Message #6 From:
NewsBot Date: August 9, 2006 04:30:00 AM
FTD News FTD Group, Inc. Reports Fourth Quarter and Fiscal Year 2006 Results
DOWNERS GROVE, Ill.--(BUSINESS WIRE)--Aug. 9, 2006--FTD Group, Inc. (NYSE:FTD):
-- Q4 Revenue Growth of 15.4%
-- Q4 Net Income of $8.8 Million and Diluted EPS of $0.30 vs. $0.18 in the prior year
-- Q4 EBITDA of $22.0 Million, a 35.6% increase over 2005 Q4 EBITDA
-- Record Fiscal Year Net Income of $25.5 Million and EBITDA of $71.9 Million, an 11.6% increase over 2005 Adjusted EBITDA
-- Interflora acquisition completed, expected to contribute to 2007 earnings growth, creates platform for expansion into Europe
-- ProFlowers Lawsuit Settled
FTD Group, Inc. (NYSE:FTD), a leading provider of floral products and services, today announced fourth quarter and full year fiscal year 2006 financial results for the period ended June 30, 2006.
FOURTH QUARTER FISCAL YEAR 2006 RESULTS
Fourth quarter fiscal year 2006 consolidated revenue grew 15.4% to $141.5 million, compared to revenue of $122.6 million for the same period of fiscal year 2005. This revenue growth was driven primarily by an increase in sales related to the Mother's Day holiday, for which the Company previously reported a 12% growth in order volume within its Consumer Segment versus the prior year, and the shift of the Easter holiday to the fourth quarter of fiscal year 2006 from the third quarter of fiscal year 2005, partially offset by a decrease in revenues related to the December 2005 sale of substantially all of the assets and certain liabilities of the Renaissance Greeting Card business (the "Renaissance Sale").
Net income for the fourth quarter of fiscal year 2006 was $8.8 million, or $0.30 per diluted share, compared to net income of $5.4 million, or $0.18 per diluted shared, in the prior year quarter. Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the fourth quarter of fiscal year 2006 was $22.0 million compared to EBITDA of $16.2 million for the prior fiscal year period, representing a 35.6% increase.
"We are pleased with our strong fourth quarter performance. Revenues grew while margins expanded, demonstrating our ability to efficiently scale our business in a competitive marketplace," said Michael J. Soenen, President and Chief Executive Officer of FTD. "As we enter fiscal 2007, we are committed to maintaining our strategy and, with the acquisition of Interflora, we believe that we can accelerate the Company's revenue and earnings growth while providing a platform for further expansion into other European countries."
Tables reconciling net income to EBITDA are included with the attached consolidated financial statements. The Company believes EBITDA provides supplemental information related to the Company's operations and results.
Consumer Segment
The Consumer Segment is comprised of FTD.COM, a leading Internet and telephone marketer of flowers and specialty gifts, which sells products directly to consumers primarily through the Internet via the www.FTD.COM Web site and through the 1-800-SEND-FTD toll-free telephone number. The Consumer Segment achieved revenues of $95.3 million in the fourth quarter of fiscal year 2006, compared to revenues of $78.0 million in the same period of fiscal year 2005, representing a 22.1% increase. Growth was primarily driven by the 12% increase in Mother's Day order volumes and the Easter shift. In the third quarter of fiscal year 2005, the Easter holiday represented approximately 5%, or approximately $4 million, of the quarterly revenues for the Consumer Segment. Fourth quarter operating income in the Consumer Segment was $6.7 million, an increase of 28.6% over operating income of $5.2 million for the prior year period.
Consumer orders during the fourth quarter totaled 1,565,000 compared to 1,327,000 orders in the same quarter of fiscal year 2005. Average order value increased slightly to $59.76 in the current quarter from $58.78 in the prior year's quarter. The percentage of Internet orders continued to grow in this segment, increasing to 90.5% from 89.3% in the fourth quarter of fiscal year 2005. Specialty gift orders, which include all orders delivered via common carrier, such as boxed flowers, plants, gourmet food gifts, holiday gifts, bath and beauty products, jewelry, wine and gift baskets, dried flowers and stuffed animals, comprised 41.6% of total orders for the fourth quarter compared to 30.7% of total orders for the fourth quarter of fiscal year 2005.
Florist Segment
The Florist Segment primarily markets floral products and services to FTD members and other retail locations offering floral products in the U.S. and Canada. The Florist Segment achieved revenues of $46.2 million in the fourth quarter of fiscal year 2006, compared to revenues of $44.6 million in the same period of the prior fiscal year. The increase in Florist Segment revenues was primarily due to an increase in revenues across a majority of the Florist Segment product lines, partially offset by a reduction in revenue related to the Renaissance Sale. The Renaissance Greeting Card business contributed $2.5 million of revenues in the fourth quarter of fiscal 2005. Fourth quarter fiscal year 2006 operating income in the Florist Segment was $15.7 million, which includes a $1.6 million gain related to the settlement of the class action lawsuit entitled In Re: Visacheck/Mastermoney Antitrust Litigation, compared to operating income of $11.5 million in the prior year quarter. As of June 30, 2006, FTD membership totaled approximately 18,900.
SIX MONTHS ENDED JUNE 30, 2006 RESULTS
Due to the shift of Easter between the third and fourth quarters when comparing fiscal year 2006 results to fiscal year 2005 results, management believes it is helpful to present investors with results for the six-month period ended June 30. Revenues for the six months ended June 30, 2006 grew 9.1% to $270.1 million, compared with revenues of $247.5 million for the same period of the prior fiscal year. This revenue growth resulted from a 15.0% increase in revenue in the Consumer Segment and a 0.3% increase in revenue in the Florist Segment, which reflects the Renaissance Sale. The Renaissance Greeting Card business contributed $5.5 million in revenues to the Florist Segment for the six months ended June 30, 2005.
Net income for the six-month period ended June 30, 2006 was $16.2 million, or $0.56 per diluted share, compared to a net loss of $20.2 million for the same period of fiscal year 2005.
Management believes it is helpful to present investors with the Company's net income and earnings per diluted share on a pro forma basis for the six-month period ended June 30, 2005, based on the Company's capital structure following the completion of its initial public offering in February 2005 (the "IPO") and the elimination of certain expenses in connection with the IPO which are not reflective of ongoing operations. As such, pro forma net income for the six months ended June 30, 2005 was $12.2 million, or $0.40 per diluted share, reflecting the elimination of $7.7 million of expense, net of tax, related to the termination of the management services agreement with Leonard Green & Partners, L.P., $3.2 million of interest expense and $21.5 million of prepayment fees related to the Company's preferred shares subject to mandatory redemption, which were repurchased with a portion of the proceeds from the IPO, and the issuance of 15.8 million shares of Common Stock, which were issued in connection with the IPO.
EBITDA for the six-month period ended June 30, 2006 was $41.6 million compared to Adjusted EBITDA of $35.1 million for same period of the prior fiscal year, representing an 18.3% increase. Adjusted EBITDA for six months ended June 30, 2005 excludes expenses related to the management services agreement which was terminated in connection with the Company's IPO, as previously described.
Tables reconciling net income/(loss) to pro forma net income, EBITDA and Adjusted EBITDA along with explanations and definitions of pro forma net income, EBITDA and Adjusted EBITDA, are included with the attached consolidated financial statements. Also included in the attached consolidated financial statements is a table reconciling weighted average shares outstanding to pro forma weighted average shares outstanding, which is used to calculate pro forma earnings per share. The Company believes pro forma net income, EBITDA, Adjusted EBITDA and pro forma earnings per share are useful and relevant because the expenses eliminated are not reflective of the Company's current capital structure or ongoing operations, and a comparison excluding these expenses provides supplemental information related to the Company's operations and results.
FULL YEAR 2006 RESULTS
Fiscal year 2006 revenues grew 6.2% to $465.1 million, compared with revenues of $437.8 million for fiscal 2005. This revenue growth was driven by an 11.6% increase in revenue in the Consumer Segment.
Net income for fiscal year 2006 was $25.5 million, or $0.86 per diluted share, compared to a net loss for fiscal year 2005 of $22.6 million.
Management believes it is helpful to investors to be presented with the Company's prior year net income and earnings per diluted share on a pro forma basis, based on the Company's capital structure following the IPO in February 2005 and the elimination of certain expenses in connection with the IPO, which are not reflective of ongoing operations. As such, pro forma net income for fiscal year 2005 was $20.5 million, or $0.68 per diluted share, reflecting the elimination of $8.3 million of expense, net of tax, related to the termination of the management services agreement with Leonard Green & Partners, L.P., $13.2 million of interest expense and $21.5 million of prepayment fees related to the Company's preferred shares subject to mandatory redemption, which were repurchased with a portion of the proceeds from the IPO, and the issuance of 15.8 million shares of Common Stock, which were issued in connection with the IPO.
EBITDA for fiscal year 2006 was $71.9 million compared to Adjusted EBITDA of $64.4 million for the prior fiscal year, representing an 11.6% increase. Adjusted EBITDA for fiscal year 2005 excludes expenses related to the management services agreement which was terminated in connection with the Company's IPO, as previously described.
Consumer Segment
The Consumer Segment achieved revenues of $275.8 million in fiscal year 2006, compared to revenues of $247.1 million in 2005, representing an 11.6% increase. Growth was primarily driven by an increase in order volumes. Operating income for the Consumer Segment was $16.1 million for fiscal year 2006, compared to $14.4 million for the prior year, an increase of 12.2%.
Consumer orders for fiscal year 2006 totaled 4,508,000 compared to 4,073,000 orders in the prior fiscal year. Average order value decreased slightly to $60.38 in fiscal year 2006 from $60.67 in the prior year, in line with management expectations. Internet orders as a percentage of total orders in this segment continued to grow, increasing to 90.1% for fiscal 2006 from 87.2% in fiscal year 2005. Specialty gift orders comprised 38.3% of total orders for the current fiscal year compared to 28.8% of total orders for fiscal year 2005.
Florist Segment
The Florist Segment achieved revenues of $189.4 million in fiscal year 2006, compared to revenues of $190.7 million in fiscal year 2005, representing a decrease of 0.7%. The decline in Florist Segment revenues was primarily due to the Renaissance Sale, which contributed $5.5 million of revenues in the last half of fiscal year 2005, in addition to lower sales resulting from a reduction of unprofitable specialty wholesaling SKUs. This decrease was partially offset by an increase in Florists' Online revenues, fresh flower sales and technology system sales. Fiscal year 2006 operating income in the Florist Segment was $58.4 million, which includes a $1.6 million gain related to the settlement of the class action lawsuit entitled In Re: Visacheck/Mastermoney Antitrust Litigation and a $1.0 million gain related to the Renaissance Sale, compared to operating income of $50.0 million in the prior year, which represents an increase of 16.8%.
BALANCE SHEET AND OTHER HIGHLIGHTS
The Company's debt balance was $220.1 million as of June 30, 2006, down from $228.0 million as of March 31, 2006 and $239.1 million as of June 30, 2005. Capital expenditures for the fiscal year ended June 30, 2006 were $8.8 million and were primarily related to a new call center that the Company opened in October 2005 and continued technology improvements.
In connection with the Interflora acquisition, the Company's bank debt was refinanced, in part, to provide for the purchase price of the acquisition. The new $225 million senior secured credit facility consists of a $150 million term loan and a $75 million revolving credit facility. The existing senior subordinated notes remain outstanding. Upon consummation of the acquisition on July 31, 2006, the Company had total debt outstanding of approximately $345 million.
SHARE REPURCHASE PROGRAM
As previously disclosed, on October 25, 2005, the Board of Directors authorized a share repurchase program totaling $30 million, effective through September 30, 2007. These purchases may be made from time to time in both open market and private transactions, dependent upon market and other conditions. The Company may repurchase shares pursuant to a 10b5-1 plan, which would generally permit the Company to repurchase shares at times when it might otherwise be prevented from doing so under certain securities laws. During the year, the Company repurchased 1.5 million shares at an average price of $9.71 for a total of $15.0 million. As of June 30, 2006, the Company has share repurchases totaling $15 million remaining under the Board authorized share repurchase program.
"Our cash flow generation coupled with low capital investment requirements is a strength of our business. We remain committed to putting our cash to use in a manner that best benefits our shareholders long term, and over the next year we will continue to actively assess acquisition, debt pay-down and share repurchase opportunities, with a bias toward repaying debt," continued Soenen.
FISCAL YEAR 2007 OUTLOOK
"In 2007, we will continue to be focused on strengthening and growing our existing segments through consistent diligence in product improvement, marketing execution and customer service. We believe, despite continued competition, our brand and marketing expertise position us to gain additional market share in 2007. We also expect our acquisition of Interflora will meaningfully contribute to results in 2007, while creating a platform for international growth," concluded Soenen.
For fiscal year 2007, reflecting the acquisition of Interflora on July 31, 2006, the Company is targeting annual revenues to be approximately $630 million, with first, second, third and fourth quarter revenues representing approximately 17%, 24%, 30%, and 29%, respectively, of the total annual revenues. The Company is targeting net income for the fiscal year to be approximately $26.5 million, with diluted earnings per share of $0.91. The targeted net income includes $1.4 million, net of tax, related to the write-off of deferred financing fees associated with the refinancing of the bank debt in July 2006. In addition, the Company targets Adjusted EBITDA, which excludes the expense related to the write-off of deferred financing fees, for fiscal year 2007 to be approximately $85.4 million, with annual Adjusted EBITDA as a percentage of revenues of approximately 14%. The Company's targeted Adjusted EBITDA includes approximately $3 million of expense related to stock compensation associated with Statement of Financial Accounting Standards No. 123(R) and a deferred compensation plan related to Interflora. The stock compensation expense includes a first quarter 2007 employee option grant of approximately 1.3 million shares. The Company anticipates approximately $10-$12 million in capital expenditures during fiscal year 2007. The above targets are only estimates, which may be exceeded or alternatively may not be achieved. In addition, these targets are also subject to final purchase accounting adjustments related to the acquisition of Interflora, which may result in increased amortization expense related to the revaluation of Interflora's assets.
CONFERENCE CALL
A conference call has been scheduled for August 9, 2006 at 10:00 a.m., ET, to review the results for the fourth quarter and full year of fiscal year 2006. To listen to the call over the Internet, go to the investor relations portion of the Company's Web site, www.FTD.COM. Please allow at least 15 minutes to register, download and install any necessary audio software. To listen to the call by phone dial (877) 381-6199 for North American callers or (706) 679-4384 for International callers; mention Conference ID #21300459. A replay of the conference call will be available through August 23, 2006 beginning one hour after the completion of the live call by phone at (800) 633-8284 for North American callers or (402) 977-9140 for International callers or on the Web at www.FTD.COM. The conference call contains time-sensitive information that is accurate only as of August 9, 2006, the date of the live broadcast. The call is the property of FTD Group, Inc. Any redistribution, retransmission or rebroadcast of the conference call in any form without the express written consent of FTD Group, Inc. is strictly prohibited.
ABOUT FTD GROUP, INC.
FTD Group, Inc. is a leading provider of floral-related products and services to consumers and retail florists, as well as other retail locations offering floral products, in the U.S., Canada, the U.K. and Ireland. The business is supported by the highly recognized FTD and Interflora brands. Both brands are supported by the Mercury Man logo, which is displayed in approximately 50,000 floral shops globally. The consumer businesses operate primarily through the www.FTD.COM Web site in the U.S. and Canada and the www.interflora.co.uk Web site in the U.K. and Ireland and are complemented by the florist businesses, which provide products and services to the independent florist networks.
FORWARD-LOOKING STATEMENTS
This press release contains various "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the Company's outlook, anticipated revenue growth and profitability; the anticipated benefits of the acquisition of Interflora and investments in new products, programs and offerings; and opportunities and trends within both the domestic and international businesses, including opportunities to expand these businesses and capitalize on growth opportunities or increase penetration of service offerings. The international business will reflect the operations of Interflora Holdings Limited. These forward-looking statements are based on management's current expectations, assumptions, estimates and projections about the Company and the Company's industry. Investors are cautioned that actual results could differ from those anticipated by the forward-looking statements as a result of: the Company's ability to acquire and retain FTD and Interflora members and continued recognition by members of the value of the Company's products and services; the acceptance by members of new or modified service offerings recently introduced; the Company's ability to sell additional products and services to FTD and Interflora members; the Company's ability to expand existing marketing partnerships and secure new marketing partners within the domestic and international consumer businesses; the success of the Company's marketing campaigns; the ability to retain customers and maintain average order value within the domestic and international consumer businesses; the existence of failures in the Company's computer systems; competition from existing and potential new competitors; levels of discretionary consumer purchases of flowers and specialty gifts; the Company's ability to manage or reduce its level of expenses within both the domestic and international businesses; actual growth rates for the markets in which the Company competes compared with forecasted growth rates; the Company's ability to increase capacity and introduce enhancements to its Web sites; and the Company's ability to integrate Interflora and additional partners or acquisitions, if any are identified. These factors, along with other potential risks and uncertainties, are discussed in the Company's reports and other documents filed with the Securities and Exchange Commission. The Company expressly disclaims any obligation to update forward-looking statements.
Financial statements follow...
FTD GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended Year Ended
June 30, June 30,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Revenues:
Florist segment $46,242 $44,596 $189,360 $190,687
Consumer segment 95,252 77,982 275,773 247,108
--------- --------- --------- ---------
Total revenues 141,494 122,578 465,133 437,795
Costs of goods sold and
services provided:
Florist segment 13,029 12,864 59,990 62,025
Consumer segment 68,285 57,632 200,549 183,692
Corporate 517 521 2,235 2,300
--------- --------- --------- ---------
Total costs of goods
sold and services
provided 81,831 71,017 262,774 248,017
Gross profit:
Florist segment 33,213 31,732 129,370 128,662
Consumer segment 26,967 20,350 75,224 63,416
Corporate (517) (521) (2,235) (2,300)
--------- --------- --------- ---------
Total gross profit 59,663 51,561 202,359 189,778
Advertising and selling:
Florist segment 13,684 14,766 53,200 56,319
Consumer segment 13,153 9,777 35,921 29,080
--------- --------- --------- ---------
Total advertising and
selling 26,837 24,543 89,121 85,399
General and administrative
(includes management fees):
Florist segment 984 2,432 6,591 10,161
Consumer segment 6,295 4,658 19,917 17,081
Corporate 6,459 6,084 25,674 37,491
--------- --------- --------- ---------
Total general and
administrative 13,738 13,174 52,182 64,733
Operating income (loss) before
corporate allocations:
Florist segment 18,545 14,534 69,579 62,182
Consumer segment 7,519 5,915 19,386 17,255
Corporate (6,976) (6,605) (27,909) (39,791)
--------- --------- --------- ---------
Total operating income
before corporate
allocations 19,088 13,844 61,056 39,646
--------- --------- --------- ---------
Corporate Allocations:
Florist segment 2,802 3,028 11,166 12,154
Consumer segment 821 708 3,272 2,895
Corporate (3,623) (3,736) (14,438) (15,049)
--------- --------- --------- ---------
Total corporate
allocations - - - -
Income (loss) from operations:
Florist segment 15,743 11,506 58,413 50,028
Consumer segment 6,698 5,207 16,114 14,360
Corporate (3,353) (2,869) (13,471) (24,742)
--------- --------- --------- ---------
Total income from
operations 19,088 13,844 61,056 39,646
--------- --------- --------- ---------
Other income and expenses:
Interest income (396) (183) (924) (649)
Interest expense 4,853 5,037 19,449 20,466
Interest expense and
prepayment fees on shares
subject to mandatory
redemption - - - 34,732
Other expense (income), net (192) 31 (398) (390)
--------- --------- --------- ---------
Total other expenses 4,265 4,885 18,127 54,159
--------- --------- --------- ---------
Income (loss) before
income tax 14,823 8,959 42,929 (14,513)
Income tax expense 6,029 3,583 17,386 8,087
--------- --------- --------- ---------
Net income (loss) $8,794 $5,376 $25,543 $(22,600)
========= ========= ========= =========
Net income (loss) per common
share - basic $0.31 $0.18 $0.89 $(1.15)
========= ========= ========= =========
Net income (loss) per common
share - diluted $0.30 $0.18 $0.86 $(1.15)
========= ========= ========= =========
Weighted average common shares
outstanding - basic 27,977 29,452 28,736 19,722
========= ========= ========= =========
Weighted average common shares
outstanding - diluted 28,936 30,366 29,779 19,722
========= ========= ========= =========
FTD GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
ASSETS June 30, 2006 June 30, 2005
------ ------------- -------------
Current Assets:
Cash and cash equivalents $10,954 $8,890
Accounts receivable, less allowance for
doubtful accounts of $4,437 at June
30, 2006 and $2,521 at June 30, 2005 26,044 23,419
Inventories, net 3,542 6,495
Deferred income taxes 2,695 2,550
Prepaid expenses and other current
assets 3,290 7,782
------------- -------------
Total current assets 46,525 49,136
Property and equipment:
Land and improvements 1,380 1,380
Building and improvements 15,611 14,291
Computer equipment 4,931 3,345
Furniture and equipment 3,343 2,814
------------- -------------
Total 25,265 21,830
Less accumulated depreciation 6,051 3,790
------------- -------------
Property and equipment, net 19,214 18,040
Other assets:
Deferred financing fees, net 6,848 8,527
Computer software, net 10,577 11,010
Other noncurrent assets 14,557 8,985
Other intangible assets, less
accumulated amortization of
$5,993 at June 30, 2006 and $3,393
at June 30, 2005 14,780 17,380
Trademark 121,577 121,577
Goodwill 336,659 336,659
------------- -------------
Total other assets 504,998 504,138
------------- -------------
Total assets $570,737 $571,314
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $45,273 $41,498
Customer deposits 4,519 5,143
Unearned income 1,909 2,522
Accrued interest 4,924 4,993
Accrued compensation 4,521 4,128
Other accrued liabilities 8,210 5,058
Current maturities of long-term debt 1,125 1,633
------------- -------------
Total current liabilities 70,481 64,975
Senior secured credit facility 48,875 67,330
Senior subordinated notes 170,117 170,117
Post-retirement benefits and accrued
pension obligations 2,368 2,856
Deferred income taxes 61,160 60,289
Stockholders' equity:
Common stock: $0.01 par value,
75,000,000 shares authorized;
29,482,182 and 29,451,791 shares
issued as of June 30, 2006 and
June 30, 2005, respectively 295 295
Additional paid-in capital 233,362 232,759
Accumulated deficit (1,554) (27,097)
Accumulated other comprehensive income
(loss) 200 (210)
Treasury stock, at cost, 1,504,480
shares as of June 30, 2006 (14,567) -
------------- -------------
Total stockholders' equity 217,736 205,747
------------- -------------
Total liabilities and stockholders'
equity $570,737 $571,314
============= =============
FTD GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended
June 30,
--------------------
2006 2005
--------- ---------
Cash flows from operating activities:
Net income (loss) $25,543 $(22,600)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation 4,214 5,113
Amortization 6,247 5,386
Interest expense and prepayment fees on
mandatorily redeemable shares - 34,732
Gain from sale of business and related
transactions (961) -
Stock-based compensation 625 -
Amortization and write off of deferred
financing costs 1,679 1,934
Provision for doubtful accounts 3,436 4,250
Deferred income taxes 822 4,438
Increase (decrease) in cash due to changes
in operating assets and liabilities:
Accounts receivable (7,430) (2,953)
Inventories 581 2,897
Prepaid expenses and other 4,083 3,400
Other noncurrent assets (4,129) 258
Accounts payable 4,225 187
Other accrued liabilities, unearned
income and customer deposits 1,910 (2,015)
--------- ---------
Net cash provided by operating
activities 40,845 35,027
--------- ---------
Cash flows from investing activities:
Capital expenditures (8,754) (5,604)
Proceeds from sale of business 3,500 -
Acquisition - (8,472)
--------- ---------
Net cash used in investing activities (5,254) (14,076)
--------- ---------
Cash flows from financing activities:
Repayments of long-term debt (18,963) (20,708)
Purchase of company stock (14,999) -
Proceeds from exercise of stock options 212 -
Net proceeds from the issuance of common stock - 192,227
Redemption of preferred stock - (186,811)
Capital contribution - common stock - 827
Deferred financing costs - (243)
--------- ---------
Net cash used in financing activities (33,750) (14,708)
--------- ---------
Effect of foreign exchange rate changes on
cash 223 156
--------- ---------
Net increase in cash and cash equivalents 2,064 6,399
Cash and cash equivalents at beginning of period 8,890 2,491
--------- ---------
Cash and cash equivalents at end of period $10,954 $8,890
========= =========
FTD GROUP, INC.
SEGMENT INFORMATION
(In thousands)
Three Months Ended
June 30, 2006
-----------------------------------------
Gross Segment Eliminations Consolidated
------------- ------------ ------------
Revenues:
Florist segment $46,351 $(109) $46,242
Consumer segment 101,351 (6,099) 95,252
------------- ------------ ------------
Total 147,702 (6,208) 141,494
------------- ------------ ------------
Costs of Goods Sold and
Services Provided:
Florist segment 13,844 (815) 13,029
Consumer segment 69,162 (877) 68,285
Corporate 517 - 517
------------- ------------ ------------
Total 83,523 (1,692) 81,831
------------- ------------ ------------
Gross Profit:
Florist segment 32,507 706 33,213
Consumer segment 32,189 (5,222) 26,967
Corporate (517) - (517)
------------- ------------ ------------
Total 64,179 (4,516) 59,663
------------- ------------ ------------
Advertising and Selling:
Florist segment 18,199 (4,515) 13,684
Consumer segment 13,153 - 13,153
------------- ------------ ------------
Total 31,352 (4,515) 26,837
------------- ------------ ------------
General and Administrative:
Florist segment 984 - 984
Consumer segment 7,222 (927) 6,295
Corporate 5,533 926 6,459
------------- ------------ ------------
Total 13,739 (1) 13,738
------------- ------------ ------------
Operating Income (Loss)
before Corporate Allocations:
Florist segment 13,324 5,221 18,545
Consumer segment 11,814 (4,295) 7,519
Corporate (6,050) (926) (6,976)
------------- ------------ ------------
Total 19,088 - 19,088
------------- ------------ ------------
Corporate Allocations:
Florist segment 2,802 - 2,802
Consumer segment 821 - 821
Corporate (3,623) - (3,623)
------------- ------------ ------------
Total - - -
------------- ------------ ------------
Operating Income (Loss):
Florist segment 10,522 5,221 15,743
Consumer segment 10,993 (4,295) 6,698
Corporate (2,427) (926) (3,353)
------------- ------------ ------------
Total $19,088 $- $19,088
============= ============ ============
Depreciation and
Amortization:
Florist segment $847 $- $847
Consumer segment 908 - 908
Corporate 966 - 966
------------- ------------ ------------
Total $2,721 $- $2,721
============= ============ ============
Three Months Ended
June 30, 2005
-----------------------------------------
Gross Segment Eliminations Consolidated
------------- ------------ ------------
Revenues:
Florist segment $44,625 $(29) $44,596
Consumer segment 84,111 (6,129) 77,982
------------- ------------ ------------
Total 128,736 (6,158) 122,578
------------- ------------ ------------
Costs of Goods Sold and
Services Provided:
Florist segment 13,709 (845) 12,864
Consumer segment 58,396 (764) 57,632
Corporate 521 - 521
------------- ------------ ------------
Total 72,626 (1,609) 71,017
------------- ------------ ------------
Gross Profit:
Florist segment 30,916 816 31,732
Consumer segment 25,715 (5,365) 20,350
Corporate (521) - (521)
------------- ------------ ------------
Total 56,110 (4,549) 51,561
------------- ------------ ------------
Advertising and Selling:
Florist segment 19,316 (4,550) 14,766
Consumer segment 9,777 - 9,777
------------- ------------ ------------
Total 29,093 (4,550) 24,543
------------- ------------ ------------
General and Administrative:
Florist segment 2,432 - 2,432
Consumer segment 5,449 (791) 4,658
Corporate 5,292 792 6,084
------------- ------------ ------------
Total 13,173 1 13,174
------------- ------------ ------------
Operating Income (Loss)
before Corporate Allocations:
Florist segment 9,168 5,366 14,534
Consumer segment 10,489 (4,574) 5,915
Corporate (5,813) (792) (6,605)
------------- ------------ ------------
Total 13,844 - 13,844
------------- ------------ ------------
Corporate Allocations:
Florist segment 3,028 - 3,028
Consumer segment 708 - 708
Corporate (3,736) - (3,736)
------------- ------------ ------------
Total - - -
------------- ------------ ------------
Operating Income (Loss):
Florist segment 6,140 5,366 11,506
Consumer segment 9,781 (4,574) 5,207
Corporate (2,077) (792) (2,869)
------------- ------------ ------------
Total $13,844 $- $13,844
============= ============ ============
Depreciation and
Amortization:
Florist segment $887 $- $887
Consumer segment 563 - 563
Corporate 961 - 961
------------- ------------ ------------
Total $2,411 $- $2,411
============= ============ ============
FTD GROUP, INC.
SEGMENT INFORMATION
(In thousands)
Year Ended
June 30, 2006
-----------------------------------------
Gross Segment Eliminations Consolidated
------------- ------------ ------------
Revenues:
Florist segment $189,674 $(314) $189,360
Consumer segment 295,187 (19,414) 275,773
------------- ------------ ------------
Total 484,861 (19,728) 465,133
------------- ------------ ------------
Costs of Goods Sold and
Services Provided:
Florist segment 63,329 (3,339) 59,990
Consumer segment 203,235 (2,686) 200,549
Corporate 2,235 - 2,235
------------- ------------ ------------
Total 268,799 (6,025) 262,774
------------- ------------ ------------
Gross Profit:
Florist segment 126,345 3,025 129,370
Consumer segment 91,952 (16,728) 75,224
Corporate (2,235) - (2,235)
------------- ------------ ------------
Total 216,062 (13,703) 202,359
------------- ------------ ------------
Advertising and Selling:
Florist segment 66,902 (13,702) 53,200
Consumer segment 35,921 - 35,921
------------- ------------ ------------
Total 102,823 (13,702) 89,121
------------- ------------ ------------
General and Administrative
(includes Management Fees):
Florist segment 6,591 - 6,591
Consumer segment 22,629 (2,712) 19,917
Corporate 22,963 2,711 25,674
------------- ------------ ------------
Total 52,183 (1) 52,182
------------- ------------ ------------
Operating Income (Loss)
before Corporate Allocations:
Florist segment 52,852 16,727 69,579
Consumer segment 33,402 (14,016) 19,386
Corporate (25,198) (2,711) (27,909)
------------- ------------ ------------
Total 61,056 - 61,056
------------- ------------ ------------
Corporate Allocations:
Florist segment 11,166 - 11,166
Consumer segment 3,272 - 3,272
Corporate (14,438) - (14,438)
------------- ------------ ------------
Total - - -
------------- ------------ ------------
Operating Income (Loss):
Florist segment 41,686 16,727 58,413
Consumer segment 30,130 (14,016) 16,114
Corporate (10,760) (2,711) (13,471)
------------- ------------ ------------
Total $61,056 $- $61,056
============= ============ ============
Depreciation and
Amortization:
Florist segment $3,398 $- $3,398
Consumer segment 3,201 - 3,201
Corporate 3,862 - 3,862
------------- ------------ ------------
Total $10,461 $- $10,461
============= ============ ============
Year Ended
June 30, 2005
-----------------------------------------
Gross Segment Eliminations Consolidated
------------- ------------ ------------
Revenues:
Florist segment $190,815 $(128) $190,687
Consumer segment 267,075 (19,967) 247,108
------------- ------------ ------------
Total 457,890 (20,095) 437,795
------------- ------------ ------------
Costs of Goods Sold and
Services Provided:
Florist segment 65,208 (3,183) 62,025
Consumer segment 186,225 (2,533) 183,692
Corporate 2,300 - 2,300
------------- ------------ ------------
Total 253,733 (5,716) 248,017
------------- ------------ ------------
Gross Profit:
Florist segment 125,607 3,055 128,662
Consumer segment 80,850 (17,434) 63,416
Corporate (2,300) - (2,300)
------------- ------------ ------------
Total 204,157 (14,379) 189,778
------------- ------------ ------------
Advertising and Selling:
Florist segment 70,697 (14,378) 56,319
Consumer segment 29,080 - 29,080
------------- ------------ ------------
Total 99,777 (14,378) 85,399
------------- ------------ ------------
General and Administrative
(includes Management Fees):
Florist segment 10,161 - 10,161
Consumer segment 19,556 (2,475) 17,081
Corporate 35,017 2,474 37,491
------------- ------------ ------------
Total 64,734 (1) 64,733
------------- ------------ ------------
Operating Income (Loss)
before Corporate Allocations:
Florist segment 44,749 17,433 62,182
Consumer segment 32,214 (14,959) 17,255
Corporate (37,317) (2,474) (39,791)
------------- ------------ ------------
Total 39,646 - 39,646
------------- ------------ ------------
Corporate Allocations:
Florist segment 12,154 - 12,154
Consumer segment 2,895 - 2,895
Corporate (15,049) - (15,049)
------------- ------------ ------------
Total - - -
------------- ------------ ------------
Operating Income (Loss):
Florist segment 32,595 17,433 50,028
Consumer segment 29,319 (14,959) 14,360
Corporate (22,268) (2,474) (24,742)
------------- ------------ ------------
Total $39,646 $- $39,646
============= ============ ============
Depreciation and
Amortization:
Florist segment $4,241 $- $4,241
Consumer segment 2,405 - 2,405
Corporate 3,853 - 3,853
------------- ------------ ------------
Total $10,499 $- $10,499
============= ============ ============
FTD GROUP, INC.
NON-GAAP FINANCIAL MEASURES
PRO FORMA NET INCOME AND PRO FORMA EARNINGS PER SHARE
(Unaudited)
(In thousands, except per share data)
Reconciliation of certain financial measures reported in accordance
with Generally Accepted Accounting Principles ("GAAP") to those
presented on the basis of methodologies other than in accordance with
GAAP ("non-GAAP").
In addition to the GAAP financial measures set forth in this press
release, the Company has included certain non-GAAP financial measures
within the meaning of Regulation G as a result of significant changes
in the Company's capital structure resulting from the Company's
initial public offering in February 2005 (the "IPO"). The Company has
included "pro forma EPS," calculated based on "pro forma net income,"
and "pro forma weighted average shares outstanding," which are all
non-GAAP financial measures. The Company's management believes that
these measurements are important to investors and other interested
persons and that such persons benefit from having a consistent basis
for comparison between quarters and for comparison with other
companies in the industry.
While management believes that pro forma net income and pro forma EPS
will be helpful to investors in understanding and evaluating the
Company's performance in the periods immediately following the IPO,
management does not expect to continue to provide pro forma net income
and pro forma EPS once the effects of the significant changes to the
Company's capital structure are able to be fully reflected in the
Company's financial statements.
The Company is providing pro forma net income, pro forma EPS and pro
forma weighted average shares outstanding for the year ended June 30,
2005, assuming that the following transactions had occurred on June
30, 2004:
(i) the issuance of 15,842,893 shares in connection with the IPO;
(ii) the repurchase of the 14% Senior Redeemable Exchangeable
Cumulative Preferred Stock and the 12% Junior Redeemable
Exchangeable Cumulative Preferred Stock; and
(iii) the termination of the Management Services Agreement.
Six
Months Year
Three Months Ended Ended Ended
------------------------------------- --------- ---------
September December March 31, June 30, June 30, June 30,
30, 2004 31, 2004 2005 2005 2005 2005
--------- -------- --------- -------- --------- ---------
Net income
(loss), as
reported
(GAAP basis) $(3,147) $756 $(25,585) $5,376 $(20,209) $(22,600)
Plus:
management
fees, net of
40% tax
effect 328 300 7,710 - 7,710 8,338
Plus:
interest
expense and
prepayment
fees on
shares
subject to
mandatory
redemption 4,943 5,105 24,684 - 24,684 34,732
--------- -------- --------- -------- --------- ---------
Pro forma net
income $2,124 $6,161 $6,809 $5,376 $12,185 $20,470
========= ======== ========= ======== ========= =========
Pro forma EPS:
--------------
Basic $0.07 $0.21 $0.23 $0.18 $0.41 $0.70
========= ======== ========= ======== ========= =========
Diluted $0.07 $0.21 $0.22 $0.18 $0.40 $0.68
========= ======== ========= ======== ========= =========
Basic:
------
Weighted
average
shares
outstanding,
as reported
(GAAP basis) 13,336 13,609 22,493 29,452 25,973 19,722
Add: weighted
average
effect as if
IPO occurred
on 6/30/04 15,843 15,843 6,959 - 3,480 9,661
--------- -------- --------- -------- --------- ---------
Pro forma
weighted
average
shares
outstanding 29,179 29,452 29,452 29,452 29,453 29,383
========= ======== ========= ======== ========= =========
Diluted:
--------
Weighted
average
shares
outstanding
(GAAP basis) 13,336 13,609 23,460 30,366 26,913 20,291
Add: weighted
average
effect as if
IPO occurred
on 6/30/04 15,843 15,843 6,959 - 3,480 9,661
--------- -------- --------- -------- --------- ---------
Pro forma
weighted
average
shares
outstanding 29,179 29,452 30,419 30,366 30,393 29,952
========= ======== ========= ======== ========= =========
FTD GROUP, INC.
NON-GAAP FINANCIAL MEASURES
EBITDA AND ADJUSTED EBITDA
(Unaudited)
(In thousands)
Reconciliation of certain financial measures reported in accordance
with Generally Accepted Accounting Principles ("GAAP") to those
presented on the basis of methodologies other than in accordance with
GAAP ("non-GAAP").
The Company defines EBITDA as net income (loss) before net interest
expense, income tax expense, depreciation and amortization. The
Company defines Adjusted EBITDA as EBITDA plus (i) expenses that are
not considered reflective of the Company's ongoing operations and (ii)
management fees, because these fees were excluded in measuring the
Company's performance under the executive compensation plan, the
senior credit agreement and the indenture governing the 7.75% Senior
Subordinated Notes (the "Notes"). EBITDA and Adjusted EBITDA are
calculated as follows for the periods presented:
Three Months Ended Six Months Ended Year Ended
June 30, June 30, June 30,
------------------ ------------------ -------------------
2006 2005 2006 2005 2006 2005
-------- --------- -------- --------- --------- ---------
Net income
(loss), as
reported
(GAAP basis) $8,794 $5,376 $16,215 $(20,209) $25,543 $(22,600)
plus:
Interest
expense, net 4,457 4,854 9,053 9,950 18,525 19,817
plus:
Interest
expense and
prepayment
fees on
shares
subject to
mandatory
redemption - - - 24,684 - 34,732
plus:
Depreciation
and
amortization 2,721 2,411 5,345 4,886 10,461 10,499
plus: Income
tax expense 6,029 3,583 10,961 2,981 17,386 8,087
-------- --------- -------- --------- --------- ---------
EBITDA (1) 22,001 16,224 41,574 22,292 71,915 50,535
plus:
Management
fees (2) - - - 12,850 - 13,897
-------- --------- -------- --------- --------- ---------
Adjusted
EBITDA (1) $22,001 $16,224 $41,574 $35,142 $71,915 $64,432
======== ========= ======== ========= ========= =========
(1) The Company uses EBITDA and Adjusted EBITDA as supplemental
measures of performance. The Company presents Adjusted EBITDA
because it considers it an important supplemental measure of
performance, as it is used as a performance measure under the
senior credit facility entered into in connection with the 2004
Going Private Transaction, the indenture governing the Notes and
the Company's executive compensation plan. The adjustment made in
the calculation of Adjusted EBITDA, as described above, is an
adjustment that would be made in calculating the Company's
performance for purposes of coverage ratios under the senior
credit facility and the indenture governing the Notes, and the
Company's executive compensation plan bases incentive compensation
payments in significant part on the Company's performance measured
using Adjusted EBITDA as presented above. Measures similar to
EBITDA and Adjusted EBITDA are also widely used by the Company and
by others in the Company's industry to evaluate and price
potential acquisition candidates.
The Company believes EBITDA and Adjusted EBITDA facilitate
operating performance comparisons from period to period and
company to company by backing out potential differences caused by
variations in capital structure (affecting relative interest
expense), tax positions (such as the impact on periods or
companies of changes in effective tax rates or net operating
losses) and the age and book depreciation of facilities and
equipment (affecting relative depreciation expense). The Company
also presents EBITDA and Adjusted EBITDA because it believes they
are frequently used by investors and other interested parties in
the evaluation of high yield issuers, many of which present EBITDA
and/or Adjusted EBITDA when reporting their results.
EBITDA and Adjusted EBITDA have limitations as analytical tools,
and should not be considered in isolation, or as a substitute for
analysis of the Company's results as reported under GAAP. Some of
the limitations of EBITDA and Adjusted EBITDA are that they do not
reflect the Company's cash expenditures for capital expenditures,
they do not reflect the significant interest expense or the cash
requirements necessary to service interest or principal payments
on the Company's debt, they do not reflect changes in, or cash
requirements for, the Company's working capital requirements, they
do not reflect the impact of management fees paid, and other
companies in the Company's industry may calculate these measures
differently than presented above. The Company compensates for
these limitations by relying primarily on GAAP results and using
EBITDA and Adjusted EBITDA only supplementally.
(2) The Management Services Agreement was terminated in connection
with the Company's initial public offering in February 2005.
FTD GROUP, INC.
NON-GAAP FINANCIAL MEASURES
EBITDA AND ADJUSTED EBITDA
(Unaudited)
(In thousands)
Reconciliation of certain financial measures reported in accordance
with Generally Accepted Accounting Principles ("GAAP") to those
presented on the basis of methodologies other than in accordance with
GAAP ("non-GAAP").
The Company defines EBITDA as net income before net interest expense,
income tax expense, depreciation and amortization. The Company defines
Adjusted EBITDA as EBITDA plus expenses that are not considered
reflective of the Company's ongoing operations because these fees are
excluded in measuring the Company's performance under the executive
compensation plan, the senior credit agreement and the indenture
governing the 7.75% Senior Subordinated Notes (the "Notes"). EBITDA
and Adjusted EBITDA are calculated as follows for the period
presented:
Year Ended
June 30, 2007
(Forecasted Targets)
----------------------
Revenues $630,000
Net income (GAAP basis) $26,500
plus: Interest expense, net 26,000
plus: Depreciation and amortization 14,500
plus: Income tax expense 16,000
----------------------
EBITDA (1) 83,000
plus: Write-off of deferred financing fees 2,400
----------------------
Adjusted EBITDA (1) $85,400
======================
(1) The Company uses EBITDA and Adjusted EBITDA as supplemental
measures of performance. Measures similar to EBITDA and Adjusted
EBITDA are also widely used by the Company and by others in the
Company's industry to evaluate and price potential acquisition
candidates. The Company believes EBITDA and Adjusted EBITDA
facilitate operating performance comparisons from period to period
and company to company by backing out potential differences caused
by variations in capital structure (affecting relative interest
expense), tax positions (such as the impact on periods or
companies of changes in effective tax rates or net operating
losses) and the age and book depreciation of facilities and
equipment (a
