##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2006
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number: 001-32425
 
 FTD Group, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware
(State or other jurisdiction of
incorporation or organization)
    
    87-0719190
(I.R.S. Employer
Identification No.)
 3113 Woodcreek Drive
Downers Grove, IL 60515
(Address of principal executive offices)
 (630) 719-7800  )
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
  o þ




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##### Table of Contents



Part I. Financial InformationItem 1. Financial StatementsConsolidated Balance Sheets
    
    
    2Consolidated Statement of Operations and Comprehensive Income (Loss)
    
    
    3Consolidated Statements of Cash Flows
    
    
    4Notes to Consolidated Financial Statements
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    12Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    21Item 4. Controls and Procedures
    
    
    21Part II. Other InformationItem 1. Legal Proceedings
    
    
    22Item 1A.
Risk Factors
    
    
    22Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    22Item 6. Exhibits
    
    
    22Signatures
    
    
    23Index of ExhibitsCertification of Principal Executive OfficerCertification of Principal Financial OfficerSection 1350 Certifications




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 FTD GROUP, INC.
 
 CONSOLIDATED BALANCE SHEETS
 (In thousands, except share amounts)
 March 31, 2006
    
    
    June 30, 2005(Unaudited)ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    223
    
    
    $
    8,890Accounts receivable, less allowance for doubtful accounts
of $3,851 at March 31, 2006 and $2,521 at June 30, 2005
    
    
    31,463
    
    
    
    23,419Inventories, net
    
    
    2,735
    
    
    
    6,495Deferred income taxes
    
    
    2,371
    
    
    
    2,550Prepaid expenses and other current assets
    
    
    4,798
    
    
    
    7,782Total current assets
    
    
    41,590
    
    
    
    49,136Property and equipment:Land and improvements
    
    
    1,380
    
    
    
    1,380Building and improvements
    
    
    15,415
    
    
    
    14,291Computer equipment
    
    
    4,828
    
    
    
    3,345Furniture and equipment
    
    
    3,262
    
    
    
    2,814Total
    
    
    24,885
    
    
    
    21,830Less accumulated depreciation
    
    
    5,412
    
    
    
    3,790Property and equipment, net
    
    
    19,473
    
    
    
    18,040Other assets:Deferred financing fees, net
    
    
    7,323
    
    
    
    8,527Computer software, net
    
    
    11,005
    
    
    
    11,010Other noncurrent assets
    
    
    12,235
    
    
    
    8,985Other intangible assets, less accumulated amortization of
$5,343 at March 31, 2006 and $3,393 at June 30, 2005
    
    
    15,430
    
    
    
    17,380Trademark
    
    
    121,577
    
    
    
    121,577Goodwill
    
    
    336,659
    
    
    
    336,659Total other assets
    
    
    504,229
    
    
    
    504,138Total assets
    
    $
    565,292
    
    
    $
    571,314LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    44,356
    
    
    $
    41,498Customer deposits
    
    
    4,497
    
    
    
    5,143Unearned income
    
    
    2,359
    
    
    
    2,522Accrued interest
    
    
    2,253
    
    
    
    4,993Accrued compensation
    
    
    4,285
    
    
    
    4,128Other accrued liabilities
    
    
    7,823
    
    
    
    5,058Current maturities of long-term debt
    
    
    590
    
    
    
    1,633Total current liabilities
    
    
    66,163
    
    
    
    64,975Senior secured credit facility
    
    
    57,277
    
    
    
    67,330Senior subordinated notes
    
    
    170,117
    
    
    
    170,117Post-retirement benefits and accrued pension obligations
    
    
    2,624
    
    
    
    2,856Deferred income taxes
    
    
    60,610
    
    
    
    60,289Stockholders equity:Common stock: $0.01 par value, 75,000,000 shares authorized; 29,482,182 and 29,451,791
shares issued as of March 31, 2006 and June 30,
2005, respectively
    
    
    295
    
    
    
    295Additional paid-in capital
    
    
    233,200
    
    
    
    232,759Accumulated deficit
    
    
    (10,348
    )
    
    
    (27,097
    )Accumulated other comprehensive loss
    
    
    (68
    )
    
    
    (210
    )Treasury stock, at cost, 1,505,480 shares as of March 31, 2006
    
    
    (14,578
    )
    
    
    Total stockholders equity
    
    
    208,501
    
    
    
    205,747Total liabilities and stockholders equity
    
    $
    565,292
    
    
    $
    571,314
  2




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FTD GROUP, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
 (Unaudited)
 (In thousands, except per share amounts)
 Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenues:Products
    
    $
    79,060
    
    
    $
    78,425
    
    
    $
    192,496
    
    
    $
    190,397Services
    
    
    49,525
    
    
    
    46,467
    
    
    
    131,143
    
    
    
    124,820Total revenues
    
    
    128,585
    
    
    
    124,892
    
    
    
    323,639
    
    
    
    315,217Costs of Goods Sold and Services Provided:Products
    
    
    69,080
    
    
    
    67,214
    
    
    
    165,364
    
    
    
    162,223Services
    
    
    4,883
    
    
    
    5,026
    
    
    
    15,579
    
    
    
    14,777Total costs of goods sold and services provided
    
    
    73,963
    
    
    
    72,240
    
    
    
    180,943
    
    
    
    177,000Gross Profit:Products
    
    
    9,980
    
    
    
    11,211
    
    
    
    27,132
    
    
    
    28,174Services
    
    
    44,642
    
    
    
    41,441
    
    
    
    115,564
    
    
    
    110,043Total gross profit
    
    
    54,622
    
    
    
    52,652
    
    
    
    142,696
    
    
    
    138,217Operating Expenses:Advertising and selling
    
    
    22,743
    
    
    
    22,671
    
    
    
    62,284
    
    
    
    60,856General and administrative
    
    
    15,048
    
    
    
    26,488
    
    
    
    38,444
    
    
    
    51,559Total operating expenses
    
    
    37,791
    
    
    
    49,159
    
    
    
    100,728
    
    
    
    112,415Income from operations
    
    
    16,831
    
    
    
    3,493
    
    
    
    41,968
    
    
    
    25,802Other Income and Expenses:Interest income
    
    
    (233
    )
    
    
    (299
    )
    
    
    (528
    )
    
    
    (466
    )Interest expense
    
    
    4,829
    
    
    
    5,395
    
    
    
    14,596
    
    
    
    15,429Interest expense and prepayment fee on shares subject to mandatory redemption
    
    
    
    
    
    
    24,684
    
    
    
    
    
    
    
    34,732Other expense (income), net
    
    
    (118
    )
    
    
    (100
    )
    
    
    (206
    )
    
    
    (421
    )Total other income and expenses
    
    
    4,478
    
    
    
    29,680
    
    
    
    13,862
    
    
    
    49,274Income (loss) before income tax
    
    
    12,353
    
    
    
    (26,187
    )
    
    
    28,106
    
    
    
    (23,472
    )Income tax expense (benefit)
    
    
    4,932
    
    
    
    (602
    )
    
    
    11,357
    
    
    
    4,504Net income (loss)
    
    $
    7,421
    
    
    $
    (25,585
    )
    
    $
    16,749
    
    
    $
    (27,976
    )Other Comprehensive Income:Foreign currency translation adjustments
    
    
    12
    
    
    
    
    
    
    
    142
    
    
    
    184Comprehensive income (loss)
    
    $
    7,433
    
    
    $
    (25,585
    )
    
    $
    16,891
    
    
    $
    (27,792
    )Net income (loss) per Common Share  basic
    
    $
    0.26
    
    
    $
    (1.14
    )
    
    $
    0.58
    
    
    $
    (1.70
    )Net income (loss) per Common Share  diluted
    
    $
    0.26
    
    
    $
    (1.14
    )
    
    $
    0.56
    
    
    $
    (1.70
    )Weighted Average Common Shares Outstanding:Basic
    
    
    28,111
    
    
    
    22,493
    
    
    
    28,989
    
    
    
    16,479Diluted
    
    
    29,031
    
    
    
    22,493
    
    
    
    30,025
    
    
    
    16,479
  3




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FTD GROUP, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 (In thousands)
 Nine Months EndedMarch 31,2006
    
    
    2005Cash flows from operating activities:Net income (loss)
    
    $
    16,749
    
    
    $
    (27,976
    )Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Depreciation
    
    
    3,160
    
    
    
    4,031Amortization
    
    
    4,580
    
    
    
    4,057Interest expense and prepayment fee on mandatorily redeemable shares
    
    
    
    
    
    
    34,732Gain from sale of business and related transactions
    
    
    (991
    )
    
    
    Stock-based compensation
    
    
    458
    
    
    
    Amortization and write off of deferred financing costs
    
    
    1,204
    
    
    
    1,170Provision for doubtful accounts
    
    
    2,589
    
    
    
    3,179Deferred income taxes
    
    
    500
    
    
    
    3,206Increase (decrease) in cash due to changes in operating assets and liabilities:Accounts receivable
    
    
    (12,002
    )
    
    
    (7,621
    )Inventories
    
    
    1,388
    
    
    
    2,122Prepaid expenses and other
    
    
    2,575
    
    
    
    (1,066
    )Other noncurrent assets
    
    
    (1,807
    )
    
    
    (2,145
    )Accounts payable
    
    
    3,308
    
    
    
    763Other accrued liabilities, unearned income, customer deposits and other
    
    
    (981
    )
    
    
    (2,851
    )Net cash provided by operating activities
    
    
    20,730
    
    
    
    11,601Cash flows from investing activities:Capital expenditures
    
    
    (7,370
    )
    
    
    (3,058
    )Proceeds from sale of business
    
    
    3,500
    
    
    
    Acquisition
    
    
    
    
    
    
    (8,458
    )Net cash used in investing activities
    
    
    (3,870
    )
    
    
    (11,516
    )Cash flows from financing activities:Net proceeds from the issuance of common stock
    
    
    
    
    
    
    193,533Redemption of preferred stock and prepayment fee
    
    
    
    
    
    
    (186,811
    )Repayments of long-term debt
    
    
    (11,096
    )
    
    
    (5,638
    )Net proceeds from revolving credit facility
    
    
    
    
    
    
    2,000Purchase of company stock
    
    
    (14,999
    )
    
    
    Proceeds from exercise of stock options
    
    
    209
    
    
    
    Tax effect of stock option benefit
    
    
    217
    
    
    
    Capital contribution
    
    
    
    
    
    
    827Deferred financing costs
    
    
    
    
    
    
    (243
    )Net cash provided by (used in) financing activities
    
    
    (25,669
    )
    
    
    3,668Effect of foreign exchange rate changes on cash
    
    
    142
    
    
    
    184Net increase (decrease) in cash and cash equivalents
    
    
    (8,667
    )
    
    
    3,937Cash and cash equivalents at beginning of period
    
    
    8,890
    
    
    
    2,491Cash and cash equivalents at end of period
    
    $
    223
    
    
    $
    6,428Supplemental disclosures of cash flow informationCash paid for:Interest
    
    $
    16,131
    
    
    $
    16,902Income taxes
    
    $
    4,570
    
    
    $
    23
  4




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FTD Group, Inc.
 
 Notes to Consolidated Financial Statements
 (Unaudited)
 Note 1. Description of the Business
      www.ftd.com
 Seasonality.
  Note 2. Basis of Presentation
  5




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Note 3. Sale of Renaissance
   Current Assets
    
    $
    4,316Property and Equipment
    
    
    153Other Assets
    
    
    297Current Liabilities
    
    
    (1,251
    )$
    3,515
 Accounting for the Impairment or Disposal
of Long-Lived Assets to be Disposed Of,
 Note 4. Stock Repurchase
  Note 5. Net Income (Loss) Per Common Share
  6




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Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Net income (loss)
    
    $
    7,421
    
    
    $
    (25,585
    )
    
    $
    16,749
    
    
    $
    (27,976
    )Weighted average common
shares outstanding  basic
    
    
    28,111
    
    
    
    22,493
    
    
    
    28,989
    
    
    
    16,479Effect of dilutive securities  stock options
    
    
    920
    
    
    
    
    
    
    
    1,036
    
    
    
    Weighted average common
shares outstanding  diluted
    
    
    29,031
    
    
    
    22,493
    
    
    
    30,025
    
    
    
    16,479Net income (loss) per share of Common Stock
 basic
    
    $
    0.26
    
    
    $
    (1.14
    )
    
    $
    0.58
    
    
    $
    (1.70
    )Net income (loss) per share of Common Stock
 diluted
    
    $
    0.26
    
    
    $
    (1.14
    )
    
    $
    0.56
    
    
    $
    (1.70
    )
  Note 6. Pension and Other Post-Retirement Benefit Plans
 Salaried
Employees Pension PlanThree Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2006
    
    
    2005
    
    
    2006
    
    
    2005(in thousands)Service cost
    
    $
    13
    
    
    $
    
    
    
    $
    41
    
    
    $
    Interest cost
    
    
    28
    
    
    
    31
    
    
    
    83
    
    
    
    94Expected return on assets
    
    
    (22
    )
    
    
    (20
    )
    
    
    (67
    )
    
    
    (60
    )Amortization of loss
    
    
    9
    
    
    
    
    
    
    
    27
    
    
    
    Net periodic benefit cost
    
    $
    28
    
    
    $
    11
    
    
    $
    84
    
    
    $
    34
 Retiree Medical PlanThree Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2006
    
    
    2005
    
    
    2006
    
    
    2005(in thousands)Interest cost
    
    $
    20
    
    
    $
    24
    
    
    $
    60
    
    
    $
    71Net periodic benefit cost
    
    $
    20
    
    
    $
    24
    
    
    $
    60
    
    
    $
    71
 Note 7. Stock-Based Compensation
  7




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Accounting for Stock
Issued to Employees Accounting for Stock-Based Compensation Share-Based Payments
   8




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Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2005
    
    
    2005Net loss, as reported
    
    $
    (25,585
    )
    
    $
    (27,976
    )Less: Stock-based employee compensation
expense determined under fair value based
method for all awards, net of related tax effects
    
    
    (103
    )
    
    
    (194
    )Pro forma net loss
    
    $
    (25,688
    )
    
    $
    (28,170
    )Net loss per share of Common Stock:Basic  as reported
    
    $
    (1.14
    )
    
    $
    (1.70
    )Basic  pro forma
    
    $
    (1.14
    )
    
    $
    (1.71
    )Diluted  as reported
    
    $
    (1.14
    )
    
    $
    (1.70
    )Diluted  pro forma
    
    $
    (1.14
    )
    
    $
    (1.71
    )Weighted average shares outstanding:Basic
    
    
    22,493
    
    
    
    16,479Diluted
    
    
    22,493
    
    
    
    16,479
    Note 8. Segment Information
 , www.ftd.com
   9




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##### Table of Contents



Three Months Ended March 31,2006
    
    
    2005Gross Segment
    
    
    Eliminations
    
    
    Consolidated
    
    
    Gross Segment
    
    
    Eliminations
    
    
    Consolidated(in thousands)Revenues:Florist segment
    
    $
    52,979
    
    
    $
    (74
    )
    
    $
    52,905
    
    
    $
    54,320
    
    
    $
    (39
    )
    
    $
    54,281Consumer segment
    
    
    80,883
    
    
    
    (5,203
    )
    
    
    75,680
    
    
    
    76,147
    
    
    
    (5,536
    )
    
    
    70,611Total
    
    
    133,862
    
    
    
    (5,277
    )
    
    
    128,585
    
    
    
    130,467
    
    
    
    (5,575
    )
    
    
    124,892Costs of Goods Sold and
Services Provided:Florist segment
    
    
    18,849
    
    
    
    (828
    )
    
    
    18,021
    
    
    
    19,846
    
    
    
    (820
    )
    
    
    19,026Consumer segment
    
    
    56,156
    
    
    
    (747
    )
    
    
    55,409
    
    
    
    53,372
    
    
    
    (743
    )
    
    
    52,629Corporate
    
    
    533
    
    
    
    
    
    
    
    533
    
    
    
    585
    
    
    
    
    
    
    
    585Total
    
    
    75,538
    
    
    
    (1,575
    )
    
    
    73,963
    
    
    
    73,803
    
    
    
    (1,563
    )
    
    
    72,240Gross Profit:Florist segment
    
    
    34,130
    
    
    
    754
    
    
    
    34,884
    
    
    
    34,474
    
    
    
    781
    
    
    
    35,255Consumer segment
    
    
    24,727
    
    
    
    (4,456
    )
    
    
    20,271
    
    
    
    22,775
    
    
    
    (4,793
    )
    
    
    17,982Corporate
    
    
    (533
    )
    
    
    
    
    
    
    (533
    )
    
    
    (585
    )
    
    
    
    
    
    
    (585
    )Total
    
    
    58,324
    
    
    
    (3,702
    )
    
    
    54,622
    
    
    
    56,664
    
    
    
    (4,012
    )
    
    
    52,652Advertising and Selling:Florist segment
    
    
    16,044
    
    
    
    (3,702
    )
    
    
    12,342
    
    
    
    18,271
    
    
    
    (4,012
    )
    
    
    14,259Consumer segment
    
    
    10,401
    
    
    
    
    
    
    
    10,401
    
    
    
    8,412
    
    
    
    
    
    
    
    8,412Total
    
    
    26,445
    
    
    
    (3,702
    )
    
    
    22,743
    
    
    
    26,683
    
    
    
    (4,012
    )
    
    
    22,671General and Administrative
(includes Management Fees):Florist segment
    
    
    2,377
    
    
    
    
    
    
    
    2,377
    
    
    
    2,612
    
    
    
    
    
    
    
    2,612Consumer segment
    
    
    6,881
    
    
    
    (735
    )
    
    
    6,146
    
    
    
    5,639
    
    
    
    (700
    )
    
    
    4,939Corporate
    
    
    5,790
    
    
    
    735
    
    
    
    6,525
    
    
    
    18,237
    
    
    
    700
    
    
    
    18,937Total
    
    
    15,048
    
    
    
    
    
    
    
    15,048
    
    
    
    26,488
    
    
    
    
    
    
    
    26,488Operating Income (Loss)
before Corporate Allocations:Florist segment
    
    
    15,709
    
    
    
    4,456
    
    
    
    20,165
    
    
    
    13,591
    
    
    
    4,793
    
    
    
    18,384Consumer segment
    
    
    7,445
    
    
    
    (3,721
    )
    
    
    3,724
    
    
    
    8,724
    
    
    
    (4,093
    )
    
    
    4,631Corporate
    
    
    (6,323
    )
    
    
    (735
    )
    
    
    (7,058
    )
    
    
    (18,822
    )
    
    
    (700
    )
    
    
    (19,522
    )Total
    
    
    16,831
    
    
    
    
    
    
    
    16,831
    
    
    
    3,493
    
    
    
    
    
    
    
    3,493Corporate Allocations:Florist segment
    
    
    2,868
    
    
    
    
    
    
    
    2,868
    
    
    
    3,117
    
    
    
    
    
    
    
    3,117Consumer segment
    
    
    849
    
    
    
    
    
    
    
    849
    
    
    
    693
    
    
    
    
    
    
    
    693Corporate
    
    
    (3,717
    )
    
    
    
    
    
    
    (3,717
    )
    
    
    (3,810
    )
    
    
    
    
    
    
    (3,810
    )Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating Income (Loss):Florist segment
    
    
    12,841
    
    
    
    4,456
    
    
    
    17,297
    
    
    
    10,474
    
    
    
    4,793
    
    
    
    15,267Consumer segment
    
    
    6,596
    
    
    
    (3,721
    )
    
    
    2,875
    
    
    
    8,031
    
    
    
    (4,093
    )
    
    
    3,938Corporate
    
    
    (2,606
    )
    
    
    (735
    )
    
    
    (3,341
    )
    
    
    (15,012
    )
    
    
    (700
    )
    
    
    (15,712
    )Total
    
    $
    16,831
    
    
    $
    
    
    
    $
    16,831
    
    
    $
    3,493
    
    
    $
    
    
    
    $
    3,493Depreciation and
Amortization:Florist segment
    
    $
    821
    
    
    $
    
    
    
    $
    821
    
    
    $
    919
    
    
    $
    
    
    
    $
    919Consumer segment
    
    
    836
    
    
    
    
    
    
    
    836
    
    
    
    593
    
    
    
    
    
    
    
    593Corporate
    
    
    967
    
    
    
    
    
    
    
    967
    
    
    
    961
    
    
    
    
    
    
    
    961Total
    
    $
    2,624
    
    
    $
    
    
    
    $
    2,624
    
    
    $
    2,473
    
    
    $
    
    
    
    $
    2,473
 10




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##### Table of Contents



Nine Months Ended March 31,2006
    
    
    2005Gross Segment
    
    
    Eliminations
    
    
    Consolidated
    
    
    Gross Segment
    
    
    Eliminations
    
    
    Consolidated(in thousands)Revenues:Florist segment
    
    $
    143,323
    
    
    $
    (205
    )
    
    $
    143,118
    
    
    $
    146,190
    
    
    $
    (99
    )
    
    $
    146,091Consumer segment
    
    
    193,836
    
    
    
    (13,315
    )
    
    
    180,521
    
    
    
    182,964
    
    
    
    (13,838
    )
    
    
    169,126Total
    
    
    337,159
    
    
    
    (13,520
    )
    
    
    323,639
    
    
    
    329,154
    
    
    
    (13,937
    )
    
    
    315,217Costs of Goods Sold and
Services Provided:Florist segment
    
    
    49,485
    
    
    
    (2,524
    )
    
    
    46,961
    
    
    
    51,499
    
    
    
    (2,338
    )
    
    
    49,161Consumer segment
    
    
    134,073
    
    
    
    (1,809
    )
    
    
    132,264
    
    
    
    127,829
    
    
    
    (1,769
    )
    
    
    126,060Corporate
    
    
    1,718
    
    
    
    
    
    
    
    1,718
    
    
    
    1,779
    
    
    
    
    
    
    
    1,779Total
    
    
    185,276
    
    
    
    (4,333
    )
    
    
    180,943
    
    
    
    181,107
    
    
    
    (4,107
    )
    
    
    177,000Gross Profit:Florist segment
    
    
    93,838
    
    
    
    2,319
    
    
    
    96,157
    
    
    
    94,691
    
    
    
    2,239
    
    
    
    96,930Consumer segment
    
    
    59,763
    
    
    
    (11,506
    )
    
    
    48,257
    
    
    
    55,135
    
    
    
    (12,069
    )
    
    
    43,066Corporate
    
    
    (1,718
    )
    
    
    
    
    
    
    (1,718
    )
    
    
    (1,779
    )
    
    
    
    
    
    
    (1,779
    )Total
    
    
    151,883
    
    
    
    (9,187
    )
    
    
    142,696
    
    
    
    148,047
    
    
    
    (9,830
    )
    
    
    138,217Advertising and Selling:Florist segment
    
    
    48,703
    
    
    
    (9,187
    )
    
    
    39,516
    
    
    
    51,381
    
    
    
    (9,828
    )
    
    
    41,553Consumer segment
    
    
    22,768
    
    
    
    
    
    
    
    22,768
    
    
    
    19,303
    
    
    
    
    
    
    
    19,303Total
    
    
    71,471
    
    
    
    (9,187
    )
    
    
    62,284
    
    
    
    70,684
    
    
    
    (9,828
    )
    
    
    60,856General and Administrative
(includes Management Fees):Florist segment
    
    
    5,607
    
    
    
    
    
    
    
    5,607
    
    
    
    7,729
    
    
    
    
    
    
    
    7,729Consumer segment
    
    
    15,407
    
    
    
    (1,785
    )
    
    
    13,622
    
    
    
    14,107
    
    
    
    (1,684
    )
    
    
    12,423Corporate
    
    
    17,430
    
    
    
    1,785
    
    
    
    19,215
    
    
    
    29,725
    
    
    
    1,682
    
    
    
    31,407Total
    
    
    38,444
    
    
    
    
    
    
    
    38,444
    
    
    
    51,561
    
    
    
    (2
    )
    
    
    51,559Operating Income (Loss)
before Corporate Allocations:Florist segment
    
    
    39,528
    
    
    
    11,506
    
    
    
    51,034
    
    
    
    35,581
    
    
    
    12,067
    
    
    
    47,648Consumer segment
    
    
    21,588
    
    
    
    (9,721
    )
    
    
    11,867
    
    
    
    21,725
    
    
    
    (10,385
    )
    
    
    11,340Corporate
    
    
    (19,148
    )
    
    
    (1,785
    )
    
    
    (20,933
    )
    
    
    (31,504
    )
    
    
    (1,682
    )
    
    
    (33,186
    )Total
    
    
    41,968
    
    
    
    
    
    
    
    41,968
    
    
    
    25,802
    
    
    
    
    
    
    
    25,802Corporate Allocations:Florist segment
    
    
    8,364
    
    
    
    
    
    
    
    8,364
    
    
    
    9,126
    
    
    
    
    
    
    
    9,126Consumer segment
    
    
    2,451
    
    
    
    
    
    
    
    2,451
    
    
    
    2,187
    
    
    
    
    
    
    
    2,187Corporate
    
    
    (10,815
    )
    
    
    
    
    
    
    (10,815
    )
    
    
    (11,313
    )
    
    
    
    
    
    
    (11,313
    )Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating Income (Loss):Florist segment
    
    
    31,164
    
    
    
    11,506
    
    
    
    42,670
    
    
    
    26,455
    
    
    
    12,067
    
    
    
    38,522Consumer segment
    
    
    19,137
    
    
    
    (9,721
    )
    
    
    9,416
    
    
    
    19,538
    
    
    
    (10,385
    )
    
    
    9,153Corporate
    
    
    (8,333
    )
    
    
    (1,785
    )
    
    
    (10,118
    )
    
    
    (20,191
    )
    
    
    (1,682
    )
    
    
    (21,873
    )Total
    
    $
    41,968
    
    
    $
    
    
    
    $
    41,968
    
    
    $
    25,802
    
    
    $
    
    
    
    $
    25,802Depreciation and
Amortization:Florist segment
    
    $
    2,551
    
    
    $
    
    
    
    $
    2,551
    
    
    $
    3,354
    
    
    $
    
    
    
    $
    3,354Consumer segment
    
    
    2,293
    
    
    
    
    
    
    
    2,293
    
    
    
    1,842
    
    
    
    
    
    
    
    1,842Corporate
    
    
    2,896
    
    
    
    
    
    
    
    2,896
    
    
    
    2,892
    
    
    
    
    
    
    
    2,892Total
    
    $
    7,740
    
    
    $
    
    
    
    $
    7,740
    
    
    $
    8,088
    
    
    $
    
    
    
    $
    8,088
 11




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
  Overview
  Florist Segment.
 Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Member Services
    
    
    57
    %
    
    
    55
    %
    
    
    59
    %
    
    
    59
    %Mercury Technology
    
    
    16
    %
    
    
    15
    %
    
    
    17
    %
    
    
    15
    %Specialty Wholesaling
    
    
    27
    %
    
    
    30
    %
    
    
    24
    %
    
    
    26
    %Total Florist Segment revenue
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 Consumer Segment. www.ftd.com
 Key Industry Trends.
 Business Strategy.
  12




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##### Table of Contents



Seasonality.
  Three Months Ended March 31, 2006 compared to the Three Months Ended March 31, 2005
 Total revenues
 Three Months EndedMarch 31,2006
    
    
    2005
    
    
    % Change(in thousands)Florist segment
    
    $
    52,905
    
    
    $
    54,281
    
    
    
    (2.5
    %)Consumer segment
    
    
    75,680
    
    
    
    70,611
    
    
    
    7.2
    %Total revenues
    
    $
    128,585
    
    
    $
    124,892
    
    
    
    3.0
    %
    13




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##### Table of Contents



Total costs of goods sold and services provided
 Three Months EndedMarch 31,2006
    
    
    2005
    
    
    % Change(in thousands)Florist segment
    
    $
    18,021
    
    
    $
    19,026
    
    
    
    (5.3
    %)Consumer segment
    
    
    55,409
    
    
    
    52,629
    
    
    
    5.3
    %Corporate
    
    
    533
    
    
    
    585
    
    
    
    (8.9
    %)Total costs of goods sold and services provided
    
    $
    73,963
    
    
    $
    72,240
    
    
    
    2.4
    %
     Advertising and selling costs
 Three Months EndedMarch 31,2006
    
    
    2005
    
    
    % Change(in thousands)Florist segment
    
    $
    12,342
    
    
    $
    14,259
    
    
    
    (13.4
    %)Consumer segment
    
    
    10,401
    
    
    
    8,412
    
    
    
    23.6
    %Total advertising and selling costs
    
    $
    22,743
    
    
    $
    22,671
    
    
    
    0.3
    %
 14




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##### Table of Contents



General and administrative costs and management fees
 Three Months EndedMarch 31,2006
    
    
    2005
    
    
    % Change(in thousands)Florist segment
    
    $
    2,377
    
    
    $
    2,612
    
    
    
    (9.0
    %)Consumer segment
    
    
    6,146
    
    
    
    4,939
    
    
    
    24.4
    %Corporate
    
    
    6,525
    
    
    
    18,937
    
    
    
    (65.5
    %)Total general and
administrative
costs and
management fees
    
    $
    15,048
    
    
    $
    26,488
    
    
    
    (43.2
    %)
     15




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##### Table of Contents



Other income and expenses
 Three Months EndedMarch 31,2006
    
    
    2005
    
    
    % Change(in thousands)Interest income
    
    $
    (233
    )
    
    $
    (299
    )
    
    
    (22.1
    %)Interest expense
    
    
    4,829
    
    
    
    5,395
    
    
    
    (10.5
    %)Interest expense and prepayment fee on
shares subject to mandatory redemption
    
    
    
    
    
    
    24,684
    
    
    
    (100.0
    %)Other (income) expense, net
    
    
    (118
    )
    
    
    (100
    )
    
    
    18.0
    %Total other (income) and expenses
    
    $
    4,478
    
    
    $
    29,680
    
    
    
    (84.9
    %)
     Nine Months Ended March 31, 2006 compared to the Nine Months Ended March 31, 2005
 Total revenues
 Nine Months EndedMarch 31,2006
    
    
    2005
    
    
    % Change(in thousands)Florist segment
    
    $
    143,118
    
    
    $
    146,091
    
    
    
    (2.0
    %)Consumer segment
    
    
    180,521
    
    
    
    169,126
    
    
    
    6.7
    %Total revenues
    
    $
    323,639
    
    
    $
    315,217
    
    
    
    2.7
    %
   16




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##### Table of Contents



Total costs of goods sold and services provided
 Nine Months EndedMarch 31,2006
    
    
    2005
    
    
    % Change(in thousands)Florist segment
    
    $
    46,961
    
    
    $
    49,161
    
    
    
    (4.5
    %)Consumer segment
    
    
    132,264
    
    
    
    126,060
    
    
    
    4.9
    %Corporate
    
    
    1,718
    
    
    
    1,779
    
    
    
    (3.4
    %)Total costs of goods sold and services provided
    
    $
    180,943
    
    
    $
    177,000
    
    
    
    2.2
    %
     Advertising and selling costs
 Nine Months EndedMarch 31,2006
    
    
    2005
    
    
    % Change(in thousands)Florist segment
    
    $
    39,516
    
    
    $
    41,553
    
    
    
    (4.9
    %)Consumer segment
    
    
    22,768
    
    
    
    19,303
    
    
    
    18.0
    %Total advertising and selling costs
    
    $
    62,284
    
    
    $
    60,856
    
    
    
    2.3
    %
 17




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##### Table of Contents



General and administrative costs and management fees
 Nine Months EndedMarch 31,2006
    
    
    2005
    
    
    % Change(in thousands)Florist segment
    
    $
    5,607
    
    
    $
    7,729
    
    
    
    (27.5
    %)Consumer segment
    
    
    13,622
    
    
    
    12,423
    
    
    
    9.7
    %Corporate
    
    
    19,215
    
    
    
    31,407
    
    
    
    (38.8
    %)Total general and administrative costs and
management fees
    
    $
    38,444
    
    
    $
    51,559
    
    
    
    (25.4
    %)
    Share-Based Payments
 18




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##### Table of Contents



Other income and expenses
 Nine Months EndedMarch 31,2006
    
    
    2005
    
    
    % Change(in thousands)Interest income
    
    $
    (528
    )
    
    $
    (466
    )
    
    
    13.3
    %Interest expense
    
    
    14,596
    
    
    
    15,429
    
    
    
    (5.4
    %)Interest expense and prepayment fee on
shares subject to mandatory redemption
    
    
    
    
    
    
    34,732
    
    
    
    (100.0
    %)Other (income) expense, net
    
    
    (206
    )
    
    
    (421
    )
    
    
    (51.1
    %)Total other (income) and expenses
    
    $
    13,862
    
    
    $
    49,274
    
    
    
    (71.9
    %)
     Liquidity and Capital Resources
      19




---



##### Table of Contents



Actual Ratio
    
    
    Required Ratioas of March 31, 2006
    
    
    as of March 31, 2006Interest Expense Coverage
    
    
    3.50
    
    
    2.20 minimumFixed Charge Coverage
    
    
    2.92
    
    
    1.50 minimumLeverage
    
    
    3.34
    
    
    5.50 maximum
   Critical Accounting Policies and Estimates
   20




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##### Table of Contents



Forward-Looking Information
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
   
 Item 4. Controls and Procedures
   21




---



##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 Issuer Purchases of Equity Securities
  Total Number of
    
    Maximum Number (orShares Purchased
    
    Approximate DollarAverage
    
    as Part of
    
    Value)Total
    
    Price
    
    Publicly
    
    of Shares that May YetNumber of
    
    Paid
    
    Announced
    
    Be PurchasedShares
    
    per
    
    Plans or
    
    Under the Plans orPeriod
    
    Purchased
    
    Share
    
    Programs
    
    ProgramsJanuary 1, 2006
through
January 31, 2006
    
    
    1,239,500
    
    
    
    9.43
    
    
    
    1,545,000
    
    
    $15.0 millionFebruary 1, 2006
through
February 28, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    $15.0 millionMarch 1, 2006
through
March 31, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    $15.0 million
  
 Item 6. Exhibits
 31.1
    
    
    Rule 13(a)  14(a)/15(d)  14(a) Certification (Principal Executive Officer).31.2
    
    
    Rule 13(a)  14(a)/15(d)  14(a) Certification (Principal Financial Officer).32
    
    
    Section 1350 Certifications.
 22




---



##### Table of Contents



SIGNATURES
  FTD Group, Inc.Date: May 10, 2006
    By:
    /S/ CARRIE A. WOLFECarrie A. WolfeChief Financial Officer
(Principal Financial and Accounting Officer) 23




---



##### Table of Contents



EXHIBIT INDEX
 Exhibit Number
    
    Description of Document31.1
    
    Rule 13(a)  14(a)/15(d)  14(a) Certification (Principal Executive Officer).31.2
    
    Rule 13(a)  14(a)/15(d)  14(a) Certification (Principal Financial Officer).32
    
    Section 1350 Certifications.
 24