##### 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, 2008
 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
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company 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
    
    
    14Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    24Item 4. Controls and Procedures
    
    
    25Part II. Other InformationItem 1. Legal Proceedings
    
    
    26Item 1A. Risk Factors
    
    
    26Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    26Item 6. Exhibits
    
    
    27Signature
    
    
    28Index of Exhibits
    
    
    29Certification of CEOCertification of CFOSection 906 Certifications




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 FTD GROUP, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands)
 March 31, 2008
    
    
    June 30, 2007(Unaudited)ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    33,997
    
    
    $
    25,462Accounts receivable, less allowance for doubtful accounts
of $6,736 at March 31, 2008 and $5,431 at June 30, 2007
    
    
    38,958
    
    
    
    32,416Inventories, net
    
    
    4,356
    
    
    
    3,694Other current assets
    
    
    11,844
    
    
    
    9,500Total Current Assets
    
    
    89,155
    
    
    
    71,072Property and Equipment:Property and equipment
    
    
    36,931
    
    
    
    35,791Less accumulated depreciation
    
    
    14,425
    
    
    
    11,018Property and Equipment, net
    
    
    22,506
    
    
    
    24,773Other Assets:Computer software, net
    
    
    12,674
    
    
    
    12,699Other noncurrent assets
    
    
    23,228
    
    
    
    21,085Other intangible assets, less accumulated amortization of
$11,548 at March 31, 2008 and $9,154 at June 30, 2007
    
    
    11,052
    
    
    
    13,454Trademarks
    
    
    187,525
    
    
    
    187,816Goodwill
    
    
    417,645
    
    
    
    418,001Total Other Assets
    
    
    652,124
    
    
    
    653,055Total Assets
    
    $
    763,785
    
    
    $
    748,900LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    70,547
    
    
    $
    52,009Other accrued liabilities
    
    
    29,856
    
    
    
    28,511Current maturities of long-term debt
    
    
    1,242
    
    
    
    8,475Dividends payable
    
    
    4,801
    
    
    
    4,707Total Current Liabilities
    
    
    106,446
    
    
    
    93,702Senior secured credit facility
    
    
    121,079
    
    
    
    133,418Senior subordinated notes
    
    
    170,117
    
    
    
    170,117Post-retirement benefits, accrued pension obligations and other liabilities
    
    
    5,319
    
    
    
    4,535Deferred income taxes
    
    
    80,072
    
    
    
    85,350Stockholders Equity:Common stock: $0.01 par value, 75,000 shares authorized; 29,832 shares issued
as of March 31, 2008 and 29,482 shares issued as of
June 30, 2007
    
    
    298
    
    
    
    295Additional paid-in capital
    
    
    237,142
    
    
    
    235,589Retained earnings
    
    
    33,657
    
    
    
    20,952Accumulated other comprehensive income
    
    
    9,655
    
    
    
    9,933Treasury stock, at cost, 519 shares as of June 30, 2007
    
    
    
    
    
    
    (4,991
    )Total Stockholders Equity
    
    
    280,752
    
    
    
    261,778Total Liabilities and Stockholders Equity
    
    $
    763,785
    
    
    $
    748,900
  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
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues:Products
    
    $
    149,726
    
    
    $
    143,483
    
    
    $
    353,551
    
    
    $
    333,184Services
    
    
    42,261
    
    
    
    39,416
    
    
    
    117,670
    
    
    
    110,026Total revenues
    
    
    191,987
    
    
    
    182,899
    
    
    
    471,221
    
    
    
    443,210Costs of Products Sold and Services Provided:Products
    
    
    114,193
    
    
    
    108,168
    
    
    
    268,142
    
    
    
    248,714Services
    
    
    4,848
    
    
    
    3,435
    
    
    
    14,029
    
    
    
    12,630Total costs of products sold and
services provided
    
    
    119,041
    
    
    
    111,603
    
    
    
    282,171
    
    
    
    261,344Gross Profit:Products
    
    
    35,533
    
    
    
    35,315
    
    
    
    85,409
    
    
    
    84,470Services
    
    
    37,413
    
    
    
    35,981
    
    
    
    103,641
    
    
    
    97,396Total gross profit
    
    
    72,946
    
    
    
    71,296
    
    
    
    189,050
    
    
    
    181,866Operating Expenses:Advertising and selling
    
    
    29,575
    
    
    
    27,348
    
    
    
    69,163
    
    
    
    68,767General and administrative
    
    
    23,912
    
    
    
    21,498
    
    
    
    63,415
    
    
    
    58,262Total operating expenses
    
    
    53,487
    
    
    
    48,846
    
    
    
    132,578
    
    
    
    127,029Income from operations
    
    
    19,459
    
    
    
    22,450
    
    
    
    56,472
    
    
    
    54,837Other Income and Expenses:Interest income
    
    
    (399
    )
    
    
    (489
    )
    
    
    (1,020
    )
    
    
    (1,126
    )Interest expense
    
    
    5,456
    
    
    
    6,444
    
    
    
    17,998
    
    
    
    21,679Other (income) expense, net
    
    
    23
    
    
    
    570
    
    
    
    (325
    )
    
    
    (725
    )Total other income and expenses
    
    
    5,080
    
    
    
    6,525
    
    
    
    16,653
    
    
    
    19,828Income before income tax expense
    
    
    14,379
    
    
    
    15,925
    
    
    
    39,819
    
    
    
    35,009Income tax expense
    
    
    5,086
    
    
    
    6,310
    
    
    
    13,404
    
    
    
    13,844Net income
    
    $
    9,293
    
    
    $
    9,615
    
    
    $
    26,415
    
    
    $
    21,165Other Comprehensive Income (Loss):Foreign currency translation adjustments
    
    
    (51
    )
    
    
    88
    
    
    
    (278
    )
    
    
    6,475Comprehensive income
    
    $
    9,242
    
    
    $
    9,703
    
    
    $
    26,137
    
    
    $
    27,640Net income per Common Share  basic
    
    $
    0.31
    
    
    $
    0.34
    
    
    $
    0.90
    
    
    $
    0.75Net income per Common Share  diluted
    
    $
    0.31
    
    
    $
    0.32
    
    
    $
    0.89
    
    
    $
    0.72Weighted Average Common Shares Outstanding:Basic
    
    
    29,520
    
    
    
    28,462
    
    
    
    29,365
    
    
    
    28,343Diluted
    
    
    29,755
    
    
    
    29,827
    
    
    
    29,698
    
    
    
    29,510Cash Dividends Declared per Common Share
    
    $
    0.1625
    
    
    $
    0.1625
    
    
    $
    0.4875
    
    
    $
    0.1625
  3




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FTD GROUP, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 (In thousands)
 Nine Months EndedMarch 31,2008
    
    
    2007Cash Flows from Operating Activities:Net income
    
    $
    26,415
    
    
    $
    21,165Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    9,463
    
    
    
    10,890Stock-based compensation expense
    
    
    1,947
    
    
    
    1,451Amortization
and write-off of deferred financing costs
    
    
    742
    
    
    
    2,512Provision for doubtful accounts
    
    
    2,504
    
    
    
    2,088Deferred income taxes
    
    
    (5,817
    )
    
    
    2,706Excess tax benefit from stock-based compensation
    
    
    (2,421
    )
    
    
    (1,904
    )(Decrease) increase due to changes in operating assets and liabilities, net of acquisition:Accounts receivable
    
    
    (8,963
    )
    
    
    (9,743
    )Inventories
    
    
    (663
    )
    
    
    (341
    )Other current assets
    
    
    (1,007
    )
    
    
    1,058Other noncurrent assets
    
    
    (3,160
    )
    
    
    283Accounts payable
    
    
    17,849
    
    
    
    2,444Other accrued liabilities
    
    
    5,365
    
    
    
    4,784Net cash provided by operating activities
    
    
    42,254
    
    
    
    37,393Cash Flows from Investing Activities:Capital expenditures
    
    
    (4,795
    )
    
    
    (6,027
    )Dividends received
    
    
    48
    
    
    
    Acquisition of business, net of cash acquired
    
    
    
    
    
    
    (96,717
    )Net cash used in investing activities
    
    
    (4,747
    )
    
    
    (102,744
    )Cash Flows from Financing Activities:Repayments of long-term debt
    
    
    (19,572
    )
    
    
    (57,750
    )Dividends paid
    
    
    (14,366
    )
    
    
    Proceeds from exercise of stock options
    
    
    2,187
    
    
    
    2,315Excess tax benefit from stock-based compensation
    
    
    2,421
    
    
    
    1,904Proceeds from issuance of common stock
    
    
    6
    
    
    
    Proceeds from issuance of long-term debt, net of financing costs
    
    
    
    
    
    
    148,536Net cash (used in) provided by financing activities
    
    
    (29,324
    )
    
    
    95,005Effect of foreign exchange rate changes on cash and cash equivalents
    
    
    352
    
    
    
    771Net increase in cash and cash equivalents
    
    
    8,535
    
    
    
    30,425Cash and cash equivalents at beginning of period
    
    
    25,462
    
    
    
    10,954Cash and cash equivalents at end of period
    
    $
    33,997
    
    
    $
    41,379Supplemental disclosures of cash flow informationNon-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
    
    $
    
    
    
    $
    3,206
  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
 Business Combinations
 Noncontrolling Interests in Consolidated
Financial Statementsan amendment of Accounting Research Bulletin No. 51
 Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards
 5




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The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115
 Fair
Value Measurements
 Note 2. Acquisition of Interflora Holdings Limited
  6




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Nine Months EndedMarch 31,2007Pro forma revenues
    
    $
    453,863Pro forma income from operations
    
    $
    55,712Pro forma net income
    
    $
    21,335Pro forma net income per share  basic
    
    $
    0.75Pro forma net income per share  diluted
    
    $
    0.72
  Note 3. Income Taxes
  Accounting for
Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109
 7




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##### Table of Contents



Note 4. Financing Arrangements
      8




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##### Table of Contents



Note 5. Net Income Per Common Share
  Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income
    
    $
    9,293
    
    
    $
    9,615
    
    
    $
    26,415
    
    
    $
    21,165Weighted average common
shares outstanding  basic
    
    
    29,520
    
    
    
    28,462
    
    
    
    29,365
    
    
    
    28,343Effect of dilutive securities  stock options
and restricted stock
    
    
    235
    
    
    
    1,365
    
    
    
    333
    
    
    
    1,167Weighted average common
shares outstanding  diluted
    
    
    29,755
    
    
    
    29,827
    
    
    
    29,698
    
    
    
    29,510Net income per share of Common Stock  basic
    
    $
    0.31
    
    
    $
    0.34
    
    
    $
    0.90
    
    
    $
    0.75Net income per share of Common Stock  diluted
    
    $
    0.31
    
    
    $
    0.32
    
    
    $
    0.89
    
    
    $
    0.72
  Note 6. Stock-Based Compensation
    9




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Note 7. Commitments and Contingencies
  Note 8. Segment Information
    , www.ftd.com
  www.interflora.co.uk
  March 31,2008
    
    
    2007Consumer segment
    
    $
    263,686
    
    
    $
    266,017Florist segment*
    
    
    315,588
    
    
    
    316,139International segment
    
    
    184,511
    
    
    
    197,228Total
    
    $
    763,785
    
    
    $
    779,384
 
 *
    
    Includes corporate assets.  10




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Three Months Ended March 31,2008
    
    
    2007(In thousands)
    
    Gross Segment
    
    
    Eliminations
    
    
    Consolidated
    
    
    Gross Segment
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Consumer segment
    
    $
    85,082
    
    
    $
    (3,396
    )
    
    $
    81,686
    
    
    $
    83,244
    
    
    $
    (3,028
    )
    
    $
    80,216Florist segment
    
    
    49,385
    
    
    
    (121
    )
    
    
    49,264
    
    
    
    49,221
    
    
    
    (98
    )
    
    
    49,123International segment
    
    
    60,940
    
    
    
    97
    
    
    
    61,037
    
    
    
    53,476
    
    
    
    84
    
    
    
    53,560Total
    
    
    195,407
    
    
    
    (3,420
    )
    
    
    191,987
    
    
    
    185,941
    
    
    
    (3,042
    )
    
    
    182,899Cost of Products Sold and

Services Provided:Consumer segment
    
    
    58,435
    
    
    
    (121
    )
    
    
    58,314
    
    
    
    57,078
    
    
    
    (98
    )
    
    
    56,980Florist segment
    
    
    17,483
    
    
    
    
    
    
    
    17,483
    
    
    
    16,639
    
    
    
    
    
    
    
    16,639International segment
    
    
    42,761
    
    
    
    (31
    )
    
    
    42,730
    
    
    
    37,528
    
    
    
    (37
    )
    
    
    37,491Corporate
    
    
    514
    
    
    
    
    
    
    
    514
    
    
    
    493
    
    
    
    
    
    
    
    493119,193
    
    
    
    (152
    )
    
    
    119,041
    
    
    
    111,738
    
    
    
    (135
    )
    
    
    111,603Gross Profit:Consumer segment
    
    
    26,647
    
    
    
    (3,275
    )
    
    
    23,372
    
    
    
    26,166
    
    
    
    (2,930
    )
    
    
    23,236Florist segment
    
    
    31,902
    
    
    
    (121
    )
    
    
    31,781
    
    
    
    32,582
    
    
    
    (98
    )
    
    
    32,484International segment
    
    
    18,179
    
    
    
    128
    
    
    
    18,307
    
    
    
    15,948
    
    
    
    121
    
    
    
    16,069Corporate
    
    
    (514
    )
    
    
    
    
    
    
    (514
    )
    
    
    (493
    )
    
    
    
    
    
    
    (493
    )Total
    
    
    76,214
    
    
    
    (3,268
    )
    
    
    72,946
    
    
    
    74,203
    
    
    
    (2,907
    )
    
    
    71,296Advertising and Selling:Consumer segment
    
    
    11,681
    
    
    
    
    
    
    
    11,681
    
    
    
    11,346
    
    
    
    
    
    
    
    11,346Florist segment
    
    
    15,935
    
    
    
    (3,396
    )
    
    
    12,539
    
    
    
    14,821
    
    
    
    (3,028
    )
    
    
    11,793International segment
    
    
    5,324
    
    
    
    31
    
    
    
    5,355
    
    
    
    4,292
    
    
    
    (83
    )
    
    
    4,209Total
    
    
    32,940
    
    
    
    (3,365
    )
    
    
    29,575
    
    
    
    30,459
    
    
    
    (3,111
    )
    
    
    27,348General
and Administrative:Consumer segment
    
    
    5,637
    
    
    
    
    
    
    
    5,637
    
    
    
    6,525
    
    
    
    
    
    
    
    6,525Florist segment
    
    
    2,292
    
    
    
    
    
    
    
    2,292
    
    
    
    2,052
    
    
    
    
    
    
    
    2,052International segment
    
    
    5,637
    
    
    
    (26
    )
    
    
    5,611
    
    
    
    6,486
    
    
    
    61
    
    
    
    6,547Corporate
    
    
    10,372
    
    
    
    
    
    
    
    10,372
    
    
    
    6,374
    
    
    
    
    
    
    
    6,374Total
    
    
    23,938
    
    
    
    (26
    )
    
    
    23,912
    
    
    
    21,437
    
    
    
    61
    
    
    
    21,498Operating Income (Loss)
before Corporate Allocations:Consumer segment
    
    
    9,329
    
    
    
    (3,275
    )
    
    
    6,054
    
    
    
    8,295
    
    
    
    (2,930
    )
    
    
    5,365Florist segment
    
    
    13,675
    
    
    
    3,275
    
    
    
    16,950
    
    
    
    15,709
    
    
    
    2,930
    
    
    
    18,639International segment
    
    
    7,218
    
    
    
    123
    
    
    
    7,341
    
    
    
    5,170
    
    
    
    143
    
    
    
    5,313Corporate
    
    
    (10,886
    )
    
    
    
    
    
    
    (10,886
    )
    
    
    (6,867
    )
    
    
    
    
    
    
    (6,867
    )Total
    
    
    19,336
    
    
    
    123
    
    
    
    19,459
    
    
    
    22,307
    
    
    
    143
    
    
    
    22,450Corporate Allocations:Consumer segment
    
    
    1,311
    
    
    
    
    
    
    
    1,311
    
    
    
    1,151
    
    
    
    
    
    
    
    1,151Florist segment
    
    
    2,479
    
    
    
    
    
    
    
    2,479
    
    
    
    2,284
    
    
    
    
    
    
    
    2,284International segment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corporate
    
    
    (3,790
    )
    
    
    
    
    
    
    (3,790
    )
    
    
    (3,435
    )
    
    
    
    
    
    
    (3,435
    )Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating Income (Loss):Consumer segment
    
    
    8,018
    
    
    
    (3,275
    )
    
    
    4,743
    
    
    
    7,144
    
    
    
    (2,930
    )
    
    
    4,214Florist segment
    
    
    11,196
    
    
    
    3,275
    
    
    
    14,471
    
    
    
    13,425
    
    
    
    2,930
    
    
    
    16,355International segment
    
    
    7,218
    
    
    
    123
    
    
    
    7,341
    
    
    
    5,170
    
    
    
    143
    
    
    
    5,313Corporate
    
    
    (7,096
    )
    
    
    
    
    
    
    (7,096
    )
    
    
    (3,432
    )
    
    
    
    
    
    
    (3,432
    )Total
    
    $
    19,336
    
    
    $
    123
    
    
    $
    19,459
    
    
    $
    22,307
    
    
    $
    143
    
    
    $
    22,450Depreciation and
Amortization:Consumer segment
    
    $
    877
    
    
    $
    
    
    
    $
    877
    
    
    $
    950
    
    
    $
    
    
    
    $
    950Florist segment
    
    
    660
    
    
    
    
    
    
    
    660
    
    
    
    799
    
    
    
    
    
    
    
    799International segment
    
    
    851
    
    
    
    
    
    
    
    851
    
    
    
    1,078
    
    
    
    
    
    
    
    1,078Corporate
    
    
    656
    
    
    
    
    
    
    
    656
    
    
    
    862
    
    
    
    
    
    
    
    862Total
    
    $
    3,044
    
    
    $
    
    
    
    $
    3,044
    
    
    $
    3,689
    
    
    $
    
    
    
    $
    3,689
 11




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##### Table of Contents



Nine Months Ended March 31,2008
    
    
    2007(In thousands)
    
    Gross Segment
    
    
    Eliminations
    
    
    Consolidated
    
    
    Gross Segment
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Consumer segment
    
    $
    200,459
    
    
    $
    (8,419
    )
    
    $
    192,040
    
    
    $
    205,437
    
    
    $
    (8,353
    )
    
    $
    197,084Florist segment
    
    
    137,037
    
    
    
    (351
    )
    
    
    136,686
    
    
    
    137,834
    
    
    
    (312
    )
    
    
    137,522International segment
    
    
    142,197
    
    
    
    298
    
    
    
    142,495
    
    
    
    108,422
    
    
    
    182
    
    
    
    108,604Total
    
    
    479,693
    
    
    
    (8,472
    )
    
    
    471,221
    
    
    
    451,693
    
    
    
    (8,483
    )
    
    
    443,210Cost of Products Sold and
Services Provided:Consumer segment
    
    
    136,114
    
    
    
    (351
    )
    
    
    135,763
    
    
    
    140,779
    
    
    
    (312
    )
    
    
    140,467Florist segment
    
    
    46,811
    
    
    
    
    
    
    
    46,811
    
    
    
    44,167
    
    
    
    
    
    
    
    44,167International segment
    
    
    98,229
    
    
    
    (99
    )
    
    
    98,130
    
    
    
    75,280
    
    
    
    (77
    )
    
    
    75,203Corporate
    
    
    1,467
    
    
    
    
    
    
    
    1,467
    
    
    
    1,507
    
    
    
    
    
    
    
    1,507282,621
    
    
    
    (450
    )
    
    
    282,171
    
    
    
    261,733
    
    
    
    (389
    )
    
    
    261,344Gross Profit:Consumer segment
    
    
    64,345
    
    
    
    (8,068
    )
    
    
    56,277
    
    
    
    64,658
    
    
    
    (8,041
    )
    
    
    56,617Florist segment
    
    
    90,226
    
    
    
    (351
    )
    
    
    89,875
    
    
    
    93,667
    
    
    
    (312
    )
    
    
    93,355International segment
    
    
    43,968
    
    
    
    397
    
    
    
    44,365
    
    
    
    33,142
    
    
    
    259
    
    
    
    33,401Corporate
    
    
    (1,467
    )
    
    
    
    
    
    
    (1,467
    )
    
    
    (1,507
    )
    
    
    
    
    
    
    (1,507
    )Total
    
    
    197,072
    
    
    
    (8,022
    )
    
    
    189,050
    
    
    
    189,960
    
    
    
    (8,094
    )
    
    
    181,866Advertising and Selling:Consumer segment
    
    
    23,915
    
    
    
    
    
    
    
    23,915
    
    
    
    25,087
    
    
    
    
    
    
    
    25,087Florist segment
    
    
    41,321
    
    
    
    (8,419
    )
    
    
    32,902
    
    
    
    43,395
    
    
    
    (8,353
    )
    
    
    35,042International segment
    
    
    12,280
    
    
    
    66
    
    
    
    12,346
    
    
    
    8,834
    
    
    
    (196
    )
    
    
    8,638Total
    
    
    77,516
    
    
    
    (8,353
    )
    
    
    69,163
    
    
    
    77,316
    
    
    
    (8,549
    )
    
    
    68,767General
and Administrative:Consumer segment
    
    
    14,515
    
    
    
    
    
    
    
    14,515
    
    
    
    16,750
    
    
    
    
    
    
    
    16,750Florist segment
    
    
    6,570
    
    
    
    
    
    
    
    6,570
    
    
    
    6,348
    
    
    
    
    
    
    
    6,348International segment
    
    
    17,584
    
    
    
    6
    
    
    
    17,590
    
    
    
    15,231
    
    
    
    318
    
    
    
    15,549Corporate
    
    
    24,740
    
    
    
    
    
    
    
    24,740
    
    
    
    19,615
    
    
    
    
    
    
    
    19,615Total
    
    
    63,409
    
    
    
    6
    
    
    
    63,415
    
    
    
    57,944
    
    
    
    318
    
    
    
    58,262Operating Income (Loss)
before Corporate Allocations:Consumer segment
    
    
    25,915
    
    
    
    (8,068
    )
    
    
    17,847
    
    
    
    22,821
    
    
    
    (8,041
    )
    
    
    14,780Florist segment
    
    
    42,335
    
    
    
    8,068
    
    
    
    50,403
    
    
    
    43,924
    
    
    
    8,041
    
    
    
    51,965International segment
    
    
    14,104
    
    
    
    325
    
    
    
    14,429
    
    
    
    9,077
    
    
    
    137
    
    
    
    9,214Corporate
    
    
    (26,207
    )
    
    
    
    
    
    
    (26,207
    )
    
    
    (21,122
    )
    
    
    
    
    
    
    (21,122
    )Total
    
    
    56,147
    
    
    
    325
    
    
    
    56,472
    
    
    
    54,700
    
    
    
    137
    
    
    
    54,837Corporate Allocations:Consumer segment
    
    
    3,339
    
    
    
    
    
    
    
    3,339
    
    
    
    3,021
    
    
    
    
    
    
    
    3,021Florist segment
    
    
    8,039
    
    
    
    
    
    
    
    8,039
    
    
    
    7,007
    
    
    
    
    
    
    
    7,007International segment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corporate
    
    
    (11,378
    )
    
    
    
    
    
    
    (11,378
    )
    
    
    (10,028
    )
    
    
    
    
    
    
    (10,028
    )Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating Income (Loss):Consumer segment
    
    
    22,576
    
    
    
    (8,068
    )
    
    
    14,508
    
    
    
    19,800
    
    
    
    (8,041
    )
    
    
    11,759Florist segment
    
    
    34,296
    
    
    
    8,068
    
    
    
    42,364
    
    
    
    36,917
    
    
    
    8,041
    
    
    
    44,958International segment
    
    
    14,104
    
    
    
    325
    
    
    
    14,429
    
    
    
    9,077
    
    
    
    137
    
    
    
    9,214Corporate
    
    
    (14,829
    )
    
    
    
    
    
    
    (14,829
    )
    
    
    (11,094
    )
    
    
    
    
    
    
    (11,094
    )Total
    
    $
    56,147
    
    
    $
    325
    
    
    $
    56,472
    
    
    $
    54,700
    
    
    $
    137
    
    
    $
    54,837Depreciation and
Amortization:Consumer segment
    
    $
    2,645
    
    
    $
    
    
    
    $
    2,645
    
    
    $
    2,883
    
    
    $
    
    
    
    $
    2,883Florist segment
    
    
    1,970
    
    
    
    
    
    
    
    1,970
    
    
    
    2,430
    
    
    
    
    
    
    
    2,430International segment
    
    
    2,882
    
    
    
    
    
    
    
    2,882
    
    
    
    2,783
    
    
    
    
    
    
    
    2,783Corporate
    
    
    1,966
    
    
    
    
    
    
    
    1,966
    
    
    
    2,794
    
    
    
    
    
    
    
    2,794Total
    
    $
    9,463
    
    
    $
    
    
    
    $
    9,463
    
    
    $
    10,890
    
    
    $
    
    
    
    $
    10,890
 12




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##### Table of Contents



Note 9. Subsequent Events
       13




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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.
 14




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##### Table of Contents



International Segment www.interflora.co.uk
 Corporate Costs.
 Seasonality.
  Acquisition
of Company by United Online, Inc.
      15




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##### Table of Contents



Three Months Ended March 31, 2008 compared to the Three Months Ended March 31, 2007
 Revenues
 Three Months EndedMarch 31,2008
    
    
    2007
    
    
    % Change(In thousands)Consumer segment
    
    $
    81,686
    
    
    $
    80,216
    
    
    
    1.8
    %Florist segment
    
    
    49,264
    
    
    
    49,123
    
    
    
    0.3
    %International segment
    
    
    61,037
    
    
    
    53,560
    
    
    
    14.0
    %Total revenues
    
    $
    191,987
    
    
    $
    182,899
    
    
    
    5.0
    %
     Gross profit
 Three Months EndedMarch 31,(In thousands)
    
    2008
    
    
    2007
    
    
    % ChangeConsumer segment
    
    $
    23,372
    
    
    $
    23,236
    
    
    
    0.6
    %Florist segment
    
    
    31,781
    
    
    
    32,484
    
    
    
    (2.2
    %)International segment
    
    
    18,307
    
    
    
    16,069
    
    
    
    13.9
    %Corporate
    
    
    (514
    )
    
    
    (493
    )
    
    
    4.3
    %Total gross profit
    
    $
    72,946
    
    
    $
    71,296
    
    
    
    2.3
    %
 16




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##### Table of Contents



Advertising and selling costs
 Three Months EndedMarch 31,(In thousands)
    
    2008
    
    
    2007
    
    
    % ChangeConsumer segment
    
    $
    11,681
    
    
    $
    11,346
    
    
    
    3.0
    %Florist segment
    
    
    12,539
    
    
    
    11,793
    
    
    
    6.3
    %International segment
    
    
    5,355
    
    
    
    4,209
    
    
    
    27.2
    %Total advertising and selling costs
    
    $
    29,575
    
    
    $
    27,348
    
    
    
    8.1
    %
     17




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##### Table of Contents



General and administrative costs
 Three Months EndedMarch 31,(In thousands)
    
    2008
    
    
    2007
    
    
    % ChangeConsumer segment
    
    $
    5,637
    
    
    $
    6,525
    
    
    
    (13.6
    %)Florist segment
    
    
    2,292
    
    
    
    2,052
    
    
    
    11.7
    %International segment
    
    
    5,611
    
    
    
    6,547
    
    
    
    (14.3
    %)Corporate
    
    
    10,372
    
    
    
    6,374
    
    
    
    62.7
    %Total general and administrative costs
    
    $
    23,912
    
    
    $
    21,498
    
    
    
    11.2
    %
      Other
 Three Months EndedMarch 31,(In thousands)
    
    2008
    
    
    2007
    
    
    % ChangeInterest income
    
    $
    (399
    )
    
    $
    (489
    )
    
    
    (18.4
    %)Interest expense
    
    
    5,456
    
    
    
    6,444
    
    
    
    (15.3
    %)Other (income) expense, net
    
    
    23
    
    
    
    570
    
    
    
    (96.0
    %)Total other (income) and expenses
    
    $
    5,080
    
    
    $
    6,525
    
    
    
    (22.1
    %)
  18




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##### Table of Contents



Nine Months Ended March 31, 2008 compared to the Nine Months Ended March 31, 2007
  Revenues
 Nine Months EndedMarch 31,(In thousands)
    
    2008
    
    
    2007
    
    
    % ChangeConsumer segment
    
    $
    192,040
    
    
    $
    197,084
    
    
    
    (2.6
    %)Florist segment
    
    
    136,686
    
    
    
    137,522
    
    
    
    (0.6
    %)International segment
    
    
    142,495
    
    
    
    108,604
    
    
    
    31.2
    %Total revenues
    
    $
    471,221
    
    
    $
    443,210
    
    
    
    6.3
    %
     19




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##### Table of Contents



Gross profit
 Nine Months EndedMarch 31,(In thousands)
    
    2008
    
    
    2007
    
    
    % ChangeConsumer segment
    
    $
    56,277
    
    
    $
    56,617
    
    
    
    (0.6
    %)Florist segment
    
    
    89,875
    
    
    
    93,355
    
    
    
    (3.7
    %)International segment
    
    
    44,365
    
    
    
    33,401
    
    
    
    32.8
    %Corporate
    
    
    (1,467
    )
    
    
    (1,507
    )
    
    
    (2.7
    %)Total gross profit
    
    $
    189,050
    
    
    $
    181,866
    
    
    
    4.0
    %
     Advertising and selling costs
 Nine Months EndedMarch 31,(In thousands)
    
    2008
    
    
    2007
    
    
    % ChangeConsumer segment
    
    $
    23,915
    
    
    $
    25,087
    
    
    
    (4.7
    %)Florist segment
    
    
    32,902
    
    
    
    35,042
    
    
    
    (6.1
    %)International segment
    
    
    12,346
    
    
    
    8,638
    
    
    
    42.9
    %Total advertising and selling costs
    
    $
    69,163
    
    
    $
    68,767
    
    
    
    0.6
    %
  20




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##### Table of Contents



General and administrative costs
 Nine Months EndedMarch 31,(In thousands)
    
    2008
    
    
    2007
    
    
    % ChangeConsumer segment
    
    $
    14,515
    
    
    $
    16,750
    
    
    
    (13.3
    %)Florist segment
    
    
    6,570
    
    
    
    6,348
    
    
    
    3.5
    %International segment
    
    
    17,590
    
    
    
    15,549
    
    
    
    13.1
    %Corporate
    
    
    24,740
    
    
    
    19,615
    
    
    
    26.1
    %Total general and administrative costs
    
    $
    63,415
    
    
    $
    58,262
    
    
    
    8.8
    %
     21




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##### Table of Contents



Other
 Nine Months EndedMarch 31,(In thousands)
    
    2008
    
    
    2007
    
    
    % ChangeInterest income
    
    $
    (1,020
    )
    
    $
    (1,126
    )
    
    
    (9.4
    %)Interest expense
    
    
    17,998
    
    
    
    21,679
    
    
    
    (17.0
    %)Other (income) expense, net
    
    
    (325
    )
    
    
    (725
    )
    
    
    (55.2
    %)Total other (income) and expenses
    
    $
    16,653
    
    
    $
    19,828
    
    
    
    (16.0
    %)
     Liquidity and Capital Resources
    22




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##### Table of Contents



Critical Accounting Policies and Estimates
    Recently Issued Accounting Pronouncements
 Business Combinations
 23




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##### Table of Contents



Noncontrolling Interests in Consolidated
Financial Statementsan amendment of Accounting Research Bulletin No. 51
 Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115
 Fair
Value Measurements
 
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
   24




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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
  25




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  International, federal, state and local governments may attempt to impose additional sales and use
taxes, value added taxes or other taxes on the business activities conducted by the Company,
including its past sales, which could decrease the Companys ability to compete with traditional
retailers, reduce its sales and have a material adverse effect on the Companys business, financial
condition, results of operations and cash flow.
   Failure
to complete the transaction with United Online could materially and
adversely affect the Companys
results of operations and stock price.
  
    
    The Company will remain liable for significant transaction costs, including
legal, accounting and other costs relating to the merger;
 
    
    Under some circumstances, the Company may have to pay a termination fee to
United Online in the amount of $11.75 million or United Onlines expenses incurred
in connection with the transaction up to $3.75 million;
 
    
    The attention of the Companys management and employees may be diverted
from day-to-day operations;
 
    
    The Companys ability to attract new employees and retain existing
employees may be harmed by uncertainties associated with the merger; and
 
    
    United Online may not realize any or all of the potential benefits of
the merger, including any synergies that could result from combining the financial
and proprietary resources of the Company and United Online.
  Since the merger agreement contemplates a fixed exchange ratio, changes in the market price of
United Online common stock could adversely affect the value of United Online common stock to be
received by the Companys stockholders in the merger.
  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  26




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##### Table of Contents



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.
 27




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##### Table of Contents



SIGNATURE
  FTD Group, Inc.Date:  May 7, 2008
    By:
    /S/  BECKY A. SHEEHANBecky A. SheehanChief Financial Officer
(principal financial officer) 28




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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.
 29