FTD Group, Inc. Reports Fourth Quarter and Fiscal Year 2008 Results

Monday, August 25, 2008 8:25 PM

Stockholder Approval Received for Pending Merger with United Online, Inc.

FTD Group, Inc. (NYSE: FTD), a leading international provider of floral related products and services, today announced fourth quarter and fiscal year 2008 financial results for the period ended June 30, 2008.

FISCAL YEAR 2008 RESULTS

Fiscal year 2008 consolidated revenue grew $33.1 million, or 5.4%, to $646.1 million, compared to consolidated revenue of $613.0 million for fiscal year 2007.

Fiscal year 2007 included only eleven months of results for the Company’s International Segment, as a result of its acquisition of the Interflora U.K. business on July 31, 2006.

Net income for fiscal year 2008 was $39.0 million, or $1.31 per diluted share. During the current fiscal year, the Company incurred $5.5 million in unusual expenses, which included $2.9 million of expenses related to the pending acquisition by United Online, Inc., $2.0 million of charges related to abandoned acquisition opportunities in light of the pending acquisition by United Online, Inc., and $0.6 million in advisory costs incurred in conjunction with the resolution of a sales tax audit. Partially offsetting these expenses was a $1.3 million tax benefit related to an enacted tax rate change in the U.K. Net of tax, these unusual expenses amounted to $0.09 per diluted share. Management does not consider any of these unusual items to be reflective of the Company’s core operating performance.

Fiscal year 2007 net income was $31.9 million, or $1.08 per diluted share, which included $0.02 per diluted share in expenses related to the Company’s secondary stock offering in the third quarter of fiscal year 2007.

Including the $5.5 million in unusual expenses described above, earnings before interest, taxes, depreciation and amortization (EBITDA) was $94.7 million for fiscal year 2008. Adjusted EBITDA, which excludes the unusual expenses described above and other (income) expense, net, was $99.6 million for fiscal year 2008 compared to Adjusted EBITDA (which excludes other (income) expense, net) of $92.5 million for the prior fiscal year.

A table reconciling net income to EBITDA and Adjusted EBITDA and management’s discussion of the use of non-GAAP measures is included with the attached consolidated financial statements. The Company believes EBITDA and Adjusted EBITDA provide useful supplemental information related to the Company’s operations and results.

Domestic Consumer Segment

The Domestic Consumer Segment achieved revenue of $286.4 million in fiscal year 2008, compared to revenue of $287.6 million in fiscal year 2007, a decrease of 0.4%. Fiscal year 2008 operating income in the Domestic Consumer Segment was $25.0 million, or 8.7% of Domestic Consumer Segment revenue, compared to $21.2 million in the prior year, or 7.4% of Domestic Consumer Segment revenue. Operating margin during the period increased primarily due to more efficient technology and marketing spending.

Domestic Consumer orders for fiscal year 2008 totaled approximately 4,428,000 compared to approximately 4,590,000 orders for fiscal year 2007. Average order value increased to $63.09 in the current year from $61.31 in the prior year.

Domestic Florist Segment

The Domestic Florist Segment achieved revenue of $181.5 million in fiscal year 2008, slightly down from the $182.0 million of revenue achieved in the same period of the prior fiscal year. Fiscal year 2008 operating income for the Domestic Florist Segment was $58.2 million, or 32.1% of Domestic Florist Segment revenue, compared to $58.7 million in the prior year, or 32.2% of Domestic Florist Segment revenue.

International Segment

The International Segment, primarily comprised of the Interflora U.K. business, achieved revenue of $178.3 million in fiscal year 2008 compared to revenue of $143.4 million in the prior fiscal year, representing a 24.3% increase. Fiscal year 2007 included only eleven months of results for the Company’s International Segment, as a result of its acquisition of the Interflora U.K. business on July 31, 2006. This increase in revenue included $5.2 million related to favorable foreign currency movement between the U.S. Dollar and the British Pound.

The International Segment achieved operating income of $18.6 million, or 10.4% of International Segment revenue, in fiscal year 2008 compared to $13.0 million, or 9.1% of revenue, in fiscal year 2007. This increase was largely due to efficiencies across the business as well as a current year reversal of previously accrued deferred compensation expense.

The International Segment continued to experience strong demand during fiscal year 2008, as consumer order volume increased 20.6% to approximately 2,152,000 for fiscal year 2008 compared to approximately 1,785,000 orders for the eleven-month period of the prior fiscal year (fiscal year 2008 order volume represents an increase of 11.5% over Interflora U.K.’s order volume for a twelve-month period of the prior fiscal year). Average order value in the International Segment was $68.11 in the current year, a 3.5% increase, primarily attributable to favorable foreign currency movement, compared to $65.81 for the eleven-month period of the prior fiscal year. Internet orders increased to 74.9% of total consumer order volume in the current year, from 71.0% in the eleven-month period of fiscal year 2007.

BALANCE SHEET AND OTHER HIGHLIGHTS

As of June 30, 2008, the Company’s cash and cash equivalents totaled $35.1 million. The Company’s debt balance totaled $292.1 million, compared to total debt of $294.1 million as of March 31, 2008. As of June 30, 2008, the Company had $74.0 million available under its revolving credit facility.

During fiscal year 2008, the Company repaid $21.6 million of debt, which included $1.7 million in notes payable. In addition, the Company made $19.2 million in dividend payments during fiscal year 2008.

FOURTH QUARTER FISCAL YEAR 2008 RESULTS

Fourth quarter fiscal year 2008 consolidated revenues grew 3.0% to $174.9 million, compared to revenue of $169.8 million for the same period of fiscal year 2007. This revenue growth was attributable to revenue increases across all three segments of the business.

Fourth quarter revenue for the Domestic Consumer Segment increased 4.2% to $94.3 million, compared to $90.5 million in the same period of the prior fiscal year. Fourth quarter Consumer Segment operating margin increased to 11.1% from 10.5% in the same period of the prior fiscal year, reflecting the Company’s continued focus on profitability.

Domestic Florist Segment fourth quarter revenue was $44.8 million compared with $44.5 million in the prior fiscal year. Fourth quarter operating margin in the Domestic Florist Segment grew to 35.4% from 30.9% in the prior fiscal year period. This increase in operating margin is due in part to a shift in timing of advertising expenses related to the Easter holiday and a florist membership event that occurred during the third quarter of the current fiscal year but during the fourth quarter of the prior fiscal year.

The International Segment contributed $35.8 million of revenue, an increase of 2.9% during this non-holiday period in the U.K., compared to $34.8 million in the same period of the prior fiscal year. Revenue was negatively impacted by $0.2 million related to unfavorable foreign currency movements between the U.S. Dollar and the British Pound. Fourth quarter operating margin in the International Segment grew to 11.6% from 11.0% in the prior fiscal year period.

Net income for the fourth quarter of fiscal year 2008 was $12.6 million, or $0.42 per diluted share, compared to net income of $10.7 million, or $0.36 per diluted share, in the prior fiscal year fourth quarter. Net income in the fourth quarter of fiscal year 2008 included $1.8 million of after-tax costs related to the pending transaction with United Online, Inc. which were offset in part by a current year reversal of previously accrued deferred compensation expense in the International Segment totaling $0.6 million, after tax.

Adjusted EBITDA for the fourth quarter of fiscal year 2008 was $30.2 million, which excludes $2.1 million of costs related to the pending transaction with United Online, Inc., compared to Adjusted EBITDA of $26.7 million for the same period of the prior fiscal year, representing a 12.9% increase.

ACQUISITION OF COMPANY BY UNITED ONLINE, INC.

The Company announced that its stockholders, at a special meeting held on August 25, 2008, voted to adopt the agreement and plan of merger among FTD, United Online, Inc. (Nasdaq: UNTD), and UNOLA Corp., an indirect wholly owned subsidiary of United Online, Inc. Shares voted in favor of the adoption of the agreement and plan of merger represented more than 79% percent of the total issued and outstanding shares of common stock of FTD.

The merger is expected to close on Tuesday, August 26, 2008. As a result of the merger, FTD will become an indirect wholly owned subsidiary of United Online, Inc., and FTD’s stockholders will be entitled to receive $10.15 in cash, without interest, and 0.4087 of a share of United Online, Inc. common stock for each share of FTD common stock that they own.

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 the Republic of Ireland. The business utilizes the highly recognized FTD and Interflora brands, both supported by the Mercury Man logo, which is displayed in approximately 45,000 floral shops worldwide. 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 are complemented by the florist businesses which provide products and services to the Company’s independent members.

FORWARD-LOOKING STATEMENTS

This press release contains various "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements may include statements regarding the Company’s outlook, anticipated revenue growth and profitability; anticipated benefits of its acquisition of Interflora Holdings Limited (“Interflora U.K.”), anticipated benefits of investments in new products, programs and offerings and opportunities and trends within both the domestic and international floral businesses, including opportunities to expand these businesses and capitalize on growth opportunities or increase penetration of service offerings. The international business reflects the operations of Interflora U.K. 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 contained in any forward-looking statements as a result of: the Company's ability to acquire and retain FTD and Interflora U.K. 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 U.K. 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 ability to manage foreign currency exchange rate risk; the Company’s performance during key holiday selling seasons such as Christmas, Valentine’s Day and Mother’s Day; 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 U.K. 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 its 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,
				2008			2007			2008			2007

Revenues:
	Consumer segment		$	94,325		$	90,537		$	286,365		$	287,621
	Florist segment			44,766			44,473			181,452			181,995
	International segment			35,813			34,792			178,308			143,396
		Total revenues		174,904			169,802			646,125			613,012

Costs of goods sold and services provided:
	Consumer segment			66,069			63,020			201,832			203,487
	Florist segment			13,803			13,331			60,614			57,498
	International segment			24,051			23,187			122,181			98,390
	Corporate			585			489			2,052			1,996
		Total costs of goods sold and services provided		104,508			100,027			386,679			361,371

Gross profit:
	Consumer segment			28,256			27,517			84,533			84,134
	Florist segment			30,963			31,142			120,838			124,497
	International segment			11,762			11,605			56,127			45,006
	Corporate			(585	)		(489	)		(2,052	)		(1,996	)
		Total gross profit		70,396			69,775			259,446			251,641

Advertising and selling:
	Consumer segment			11,349			11,013			35,264			36,100
	Florist segment			10,422			12,657			43,324			47,699
	International segment			2,608			1,988			14,954			10,626
		Total advertising and selling		24,379			25,658			93,542			94,425

General and administrative:
	Consumer segment			5,181			5,952			19,696			22,702
	Florist segment			2,125			2,009			8,695			8,357
	International segment			4,985			5,803			22,575			21,352
	Corporate			8,821			7,070			33,561			26,685
		Total general and administrative		21,112			20,834			84,527			79,096

Operating income (loss) before corporate allocations:
	Consumer segment			11,726			10,552			29,573			25,332
	Florist segment			18,416			16,476			68,819			68,441
	International segment			4,169			3,814			18,598			13,028
	Corporate			(9,406	)		(7,559	)		(35,613	)		(28,681	)
		Total operating income before corporate allocations		24,905			23,283			81,377			78,120

Corporate Allocations:
	Consumer segment			1,256			1,090			4,595			4,111
	Florist segment			2,575			2,753			10,614			9,760
	International segment			-			-			-			-
	Corporate			(3,831	)		(3,843	)		(15,209	)		(13,871	)
		Total corporate allocations		-			-			-			-

Income (loss) from operations:
	Consumer segment			10,470			9,462			24,978			21,221
	Florist segment			15,841			13,723			58,205			58,681
	International segment			4,169			3,814			18,598			13,028
	Corporate			(5,575	)		(3,716	)		(20,404	)		(14,810	)
		Total income from operations		24,905			23,283			81,377			78,120

Other income and expenses:
	Interest income			(346	)		(757	)		(1,366	)		(1,883	)
	Interest expense			4,978			6,548			22,976			28,227
	Other income, net			(311	)		(204	)		(636	)		(929	)

		Total other expenses		4,321			5,587			20,974			25,415

		Income before income tax		20,584			17,696			60,403			52,705

Income tax expense				7,968			6,949			21,372			20,793

		Net income	$	12,616		$	10,747		$	39,031		$	31,912


Net income per common share - basic			$	0.43		$	0.37		$	1.33		$	1.12
Net income per common share - diluted			$	0.42		$	0.36		$	1.31		$	1.08

Weighted average common shares outstanding - basic				29,523			28,955			29,405			28,496
Weighted average common shares outstanding - diluted				29,778			30,014			29,719			29,577


FTD GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)


			June 30, 2008			June 30, 2007
ASSETS

Current Assets:
	Cash and cash equivalents		$	35,097		$	25,462
	Accounts receivable, less allowance for doubtful accounts of $7,208 at June 30, 2008 and $5,431 at June 30, 2007			31,644			32,416
	Inventories, net			5,094			3,694
	Other current assets			11,007			9,500
		Total current assets		82,842			71,072

Property and equipment:
	Property and equipment			37,532			35,791
	Less accumulated depreciation			15,719			11,018
		Property and equipment, net		21,813			24,773

Other assets:
	Computer software, net			12,801			12,699
	Other noncurrent assets			23,285			21,085
	Other intangible assets, less accumulated amortization of $12,342 at June 30, 2008 and $9,154 at June 30, 2007			10,258			13,454
	Trademark			187,535			187,816
	Goodwill			417,656			418,001
		Total other assets		651,535			653,055
		Total assets	$	756,190		$	748,900

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
	Accounts payable		$	50,224		$	52,009
	Other accrued liabilities			34,781			28,511
	Current maturities of long-term debt			1,242			8,475
	Dividends payable			-			4,707
		Total current liabilities		86,247			93,702

Senior secured credit facility				120,768			133,418
Senior subordinated notes				170,117			170,117
Post-retirement benefits, accrued pension obligations and other liabilities				4,843			4,535
Deferred income taxes				80,573			85,350

Stockholders' equity:
	Common stock: $0.01 par value, 75,000 shares authorized; 29,832 shares issued as of June 30, 2008 and 29,482 shares issued as of June 30, 2007			298			295
	Additional paid-in capital			237,744			235,589
	Retained earnings			46,227			20,952
	Accumulated other comprehensive income			9,439			9,933
	Treasury stock, at cost, 5 shares as of June 30, 2008 and 519 shares as of June 30, 2007			(66	)		(4,991	)
		Total stockholders' equity		293,642			261,778
		Total liabilities and stockholders' equity	$	756,190		$	748,900


FTD GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)


				Year Ended
				June 30,

					2008			2007


Cash flows from operating activities:
	Net income			$	39,031		$	31,912
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization			12,675			14,335
		Stock-based compensation expense			2,549			1,965
		Amortization and write off of deferred financing costs			954			2,775
		Provision for doubtful accounts			3,311			3,260
		Deferred income taxes			(4,341	)		1,925
		Excess tax benefit from stock-based compensation			(2,421	)		(4,122	)
		Increase (decrease) in cash due to changes in operating assets and liabilities, net of acquisition
			Accounts receivable		(2,505	)		5,208
			Inventories		(1,398	)		(31	)
			Prepaid expenses and other		(267	)		2,305
			Other noncurrent assets		(4,119	)		(214	)
			Accounts payable		(2,811	)		(14,733	)
			Other accrued liabilities, unearned income, and customer deposits		10,749			3,805
			Net cash provided by operating activities		51,407			48,390

Cash flows from investing activities:
	Capital expenditures				(6,652	)		(7,835	)
	Proceeds from sale of business and related notes receivable				650			-
	Dividends received				48			-
	Acquisition of business, net of cash acquired				-			(96,702	)
	Settlement of foreign exchange contract				-			1,386

			Net cash used in investing activities		(5,954	)		(103,151	)

Cash flows from financing activities:
	Repayments of long-term debt				(19,883	)		(58,107	)
	Dividends paid				(19,213	)		(4,699	)
	Excess tax benefit from stock-based compensation				2,421			4,122
	Proceeds from exercise of stock options				2,187			2,510
	Repayment of notes payable and capital lease obligations				(1,706	)		(23,572	)
	Repurchase of company stock				(66	)		-
	Proceeds from issuance of common stock				6			-
	Proceeds from issuance of long-term debt, net of financing costs				-			148,536

			Net cash (used in) provided by financing activities		(36,254	)		68,790

	Effect of foreign exchange rate changes on cash and cash equivalents				436			479

Net increase in cash and cash equivalents					9,635			14,508

Cash and cash equivalents at beginning of period					25,462			10,954

Cash and cash equivalents at end of period				$	35,097		$	25,462


FTD GROUP, INC.
SEGMENT INFORMATION
(In thousands)

		Three Months Ended June 30, 2008									Three Months Ended June 30, 2007
		Gross Segment			Eliminations			Consolidated			Gross Segment			Eliminations			Consolidated

Revenues:
Consumer segment		$	98,299		$	(3,974	)	$	94,325		$	94,162		$	(3,625	)	$	90,537
Florist segment			44,877			(111	)		44,766			44,669			(196	)		44,473
International segment			35,713			100			35,813			34,650			142			34,792
	Total		178,889			(3,985	)		174,904			173,481			(3,679	)		169,802

Costs of Goods Sold and Services Provided:
Consumer segment			66,180			(111	)		66,069			63,216			(196	)		63,020
Florist segment			13,803			-			13,803			13,331			-			13,331
International segment			24,085			(34	)		24,051			23,231			(44	)		23,187
Corporate			585			-			585			489			-			489
	Total		104,653			(145	)		104,508			100,267			(240	)		100,027

Gross Profit:
Consumer segment			32,119			(3,863	)		28,256			30,946			(3,429	)		27,517
Florist segment			31,074			(111	)		30,963			31,338			(196	)		31,142
International segment			11,628			134			11,762			11,419			186			11,605
Corporate			(585	)		-			(585	)		(489	)		-			(489	)
	Total		74,236			(3,840	)		70,396			73,214			(3,439	)		69,775

Advertising and Selling:
Consumer segment			11,349			-			11,349			11,013			-			11,013
Florist segment			14,396			(3,974	)		10,422			16,282			(3,625	)		12,657
International segment			2,592			16			2,608			2,172			(184	)		1,988
	Total		28,337			(3,958	)		24,379			29,467			(3,809	)		25,658

General and Administrative:
Consumer segment			5,181			-			5,181			5,952			-			5,952
Florist segment			2,125			-			2,125			2,009			-			2,009
International segment			4,924			61			4,985			5,677			126			5,803
Corporate			8,821			-			8,821			7,070			-			7,070
	Total		21,051			61			21,112			20,708			126			20,834

Operating Income (Loss) before Corporate Allocations:
Consumer segment			15,589			(3,863	)		11,726			13,981			(3,429	)		10,552
Florist segment			14,553			3,863			18,416			13,047			3,429			16,476
International segment			4,112			57			4,169			3,570			244			3,814
Corporate			(9,406	)		-			(9,406	)		(7,559	)		-			(7,559	)
	Total		24,848			57			24,905			23,039			244			23,283

Corporate Allocations:
Consumer segment			1,256			-			1,256			1,090			-			1,090
Florist segment			2,575			-			2,575			2,753			-			2,753
International segment			-			-			-			-			-			-
Corporate			(3,831	)		-			(3,831	)		(3,843	)		-			(3,843	)
	Total		-			-			-			-			-			-

Operating Income (Loss):
Consumer segment			14,333			(3,863	)		10,470			12,891			(3,429	)		9,462
Florist segment			11,978			3,863			15,841			10,294			3,429			13,723
International segment			4,112			57			4,169			3,570			244			3,814
Corporate			(5,575	)		-			(5,575	)		(3,716	)		-			(3,716	)
	Total	$	24,848		$	57		$	24,905		$	23,039		$	244		$	23,283

Depreciation and Amortization:
Consumer segment		$	889		$	-		$	889		$	885		$	-		$	885
Florist segment			690			-			690			837			-			837
International segment			979			-			979			1,062			-			1,062
Corporate			654			-			654			661			-			661
	Total	$	3,212		$	-		$	3,212		$	3,445		$	-		$	3,445


FTD GROUP, INC.
SEGMENT INFORMATION
(In thousands)

		Year Ended June 30, 2008									Year Ended June 30, 2007
		Gross Segment			Eliminations			Consolidated			Gross Segment			Eliminations			Consolidated

Revenues:
Consumer segment		$	298,758		$	(12,393	)	$	286,365		$	299,599		$	(11,978	)	$	287,621
Florist segment			181,914			(462	)		181,452			182,503			(508	)		181,995
International segment			177,910			398			178,308			143,072			324			143,396
	Total		658,582			(12,457	)		646,125			625,174			(12,162	)		613,012

Costs of Goods Sold and Services Provided:
Consumer segment			202,294			(462	)		201,832			203,995			(508	)		203,487
Florist segment			60,614			-			60,614			57,498			-			57,498
International segment			122,314			(133	)		122,181			98,511			(121	)		98,390
Corporate			2,052			-			2,052			1,996			-			1,996
	Total		387,274			(595	)		386,679			362,000			(629	)		361,371

Gross Profit:
Consumer segment			96,464			(11,931	)		84,533			95,604			(11,470	)		84,134
Florist segment			121,300			(462	)		120,838			125,005			(508	)		124,497
International segment			55,596			531			56,127			44,561			445			45,006
Corporate			(2,052	)		-			(2,052	)		(1,996	)		-			(1,996	)
	Total		271,308			(11,862	)		259,446			263,174			(11,533	)		251,641

Advertising and Selling:
Consumer segment			35,264			-			35,264			36,100			-			36,100
Florist segment			55,717			(12,393	)		43,324			59,677			(11,978	)		47,699
International segment			14,872			82			14,954			11,006			(380	)		10,626
	Total		105,853			(12,311	)		93,542			106,783			(12,358	)		94,425

General and Administrative:
Consumer segment			19,696			-			19,696			22,702			-			22,702
Florist segment			8,695			-			8,695			8,357			-			8,357
International segment			22,508			67			22,575			20,908			444			21,352
Corporate			33,561			-			33,561			26,685			-			26,685
	Total		84,460			67			84,527			78,652			444			79,096

Operating Income (Loss) before Corporate Allocations:
Consumer segment			41,504			(11,931	)		29,573			36,802			(11,470	)		25,332
Florist segment			56,888			11,931			68,819			56,971			11,470			68,441
International segment			18,216			382			18,598			12,647			381			13,028
Corporate			(35,613	)		-			(35,613	)		(28,681	)		-			(28,681	)
	Total		80,995			382			81,377			77,739			381			78,120

Corporate Allocations:
Consumer segment			4,595			-			4,595			4,111			-			4,111
Florist segment			10,614			-			10,614			9,760			-			9,760
International segment			-			-			-			-			-			-
Corporate			(15,209	)		-			(15,209	)		(13,871	)		-			(13,871	)
	Total		-			-			-			-			-			-

Operating Income (Loss):
Consumer segment			36,909			(11,931	)		24,978			32,691			(11,470	)		21,221
Florist segment			46,274			11,931			58,205			47,211			11,470			58,681
International segment			18,216			382			18,598			12,647			381			13,028
Corporate			(20,404	)		-			(20,404	)		(14,810	)		-			(14,810	)
	Total	$	80,995		$	382		$	81,377		$	77,739		$	381		$	78,120

Depreciation and Amortization:
Consumer segment		$	3,534		$	-		$	3,534		$	3,768		$	-		$	3,768
Florist segment			2,660			-			2,660			3,267			-			3,267
International segment			3,861			-			3,861			3,845			-			3,845
Corporate			2,620			-			2,620			3,455			-			3,455
	Total	$	12,675		$	-		$	12,675		$	14,335		$	-		$	14,335


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 before net interest expense, income tax expense, depreciation and amortization. The Company defines Adjusted EBITDA as EBITDA plus expenses and minus income items that are not considered reflective of the Company's core operations. EBITDA and Adjusted EBITDA are calculated as follows for the periods presented:

		Three Months Ended						Year Ended
		June 30,						June 30,
			2008			2007			2008			2007

	Net income, as reported (GAAP basis)	$	12,616		$	10,747		$	39,031		$	31,912
	plus: Interest expense, net		4,632			5,791			21,610			26,344
	plus: Depreciation and amortization		3,212			3,445			12,675			14,335
	plus: Income tax expense		7,968			6,949			21,372			20,793
	EBITDA (1)		28,428			26,932			94,688			93,384
	Other income, net		(311	)		(204	)		(636	)		(929	)
	Items not reflective of core operations (2)		2,051			-			5,513			-
	Adjusted EBITDA (1)	$	30,168		$	26,728		$	99,565		$	92,455

(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 acquisition of Interflora Holdings Limited, 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), the age and book depreciation of facilities and equipment (affecting relative depreciation expense), other (income) expense, net (including foreign currency transactions) and other expenses or income items that are not considered reflective of the Company's core operations. 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 other expenses or gains excluded above 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)	During fiscal year 2008, the Company recorded $2.9 million of expenses related to the pending acquisition by United Online, Inc., $2.0 million of expenses related to abandoned acquisition opportunities and $0.6 million in advisory costs incurred in conjunction with the resolution of a sales tax audit. Management does not consider these expenses reflective of the Company's core operating performance.

FTD Group, Inc.
Jandy Tomy
Investor Relations
(630) 724-6984
jtomy@ftdi.com

(Source: Business Wire )

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