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Article by DailyStocks_admin    (01-22-08 01:59 AM)

The Daily Magic Formula Stock for 01/21/2008 is FTD Group Inc. According to the Magic Formula Investing Web Site, the ebit yield is 14% and the EBIT ROIC is >100 %.

Dailystocks.com only deals with facts, not biased journalism. What is a better way than to go to the SEC Filings? It's not exciting reading, but it makes you money. We cut and paste the important information from SEC filings for you to get started on your research on a specific company.


Dailystocks.com makes NO RECOMMENDATIONS whatsoever, and provides this for informational purpose only.

BUSINESS OVERVIEW

Overview

FTD Group, Inc., formerly Mercury Man Holdings Corporation, is a Delaware corporation that was formed in 2003 by Green Equity Investors IV, L.P., a private investment fund affiliated with Leonard Green & Partners, L.P., solely for the purpose of acquiring majority ownership of FTD, Inc.

FTD, Inc. is a Delaware corporation that commenced operations in 1994 and includes the operations of its principal operating subsidiary, Florists‚Äô Transworld Delivery, Inc., a Michigan corporation (‚ÄúFTD‚ÄĚ or the ‚ÄúOperating Company‚ÄĚ). The operations of FTD include those of its wholly-owned subsidiaries, FTD.COM INC. (‚ÄúFTD.COM‚ÄĚ), FTD Canada, Inc. (formerly known as Florists‚Äô Transworld Delivery Association of Canada, Ltd.) and Interflora.

Secondary Offering

On March 12, 2007, the Company closed its underwritten secondary public offering of 6,000,000 shares of common stock. The underwriters exercised in full their over-allotment option for an additional 900,000 shares of common stock at the public offering price of $17.50 per share, less underwriting discounts. Of the shares sold, 6,285,900 shares were sold by affiliates of Leonard Green & Partners, L.P. and 614,100 shares were sold by members of management. As a result of the secondary offering, affiliates of Leonard Green & Partners, L.P. control less than a majority of the voting power of the Company‚Äôs outstanding common stock. As a result, the Company is no longer a ‚Äúcontrolled company‚ÄĚ within the meaning of the New York Stock Exchange rules and, thus, is required to have a board of directors comprised of a majority of independent directors and nominating and compensation committees composed entirely of independent directors. The Company will phase in these corporate governance requirements by March 11, 2008. See Note 12 of the Consolidated Financial Statements included herein for further detail.

Acquisition of Interflora

On July 31, 2006, the Company completed the acquisition of Interflora, a U.K. based provider of floral-related products and services to consumers and retail floral locations in the U.K and the Republic of Ireland. Interflora is an internationally recognized brand and utilizes the same Mercury Man logo as the Company. Interflora provides various products and services to its members and also markets flowers directly to consumers in the U.K. and the Republic of Ireland through both Interflora‚Äôs Web site at www.interflora.co.uk and a toll-free telephone number. Founded in 1923, Interflora was originally operated as an unincorporated association, which was incorporated in February 2005. As a result of the Interflora acquisition, the Company also acquired majority control of Interflora, Inc., in which the Company previously had a 33.3% interest. Interflora, Inc. was formed in 1946 and is an international clearinghouse for flowers-by-wire order exchanges between its members. Interflora, Inc. is also the owner of the ‚ÄúInterflora‚ÄĚ trademark, in respect of which the Company is the exclusive licensee in a number of jurisdictions around the world. See ‚ÄúTrademarks‚ÄĚ below. See Note 2 of the Consolidated Financial Statements included herein for additional information regarding the Interflora acquisition.

Sale of Renaissance Greeting Cards Assets

On December 21, 2005, the Company sold substantially all of the assets and certain liabilities of Renaissance Greeting Cards, Inc. (‚ÄúRenaissance‚ÄĚ). See Note 3 of the Consolidated Financial Statements included herein for further detail. Prior to the sale, the operations of Renaissance were included in the florist segment in the consolidated financial statements.

2005 Initial Public Offering (‚ÄúIPO‚ÄĚ)

On February 14, 2005, the Company closed the sale of 13,100,000 shares of Common Stock at a price of $13.00 per share in a firm commitment underwritten initial public offering. In addition, on that date, 2,307,693 shares of Common Stock were sold at the public offering price to Green Equity Investors IV, L.P., the Company’s principal stockholder and an affiliate. On March 15, 2005, the Company closed the sale of 435,200 shares of Common Stock at the public offering price to satisfy the underwriter’s over-allotment option. The offering was effected pursuant to a Registration Statement on Form S-1 (File No. 333-120723), which the Securities and Exchange Commission declared effective on February 8, 2005. See Note 12 of the Consolidated Financial Statements included herein for further detail.

On February 7, 2005, the stockholders approved an increase in the number of authorized shares to 75,000,000, as well as a 1-for-3 reverse stock split. All common share and per share amounts reflect this reverse stock split.

2004 Going Private Transaction with Nectar Merger Corporation, an Affiliate of Leonard Green & Partners, L.P.

On February 24, 2004, the Company completed a going private transaction with an affiliate of Leonard Green & Partners, L.P. (the ‚Äú2004 Going Private Transaction‚ÄĚ). In the transaction, Nectar Merger Corporation, which was a wholly-owned subsidiary of Mercury Man Holdings Corporation, merged with and into FTD, Inc., with FTD, Inc. continuing as the surviving corporation. As a result of the 2004 Going Private Transaction, the Company ceased to have its equity publicly traded and became a wholly-owned subsidiary of Mercury Man Holdings Corporation, an affiliate of Green Equity Investors IV, L.P., a private investment fund affiliated with Leonard Green & Partners, L.P. The results of operations presented herein for all periods prior to the 2004 Going Private Transaction are referred to as the results of operations of the ‚ÄúPredecessor.‚ÄĚ The financial data of the Predecessor and the Company has been combined for fiscal year 2004 and is presented for comparative purposes. The Predecessor ceased operations as of the date of the 2004 Going Private Transaction.

Business

FTD Group, Inc. is a leading provider of floral and specialty gift 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 Company conducts its business through three operating segments: the consumer segment, the florist segment and the international segment.

The consumer segment operates primarily through the www.ftd.com Web site in the U.S. and Canada. As a result of the Company’s same-day delivery capability and broad product selection, the Company’s consumer segment is one of the largest direct marketers of floral arrangements and specialty gifts in the U.S., generating 4.6 million orders from consumers in the fiscal year ended June 30, 2007.

The florist segment provides a comprehensive suite of products and services that enable FTD members to send and deliver floral orders. This suite of products and services is also designed to promote revenue growth and enhance the operating efficiencies of FTD members in the U.S. and Canada.

The international segment was added as a result of the acquisition of Interflora on July 31, 2006. Interflora generated 1.8 million orders from consumers in the fiscal year ended June 30, 2007. Interflora also provides products and services to its network of members in the U.K. and the Republic of Ireland.

The Company’s consumer and florist businesses are highly complementary, as floral orders generated by the consumer businesses are delivered by the network of members. Management believes that the Company’s strong brand name recognition, complementary florist and consumer businesses, extensive customer database of floral and specialty gift consumers, network of FTD and Interflora members and international footprint provide the Company with competitive advantages.

Consumer Segment

The consumer segment is an Internet and telephone marketer of flowers and specialty gift items to consumers, operating in the U.S. and Canada, primarily through the www.ftd.com Web site, in addition to the 1-800-SEND-FTD toll-free telephone number. The Company offers floral arrangements for florist delivery as well as specialty gift items which are delivered via common carrier, including boxed flowers, plants, gourmet food gifts, holiday gifts, bath and beauty products, jewelry, wine and gift baskets, dried flowers and stuffed animals.

Consumers place orders at the www.ftd.com Web site or over the telephone, which are then transmitted to florists or third-party specialty gift providers for processing and delivery. The Internet is the primary channel for orders, representing 90.3% of total order volume during the year ended June 30, 2007. Through its network of FTD members, the Company is able to offer same-day delivery to nearly 100% of U.S. and Canadian populations. Additionally, the consumer segment routes floral orders through an international network of floral retailers enabling next-day delivery in over 150 countries. Through third-party manufacturers and distributors, the Company offers next-day delivery of direct ship orders throughout the United States. The consumer segment has very low working capital requirements because FTD members and specialty gift providers generally maintain physical inventory and bear the cost of warehousing and distribution facilities. In addition, consumers generally pay for floral and specialty gift orders before the Company pays florists and specialty gift providers to deliver them. The consumer segment does not own or operate any retail locations.

For the year ended June 30, 2007, the consumer segment generated revenues of $287.6 million, representing 46.9% of the Company’s total revenues for this period.

Florist Segment

The florist segment provides a comprehensive suite of products and services that enable FTD members to send and deliver floral orders. This suite of products and services is also designed to promote revenue growth and enhance the operating efficiencies of FTD members. The Company provides these services to its network of independent members located primarily in the U.S. and Canada, which includes traditional retail florists as well as other retailers offering floral products.

The Company provides FTD members with access to the FTD brand and the Mercury Man logo, supported by various advertising campaigns, order clearinghouse services (which eliminate counterparty credit risks between sending and receiving FTD members), a quarterly directory publication of FTD members, credit card processing services, e-commerce Web site development and maintenance, online advertising tools and a 24-hour telephone answering and order-taking service. In addition, the Company provides the Floral Selections Guide, a counter display published by FTD, featuring FTD products for all occasions. The Company’s members pay for these services through monthly dues and activity-based fees, such as per order charges. Through the Company’s proprietary Mercury Network, members electronically transmit orders and send messages to other FTD members, for which the Company receives monthly fees in addition to per-order and per-message fees.

The Company sells basic software and hardware for transmitting and receiving orders, as well as software and hardware that provide full back-end systems to manage a member’s business. The Company also acts as a national wholesaler to FTD members, providing FTD-branded and non-branded hard goods and cut flowers as well as packaging, promotional products and a wide variety of other floral-related supplies. During holiday seasons such as Valentine’s Day, Mother’s Day and Christmas, the Company designs specialized floral bouquets with exclusive FTD containers and features these exclusive FTD products in advertising and on the heavily trafficked www.ftd.com Web site.

Revenues in the florist segment are driven by the strength of the Company’s brand, the comprehensive suite of products and services and the Company’s strong relationships with its FTD members. Approximately 75% of florist segment revenues in fiscal 2007 were derived from membership, service and other monthly fees. Florist segment revenues are derived primarily from the top half of the Company’s membership base. As a result and because the mix of membership is changing as the Company adds more supermarket members and seeks to add mass merchants, the Company no longer considers the absolute number of members to necessarily be indicative of segment performance. The Company focuses primarily on the penetration of goods and services sold to FTD members. For the year ended June 30, 2007, the florist segment generated revenues of $182.0 million, representing 29.7% of the Company’s total revenues for this period.

International Segment

The international segment is primarily comprised of Interflora, which has both a florist and a consumer business. Interflora is an internationally recognized brand and utilizes the same Mercury Man logo as FTD. Similar to FTD, Interflora previously operated as an unincorporated association until its incorporation and conversion to a ‚Äúfor-profit‚ÄĚ organization in February 2005. Interflora markets floral products and specialty gifts direct to consumers in the U.K. and the Republic of Ireland through both the www.interflora.co.uk Web site and a toll-free telephone number and provides various products and services to its members. For the eleven months that it was owned by the Company during the year ended June 30, 2007, the international segment generated revenues of $143.4 million, representing 23.4% of the Company‚Äôs total revenues for the fiscal year.

Seasonality

In view of seasonal variations in the revenues and operating results of the Company’s consumer, florist and international segments, the Company believes that comparisons of its revenues and operating results for any period with those of the immediately preceding period, or in some instances, the same period of the preceding fiscal year may be of limited relevance in evaluating the Company’s historical performance and predicting the Company’s future financial performance. The Company’s working capital, cash and short-term borrowings also fluctuate during the year as a result of the factors set forth below.

The Company generated 18%, 25%, 30% and 27% of its total revenue in the quarters ended September 30, December 31, March 31 and June 30 of fiscal year 2007, respectively. The Company’s quarterly revenue and operating results typically exhibit seasonality. For example, revenue and operating results tend to be lower for the quarter ending September 30 because none of the most popular floral and gift holidays, which include Valentine’s Day, Easter, Mother’s Day, Thanksgiving, and Christmas, fall within that quarter. In addition, depending on the year, Easter and the U.K. Mother’s Day sometimes fall within the quarter ending March 31 and sometimes fall within the quarter ending June 30.

Trademarks

The Company’s intellectual property portfolio includes service marks, trademarks and collective trademarks that distinguish the services and products offered by the Company or its members from those offered by other companies.

The ‚ÄúFTD‚ÄĚ word mark and the ‚ÄúMercury Man‚ÄĚ logo are registered in the United States, Canada and other jurisdictions throughout the world for various products and services. These marks are used directly by the Company or under license by FTD members.

Other registered trademarks and service marks of the Company include ‚ÄúFlorists‚Äô Transworld Delivery,‚ÄĚ ‚ÄúMercury‚ÄĚ and ‚ÄúMercury Network.‚ÄĚ The Company also has registered collective trademarks, which are used under license by its members for floral products and related items. These collective trademarks include ‚ÄúAutumn Splendor,‚ÄĚ ‚ÄúBig Hug,‚ÄĚ ‚ÄúBirthday Party,‚ÄĚ ‚ÄúChicken Soup,‚ÄĚ ‚ÄúSweet Dreams,‚ÄĚ and ‚ÄúThanks A Bunch.‚ÄĚ In addition, the Company has applied to register certain other trademarks, service marks and collective trademarks in the United States and other countries, and likely will seek to register additional marks, as appropriate. It is possible that some of these applications to register additional marks will not result in registrations.

The Company also uses various marks under license, including the ‚ÄúInterflora‚ÄĚ mark, owned by Interflora, Inc., a corporation in which the Company owns a controlling interest as a result of its acquisition of Interflora. The Company is the exclusive licensee to use this mark in North America and South America, as well as Japan, South Korea, the Philippine Islands and Taiwan. In addition, as a result of the Interflora acquisition, a wholly-owned subsidiary of the Company is the exclusive licensee to use the ‚ÄúInterflora‚ÄĚ mark in Australia, China, Great Britain, Hong Kong, India, Indonesia, Ireland, New Zealand, Pakistan, South Africa and a number of other countries. However, because of the intellectual property laws of certain of these jurisdictions, there may be impediments to exploiting this license.

Competition

The Company competes in the extremely fragmented floral services industry with a large number of wholesalers, service providers and direct marketers of flowers and specialty gifts. The principal competitors of the Company‚Äôs consumer segment are 1-800-FLOWERS.COM, Inc. and ProFlowers.com, owned by Liberty Media Corporation, which offer some similar floral and specialty gift items to consumers through their Web sites and toll-free telephone numbers. Additionally, Teleflora LLC (‚ÄúTeleflora‚ÄĚ) has a presence in the floral direct marketing portion of the consumer segment market.

The principal competitors of the Company’s florist segment are Teleflora and 1-800-FLOWERS.COM, Inc. FTD, Teleflora and 1-800-FLOWERS.COM, Inc. are the largest floral service providers in the United States based on membership. Teleflora and 1-800-FLOWERS.COM, Inc. offer some products and services that are similar to those offered by the Company, and florists may subscribe to all of these competing services.

The principal competitors of the international segment’s florist business are Teleflorist and Flowers Direct. Teleflorist and Flowers Direct offer some products and services that are comparable to those offered by the Company; however florists may subscribe to only one of these competing wire-service providers. The principal competitors for the international segment’s consumer business include Marks & Spencer, Tesco and John Lewis.

Employees

At June 30, 2007, the Company employed approximately 984 full-time employees. The Company considers its relations with its employees to be good. None of the Company’s employees are currently covered by a collective bargaining agreement.

Financial Information about Segments

Financial and other information by segment relating to the Company’s operations for the fiscal years ended June 30, 2007, 2006 and 2005 is set forth in Note 16 of the Consolidated Financial Statements included herein.

CEO BACKGROUND

Becky A. Sheehan. Ms. Sheehan joined the Company as Chief Financial Officer in July 2006. Prior to joining the Company, Ms. Sheehan was a partner with Deloitte & Touche LLP since June 2002 where she led the Consumer Business and Manufacturing audit practice for the Chicago office. Further, Ms. Sheehan served as the lead partner for global audit services, acquisition work, international accounting standards matters and Board of Director communications. Prior to joining Deloitte, Ms. Sheehan was a partner with Arthur Andersen, which she joined in 1987. Ms. Sheehan is a certified public accountant. She received her Bachelor’s degree in Accounting from Illinois State University in 1987.

Jon R. Burney. Mr. Burney has served as Vice President, General Counsel and Secretary of FTDI and as Secretary of FTD, Inc. since October 2000. Since June 28, 2002, he has also served as Vice President and General Counsel of FTD, Inc. as well as Vice President, General Counsel and Secretary of FTD.COM. In November 2004, Mr. Burney was appointed Vice President, General Counsel and Secretary of the Company. Prior to joining the Company, Mr. Burney practiced law with the firm of Burney and Herthneck in Cleveland, Ohio for 18 years and he has been a member of the Ohio State Bar since 1968. Prior to Burney and Herthneck, he was Vice President and General Counsel for Apcoa Inc. and counsel for the Apcoa division of ITT. Mr. Burney received a Bachelor of Arts degree from Denison University in 1964 and a Juris Doctorate from The Ohio State University College of Law in 1967.

Anthony M. Dillon. Mr. Dillon has served as Chief Technology Officer since February 2007. From December 2005 through February 2007, Mr. Dillon served as the Vice President of Technology for FTD.COM and from December 2004 to December 2005, Mr. Dillon served as the Vice President of Technology for Mercury Technology. From January 2003 until joining the Company in 2004, Mr. Dillon was the Managing Partner of Plan B Media, a strategy and technology consulting firm for emerging media ventures. He has held senior management positions in several software and technology companies and was the director of retail research and development for McDonald’s, Inc. Mr. Dillon holds an engineering degree in Computer Science from Arizona State University and a Master’s in Management (MBA) from the Kellogg Graduate School of Management at Northwestern University.

Lawrence W. Johnson. Mr. Johnson was appointed as Executive Vice President, Florist Segment in January 2007. From October 2003 through January 2007, Mr. Johnson served as the Executive Vice President of Mercury Technology and from 1997 to October 2003, Mr. Johnson served in various positions, including Vice President-Human Resources, the Director of Administration and Tax Manager. Prior to joining the Company in 1997, Mr. Johnson worked as a Tax Manager for Culumber and Scanlan, Ltd., an independent public accounting firm. Mr. Johnson received a Bachelor of Science degree in Accounting from DePaul University in 1989 and is a certified public accountant.

George T. Kanganis. Mr. Kanganis was appointed as Executive Vice President, Sales in December 2002. From October 2000 until December 2002, Mr. Kanganis served as the Vice President of Sales and the Vice President of National Accounts. Prior to joining the Company, Mr. Kanganis served in various sales positions, including the Vice President of National Accounts, for Teleflora LLC from 1989 to September 2000. Mr. Kanganis worked in his family’s New York based flower shop from 1979 to 1989. Mr. Kanganis received a Bachelor of Science degree in Business Administration from Manhattan College and currently serves on the Society of American Florists’ National Convention Committee.

Stephen W. Richards. Mr. Richards was appointed an Executive Vice President of the Company in July 2006, upon the Company‚Äôs acquisition of Interflora, and has served as the Chief Executive Officer of Interflora since September 2003. Mr. Richards led the 3i backed ‚Äėincorporation‚Äô of Interflora‚Äôs trade association in February 2005. Prior to joining Interflora, Mr. Richards‚Äôs retail and marketing background began with Marks & Spencer stores, Lillywhites Limited and culminated in the role of Managing Director of Manchester United Merchandising Limited. Mr. Richards has also spent three years running his own textile business. Mr. Richards received a Bachelor of Science Degree from Manchester University in 1979.

William J. Van Cleave. Mr. Van Cleave was appointed as the Executive Vice President of FTD.COM in June 2006. Previously he served as the Executive Vice President of Member Services from March 2002 to January 2007. In addition, he served as Executive Vice President of Mercury Technology from May 2002 to December 2002. From August 1999 through March 2002, Mr. Van Cleave served as Vice President-Marketing of FTD.COM. Prior to joining the Company in August 1999, he was the Marketing Director of americangreetings.com, the Internet marketing division of American Greetings Corporation, from November 1995 to July 1999. From August 1990 to October 1995, Mr. Van Cleave served in various other capacities at American Greetings Corporation. Mr. Van Cleave received a Bachelor of Science degree from Miami University in 1986 and a Masters of Business Administration from Case Western Reserve University in 1990.

SHARE OWNERSHIP

The number of shares beneficially owned includes 9,183,539 shares of Common Stock held by Green Equity Investors IV, L.P., a Delaware limited partnership, ( ‚ÄúGEI IV‚ÄĚ ) and 93,256 shares of Common Stock held by FTD Co-Investment LLC. On Schedule 13D, as amended, dated as of March 23, 2007 as filed with the SEC, GEI IV, GEI Capital IV, LLC, a Delaware limited liability company ( ‚ÄúGEIC‚ÄĚ ), Green Partnership Holdings, L.P., a Delaware limited partnership ( ‚ÄúGPH‚ÄĚ ), Leonard Green & Partners, L.P., a Delaware limited partnership ( ‚ÄúLGP‚ÄĚ ), LGP Management, Inc., a Delaware corporation ( ‚ÄúLGPM‚ÄĚ ), John M. Baumer, Timothy J. Flynn and Peter J. Nolan (collectively, ‚ÄúReporting Persons‚ÄĚ) reported ownership of these shares as of that date. GEI IV is the record owner of the 9,183,539 shares. GEIC is the general partner of GEI IV. GPH is a limited partner of GEI IV. LGP is an affiliate of GEIC. LGP‚Äôs principal business is to act as the management company of GEI IV and other affiliated funds. LGPM is the general partner of LGP. Due to their relationship with GEI IV, each of GEIC, GPH, LGP and LGPM may be deemed to have shared voting and investment power with respect to the shares beneficially owned by GEI IV. As such, GEIC, GPH, LGP and LGPM may be deemed to have shared beneficial ownership of the shares of which GEI IV is the owner. Each of GEIC, GPH, LGP and LGPM, however, disclaims beneficial ownership of such shares of Common Stock. John M. Baumer, Timothy J.

Flynn and Peter J. Nolan directly (whether through ownership interest or position) or indirectly through one or more intermediaries, may be deemed to control GEI IV, GEIC, GPH, LGP and/or LGPM. Each of Messrs. Baumer, Flynn and Nolan is a director of the Company and a partner of LGP and may be deemed to have shared voting and investment power with respect to the shares owned by GEI IV. As such, Messrs. Baumer, Flynn and Nolan may be deemed to have shared beneficial ownership over such shares. Messrs. Baumer, Flynn and Nolan, however, disclaim beneficial ownership of such shares. The address for each of the Reporting Persons is c/o Leonard Green & Partners, L.P., 11111 Santa Monica Boulevard, Suite 2000, Los Angeles, California 90025.

Based on Form 13F filed with the SEC on August 14, 2007 reporting beneficial ownership of, but no voting authority with respect to, these shares as of June 30, 2007. The address of this group is 82 Devonshire Street, Boston, MA 02109.

Based on Form 13F filed with the SEC on July 27, 2007 reporting ownership of these shares as of June 30, 2007. Barclays Global Investors, N.A. holds 1,413,064 shares and retains sole dispositive power over all such shares and sole voting power over 1,377,383 of such shares, and Barclays Global Fund Advisors holds 274,830 shares. The address of this group is 45 Fremont Street, San Francisco CA 94105.

COMPENSATION

Directors who are not members of the Company’s management or principals of Leonard Green & Partners, L.P. receive a $25,000 annual retainer, $5,000 per Board meeting attended in person ($1,000 per meeting attended by phone), a one-time grant of an option to purchase 25,000 shares of Common Stock upon joining the Board of Directors (one-third to vest on the grant date, one-third to vest one year from the grant date and one-third to vest two years from the grant date) and an annual grant of an option to purchase 2,500 shares of Common Stock on the date of each annual meeting (vesting one year from the grant date). The members of the Audit Committee receive a $7,500 annual retainer ($20,000 for the Audit Committee Chairman) and $2,000 per meeting attended in person ($1,000 per meeting attended by phone). The members of the Compensation Committee and Nominating and Corporate Governance Committee who are not members of management of the Company or principals of Leonard Green & Partners, L.P. also receive $2,000 per meeting attended in person ($1,000 per meeting attended by phone). In addition, if a director is Chairman of the Compensation Committee or Nominating and Corporate Governance Committee and is not a member of management of the Company or a principal of Leonard Green & Partners, L.P., that individual receives an annual retainer of $5,000. Directors who are employees do not receive additional compensation for serving as directors or for attending Board of Directors or committee meetings. The Company reimburses all directors for their expenses in connection with attending meetings of the Board of Directors or committees of the Board of Directors.

The compensation of directors may be modified from time to time by the Compensation Committee if it determines such modification is necessary or appropriate in light of the Company’s needs, best market practices or applicable legal and regulatory changes.

MANAGEMENT DISCUSSION FROM LATEST 10K

Overview

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 Company conducts its business through three operating segments: the consumer segment, the florist segment and the international segment.

Consumer Segment. The consumer segment is an Internet and telephone marketer of flowers and specialty gift items to consumers, operating in the U.S. and Canada primarily through the www.ftd.com Web site, in addition to the 1-800-SEND-FTD toll-free telephone number. The Company offers floral arrangements for florist delivery as well as specialty gift items which are delivered via common carrier, including boxed flowers, plants, gourmet food gifts, holiday gifts, bath and beauty products, jewelry, wine and gift baskets, dried flowers and stuffed animals.

Consumers place orders at the www.ftd.com Web site or over the telephone, which are then transmitted to florists or third-party specialty gift providers for processing and delivery. The Internet is the primary channel for orders, representing 90.3% of total order volume during the year ended June 30, 2007. Through its network of FTD members, the Company is able to offer same-day delivery to nearly 100% of U.S. and Canadian populations. Additionally, the consumer segment routes floral orders through an international network of floral retailers enabling next-day delivery in over 150 countries. Through third-party manufacturers and distributors, the Company offers next-day delivery of direct ship orders throughout the United States. The consumer segment has very low working capital requirements because FTD members and specialty gift providers generally maintain physical inventory and bear the cost of warehousing and distribution facilities. In addition, consumers generally pay for floral and specialty gift orders before the Company pays florists and specialty gift providers to deliver them. The consumer segment does not own or operate any retail locations.

For the year ended June 30, 2007, the consumer segment generated revenues of $287.6 million, representing 46.9% of the Company’s total revenues for this period.

Florist Segment. The florist segment provides a comprehensive suite of products and services that enable FTD members to send and deliver floral orders. This suite of products and services is also designed to promote revenue growth and enhance the operating efficiencies of FTD members. The Company provides these services to its network of independent members located primarily in the U.S. and Canada, which includes traditional retail florists as well as other retailers offering floral products.

The Company provides FTD members with access to the FTD brand and the Mercury Man logo, supported by various advertising campaigns, order clearinghouse services (which eliminate counterparty credit risks between sending and receiving FTD members), a quarterly directory publication of FTD members, credit card processing services, e-commerce Web site development and maintenance, online advertising tools and a 24-hour telephone answering and order-taking service. In addition, the Company provides the Floral Selections Guide, a counter display published by FTD, featuring FTD products for all occasions. The Company’s members pay for these services through monthly dues and activity-based fees, such as per order charges. Through the Company’s proprietary Mercury Network, members electronically transmit orders and send messages to other FTD members, for which the Company receives monthly fees in addition to per-order and per-message fees.

The Company sells basic software and hardware for transmitting and receiving orders, as well as software and hardware that provide full back-end systems to manage a member’s business. The Company also acts as a national wholesaler to FTD members, providing FTD-branded and non-branded hard goods and cut flowers as well as packaging, promotional products and a wide variety of other floral-related supplies. During holiday seasons such as Valentine’s Day, Mother’s Day and Christmas, the Company designs specialized floral bouquets with exclusive FTD containers and feature these exclusive FTD products in advertising and on the heavily trafficked www.ftd.com Web site.

Revenues in the florist segment are driven by the strength of the Company’s brand, the comprehensive suite of products and services and the Company’s strong relationships with its FTD members. Approximately 75% of florist segment revenues in fiscal 2007 were derived from membership, service and other monthly fees. Florist segment revenues are derived primarily from the top half of the Company’s membership base. As a result and because the mix of membership is changing as the Company adds more supermarket members and seeks to add mass merchants, the Company no longer considers the absolute number of members to necessarily be indicative of segment performance. The Company focuses primarily on the penetration of goods and services sold to FTD members. For the year ended June 30, 2007, the florist segment generated revenues of $182.0 million, representing 29.7% of the Company’s total revenues for this period.

International Segment. The international segment is primarily comprised of Interflora, which has both a florist and a consumer business. Interflora is an internationally recognized brand and utilizes the same Mercury Man logo as FTD. Similar to FTD, Interflora previously operated as an unincorporated association until its incorporation and conversion to a ‚Äúfor-profit‚ÄĚ organization in February 2005. Interflora markets floral products and specialty gifts direct to consumers in the U.K. and the Republic of Ireland through both the www.interflora.co.uk Web site and a toll-free telephone number and provides various products and services to its members. For the eleven months that it was owned by the Company during the year ended June 30, 2007, the international segment generated revenues of $143.4 million, representing 23.4% of the Company‚Äôs total revenues for the fiscal year.

Key Industry Trends. The Company believes key trends in the floral retail market include the increasing role of floral direct marketers, particularly those marketing floral products over the Internet, which has resulted in increased orders for delivery placed through floral direct marketers versus traditional retail florists, consumer purchasing of ‚Äúcash and carry‚ÄĚ flowers continuing to shift away from traditional retail florists to supermarket and mass merchant retail locations, the increasing dependence of traditional retail florists on wire-services to provide incoming order volume lost to Internet, supermarket and mass merchant retailers and the expansion of product offerings by traditional retail florists and direct marketers to include specialty gift items. The principal trends are addressed through the consumer segment, the florist segment and the international segment business strategies.

Business Strategy. The Company plans to continue to direct consumers to the Company’s www.ftd.com and www.interflora.co.uk Web sites for their floral and specialty gift purchasing needs, as processing orders over the Internet is a profitable order generating vehicle for the Company and an efficient and convenient ordering method for the consumer. The Company plans to add new consumers by continuing to expand existing marketing efforts, focusing on highly trafficked Internet sites as well as continued growth and focus on numerous customer affinity programs. The Company also plans to pursue growth in additional specialty gift categories and expansion of its existing categories, as management believes that the Company’s marketing expertise and brand strength allows the business to attract a wide range of quality specialty gift manufacturers. Additionally, management believes that lower-priced floral products are a significant portion of the market and, accordingly, the Company plans to continue refining its offerings in this area to meet consumer demand.

The Company plans to continue to drive product and service offering penetration and continue to attract florists to its FTD and Interflora networks through continued improvements in product and service offerings that increase revenue and reduce costs for members. The Company is currently pursuing opportunities to expand its presence in a number of channels that have not historically represented a meaningful portion of the Company’s revenues, such as the supermarket channel and other mass market channels.

In addition to funding working capital needs and capital expenditures, the Company plans to use available cash generated from operations to service and reduce its indebtedness, pay dividends to shareholders and may repurchase shares of its Common Stock pursuant to its share repurchase program, which expires on September 30, 2007

Revenues increased by $147.9 million, or 31.8%, to $613.0 million for the year ended June 30, 2007, compared to revenues for the year ended June 30, 2006 of $465.1 million. The Company acquired Interflora on July 31, 2006 and reports its results within the Company’s international segment. The international segment accounted for $143.4 million of the increase in revenue for the year ended June 30, 2007. Growth in the Company’s domestic consumer segment of $11.8 million, partially offset by a decline in the Company’s domestic florist segment of $7.4 million, contributed to the remaining increase.

The consumer segment achieved revenues of $287.6 million for the year ended June 30, 2007, compared to revenues for the year ended June 30, 2006 of $275.8 million, representing a 4.3% increase. Growth was driven by a 1.8% increase in order volume which totaled 4.6 million orders for the year ended June 30, 2007, up from 4.5 million orders for the year ended June 30, 2006 and a 1.5% increase in average order value in fiscal year 2007 which was $61.31 compared to $60.38 in fiscal year 2006. Internet orders were 90.3% of total orders for the year ended June 30, 2007, compared to 90.1% for the year ended June 30, 2006. Advertising revenue contributed $6.2 million of revenue in fiscal 2007, an increase of $2.6 million versus fiscal 2006.

Revenues for the florist segment decreased by $7.4 million, or 3.9% to $182.0 million for the year ended June 30, 2007, compared to revenues for the year ended June 30, 2006 of $189.4 million. The decline in revenues was primarily due to the December 2005 sale of Renaissance, which contributed $3.9 million of revenues in fiscal year 2006, and the elimination of certain customers.

The international segment achieved revenues of $143.4 million for the eleven months ended June 30, 2007. Consumer orders in the international segment totaled 1.8 million during the period, with an average order value of $64.78. Internet orders comprised 71.0% of the total consumer order volume for the period.

Costs of goods sold and services provided increased by $98.6 million, or 37.5%, to $361.4 million for the year ended June 30, 2007, from $262.8 million for the year ended June 30, 2006. Total gross margin for the year ended June 30, 2007 was 41.0%, compared to 43.5% for the year ended June 30, 2006.

Costs of goods sold and services provided associated with the consumer segment increased by $3.0 million, or 1.5%, to $203.5 million for the year ended June 30, 2007, compared to $200.5 million for the year ended June 30, 2006. Gross margin for the consumer segment increased to 29.3% for the year ended June 30, 2007, compared to 27.3% for the year ended June 30, 2006, primarily due to an increase in average order values and advertising revenue. Savings in product guarantee expense due to process improvements also contributed to the increase.

Costs of goods sold and services provided associated with the florist segment decreased by $2.5 million, or 4.2%, to $57.5 million for the year ended June 30, 2007, compared to $60.0 million for the year ended June 30, 2006. Gross margin for the florist segment remained relatively consistent with the prior year at 68.4% for the year ended June 30, 2007, compared to 68.3% for the year ended June 30, 2006.

Costs of goods sold and services provided associated with the international segment were $98.4 million for the eleven months ended June 30, 2007. Gross margin for the international segment was 31.4%.

Costs of goods sold and services provided related to corporate activities remained relatively consistent at $2.0 million for the year ended June 30, 2007, compared to $2.2 million for year ended June 30, 2006. These costs were related to the development and maintenance of internal corporate technology platforms supporting both the florist and consumer segments.

Advertising and selling costs increased by $5.3 million, or 6.0%, to $94.4 million for the year ended June 30, 2007, compared to advertising and selling costs for the year ended June 30, 2006 of $89.1 million. As a percentage of revenue, advertising and selling costs decreased to 15.4% for the year ended June 30, 2007 compared to 19.2% for the year ended June 30, 2007. This decrease is primarily related to the addition of the international segment which has lower advertising spending than the domestic businesses.

Advertising and selling costs associated with the consumer segment increased slightly to $36.1 million for the year ended June 30, 2007 compared to $35.9 million for the year ended June 30, 2006. Advertising and selling costs as a percentage of revenue associated with the consumer segment for the year ended June 30, 2007 were 12.6% compared to 13.0% for the year ended June 30, 2006.

Advertising and selling costs associated with the florist segment decreased by $5.5 million, or 10.3%, to $47.7 million for the year ended June 30, 2007, compared to $53.2 million for the year ended June 30, 2006. This decrease was primarily due to a decrease in rebates which are earned by FTD members under a customer incentive program, the sale of Renaissance during the second quarter of fiscal year 2006, planned cost reductions and a shift to more efficient member marketing programs.

Advertising and selling costs associated with the international segment totaled $10.6 million, or 7.4% of international segment revenue, for the eleven months ended June 30, 2007.

General and administrative costs increased by $26.9 million, or 51.6%, to $79.1 million for the year ended June 30, 2007, compared to $52.2 million for the year ended June 30, 2006.

General and administrative costs associated with the consumer segment increased by $2.8 million, or 14.0%, to $22.7 million for the year ended June 30, 2007, compared to $19.9 million for the year ended June 30, 2006. The increase in general and administrative costs for the consumer segment was primarily due to investment spending in the consumer segment’s technology infrastructure, including increased headcount and an increase in amortization expense associated with technology improvements put in service over the last year. Also contributing to the increase in general and administrative expense was an increase in salaries and headcount in other administrative areas. As a percentage of revenue, general and administrative costs increased to 7.9% from 7.2% in the prior fiscal year.

General and administrative costs associated with the florist segment increased by $1.8 million, or 26.8%, to $8.4 million for the year ended June 30, 2007, compared to $6.6 million for the year ended June 30, 2006.

As a percentage of revenue, general and administrative costs increased to 4.6% from 3.5% in the prior fiscal year. General and administrative costs for the florist segment for the fiscal year ended June 30, 2006 were reduced by a $1.0 million gain related to the sale of Renaissance in the second quarter of fiscal year 2006 and a $1.6 million gain related to the settlement of the class action lawsuit entitled In Re: Visacheck/Mastermoney Antitrust Litigation in the fourth quarter of fiscal year 2006. Additionally, general and administrative costs were lower in the year ended June 30, 2007 as a result of the sale of Renaissance.

General and administrative costs associated with the international segment were $21.4 million, or 14.9% of revenue for the eleven months ended June 30, 2007.

Corporate general and administrative costs increased by $1.0 million, or 3.9%, to $26.7 million for the year ended June 30, 2007, compared to $25.7 million for the year ended June 30, 2007. The increase in corporate general and administrative costs is primarily related to an increase in salaries and stock-based compensation expense, partially offset by a decrease in legal and insurance costs in the current year period.

Interest income increased $1.0 million, to $1.9 million for the year ended June 30, 2007, compared to $0.9 million for the year ended June 30, 2006. The increase was primarily due to increased cash balances during the year ended June 30, 2007 and an increase in interest rates in fiscal year 2007.

Interest expense increased $8.8 million, to $28.2 million for the year ended June 30, 2007, compared to $19.4 million for the year ended June 30, 2006. The increase is due to an increase in outstanding indebtedness during the current year period resulting from the purchase of Interflora as well as a $1.8 million write-off of unamortized deferred financing costs associated with the repayment of the Company’s previous credit facility.

Other income, net was $0.9 million for the year ended June 30, 2007 compared to $0.4 million for the year ended June 30, 2006. The current year income was primarily due to foreign currency exchange gains, partially offset by the costs related to the March 2007 secondary stock offering.

MANAGEMENT DISCUSSION FOR LATEST QUARTER

Overview
FTD Group, Inc. is a leading provider of floral and specialty gift products 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 Company conducts business through three operating segments, the consumer segment, the florist segment and the international segment.
Consumer Segment. The consumer segment is an Internet and telephone marketer of flowers and specialty gift items, which sells products directly to consumers primarily through the www.ftd.com Web site, in addition to the 1-800-SEND-FTD toll-free telephone number.
Florist Segment. The florist segment provides a comprehensive suite of products and services that enable FTD members to send and deliver floral orders. The Company provides these services to its network of independent members located primarily in the U.S. and Canada, which includes traditional retail florists as well as other retailers offering floral products.

International Segment . The international segment is primarily comprised of Interflora, which serves both the florist and consumer markets. Interflora markets floral products and specialty gifts direct to consumers in the U.K. and the Republic of Ireland through both the www.interflora.co.uk Web site and a toll-free telephone number. Interflora also provides various products and services to its members.
Corporate Costs. Costs related to corporate headquarters, including accounting, executive, legal, facilities, information technology and credit and collections are charged to Corporate. Costs related to facilities, information technology and credit and collections are allocated to the consumer and florist segments.
Seasonality. In view of seasonal variations in the revenues and operating results of the Company’s florist, consumer and international segments, the Company believes that comparisons of its revenues and operating results for any period with those of the immediately preceding period, or in some instances, the same period of the preceding fiscal year may be of limited relevance in evaluating the Company’s historical performance and predicting the Company’s future financial performance. The Company’s working capital, cash and short-term borrowings also fluctuate during the year as a result of the factors set forth below.
Revenues and operating results tend to be lower for the quarter ending September 30 because none of the most popular floral and gift holidays, which include Valentine’s Day, Easter, Mother’s Day, Thanksgiving and Christmas, fall within that quarter. In addition, depending on the year, the popular floral holidays of Easter and the U.K. Mother’s Day sometimes fall within the quarter ending March 31 and sometimes fall within the quarter ending June 30.

Total revenue grew $14.9 million, or 13.8%, to $123.7 million for the first quarter fiscal year 2008, compared to total revenues of $108.8 million for the same period of fiscal year 2007. The Company acquired Interflora on July 31, 2006, and, as a result, only two months of Interflora’s financial results are included in the first quarter of the prior year. Interflora, which is included in the Company’s international segment, accounted for $17.6 million of the increase in revenue, partially offset by declines in the Company’s consumer and florist segments totaling $2.7 million.
Revenues in the consumer segment decreased $1.7 million, or 3.5% to $45.7 million in the first quarter of fiscal year 2008, compared to revenues of $47.4 million in the same period of fiscal year 2007. This decline was driven by an 8.4% decrease in order volumes, which totaled 703,000 during the first quarter of fiscal year 2008 compared to 768,000 orders in the same period of fiscal year 2007. This decline was partially offset by an increase in average order value to $63.36 for the first quarter of fiscal year 2008, compared to $60.52 for the same period of fiscal year 2007. The percentage of Internet orders increased to 89.4% from 88.1% in the first quarter of fiscal year 2007.
Revenues in the florist segment decreased $1.0 million, or 2.3%, to $42.8 million in the first quarter of fiscal year 2008, compared to revenues of $43.8 million in the same period of fiscal year 2007. This decline was driven by reduced container sales and decreases in clearinghouse order volumes and other services, partially offset by an increase in sales of fresh flowers.
Revenues in the international segment were $35.2 million in the first quarter of fiscal year 2008. First quarter fiscal year 2007 revenues were $17.6 million, which represented only two months of financial results as Interflora was acquired by the Company on July 31, 2006. The remaining increase was driven by favorable exchange (7%) and increased sales volume in both Interflora’s consumer and florist businesses. Consumer orders in the international segment were 407,000 in the first quarter of 2008, compared to orders of 229,000 in the two-month period of the prior year. Average order value increased to $70.12 in the first quarter of fiscal 2008 compared to $62.84 in the two-month period in the prior year driven by favorable exchange, as well as price and product mix. The percentage of Internet orders increased to 71.7% from 69.7% for the two-month period in the prior year.

Gross profit increased by $4.3 million, or 8.7% to $52.6 million for the first quarter of fiscal year 2008, compared to gross profit for the first quarter of fiscal year 2007 of $48.3 million. Total gross margin decreased to 42.5% for the first quarter of fiscal year 2008 from 44.4% for the same period in fiscal year 2007.
Gross profit associated with the consumer segment decreased by $0.1 million, or 1.0%, to $13.8 million for the first quarter of fiscal year 2008, compared to $13.9 million for the first quarter of fiscal year 2007. Gross margin for the consumer segment increased to 30.2% for the first quarter of fiscal year 2008, compared to 29.4% for same period in fiscal year 2007, primarily due to increases in advertising revenue and average order value, partially offset by an increase in costs associated with miles and points programs.
Gross profit associated with the florist segment decreased by $1.8 million, or 5.9%, to $27.6 million for the first quarter of fiscal year 2008, compared to $29.4 million for the first quarter of fiscal year 2007. Gross margin for the florist segment decreased to 64.5% for the first quarter of fiscal year 2008, compared to 67.0% for the same period in fiscal year 2007, primarily due to the mix of products and services sold in the first quarter of fiscal year 2008 compared to 2007.
Gross profit associated with the international segment increased by $6.0 million, or 108.9%, to $11.6 million for the first quarter of fiscal year 2008, compared to $5.6 million for the two months ended September 30, 2007. Gross margin for the international segment increased to 33.0% for the first quarter of fiscal year 2008, compared to 31.7% for the two months ended September 30, 2006, primarily due to increases in average order value and in advertising revenue related to a program that the international segment initiated in the third quarter of fiscal 2007.
Costs related to corporate activities remained consistent at $0.5 million for the first quarter of fiscal year 2008, compared to $0.5 million for the first quarter of fiscal year 2007. These costs are related to the development and maintenance of internal corporate technology platforms which support the florist and consumer segments.

Advertising and selling costs increased $0.1 million, or 0.5%, to $16.7 million for the first quarter of fiscal year 2008, compared to $16.6 million for the first quarter of fiscal year 2007. As a percentage of revenue, advertising and selling costs decreased to 13.5% for the first quarter of fiscal year 2008 compared to 15.2% for the first quarter of fiscal year 2007.
Advertising and selling costs associated with the consumer segment remained relatively consistent at $4.8 million for the first quarter of fiscal year 2008, compared to $4.9 million for the first quarter of fiscal year 2007. Advertising and selling costs as a percentage of revenue associated with the consumer segment were 10.4% for the first quarter of fiscal year 2008 compared to 10.3% for the first quarter of fiscal year 2007.
Advertising and selling costs associated with the florist segment decreased $1.4 million, or 12.7%, to $9.1 million for the first quarter of fiscal year 2008 compared to $10.5 million for the first quarter of fiscal year 2007. The decrease in advertising and selling costs was primarily due to certain selling expenses incurred in fiscal year 2007 which were not repeated in fiscal year 2008, timing of trade show conventions and a decrease in rebates, which are earned by FTD members under a customer incentive program.
Advertising and selling costs associated with the international segment increased $1.5 million, or 127.8%, to $2.7 million for the first quarter of fiscal year 2008, compared to $1.2 million for the two months ended September 30, 2006. The increase is primarily related to the additional month of operations included in the current year quarter versus the prior year. As a percentage of revenue, advertising and selling costs increased to 7.8% for the first quarter of fiscal year 2008 compared to 6.9% for the prior year two-month period. The increase in advertising and selling costs was primarily due to an increase in marketing costs per order.

General and administrative costs increased by $2.7 million, or 16.2%, to $19.1 million for the first quarter of fiscal year 2008, compared to $16.4 million for the first quarter of fiscal year 2007.

General and administrative costs associated with the consumer segment remained relatively consistent at $4.4 million for the first quarter of fiscal year 2008, compared to $4.5 million for the first quarter of fiscal year 2007. General and administrative costs as a percentage of revenue also remained consistent between fiscal years 2008 and 2007 at 9.6% and 9.4%, respectively.
General and administrative costs associated with the florist segment were $2.1 million for the first quarter of fiscal year 2008, compared to $2.3 million for the first quarter of fiscal year 2007. As a percentage of revenue, general and administrative costs declined to 4.9% compared with 5.2% in the prior year quarter. This decrease is primarily related to a decrease in legal expenses in the first quarter of fiscal year 2008.
General and administrative costs associated with the international segment increased by $2.7 million, or 86.0%, to $5.9 million for the first quarter of fiscal year 2008, compared to $3.2 million for the two months ended September 30, 2006. The increase is primarily related to the additional month of operations included in the current year quarter versus the prior year. As a percentage of revenue, general and administrative costs declined to 16.7% compared with 18.0% in the prior year first quarter.
Corporate general and administrative costs were $6.7 million for the first quarter of fiscal year 2008, compared to $6.5 million for the first quarter of fiscal year 2007. The increase in general and administrative costs was primarily due to an increase in salary and personnel-related costs.

Interest income remained consistent at $0.3 million for the first quarters of fiscal years 2008 and 2007.
Interest expense decreased by $1.8 million, or 22.4%, to $6.4 million for the first quarter of fiscal year 2008, compared to $8.2 million for the first quarter of fiscal year 2007. The decrease relates to the $1.8 million write-off of unamortized deferred financing costs in the first quarter of 2007 associated with the refinancing of the Company’s existing credit facility in connection with the Interflora acquisition.
Other income decreased to $0.2 million for the first quarter of fiscal year 2008, compared to $1.5 million for the first quarter of fiscal year 2007. The decrease is primarily related to a foreign currency contract in the amount of £51.0 million that was settled on July 28, 2006 and resulted in a gain of $1.4 million in the first quarter of fiscal 2007. Other income in fiscal year 2008 relates to the remaining forward contract for £0.8 million that is expected to be settled during the first half of fiscal year 2009.
Taxes on earnings reflect the estimated annual effective rates, excluding the effect of significant unusual items. Tax expense in the quarter ended September 30, 2007 includes 12.3 percentage points of tax benefit related to a statutory income tax rate reduction in the U.K. Excluding this unusual item, the effective tax rate was 38.0% for the first quarter of fiscal year 2008. For the same quarter of fiscal year 2007, the effective rate was 39.5%.
Liquidity and Capital Resources
As of September 30, 2007, the Company‚Äôs debt balance totaled $313.4 million, including notes payable of $1.8 million related to the Interflora acquisition and $170.1 million of 7.75% Senior Subordinated Notes, down from $313.7 million as of June 30, 2007. The Company‚Äôs principal sources of liquidity are cash from operations and funds available for borrowing under FTD, Inc.‚Äôs senior secured credit facility (the ‚Äú2006 Credit Agreement‚ÄĚ) that provides for aggregate borrowings of up to $225.0 million, consisting of a seven-year $150.0 million term loan and a six-year $75.0 million revolving credit facility. As of September 30, 2007, the balance outstanding under the 2006 Credit Agreement was $141.5 million. The Company also had notes payable related to the acquisition of Interflora of $1.8 million and an additional $1.2 million in outstanding letters of credit. Borrowings under the revolving credit facility are used to finance working capital, capital expenditures, acquisitions and letter of credit needs. The revolving credit facility had availability of approximately $72.0 million at September 30, 2007.
Cash and cash equivalents decreased by $11.8 million to $13.7 million at September 30, 2007 from $25.5 million at June 30, 2007.
Net cash used in operating activities was $9.6 million for the three-month period ended September 30, 2007 and $5.5 million for the three-month period ended September 30, 2006. Net income, adjusted for non-cash items, continues to be a primary source of funds to finance operating needs and capital expenditures, repay indebtedness, pay dividends and make other strategic investments.
Net cash used in investing activities was $1.6 million for the three-month period ended September 30, 2007, which was comprised of capital expenditures, primarily related to continued technology developments and improvements.
Net cash used in investing activities for the three-month period ended September 30, 2006 was $98.5 million, which primarily consisted of $96.7 million related to the Interflora acquisition and $1.9 million of capital expenditures, which was primarily related to continued technology developments and improvements.
Net cash used in financing activities was $0.7 million for the three-month period ended September 30, 2007, which primarily consisted of $4.7 million of dividends paid and $0.4 million of repayments under the 2006 Credit Agreement, partially offset by $2.1 million of proceeds from stock option exercises and $2.3 million of excess tax benefits from stock-based compensation.
Net cash provided by financing activities was $105.6 million for the three-month period ended September 30, 2006, which primarily consisted of $148.6 million of net proceeds from the 2006 Credit Agreement, $6.0 million of net proceeds from the revolving credit facility, which was used to fund working capital needs, partially offset by $50.0 million of repayments under the 2004 Credit Agreement.
In addition to its debt service obligations, the Company’s remaining liquidity requirements are primarily for working capital needs and capital expenditures. The Company believes, based on current circumstances, that its existing and future cash flows from operations, together with borrowings under the 2006 Credit Agreement, will be sufficient to fund its working capital needs, capital expenditures and to make interest and principal payments as they become due under the terms of the long-term indebtedness for the foreseeable future.
On August 14, 2007, the Company’s Board of Directors declared a quarterly cash dividend of $0.1625 per share. The dividend was paid on October 4, 2007 to stockholders of record as of the close of business on September 20, 2007. The continued payment of cash dividends in the future is at the discretion of the Company’s Board of Directors and depends on numerous factors, including without limitation, the Company’s net earnings, financial condition, availability of capital, continued compliance with the requirements of the Company’s 2006 Credit Agreement, as amended, and the indenture governing the 7.75% Senior Subordinated Notes and other business needs.
On October 25, 2005, the Company’s 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 markets 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 U.S. federal securities laws. No shares were repurchased under this program during the year ended June 30, 2007 or during the first quarter of fiscal year 2008.

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