| << Back |
| FTD Group, Inc. Reports Second Quarter of Fiscal Year 2006 |
DOWNERS GROVE, Ill.--(BUSINESS WIRE)--Jan. 25, 2006--FTD Group, Inc. (NYSE:FTD):
FTD Group, Inc. (NYSE:FTD), a leading provider of floral services and products, today announced second quarter fiscal year 2006 financial results for the period ended December 31, 2005. SECOND QUARTER FISCAL YEAR 2006 RESULTS As previously announced on December 29, 2005, the Consumer Segment experienced a decrease of approximately 4% in total orders during the 2005 Christmas season (December 1, 2005 - December 25, 2005), compared to the same period of the prior fiscal year. As a result, second quarter fiscal year 2006 consolidated revenues grew approximately 1% to $109.2 million, compared to revenues of $108.3 million for the same period of fiscal year 2005. Net income for the second quarter of fiscal year 2006 was $5.9 million, or $0.19 per diluted share, compared to net income for the second quarter of fiscal year 2005 of $0.8 million. Management believes it is helpful to investors to be presented with the Company's prior year second quarter net income and earnings per diluted share on a pro forma basis, based on the Company's new 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. Pro forma net income for the second quarter of fiscal year 2005 was $6.2 million, or $0.21 per diluted share, reflecting the elimination of $5.1 million of interest expense related to the Company's preferred shares subject to mandatory redemption, which were repurchased with a portion of the proceeds from the IPO, the elimination of $0.3 million, net of tax, of management fees related to the Management Services Agreement, which was terminated in connection with the IPO, and the issuance of 15.8 million shares of Common Stock issued in connection with the IPO. Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the second quarter of fiscal year 2006 was $17.4 million compared to Adjusted EBITDA of $17.8 million for the same period of the prior fiscal year, representing a 2.3% decrease. Adjusted EBITDA for the second quarter of fiscal year 2005 excludes expenses related to the Management Services Agreement which was terminated in connection with the Company's IPO. "As previously announced, the Consumer Business's order growth for the 2005 Christmas season was below expectations due to our decision not to pursue high cost order volume associated with online search. In anticipation of continued competitiveness in the online search environment and to better manage the Consumer Segment business going forward, we have made management changes within this segment including the replacement of our head of marketing. Further, our marketing will continue to evolve as we focus on a more broad based marketing strategy," said Michael J. Soenen, President and Chief Executive Officer of FTD. "While I anticipate that these changes will take some time to take effect, I believe that this is the right long-term course of action for the business and we have adjusted our financial targets accordingly." 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. 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 $63.3 million in the second quarter of fiscal year 2006, compared to revenues of $62.1 million in the same period of fiscal year 2005, representing a 1.8% increase. Operating income for the Consumer Segment was $3.9 million for the second quarter of fiscal year 2006, reflecting 6.2% operating income margins, compared to $3.8 million for the second quarter of the prior fiscal year, reflecting 6.0% operating income margins. While October and November order volume growth was within management's expectations, Christmas order volume was affected by the decision to forgo high cost order volume that would have resulted from significant increases in certain online search engine costs. Consumer orders during the second quarter of fiscal year 2006 totaled 1.1 million compared to 1.0 million orders in the same period of the prior fiscal year. Average order value decreased slightly to $59.33 in the second quarter of fiscal year 2006 from $60.31 in the same period of the prior fiscal year, in line with management expectations. The percentage of Internet orders continues to grow in this segment, increasing to 89.3% for the second quarter of fiscal year 2006 from 85.0% in the second quarter of fiscal year 2005. Specialty gift orders, which include all orders delivered via common carrier, comprised 37.0% of total orders for the second quarter of the current fiscal year compared to 30.4% of total orders for the same period 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 $45.9 million in the second quarter of fiscal year 2006, compared to revenues of $46.1 million in the same period of the prior fiscal year. The decline in Florist Segment revenues was due to a decrease in directory services revenues as well as lower sales resulting from a reduction of unprofitable specialty wholesaling SKUs, as discussed in the first quarter earnings release. This decrease was partially offset by an increase in technology system sales and fresh flower sales to florists. Second quarter fiscal year 2006 operating income in the Florist Segment was $13.1 million, representing operating income margins of 28.6%, compared to $13.5 million, representing operating margins of 29.4%, for the same period of the prior fiscal year. Margins compressed largely as the result of an increase in sales of the Company's lower margin product lines as a percent of total revenues. Additionally, on December 21, 2005, the Florist Segment sold substantially all of the assets and certain liabilities of Renaissance Greeting Cards, Inc. Soenen commented, "This business was not core to our business objectives and allows us to expand the greeting card options which we provide to our FTD members without additional capital investments, through an ongoing vendor relationship with the purchaser." BALANCE SHEET AND OTHER HIGHLIGHTS The Company's debt balance was $233.1 million as of December 31, 2005, down from $243.9 million as of September 30, 2005. Capital expenditures for the fiscal year to date period ended December 31, 2005 were $5.4 million and were primarily related to the new call center that the Company opened in October 2005, in addition to continued technology improvements. TREASURY SHARE REPURCHASE PROGRAM TO CONTINUE 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 intends to 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. The Company plans to continue to repurchase shares under this program and, through January 20, 2006, has repurchased 1.4 million shares for a total of $13.7 million. "Our strong cash flow and low capital expenditures has enabled us to balance our commitment to pay down debt and repurchase shares. We plan to continue this course of action, which we believe will continue to provide enduring shareholder value," explained Soenen. FISCAL YEAR 2006 OUTLOOK "Looking ahead, we remain committed to disciplined operations as we continue to prioritize cost effective marketing and innovation across all of our businesses," stated Soenen. For the full fiscal year 2006, the Company is anticipating revenues of approximately $450 million to $460 million, recognizing the uncertainty in the online search arena and reflecting the sale of Renaissance Greeting Cards, Inc. described above. The Company anticipates targeted net income of approximately $23 million, targeted diluted earnings per share at approximately $0.76 and targeted EBITDA at approximately $67.5 million, with annual EBITDA margins of approximately 15%. Targeted EBITDA includes the effect of approximately $0.6 million of non-cash stock compensation expense associated with the Company's adoption of Statement of Financial Accounting Standards No. 123(R), of which the Company incurred $0.3 million in the fiscal year to date period ended December 31, 2005. There were no comparable expenses in fiscal year 2005. Without the effect of this non-cash expense, forecasted EBITDA would be targeted at approximately $68 million. The above targets are only estimates, which may be exceeded or alternatively may not be achieved. "We will have better visibility of our annual financial outlook following the upcoming Valentine's Day holiday and will provide an update of our results following the holiday," said Soenen. CONFERENCE CALL A conference call has been scheduled for January 25, 2006 at 10:00 a.m., ET, to review the results for the second quarter 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, at least 15 minutes early to register, download and install any necessary audio software. To listen to the call by telephone, dial (877) 381-6199 (mention conference ID #21281531). A replay of the call will be available through February 8, 2006 through www.FTD.COM or by dialing (800) 633-8284 (mention conference ID #21281531). The conference call contains time-sensitive information that is accurate only as of January 25, 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 floral locations in the U.S. floral retail market. The business is supported by the highly recognized FTD brand, which was established in 1910 and enjoys 96% brand recognition among the Company's principal target market of U.S. consumers between the ages of 25 and 64, as well as by the Mercury Man logo, which is displayed in approximately 50,000 floral shops, globally. The Company conducts its business through two operating segments. The Consumer Segment, primarily through the www.FTD.COM Web site and the 1-800-SEND-FTD toll-free telephone number, offers same-day delivery of floral orders to nearly 100% of the U.S. and Canadian populations. As a result of the same-day delivery capability and broad product selection, the Consumer Segment is one of the largest direct marketers of floral arrangements and specialty gifts in the U.S. The Florist Segment provides a comprehensive suite of products and services to enable the network of approximately 20,000 FTD members to send and deliver floral orders. This suite of products and services is designed to promote revenue growth and enhance the operating efficiencies of FTD members. 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 investments in new products, programs and offerings; and opportunities and trends within both the Consumer and Florist Segments, including opportunities to expand these businesses and capitalize on growth opportunities or increase penetration of service offerings. These forward-looking statements are based on management's current expectations, assumptions, estimates and projections about the Company and its 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 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 members; the Company's ability to expand existing marketing partnerships and secure new marketing partners within the Consumer Segment; the success of the Company's marketing campaigns; the ability to retain customers and maintain average order value within the Consumer Segment; the existence of failures in the Mercury Network or the Company's Consumer Segment 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 Consumer and Florist Segments; 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 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
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
December 31, December 31,
--------------------- ---------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Revenues:
Florist segment $45,903 $46,109 $90,213 $91,810
Consumer segment 63,282 62,145 104,841 98,515
---------- ---------- ---------- ----------
Total revenues 109,185 108,254 195,054 190,325
Costs of goods sold and
services provided:
Florist segment 14,102 13,007 28,940 30,135
Consumer segment 46,397 46,101 76,855 73,431
Corporate 623 582 1,185 1,194
---------- ---------- ---------- ----------
Total costs of goods
sold and services
provided 61,122 59,690 106,980 104,760
Gross profit:
Florist segment 31,801 33,102 61,273 61,675
Consumer segment 16,885 16,044 27,986 25,084
Corporate (623) (582) (1,185) (1,194)
---------- ---------- ---------- ----------
Total gross profit 48,063 48,564 88,074 85,565
Advertising and selling:
Florist segment 14,055 14,040 27,174 27,294
Consumer segment 7,835 7,441 12,367 10,891
---------- ---------- ---------- ----------
Total advertising and
selling 21,890 21,481 39,541 38,185
General and administrative
(includes management
fees):
Florist segment 1,937 2,543 4,221 5,117
Consumer segment 4,248 4,127 7,476 7,484
Corporate 6,273 6,024 12,690 12,470
---------- ---------- ---------- ----------
Total general and
administrative 12,458 12,694 24,387 25,071
Operating income (loss)
before corporate
allocations:
Florist segment 15,809 16,519 29,878 29,264
Consumer segment 4,802 4,476 8,143 6,709
Corporate (6,896) (6,606) (13,875) (13,664)
---------- ---------- ---------- ----------
Total operating income
before corporate
allocations 13,715 14,389 24,146 22,309
---------- ---------- ---------- ----------
Corporate Allocations:
Florist segment 2,683 2,984 5,496 6,009
Consumer segment 867 717 1,602 1,494
Corporate (3,550) (3,701) (7,098) (7,503)
---------- ---------- ---------- ----------
Total corporate
allocations - - - -
Income (loss) from
operations:
Florist segment 13,126 13,535 24,382 23,255
Consumer segment 3,935 3,759 6,541 5,215
Corporate (3,346) (2,905) (6,777) (6,161)
---------- ---------- ---------- ----------
Total income from
operations 13,715 14,389 24,146 22,309
---------- ---------- ---------- ----------
Other income and expenses:
Interest income (129) (91) (295) (167)
Interest expense 4,986 5,017 9,767 10,034
Interest expense on
shares subject to
mandatory redemption - 5,105 - 10,048
Other income, net (1,035) (274) (1,079) (321)
---------- ---------- ---------- ----------
Total other expenses 3,822 9,757 8,393 19,594
---------- ---------- ---------- ----------
Income before income
tax 9,893 4,632 15,753 2,715
Income tax expense 3,992 3,876 6,425 5,106
---------- ---------- ---------- ----------
Net income (loss) $5,901 $756 $9,328 $(2,391)
========== ========== ========== ==========
Net income (loss) per
common share - basic $0.20 $0.06 $0.32 $(0.18)
========== ========== ========== ==========
Net income (loss) per
common share - diluted $0.19 $0.06 $0.31 $(0.18)
========== ========== ========== ==========
Weighted average common
shares outstanding -
basic 29,404 13,609 29,429 13,473
========== ========== ========== ==========
Weighted average common
shares outstanding -
diluted 30,417 13,609 30,481 13,473
========== ========== ========== ==========
FTD GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
ASSETS December 31, 2005 June 30, 2005
------ ----------------- -----------------
(unaudited)
Current assets:
Cash and cash equivalents $14,488 $8,890
Accounts receivable, less
allowance for doubtful accounts
of $3,586 at December 31, 2005
and $2,521 at June 30, 2005 29,597 23,419
Inventories, net 5,099 6,495
Deferred income taxes 2,147 2,550
Prepaid expenses and other
current assets 4,855 7,782
----------------- -----------------
Total current assets 56,186 49,136
Property and equipment:
Land and improvements 1,380 1,380
Building and improvements 14,845 14,291
Computer equipment 4,609 3,345
Furniture and equipment 3,260 2,814
----------------- -----------------
Total 24,094 21,830
Less accumulated depreciation 4,766 3,790
----------------- -----------------
Property and equipment, net 19,328 18,040
Other assets:
Deferred financing fees, net 7,751 8,527
Computer software, net 11,179 11,010
Other noncurrent assets, net 11,863 8,985
Other intangible assets, less
accumulated amortization of
$4,693 at December 31, 2005
and $3,393 at June 30, 2005 16,080 17,380
Trademark 121,577 121,577
Goodwill 336,659 336,659
----------------- -----------------
Total other assets 505,109 504,138
----------------- -----------------
Total assets $580,623 $571,314
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $51,363 $41,498
Customer deposits 5,047 5,143
Unearned income 1,685 2,522
Accrued interest 5,011 4,993
Accrued compensation 2,580 4,128
Other accrued liabilities 5,791 5,058
Current maturities of long-term
debt 642 1,633
----------------- -----------------
Total current liabilities 72,119 64,975
Senior secured credit facility 62,386 67,330
Senior subordinated notes 170,117 170,117
Post-retirement benefits and
accrued pension obligations 2,693 2,856
Deferred income taxes 60,748 60,289
Stockholders' equity:
Common stock: $0.01 par value,
75,000,000 shares authorized;
29,482,182 and 29,451,791
shares issued and outstanding
as of December 31, 2005 and
June 30, 2005, respectively 295 295
Additional paid-in capital 233,089 232,759
Accumulated deficit (17,769) (27,097)
Accumulated other comprehensive
loss (80) (210)
Treasury stock, at cost, 274,388
shares as of December 31, 2005 (2,975) -
----------------- -----------------
Total stockholders' equity 212,560 205,747
----------------- -----------------
Total liabilities and
stockholders' equity $580,623 $571,314
================= =================
FTD GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Six Months Ended
December 31,
-----------------------------------
2005 2004
----------------- -----------------
Cash flows from operating
activities:
Net income (loss) $9,328 $(2,391)
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities:
Depreciation 2,134 2,903
Amortization 2,982 2,712
Interest expense on
mandatorily redeemable shares - 10,048
Gain from sale of business (991) -
Stock-based compensation 304 -
Amortization and write off of
deferred financing costs 776 669
Provision for doubtful
accounts 1,769 1,971
Provision for obsolete
inventory 1,197 171
Deferred income taxes 862 -
Increase (decrease) in cash
due to changes in operating
assets and liabilities:
Accounts receivable (10,930) (6,574)
Inventories (2,173) (2,123)
Prepaid expenses and other 2,518 3,082
Other noncurrent assets 179 (257)
Accounts payable 10,315 10,890
Other accrued liabilities,
unearned income, customer
deposits and other (2,014) 339
----------------- -----------------
Net cash provided
by operating
activities 16,256 21,440
----------------- -----------------
Cash flows from investing
activities:
Capital expenditures (5,425) (1,906)
Proceeds from sale of business 3,500 -
Acquisition - (3,129)
----------------- -----------------
Net cash used in
investing
activities (1,925) (5,035)
----------------- -----------------
Cash flows from financing
activities:
Repayments of long-term debt (5,936) (425)
Purchase of company stock net of
reissue (3,214) -
Proceeds from exercise of stock
options 91 -
Tax effect of stock option
benefit 196 -
Capital contribution - 827
----------------- -----------------
Net cash provided
by (used in)
financing
activities (8,863) 402
----------------- -----------------
Effect of foreign exchange rate
changes on cash 130 184
----------------- -----------------
Net increase in cash and cash
equivalents 5,598 16,991
Cash and cash equivalents at
beginning of period 8,890 2,491
----------------- -----------------
Cash and cash equivalents at end
of period $14,488 $19,482
================= =================
FTD GROUP, INC.
SEGMENT INFORMATION
(Unaudited)
(In thousands)
Three Months Ended
December 31, 2005
-----------------------------------------
Gross Segment Eliminations Consolidated
------------- ------------- -------------
Revenues:
Florist segment $45,989 $(86) $45,903
Consumer segment 68,003 (4,721) 63,282
------------- ------------- -------------
Total 113,992 (4,807) 109,185
------------- ------------- -------------
Costs of Goods Sold
and Services Provided:
Florist segment 14,953 (851) 14,102
Consumer segment 47,040 (643) 46,397
Corporate 623 - 623
------------- ------------- -------------
Total 62,616 (1,494) 61,122
------------- ------------- -------------
Gross Profit:
Florist segment 31,036 765 31,801
Consumer segment 20,963 (4,078) 16,885
Corporate (623) - (623)
------------- ------------- -------------
Total 51,376 (3,313) 48,063
------------- ------------- -------------
Advertising and Selling:
Florist segment 17,368 (3,313) 14,055
Consumer segment 7,835 - 7,835
------------- ------------- -------------
Total 25,203 (3,313) 21,890
------------- ------------- -------------
General and Administrative
(includes Management Fees):
Florist segment 1,937 - 1,937
Consumer segment 4,871 (623) 4,248
Corporate 5,650 623 6,273
------------- ------------- -------------
Total 12,458 - 12,458
------------- ------------- -------------
Operating Income (Loss)
before Corporate
Allocations:
Florist segment 11,731 4,078 15,809
Consumer segment 8,257 (3,455) 4,802
Corporate (6,273) (623) (6,896)
------------- ------------- -------------
Total 13,715 - 13,715
------------- ------------- -------------
Corporate Allocations:
Florist segment 2,683 - 2,683
Consumer segment 867 - 867
Corporate (3,550) - (3,550)
------------- ------------- -------------
Total - - -
------------- ------------- -------------
Operating Income (Loss):
Florist segment 9,048 4,078 13,126
Consumer segment 7,390 (3,455) 3,935
Corporate (2,723) (623) (3,346)
------------- ------------- -------------
Total $13,715 $- $13,715
============= ============= =============
Depreciation and
Amortization:
Florist segment 862 $- $862
Consumer segment 840 - 840
Corporate 965 - 965
------------- ------------- -------------
Total $2,667 $- $2,667
============= ============= =============
Three Months Ended
December 31, 2004
-----------------------------------------
Gross Segment Eliminations Consolidated
------------- ------------- -------------
Revenues:
Florist segment $46,157 $(48) $46,109
Consumer segment 67,097 (4,952) 62,145
------------- ------------- -------------
Total 113,254 (5,000) 108,254
------------- ------------- -------------
Costs of Goods Sold
and Services Provided:
Florist segment 13,811 (804) 13,007
Consumer segment 46,736 (635) 46,101
Corporate 582 - 582
------------- ------------- -------------
Total 61,129 (1,439) 59,690
------------- ------------- -------------
Gross Profit:
Florist segment 32,346 756 33,102
Consumer segment 20,361 (4,317) 16,044
Corporate (582) - (582)
------------- ------------- -------------
Total 52,125 (3,561) 48,564
------------- ------------- -------------
Advertising and Selling:
Florist segment 17,600 (3,560) 14,040
Consumer segment 7,441 - 7,441
------------- ------------- -------------
Total 25,041 (3,560) 21,481
------------- ------------- -------------
General and Administrative
(includes Management Fees):
Florist segment 2,543 - 2,543
Consumer segment 4,742 (615) 4,127
Corporate 5,410 614 6,024
------------- ------------- -------------
Total 12,695 (1) 12,694
------------- ------------- -------------
Operating Income (Loss)
before Corporate
Allocations:
Florist segment 12,203 4,316 16,519
Consumer segment 8,178 (3,702) 4,476
Corporate (5,992) (614) (6,606)
------------- ------------- -------------
Total 14,389 - 14,389
------------- ------------- -------------
Corporate Allocations:
Florist segment 2,984 - 2,984
Consumer segment 717 - 717
Corporate (3,701) - (3,701)
------------- ------------- -------------
Total - - -
------------- ------------- -------------
Operating Income (Loss):
Florist segment 9,219 4,316 13,535
Consumer segment 7,461 (3,702) 3,759
Corporate (2,291) (614) (2,905)
------------- ------------- -------------
Total $14,389 $- $14,389
============= ============= =============
Depreciation and
Amortization:
Florist segment $1,102 $- $1,102
Consumer segment 598 - 598
Corporate 960 - 960
------------- ------------- -------------
Total $2,660 $- $2,660
============= ============= =============
FTD GROUP, INC.
SEGMENT INFORMATION
(Unaudited)
(In thousands)
Six Months Ended
December 31, 2005
-----------------------------------------
Gross Segment Eliminations Consolidated
------------- ------------- -------------
Revenues:
Florist segment $90,344 $(131) $90,213
Consumer segment 112,953 (8,112) 104,841
------------- ------------- -------------
Total 203,297 (8,243) 195,054
------------- ------------- -------------
Costs of Goods Sold and
Services Provided:
Florist segment 30,636 (1,696) 28,940
Consumer segment 77,917 (1,062) 76,855
Corporate 1,185 - 1,185
------------- ------------- -------------
Total 109,738 (2,758) 106,980
------------- ------------- -------------
Gross Profit:
Florist segment 59,708 1,565 61,273
Consumer segment 35,036 (7,050) 27,986
Corporate (1,185) - (1,185)
------------- ------------- -------------
Total 93,559 (5,485) 88,074
------------- ------------- -------------
Advertising and Selling:
Florist segment 32,659 (5,485) 27,174
Consumer segment 12,367 - 12,367
------------- ------------- -------------
Total 45,026 (5,485) 39,541
------------- ------------- -------------
General and Administrative
(includes Management Fees):
Florist segment 4,221 - 4,221
Consumer segment 8,526 (1,050) 7,476
Corporate 11,640 1,050 12,690
------------- ------------- -------------
Total 24,387 - 24,387
------------- ------------- -------------
Operating Income (Loss)
before Corporate Allocations:
Florist segment 22,828 7,050 29,878
Consumer segment 14,143 (6,000) 8,143
Corporate (12,825) (1,050) (13,875)
------------- ------------- -------------
Total 24,146 - 24,146
------------- ------------- -------------
Corporate Allocations:
Florist segment 5,496 - 5,496
Consumer segment 1,602 - 1,602
Corporate (7,098) - (7,098)
------------- ------------- -------------
Total - - -
------------- ------------- -------------
Operating Income (Loss):
Florist segment 17,332 7,050 24,382
Consumer segment 12,541 (6,000) 6,541
Corporate (5,727) (1,050) (6,777)
------------- ------------- -------------
Total $24,146 $- $24,146
============= ============= =============
Depreciation and
Amortization:
Florist segment $1,730 $- $1,730
Consumer segment 1,457 - 1,457
Corporate 1,929 - 1,929
------------- ------------- -------------
Total $5,116 $- $5,116
============= ============= =============
Six Months Ended
December 31, 2004
-----------------------------------------
Gross Segment Eliminations Consolidated
------------- ------------- -------------
Revenues:
Florist segment $91,870 $(60) $91,810
Consumer segment 106,817 (8,302) 98,515
------------- ------------- -------------
Total 198,687 (8,362) 190,325
------------- ------------- -------------
Costs of Goods Sold and
Services Provided:
Florist segment 31,653 (1,518) 30,135
Consumer segment 74,457 (1,026) 73,431
Corporate 1,194 - 1,194
------------- ------------- -------------
Total 107,304 (2,544) 104,760
------------- ------------- -------------
Gross Profit:
Florist segment 60,217 1,458 61,675
Consumer segment 32,360 (7,276) 25,084
Corporate (1,194) - (1,194)
------------- ------------- -------------
Total 91,383 (5,818) 85,565
------------- ------------- -------------
Advertising and Selling:
Florist segment 33,110 (5,816) 27,294
Consumer segment 10,891 - 10,891
------------- ------------- -------------
Total 44,001 (5,816) 38,185
------------- ------------- -------------
General and Administrative
(includes Management Fees):
Florist segment 5,117 - 5,117
Consumer segment 8,468 (984) 7,484
Corporate 11,488 982 12,470
------------- ------------- -------------
Total 25,073 (2) 25,071
------------- ------------- -------------
Operating Income (Loss)
before Corporate Allocations:
Florist segment 21,990 7,274 29,264
Consumer segment 13,001 (6,292) 6,709
Corporate (12,682) (982) (13,664)
------------- ------------- -------------
Total 22,309 - 22,309
------------- ------------- -------------
Corporate Allocations:
Florist segment 6,009 - 6,009
Consumer segment 1,494 - 1,494
Corporate (7,503) - (7,503)
------------- ------------- -------------
Total - - -
------------- ------------- -------------
Operating Income (Loss):
Florist segment 15,981 7,274 23,255
Consumer segment 11,507 (6,292) 5,215
Corporate (5,179) (982) (6,161)
------------- ------------- -------------
Total $22,309 $- $22,309
============= ============= =============
Depreciation and
Amortization:
Florist segment $2,435 $- $2,435
Consumer segment 1,249 - 1,249
Corporate 1,931 - 1,931
------------- ------------- -------------
Total $5,615 $- $5,615
============= ============= =============
FTD GROUP, INC.
NON-GAAP FINANCIAL MEASURES
PRO FORMA NET INCOME AND PROFORMA 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 three- and six-month
periods ended December 31, 2004, 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.
Three Months Six Months
Ended Ended
December 31, December 31,
2004 2004
------------- ------------
Net income (loss), as reported (GAAP basis) $756 $(2,391)
Plus: management fees, net of 40% tax effect 300 628
Plus: interest expense on shares subject to
mandatory redemption 5,105 10,048
------------- ------------
Pro forma net income $6,161 $8,285
============= ============
Pro forma EPS:
--------------
Basic $0.21 $0.28
============= ============
Diluted $0.21 $0.28
============= ============
Basic:
------
Weighted average shares outstanding, as
reported (GAAP basis) 13,609 13,473
Add: weighted average effect as if IPO
occurred on 6/30/04 15,843 15,843
------------- ------------
Pro forma weighted average shares
outstanding 29,452 29,316
============= ============
Diluted:
--------
Weighted average shares outstanding, as
reported (GAAP basis) 13,609 13,473
Add: weighted average effect as if IPO
occurred on 6/30/04 15,843 15,843
------------- ------------
Pro forma weighted average shares
outstanding 29,452 29,316
============= ============
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
December 31, December 31,
--------------------- ---------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Net income (loss), as
reported (GAAP basis) $5,901 $756 $9,328 $(2,391)
plus: Interest expense,
net 4,857 4,926 9,472 9,867
plus: Interest expense on
shares subject to
mandatory redemption - 5,105 - 10,048
plus: Depreciation and
amortization 2,667 2,660 5,116 5,615
plus: Income tax expense 3,992 3,876 6,425 5,106
---------- ---------- ---------- ----------
EBITDA 17,417 17,323 30,341 28,245
plus: Management fees (1) - 500 - 1,047
---------- ---------- ---------- ----------
Adjusted EBITDA (2) $17,417 $17,823 $30,341 $29,292
========== ========== ========== ==========
(1) The Management Services Agreement was terminated in connection
with the Company's initial public offering in February 2005.
(2) 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.
FTD GROUP, INC.
NON-GAAP FINANCIAL MEASURES
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. EBITDA is
calculated as follows for the period presented:
Year Ending
June 30, 2006
(Forecasted Targets)
--------------------
(in thousands)
Revenues $450,000 - $460,000
Net income (GAAP basis) $23,000
plus: Interest expense, net 18,500
plus: Depreciation and amortization 10,750
plus: Income tax expense 15,250
--------------------
EBITDA (1) $67,500
====================
(1) The Company uses EBITDA as a supplemental measure of performance.
The Company presents EBITDA because it considers it an important
supplemental measure of performance, as it is materially the same
performance measure that 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 senior credit
facility, the indenture governing the Notes and the executive
compensation plan also allow for the adjustment to EBITDA of
non-cash stock compensation expenses related to the adoption of
Statement of Financial Accounting Standards No. 123(R). Measures
similar to 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 facilitates
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 because it believes it is frequently used by
investors and other interested parties in the evaluation of high
yield issuers, many of which present EBITDA when reporting their
results. EBITDA has limitations as an analytical tool, 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 is that it does not reflect the Company's
cash expenditures for capital expenditures, it does not reflect
the significant interest expense or the cash requirements
necessary to service interest or principal payments on the
Company's debt, it does not reflect changes in, or cash
requirements for, the Company's working capital requirements, 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 only supplementally.
CONTACT: FTD Group, Inc. |
| "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding FTD Group, Inc.'s business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year. |