<PAGE>   1
 
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D. C. 20549
                            ------------------------
 
                                   FORM 10-K
                            ------------------------
                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                      THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE FISCAL YEAR ENDED JUNE 30, 1997
 
COMMISSION FILE NUMBER 33-91582
 
                                FTD CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
<TABLE>
<C>                                            <C>
                   DELAWARE                                      13-3711271
       (STATE OR OTHER JURISDICTION OF                        (I.R.S. EMPLOYER
        INCORPORATION OR ORGANIZATION)                      IDENTIFICATION NO.)
</TABLE>
 
                              3113 WOODCREEK DRIVE
                          DOWNERS GROVE, IL 60515-5420
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
 
Registrant's telephone number, including area code (630) 719-7800
 
Securities registered pursuant to Section 12(b) of the Act:
 
                                      NONE
 
Securities registered pursuant to Section 12(g) of the Act:
 
                      CLASS A COMMON STOCK, $.01 PAR VALUE
 
     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 [X]  NO [ ]
 
     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
 
     Because no established public trading market exists for shares of the
Registrant's voting stock, the aggregate market value of voting stock held by
non-affiliates of the Registrant cannot be determined.
 
     As of September 25 , 1997, there were 6,035,470 shares of the Registrant's
Class A Common Stock, par value $.01 per share, and 1,566,686 shares of the
Registrant's Class B Common Stock, par value $.0005 per share outstanding.
 
                      DOCUMENTS INCORPORATED BY REFERENCE.
 
     Portions of the Registrant's definitive information statement (to be filed
pursuant to Regulation 14(C) for the 1997 Annual Meeting of Stockholders (the
"Information Statement") are incorporated by reference in Items 10, 11, 12 and
13 of Part III hereof.
================================================================================
<PAGE>   2
 
                                     PART I
 
ITEM 1. BUSINESS
 
OVERVIEW
 
     FTD Corporation ("FTD Corporation" or the "Registrant") was incorporated as
a Delaware corporation on March 8, 1993. As used in this Report, the terms
"Company" or "FTD" refer to FTD Corporation and its wholly owned subsidiary,
Florists' Transworld Delivery, Inc., a Michigan corporation (the "Operating
Company"). All of the operations of FTD are conducted through the Operating
Company.
 
     FTD is the world's largest floral services organization based on the number
of members of FTD Association (as defined below) and affiliated organizations.
FTD Association has a membership of approximately 21,000 retail florist shops
primarily in the U.S. and Canada and, through affiliated or related
organizations, approximately 32,000 additional retail florist shops in
approximately 140 other countries. Through these members FTD offers consumers
expedited delivery of high-quality FTD-branded products in the U.S. and Canada
and non-branded floral products throughout most of the world.
 
     FTD promotes a worldwide brand based on the FTD Mercury Man logo, one of
the most recognized corporate logos in the world according to consumer
recognition studies. See "-- Marketing and Advertising." A significant portion
of FTD's revenues, operating income and competitive advantage is derived from
FTD's technology-based transaction processing businesses, which include the
Mercury Network, Clearinghouse, Advantage Software and Direct Access
(1-800-SEND-FTD). In addition to the foregoing, FTD's operations include
Marketplace and other businesses which support and enhance the retail floral
industry. See "-- Operations."
 
THE ACQUISITION AND RELATIONSHIP WITH FTD ASSOCIATION
 
     The Operating Company is the successor to a non-profit cooperative
association founded by a group of retail florists in the United States in 1910.
The Operating Company was the surviving corporation after the acquisition (the
"Acquisition") on December 19, 1994 by FTD Corporation, of all of the
outstanding equity of Florists' Transworld Delivery Association, a Michigan
non-profit cooperative association (the "Old Association"), pursuant to an
Agreement and Plan of Merger, dated August 2, 1994 (the "Merger Agreement"),
among FTD Corporation, FTD Acquisition Corporation, a Delaware corporation, and
the Old Association. Upon consummation of the Acquisition, the Operating Company
became a wholly-owned subsidiary of FTD Corporation. Immediately following the
Acquisition, the Old Association was converted from a non-profit corporation to
a for-profit corporation and renamed "Florists' Transworld Delivery, Inc."
 
     FTD Corporation, through the Operating Company, operates all of the
businesses conducted by the Old Association prior to the Acquisition except for
certain trade association activities which are being conducted by FTD
Association, an Ohio non-profit corporation organized in connection with the
Acquisition and structured as a member-owned trade association ("FTD
Association"). Neither FTD nor the Operating Company has any ownership interest
in FTD Association; however, as provided in the Merger Agreement, the Operating
Company and FTD Association have entered into the Mutual Support Agreement,
dated December 18, 1994 (the "Mutual Support Agreement"), which governs the
relationship between the Operating Company and FTD Association. Pursuant to the
Mutual Support Agreement, among other things: (i) existing and future members
have the exclusive right, subject to execution of a Trademark Membership License
Agreement with the Operating Company, to use the FTD logo and other FTD
trademarks in connection with the operation of a retail florist shop; (ii) all
members in good standing are provided access to FTD's Clearinghouse, Mercury
Network and certain other FTD services and products; (iii) the Operating
Company's prices to members for specified services will not be increased above
those charged on July 1, 1994 prior to December 19, 1997 (except for adjustments
for inflation); (iv) payments by the Operating Company equal to a percentage of
the value of every floral order cleared through FTD's Clearinghouse are made to
FTD Association; and (v) the Operating Company and FTD Association may designate
up to 20% but not fewer than two individuals to be elected to the other's board
of directors. All references herein to "members" refer to the members of FTD
Association.
 
                                        2
<PAGE>   3
 
MARKETING AND ADVERTISING
 
     FTD conducts extensive marketing and advertising programs on both a
national and local basis. FTD's national advertising (via television, radio,
magazines and Sunday newspaper supplements) generally promotes FTD florists,
FTD-branded products, 1-800-SEND-FTD and FTD Florists' Online Internet site
(www.ftd.com). FTD coordinates cooperative advertising on a local basis with
participating florists. FTD also provides FTD florists with advertising tools
such as billboard paper, slicks for print advertising and television and radio
tapes to be tagged with individual shop information. In addition, FTD provides
FTD florists with customized direct mail pieces, in-shop merchandising materials
and FTD Floral Selections, a counter display catalog featuring FTD products for
all occasions.
 
     FTD's marketing and advertising programs are designed to: (i) increase
consumer demand for FTD-branded floral arrangements which FTD florists clear
through Clearinghouse and components of which are Marketplace's FTD-branded
hardgoods; (ii) feature the FTD Mercury Man logo; and (iii) support the FTD
retail florists generally by encouraging consumers to associate FTD professional
florists with high-quality floral goods and outstanding customer service.
 
OPERATIONS
 
     For each transaction cleared by FTD, FTD's Clearinghouse operations
collects the billing information from either the Mercury Network or the florist
that fills the order locally (the "Receiving Florist") if the Mercury Network
has not been used, and allocates funds among FTD, the florist with whom a
customer places the delivery order (the "Sending Florist") and the Receiving
Florist. Generally, orders received by the Receiving Florist by 2:00 p.m. will
be delivered to the recipient in the same postal zip code on the same day.
Floral orders between FTD florists are transmitted primarily by FTD's Mercury
Network.
 
     FTD was initially formed to encourage flowers-by-wire transactions between
member florists, but over time FTD has developed a number of additional services
and products that support and enhance the retail floral operations of FTD
professional florists. Currently, FTD's primary operations are Marketplace,
Clearinghouse, Mercury Network and Other (including Direct Access).
 
     The following table illustrates the percentage of total revenue generated
by the Operating Company's major businesses as a percentage of total revenue for
the three fiscal years ended June 30, 1995, 1996 and 1997:
 
<TABLE>
<CAPTION>
                                                                1997     1996     1995
                                                                ----     ----     ----
<S>                                                             <C>      <C>      <C>
REVENUE:
Marketplace.................................................     30.6%    34.8%    37.3%
Clearinghouse...............................................     21.1     22.3     23.8
Mercury Network.............................................     23.1     20.5     18.3
Other (including Direct Access).............................     25.2     22.4     20.6
                                                                -----    -----    -----
Total Revenue...............................................    100.0%   100.0%   100.0%
                                                                =====    =====    =====
</TABLE>
 
     Marketplace. FTD's Marketplace is one of the largest wholesale suppliers of
hardgoods to retail florists in the U.S. based on total sales. Marketplace
products include both FTD-branded and non-branded holiday and everyday floral
arrangement containers and products, as well as packaging, promotional products
and a wide variety of other floral-related supplies. By capitalizing on FTD's
sourcing expertise and volume purchases, Marketplace is able to provide FTD
florists with a broad selection of products at attractive prices.
 
     Marketplace also enters into promotional partnerships to design, promote
and sell FTD-branded products. To date, FTD has participated in partnerships
with companies such as Gerber Products Company, Mars, Inc. and Disney
Enterprises, Inc. For example, collectible containers featuring Winnie the Pooh
and his friends have been developed for friendship, new baby, Christmas,
Valentine's Day and Easter floral arrangements. M&M's have been included in the
Sweet Surprise floral arrangement since 1993. The
 
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Company believes that FTD's large retail network and brand recognition make it a
valuable corporate partner for such ventures.
 
     Clearinghouse. FTD's Clearinghouse provides billing and collection services
to both the Sending Florist and the Receiving Florist in flowers-by-wire
transactions. In fiscal 1997, FTD cleared floral orders aggregating in excess of
$492 million in retail sales. Revenue from FTD's Clearinghouse is generated by
FTD retaining a percentage of the sales price of orders sent through
Clearinghouse.
 
     FTD is a joint venture participant in Interflora, Inc., a floral services
organization with non-FTD member florists, which enables florists to transmit
and receive orders outside the Americas.
 
     Mercury Network. FTD's Mercury Network is one of the largest proprietary
telecommunications networks in the world, based on the total number of
participating retail outlets, linking together FTD and approximately 16,400 of
the 21,000 FTD florists. FTD's on-line florists may use the Mercury Network to
transmit orders cleared through FTD or through competing clearinghouses and to
send messages. In fiscal 1997, the Mercury Network transmitted approximately
14.5 million orders among U.S. and Canadian members.
 
     Direct Access. FTD's Direct Access business offers retail customers the
opportunity to place orders directly with FTD by dialing a toll free number
(1-800-SEND-FTD), through online services such as Compuserve or through FTD
Florists' Online Internet site (www.ftd.com). Revenue from the Direct Access
business is generated by FTD's receipt of a percentage of the sales price as the
Sending Florist and a service charge from the consumer.
 
OTHER BUSINESSES
 
     FTD has developed several other businesses to support and enhance FTD
florists' retail floral operations, including greeting cards, Advantage Software
for florists' operations, publications, and credit card authorization and
processing services.
 
     Renaissance Greeting Cards. Through Renaissance Greeting Cards, Inc.
("Renaissance"), a subsidiary of the Operating Company acquired in 1992, FTD
produces greeting cards for special occasions and holidays which are sold in
over 7,900 retail outlets nationwide. Renaissance cards are made using only
recycled paper.
 
     Advantage Software. FTD offers FTD florists computer software, which
operates on the Mercury computer system, that is customized to the needs of
retail florists. The Advantage Plus software package provides a comprehensive
range of payroll and accounting functions for the retail florist. In addition,
the package was expanded in 1997 with modules which streamline the delivery
process. These modules automatically calculate delivery rates, confirm accuracy
of addresses, build efficient delivery routes, print delivery maps and capture
recipient data for future marketing.
 
     FTD Directory & Toll Free Listings. FTD produces the FTD Directory & Toll
Free Listings ("FTD Directory"), a directory of all current FTD florists, their
locations, product ordering information and minimum order amounts. In a typical
transaction, the Sending Florist is responsible for selecting the Receiving
Florist within the desired locale. Unless the Sending Florist has already
established a relationship with a particular florist in that locale, the Sending
Florist typically consults FTD Directory to identify a Receiving Florist. FTD
Directory is published periodically and is supplied to FTD florists in printed
form. FTD Directory is also available on CD-ROM.
 
     Credit Card Authorization and Processing. FTD offers processing of credit
card transactions to participating FTD florists. By pooling the credit card
transactions of such florists, FTD is able to secure more favorable terms on
credit card transactions than they could secure individually. Credit card
authorizations can be obtained by telephone, with a dedicated authorization
terminal, or by using the accounting software offered to retail florists by FTD.
FTD also provides an address verification system to minimize fraud, as well as
statement and adjustment services. Revenue from FTD's credit card program is
generated by a monthly subscriber fee and discounts charged for transactions.
 
                                        4
<PAGE>   5
 
SEASONALITY
 
     FTD generated 22.8%, 25.6%, 29.2% and 22.4% of total revenue in the
quarters ended September 30, December 31, March 31 and June 30 of fiscal 1997,
respectively. FTD's revenue typically exhibits a modest degree of seasonality as
demonstrated in fiscal 1997. FTD's operating income also fluctuates over the
course of the fiscal year, with FTD generating slightly more of its operating
income in the fiscal quarters ending September 30 and March 31. This fluctuation
is primarily attributable to (i) increased advertising and promotional
expenditures during the holiday seasons in the fiscal quarters ending December
31 and June 30 and (ii) a Clearinghouse volume incentive program, which
experiences higher expenses as a result of increased volume during these
quarters. FTD's working capital, cash and short-term borrowings also fluctuate
during the year as a result of the factors set forth above.
 
TRADEMARKS
 
     The FTD Mercury Man logo is a registered U.S. trademark which distinguishes
FTD's services and products from those offered by others and appears on the shop
window or door of each member. FTD also owns the rights to a number of other
trademarks, including "FTD," "FTDA" and "Florists' Transworld Delivery" and
trademarks for certain floral products, including the "Chicken Soup Bouquet,"
"Thanks a Bunch Bouquet," "Stay in Touch Bouquet," "Pick-Me-Up Bouquet,"
"Birthday Party Bouquet," "Anniversary Bouquet," "Puzzle Fun Bouquet" and "Sweet
Dreams Bouquet." FTD has licensed certain of its trademarks, including the FTD
Mercury Man logo, to FTD Association for use with its trade association
activities and to the FTD florists who have executed a Trademark Membership
License Agreement with the Operating Company.
 
COMPETITION
 
     FTD's Clearinghouse operation has two primary competitors: American Floral
Services, Inc. and Teleflora LLC ("Teleflora"). Both these competing services
offers some products and services which are comparable to those offered by FTD
and most FTD florists subscribe to at least one of these competing services.
FTD's Clearinghouse processes more orders than any competing service.
 
     FTD's Marketplace operation competes in an extremely fragmented industry
against a large number of wholesalers. The Company believes that it has a
competitive advantage in this segment due to its multi-faceted relationship with
retail florists, its depth of product line and its ability to offer discounted
pricing because of FTD's substantial volume purchases.
 
     The primary competitor for the Direct Access (1-800-SEND-FTD) business is
1-800-FLOWERS, Inc. Several other less significant companies operate in the toll
free and online services markets.
 
     The Operating Company is subject to certain operating restrictions pursuant
to the Modified Final Judgment, dated November 13, 1990, of the United States
District Court for the Eastern District of Michigan in United States of America
v. Florists' Telegraph Delivery Association, Civ. No. 56-15748, and United
States of America v. Florists' Transworld Delivery Association, Civ. No.
66-28784 (collectively referred to as the "Consent Order"). Among its terms, the
Consent Order prohibits restricting FTD Association membership to florists who
are not subscribers to a competing clearinghouse. The Consent Order expires on
August 1, 2005.
 
EMPLOYEES
 
     As of June 30, 1997, FTD employed approximately 380 full-time employees.
FTD considers its relations with its employees to be good. FTD employees are not
currently covered by any collective bargaining agreement.
 
ITEM 2. PROPERTIES
 
     FTD's principal executive offices, consisting of approximately 120,000
square feet of office space, are owned by FTD and are located in Downers Grove,
Illinois. FTD leases office space through a subsidiary in
 
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<PAGE>   6
 
Sanford, Maine. FTD uses independent warehouse and distribution facilities in
California, Ohio and Ontario, Canada for product distribution.
 
ITEM 3. LEGAL PROCEEDINGS
 
     On July 16, 1997, Teleflora instituted an arbitration proceeding against
FTD in Southfield, Michigan. The arbitration was filed under the Commercial
Arbitration Rules of the American Arbitration Association alleging that FTD
breached a 1991 Agreement by which FTD provides certain Mercury Network services
to Teleflora (the "1991 Agreement"). The specific claim is that FTD has failed
to negotiate in good faith a new contract on expiration of the 1991 Agreement as
required by its terms. Unspecified damages are alleged. FTD has filed an
answering statement that denies the allegations made by Teleflora. FTD
management believes that it has meritorious defenses to this action and intends
to contest Teleflora's allegations vigorously. An adverse decision could have a
material adverse effect on the Company's financial position and results of
operations.
 
     On July 21, 1997, Teleflora filed a complaint against FTD in United States
District Court for the Central District of California. On August 7, 1997,
Teleflora filed a first amended and supplemental complaint in that action. The
first amended and supplemental complaint contains six counts alleging
monopolization and attempted monopolization in violation of Section 2 of the
Sherman Act, discriminatory pricing in violation of Section 2 of the Clayton
Act, unfair competition in violation of California Business and Professions Code
Sections 17200 et seq., and a claim for breach of contract. The allegations
pertain to the 1991 Agreement. Teleflora seeks compensatory and treble damages
and declaratory relief, and has moved for a preliminary injunction. FTD
management believes that it has meritorious defenses to this action, and intends
to contest Teleflora's allegations vigorously. An adverse decision could have a
material adverse effect on the Company's financial position and results of
operations.
 
     FTD is involved in various other lawsuits and matters arising in the normal
course of business. In the opinion of the management of FTD, although the
outcomes of these claims and suits are uncertain, they should not have a
material adverse effect on FTD's financial position or results of operations.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
 
     No matters were submitted to a vote of the Company's security-holders
during the fourth quarter of fiscal 1997.
 
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
 
     The information below is included in this report pursuant to instruction 3
to Item 401(b) of Regulation S-K:
 
<TABLE>
<CAPTION>
                            NAME                                AGE       EXECUTIVE OFFICERS
                            ----                                ---       ------------------
<S>                                                             <C>    <C>
 
Robert L. Norton............................................    50     President
Francis C. Piccirillo.......................................    47     Treasurer
Scott D. Levin..............................................    35     Secretary
Fred Johnson................................................    49     Executive Vice President
                                                                       Technology of the
                                                                       Operating Company
Rock A. Davis...............................................    42     Vice President
                                                                       Marketplace of the
                                                                       Operating Company
</TABLE>
 
     Mr. Norton has been the President of FTD Corporation since January, 1997.
Mr. Norton is currently the Chief Executive Officer, President and Director of
the Operating Company. Mr. Norton joined the Operating Company in October 1996
as General Manager and became President and Chief Operating Officer in January
1997. From March 1993 until May 1996, Mr. Norton was Vice Chairman and Chief
Financial Officer of
 
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<PAGE>   7
 
Fabri-Centers of America, Inc., a retail chain of fabric and craft stores. Mr.
Norton received a B.S. from Cleveland State University in 1973.
 
     Mr. Piccirillo joined FTD Corporation as Treasurer in August 1997. Mr.
Piccirillo is also Vice President and Chief Financial Officer of the Operating
Company. Prior to that time, Mr. Piccirillo was Vice President/Treasurer of
Fabri-Centers of America, Inc. Mr. Piccirillo received a B.S. in Industrial
Management in 1971 and an M.B.A. in 1973 from Gannon University. In addition,
Mr. Piccirillo received a J.D. from Cleveland State University in 1976, and is a
Certified Public Accountant.
 
     Mr. Levin joined FTD Corporation as Secretary in May 1996. Mr. Levin also
served as Vice President of FTD Corporation from May 1996 to September 1997. Mr.
Levin also serves as Vice President Administration, General Counsel and
Secretary of the Operating Company. Prior to joining the Company, Mr. Levin
practiced law with Schulte Roth & Zabel LLP specializing in corporate and
securities transactions from April 1989 to April 1996. Mr. Levin received a B.A.
in Political Science and Philosophy from Boston College in 1984 and a J.D. from
The National Law Center of George Washington University in 1987.
 
     Mr. Johnson joined the Operating Company as Executive Vice President
Technology in July 1997. Prior to that time, Mr. Johnson was Senior Vice
President MIS for Fabri Centers of America, Inc. Mr. Johnson received a B.S. in
engineering from Case Institute of Technology in 1969 and an M.B.A. from Case
Western Reserve University in 1977.
 
     Mr. Davis is Vice President Marketplace of the Operating Company. Mr. Davis
joined the Operating Company as Vice President Direct Access in April 1995.
Previously, Mr. Davis was Senior Vice President of The Signature Group from June
1982 to July 1994. Prior to joining The Signature Group, Mr. Davis was in the
Audit Division of Arthur Andersen & Company. Mr. Davis received a B.S. in
General Management from Purdue University in 1977 and a Masters of Management
from Northwestern University in 1986. Mr. Davis is a Certified Public
Accountant.
 
     Executive Officers are selected by and serve at the discretion of the Board
of Directors.
 
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<PAGE>   8
 
                                    PART II
 
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 
     No established public trading market exists for FTD Corporation's common
equity. As of September 25, 1997, there were approximately 1,800 holders of
Class A Common Stock, par value $.01 per share, of FTD Corporation, and
approximately five holders of Class B Common Stock, par value $.0005 per share,
of FTD Corporation.
 
     FTD has not paid any dividends on its common equity since its inception,
and it has no present intention of paying any such dividends. Any future
determination as to the payment of dividends will be at the discretion of the
Board of Directors of FTD, and will depend on the Company's financial condition,
results of operations, capital requirements, compliance with charter and
contractual restrictions, and such other factors as the Board of Directors deems
relevant. In addition, under the terms of its borrowings, the Company may not
declare or pay any dividend or make any distribution (other than dividends or
distributions payable solely in capital stock of the Company) on shares of its
common stock to holders of such common stock if at the time of such proposed
dividend, or immediately after giving effect thereto, certain financial
conditions are not satisfied. Notwithstanding the foregoing, the following,
among other things, are permitted: (1) payments by the Operating Company to or
on behalf of FTD to fund certain operating expenses of FTD; (2) payments by the
Operating Company to FTD pursuant to a tax sharing agreement between such
parties as in effect on December 19, 1994 or any amendment thereto or
replacement agreement thereof; (3) payments by the Operating Company to FTD to
fund certain payments by FTD for management services provided to the Operating
Company; (4) payments by the Operating Company to FTD to pay reasonable expenses
incurred in connection with a public equity offering to members pursuant to the
Mutual Support Agreement; and (5) payments by the Operating Company to FTD to
repurchase shares of its Common Stock or options to purchase Common Stock held
by former employees of FTD or its subsidiaries (subject to restrictions).
 
ITEM 6. SELECTED FINANCIAL DATA
 
     The following table sets forth selected historical data of the Old
Association for the fiscal years ended June 30, 1993 and 1994 and the period
from July 1, 1994 to December 18, 1994, and of FTD for the period December 19,
1994 to June 30, 1995 and the fiscal years ended June 30, 1996 and 1997. The
selected historical balance sheet and statement of operations data as of and for
the fiscal years ended June 30, 1993 and 1994 were derived from the audited
consolidated financial statements of the Old Association. The Acquisition was
consummated on December 19, 1994. The selected historical statement of
operations data for the period from July 1, 1994 to December 18, 1994 were
derived from the audited consolidated financial statements of the Old
Association. The selected historical statement of operating data for the period
from December 19, 1994 to June 30, 1995, and for the years ended June 30, 1996
and 1997, and the balance sheet data as of June 30, 1995, 1996 and 1997 were
derived from the audited consolidated financial statements of FTD. The
information contained in this table should be read in conjunction with Item 7 --
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements for the years ended June
30, 1995, 1996 and 1997, of FTD, including the notes thereto, appearing
elsewhere in this Form 10-K.
 
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<PAGE>   9
 
<TABLE>
<CAPTION>
                                         CONSOLIDATED FTD CORPORATION               OLD ASSOCIATION
                                      ----------------------------------   ----------------------------------
                                                            DECEMBER 19,
                                                                1994          JULY 1
                                      YEAR ENDED JUNE 30,     THROUGH        THROUGH      YEAR ENDED JUNE 30,
                                      -------------------     JUNE 30,     DECEMBER 18,   -------------------
                                        1997       1996         1995           1994         1994       1993
                                        ----       ----     ------------   ------------     ----       ----
                                            (DOLLARS IN THOUSANDS, EXCEPT FOR EARNINGS PER SHARE DATA)
<S>                                   <C>        <C>        <C>            <C>            <C>        <C>
 
STATEMENT OF OPERATIONS DATA:
  Total revenue.....................  $162,583   $166,255     $ 96,518       $75,333      $166,560   $169,195
  Cost of goods sold and services
     provided.......................    96,306    104,386       58,567        49,109       102,260    103,622
  Selling, general and
     administrative.................    55,769     58,376       30,669        28,684        57,625     61,073
                                      --------   --------     --------       -------      --------   --------
  Income (loss) from operations.....    10,508      3,493        7,282        (2,460)        6,675      4,500
  Other expense, net(1).............    11,839     12,067        5,827            77           795      1,178
  Income taxes (benefit)(2).........       416     (1,813)       1,021            35            92         42
  Minority interest(3)..............       (14)       (33)           8
  Cumulative effect of accounting
     change(4)......................                                                         6,277
                                      --------   --------     --------       -------      --------   --------
  Net income (loss).................  $ (1,733)  $ (6,728)    $    426       $(2,572)     $   (489)  $  3,280
                                      ========   ========     ========       =======      ========   ========
  Earnings (loss) per share(5)
     Primary........................  $   (.23)  $  (1.01)    $   0.06
     Fully Diluted..................  $   (.23)  $  (1.01)    $   0.06
OTHER DATA:
  Depreciation and amortization.....  $ 15,606   $ 14,231     $  6,525       $ 4,911      $ 10,144   $  9,043
  Capital expenditures..............     2,614      4,950        3,082         1,413         8,134     18,200
  Ratio of earnings to fixed
     charges(6).....................        --         --          1.2x           --           2.9x       2.0x
BALANCE SHEET DATA:
  (at end of period)
  Working capital...................  $  5,339   $  2,718     $  6,546                    $ 16,918   $ 12,581
  Total assets......................   181,724    196,082      203,864                     135,506    125,816
  Long-term debt, including current
     portion........................    82,400     96,277      100,757                      33,463     33,746
  Total equity......................  $ 27,172   $ 29,140     $ 35,080                    $ 36,216   $ 40,521
</TABLE>
 
-------------------------
(1) Interest expense in fiscal 1993 is net of $185 of interest capitalized as
    construction in progress.
 
(2) Taxes on income for the fiscal years ended June 30, 1993 and 1994 and the
    period July 1 through December 18, 1994 are generally applicable to the Old
    Association's Canadian operations. During these periods, the Old Association
    conducted substantially all of its business activities as a member-owned
    non-profit cooperative association and, accordingly, no provision for U.S.
    income taxes was required. Taxes on income for the period December 19, 1994
    through June 30, 1995 and for the fiscal years ended June 30, 1996 and 1997
    represent operations after conversion from a cooperative association to a
    for-profit corporation, which resulted in a provision for U.S. income tax
    liabilities to be recorded.
 
(3) Represents FTD's interest in Renaissance.
 
(4) Effective July 1, 1993, the Old Association and its consolidated
    subsidiaries adopted Statement of Financial Accounting Standards No. 106,
    "Employers' Accounting for Post-Retirement Benefits Other Than Pensions,"
    for its unfunded post-retirement health care program. See note 8 to the
    consolidated financial statements of the Company.
 
(5) The Old Association was a member-owned non-profit cooperative association
    and accordingly, no stock was issued.
 
(6) In calculating the ratio of earnings to fixed charges, earnings consists of
    net income prior to income taxes, minority interest and cumulative effect of
    accounting change, plus fixed charges. Fixed charges consist of interest
    expense and the component of rental expense believed by management to be
    representative of the interest factor thereon. Earnings for the period July
    1 through December 18, 1994 were insufficient to cover fixed charges by
    $2,537. Earnings for the year ended June 30, 1996 and 1997 were insufficient
    to cover fixed charges by $8,574 and $1,331, respectively.
 
                                        9
<PAGE>   10
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS
 
     Except for the historical information contained in this report, certain
statements made herein are forward-looking statements that involve risks and
uncertainties and are subject to important factors that could cause FTD's actual
results to differ significantly from the results discussed in the
forward-looking statements, including without limitation, the effect of economic
and market conditions and the impact of competitive activities. The following
discussion should be read in conjunction with the Consolidated Financial
Statements including the notes thereto included elsewhere in this report.
 
EFFECT OF ACQUISITION ON RESULTS OF OPERATIONS
 
     The Acquisition was consummated on December 19, 1994. Accordingly, the
results of operations from December 19, 1994 through June 30, 1995 and for the
years ended June 30, 1996 and 1997 represent those of FTD Corporation and its
consolidated subsidiaries. Results of operations prior to December 19, 1994 are
those of the Old Association. The Acquisition generally affected FTD's results
of operations as follows: (i) certain trade association activities previously
conducted by FTD are now being conducted by FTD Association; (ii) immediately
following the consummation of the Acquisition, the Operating Company was
converted from a non-profit cooperative association owned by its members to a
for-profit corporation; (iii) in connection with the Acquisition, FTD recorded a
$7.0 million liability subsequently adjusted to $3.9 million for the costs of
termination benefits and other expenses associated with FTD's employee headcount
reduction and the planned consolidation of FTD's data processing facilities;
(iv) as a result of the Acquisition, FTD's balance sheet carries significant
goodwill; (v) certain provisions of the Mutual Support Agreement may impact,
among other things, product pricing in transactions with members; and (vi) the
Company has implemented or plans to implement several cost reduction strategies,
including a reduction in costs related to the Company's Board of Directors, the
elimination of costs associated with trade activities of the Old Association and
a reduction in various general and administrative expenses of the Old
Association (offset by additional costs related to the new management team and
out-sourcing certain functions).
 
RESULTS OF OPERATIONS
 
     The following table illustrates the total revenue generated by FTD's major
businesses and summarizes FTD's historical results of operations for the three
fiscal years ended June 30, 1995, 1996 and 1997:
 
<TABLE>
<CAPTION>
                                                                   YEAR ENDED JUNE 30,
                                                              ------------------------------
                                                                1997       1996       1995
                                                                ----       ----       ----
<S>                                                           <C>        <C>        <C>
REVENUE:
Marketplace.................................................  $ 49,738   $ 57,924   $ 64,016
Clearinghouse...............................................    34,383     37,070     40,831
Mercury Network.............................................    37,558     34,138     31,483
Other.......................................................    40,904     37,123     35,521
                                                              --------   --------   --------
     Total revenue..........................................   162,583    166,255    171,851
Cost of goods sold and services provided....................    96,306    104,386    107,676
Selling, general and administrative.........................    55,769     58,376     59,353
                                                              --------   --------   --------
Income from operations......................................  $ 10,508   $  3,493   $  4,822
                                                              ========   ========   ========
</TABLE>
 
YEAR ENDED JUNE 30, 1997 COMPARED TO YEAR ENDED JUNE 30, 1996
 
     The following is a discussion of changes in the Company's financial
condition and results of operations for the year ended June 30, 1997 compared
with the year ended June 30, 1996.
 
     Revenue decreased by $3.7 million, or 2.2%, to $162.6 million for the year
ended June 30, 1997 compared to $166.3 million for the year ended June 30, 1996.
The decline in revenue was the net result of decreases in Marketplace and
Clearinghouse revenue, partially offset by increases in Mercury Network and
Other revenue.
 
                                       10
<PAGE>   11
 
     Marketplace revenue decreased by $8.2 million, or 14.2%, to $49.7 million
for the year ended June 30, 1997 compared to $57.9 million for the year ended
June 30, 1996. The decrease from the prior year was the result of lower sales
volume of holiday products. Marketplace revenue was 30.6% and 34.8% of total
revenue for the years ended June 30, 1997 and 1996, respectively.
 
     Clearinghouse revenue decreased by $2.7 million, or 7.3%, to $34.4 million
for the year ended June 30, 1997 from $37.1 million for the year ended June 30,
1996. This was the net result of a decline in the volume of floral orders
cleared through FTD and a 3.5% increase in the average revenue per order in
accordance with overall industry trends. The Company believes the decline in the
volume of orders cleared by FTD is due to competition from other clearinghouse
services, and the general decline in industry clearings which has resulted from
the general decline in the market share of retail florists. Clearinghouse
revenue was 21.1% and 22.3% of total revenue for the years ended June 30, 1997
and 1996, respectively.
 
     Mercury Network revenue increased by $3.5 million, or 10.3%, to $37.6
million for the year ended June 30, 1997 from $34.1 million for the year ended
June 30, 1996. An increase in terminal leasing revenue, order transmission
income and sales of Advantage floral business systems were the major factors in
the revenue increase. Mercury Network revenue was 23.1% and 20.5% of total
revenue for the years ended June 30, 1997 and 1996, respectively.
 
     Other revenue experienced a net increase of $3.8 million, or 10.2%, to
$40.9 million for the year ended June 30, 1997 from $37.1 million for the year
ended June 30, 1996. This increase was primarily due to growth in the order
volume of Direct Access (1-800-SEND-FTD) and publications revenue. Other revenue
was 25.2% and 22.4% of total revenue for the year ended June 30, 1997 and 1996,
respectively.
 
     The cost of goods sold and services provided decreased by $8.1 million, or
7.8%, to $96.3 million for the year ended June 30, 1997 from $104.4 million for
the year ended June 30, 1996. This is primarily the result of lower cost of
goods sold related to lower Marketplace sales discussed above. In addition, FTD
realized cost reductions resulting from improvements in customer service
operations. As a percentage of revenue, cost of goods sold and services provided
decreased slightly to 59.2% for the year ended June 30, 1997 from 62.8% for the
year ended June 30, 1996.
 
     Selling, general and administrative expenses decreased by $2.6 million, to
$55.8 million for the year ended June 30, 1997 from $58.4 million for the year
ended June 30, 1996. This decrease is primarily due to FTD's decreased
advertising and promotional expenditures in fiscal 1997. In addition, a pension
curtailment gain of $2.7 million, a $0.8 million postretirement curtailment gain
and a $0.5 million pension settlement gain were partially offset by costs of
$4.5 million due to FTD's facility consolidation efforts including the writeoff
of the trained workforce intangible asset.
 
     Interest income for the years ended June 30, 1997 and 1996 was $1.5 million
and $1.4 million, respectively. The increase is attributable to higher average
invested cash. Interest expense for the year ended June 30, 1997 was $12.8
million as compared to $13.5 million in the prior year. The decrease of $0.7
million resulted from a reduction in debt during the year ended June 30, 1997.
See "-- Liquidity and Capital Resources."
 
     Income taxes for the year ended June 30, 1997 reflect an expense of $ 0.4
million compared to a benefit of $1.8 million in the prior year. The tax
expenses for the year ended June 30, 1997 represents the current year reduction
to the Company's deferred tax assets. The tax benefit for the year ended June
30, 1996 represents the amount of deferred tax benefit recognized as a result of
the pretax loss incurred for the year.
 
     As a result of the factors described above, a net loss of $1.7 million
resulted for the year ended June 30, 1997, an improvement of $5.0 million from a
net loss of $6.7 million for the year ended June 30, 1996.
 
YEAR ENDED JUNE 30, 1996 COMPARED TO YEAR ENDED JUNE 30, 1995
 
     The following is a discussion of changes in the Company's financial
condition and results of operations for the year ended June 30, 1996 compared
with the year ended June 30, 1995. For purposes of presenting a meaningful
comparison, as stated above, the year ended June 30, 1995 includes both: (i)
results of the
 
                                       11
<PAGE>   12
 
Operating Company's predecessor (Florists' Transworld Delivery Association) for
the period prior to the acquisition on December 19, 1994; and (ii) the results
of the Company from December 19, 1994 through June 30, 1995.
 
     Revenue decreased by $5.6 million, or 3.3%, to $166.3 million for the year
ended June 30, 1996, compared to $171.9 million for the year ended June 30,
1995. The decline in revenue was partly due to the elimination of $2.7 million
in revenue from trade association activities in the prior comparable period
which, since the Acquisition, have no longer been conducted by the Company. The
balance of the decline in revenue was the net result of decreases in Marketplace
and Clearinghouse, partially offset by Mercury Network and Other revenue.
 
     Marketplace revenue decreased by $6.1 million, or 9.5%, to $57.9 million
for the year ended June 30, 1996 compared to $64.0 million for the year ended
June 30, 1995. The decrease from the prior year was the result of lower sales of
holiday, seasonal and non-branded everyday containers. This was partially offset
by increased sales of the expanded perishables product line and FTD branded
everyday products. Marketplace revenue was 34.8% and 37.3% of total revenue for
the years ended June 30, 1996 and 1995, respectively.
 
     Clearinghouse revenue decreased by $3.7 million, or 9.2%, to $37.1 million
for the year ended June 30, 1996 from $40.8 million for the year ended June 30,
1995. This was the net result of a decline in the volume of floral orders
cleared through FTD and a 3.1% increase in the average revenue per order in
accordance with overall industry trends. The Company believes the decline in the
volume of orders cleared by FTD is due to competition from other clearinghouse
services, and the general decline in industry clearings which has resulted from
the general decline in the market share of retail florists. Clearinghouse
revenue was 22.3% and 23.8% of total revenue for the years ended June 30, 1996
and 1995, respectively.
 
     Mercury Network revenue increased by $2.6 million, or 8.4%, to $34.1
million for the year ended June 30, 1996 from $31.5 million for the year ended
June 30, 1995. An increase in terminal leasing revenue, order transmission
income and equipment sales were the major factors in the revenue increase.
Mercury Network revenue was 20.5% and 18.3% of total revenue for the years ended
June 30, 1996 and 1995, respectively.
 
     Excluding the trade association related revenues from the prior year
discussed above, Other revenue experienced a net increase of $4.3 million, or
13.1%, to $37.1 million for the year ended June 30, 1996 from $32.8 million for
the year ended June 30, 1995. This increase was primarily due to growth in the
order volume of the Direct Access business and in the volume of listings in the
FTD Directory. Other revenue was 22.4% and 20.6% of total revenue for the year
ended June 30, 1996 and 1995, respectively.
 
     The cost of goods sold and services provided decreased by $3.3 million, or
3.1%, to $104.4 million for the year ended June 30, 1996 from $107.7 million for
the year ended June 30, 1995. The decrease in cost of goods sold and services
provided is primarily due to a $6.2 million reduction in costs for products and
distribution related to the lower Marketplace sales volume and a $1.8 million
decrease due to lower costs of member programs which have not been conducted by
the Company since the Acquisition. Offsetting these decreases was a depreciation
expense increase of $1.1 million from the prior year primarily due to computer
hardware and software acquisitions. Other offsetting cost increases resulted
from the increase in Direct Access order volume, additional FTD Directory costs,
field service costs and Mercury Network product and other costs. As a percentage
of revenue, cost of goods sold and services provided remained relatively
constant, with an increase to 62.8% for the year ended June 30, 1996 from 62.7%
for the year ended June 30, 1995.
 
     Selling, general and administrative expenses decreased by $0.9 million, or
1.5%, to $58.4 million for the year ended June 30, 1996 from $59.3 million for
the year ended June 30, 1995. Several factors contributed to the net decrease:
(i) non-recurring Acquisition related costs of $4.1 million were incurred by the
Company during the year ended June 30, 1995; (ii) the elimination of
approximately $1.3 million in costs of certain trade association activities in
fiscal 1995 which, since the Acquisition, have not been conducted by the
Company; (iii) various overhead reductions of $0.8 million affecting promotional
costs; (iv) advertising activities related to the Company's member incentive
program which was implemented during the year ended June 30, 1996 which amounted
to $4.7 million; and (v) amortization of goodwill and other intangibles
increased by $1.8 million for the year ended June 30, 1996 from the prior
comparable period which included a
 
                                       12
<PAGE>   13
 
partial year of amortization. Selling, general and administrative expenses
increased, as a percent of revenue, to 35.1% from 34.5% for the year ended June
30, 1996 compared to the comparable period in 1995.
 
     Interest income for the years ended June 30, 1996 and 1995 was $1.4 million
and $2.8 million, respectively. The decrease is attributable to lower average
invested cash due to cash utilized to effect the Acquisition. Interest expense
for the year ended June 30, 1996 was $13.5 million as compared to $8.7 million
in the prior year. The increase of $4.8 million resulted from a full year of
interest on the debt in fiscal 1996 versus a partial year of interest on the
debt in fiscal 1995. See "-- Liquidity and Capital Resources."
 
     Income taxes for the year ended June 30, 1996 reflect a benefit of $1.8
million compared to an expense of $1.0 million for the prior year. The expense
in the prior year was due to the Operating Company's conversion from a
cooperative association to a for-profit corporation on December 19, 1994, the
date of the Acquisition, resulting in recognition of primarily deferred tax
expense for the period from December 19, 1994 through June 30, 1995. Income tax
expense prior to December 19, 1994 was entirely related to the Old Association's
Canadian operations. The tax benefit for the year ended June 30, 1996 represents
the amount of deferred tax benefit recognized as a result of the pretax loss
incurred for the year.
 
     As a result of the factors described above, a net loss of $6.7 million
resulted for the year ended June 30, 1996, an increase of $4.6 million from a
net loss of $2.1 million for the year ended June 30, 1995.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     Interest payments on the Operating Company's $60.0 million aggregate
principal amount of $14% Senior Subordinated Notes due 2001 (the "Notes"),
registered under the Securities Act of 1933, as amended (the "Securities Act")
and interest and principal payments on obligations under a credit agreement
dated December 19, 1994, as amended (the "Bank Credit Agreement") represent
significant liquidity requirements for FTD. Borrowings under the Bank Credit
Agreement bear interest at floating rates and require interest payments on
varying dates depending on the interest rate option selected by FTD. Borrowings
available under the Bank Credit Agreement consist of a $45.0 million term loan
facility and a $25.0 million revolving credit facility to finance working
capital and letter of credit needs. FTD has repaid $20.4 million of the term
loans through June 30, 1997 and is required to repay principal amounts of $9.3
million in fiscal 1998, $10.1 million in fiscal 1999 and $5.3 million in fiscal
2000. Any loans outstanding under the revolving credit facility will mature on
December 19, 1999. Under the terms of the Bank Credit Agreement, borrowings
under the revolving credit facility are required to be reduced to zero for 30
consecutive days in each annual period. None of the $25.0 million revolving
credit facility available under the Bank Credit Agreement was borrowed from the
date of Acquisition through June 30, 1997. The Company believes, based on
current circumstances, that its cash flow, together with borrowings under the
revolving credit facility, will be sufficient to fund operations, including
planned capital expenditures, and to repay the term loans and make interest
payments as they become due through the term of the Notes and the Bank Credit
Agreement.
 
     In addition to its debt service obligations, FTD's remaining liquidity
demands will be primarily for capital expenditures and working capital needs. In
the fiscal years ended June 30, 1997 and 1996, FTD's capital expenditures were
$2.6 million and $5.0 million, respectively, related primarily in 1997 to the
purchase of additional office equipment and in 1996 to the upgrade of its
Mercury Network communications facilities through the purchase of its new
Mercury 3000 terminals that are leased to FTD florists. FTD's expected capital
expenditures for fiscal 1998 are estimated to be approximately $5.0 million and
will primarily be used for improvements of internal customer service and
information systems and the Mercury Network. The Company believes that cash flow
from operations, together with borrowings available under the revolving credit
facility, will be sufficient to fund anticipated capital expenditures and
working capital needs.
 
     The Bank Credit Agreement contains certain restrictive covenants with
respect to the Company that, among other things, create limitations (subject to
certain exceptions) on the declaration or payment of any dividend or making of
any distribution by the Company on shares of its common stock.
 
     Cash provided by operating activities was $12.5 million for the year ended
June 30, 1997 compared to cash provided of $11.1 million for the year ended June
30, 1996. Factors contributing to this change in cash
 
                                       13
<PAGE>   14
 
flow were: pension benefits of $2.9 million and an inventory build of $3.5
million, offset by certain program obligations to members.
 
     Cash provided by investing activities was $3.6 million for the year ended
June 30, 1997 compared to cash used of $5.0 million for the year ended June 30,
1996. In fiscal 1997, the cash provided by investing activities primarily
consisted of the sale of the Company's previous headquarters in Southfield,
Michigan, which was offset by capital expenditures.
 
     Cash used in financing activities was $14.4 million for the year ended June
30, 1997 compared to cash used of $4.0 million for the year ended June 30, 1996.
The net cash used in the year ended June 30, 1997, reflects primarily payment of
principal on the term loans.
 
     Effective January 1, 1997, amendments to FTD's defined benefit pension plan
were adopted, including the elimination of the accrual of future benefits under
the plan. As a result of these amendments, and the corresponding remeasurement
of the accumulated and projected benefit of obligations under the plan, a pre-
tax pension curtailment gain of $2.7 million as well as a pre-tax settlement
gain of $0.5 million were recognized in income as a reduction in selling,
general and administrative costs during fiscal 1997. FTD has established a new
401(k) savings plan for all of its eligible employees.
 
     On January 3, 1997, FTD's Board of Directors approved a plan to consolidate
corporate staff and operations into its Downers Grove, Illinois facility, which
has enabled FTD to improve program execution and is helping FTD to better serve
its customers. Leased office space in Boston, Massachusetts was subleased, and
land and buildings in Southfield, Michigan were sold. FTD's bank credit
agreement required FTD to use the net proceeds from the sale of assets to reduce
the outstanding term loan and as a result, future interest costs will be
reduced. In accordance with EITF Consensus no. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Cost to Exit an Activity,"
non-recurring charges in connection with the consolidation including severance,
asset impairment losses, and other costs aggregating $2.3 million were
recognized as Selling, General and Administrative costs during fiscal 1997.
Additional non-recurring expenses of $0.7 million were also incurred in
connection with the consolidation resulting in a total of $3.0 million in
non-recurring costs being recorded in fiscal 1997.
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
     The consolidated financial statements of the Registrant required by this
item are set forth on pages F-1 through F-20 and the related schedule is set
forth on page F-22.
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURES
 
     Not applicable.
 
                                       14
<PAGE>   15
 
                                    PART III
 
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
     Information with respect to the directors of the Company is hereby
incorporated herein by reference to the section. "Election of Directors"
contained in the Information Statement. See also Item 4A, "Executive Officers of
the Registrant" in Part I of this Annual Report on Form 10-K.
 
ITEM 11. EXECUTIVE COMPENSATION
 
     Information with respect to executive compensation is hereby incorporated
herein by reference to the sections, "Management-Executive Compensation,"
"Summary Compensation Table," "Option Grants in Last Fiscal Year," "Fiscal
Year-End Option Values" and "Director Compensation for the Last Fiscal Year" in
the Company's Information Statement. The sections, "Board of Directors Report on
Executive Compensation" and "Stockholder Return Comparison," in the Company's
Information Statement are not incorporated by reference herein. Such sections
are furnished solely for information and shall not be deemed to be soliciting
material or to be "filed" as part of this report.
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
     Information with respect to security ownership of certain beneficial owners
and management is hereby incorporated by reference to the sections, "Security
Ownership of Certain Beneficial Owners and Management" and "Principal
Stockholders," in the Company's Information Statement.
 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
     Information with respect to certain relationships and related transactions
is hereby incorporated by reference to the section, "Relationship with
Affiliates," in the Company's Information Statement.
 
                                       15
<PAGE>   16
 
                                    PART IV
 
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
 
(A) FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS
 
     (1) & (2) The consolidated financial statements and schedule which are
filed with this Form 10-K are set forth in the Index to Consolidated Financial
Statements and Schedule at Page F-1 which immediately precedes such documents.
 
     (3) See accompanying Index to Exhibits. The Company will furnish to any
stockholder upon written request, any exhibit listed in the accompanying Index
to Exhibits upon payment by such stockholders of the Company's reasonable
expenses in furnishing any such exhibits. Such exhibits are, as indicated in the
index, either filed herewith or have heretofore been filed with the Securities
and Exchange Commission under the Securities Act and are referred to and
incorporated herein by reference to such filings.
 
(B) REPORTS ON FORM 8-K
 
     No forms 8-K were filed by the Company during the fourth quarter of fiscal
1997.
 
(C) EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
 
     See accompanying Index to Exhibits.
 
                                       16
<PAGE>   17
 
                                   SIGNATURES
 
     Pursuant to the requirements of Section 13 or 15(d) 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 CORPORATION
 
                                          By:     /s/ ROBERT L. NORTON
                                            ------------------------------------
                                            Name: Robert L. Norton
                                              Title: President
                                            Date: September 25, 1997
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in the capacities and on
the dates indicated.
 
<TABLE>
<CAPTION>
                SIGNATURE                                    TITLE                           DATE
                ---------                                    -----                           ----
<C>                                           <S>                                     <C>
 
           /s/ RICHARD C. PERRY               Chairman of the Board and Director      September 25, 1997
------------------------------------------
             Richard C. Perry
 
           /s/ ROBERT L. NORTON               President (Principal Executive          September 25, 1997
------------------------------------------    Officer)
             Robert L. Norton
 
        /s/ FRANCIS C. PICCIRILLO             Treasurer (Principal Accounting and     September 25, 1997
------------------------------------------    Financial Officer)
          Francis C. Piccirillo
 
            /s/ VERONICA K. HO                Director                                September 25, 1997
------------------------------------------
              Veronica K. Ho
 
          /s/ GARY K. SILBERBERG              Director                                September 25, 1997
------------------------------------------
            Gary K. Silberberg
 
           /s/ GEOFFREY REHNERT               Director                                September 25, 1997
------------------------------------------
             Geoffrey Rehnert
 
             /s/ HABIB GORGI                  Director                                September 25, 1997
------------------------------------------
               Habib Gorgi
</TABLE>
 
                                       17
<PAGE>   18
 
            INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
 
<TABLE>
<S>                                                             <C>
Independent Auditors' Report................................    F-2
Consolidated Balance Sheets as of June 30, 1997 and 1996....    F-3
Consolidated Statements of Operations for the years ended
  June 30, 1997, 1996 and 1995..............................    F-4
Consolidated Statements of Stockholders' Equity for the
  years ended June 30, 1997, 1996 and 1995..................    F-5
Consolidated Statements of Cash Flows for the years ended
  June 30, 1997, 1996 and 1995..............................    F-6
Notes to Consolidated Financial Statements as of June 30,
  1997 and 1996.............................................    F-7
Independent Auditors' Report on Financial Statement
  Schedule..................................................    F-21
Schedule II -- Valuation and Qualifying Accounts............    F-22
</TABLE>
 
     All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are not applicable and therefore have
been omitted.
 
                                       F-1
<PAGE>   19
 
[KPMG LETTERHEAD]
 
                          INDEPENDENT AUDITORS' REPORT
 
Board of Directors
FTD Corporation
 
To the Board of Directors:
 
     We have audited the accompanying consolidated balance sheets of FTD
Corporation and subsidiary as of June 30, 1997 and 1996, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the years in the three year period ended June 30, 1997. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
FTD Corporation and subsidiary as of June 30, 1997 and 1996, and the results of
their operations and their cash flows for each of the years in the three year
period ended June 30, 1997, in conformity with generally accepted accounting
principles.
 
KPMG PEAT MARWICK LLP
 
Detroit, Michigan
August 14, 1997
 
                                       F-2
<PAGE>   20
 
                                FTD CORPORATION
 
                          CONSOLIDATED BALANCE SHEETS
                          AS OF JUNE 30, 1997 AND 1996
 
<TABLE>
<CAPTION>
                                                                1997       1996
                                                                ----       ----
                                                                (IN THOUSANDS)
<S>                                                           <C>        <C>
                           ASSETS
CURRENT ASSETS:
Cash and cash equivalents...................................  $ 28,294   $ 26,650
Accounts receivable, less allowance for doubtful accounts
  ($2,211 in 1997, and $1,412 in 1996)......................    24,979     24,080
Inventories, principally finished goods, net................    14,992     12,468
Deferred income taxes.......................................     7,242      5,569
Other current assets........................................     2,034      1,718
                                                              --------   --------
    Total current assets....................................    77,541     70,485
PROPERTY AND EQUIPMENT:
Land and improvements.......................................     1,600      2,500
Building and improvements...................................     7,601     13,169
Mercury consoles............................................    22,472     23,187
Furniture and equipment.....................................    12,832     11,630
                                                              --------   --------
    Total...................................................    44,505     50,486
Less accumulated depreciation...............................    23,925     15,158
                                                              --------   --------
    Property and equipment, net.............................    20,580     35,328
OTHER ASSETS:
Deferred financing costs, less accumulated amortization
  ($2,724 in 1997 and $1,648 in 1996).......................     3,394      4,470
Deferred income taxes.......................................        --        194
Other noncurrent assets.....................................     1,979      2,191
Goodwill and other intangibles, less accumulated
  amortization
  ($7,528 in 1997 and $4,874 in 1996).......................    78,230     83,414
                                                              --------   --------
    Total other assets......................................    83,603     90,269
                                                              --------   --------
    Total assets............................................  $181,724   $196,082
                                                              ========   ========
            LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt........................  $  9,297   $  8,496
Accounts payable............................................    29,237     28,360
Accrued member incentive programs...........................    13,816     12,949
Accrued severance costs.....................................     1,245      1,319
Other accrued liabilities...................................     5,765      6,059
Members' deposits...........................................     9,991      8,876
Unearned income.............................................     2,724      1,708
                                                              --------   --------
    Total current liabilities...............................    72,075     67,767
Long-term debt, less current maturities.....................    73,103     87,781
Post-retirement benefits, less current portion..............     6,577      7,163
Accrued pension obligations.................................       876      4,061
Deferred income taxes.......................................     1,765         --
Minority interest in subsidiary.............................       156        170
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value, 1,000,000 shares
  authorized, no shares issued..............................        --         --
Common stock:
  Class A, $0.01 par value, 30,000,000 shares authorized;
    6,164,514 shares issued and 6,073,839 outstanding at
    June 30, 1997; 6,160,181 issued and 6,134,549
    outstanding at June 30, 1996............................        62         62
  Class B, $0.0005 par value, 3,000,000 shares authorized;
    1,566,686 shares issued and outstanding at June 30, 1997
    and 1996................................................         1          1
Paid-in capital.............................................    35,639     35,607
Accumulated deficit.........................................    (8,013)    (6,275)
Notes receivable............................................       (32)      (128)
Treasury stock, at cost, 90,675 shares Class A Common Stock
  at June 30, 1997 25,632 shares Class A Common Stock at
  June 30, 1996.............................................      (485)      (127)
                                                              --------   --------
    Total stockholders' equity..............................    27,172     29,140
                                                              --------   --------
    Total liabilities and stockholders' equity..............  $181,724   $196,082
                                                              ========   ========
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                       F-3
<PAGE>   21
 
                                FTD CORPORATION
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                FOR THE YEARS ENDED JUNE 30, 1997, 1996 AND 1995
 
<TABLE>
<CAPTION>
                                                                  1997        1996       1995
                                                                  ----        ----       ----
                                                                     (IN THOUSANDS, EXCEPT
                                                                      PER SHARE AMOUNTS)
<S>                                                             <C>         <C>         <C>
REVENUES:
Marketplace.................................................    $ 49,738    $ 57,924    $35,460
Clearinghouse...............................................      34,383      37,070     24,738
Mercury Network.............................................      37,558      34,138     17,618
Other.......................................................      40,904      37,123     18,702
                                                                --------    --------    -------
     Total revenues.........................................     162,583     166,255     96,518
COSTS:
Products and distribution...................................      35,897      41,209     25,736
Floral order transmissions and processing services..........      29,803      30,562     14,923
Member programs.............................................      30,606      32,615     17,908
                                                                --------    --------    -------
     Total cost of goods sold and services provided.........      96,306     104,386     58,567
Selling, general and administrative expense.................      55,769      58,376     30,669
                                                                --------    --------    -------
     Income from operations.................................      10,508       3,493      7,282
OTHER INCOME AND EXPENSES:
Interest income.............................................      (1,480)     (1,431)    (1,719)
Interest expense............................................      12,789      13,498      7,546
Loss on sale of Southfield Michigan facility................         530          --         --
                                                                --------    --------    -------
     Total other income and expenses........................      11,839      12,067      5,827
     Income (loss) before income tax expense (benefit) and
       minority interest....................................      (1,331)     (8,574)     1,455
Income tax expense (benefit)................................         416      (1,813)     1,021
Minority interest in earnings (loss) of subsidiary..........         (14)        (33)         8
                                                                --------    --------    -------
     Net income (loss)......................................    $ (1,733)   $ (6,728)   $   426
                                                                ========    ========    =======
EARNINGS (LOSS) PER SHARE:
Primary.....................................................      $(0.23)     $(1.01)     $0.06
Fully Diluted...............................................      $(0.23)     $(1.01)     $0.06
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                       F-4
<PAGE>   22
 
                                FTD CORPORATION
 
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
               FOR THE YEARS ENDED JUNE 30, 1997, 1996, AND 1995
 
<TABLE>
<CAPTION>
                                                               1997      1996      1995
                                                               ----      ----      ----
                                                                    (IN THOUSANDS)
<S>                                                           <C>       <C>       <C>
Class A, shares outstanding
  Balance at beginning of year..............................    6,135     6,029         0
    Common stock issued to effect merger....................                        5,986
    Additional common stock issued..........................                          149
    Purchase of common stock from initial investors.........               (552)
    Sales of common stock in public offering................                659
    Repurchase of common stock..............................      (66)      (33)     (106)
    Sale of common stock to officers........................        4        32
                                                              -------   -------   -------
  Balance at end of year....................................    6,073     6,135     6,029
                                                              -------   -------   -------
Class B, shares outstanding
  Balance at beginning of year..............................    1,567       442
    Common Stock issued to effect merger....................                          442
    Exercise of common stock warrants.......................              1,125
                                                              -------   -------   -------
  Balance at end of year....................................    1,567     1,567       442
                                                              -------   -------   -------
Common stock Class A and Class B at par value
  Balance at beginning of year..............................  $    63   $    66   $     0
    Repurchase of initial investment........................                 (5)
    Common stock issued to effect merger....................                           64
    Additional common stock issued..........................                            2
    Sale of treasury stock..................................                 (1)
    Sale of common stock in public offering.................                  6
    Change in par value of class B shares...................                 (4)
    Exercise of common stock warrants.......................                  1
                                                              -------   -------   -------
  Balance at end of year....................................  $    63   $    63   $    66
                                                              =======   =======   =======
Paid-in Capital
  Balance at beginning of year..............................  $35,607   $35,385   $     0
    Repurchase of initial investment........................             (2,949)
    Common stock issued to effect merger....................                       29,936
    Additional common stock issued..........................                          949
    Net income (loss).......................................                        4,500
    Sale of treasury stock..................................               (499)
    Sale of common stock in public offering.................              3,516
    Repurchase of common stock..............................                 80
    Sale of common stock to officers........................       32       135
    Change in par value of class B shares...................                  4
    Cancellation of shareholder receivable related to
     repurchase of common stock.............................                (65)
                                                              -------   -------   -------
  Balance at end of year....................................  $35,639   $35,607   $35,385
                                                              =======   =======   =======
Retained Earnings (Accumulated Deficit)
  Balance at beginning of year..............................  $(6,275)  $   449   $     0
    Net income (loss).......................................   (1,733)   (6,728)      426
    Foreign currency translation adjustment.................       (5)        4        23
                                                              -------   -------   -------
  Balance at end of year....................................  $(8,013)  $(6,275)  $   449
                                                              =======   =======   =======
Stock Subscription and Notes Receivable
  Balance at beginning of year..............................  $  (128)  $  (319)  $     0
    Repurchase of initial investment........................                 68
    Additional common stock issued..........................                         (319)
    Sale of common stock to officers........................      (32)      (12)
    Amortization of shareholder notes receivable............                 70
    Cancellation of shareholder receivable related to
     repurchase of common stock.............................                 65
    Forgiveness of officers loan............................      128
                                                              -------   -------   -------
  Balance at end of year....................................  $   (32)  $  (128)  $  (319)
                                                              =======   =======   =======
Treasury Stock
  Balance at beginning of year..............................  $  (127)  $  (500)  $     0
    Repurchase of common stock..............................     (358)     (162)     (500)
    Sale of treasury stock..................................                500
    Sale of common stock to officers........................                 35
                                                              -------   -------   -------
  Balance at end of year....................................  $  (485)  $  (127)  $  (500)
                                                              =======   =======   =======
Total Stockholders Equity...................................  $27,172   $29,140   $35,081
                                                              =======   =======   =======
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                       F-5
<PAGE>   23
 
                                FTD CORPORATION
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE YEARS ENDED JUNE 30, 1997, 1996 AND 1995
 
<TABLE>
<CAPTION>
                                                                  1997       1996        1995
                                                                  ----       ----        ----
                                                                        (IN THOUSANDS)
<S>                                                             <C>         <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)...........................................    $ (1,733)   $(6,728)   $    426
Adjustments to reconcile net income (loss) to net cash
  provided by (used in) operating activities:
  Depreciation and amortization.............................      15,606     14,231       6,525
  Amortization of deferred financing costs and original
    issue discount..........................................       1,404      1,359         708
  Post-retirement benefits..................................        (586)       401         361
  Pension...................................................      (2,756)      (120)
  Minority interest in earnings (loss) of subsidiary........         (14)       (33)          8
  Undistributed loss of unconsolidated affiliate............         (30)       (66)        (54)
  Loss on sale or disposal of assets........................         530        663
  Increase (decrease) in cash due to change in:
    Accounts receivable.....................................        (899)    (3,219)     12,842
    Inventories.............................................      (2,524)     1,027       1,524
    Deferred income taxes...................................         286     (2,035)        507
    Other current assets....................................        (316)      (159)      2,336
    Accounts payable........................................         877      1,491     (28,694)
    Accrued member incentive programs.......................         867      6,194      (2,819)
    Accrued severance costs.................................         (74)    (1,504)     (1,075)
    Other accrued liabilities, unearned income, and members'
     deposits...............................................       1,837       (417)      1,907
                                                                --------    -------    --------
      Net cash provided by (used in) operating activities...      12,475     11,085      (5,498)
CASH FLOWS FROM INVESTING ACTIVITIES:
Release of restricted cash related to credit deposit fund
  investments...............................................                              2,173
Proceeds from acquisition...................................                             46,577
Payment to effect merger....................................                           (109,028)
Capital expenditures, net...................................      (2,614)    (4,950)     (3,082)
Proceeds from sale of Southfield Michigan facility..........       6,224
                                                                --------    -------    --------
      Net cash provided by (used in) investing activities...       3,610     (4,950)    (63,360)
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to deferred financing costs.......................                               (126)
Proceeds from long-term debt................................                             95,436
Repayments of long-term debt................................     (14,206)    (4,762)    (35,101)
Issuance of common stock....................................                  3,681      30,631
Repurchase of common stock..................................        (358)    (3,037)       (500)
Issuance of common stock warrants...........................                      1       3,000
Decrease in notes receivable from stockholders..............         128        138
                                                                --------    -------    --------
      Net cash provided by (used in) financing activities...     (14,436)    (3,979)     93,340
Effect of foreign exchange rate changes on cash.............          (5)        12
                                                                --------    -------    --------
Net increase in cash and cash equivalents...................       1,644      2,168      24,482
Cash and cash equivalents at beginning of period............      26,650     24,482
                                                                --------    -------    --------
Cash and cash equivalents at end of period..................    $ 28,294    $26,650    $ 24,482
                                                                ========    =======    ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid...............................................    $ 11,458    $12,113    $  6,704
                                                                ========    =======    ========
Income taxes paid...........................................    $    237    $   201    $    260
                                                                ========    =======    ========
 
</TABLE>

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
    Florists' Transworld Delivery Association (the "Acquired Company") was
acquired by FTD Corporation (the "Company") on December 19, 1994 (see note 2).
The acquisition was effected through a merger of the Acquired Company with a
subsidiary of the Company, with the Acquired Company surviving the merger as a
wholly owned subsidiary of the Company, as follows:
 
<TABLE>
<S>                                                             <C>
Cash utilized to effect merger..............................    $109,028
NONCASH ITEMS:
Reduction of proceeds from long-term debt for financing
  costs.....................................................       5,992
Value ascribed to common stock warrants issued..............       1,500
Reduction in accrued severance costs subsequent to initial
  purchase price allocation.................................       3,138
Other purchase accounting adjustments for assets acquired
  and liabilities assumed...................................        (809)
                                                                --------
  Total purchase price......................................    $118,849
                                                                ========
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                       F-6
<PAGE>   24
 
                                FTD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 1997 AND 1996
 
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
DESCRIPTION OF THE BUSINESS
 
     FTD Corporation (the "Company"), is a supplier of non-perishable hardgoods,
order clearing services, marketing support and other services, including
greeting cards, publications and credit card authorization and processing to the
retail floral industry and operates a toll free number that offers consumers the
opportunity to place orders directly with the Company.
 
PRINCIPLES OF CONSOLIDATION
 
     The consolidated financial statements of the Company at June 30, 1997 and
1996, include the accounts of FTD Corporation and its wholly owned subsidiary,
Florists' Transworld Delivery, Inc. (the "Operating Company"). All significant
intercompany accounts and transactions have been eliminated in consolidation.
 
     Prior to the acquisition, the Company was inactive. The accompanying
consolidated statements of operations and cash flows for the year ended June 30,
1995 includes only the Operating Company's revenues, operating expenses and cash
flows for the period December 19, 1994 through June 30, 1995.
 
     Certain amounts in the 1996 and 1995 consolidated financial statements have
been reclassified to conform to the 1997 presentation.
 
CASH AND CASH EQUIVALENTS
 
     The Company's policy is to invest cash in excess of operating requirements
in income-producing investments. The Company considers all investments purchased
with maturities of three months or less at the date of purchase to be cash
equivalents.
 
FAIR VALUE OF FINANCIAL INSTRUMENTS
 
     Financial instruments consist primarily of cash and cash equivalents,
accounts receivable, accounts payable, accrued member incentive programs,
accrued severance costs, other accrued liabilities, unearned income, member
deposits and long-term debt. At June 30, 1997, because of the short maturity of
those instruments other than Long-term debt, the fair value of these financial
instruments approximates the carrying amount. Long-term debt is discussed in
Note 4.
 
INVENTORIES
 
     Inventories consist principally of finished goods and are stated at the
lower of cost, principally on a first in, first out basis, or market (net
realizable sales value).
 
PROPERTY AND EQUIPMENT
 
     Property and equipment are recorded at cost and are depreciated over their
estimated useful lives using the straight-line method. The useful lives are ten
to 31.5 years for building and improvements, five years for Mercury consoles,
and five to ten years for furniture and equipment. Assets acquired on December
19, 1994 (see Note 2), have been recorded at fair value.
 
     Upon sale or retirement of property and equipment, the cost and related
accumulated depreciation are eliminated from the respective accounts, and any
gain or loss incurred in the ordinary course of business is included as selling,
general and administrative expenses in the accompanying consolidated statements
of operations. Maintenance and repairs are charged to expense as incurred.
Expenditures which improve or extend the life of existing property and equipment
are capitalized.
 
                                       F-7
<PAGE>   25
 
                                FTD CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
 
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
SYSTEMS SOFTWARE
 
     Systems software, included in other noncurrent assets, is recorded at
purchase cost and is being amortized over its expected economic life of five
years using the straight-line method. Assets acquired on December 19, 1994 (see
Note 2), have been recorded at fair value.
 
INTANGIBLES
 
     Deferred financing costs are being amortized over the life of the related
financing using the straight-line method. Goodwill is being amortized using the
straight line method over 30 years. Other intangibles consist of trademarks,
trained workforce, and software, and are being amortized over 40, 7, and 5
years, respectively, using the straight-line method.
 
     The Company periodically evaluates whether events and circumstances that
have occurred indicate that the remaining balance of goodwill and other
intangibles may not be recoverable or that the remaining estimated useful lives
may warrant revision. When such factors indicate that goodwill and other
intangibles should be evaluated for possible impairment, the Company uses an
estimate of undiscounted future cash flows to measure whether the goodwill and
other intangibles is recoverable, and over what period (see Notes 2 and 3).
 
INCOME TAXES
 
     The Company follows Statement of Financial Accounting Standards ("SFAS")
No. 109, Accounting for Income Taxes. SFAS No. 109 requires the asset and
liability method of accounting for income taxes in which deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. Under SFAS No.
109, the effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment date (see Note
7).
 
FOREIGN CURRENCY TRANSLATION
 
     In accordance with SFAS No. 52, balance sheet accounts of the Company's
foreign operations are translated from Canadian currency into U.S. dollars at
year-end or historical rates, while income and expenses are translated at the
weighted average exchange rates for the year. Translation gains or losses
related to net assets located outside the United States are included in retained
earnings. Gains and losses resulting from foreign currency transactions are
included in net income.
 
EARNINGS PER SHARE
 
     Earnings (loss) per share is calculated by dividing net income (loss) by
the weighted average common shares and common share equivalents outstanding
during the period. Where dilutive, unexercised stock options of the Company are
included as common stock equivalents using the treasury stock method.
 
REVENUES
 
     Revenues earned by the Company for processing floral orders are recorded in
the month the orders are reported to the Company as filled. Revenues for other
services related to the processing of floral orders (including equipment rentals
and transmission charges) are recorded in the period the service is provided.
Sales of products are recorded when the products are shipped. Revenues relating
to publications are recognized in the periods in which the publications are
issued.
 
                                       F-8
<PAGE>   26
 
                                FTD CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
 
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
STOCK-BASED COMPENSATION
 
     Prior to July 1, 1996, the Company accounted for its stock options in
accordance with provisions of Accounting Principles Board ("APB") Opinion No.
25, Accounting for Stock Issued to Employees, and related interpretations. As
such, compensation expense would be recorded on the date of grant only if the
current market price of the underlying stock exceeded the exercise price.
 
     On July 1, 1996, the Company adopted SFAS No. 123 Accounting for
Stock-Based Compensation, which permits entities to recognize as expense over
the vesting period the fair value of all stock-based awards on the date of
grant. Alternatively, SFAS No. 123 also allows entities to continue to apply the
provisions of APB Opinion No. 25 and provide pro forma net income and pro forma
earnings per share disclosures for employee stock option grants made in 1995 and
future years as if the fair value-based method defined in SFAS No. 123 has been
applied. The Company has elected to continue apply the provisions of APB Opinion
No. 25 and provide the pro forma disclosure provisions of SFAS No. 123 (see Note
11).
 
USE OF ESTIMATES
 
     Management of the Company has made estimates and assumptions relating to
the reporting of assets and liabilities and related disclosures to prepare these
consolidated financial statements in conformity with generally accepted
accounting principles. Actual results may differ from those estimates.
 
NEW ACCOUNTING PRONOUNCEMENTS
 
     The Financial Accounting Standards Board (FASB) issued SFAS No. 128,
"Earnings Per Share" in Fiscal 1997. This Statement establishes standards for
computing and presenting earnings per share and applies to entities with
publicly held Common Stock or potential Common Stock. This statement supersedes
Accounting Principles Board (APB) Opinion No. 15 and is effective for periods
ending after December 15, 1997. The Company will adopt this statement in the
second quarter of Fiscal 1998. Currently, the Company is evaluating the effect
of this statement.
 
     The FASB also has recently issued two new accounting standards, SFAS No.
130, Reporting Comprehensive Income and SFAS No. 131, Disclosures about Segments
of an Enterprise and Related Information. These statements will affect the
disclosure requirements for the Fiscal 1999 annual financial statements. The
Company does not know at this time the effect of these new statements.
 
(2) ACQUISITION
 
     On December 19, 1994 (the "Merger Date"), FTD Corporation, a Delaware
corporation, completed an acquisition of all of the outstanding equity of
Florists' Transworld Delivery Association, a Michigan nonprofit cooperative
association (the "Acquired Company"), pursuant to the terms of an Agreement and
Plan of Merger (the "Merger Agreement") dated August 2, 1994. The acquisition
was effected through the merger (the "Merger") of FTD Acquisition Corp., a
wholly owned subsidiary of FTD Corporation, with and into the Acquired Company,
with the Acquired Company surviving the Merger as a wholly owned subsidiary of
FTD Corporation. Concurrent with the Merger, the Acquired Company was converted
from a nonprofit cooperative association to a for-profit corporation and renamed
"Florists' Transworld Delivery, Inc." (from and after the Merger Date, the
"Operating Company").
 
     The Company has accounted for the Merger under the purchase method of
accounting, and accordingly, the Company's consolidated financial statements,
reflect the allocation of the total purchase price to the tangible and
intangible assets acquired and liabilities assumed of the Acquired Company as of
December 19, 1994, based on their respective estimated fair values.
 
                                       F-9
<PAGE>   27
 
                                FTD CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
 
(2) ACQUISITION -- CONTINUED
     Upon consummation of the acquisition of the Operating Company by FTD
Corporation, management began to assess, formulate, and implement a plan to
involuntarily terminate and/or relocate employees of the Operating Company as
part of its relocation and/or consolidation efforts. The allocation of the total
purchase price referred to above included a reserve for the estimated cost of
planned termination, severance and relocation.
 
     On January 3, 1997, the Operating Company's Board of Directors approved a
plan to consolidate corporate staff and operations into its Downers Grove,
Illinois facility. Leased office space in Boston, Massachusetts was sub-leased,
and land and buildings, in Southfield, Michigan were sold. The Company's bank
credit agreement required it to use the net proceeds from the sale of assets to
reduce the outstanding term loan. In accordance with EITF Consensus No. 94-3
"Liability Recognition for Certain Employee Termination Benefits and Other Costs
to Exit an Activity," non-recurring charges in connection with this
consolidation including severance, asset impairment losses, and other costs
aggregating $3.0 million were recognized as selling, general and administrative
costs in the accompanying Consolidated Statement of Operations for the year
ended June 30, 1997. The severance costs results from the planned termination of
approximately 183 employees, who performed corporate and operating functions at
the Southfield and Boston locations. In addition, based on the consolidation of
the Company's facilities and the termination of a majority of the workforce as a
result of the closed facilities, the balance of $2.1 million, net of $0.6
million of amortization, for the intangible asset of trained workforce was
written off during the year ended June 30, 1997. The activity in such reserves
during the period December 19, 1994 through June 30, 1995 and the years ended
June 30, 1996 and 1997, can be summarized as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                           SEVERANCE   RELOCATION
                                                           BENEFITS      COSTS      OTHER    TOTAL
                                                           ---------   ----------   -----    -----
<S>                                                        <C>         <C>          <C>      <C>
Initial estimate as of December 19, 1994.................   $5,573        $600      $  863   $7,036
Costs paid during the period December 19, 1994
  through June 30, 1995..................................      843          --         232    1,075
                                                            ------        ----      ------   ------
Remaining liability as of June 30, 1995..................    4,730         600         631    5,961
                                                            ------        ----      ------   ------
Costs paid during the year ending June 30, 1996..........    1,310          41         153    1,504
Change in estimate.......................................    2,370         480         288    3,138
                                                            ------        ----      ------   ------
Remaining liability as of June 30, 1996..................    1,050          79         190    1,319
                                                            ------        ----      ------   ------
Additional liability recognized due to consolidation.....    1,292          93       1,575    2,960
Cost paid during the year ending June 30, 1997...........    1,550          53       1,431    3,034
                                                            ------        ----      ------   ------
Remaining liability as of June 30, 1997..................   $  792        $119      $  334   $1,245
                                                            ======        ====      ======   ======
</TABLE>
 
(3) INTANGIBLES
 
     At June 30, 1997 and 1996 goodwill and other intangible assets consisted of
the following (in thousands):
 
<TABLE>
<CAPTION>
                                                                 1997       1996
                                                                 ----       ----
<S>                                                             <C>        <C>
 
Goodwill....................................................    $68,758    $69,188
Trademarks..................................................     15,000     15,000
Trained Workforce...........................................         --      2,100
Software....................................................      2,000      2,000
                                                                -------    -------
Total.......................................................     85,758     88,288
Less accumulated amortization...............................      7,528      4,874
                                                                -------    -------
Total.......................................................    $78,230    $83,414
                                                                =======    =======
</TABLE>
 
                                      F-10
<PAGE>   28
 
                                FTD CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
 
(3) INTANGIBLES -- CONTINUED
     The Company had no intangibles prior to the Merger Date. The changes in
goodwill resulted from adjustments to the reserve for estimated costs of planned
termination, severance and relocation (see Note 2), as well as pension and
postretirement obligations (see Notes 8 and 9). The reduction in trained
workforce related from the consolidation of the Company's offices in Fiscal 1997
and the related impairment of this asset at that time (see Note 2).
 
(4) FINANCING ARRANGEMENTS
 
LONG-TERM DEBT (IN THOUSANDS)
 
     At June 30, 1997 and 1996 long-term debt consisted of the following:
 
<TABLE>
<CAPTION>
                                                                 1997       1996
                                                                 ----       ----
<S>                                                             <C>        <C>
Series B senior subordinated notes, interest payable
  semiannnually at 14% due December 15, 2001, net of
  unamortized discount of $2,252 and $2,580 at June 30, 1997
  and 1996 respectively.....................................    $57,748    $57,420
Term loan, payable quarterly at various amounts, plus
  interest at a weighted average floating Eurodollar rate of
  8.8%, and 8.5% at June 30, 1997 and 1996 respectively, due
  December 15, 1999.........................................     24,619     38,781
Other.......................................................         33         76
                                                                -------    -------
       Total long-term debt.................................     82,400     96,277
Less current maturities.....................................      9,297      8,496
                                                                -------    -------
       Long-term debt, less current maturities..............    $73,103    $87,781
                                                                =======    =======
</TABLE>
 
     The principal payments required for each of the following five Fiscal years
are as follows (in thousands):
 
<TABLE>
<S>                                                            <C>
1998.......................................................    $ 9,297
1999.......................................................     10,094
2000.......................................................      5,252
2001.......................................................          6
2002.......................................................     60,003
                                                               -------
     Total.................................................    $84,652
                                                               =======
</TABLE>
 
     The Company's debt agreements include covenants which, among other things,
require that the Company maintain certain financial ratios and a minimum level
of consolidated net worth. The Company is in compliance with all debt covenants
at June 30, 1997. The Company's debt agreements also include restrictions on the
declaration and payment of dividends. The term loan agreement requires the
Company to repay principal of the loans to the extent cash flow generated in the
Fiscal year exceeds certain calculated amounts. As of June 30, 1997 the
estimated fair value of long-term debt, discounted at current rates, was
$87,652,000.
 
LINE OF CREDIT
 
     The Company has a $25 million revolving line of credit, obtained at the
acquisition date, with a group of banks at an interest rate varying with prime
or other indices. There were no borrowings on this line during 1997 or 1996
however the Company has trade letters of credit of approximately $3.0 million
outstanding under this revolving line of credit agreement at June 30, 1997. The
agreement provides a maximum commitment for letters of credit of $5.0 million
and requires an annual commitment fee of 0.5% on the unused portion of the
commitment.
 
                                      F-11
<PAGE>   29
 
                                FTD CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
 
(5) LEASES
 
AS LESSOR
 
     The Company leases Mercury consoles to members through leases classified as
operating leases for accounting purposes. The net investment in equipment leased
to members under operating leases, including equipment used for maintenance
purposes, was as follows at June 30, 1997 and 1996 (in thousands):
 
<TABLE>
<CAPTION>
                                                               1997      1996
                                                               ----      ----
<S>                                                           <C>       <C>
Mercury consoles............................................  $22,472   $23,187
Less: Accumulated Depreciation..............................   17,710    10,946
                                                              -------   -------
     Net Investment                                           $ 4,762   $12,241
                                                              =======   =======
</TABLE>
 
AS LESSEE
 
     Rental expense with respect to operating leases related to facilities and
equipment was $1,005,000, $802,000 and $459,000 for the years ended June 30,
1997, 1996 and 1995, respectively. The minimum aggregate annual operating lease
obligations are as follows (in thousands):
 
<TABLE>
<S>                                                             <C>
1998........................................................    $1,160
1999........................................................       637
2000........................................................       333
2001........................................................       333
Thereafter..................................................       106
                                                                ------
     Total..................................................    $2,569
                                                                ======
</TABLE>
 
(6) ADVERTISING AND SALES PROMOTION COSTS
 
     The Company expenses advertising time and space costs and related residual
rights and contracts at the time the advertising is first broadcast or
displayed. Production and promotion costs are charged to expense when incurred.
Advertising credits earned by FTD members under the Company's sales incentive
program are charged to expense when earned.
 
     In the years ended 1997, 1996 and 1995, advertising and sales promotion
expense was $28 million, $31 million and $16 million, respectively.
 
                                      F-12
<PAGE>   30
 
                                FTD CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
 
(7) INCOME TAXES
 
     At June 30, 1997 and 1996, the Company's deferred tax assets and
liabilities consisted of the following (in thousands):
 
<TABLE>
<CAPTION>
                                                               1997      1996
                                                               ----      ----
<S>                                                           <C>       <C>
Current deferred tax assets:
  Accrued Value Plus incentive obligations..................  $ 2,824   $ 3,058
  Accrued severance costs...................................      399       499
  Allowance for doubtful accounts...........................      814       518
  Unearned income...........................................      970       617
  Inventory.................................................    1,075       497
  Accrued vacation..........................................      132       246
  Other.....................................................    1,028       134
                                                              -------   -------
Current deferred tax assets.................................    7,242     5,569
                                                              -------   -------
Noncurrent deferred tax assets:
  Net operating loss carryforwards..........................    3,131     4,844
  Postretirement benefit obligations........................    2,433     2,650
  Accrued pension...........................................      324     1,503
  Other.....................................................      254       197
                                                              -------   -------
Noncurrent deferred tax assets..............................    6,142     9,194
Noncurrent deferred tax liabilities -- tax over book
  depreciation and difference in basis......................    6,407     7,500
                                                              -------   -------
Net noncurrent deferred tax assets (liabilities)............     (265)    1,694
                                                              -------   -------
Deferred tax assets -- valuation allowance..................   (1,500)   (1,500)
                                                              -------   -------
Net deferred tax assets.....................................  $ 5,477   $ 5,763
                                                              =======   =======
</TABLE>
 
     The deferred tax assets are subject to certain asset realization tests.
Company management believes that, under the principles of SFAS No. 109, based on
their evaluation of taxable income in future years and the uncertainty of fully
realizing the noncurrent deferred tax assets with very long lives, a valuation
allowance of $1.5 million is appropriate at June 30, 1997 and 1996.
 
     The Company's net operating loss carryforwards at June 30, 1997 and 1996,
of approximately $8.5 million, and $10.8 million, respectively, the tax benefits
of which are included above as noncurrent deferred tax assets, will expire if
unused, as follows: $0.2 million in 2007; $2.3 million in 2008; $0.8 million in
2009; and $5.2 million in 2010. In addition, as a result of the Merger (see Note
2), the Company's pre-Merger net operating loss carryforwards of $3.3 million
available to be utilized in the future are limited to approximately $1.8 million
per year.
 
     The provision for income taxes consists of the following components (in
thousands):
 
<TABLE>
<CAPTION>
                                                              1997    1996      1995
                                                              ----    ----      ----
<S>                                                           <C>    <C>       <C>
Current.....................................................  $130   $   189   $  144
Deferred....................................................   286    (2,002)     877
                                                              ----   -------   ------
Income Tax expense (benefit)................................  $416   $(1,813)  $1,021
                                                              ====   =======   ======
</TABLE>
 
                                      F-13
<PAGE>   31
 
                                FTD CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
 
(7) INCOME TAXES -- CONTINUED
     The provision for income taxes for the years ended June 30, 1997, 1996 and
1995, differs from the amount computed by applying the U.S. federal income tax
rate (35%) to pretax income because of the effect of the following items (in
thousands):
 
<TABLE>
<CAPTION>
                                                             1997     1996      1995
                                                             ----     ----      ----
<S>                                                          <C>     <C>       <C>
Tax expense (benefit) at U.S. federal income tax rate......  $(466)  $(3,001)  $  509
State income taxes (benefit), net of federal income tax
  benefit..................................................    (27)     (172)      29
Amortization of purchased goodwill.........................    893       842      464
Valuation allowance........................................     --       500       --
Other items, net...........................................     16        18       19
                                                             -----   -------   ------
     Reported income tax expense (benefit).................  $ 416   $(1,813)  $1,021
                                                             =====   =======   ======
</TABLE>
 
(8) POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
 
     The Operating Company provides certain postretirement health care benefits
to substantially all employees who retired with a minimum of 10 years of service
and have attained 60 years of age. The plan retirees are required to share in
the cost of the benefit. During 1997, the consolidation of corporate staff and
operations into one facility (see Note 2), together with other factors, resulted
in the termination of numerous employees which significantly reduced the
expected years of future service of those employees and the Operating Company's
corresponding liability for certain postretirement benefits. These terminations
caused a decrease in the Operating Company's postretirement obligation and
generated a pretax gain of $0.8 million which was recorded as a reduction in
selling, general and administrative expenses. In addition, the Operating Company
amended its postretirement benefit plan effective January 1, 1997, and will no
longer provide such benefits to employees hired after January 1, 1997.
 
     At June 30, 1997 and 1996 the status of the plan consisted of the following
(in thousands):
 
<TABLE>
<CAPTION>
                                                               1997     1996
                                                               ----     ----
<S>                                                           <C>      <C>
Retirees....................................................  $4,448   $4,198
Fully eligible active participants..........................      --       62
Other active participants...................................     860    1,921
                                                              ------   ------
Accumulated postretirement benefit obligation...............   5,308    6,181
Unrecognized net gain.......................................   1,526    1,238
                                                              ------   ------
Accrued postretirement benefit liability....................  $6,834   $7,419
                                                              ======   ======
</TABLE>
 
     At June 30, 1995, the accrued postretirement benefit liability included
employees who were subsequently voluntarily or involuntarily terminated as part
of the Company's relocation and/or consolidation plan to relocate and/or
consolidate employees. Upon the completion of the Company's relocation and/or
consolidation plan, a reduction to the accrued postretirement benefit liability
of $590,000 was recorded to reflect the impact of this plan.
 
     Net periodic postretirement benefit costs for the years ended June 30,
1997, 1996 and 1995 included the following components (in thousands):
 
<TABLE>
<CAPTION>
                                                                1997    1996    1995
                                                                ----    ----    ----
<S>                                                             <C>     <C>     <C>
Service cost................................................    $190    $194    $168
Interest cost...............................................     434     438     294
Unrecognized prior period gain..............................     (45)    (54)     --
                                                                ----    ----    ----
Total.......................................................    $579    $578    $462
                                                                ====    ====    ====
</TABLE>
 
                                      F-14
<PAGE>   32
 
                                FTD CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
 
(8) POSTRETIREMENT BENEFITS OTHER THAN PENSIONS -- CONTINUED
     The discount rates used in determining the accumulated postretirement
benefit obligation ("APBO") were 7.75% at and for the year ended June 30, 1997,
7.5% at and for the year ended June 30, 1996, 8.5% for the year ended June 30,
1995 and 7.75% at June 30, 1995. The assumed health care cost trend rate used in
measuring the APBO was 9.8% and graded down to 5.75% over 11 years at June 30,
1997, 10.0% and graded down to 5.5% over 12 years at June 30, 1996 and 13.2% and
graded down to 6.4% over 13 years at June 30, 1995. If the current health care
cost trend rate assumption was increased by one percent, the APBO as of June 30,
1997, would increase approximately $558,000, or 10.5%, while the periodic cost
for the Fiscal year ended June 30, 1997, would have increased approximately
$64,800, or 11.2%.
 
(9) PENSION PLANS
 
     During the quarter ended December 31, 1996, the level of lump sum
distributions made to participants in the Company's defined benefit pension plan
caused a partial pension plan settlement, resulting in the recognition of a
pre-tax pension settlement gain of $429,000. As virtually all of these
distributions were accrued as part of a purchase price allocation in connection
with the Merger, the settlement gain was accounted for as a reduction of
goodwill which arose as part of the Merger.
 
     Prior to January 1, 1997, the Operating Company had both a defined benefit
and a defined contribution plan which covered substantially all domestic
employees. The Operating Company's funding policy was to contribute annually to
the defined benefit plan the amount deductible for income tax purposes. No
contributions were made in 1997, 1996, or 1995. The Operating Company's matching
contributions to the defined contribution plan are determined at the discretion
of its Board of Directors. No matching contributions were made in the year ended
June 30, 1997, 1996 or 1995 to the defined contribution plan.
 
     Effective January 1, 1997, amendments to the Operating Company's defined
benefit pension plan were adopted, including the elimination of the accrual of
future benefits under the plan. As a result of these amendments, and the
corresponding remeasurement of the accumulated and projected benefit obligations
under the plan, a pre-tax pension curtailment gain of $2.7 million as well as a
pre-tax settlement gain of $0.5 million were recognized in income as a reduction
in selling, general and administrative costs. The Operating Company has
established a new 401(k) savings plan for all of its eligible employees to
replace the defined benefit pension plan.
 
     Benefits under the defined benefit plan are based on the employee's age,
years of service, and the highest consecutive five-year average compensation.
 
     Pension expense, including administrative costs, charged to the operations
for the above-mentioned plans amounted to $370,000, $903,000 and $491,000 in the
year ended June 30, 1997, 1996 and 1995, respectively.
 
     Plan assets for the defined benefit plan consist of investments in common
stock, real estate properties, fixed income securities, and short-term
investments. Pension expense for the defined benefit plan in 1997, 1996 and 1995
was computed as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                               1997       1996      1995
                                                               ----       ----      ----
<S>                                                           <C>        <C>        <C>
Service cost..............................................    $   299    $   616    $ 360
Interest cost.............................................        546        820      387
Actual gain on plan assets................................       (495)    (1,434)    (566)
Net amortization and deferral.............................         20        901      310
                                                              -------    -------    -----
Net Periodic Pension expense..............................        370        903      491
Settlement gain...........................................       (936)        --       --
Curtailment gain..........................................     (2,665)        --       --
                                                              -------    -------    -----
Total Pension Cost / (Gain)...............................    $(3,231)   $   903    $ 491
                                                              =======    =======    =====
</TABLE>
 
                                      F-15
<PAGE>   33
 
                                FTD CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
 
(9) PENSION PLANS -- CONTINUED
     At June 30, 1997 and 1996 the funded status of the defined benefit plan was
as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                                 1997       1996
                                                                 ----       ----
<S>                                                             <C>        <C>
Actuarial present value of:
  Vested benefit obligations................................    $ 2,457    $ 6,136
  Nonvested benefit obligations.............................        573        840
                                                                -------    -------
  Accumulated benefit obligations...........................      3,030      6,976
                                                                =======    =======
Projected benefit obligations...............................      3,144     10,653
Plan assets at fair value...................................     (2,562)    (5,780)
                                                                -------    -------
Projected benefit obligations in excess of plan assets......        582      4,873
Unrecognized net gain.......................................      1,272        212
                                                                -------    -------
Total accrued pension obligations...........................    $ 1,854    $ 5,085
                                                                =======    =======
</TABLE>
 
     For the period July 1, 1995 through March 1, 1996, the weighted average
discount rate was 7.75% preretirement and 6% postretirement for those
participating in the defined benefit plan on November 1, 1976, and 7.75% for all
others. For any benefits accrued after March 1, 1996, the weighted average
discount rate was 7.75% for both preretirement and postretirement for all plan
participants. For the year ended June 30, 1995, the weighted average discount
rate was 8.5% preretirement and 6% postretirement for those participating in the
defined benefit plan on November 1, 1976, and 8.5% for all others. The discount
rate used to calculate the projected benefit obligation at June 30, 1996 was
decreased to 7.5%. The discount rate used to calculate the projected benefit
obligation at June 30, 1997 was decreased to 7.0% for the period January 1, 1997
through June 30, 1997. The rate of increase in future compensation levels was
5.0% and the expected long-term rate of return on assets was 9.0%.
 
     At June 30, 1995 the calculated projected benefit obligation assumed that
certain employees of FTD Association, who were formerly employees of the
Operating Company, were active plan participants continuing to earn benefits.
Subsequent to June 30, 1995, the status of FTD Association employees was changed
to vested terminated participants who were due a lump sum under the plan
agreement and, accordingly, the calculated projected benefit obligation was
increased by $734,000.
 
(10) NOTE RECEIVABLE AND OTHER RELATED PARTY TRANSACTIONS
 
     Operating expenses for the years ended June 30, 1997, 1996 and 1995 include
$1,000,000 payable each period to certain investors of the Company for
management consulting services.
 
     An agreement with a former officer of the Company ("Agreement") provided,
among other things, for the sale of 127,500 shares of Common Stock of the
Company at the assumed fair market value on the agreement date of $4.71 per
share. A portion of such purchase was financed through (i) a $100,000 one-year,
interest-free loan from the Company, and (ii) a $150,000 interest-bearing
recourse loan from the Company due June 30, 1996. The interest-free loan was
forgiven in its entirety by June 30, 1996 and was recorded as compensation
expense by the Operating Company in the amount of $97,000 for the year ended
June 30, 1996. The outstanding principal balance of the interest-bearing
recourse loan accrued interest at 9%. At June 30, 1996, $128,419 was outstanding
from these notes.
 
     In November 1996, options for 255,000 shares of Class A Common Stock issued
to such former officer pursuant to the FTD Corporation 1994 Stock Award and
Incentive Plan were canceled. Also in November 1996, $128,419 and owing under
the $150,000 recourse loan was forgiven by the Operating Company. The Company
during the third quarter repurchased 45,689 shares of Class A Common Stock for
$241,898 from such former officer.
 
                                      F-16
<PAGE>   34
 
                                FTD CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
 
(10) NOTE RECEIVABLE AND OTHER RELATED PARTY TRANSACTIONS -- CONTINUED
     The Company loaned an officer of the Company $150,000 pursuant to a five
year interest bearing note dated June 30, 1997, with accrued interest at 7% per
annum with principal due at maturity.
 
     The Company and the Operating Company, pursuant to an employment
arrangement the current president was granted Non-Qualified Stock Options to
purchase (i) 60,000 shares of Class A Common Stock at an exercise price of $7.50
per share and (ii) 50,000 shares of Class A Common Stock at an exercise price of
$25.00 per share.
 
(11) 1994 STOCK AWARD AND INCENTIVE PLAN
 
     The Company's 1994 Stock Award and Incentive Plan (the "Plan") was adopted
by the Board of Directors of the Company and approved by the Company's
stockholders on December 19, 1994, and amended on June 12, 1995. The maximum
number of shares of Common Stock authorized for issuance under the Plan is equal
to 15% of the initial equity capital of the Company upon the consummation of the
Merger.
 
     The Plan provides for the granting of incentive stock options ("ISOs");
options which do not qualify as ISOs, known as nonqualified stock options
("NSOs"); or a combination of both ISOs and NSOs ("Options"), provided, however,
that ISOs may only be granted to employees of the Company and its subsidiaries.
Options granted under the Plan may be accompanied by stock appreciation rights
("SARs") or limited stock appreciation rights ("LSARs"), or both ("Rights"). The
Plan also provides for the granting of restricted stock, deferred stock, and
performance shares (together, referred to as "Restricted Awards"). The Plan is
not subject to any provisions of the Employee Retirement Income Security Act of
1974, as amended, nor is the Plan a qualified plan within the meaning of section
401(a) of the Internal Revenue Code of 1986, as amended.
 
     Under the Agreement (see Note 10), a former officer was issued options in
Fiscal 1995 to purchase: (i) at an exercise price of $4.71 per share, 127,500
shares of the Company's Common Stock; and (ii) at an exercise price of $18.84
per share, 127,500 shares of the Company's Common Stock. During the year ended
June 30, 1995, another senior officer of the Company was granted options to
purchase: (i) at an exercise price of $4.71 per share, 40,000 shares of the
Company's Common Stock; and (ii) at an exercise price of $18.84 per share,
40,000 shares of the Company's Common Stock. As of June 30, 1995, options
covering 335,000 shares of the Class A Common Stock were outstanding, of which
none were exercisable.
 
     During the year ended June 30, 1996, other senior officers were granted
options to purchase: (i) at an exercise price of $5.35 per share, 75,000 shares
of the Company's Common Stock; and (ii) at an exercise price of $21.40 per
share, 100,000 shares of the Company's Common Stock. During the year ended June
30, 1997, other employees have been granted options to purchase: (i) at an
exercise price of $7.50 per share, 163,500 shares of the Company's Common Stock;
and (ii) at an excercise price of $25.00 per share, 91,500 shares of the
Company's Common Stock. These options vest and become exercisable in four or
five equal installments. As of June 30, 1997 and 1996, options covering 217,000
and 430,000 shares respectively of Class A Common Stock were outstanding of
which 7,500 and 51,000 shares were vested, respectively and none were exercised.
 
     The Company applies APB Opinion No. 25 and related interpretations in
accounting for the Plan and accordingly, no compensation cost has been
recognized for the Plan. Had compensation cost for the Plan been determined
based on the fair value at the grant dates for options under the Plan consistent
with SFAS
 
                                      F-17
<PAGE>   35
 
                                FTD CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
 
(11) 1994 STOCK AWARD AND INCENTIVE PLAN -- CONTINUED
No. 123, the Company's net income and earnings per share would have been reduced
to the Pro Forma amounts shown in the table below:
 
PRO FORMA RESULTS
 
<TABLE>
<CAPTION>
                                               1997         1997         1996         1996
                                            AS REPORTED   PRO FORMA   AS REPORTED   PRO FORMA
                                            -----------   ---------   -----------   ---------
<S>                                         <C>           <C>         <C>           <C>
Net Loss (in thousands)...................    $(1,733)     $(2,051)     $(6,728)     $(7,121)
Earnings per share:
  Primary.................................    $ (0.23)     $ (0.27)     $ (1.01)     $ (1.07)
  Fully Diluted...........................    $ (0.23)     $ (0.27)     $ (1.01)     $ (1.07)
</TABLE>
 
     The pro forma disclosures shown are not representative of the future
effects on net earnings and earnings per share because the retroactive
application of SFAS No. 123 is prohibited.
 
     The fair values of the options granted under the Plan during Fiscal 1997
and 1996 were determined at the grant date using the Black-Scholes option
pricing model. The significant assumptions used to calculate the fair value of
option grants were: risk-free interest rates ranging from 6.19% to 6.37%,
expected volatility of 50%, expected lives of 3.07 to 5.05 years and no expected
dividends for the shares.
 
SUMMARY STOCK OPTION ACTIVITY
 
<TABLE>
<CAPTION>
                                                               CLASS A       WEIGHTED AVERAGE
                                                             # OF OPTIONS       EXERCISE $
                                                             ------------    ----------------
<S>                                                          <C>             <C>
Outstanding @ December 19, 1994............................         --                --
  Granted..................................................    335,000            $11.78
                                                               -------           -------
Outstanding @ June 30, 1995................................    335,000             11.78
  Granted..................................................    175,000             14.52
  Canceled.................................................     80,000             11.78
                                                               -------           -------
Outstanding @ June 30, 1996................................    430,000             12.89
  Granted..................................................    255,000             13.78
  Canceled.................................................    468,000              2.88
                                                               -------           -------
Outstanding @ June 30, 1997................................    217,000             13.96
                                                               =======           =======
Exercisable @ June 30, 1997................................      7,500            $ 5.35
Weighted Average of Fair Value of options granted in Fiscal
  1997.....................................................    $  2.29
Weighted Average of Fair Value of options granted in Fiscal
  1996.....................................................    $  3.26
</TABLE>
 
STOCK OPTIONS OUTSTANDING
 
<TABLE>
<CAPTION>
                                                      WEIGHTED AVERAGE
CLASS A OPTIONS      EXERCISE      WEIGHTED AVERAGE      REMAINING
  OUTSTANDING     PRICE (RANGE)       EXERCISE $      CONTRACTUAL LIFE
---------------   -------------    ----------------   ----------------
<C>               <C>              <C>                <C>
    132,000       $ 5.35 -  7.50        $ 7.26           9.57 years
     85,000        21.40 - 25.00         24.36           9.45 years
    -------       --------------       -------           ----------
    217,000       $ 5.35 - 25.00        $13.96           9.52 years
    =======       ==============       =======           ==========
</TABLE>
 
                                      F-18
<PAGE>   36
 
                                FTD CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
 
(12) COMMITMENTS AND CONTINGENCIES
 
     On July 16, 1997, Teleflora LLC ("Teleflora") instituted an arbitration
against FTD in Southfield, Michigan. The arbitration was filed under the
Commercial Arbitration Rules of the American Arbitration Association alleging
that FTD breached a 1991 Agreement by which FTD provides certain Mercury Network
services to Teleflora (the "1991 Agreement"). The specific claim is that FTD has
failed to negotiate in good faith a new contract on expiration of the 1991
Agreement as required by its terms. Unspecified damages are alleged. FTD has
filed an answering statement that denies the allegations. FTD management
believes that it has meritorious defenses to this action and intends to contest
Teleflora's allegations vigorously. An adverse decision could have a material
adverse effect on the Company's financial position and results of operations.
 
     On July 21, 1997, Teleflora filed a complaint against FTD in United States
District Court for the Central District of California. On August 7, 1997,
Teleflora filed a first amended and supplemental complaint in that action. The
first amended and supplemental complaint contains six counts alleging
monopolization and attempted monopolization in violation of Section 2 of the
Sherman Act, discriminatory pricing violation of Section 2 of the Clayton Act,
unfair competition in violation of California Business and Professions Code
Sections 17200 et seq., and a claim for breach of contract. The allegations
pertain to the 1991 Agreement. Teleflora seeks compensatory and treble damages,
and declaratory relief and have moved for a preliminary injunction. FTD
management believes that it also has meritorious defenses to this action and
intends to contest Teleflora's allegations vigorously. An adverse decision could
have a material adverse effect on the Company's financial position and results
of operations.
 
     The Company is involved in various lawsuits and other matters arising in
the normal course of business. In the opinion of the management of the Company,
although the outcomes of these claims and suits are uncertain, they should not
have a material adverse effect on the Company's financial condition, liquidity,
or results of operations.
 
(13) CAPITAL STOCK
 
     Class A and non-voting class B Common Stock rank equally and, except with
respect to voting power, are substantially identical in all material respects.
Class B Common Stock is convertible into Class A Common Stock on a one-to-one
basis.
 
     The Company is authorized to establish and designate one or more series of
preferred stock.
 
     Pursuant to the Merger Agreement, on July 5, 1995, the Company sold 658,483
shares of Class A Common Stock at a price of $5.35 to certain members of FTD
Association. The Company concurrently repurchased 552,239 shares of Class A
Common Stock and two shares of Class B Common Stock from existing stockholders
on a pro rata basis and recouped the costs associated with a previous purchase
of treasury stock.
 
     Effective September 21, 1995, the stockholders of the Company, in an
unanimous Action by Written Consent, authorized a change in the par value of the
Class B Common Stock from $0.01 to $0.0005 per share.
 
     Ninety thousand warrants were exercised in May, 1996 to purchase 1,125,000
shares of Class B Common Stock at a price of $0.01 per warrant, each of which
bought 12.5 shares of Class B Common Stock.
 
     During Fiscal 1997 the Company repurchased into treasury 65,043 shares of
Class A Common Stock at a cost of approximately $358,000.
 
                                      F-19
<PAGE>   37
 
                                FTD CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
 
(14) QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (IN THOUSANDS, EXCEPT FOR PER
     SHARE DATA):
 
<TABLE>
<CAPTION>
           FISCAL 1997                FIRST QUARTER    SECOND QUARTER    THIRD QUARTER    FOURTH QUARTER
           -----------                -------------    --------------    -------------    --------------
<S>                                   <C>              <C>               <C>              <C>
Net Revenue.......................       $37,068          $41,640           $47,841          $36,034
Income from Operations............         2,403            1,417             6,742              (54)
Net Income (Loss).................          (548)          (1,162)            2,270           (2,293)
Net Income (Loss) Per Common
  Share:
  Primary.........................       $  (.07)         $  (.15)          $   .30          $  (.30)
  Fully Diluted...................       $  (.07)         $  (.15)          $   .30          $  (.30)
</TABLE>
 
<TABLE>
<CAPTION>
           FISCAL 1996                FIRST QUARTER    SECOND QUARTER    THIRD QUARTER    FOURTH QUARTER
           -----------                -------------    --------------    -------------    --------------
<S>                                   <C>              <C>               <C>              <C>
Net Revenue.......................       $36,536          $45,865           $44,794          $39,060
Income from Operations............         3,657           (1,463)            2,343           (1,044)
Net Income (Loss).................           107           (3,067)             (627)          (3,141)
Net Income (Loss) Per Common
  Share:
  Primary.........................       $   .01          $  (.43)          $  (.09)         $  (.47)
  Fully Diluted...................       $   .01          $  (.43)          $  (.09)         $  (.47)
</TABLE>
 
                                      F-20
<PAGE>   38
 
KPMG LETTERHEAD
 
           INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTARY INFORMATION
 
The Board of Directors
FTD Corporation:
 
     We have audited and reported separately herein on the financial statements
of FTD Corporation as of and for the years ended June 30, 1997 and 1996.
 
     Our audits were made for the purpose of forming an opinion on the basic
financial statements of the Company taken as a whole. The supplementary
information included in Schedule II is presented for purposes of additional
analysis and is not a required part of the basic financial statements. Such
information has been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
 
/s/ KPMG PEAT MARWICK LLP
 
August 14, 1997
Detroit, Michigan
 
                                      F-21
<PAGE>   39
 
                                FTD CORPORATION
 
                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
 
<TABLE>
<CAPTION>
                                                     ADDITIONS
                                             --------------------------
                                               BALANCE       CHARGED TO    CHARGED TO                  BALANCE AT
                                             BEGINNING OF     COST AND       OTHER                       END OF
                                                PERIOD        EXPENSES      ACCOUNTS     DEDUCTIONS      PERIOD
                                             ------------    ----------    ----------    ----------    ----------
                                                                        (IN THOUSANDS)
<S>                                          <C>             <C>           <C>           <C>           <C>
 
YEAR 1996
Allowance for doubtful accounts (shown as
  deduction from Accounts Receivable in
  balance sheet).........................       $1,589         $  895         $80(a)       $1,152(b)     $1,412
Inventory valuation reserve (included in
  Inventories, net in balance sheet).....       $  345         $1,325          --          $1,276(c)     $  394
YEAR 1997
Allowance for doubtful accounts (shown as
  deduction from Accounts Receivable in
  balance sheet).........................       $1,412         $1,105         $75(a)       $  381(b)     $2,211
Inventory valuation reserve (included in
  Inventories, net in balance sheet).....       $  394         $1,363          --          $   52(c)     $1,705
</TABLE>
 
-------------------------
(a) Collection of accounts previously written off
 
(b) Uncollectible accounts written off
 
(c) Valuation writedown
 
                                      F-22
<PAGE>   40
 
                               INDEX TO EXHIBITS
 
<TABLE>
<CAPTION>
EXHIBIT                                                                     PAGE
NUMBER                       DESCRIPTION OF DOCUMENT                       NUMBER
-------                      -----------------------                       ------
<S>        <C>                                                             <C>
</TABLE>
 
 3.1       Restated Certificate of Incorporation of the Registrant.
 3.2       Bylaws of the Registrant.
 4.1       Indenture, dated as of December 1, 1994 (the "Indenture"),
           by and between Florists' Transworld Delivery, Inc. and First
           Trust of New York, National Association, as Trustee.
           (Incorporated by reference to Exhibit 4.1 of the Florists'
           Transworld Delivery, Inc. Registration Statement on Form S-1
           (File No. 33-88628) (the "FTDI S-1").)
 4.2       Supplemental Indenture, dated as of December 19, 1994, to
           the Indenture. (Incorporated by reference to Exhibit 4.3 of
           the FTDI S-1.)
 4.3       Form of Subscription Agreement among FTD and certain
           stockholders of FTD. (Incorporated by reference to Exhibit
           4.3 of Post-Effective Amendment No. 1 to the Registrant's
           Registration Statement on Form S-1 (File No. 33-91582) (the
           "FTD S-1").
10.1       Credit Agreement, dated as of December 19, 1994, among the
           Registrant, Florists' Transworld Delivery, Inc., the various
           lending institutions party thereto and Bankers Trust
           Company, as Agent. (Incorporated by reference to Exhibit
           10.1 of the FTDI S-1.)
10.2       First Amendment to Credit Agreement, dated as of August 30,
           1995, among the Registrant, Florists' Transworld Delivery,
           Inc., the lending institutions party to the Credit Agreement
           and Bankers Trust Company, as Agent. (Incorporated by
           reference to Exhibit 10.1(b) of the Florists' Transworld
           Delivery, Inc. Annual Report on Form 10-K for fiscal year
           ended June 30, 1995.)
10.3       Second Amendment to Credit Agreement, dated as of June 11,
           1996, among the Registrant, Florists' Transworld Delivery,
           Inc., the lending institutions party to the Credit Agreement
           and Bankers Trust Company, as Agent. (Incorporated by
           reference to Exhibit I(d) of the Registrant's Registration
           Statement on Form 8-A, filed August 28, 1996.)
10.4       Third Amendment to Credit Agreement, dated as of November
           21, 1996, among the Registrant, Florists' Transworld
           Delivery, Inc., the lending institutions party to the Credit
           Agreement and Bankers Trust Company, as Agent. (Incorporated
           by reference to Exhibit 10(b) of the Registrant's Form 10-Q,
           filed December 31, 1996.)
10.5       Pledge Agreement, dated December 19, 1994, by and among the
           Registrant, Florists' Transworld Delivery, Inc., FTD
           Holdings, Incorporated, FTD Direct Access, Inc., Directory
           Advertising, Inc. and Bankers Trust Company, as Agent.
           (Incorporated by reference to Exhibit 10.2 of the FTDI S-1.)
10.6       Security Agreement, dated December 19, 1994, by and among
           the Registrant, Florists' Transworld Delivery, Inc., certain
           subsidiaries of the Registrant and Bankers Trust Company, as
           Agent. (Incorporated by reference to Exhibit 10.3 of the
           FTDI S-1.)
10.7*      Consultation Agreement and Covenant Not to Compete, dated as
           of August 2, 1994, by and between Florists' Transworld
           Delivery, Inc. and John A. Borden. (Incorporated by
           reference to Exhibit 10.8 of the FTDI S-1.)
10.8       Mutual Support Agreement, dated as of December 18, 1994, by
           and between Florists' Transworld Delivery, Inc. and FTD
           Association. (Incorporated by reference to Exhibit 10.9 of
           the FTDI S-1.)
10.9       Supplement to Mutual Support Agreement, dated as of January
           11, 1996, by and between Florists' Transworld Delivery, Inc.
           and FTD Association.
 
                                        i
<PAGE>   41
 
<TABLE>
<CAPTION>
 EXHIBIT                                                                                                      PAGE
 NUMBER                                        DESCRIPTION OF DOCUMENT                                       NUMBER
---------  -----------------------------------------------------------------------------------------------  ---------
<S>        <C>                                                                                              <C>
10.10      Trademark License Agreement, dated as of December 18, 1994, by and between Florists' Transworld
           Delivery, Inc. and FTD Association. (Incorporated by reference to Exhibit 10.10 of the FTDI
           S-1.)
10.11      Securityholders' and Registration Rights Agreement, dated as of December 19, 1994, among the
           Registrant, Florists' Transworld Delivery, Inc., BT Securities Corporation and Montgomery
           Securities. (Incorporated by reference to Exhibit 10.11 of FTD S-1.)
10.12      Tax Sharing Agreement, dated as of December 19, 1994, between the Registrant and Florists'
           Transworld Delivery, Inc. (Incorporated by reference to Exhibit 10.12 of the FTDI S-1.)
10.13      Stockholders' Agreement, dated as of December 19, 1994, among the Registrant and certain
           stockholders of the Registrant. (Incorporated by reference to Exhibit 10.13 of the FTD S-1.)
10.14*     FTD Corporation 1994 Stock Award and Incentive Plan (Incorporated by reference to Exhibit 10.14
           of the FTD S-1).
10.15*     Letter dated October 17, 1996 regarding Norton employment arrangements.
10.16*     Letter dated June 6, 1997, amending Norton employment arrangements.
10.17*     Description of Key Management Incentive Plan (Incorporated by reference to Exhibit 10.b of the
           Operating Company's Form 10-Q, filed March 31, 1997.)
10.18*     Promissory Note, dated June 30, 1997, made by Scott D. Levin.
11.1       Computation of Earnings Per Share.
21.1       Subsidiaries of the Registrant. (Incorporated by reference to Exhibit 21.1 of the FTD S-1.)
27.1       Financial Data Schedule.
</TABLE>
 
-------------------------
* Management contract or compensatory plan arrangement required to be filed as
  an Exhibit to the Form 10-K pursuant to Item 14(a)3.
 
                                       ii