##### 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 December 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
    
    87-0719190(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 3113 Woodcreek Drive
Downers Grove, IL 60515
(Address of principal executive offices)
 (630) 719-7800  )
 þ o
  o þ o
 o þ




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##### 



Part I. Financial InformationItem 1.
    
    Financial Statements (unaudited)Condensed Consolidated Balance Sheets
    
    
    2Condensed Consolidated Statements of Income and Comprehensive Income
    
    
    3Condensed Consolidated Statements of Cash Flows
    
    
    4Notes to Condensed Consolidated Financial Statements
    
    
    5Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    21Item 4.
    
    Controls and Procedures
    
    
    22Part II. Other InformationItem 1.
    
    Legal Proceedings
    
    
    23Item 1A.
    
    Risk Factors
    
    
    23Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    23Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    23Item 6.
    
    Exhibits
    
    
    24Signatures
    
    
    
    
    25Exhibit IndexExhibit 31.1Exhibit 31.2Exhibit 32




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 FTD GROUP, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (Unaudited)
 (In thousands, except share amounts)
 December 31, 2006
    
    
    June 30, 2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    30,760
    
    
    $
    10,954Accounts receivable, less allowance for doubtful accounts
of $5,084 at December 31, 2006 and $4,437 at June 30, 2006
    
    
    54,846
    
    
    
    26,044Inventories, net
    
    
    5,191
    
    
    
    3,542Other current assets
    
    
    9,375
    
    
    
    5,985Total current assets
    
    
    100,172
    
    
    
    46,525Property and equipment:Property and equipment, at cost
    
    
    33,687
    
    
    
    25,265Less accumulated depreciation
    
    
    8,400
    
    
    
    6,051Property and equipment, net
    
    
    25,287
    
    
    
    19,214Other assets:Computer software, net
    
    
    14,331
    
    
    
    10,577Other noncurrent assets
    
    
    22,642
    
    
    
    21,405Intangible assets, less accumulated amortization of
$7,544 at December 31, 2006 and $5,993 at June 30, 2006
    
    
    15,027
    
    
    
    14,780Trademark
    
    
    186,451
    
    
    
    121,577Goodwill
    
    
    416,518
    
    
    
    336,659Total other assets
    
    
    654,969
    
    
    
    504,998Total assets
    
    $
    780,428
    
    
    $
    570,737LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    82,145
    
    
    $
    45,273Notes payable
    
    
    22,684
    
    
    
    Other accrued liabilities
    
    
    28,237
    
    
    
    24,083Current maturities of long-term debt
    
    
    1,500
    
    
    
    1,125Total current liabilities
    
    
    134,566
    
    
    
    70,481Senior secured credit facility
    
    
    148,125
    
    
    
    48,875Senior subordinated notes
    
    
    170,117
    
    
    
    170,117Post-retirement benefits, accrued pension obligations and other liabilities
    
    
    5,119
    
    
    
    2,368Deferred income taxes
    
    
    81,590
    
    
    
    61,160Stockholders equity:Common stock: $0.01 par value, 75,000,000 shares authorized; 29,482,182
shares issued as of December 31, 2006 and June 30, 2006
    
    
    295
    
    
    
    295Additional paid-in capital
    
    
    234,844
    
    
    
    233,362Retained earnings (accumulated deficit)
    
    
    9,996
    
    
    
    (1,554
    )Accumulated other comprehensive income
    
    
    6,587
    
    
    
    200Treasury stock, at cost, 1,147,326 shares as of December 31, 2006
and 1,504,480 shares as of June 30, 2006
    
    
    (10,811
    )
    
    
    (14,567
    )Total stockholders equity
    
    
    240,911
    
    
    
    217,736Total liabilities and stockholders equity
    
    $
    780,428
    
    
    $
    570,737
  2




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##### Table of Contents



FTD GROUP, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
 (Unaudited)
 (In thousands, except per share amounts)
 Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenues:Products
    
    $
    115,828
    
    
    $
    81,359
    
    
    $
    189,701
    
    
    $
    137,189Services
    
    
    35,712
    
    
    
    27,826
    
    
    
    70,610
    
    
    
    57,865Total revenues
    
    
    151,540
    
    
    
    109,185
    
    
    
    260,311
    
    
    
    195,054Costs of products sold and services provided:Products
    
    
    84,392
    
    
    
    56,346
    
    
    
    140,546
    
    
    
    97,655Services
    
    
    4,926
    
    
    
    4,776
    
    
    
    9,195
    
    
    
    9,325Total costs of products sold and services provided
    
    
    89,318
    
    
    
    61,122
    
    
    
    149,741
    
    
    
    106,980Gross profit:Products
    
    
    31,436
    
    
    
    25,013
    
    
    
    49,155
    
    
    
    39,534Services
    
    
    30,786
    
    
    
    23,050
    
    
    
    61,415
    
    
    
    48,540Total gross profit
    
    
    62,222
    
    
    
    48,063
    
    
    
    110,570
    
    
    
    88,074Operating expenses:Advertising and selling
    
    
    24,855
    
    
    
    21,890
    
    
    
    41,419
    
    
    
    39,541General and administrative
    
    
    20,354
    
    
    
    11,467
    
    
    
    36,764
    
    
    
    23,396Total operating expenses
    
    
    45,209
    
    
    
    33,357
    
    
    
    78,183
    
    
    
    62,937Income from operations
    
    
    17,013
    
    
    
    14,706
    
    
    
    32,387
    
    
    
    25,137Other income and expenses:Interest income
    
    
    (339
    )
    
    
    (129
    )
    
    
    (637
    )
    
    
    (295
    )Interest expense
    
    
    7,009
    
    
    
    4,986
    
    
    
    15,235
    
    
    
    9,767Other expense (income), net
    
    
    249
    
    
    
    (44
    )
    
    
    (1,295
    )
    
    
    (88
    )Total other expenses, net
    
    
    6,919
    
    
    
    4,813
    
    
    
    13,303
    
    
    
    9,384Income before income tax
    
    
    10,094
    
    
    
    9,893
    
    
    
    19,084
    
    
    
    15,753Income tax expense
    
    
    3,987
    
    
    
    3,992
    
    
    
    7,534
    
    
    
    6,425Net income
    
    $
    6,107
    
    
    $
    5,901
    
    
    $
    11,550
    
    
    $
    9,328Other comprehensive income:Foreign currency translation adjustments
    
    
    3,987
    
    
    
    29
    
    
    
    6,387
    
    
    
    130Comprehensive income
    
    $
    10,094
    
    
    $
    5,930
    
    
    $
    17,937
    
    
    $
    9,458Net income per Common Share  basic
    
    $
    0.22
    
    
    $
    0.20
    
    
    $
    0.41
    
    
    $
    0.32Net income per Common Share  diluted
    
    $
    0.21
    
    
    $
    0.19
    
    
    $
    0.39
    
    
    $
    0.31Weighted average common shares outstanding:Basic
    
    
    28,335
    
    
    
    29,404
    
    
    
    28,283
    
    
    
    29,429Diluted
    
    
    29,762
    
    
    
    30,417
    
    
    
    29,479
    
    
    
    30,481
  3




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FTD GROUP, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 (In thousands)
 Six Months EndedDecember 31,2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    11,550
    
    
    $
    9,328Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    7,201
    
    
    
    5,116Gain from sale of business and related transaction
    
    
    
    
    
    
    (991
    )Stock-based compensation expense
    
    
    959
    
    
    
    304Amortization and write off of deferred financing costs
    
    
    2,294
    
    
    
    776Provision for doubtful accounts
    
    
    1,481
    
    
    
    1,769Deferred income taxes
    
    
    753
    
    
    
    862Decrease in cash due to changes in operating assets and liabilities, net of acquisition
    
    
    (5,275
    )
    
    
    (908
    )Net cash provided by operating activities
    
    
    18,963
    
    
    
    16,256Cash flows from investing activities:Acquisition of business, net of cash acquired
    
    
    (96,717
    )
    
    
    Capital expenditures
    
    
    (4,849
    )
    
    
    (5,425
    )Proceeds from sale of business
    
    
    
    
    
    
    3,500Net cash used in investing activities
    
    
    (101,566
    )
    
    
    (1,925
    )Cash flows from financing activities:Proceeds from issuance of long-term debt, net of financing costs
    
    
    148,536
    
    
    
    Repayments of long-term debt
    
    
    (50,375
    )
    
    
    (5,936
    )Excess tax benefit from stock-based compensation
    
    
    654
    
    
    
    196Proceeds from exercise of stock options
    
    
    422
    
    
    
    184Purchase of company stock
    
    
    
    
    
    
    (3,307
    )Net cash provided by (used in) financing activities
    
    
    99,237
    
    
    
    (8,863
    )Effect of foreign exchange rate changes on cash and cash equivalents
    
    
    3,172
    
    
    
    130Net increase in cash and cash equivalents
    
    
    19,806
    
    
    
    5,598Cash and cash equivalents at beginning of period
    
    
    10,954
    
    
    
    8,890Cash and cash equivalents at end of period
    
    $
    30,760
    
    
    $
    14,488Supplemental disclosures of cash flow informationCash paid for:Interest
    
    $
    12,386
    
    
    $
    8,972Income taxes, net
    
    $
    9,676
    
    
    $
    2,539Non-cash disclosure:Issuance of notes payable associated with the purchase of Interflora Holdings Limited
    
    $
    23,313Issuance of treasury stock associated with the purchase of Interflora Holdings Limited
    
    $
    3,206Issuance of notes receivable associated with the sale of Renaissance
    
    
    
    
    
    $
    1,805
  4




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FTD Group, Inc.
 
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 Note 1. Description of the Business
 Basis of Presentation
      Recently Issued Accounting Pronouncements
 Employers Accounting for Defined Benefit Pension and Other
Postretirement Plans  an amendment of FASB Statement No. 87, 88, 106 and 132(R), (SFAS 158)
 Accounting for Uncertainty in
Income Taxes  an Interpretation of FASB Statement No. 109 (SFAS 109)
 5




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Note 2. Acquisition of Interflora Holdings Limited
   Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2005
    
    
    2006
    
    
    2005Proforma revenues
    
    $
    138,396
    
    
    $
    270,964
    
    
    $
    247,571Proforma income from operations
    
    $
    17,426
    
    
    $
    33,262
    
    
    $
    29,393Proforma net income
    
    $
    6,827
    
    
    $
    11,720
    
    
    $
    10,307Proforma net income per share  basic
    
    $
    0.23
    
    
    $
    0.41
    
    
    $
    0.35Proforma net income per share  diluted
    
    $
    0.22
    
    
    $
    0.40
    
    
    $
    0.34
  Goodwill
    
    $
    76,024Trademark
    
    
    61,764Computer software
    
    
    4,372Land and building
    
    
    2,942Other intangible assets (customer list)
    
    
    1,711Deferred tax liability
    
    
    (20,464
    )Other assets acquired and liabilities assumed, net
    
    
    (1,211
    )Total preliminary allocation of acquisition cost
    
    $
    125,138
 6




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##### Table of Contents



Note 3. Goodwill and Other Intangibles
   Consumer
    
    
    Florist
    
    
    InternationalSegment
    
    
    Segment
    
    
    Segment
    
    
    TotalGoodwill:Balance at June 30, 2006
    
    $
    178,141
    
    
    $
    158,518
    
    
    $
    
    
    
    $
    336,659Acquisition of Interflora
    
    
    
    
    
    
    
    
    
    
    76,024
    
    
    
    76,024Impact of foreign exchange
    
    
    
    
    
    
    
    
    
    
    3,835
    
    
    
    3,835Balance at December 31, 2006
    
    $
    178,141
    
    
    $
    158,518
    
    
    $
    79,859
    
    
    $
    416,518Trademark:Balance at June 30, 2006
    
    $
    67,842
    
    
    $
    53,735
    
    
    $
    
    
    
    $
    121,577Acquisition of Interflora
    
    
    
    
    
    
    
    
    
    
    61,764
    
    
    
    61,764Impact of foreign exchange
    
    
    
    
    
    
    
    
    
    
    3,110
    
    
    
    3,110Balance at December 31, 2006
    
    $
    67,842
    
    
    $
    53,735
    
    
    $
    64,874
    
    
    $
    186,451
 December 31, 2006
    
    
    June 30, 2006NetGross Carrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Gross Carrying
    
    
    Accumulated
    
    
    Net CarryingAmount
    
    
    Amortization
    
    
    Amount
    
    
    Amount
    
    
    Amortization
    
    
    AmountAmortizable Intangible Assets:Customer lists
    
    $
    14,634
    
    
    $
    7,474
    
    
    $
    7,160
    
    
    $
    12,836
    
    
    $
    5,940
    
    
    $
    6,896Non-compete agreements
    
    
    100
    
    
    
    70
    
    
    
    30
    
    
    
    100
    
    
    
    53
    
    
    
    47Total
    
    $
    14,734
    
    
    $
    7,544
    
    
    $
    7,190
    
    
    $
    12,936
    
    
    $
    5,993
    
    
    $
    6,943
  Estimated amortization expense (in thousands):For the remaining six-month period ending June 30, 2007
    
    $
    1,601For the year ending June 30, 2008
    
    $
    3,180For the year ending June 30, 2009
    
    $
    2,332For the year ending June 30, 2010
    
    $
    77
 Note 4. Financing Arrangements
  7




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Note 5. Net Income Per Common Share
  Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Net income
    
    $
    6,107
    
    
    $
    5,901
    
    
    $
    11,550
    
    
    $
    9,328Weighted average common
shares outstanding  basic
    
    
    28,335
    
    
    
    29,404
    
    
    
    28,283
    
    
    
    29,429Effect of dilutive securities  stock options
    
    
    1,427
    
    
    
    1,013
    
    
    
    1,196
    
    
    
    1,052Weighted average common
shares outstanding  diluted
    
    
    29,762
    
    
    
    30,417
    
    
    
    29,479
    
    
    
    30,481Net income per share of Common Stock  basic
    
    $
    0.22
    
    
    $
    0.20
    
    
    $
    0.41
    
    
    $
    0.32Net income per share of Common Stock  diluted
    
    $
    0.21
    
    
    $
    0.19
    
    
    $
    0.39
    
    
    $
    0.31
  Note 6. Pension and Other Post-Retirement Benefit Plans
  8




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Salaried Employees Pension PlanThree Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Service cost
    
    $
    13
    
    
    $
    14
    
    
    $
    26
    
    
    $
    28Interest cost
    
    
    26
    
    
    
    27
    
    
    
    52
    
    
    
    55Expected return on assets
    
    
    (23
    )
    
    
    (22
    )
    
    
    (46
    )
    
    
    (45
    )Amortization
    
    
    1
    
    
    
    9
    
    
    
    2
    
    
    
    18Net periodic benefit cost
    
    $
    17
    
    
    $
    28
    
    
    $
    34
    
    
    $
    56
  Retiree Medical PlanThree Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Interest cost
    
    $
    22
    
    
    $
    20
    
    
    $
    44
    
    
    $
    40Net periodic benefit cost
    
    $
    22
    
    
    $
    20
    
    
    $
    44
    
    
    $
    40
 Note 7. Stock-Based Compensation
 Share-Based Payment
   Note 8. Commitments and Contingencies
  9




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##### Table of Contents



Note 9. Segment Information
  www.ftd.com
  www.interflora.co.uk
    10




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##### Table of Contents



Three Months Ended December 31,2006
    
    
    2005Gross Segment
    
    
    Eliminations
    
    
    Consolidated
    
    
    Gross Segment
    
    
    Eliminations
    
    
    Consolidated(in thousands)Revenues:Consumer segment
    
    $
    73,941
    
    
    $
    (4,466
    )
    
    $
    69,475
    
    
    $
    68,003
    
    
    $
    (4,721
    )
    
    $
    63,282Florist segment
    
    
    44,702
    
    
    
    (124
    )
    
    
    44,578
    
    
    
    45,989
    
    
    
    (86
    )
    
    
    45,903International segment
    
    
    37,422
    
    
    
    65
    
    
    
    37,487
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    156,065
    
    
    
    (4,525
    )
    
    
    151,540
    
    
    
    113,992
    
    
    
    (4,807
    )
    
    
    109,185Cost of Products Sold and
Services Provided:Consumer segment
    
    
    50,709
    
    
    
    (669
    )
    
    
    50,040
    
    
    
    47,040
    
    
    
    (643
    )
    
    
    46,397Florist segment
    
    
    13,908
    
    
    
    (844
    )
    
    
    13,064
    
    
    
    14,953
    
    
    
    (851
    )
    
    
    14,102International segment
    
    
    25,740
    
    
    
    (24
    )
    
    
    25,716
    
    
    
    
    
    
    
    
    
    
    
    Corporate
    
    
    498
    
    
    
    
    
    
    
    498
    
    
    
    623
    
    
    
    
    
    
    
    62390,855
    
    
    
    (1,537
    )
    
    
    89,318
    
    
    
    62,616
    
    
    
    (1,494
    )
    
    
    61,122Gross Profit:Consumer segment
    
    
    23,232
    
    
    
    (3,797
    )
    
    
    19,435
    
    
    
    20,963
    
    
    
    (4,078
    )
    
    
    16,885Florist segment
    
    
    30,794
    
    
    
    720
    
    
    
    31,514
    
    
    
    31,036
    
    
    
    765
    
    
    
    31,801International segment
    
    
    11,682
    
    
    
    89
    
    
    
    11,771
    
    
    
    
    
    
    
    
    
    
    
    Corporate
    
    
    (498
    )
    
    
    
    
    
    
    (498
    )
    
    
    (623
    )
    
    
    
    
    
    
    (623
    )Total
    
    
    65,210
    
    
    
    (2,988
    )
    
    
    62,222
    
    
    
    51,376
    
    
    
    (3,313
    )
    
    
    48,063Advertising and Selling:Consumer segment
    
    
    8,855
    
    
    
    
    
    
    
    8,855
    
    
    
    7,835
    
    
    
    
    
    
    
    7,835Florist segment
    
    
    15,850
    
    
    
    (3,076
    )
    
    
    12,774
    
    
    
    17,368
    
    
    
    (3,313
    )
    
    
    14,055International segment
    
    
    3,296
    
    
    
    (70
    )
    
    
    3,226
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    28,001
    
    
    
    (3,146
    )
    
    
    24,855
    
    
    
    25,203
    
    
    
    (3,313
    )
    
    
    21,890General and AdministrativeConsumer segment
    
    
    6,439
    
    
    
    (692
    )
    
    
    5,747
    
    
    
    4,871
    
    
    
    (623
    )
    
    
    4,248Florist segment
    
    
    2,031
    
    
    
    
    
    
    
    2,031
    
    
    
    946
    
    
    
    
    
    
    
    946International segment
    
    
    5,722
    
    
    
    121
    
    
    
    5,843
    
    
    
    
    
    
    
    
    
    
    
    Corporate
    
    
    6,041
    
    
    
    692
    
    
    
    6,733
    
    
    
    5,650
    
    
    
    623
    
    
    
    6,273Total
    
    
    20,233
    
    
    
    121
    
    
    
    20,354
    
    
    
    11,467
    
    
    
    
    
    
    
    11,467Operating Income (Loss)
before Corporate Allocations:Consumer segment
    
    
    7,938
    
    
    
    (3,105
    )
    
    
    4,833
    
    
    
    8,257
    
    
    
    (3,455
    )
    
    
    4,802Florist segment
    
    
    12,913
    
    
    
    3,796
    
    
    
    16,709
    
    
    
    12,722
    
    
    
    4,078
    
    
    
    16,800International segment
    
    
    2,664
    
    
    
    38
    
    
    
    2,702
    
    
    
    
    
    
    
    
    
    
    
    Corporate
    
    
    (6,539
    )
    
    
    (692
    )
    
    
    (7,231
    )
    
    
    (6,273
    )
    
    
    (623
    )
    
    
    (6,896
    )Total
    
    
    16,976
    
    
    
    37
    
    
    
    17,013
    
    
    
    14,706
    
    
    
    
    
    
    
    14,706Corporate Allocations:Consumer segment
    
    
    1,053
    
    
    
    
    
    
    
    1,053
    
    
    
    867
    
    
    
    
    
    
    
    867Florist segment
    
    
    2,331
    
    
    
    
    
    
    
    2,331
    
    
    
    2,683
    
    
    
    
    
    
    
    2,683International segment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corporate
    
    
    (3,384
    )
    
    
    
    
    
    
    (3,384
    )
    
    
    (3,550
    )
    
    
    
    
    
    
    (3,550
    )Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating Income (Loss):Consumer segment
    
    
    6,885
    
    
    
    (3,105
    )
    
    
    3,780
    
    
    
    7,390
    
    
    
    (3,455
    )
    
    
    3,935Florist segment
    
    
    10,582
    
    
    
    3,796
    
    
    
    14,378
    
    
    
    10,039
    
    
    
    4,078
    
    
    
    14,117International segment
    
    
    2,664
    
    
    
    38
    
    
    
    2,702
    
    
    
    
    
    
    
    
    
    
    
    Corporate
    
    
    (3,155
    )
    
    
    (692
    )
    
    
    (3,847
    )
    
    
    (2,723
    )
    
    
    (623
    )
    
    
    (3,346
    )Total
    
    $
    16,976
    
    
    $
    37
    
    
    $
    17,013
    
    
    $
    14,706
    
    
    $
    
    
    
    $
    14,706Depreciation and
Amortization:Consumer segment
    
    $
    993
    
    
    $
    
    
    
    $
    993
    
    
    $
    840
    
    
    $
    
    
    
    $
    840Florist segment
    
    
    797
    
    
    
    
    
    
    
    797
    
    
    
    862
    
    
    
    
    
    
    
    862International segment
    
    
    1,129
    
    
    
    
    
    
    
    1,129
    
    
    
    
    
    
    
    
    
    
    
    Corporate
    
    
    966
    
    
    
    
    
    
    
    966
    
    
    
    965
    
    
    
    
    
    
    
    965Total
    
    $
    3,885
    
    
    $
    
    
    
    $
    3,885
    
    
    $
    2,667
    
    
    $
    
    
    
    $
    2,667
 11




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##### Table of Contents



Six Months Ended December 31,2006
    
    
    2005Gross Segment
    
    
    Eliminations
    
    
    Consolidated
    
    
    Gross Segment
    
    
    Eliminations
    
    
    Consolidated(in thousands)Revenues:Consumer segment
    
    $
    124,809
    
    
    $
    (7,941
    )
    
    $
    116,868
    
    
    $
    112,953
    
    
    $
    (8,112
    )
    
    $
    104,841Florist segment
    
    
    88,583
    
    
    
    (184
    )
    
    
    88,399
    
    
    
    90,344
    
    
    
    (131
    )
    
    
    90,213International segment
    
    
    54,946
    
    
    
    98
    
    
    
    55,044
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    268,338
    
    
    
    (8,027
    )
    
    
    260,311
    
    
    
    203,297
    
    
    
    (8,243
    )
    
    
    195,054Cost of Products Sold and
Services Provided:Consumer segment
    
    
    84,614
    
    
    
    (1,127
    )
    
    
    83,487
    
    
    
    77,917
    
    
    
    (1,062
    )
    
    
    76,855Florist segment
    
    
    29,199
    
    
    
    (1,671
    )
    
    
    27,528
    
    
    
    30,636
    
    
    
    (1,696
    )
    
    
    28,940International segment
    
    
    37,752
    
    
    
    (40
    )
    
    
    37,712
    
    
    
    
    
    
    
    
    
    
    
    Corporate
    
    
    1,014
    
    
    
    
    
    
    
    1,014
    
    
    
    1,185
    
    
    
    
    
    
    
    1,185152,579
    
    
    
    (2,838
    )
    
    
    149,741
    
    
    
    109,738
    
    
    
    (2,758
    )
    
    
    106,980Gross Profit:Consumer segment
    
    
    40,195
    
    
    
    (6,814
    )
    
    
    33,381
    
    
    
    35,036
    
    
    
    (7,050
    )
    
    
    27,986Florist segment
    
    
    59,384
    
    
    
    1,487
    
    
    
    60,871
    
    
    
    59,708
    
    
    
    1,565
    
    
    
    61,273International segment
    
    
    17,194
    
    
    
    138
    
    
    
    17,332
    
    
    
    
    
    
    
    
    
    
    
    Corporate
    
    
    (1,014
    )
    
    
    
    
    
    
    (1,014
    )
    
    
    (1,185
    )
    
    
    
    
    
    
    (1,185
    )Total
    
    
    115,759
    
    
    
    (5,189
    )
    
    
    110,570
    
    
    
    93,559
    
    
    
    (5,485
    )
    
    
    88,074Advertising and Selling:Consumer segment
    
    
    13,741
    
    
    
    
    
    
    
    13,741
    
    
    
    12,367
    
    
    
    
    
    
    
    12,367Florist segment
    
    
    28,574
    
    
    
    (5,325
    )
    
    
    23,249
    
    
    
    32,659
    
    
    
    (5,485
    )
    
    
    27,174International segment
    
    
    4,542
    
    
    
    (113
    )
    
    
    4,429
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    46,857
    
    
    
    (5,438
    )
    
    
    41,419
    
    
    
    45,026
    
    
    
    (5,485
    )
    
    
    39,541General and AdministrativeConsumer segment
    
    
    11,379
    
    
    
    (1,154
    )
    
    
    10,225
    
    
    
    8,526
    
    
    
    (1,050
    )
    
    
    7,476Florist segment
    
    
    4,296
    
    
    
    
    
    
    
    4,296
    
    
    
    3,230
    
    
    
    
    
    
    
    3,230International segment
    
    
    8,745
    
    
    
    257
    
    
    
    9,002
    
    
    
    
    
    
    
    
    
    
    
    Corporate
    
    
    12,087
    
    
    
    1,154
    
    
    
    13,241
    
    
    
    11,640
    
    
    
    1,050
    
    
    
    12,690Total
    
    
    36,507
    
    
    
    257
    
    
    
    36,764
    
    
    
    23,396
    
    
    
    
    
    
    
    23,396Operating Income (Loss)
before Corporate Allocations:Consumer segment
    
    
    15,075
    
    
    
    (5,660
    )
    
    
    9,415
    
    
    
    14,143
    
    
    
    (6,000
    )
    
    
    8,143Florist segment
    
    
    26,514
    
    
    
    6,812
    
    
    
    33,326
    
    
    
    23,819
    
    
    
    7,050
    
    
    
    30,869International segment
    
    
    3,907
    
    
    
    (6
    )
    
    
    3,901
    
    
    
    
    
    
    
    
    
    
    
    Corporate
    
    
    (13,101
    )
    
    
    (1,154
    )
    
    
    (14,255
    )
    
    
    (12,825
    )
    
    
    (1,050
    )
    
    
    (13,875
    )Total
    
    
    32,395
    
    
    
    (8
    )
    
    
    32,387
    
    
    
    25,137
    
    
    
    
    
    
    
    25,137Corporate Allocations:Consumer segment
    
    
    1,870
    
    
    
    
    
    
    
    1,870
    
    
    
    1,602
    
    
    
    
    
    
    
    1,602Florist segment
    
    
    4,723
    
    
    
    
    
    
    
    4,723
    
    
    
    5,496
    
    
    
    
    
    
    
    5,496International segment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corporate
    
    
    (6,593
    )
    
    
    
    
    
    
    (6,593
    )
    
    
    (7,098
    )
    
    
    
    
    
    
    (7,098
    )Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating Income (Loss):Consumer segment
    
    
    13,205
    
    
    
    (5,660
    )
    
    
    7,545
    
    
    
    12,541
    
    
    
    (6,000
    )
    
    
    6,541Florist segment
    
    
    21,791
    
    
    
    6,812
    
    
    
    28,603
    
    
    
    18,323
    
    
    
    7,050
    
    
    
    25,373International segment
    
    
    3,907
    
    
    
    (6
    )
    
    
    3,901
    
    
    
    
    
    
    
    
    
    
    
    Corporate
    
    
    (6,508
    )
    
    
    (1,154
    )
    
    
    (7,662
    )
    
    
    (5,727
    )
    
    
    (1,050
    )
    
    
    (6,777
    )Total
    
    $
    32,395
    
    
    $
    (8
    )
    
    $
    32,387
    
    
    $
    25,137
    
    
    $
    
    
    
    $
    25,137Depreciation and
Amortization:Consumer segment
    
    $
    1,933
    
    
    $
    
    
    
    $
    1,933
    
    
    $
    1,457
    
    
    $
    
    
    
    $
    1,457Florist segment
    
    
    1,631
    
    
    
    
    
    
    
    1,631
    
    
    
    1,730
    
    
    
    
    
    
    
    1,730International segment
    
    
    1,705
    
    
    
    
    
    
    
    1,705
    
    
    
    
    
    
    
    
    
    
    
    Corporate
    
    
    1,932
    
    
    
    
    
    
    
    1,932
    
    
    
    1,929
    
    
    
    
    
    
    
    1,929Total
    
    $
    7,201
    
    
    $
    
    
    
    $
    7,201
    
    
    $
    5,116
    
    
    $
    
    
    
    $
    5,116
 12




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-Looking Information
   Overview
   Consumer Segment. www.ftd.com
 Florist Segment.
 13




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##### Table of Contents



International Segment
 Corporate Segment.
 Seasonality.
  Three Months Ended December 31, 2006 compared to the Three Months Ended December 31, 2005
 Total revenues
 Three Months EndedDecember 31,2006
    
    
    2005
    
    
    % Change(in thousands)Consumer segment
    
    $
    69,475
    
    
    $
    63,282
    
    
    
    9.8
    %Florist segment
    
    
    44,578
    
    
    
    45,903
    
    
    
    (2.9
    %)International segment
    
    
    37,487
    
    
    
    
    
    
    
    N/ATotal revenues
    
    $
    151,540
    
    
    $
    109,185
    
    
    
    38.8
    %
    14




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##### Table of Contents



Total gross profit
 Three Months EndedDecember 31,2006
    
    
    2005
    
    
    % Change(in thousands)Consumer segment
    
    $
    19,435
    
    
    $
    16,885
    
    
    
    15.1
    %Florist segment
    
    
    31,514
    
    
    
    31,801
    
    
    
    (0.9
    %)International segment
    
    
    11,771
    
    
    
    
    
    
    
    N/ACorporate
    
    
    (498
    )
    
    
    (623
    )
    
    
    (20.1
    %)Total gross profit
    
    $
    62,222
    
    
    $
    48,063
    
    
    
    29.5
    %
      Advertising and selling costs
 Three Months EndedDecember 31,2006
    
    
    2005
    
    
    % Change(in thousands)Consumer segment
    
    $
    8,855
    
    
    $
    7,835
    
    
    
    13.0
    %Florist segment
    
    
    12,774
    
    
    
    14,055
    
    
    
    (9.1
    %)International segment
    
    
    3,226
    
    
    
    
    
    
    
    N/ATotal advertising and selling costs
    
    $
    24,855
    
    
    $
    21,890
    
    
    
    13.5
    %
 15




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##### Table of Contents



General and administrative costs
 Three Months EndedDecember 31,2006
    
    
    2005
    
    
    % Change(in thousands)Consumer segment
    
    $
    5,747
    
    
    $
    4,248
    
    
    
    35.3
    %Florist segment
    
    
    2,031
    
    
    
    946
    
    
    
    114.7
    %International segment
    
    
    5,843
    
    
    
    
    
    
    
    N/ACorporate
    
    
    6,733
    
    
    
    6,273
    
    
    
    7.3
    %Total general and administrative costs
    
    $
    20,354
    
    
    $
    11,467
    
    
    
    77.5
    %
      16




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##### Table of Contents



Other income and expenses
 Three Months EndedDecember 31,2006
    
    
    2005
    
    
    % Change(in thousands)Interest income
    
    $
    (339
    )
    
    $
    (129
    )
    
    
    162.8
    %Interest expense
    
    
    7,009
    
    
    
    4,986
    
    
    
    40.6
    %Other expense (income), net
    
    
    249
    
    
    
    (44
    )
    
    
    (665.9
    %)Total other income and expenses
    
    $
    6,919
    
    
    $
    4,813
    
    
    
    43.8
    %
    Six Months Ended December 31, 2006 compared to the Six Months Ended December 31, 2005
  Total revenues
 Six Months EndedDecember 31,2006
    
    
    2005
    
    
    % Change(in thousands)Consumer segment
    
    $
    116,868
    
    
    $
    104,841
    
    
    
    11.5
    %Florist segment
    
    
    88,399
    
    
    
    90,213
    
    
    
    (2.0
    %)International segment
    
    
    55,044
    
    
    
    
    
    
    
    N/ATotal revenues
    
    $
    260,311
    
    
    $
    195,054
    
    
    
    33.5
    %
   17




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##### Table of Contents



Total gross profit
 Six Months EndedDecember 31,2006
    
    
    2005
    
    
    % Change(in thousands)Consumer segment
    
    $
    33,381
    
    
    $
    27,986
    
    
    
    19.3
    %Florist segment
    
    
    60,871
    
    
    
    61,273
    
    
    
    (0.7
    %)International segment
    
    
    17,332
    
    
    
    
    
    
    
    N/ACorporate
    
    
    (1,014
    )
    
    
    (1,185
    )
    
    
    (14.4
    %)Total gross profit
    
    $
    110,570
    
    
    $
    88,074
    
    
    
    25.5
    %
      18




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##### Table of Contents



Advertising and selling costs
 Six Months EndedDecember 31,2006
    
    
    2005
    
    
    % Change(in thousands)Consumer segment
    
    $
    13,741
    
    
    $
    12,367
    
    
    
    11.1
    %Florist segment
    
    
    23,249
    
    
    
    27,174
    
    
    
    (14.4
    %)International segment
    
    
    4,429
    
    
    
    
    
    
    
    N/ATotal advertising and selling costs
    
    $
    41,419
    
    
    $
    39,541
    
    
    
    4.7
    %
     General and administrative costs
 Six Months EndedDecember 31,2006
    
    
    2005
    
    
    % Change(in thousands)Consumer segment
    
    $
    10,225
    
    
    $
    7,476
    
    
    
    36.8
    %Florist segment
    
    
    4,296
    
    
    
    3,230
    
    
    
    33.0
    %International segment
    
    
    9,002
    
    
    
    
    
    
    
    N/ACorporate
    
    
    13,241
    
    
    
    12,690
    
    
    
    4.3
    %Total general and administrative costs
    
    $
    36,764
    
    
    $
    23,396
    
    
    
    57.1
    %
    19




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##### Table of Contents



Other income and expenses
 Six Months EndedDecember 31,2006
    
    
    2005
    
    
    % Change(in thousands)Interest income
    
    $
    (637
    )
    
    $
    (295
    )
    
    
    115.9
    %Interest expense
    
    
    15,235
    
    
    
    9,767
    
    
    
    56.0
    %Other expense (income), net
    
    
    (1,295
    )
    
    
    (88
    )
    
    
    1371.6
    %Total other income and expenses
    
    $
    13,303
    
    
    $
    9,384
    
    
    
    41.8
    %
    Liquidity and Capital Resources
    20




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##### Table of Contents



Critical Accounting Policies and Estimates
    
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
   21




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##### Table of Contents



Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  22




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##### 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
     
 Item 4. Submission of Matters to a Vote of Security Holders
 (a)
    
    The Annual Meeting of the Stockholders was held on November 15, 2006.(b)
    
    At the Annual Meeting of Stockholders, the stockholders voted to elect ten
directors to the Board of Directors of the Company to serve for a term of one year. The
votes for the director nominees were as follows:
 Director Nominee
    
    For
    
    WithholdPeter J. Nolan
    
    
    20,725,423
    
    
    
    5,969,664Robert S. Apatoff
    
    
    20,612,966
    
    
    
    6,082,121Adam M. Aron
    
    
    26,471,837
    
    
    
    223,250John R. Baumer
    
    
    21,669,342
    
    
    
    5,025,745William J. Chardavoyne
    
    
    26,502,437
    
    
    
    192,650
 23




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##### Table of Contents



Director Nominee
    
    For
    
    WithholdTimothy J. Flynn
    
    
    20,702,654
    
    
    
    5,992,433Ted C. Nark
    
    
    20,734,926
    
    
    
    5,960,161Michael J. Soenen
    
    
    21,653,436
    
    
    
    5,041,651Thomas M. White
    
    
    26,505,937
    
    
    
    189,150Carrie A. Wolfe
    
    
    21,625,032
    
    
    
    5,070,055
 (c)
    
    The results of stockholder voting on Proposal 2 were as follows:Proposal 2  The ratification of the appointment of Ernst & Young LLP as the
Companys independent registered public accounting firm for the fiscal year ending
June 30, 2007.
 For
    
    Against
    
    Abstain25,950,917
    
    743,920
    
    250
 
 Item 6. Exhibits
 31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of
Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of
Sarbanes-Oxley Act of 2002.32
    
    Certifications of Chief Executive Officer and Chief Financial Officer pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
 24




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##### Table of Contents



SIGNATURES
  FTD Group, Inc.Date: February 7, 2007
    
    By:
    
    /S/ BECKY A. SHEEHANBecky A. SheehanChief Financial Officer(principal financial officer)
 25




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##### Table of Contents



EXHIBIT INDEX
 Exhibit Number
    
    Description of Document31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of
Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of
Sarbanes-Oxley Act of 2002.32
    
    Certifications of Chief Executive Officer and Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
 26