costs as a percentage of revenue
remained consistent between fiscal years 2007 and 2006 at 8.1%.
General and administrative costs associated with the florist segment decreased by $0.3 million
to $2.1 million for the third quarter of fiscal year 2007, compared to $2.4 million for the third
quarter of fiscal year 2006, primarily due to a decrease in personnel related costs. As a
percentage of revenue, general and administrative costs declined to 4.2% compared with 4.5% in the
prior year quarter.
General and administrative costs associated with the international segment were $6.5 million,
or 12.2% of revenue, for the third quarter of fiscal year 2007.
Corporate general and administrative costs decreased by $0.1 million, or 2.3%, to $6.4 million
for the third quarter of fiscal year 2007, compared to $6.5 million for the third quarter of fiscal
year 2006.
17
Other income and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
March 31, |
|
|
|
|
|
|
2007 |
|
|
2006 |
|
|
% Change |
|
|
|
(in thousands) |
|
|
|
|
|
Interest income |
|
$ |
(489 |
) |
|
$ |
(233 |
) |
|
|
109.9 |
% |
Interest expense |
|
|
6,444 |
|
|
|
4,829 |
|
|
|
33.4 |
% |
Other expense (income), net |
|
|
570 |
|
|
|
(118 |
) |
|
|
(583.1 |
%) |
|
|
|
|
|
|
|
|
|
|
|
Total other expenses, net |
|
$ |
6,525 |
|
|
$ |
4,478 |
|
|
|
45.7 |
% |
|
|
|
|
|
|
|
|
|
|
Interest income increased to $0.5 million for the third quarter of fiscal year 2007
compared to $0.2 million for the third quarter of fiscal year 2006 primarily due to increased
average cash balances and an increase in interest rates in fiscal year 2007.
Interest expense increased by $1.6 million, or 33.4%, to $6.4 million for the third quarter of
fiscal year 2007, compared to $4.8 million for the third quarter of fiscal year 2006. The increase
related to an increase in outstanding indebtedness related to the July 2006 acquisition of
Interflora.
Other expense (income), net increased to $0.6 million of expense for the third quarter of
fiscal year 2007, compared to income of $0.1 million for the third quarter of fiscal year 2006.
The increase in expense is primarily related to secondary offering costs of $0.8 million, net of
foreign currency gains recognized during the third quarter of fiscal year 2007.
Nine Months Ended March 31, 2007 compared to the Nine Months Ended March 31, 2006
The Company acquired Interflora on July 31, 2006, and, as a result, eight months of
Interfloras financial results are included in the nine-month period ended March 31, 2007.
Total revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
|
|
|
March 31, |
|
|
|
|
|
|
2007 |
|
|
2006 |
|
|
% Change |
|
|
|
(in thousands) |
|
|
|
|
|
Consumer segment |
|
$ |
197,084 |
|
|
$ |
180,521 |
|
|
|
9.2 |
% |
Florist segment |
|
|
137,522 |
|
|
|
143,118 |
|
|
|
(3.9 |
%) |
International segment |
|
|
108,604 |
|
|
|
|
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
$ |
443,210 |
|
|
$ |
323,639 |
|
|
|
36.9 |
% |
|
|
|
|
|
|
|
|
|
|
Consolidated revenue in the nine-month period ended March 31, 2007 grew $119.6 million,
or 36.9%, to $443.2 million, compared to revenue of $323.6 million for the same period of the prior
fiscal year. The international segment accounted for $108.6 million of this increase in revenue.
Growth in the Companys domestic consumer segment of $16.6 million offset by a decline in the
Companys domestic florist segment of $5.6 million contributed the remaining $11.0 million
increase.
The consumer segment achieved revenues of $197.1 million in the nine-month period ended March
31, 2007, compared to revenues of $180.5 million in the same period of the prior fiscal year,
representing a 9.2% increase. Growth was driven by a 6.9% increase in order volume, which totaled
3,147,000 during the nine-month period ended March 31, 2007 compared to 2,943,000 orders in the
same period of the prior fiscal year. Average order value increased to $61.33 for the nine-month
period ended March 31, 2007, compared to $60.71 for the same period of the prior fiscal year. The
percentage of Internet orders for the nine-month period ended March 31, 2007 decreased slightly to
89.6% from 89.8% for the nine-month period ended March 31, 2006. Also contributing to the increase
in revenue is advertising revenue, which is related to a program the Company initiated in December
2005.
Florist segment revenues are comprised of products and service offerings to FTD members and
other retail locations offering floral products. The florist segment achieved revenues of $137.5
million in the nine-month period
18
ended March 31, 2007, compared to revenues of $143.1 million in the same period of the prior
fiscal year. Revenues in the nine-month period ended March 31, 2006 included $3.9 million of
revenue related to Renaissance Greeting Cards, Inc (Renaissance). The Company sold substantially
all the assets and certain liabilities of Renaissance in December 2005. Excluding the revenue
from the prior year related to Renaissance, revenues from the florist segment decreased 1.2% over
the same period of the prior year primarily due to declines in sales of containers, decreased
clearinghouse order volume, a decrease in fresh flower sales, and a decrease in publications
revenue. These declines were partially offset by an increase in sales related to the Companys
online services and an increase in the number of technology systems sold.
The international segment achieved revenues of $108.6 million in the nine-month period ended
March 31, 2007, driven by sales volume in Interfloras consumer and florist businesses. Consumer
orders in the international segment totaled 1,366,000 during the period, with an average order
value of $64.86. Internet orders comprised 71.3% of the total order volume for the period.
Total gross profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
|
|
|
March 31, |
|
|
|
|
|
|
2007 |
|
|
2006 |
|
|
% Change |
|
|
|
(in thousands) |
|
|
|
|
|
Consumer segment |
|
$ |
56,617 |
|
|
$ |
48,257 |
|
|
|
17.3 |
% |
Florist segment |
|
|
93,355 |
|
|
|
96,157 |
|
|
|
(2.9 |
%) |
International segment |
|
|
33,401 |
|
|
|
|
|
|
|
N/A |
|
Corporate |
|
|
(1,507 |
) |
|
|
(1,718 |
) |
|
|
(12.3 |
%) |
|
|
|
|
|
|
|
|
|
|
Total gross profit |
|
$ |
181,866 |
|
|
$ |
142,696 |
|
|
|
27.4 |
% |
|
|
|
|
|
|
|
|
|
|
Gross profit increased by $39.2 million, or 27.4%, to $181.9 million for the nine-month
period ended March 31, 2007, compared to gross profit for the same period of the prior fiscal year
of $142.7 million. Total gross margin decreased to 41.0% for the nine-month period ended March 31,
2007 from 44.1% for the same period of the prior fiscal year, primarily due to the addition of the
international segment. Gross margin for the domestic segments in the nine month period ended March
31, 2007 was 44.4%.
Gross profit associated with the consumer segment increased by $8.3 million, or 17.3%, to
$56.6 million for the nine-month period ended March 31, 2007, compared to $48.3 million for the
same period of the prior fiscal year. Gross margin for the consumer segment increased to 28.7% for
the nine-month period ended March 31, 2007, compared to 26.7% for same period of the prior fiscal
year, primarily due to an increase in average order value and advertising revenue and savings in
product guarantee expense in the current fiscal year period due to process improvements implemented
since December 31, 2005.
Gross profit associated with the florist segment decreased by $2.8 million, or 2.9%, to $93.4
million for the nine-month period ended March 31, 2007, compared to $96.2 million for the same
period of the prior fiscal year. Gross margin for the florist segment increased to 67.9% for the
nine-month period ended March 31, 2007, compared to 67.2% for the same period in the prior fiscal
year, primarily due to the revenue decreases described above as these are lower margin product
lines.
For the nine-month period ended March 31, 2007, gross profit associated with the international
segment was $33.4 million and gross margin for the international segment was 30.8%.
Costs associated with corporate activities decreased $0.2 million, or 12.3%, to $1.5 million
for the nine-month period ended March 31, 2007, compared to $1.7 million for the same period of the
prior fiscal year. This decrease is primarily related to a decrease in depreciation expense due to
assets becoming fully depreciated.
19
Advertising and selling costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
|
|
|
March 31, |
|
|
|
|
|
|
2007 |
|
|
2006 |
|
|
% Change |
|
|
|
(in thousands) |
|
|
|
|
|
Consumer segment |
|
$ |
25,087 |
|
|
$ |
22,768 |
|
|
|
10.2 |
% |
Florist segment |
|
|
35,042 |
|
|
|
39,516 |
|
|
|
(11.3 |
%) |
International segment |
|
|
8,638 |
|
|
|
|
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
Total advertising and selling costs |
|
$ |
68,767 |
|
|
$ |
62,284 |
|
|
|
10.4 |
% |
|
|
|
|
|
|
|
|
|
|
Advertising and selling costs increased $6.5 million, or 10.4%, to $68.8 million for the
nine-month period ended March 31, 2007, compared to $62.3 million for the same period of the prior
fiscal year. As a percentage of revenue, advertising and selling costs decreased to 15.5% for the
nine-month period ended March 31, 2007 compared to 19.2% for the same period of the prior fiscal
year.
Advertising and selling costs associated with the consumer segment increased $2.3 million, or
10.2%, to $25.1 million for the nine-month period ended March 31, 2007, compared to $22.8 million
for the same period of the prior fiscal year. Advertising and selling costs as a percentage of
revenue associated with the consumer segment remained consistent at 12.7% for the nine-month period
ended March 31, 2007 compared to 12.6% for the same period of the prior fiscal year.
Advertising and selling costs associated with the florist segment decreased $4.5 million, or
11.3%, to $35.0 million for the nine-month period ended March 31, 2007 compared to $39.5 million
for the same period of the prior fiscal year. The decrease in advertising and selling costs was
primarily due to the sale of Renaissance which accounted for $2.5 million of advertising and
selling costs in the nine-month period ended March 31, 2006, with the remaining decrease related to
a decrease in volume-based rebates associated with orders sent through the FTD clearinghouse,
planned cost reductions, and a shift to more efficient member marketing programs.
Advertising and selling costs associated with the international segment totaled $8.6 million,
or 8.0% of revenue for the nine-month period ended March 31, 2007.
General and administrative costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
|
|
|
March 31, |
|
|
|
|
|
|
2007 |
|
|
2006 |
|
|
% Change |
|
|
|
(in thousands) |
|
|
|
|
|
Consumer segment |
|
$ |
16,750 |
|
|
$ |
13,622 |
|
|
|
23.0 |
% |
Florist segment |
|
|
6,348 |
|
|
|
5,607 |
|
|
|
13.2 |
% |
International segment |
|
|
15,549 |
|
|
|
|
|
|
|
N/A |
|
Corporate |
|
|
19,615 |
|
|
|
19,215 |
|
|
|
2.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
Total general and administrative costs |
|
$ |
58,262 |
|
|
$ |
38,444 |
|
|
|
51.6 |
% |
|
|
|
|
|
|
|
|
|
|
General and administrative costs increased by $19.9 million, or 51.6%, to $58.3 million
for the nine-month period ended March 31, 2007, compared to $38.4 million for the same period of
the prior fiscal year.
General and administrative costs associated with the consumer segment increased by $3.2
million, or 23.0%, to $16.8 million for the nine-month period ended March 31, 2007, compared to
$13.6 million for the same period of the prior fiscal year. This increase is primarily due to
investment spending in the consumer segments technology infrastructure, including increased
headcount and an increase in amortization expense associated with technology improvements put in
service over the last year. Also contributing to the increase in general and administrative
expense is an increase in salaries and headcount in other administrative areas. As a percentage of
revenue, general and administrative costs increased to 8.5% from 7.5% in the prior year nine-month
period.
20
General and administrative costs associated with the florist segment increased by $0.7
million, or 13.2%, to $6.3 million for the nine-month period ended March 31, 2007, compared to $5.6
million for the same period of the prior fiscal year. The increase is primarily due to an offset in
the prior year related to the $1.0 million gain recognized as a result of the sale of Renaissance.
As a percentage of revenue, general and administrative costs increased to 4.6% from 3.9% in the
prior year nine-month period.
General and administrative costs associated with the international segment were $15.5 million,
or 14.3% of revenue, for the nine-month period ended March 31, 2007.
Corporate general and administrative costs increased by $0.4 million, or 2.1%, to $19.6
million for the nine-month period ended March 31, 2007, compared to $19.2 million for the same
period of the prior fiscal year. This increase was primarily the result of an increase in salaries
and stock-based compensation expense, partially offset by a decrease in legal and insurance expense
in the current year period.
Other income and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
|
|
|
March 31, |
|
|
|
|
|
|
2007 |
|
|
2006 |
|
|
% Change |
|
|
|
(in thousands) |
|
|
|
|
|
Interest income |
|
$ |
(1,126 |
) |
|
$ |
(528 |
) |
|
|
113.3 |
% |
Interest expense |
|
|
21,679 |
|
|
|
14,596 |
|
|
|
48.5 |
% |
Other expense (income), net |
|
|
(725 |
) |
|
|
(206 |
) |
|
|
251.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
Total other expenses, net |
|
$ |
19,828 |
|
|
$ |
13,862 |
|
|
|
43.0 |
% |
|
|
|
|
|
|
|
|
|
|
Interest income increased to $1.1 million for the nine-month period ended March 31, 2007
compared to $0.5 million for the same period of the prior fiscal year primarily due to an increase
in average cash balances an increase in interest rates in fiscal year 2007.
Interest expense increased by $7.1 million, or 48.5%, to $21.7 million for the nine-month
period ended March 31, 2007, compared to $14.6 million for the same period of the prior fiscal
year. The increase related to an increase in outstanding indebtedness during the current year
period resulting from the purchase of Interflora as well as a $1.8 million write-off of unamortized
deferred financing costs associated with the refinancing of the Companys previous credit facility.
Other expense (income), net increased to $0.7 million of income for the nine-month period
ended March 31, 2007, compared to $0.2 million of income for the same period of the prior fiscal
year. This increase is primarily related to recognized gains on foreign currency forward exchange
contracts the Company entered into in connection with the Interflora acquisition, partially offset
by costs related to the secondary offering totaling $0.8 million.
Liquidity and Capital Resources
Cash and cash equivalents increased by $30.4 million to $41.4 million at March 31, 2007 from
$11.0 million at June 30, 2006.
As of March 31, 2007, the Companys debt balance totaled $336.9 million, including notes
payable of $24.5 million related to the Interflora acquisition, up from $220.1 million as of June
30, 2006. The Companys principal sources of liquidity are cash from operations and funds
available for borrowing under FTD, Inc.s senior secured credit facility (the 2006 Credit
Agreement) that was entered into on July 28, 2006, which replaced the 2004 senior secured credit
facility (the 2004 Credit Agreement) and provides for aggregate borrowings of up to $225 million,
consisting of a seven-year $150.0 million term loan and a six-year $75.0 million revolving credit
facility. As of March 31, 2007, the balance of the term loan under the 2006 Credit Agreement was
$142.3 million and the Company had $26.0 million of outstanding letters of credit, $24.5 million of
which are related to the notes payable the Company issued in conjunction with the Interflora
acquisition and are included in the total debt balance reported above. Borrowings under the
revolving credit facility are used to finance working capital, capital expenditures, acquisitions,
certain expenses associated with the bank credit facilities and letter of credit needs. The
revolving credit facility had availability of $49.0 million as of March 31, 2007.
21
Net cash provided by operating activities was $37.4 million for the nine-month period ended
March 31, 2007 and $20.7 million for the nine-month period ended March 31, 2006. Net income,
adjusted for non-cash items, continues to be an important source of funds to finance operating
needs and capital expenditures, repay indebtedness, pay dividends and make other strategic
investments. Additionally, cash provided by operating activities for the nine-month period ended
March 31, 2007 includes the results of Interflora.
Net cash used in investing activities was $102.7 million for the nine-month period ended March
31, 2007, which included $96.7 million of cash used for the Interflora acquisition and $6.0 million
of capital expenditures, primarily related to continued technology developments and improvements.
Net cash used in investing activities was $3.9 million for the nine-month period ended March 31,
2006, which consisted of $7.4 million of capital expenditures, primarily related to a new call
center which was opened in October 2005 and other technology developments and improvements,
partially offset by the proceeds received from the sale of Renaissance in December 2005.
Net cash provided by financing activities was $95.0 million for the nine-month period ended
March 31, 2007, which primarily consisted of $148.5 million of net proceeds received from the 2006
Credit Agreement, offset by $50.0 million of repayments under the 2004 Credit Agreement and $7.8
million of repayments under the 2006 Credit Agreement. Net cash proceeds from financing activities
were used to fund the acquisition of Interflora. Net cash used in financing activities was $25.7
million for the nine-month period ended March 31, 2006, which primarily consisted of $11.1 million
of principal repayments under the 2004 Credit Agreement and $15.0 million of repurchases of the
Companys common stock.
The Company believes that its current capital resources, including cash and cash equivalents,
cash generated from operations and funds available from its revolving credit facility will be
sufficient to finance its operations and capital expenditures for the foreseeable future.
On October 25, 2005, the Companys Board of Directors authorized a share repurchase program
totaling $30 million, effective through September 30, 2007. These purchases may be made from time
to time in both open markets and private transactions, dependent upon market and other conditions.
The Company may repurchase shares pursuant to a 10b5-1 plan, which would generally permit the
Company to repurchase shares at times when it might otherwise be prevented from doing so under U.S.
federal securities laws. The Company has repurchased 1.5 million shares of common stock under this
plan. No shares were repurchased under this program during the nine-month period ended March 31,
2007.
On February 20, 2007, the Companys Board of Directors approved a dividend policy and declared
its first quarterly cash dividend of $0.1625 per share. The dividend was paid on April 2, 2007 to
stockholders of record as of the close of business on March 19, 2007. On an annual basis, the cash
dividend is expected to be $0.65 per share. While the Company intends to continue to pay quarterly
dividends, the declaration and payment of dividends is subject to the determination of the Board of
Directors and continued compliance with the requirements of the
Companys 2006 Credit Agreement and the indenture governing the 7.75% Senior Subordinated
Notes, among other considerations.
On April 24, 2007, the Companys Board of Directors declared a cash dividend of $0.1625 to be
paid on July 6, 2007, to stockholders of record as of the close of business on June 22, 2007.
Critical Accounting Policies and Estimates
The Companys consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America. The preparation of these
financial statements requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and expenses during the
reporting period.
Management bases its estimates and judgments on historical experience and on various other
factors that are believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about
22
the carrying values of assets and liabilities. Actual results may
differ from these estimates under different assumptions or conditions.
See the information concerning the Companys critical accounting policies included under Note
1 and Item 7 in the Companys Annual Report on Form 10-K for the fiscal year ended June 30, 2006 as
filed with the SEC.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Companys exposure to interest rate risk is primarily the result of borrowings under its
bank credit facilities. At March 31, 2007, $142.3 million of debt was outstanding under the 2006
Credit Agreement and is subject to variable interest rates. Borrowings under the 2006 Credit
Agreement are secured by first priority security interests in, and mortgages on, substantially all
of the Companys tangible and intangible assets. The Companys results of operations are affected
by changes in market interest rates on these borrowings. The variable interest rate borrowings
comprised 42.2% of the Companys $336.9 million aggregate principal amount of indebtedness as of
March 31, 2007. A 1% increase in the variable interest rate would result in additional annual
interest expense of approximately $1.4 million.
The Company is exposed to foreign currency exchange rate risk with respect to the British
pound, the Canadian dollar and the Euro. The resulting foreign currency exchange adjustments are
included in the other comprehensive income caption on the consolidated statements of operations and
comprehensive income.
In conjunction with the acquisition of Interflora, the Company entered into forward exchange
contracts totaling £61.8 million to hedge the acquisition price. A contract in the amount of £51.0
million was settled on July 28, 2006 and resulted in a gain of $1.4 million, which has been
recorded in other expense (income), net within the Condensed Consolidated Statements of Income and
Comprehensive Income. The remaining forward contracts include a contract for £10.0 million,
expected to be settled during the fourth quarter of fiscal year 2007 and a contract for £0.8
million, expected to be settled during the first quarter of fiscal year 2009. The settlement of
these contracts coincide with the due dates of the notes payable related to the acquisition of
Interflora.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Based on their evaluation for the period covered by this Quarterly Report on Form 10-Q, the
Chief Executive Officer and the Chief Financial Officer of FTD Group, Inc. have concluded that, as
of the end of such period, FTD Group, Inc.s disclosure controls and procedures (as defined in
Rules 13a-14(c) and 15d-14(c) under the Exchange Act) are effective to ensure that information
required to be disclosed by FTD Group, Inc. in the reports that it files or submits under the
Exchange Act are recorded, processed, summarized and reported within the time periods specified in
the SECs rules and forms.
Changes in Internal Control over Financial Reporting
The Company acquired Interflora on July 31, 2006 and, as a result of the acquisition, the
Companys internal controls over financial reporting with respect to the consolidation of its
financial statements have changed. Management of the Company expects that ongoing processes and
controls related to consolidation will continue to be modified during fiscal year 2007. There are
no other changes in internal control over financial reporting that occurred during the period that
have materially affected or are reasonably likely to materially affect the Companys internal
control over financial reporting.
23
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is involved in various claims and lawsuits and other matters arising in the normal
course of business. In the opinion of management of the Company, although the outcome of these
claims and suits are uncertain, they are not expected to have a material adverse effect on the
Companys financial condition, liquidity or results of operations.
Item 1A. Risk Factors
The Companys business, financial condition, results of operations or cash flows can be
impacted by a number of factors, any one of which could cause actual results to vary materially
from anticipated future results. See the discussion in Forward-Looking Information, Risk
Factors and elsewhere in the Companys Annual Report on Form 10-K for the year ended June 30, 2006
and in Forward-Looking Information and elsewhere in this Quarterly Report on Form 10-Q. There
have been no material changes to such risk factors provided in the Companys Annual Report on Form
10-K for the year ended June 30, 2006.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a) On July 31, 2006, in connection with the acquisition of Interflora, the Company sold
216,374 shares of its common stock (from its treasury), to certain senior managers of Interflora,
in exchange for shares of common stock of FTD, Inc. These shares of common stock of FTD, Inc. were
acquired by the Interflora senior managers in exchange for 216,374 preferred shares of FTD UK
Holdings Limited. These preferred shares of FTD UK Holdings Limited were acquired by the
Interflora senior managers as partial consideration for their equity securities in Interflora.
The 216,374 shares of common stock of FTD Group, Inc. were valued at $14.77 per share,
representing the closing price of such shares on the New York stock exchange on July 28, 2006, for
aggregate consideration of $3.2 million.
These shares of common stock of FTD Group, Inc. were issued in reliance upon the exemption
contained in Section 4(2) of the Securities Act of 1933, as amended, in reliance, among other
factors, upon various representations and warranties made by the senior managers of Interflora with
respect to their investment intentions, investment experience, financial capabilities and other
matters.
(c) On October 25, 2005, the Companys Board of Directors authorized a share repurchase
program totaling $30.0 million, effective through September 30, 2007. These purchases may be made
from time to time in both open market and private transactions, dependent upon market and other
conditions. The Company may repurchase shares pursuant to a 10b5-1 plan, which would generally
permit the Company to repurchase shares at times when it might otherwise be prevented from doing so
under U.S. federal securities laws. The Company has repurchased 1.5 million shares of common stock
under this plan. There were no purchases made by, or on behalf of, the Company, or shares of the
Companys common stock during the nine-month period ended March 31, 2007.
Item 6. Exhibits
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Section 302 of
Sarbanes-Oxley Act of 2002. |
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Section 302 of
Sarbanes-Oxley Act of 2002. |
|
|
|
32
|
|
Certifications of Chief Executive Officer and Chief Financial Officer pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002. |
24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
|
|
|
FTD Group, Inc.
|
|
Date: May 9, 2007 |
By: |
/S/ BECKY A. SHEEHAN
|
|
|
|
Becky A. Sheehan |
|
|
|
Chief Financial Officer
(principal financial officer) |
|
25
EXHIBIT INDEX
|
|
|
Exhibit Number |
|
Description of Document |
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Section 302 of
Sarbanes-Oxley Act of 2002. |
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Section 302 of
Sarbanes-Oxley Act of 2002. |
|
|
|
32
|
|
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002. |
26