UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March~~December 31, 2007


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-32425

FTD Group, Inc.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization) 87-0719190 (I.R.S. Employer Identification No.)


Delaware		87-0719190
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

3113 Woodcreek Drive
Downers Grove, IL 60515
(Address of principal executive offices)

(630) 719-7800
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES þ [X] NO o [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Securities Exchange Act of 1934. (Check one):

Large accelerated filer o Accelerated filer þ Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).

~~Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).~~ YES o NO þ

As of ~~May~~January 131, ~~2007~~2008, there were 2829,~~940~~827,~~735~~968 outstanding shares of the issuer’s Common Stock, ~~par~~ par value $0.01 per share.

FTD GROUP, INC.
QUARTERLY REPORT ON FORM 10-Q
INDEX

Part I. Financial Information
	Item 1.		Financial Statements (unaudited)
Item 1. Financial Statements
Condensed Consolidated Balance Sheets		2	~~Condensed Consolidated Balance Sheets~~	2
Condensed Consolidated Statements of Income and Comprehensive Income		3	~~Condensed Consolidated Statements of Income and Comprehensive Income~~	3
Condensed Consolidated Statements of Cash Flows		4	~~Condensed Consolidated Statements of Cash Flows~~	4
Notes to Condensed Consolidated Financial Statements		5	~~Notes to Condensed Consolidated Financial Statements~~	5
	Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		13
	Item 3.		Quantitative and Qualitative Disclosures about Market Risk	23
Item 3. Quantitative and Qualitative Disclosures about Market Risk		22
	Item 4.		Controls and Procedures	23
Item 4. Controls and Procedures		22
Part II. Other Information
	Item 1.		Legal Proceedings	24
Item 1. Legal Proceedings		23
	Item 1A.		Risk Factors	24
Item 1A. Risk Factors		23
	Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		23
	Item 6.		Exhibits	24
Item 4. Submission of Matters to a Vote of Security Holders		24
Signatures				25
Item 6. Exhibits		24
Exhibit Index				26
Signature		25
Index of Exhibits		26
302 Certification of Chief Executive Officer
302 Certification of Chief Financial Officer
Section 906 Certification of CEO and CFO
906 Certification of CEO and CFO

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

FTD GROUP, INC. ~~CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except share amounts)~~

	March 31, 2007			June 30, 2006
ASSETS
Current assets:
Cash and cash equivalents	$	41,379		$	10,954
Accounts receivable, less allowance for doubtful accounts of $5,047 at March 31, 2007 and $4,437 at June 30, 2006		47,649			26,044
Inventories, net		3,998			3,542
Other current assets		9,812			5,985
Total current assets		102,838			46,525
Property and equipment:
Property and equipment, at cost		34,268			25,265
Less accumulated depreciation		9,702			6,051
Property and equipment, net		24,566			19,214
Other assets:
Computer software, net		13,509			10,577
Other noncurrent assets		21,172			21,405
Intangible assets, less accumulated amortization of $8,345 at March 31, 2007 and $5,993 at June 30, 2006		14,228			14,780
Trademarks		186,504			121,577
Goodwill		416,567			336,659
Total other assets		651,980			504,998
Total assets	$	779,384		$	570,737
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	69,700		$	45,273
Notes payable		22,829			—
Other accrued liabilities		32,054			24,083
Current maturities of long-term debt		1,430			1,125
Dividends payable		4,699			—
Total current liabilities		130,712			70,481
Senior secured credit facility		140,820			48,875
Senior subordinated notes		170,117			170,117
Post-retirement benefits, accrued pension obligations and other liabilities		5,066			2,368
Deferred income taxes		83,116			61,160
Stockholders’ equity:
Common stock: $0.01 par value, 75,000,000 shares authorized; 29,482,182 shares issued as of March 31, 2007 and June 30, 2006		295			295
Additional paid-in capital		232,865			233,362
Retained earnings (accumulated deficit)		14,912			(1,554	)
Accumulated other comprehensive income		6,675			200
Treasury stock, at cost, 541,447 shares as of March 31, 2007 and 1,504,480 shares as of June 30, 2006		(5,194	)		(14,567	)
Total stockholders’ equity		249,553			217,736
Total liabilities and stockholders’ equity	$	779,384		$	570,737

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)


	December 31, 2007			June 30, 2007
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	27,548		$	25,462
Accounts receivable, less allowance for doubtful accounts of $6,329 at December 31, 2007 and $5,431 at June 30, 2007		41,071			32,416
Inventories, net		5,802			3,694
Other current assets		14,253			9,500

Total Current Assets		88,674			71,072

Property and Equipment:
Property and equipment		37,082			35,791
Less accumulated depreciation		13,257			11,018

Property and Equipment, net		23,825			24,773

Other Assets:
Computer software, net		12,441			12,699
Other noncurrent assets		23,038			21,085
Other intangible assets, less accumulated amortization of$10,757 at December 31, 2007 and $9,154 at June 30, 2007		11,848			13,454
Trademarks		187,598			187,816
Goodwill		417,734			418,001

Total Other Assets		652,659			653,055

Total Assets	$	765,158		$	748,900


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	64,473		$	52,009
Current income taxes payable		6,308			1,671
Other accrued liabilities		31,550			26,840
Current maturities of long-term debt		1,318			8,475
Dividends payable		4,843			4,707

Total Current Liabilities		108,492			93,702

Senior secured credit facility		128,832			133,418
Senior subordinated notes		170,117			170,117
Post-retirement benefits, accrued pension obligations and other liabilities		3,509			4,535
Deferred income taxes		78,666			85,350

Stockholders’ Equity:
Common stock: $0.01 par value, 75,000 shares authorized; 29,818 shares issued as of December 31, 2007 and 29,482 shares issued as of June 30, 2007		298			295
Additional paid-in capital		236,577			235,589
Retained earnings		29,159			20,952
Accumulated other comprehensive income		9,706			9,933
Treasury stock, at cost, 20 shares as of December 31, 2007 and 519 shares as of June 30, 2007		(198	)		(4,991	)

Total Stockholders’ Equity		275,542			261,778

Total Liabilities and Stockholders’ Equity	$	765,158		$	748,900

SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

FTD GROUP, INC. ~~CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited) (In thousands, except per share amounts)~~

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2007			2006			2007			2006
Revenues:
Products	$	143,483		$	95,736		$	333,184		$	232,925
Services		39,416			32,849			110,026			90,714
Total revenues		182,899			128,585			443,210			323,639
Costs of products sold and services provided:
Products		108,168			69,637			248,714			167,292
Services		3,435			4,326			12,630			13,651
Total costs of products sold and services provided		111,603			73,963			261,344			180,943
Gross profit:
Products		35,315			26,099			84,470			65,633
Services		35,981			28,523			97,396			77,063
Total gross profit		71,296			54,622			181,866			142,696
Operating expenses:
Advertising and selling		27,348			22,743			68,767			62,284
General and administrative		21,498			15,048			58,262			38,444
Total operating expenses		48,846			37,791			127,029			100,728
Income from operations		22,450			16,831			54,837			41,968
Other income and expenses:
Interest income		(489	)		(233	)		(1,126	)		(528	)
Interest expense		6,444			4,829			21,679			14,596
Other expense (income), net		570			(118	)		(725	)		(206	)
Total other expenses, net		6,525			4,478			19,828			13,862
Income before income tax		15,925			12,353			35,009			28,106
Income tax expense		6,310			4,932			13,844			11,357
Net income	$	9,615		$	7,421		$	21,165		$	16,749
Other comprehensive income:
Foreign currency translation adjustments		88			12			6,475			142
Comprehensive income	$	9,703		$	7,433		$	27,640		$	16,891
Net income per common share — basic	$	0.34		$	0.26		$	0.75		$	0.58
Net income per common share — diluted	$	0.32		$	0.26		$	0.72		$	0.56
Weighted average common shares outstanding:
Basic		28,462			28,111			28,343			28,989
Diluted		29,827			29,031			29,510			30,025
Cash dividends declared per common share	$	0.1625		$	—		$	0.1625		$	—

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Unaudited)
(In thousands, except per share amounts)


	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2007			2006			2007			2006
Revenues:
Products	$	114,967		$	115,828		$	203,825		$	189,701
Services		40,522			35,712			75,409			70,610

Total revenues		155,489			151,540			279,234			260,311

Costs of Products Sold and Services Provided:
Products		87,216			84,392			153,949			140,546
Services		4,745			4,926			9,181			9,195

Total costs of products sold and services provided		91,961			89,318			163,130			149,741

Gross Profit:
Products		27,751			31,436			49,876			49,155
Services		35,777			30,786			66,228			61,415

Total gross profit		63,528			62,222			116,104			110,570

Operating Expenses:
Advertising and selling		22,936			24,855			39,588			41,419
General and administrative		20,432			20,354			39,503			36,764

Total operating expenses		43,368			45,209			79,091			78,183


Income from operations		20,160			17,013			37,013			32,387

Other Income and Expenses:
Interest income		(319	)		(339	)		(621	)		(637	)
Interest expense		6,155			7,009			12,542			15,235
Other (income) expense, net		(138	)		249			(348	)		(1,295	)

Total other income and expenses		5,698			6,919			11,573			13,303


Income before income tax expense		14,462			10,094			25,440			19,084

Income tax expense		5,496			3,987			8,318			7,534

Net income	$	8,966		$	6,107		$	17,122		$	11,550


Other Comprehensive Income (Loss):
Foreign currency translation adjustments		(3,116	)		3,987			(227	)		6,387

Comprehensive income	$	5,850		$	10,094		$	16,895		$	17,937


Net income per Common Share — basic	$	0.30		$	0.22		$	0.58		$	0.41

Net income per Common Share — diluted	$	0.30		$	0.21		$	0.58		$	0.39


Weighted Average Common Shares Outstanding:
Basic		29,509			28,335			29,287			28,283

Diluted		29,758			29,762			29,653			29,479


Cash Dividends Declared per Common Share	$	0.1625		$	—		$	0.3250		$	—

SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

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

	Nine Months Ended
	March 31,
	2007			2006
Cash flows from operating activities:
Net income	$	21,165		$	16,749
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		10,890			7,740
Gain from sale of business and related transaction		—			(991	)
Stock-based compensation expense		1,451			458
Amortization and write off of deferred financing costs		2,512			1,204
Provision for doubtful accounts		2,088			2,589
Deferred income taxes		2,706			500
All other, net of acquisition		(3,419	)		(7,519	)
Net cash provided by operating activities		37,393			20,730
Cash flows from investing activities:
Acquisition of business, net of cash acquired		(96,717	)		—
Capital expenditures		(6,027	)		(7,370	)
Proceeds from sale of business		—			3,500
Net cash used in investing activities		(102,744	)		(3,870	)
Cash flows from financing activities:
Proceeds from issuance of long-term debt, net of financing costs		148,536			—
Repayments of long-term debt		(57,750	)		(11,096	)
Excess tax benefit from stock-based compensation		1,904			217
Proceeds from exercise of stock options		2,315			209
Purchase of company stock		—			(14,999	)
Net cash provided by (used in) financing activities		95,005			(25,669	)
Effect of foreign exchange rate changes on cash and cash equivalents		771			142
Net increase (decrease) in cash and cash equivalents		30,425			(8,667	)
Cash and cash equivalents at beginning of period		10,954			8,890
Cash and cash equivalents at end of period	$	41,379		$	223
Supplemental disclosures of cash flow information
Cash paid for:
Interest	$	20,994		$	16,131
Income taxes, net	$	13,356		$	4,570
Non-cash disclosure:
Issuance of notes payable associated with the purchase of Interflora Holdings Limited	$	23,313
Issuance of treasury stock associated with the purchase of Interflora Holdings Limited	$	3,206
Issuance of notes receivable associated with the sale of Renaissance				$	1,805

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)
(In thousands)


	Six Months Ended
	December 31,
	2007			2006
Cash Flows from Operating Activities:
Net income	$	17,122		$	11,550
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		6,419			7,201
Stock-based compensation expense		1,314			959
Amortization and write off of deferred financing costs		470			2,294
Provision for doubtful accounts		1,862			1,481
Deferred income taxes		(6,575	)		753
Excess tax benefit from stock-based compensation		(2,308	)		(654	)
(Decrease) increase due to changes in operating assets and liabilities, net of acquisition:
Accounts receivable		(10,499	)		(9,072	)
Inventories		(2,112	)		(1,531	)
Prepaid expenses and other		(4,102	)		(6,052	)
Other noncurrent assets		(2,550	)		(1,133	)
Accounts payable		11,753			12,373
Other accrued liabilities		11,432			794

Net cash provided by operating activities		22,226			18,963


Cash Flows from Investing Activities:
Capital expenditures		(3,622	)		(4,849	)
Acquisition of business, net of cash acquired		—			(96,717	)

Net cash used in investing activities		(3,622	)		(101,566	)


Cash Flows from Financing Activities:
Repayments of long-term debt		(11,743	)		(50,375	)
Dividends paid		(9,515	)		—
Proceeds from exercise of stock options		2,156			422
Excess tax benefit from stock-based compensation		2,308			654
Proceeds from issuance of long-term debt, net of financing costs		—			148,536
Proceeds from issuance of common stock		6			—

Net cash (used in) provided by financing activities		(16,788	)		99,237

Effect of foreign exchange rate changes on cash and cash equivalents		270			3,172

Net increase in cash and cash equivalents		2,086			19,806
Cash and cash equivalents at beginning of period		25,462			10,954

Cash and cash equivalents at end of period	$	27,548		$	30,760


Supplemental disclosures of cash flow information
Non-cash disclosure:
Issuance of notes payable associated with the purchase of Interflora Holdings Limited	$	—		$	23,313

Issuance of treasury stock associated with the purchase of Interflora Holdings Limited	$	—		$	3,206

SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

FTD Group, Inc. ~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1. Description of the Business

Basis of Presentation

These condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, therefore, do not include all information and footnote disclosures normally included in audited financial statements. However, in the opinion of management, all adjustments, consisting only of normal recurring adjustments, unless otherwise noted herein, necessary to present fairly the results of operations, financial position and cash flows have been made. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in FTD Group, Inc.’s Annual Report on Form 10-K for the year ended June 30, ~~2006~~2007. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the full year.

As used in this Form 10-Q, the term “Company” refers to FTD Group, Inc. and its consolidated subsidiaries, including FTD, Inc. taken as a whole. FTD, Inc. is a Delaware corporation that commenced operations in 1994 ~~and includes the operations of its principal operating subsidiaries, Florists’ Transworld Delivery, Inc~~.~~, (“FTD” or the “Operating Company”), FTD.COM, INC. (“FTD.COM”)~~ ~~and Interflora British Unit.~~

On July 31, 2006, the Company completed its acquisition of Interflora Holdings Limited (“Interflora”), ~~the parent company of Interflora British Unit,~~ 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. Refer to Note 42 below. As a result of the Interflora acquisition, the Company also acquired majority control of Interflora, Inc. Interflora, Inc. is an international clearinghouse for flowers-by-wire order exchanges between its members. The results of operations associated with Interflora and Interflora, Inc. are included in athe ~~new~~ international segment.

All intercompany accounts and transactions have been eliminated in consolidation.

Certain amounts reported within total revenues and costs of products sold and services provided have been reclassified between products and services in the fiscal year 2006 financial statements to conform to current year presentation. Such reclassifications primarily related to service fees in the consumer segment and did not affect reported total revenues or costs of products sold and services provided.

Recently Issued Accounting Pronouncements

In ~~September~~December ~~2006~~2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 141 (revised 2007), Business Combinations (“SFAS No. 141(R)”). SFAS No. ~~158,~~141(R) ~~Employers’~~establishes ~~Accounting~~principles and requirements for ~~Defined~~how ~~Benefit~~an ~~Pension~~acquirer recognizes and ~~Other~~measures ~~Postretirement~~in ~~Plans~~its —financial anstatements ~~amendment~~the ofidentifiable ~~FASB~~assets ~~Statement No. 87~~acquired, 88the liabilities assumed, ~~106~~any noncontrolling ~~and~~interest ~~132(R),~~in ~~(“SFAS~~the ~~158”), effective~~acquiree ~~for~~and the ~~Company’s~~goodwill ~~fiscal~~acquired ~~year~~in ~~ending~~a ~~June 30,~~business ~~2007~~combination. SFAS No. 141(R) ~~158~~also ~~requires~~establishes ~~the~~disclosure ~~balance~~requirements ~~sheet recognition~~to ofenable the ~~overfunded~~evaluation ~~or underfunded status~~ of athe ~~defined~~nature ~~benefit postretirement plan as an~~and ~~asset~~financial oreffects ~~liability~~of ~~along~~the ~~with~~business acombination. ~~corresponding~~SFAS ~~after-tax~~No. 141(R) ~~adjustment~~is toeffective ~~accumulated~~for ~~other~~the Company’s ~~comprehensive~~fiscal ~~income~~year ~~included~~ending inJune 30, ~~stockholders’ equity~~2010. ~~The~~This ~~Company~~statement ~~does~~is ~~not~~applicable ~~expect~~to ~~the~~business ~~adoption~~combinations ofentered ~~SFAS~~into ~~158~~subsequent to ~~have a material effect on~~ the ~~Company’s~~effective ~~consolidated financial statements~~date.

In ~~June~~December ~~2006~~2007, the FASB issued ~~Interpretation~~SFAS No. ~~48 (“FIN 48”)~~160, ~~Accounting~~Noncontrolling ~~for~~Interests ~~Uncertainty~~ in Consolidated ~~Income~~Financial ~~Taxes~~ Statements— an ~~Interpretation~~amendment of ~~FASB~~Accounting ~~Statement~~Research Bulletin No. ~~109~~51 (“SFAS ~~109~~No. 160”). ~~FIN~~SFAS No. 160 48establishes ~~clarifies the~~ accounting ~~for~~and ~~uncertainty~~reporting instandards ~~income~~for ~~taxes~~noncontrolling ~~recognized~~ownership ininterests ~~an entity’s financial statements~~ in ~~accordance~~entities ~~with~~controlled ~~SFAS~~by ~~109~~parties ~~and~~other ~~prescribes~~than ~~that~~the areporting ~~company~~entity, ~~should~~the ~~use~~amount aof ~~more-likely-than-not~~consolidated net ~~recognition~~income ~~threshold~~attributable ~~based~~to on the ~~technical~~controlling ~~merits~~interest ofand to the ~~tax~~noncontrolling ~~position~~interest, ~~taken~~changes orin ~~expected to be~~a ~~taken.~~controlling ~~Tax~~entity’s ~~positions~~ownership ~~that~~interest, ~~meet~~and the ~~more-likely-than-not~~valuation ~~recognition~~of ~~threshold~~retained ~~should~~noncontrolling ~~be measured~~equity ininvestments ~~order~~when toa ~~determine~~subsidiary ~~the~~is ~~tax~~deconsolidated. ~~benefit~~SFAS toNo. 160 bealso ~~recognized~~establishes indisclosure requirements ~~the~~that ~~financial~~clearly ~~statements.~~identify ~~Additionally, FIN~~and 48distinguish ~~provides~~between ~~guidance~~the oninterests ~~derecognition,~~of ~~classification,~~the ~~interest~~controlling entity and ~~penalties,~~the ~~accounting~~interests ~~in interim~~of ~~periods,~~the ~~disclosure~~noncontrolling ~~and transition~~owners. ~~FIN~~SFAS 48No. 160 is effective for the Company’s fiscal ~~year~~ year ending June 30, ~~2008~~2010. The Company is currently evaluating the potential impact, ~~with~~if ~~early~~any, the adoption of SFAS No. 160 will have on the Company’s consolidated financial statements.

~~permitted~~ In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115 (“SFAS No. 159”). SFAS No. 159 provides a company with the option to measure selected financial instruments and certain other items at fair value at specified election dates. The election may be applied on an item by item basis, with disclosure regarding reasons for partial election and additional information about items for which the company elects the fair value option. SFAS No. 159 is effective for the Company’s fiscal year ending June 30, 2009. The Company is currently evaluating the potential impact, if any, the adoption of ~~FIN~~SFAS 48No. 159 will have on the Company’s consolidated financial statements.

~~Note~~ In 2September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, ~~Secondary~~Fair Value ~~Offering~~Measurements (“SFAS No. 157”). SFAS No. 157 clarifies the principle that fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. Under the standard, fair value measurements would be separately disclosed by level within the fair value hierarchy. SFAS No. 157 is effective for the Company’s fiscal year ending June 30, 2009. The Company is currently evaluating the potential impact, if any, the adoption of SFAS No. 157 will have on the Company’s consolidated financial statements.

OnNote ~~March 12, 2007, the Company closed its underwritten secondary public offering of 6,000,000 shares of common stock~~2. ~~The~~Acquisition ~~underwriters exercised in full their over-allotment option for an additional 900,000 shares~~ of ~~common~~Interflora ~~stock~~Holdings ~~at the public offering price of $17.50 per share, less~~Limited 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 transaction, the total ownership of affiliates of Leonard Green & Partners, L.P. was reduced from 54.9% to 32.8% and therefore the Company is no longer a “controlled company” as defined under New York Stock Exchange regulations.

InOn ~~conjunction~~July 31, 2006 the Company completed the acquisition of Interflora for a purchase price of approximately $122.8 million plus transaction related costs totaling $2.3 million. Approximately $98.6 million of the acquisition price was paid in cash at closing and $1.9 million of cash was acquired in connection with the ~~offering~~purchase. The consideration included notes payable, ~~the~~of ~~Company~~which ~~realized~~$23.1 million were paid in May 2007 and the remainder, $1.7 million, is expected to be paid in ~~proceeds~~the ~~from~~first half of fiscal year 2009. The remainder of the purchase price was funded through the issuance of ~~exercise~~216,374 shares of common stock ~~options~~(consisting byof ~~members~~treasury shares) to certain senior managers of Interflora. ~~management~~The Company financed the acquisition with a new senior secured credit facility (the “2006 Credit Agreement”) consisting of a $150.0 million term loan and ~~incurred~~a $75.0 million revolving credit facility. The proceeds from the 2006 Credit Agreement were also used to repay the Company’s existing term loan. In addition, the Company entered into foreign currency forward exchange contracts totaling £61.8 million to hedge the acquisition cost. A contract in ~~offering~~the ~~related costs~~amount of £51.0 million ~~These~~was ~~offering~~settled ~~related~~on ~~costs~~July 28, ~~have~~2006 ~~been~~and ~~recorded~~resulted in ~~other~~a ~~expense~~gain of $1.4 million, which was recorded in other (income) expense, net within the Condensed Consolidated Statements of Income and Comprehensive Income. A contract in the amount of £10.0 million was settled on May 1, 2007 and resulted in a gain of $1.4 million, which offset the foreign currency loss on the notes in the same amount. The remaining forward contract for £0.8 million is expected to be settled during the first quarter of fiscal year 2009. For the three-month and six-month periods ended December 31, 2007, other (income) expense, net, related to the mark-to-market adjustments on this forward contract and the related note payable was not significant. For the three-month and six-month periods ended December 31, 2006, other (income) expense, net, included $0.2 million and $1.3 million, respectively, of income related to the mark-to-market adjustments on these forward contracts and the related notes payable.

Note 3. Dividend Declared

On February 20, 2007, the Company’s Board of Directors approved a dividend policy and declared its first quarterly cash dividend of $0.1625 per share. The dividend was paid on April 2, 2007 to stockholders of record as of the close of business on March 19, 2007. On an annual basis, the cash dividend is expected to be $0.65 per share. While the Company intends to continue to pay quarterly dividends, the declaration and payment of dividends is subject to the determination of the Board of Directors and continued compliance with the requirements of the Company’s 2006 Credit Agreement and the indenture governing the 7.75% Senior Subordinated Notes, among other considerations.

Note 4. Acquisition of Interflora Holdings Limited

On July 31, 2006, in connection with the Company’s international expansion strategy, the Company completed the acquisition of Interflora for a purchase price of approximately $122.8 million (£66 million) plus transaction related costs totaling $2.3 million. Approximately $98.6 million of the acquisition price was paid in cash at closing and $1.9 million of cash was acquired in connection with the purchase. The consideration included approximately $23.3 million (£12.5 million) of notes payable, of which $21.6 million (£11.6 million) will be paid in May 2007 and the remainder, $1.7 million (£0.9 million), is expected be paid in the first half of fiscal 2008. The remainder of the purchase price ($3.2 million) was funded through the issuance of 216,374 shares of common stock (consisting of treasury shares) to certain senior managers of Interflora. The Company financed the acquisition with a new senior secured credit facility consisting of a $150.0 million term loan and a $75.0 million revolving credit facility. The proceeds from the new facility were also used to repay the Company’s existing term loan. Refer to Note 6 below. In addition, the Company entered into foreign currency forward exchange contracts totaling £61.8 million to hedge the acquisition cost. A contract in the amount of £51.0 million was settled on July 28, 2006 and resulted in a gain of $1.4 million, which has been recorded in other income, net within the Condensed Consolidated Statements of Income and Comprehensive Income. The remaining forward contracts include a contract for £10 million, expected to be settled during the fourth quarter of fiscal year 2007 and a contract for £0.8 million, expected to be settled during the first quarter of fiscal year 2009. The settlement of these contracts coincide with the due dates of the notes payable related to the acquisition of Interflora. For the three-month and nine-month periods ended March 31, 2007, other expense (income), net included $0.1 million and $1.4 million of income, respectively, related to the mark-to-market adjustments on these forward contracts and the related notes payable.

Financial results for Interflora are included herein beginning August 1, 2006. The pro forma information below presents the results of operations as if the acquisition occurred on July 1, 2005 (in thousands, except per share amounts). Pro forma financial information related to Interflora, Inc. has not been included herein, as the operating results of Interflora, Inc. are not considered material to the Company’s operating results.

	Three Months Ended		Nine Months Ended
	March 31,		March 31,
	2006		2007		2006
Proforma revenues	$	170,405	$	453,863	$	417,976
Proforma income from operations	$	20,615	$	55,712	$	50,008
Proforma net income	$	8,798	$	21,335	$	19,105
Proforma net income per share — basic	$	0.31	$	0.75	$	0.65
Proforma net income per share — diluted	$	0.30	$	0.72	$	0.63

Financial results for Interflora are included herein beginning August 1, 2006. The pro forma information below presents the results of operations as if the acquisition occurred on July 1, 2006 (in thousands, except per share amounts). Pro forma financial information related to Interflora, Inc. has not been included herein, as the operating results of Interflora, Inc. are not material to the Company’s operating results.

The allocation of the acquisition cost, which is substantially complete, is shown in the table below (in thousands). Such allocation will be finalized when remaining fair value adjustments are completed.


	Six Months Ended
	December 31,
	2006
Pro forma revenues	$	270,964


Pro forma income from operations	$	33,262


Pro forma net income	$	11,720


Pro forma net income per share — basic	$	0.41

Pro forma net income per share — diluted	$	0.40

Goodwill	$	76,024
Trademark		61,764
Computer software		4,372
Land and building		2,942
Other intangible assets (customer list)		1,711
Deferred tax liability		(20,464	)
Other assets acquired and liabilities assumed, net		(1,211	)
Total preliminary allocation of acquisition cost	$	125,138

In conjunction with the acquisition, the Company implemented a deferred compensation plan for certain members of Interflora management. Under the terms of the plan, participants will be paid a cash bonus upon achieving a specified annual earnings target if such target is achieved in any annual period within the seven years following the acquisition. The maximum payout under such plan is £2.6 million ($5.2 million translated at the December 31, 2007 exchange rate). The amounts accrued under this deferred compensation plan were $1.7 million and $0.6 million as of December 31, 2007, and 2006, respectively.

~~Goodwill~~Note ~~and trademark assets are considered indefinite lived and therefore will not be subject to amortization~~3. ~~Computer~~Income ~~software will be amortized over 5 years; the customer list will~~Taxes ~~be amortized over 3 years.~~

~~The~~Taxes ~~Company~~on ~~implemented~~earnings areflect ~~deferred~~the ~~compensation~~estimated ~~plan~~annual ~~for~~effective ~~certain~~rates, ~~members~~excluding ~~of Interflora management. Under~~ the ~~terms~~effect of significant ~~the~~unusual ~~plan,~~items. ~~participants~~Tax ~~will~~expense bein ~~paid~~the asix-months ~~cash~~ended ~~bonus~~December 31, ~~upon~~2007 ~~achieving~~includes a$1.3 ~~specified~~million ~~annual~~of ~~earnings~~tax ~~target~~benefit ifrelated ~~such~~to ~~target~~a isstatutory ~~achieved~~income intax ~~any~~rate ~~annual~~reduction ~~period~~in ~~within~~ the ~~next seven years~~U.K. ~~The~~Excluding ~~maximum~~this unusual ~~payout~~item, ~~under~~the ~~such~~effective ~~plan~~tax israte £2was 38.~~9 million.~~0% ~~During~~for the three-month and ~~nine~~ six-month periods ended ~~March~~ December 31, 2007,. For the ~~Company~~three-month ~~recorded~~and ~~$0.3 million~~six-month ~~and~~periods ~~$0.9 million~~ended ~~of expense~~December 31, ~~respectively~~2006, ~~related~~the toeffective rate ~~this~~was ~~deferred compensation plan~~39.5%.

~~Note~~ Unrecognized 5tax benefits as of the adoption of FASB Interpretation No. 48, ~~Goodwill~~Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109 (“FIN 48”) on July 1, 2007 were approximately $2.4 million. If recognized, $0.7 million of these unrecognized tax benefits would reduce the effective tax rate. As a result of the implementation of FIN 48, the Company recognized a $0.7 million decrease in the liability for unrecognized tax benefits. This decrease in the liability resulted in an increase to beginning retained earnings of $0.7 million. The Company does not expect the total amount of unrecognized tax benefits to change significantly within the next twelve months. Consistent with prior periods, the Company recognizes interest and penalties ~~Other~~related ~~Intangibles~~to unrecognized benefits as a component of tax expense. Reserves for interest and penalties are not significant. The Company is subject to U.S. Federal income tax examinations for the tax years ended June 30, 2004 through June 30, 2007. The Company is subject to income tax examinations in the U.K. for the twelve-month period ended May 31, 2007 and the one-month period ended June 30, 2007. In addition, the Company is subject to various state and local income tax examinations for the tax years ended June 30, 2003 through June 30, 2007. During the six months ended December 31, 2007, the change in unrecognized tax benefits was not significant.

Goodwill resulting from the Interflora acquisition will be reported as part of the international segment.

The changes in the carrying amount of goodwill, trademark and amortizable intangible assets, the related accumulated amortization as of March 31, 2007 and estimated amortization expense are as follows (in thousands):

	Consumer		Florist		International
	Segment		Segment		Segment		Total
Goodwill:
Balance at June 30, 2006	$	178,141	$	158,518	$	—	$	336,659
Acquisition of Interflora		—		—		76,024		76,024
Impact of foreign exchange		—		—		3,884		3,884
Balance at March 31, 2007	$	178,141	$	158,518	$	79,908	$	416,567
Trademark:
Balance at June 30, 2006	$	67,842	$	53,735	$	—	$	121,577
Acquisition of Interflora		—		—		61,764		61,764
Impact of foreign exchange		—		—		3,163		3,163
Balance at March 31, 2007	$	67,842	$	53,735	$	64,927	$	186,504

Note 4. Financing Arrangements

	March 31, 2007						June 30, 2006
	Gross Carrying		Accumulated		Net		Gross Carrying		Accumulated		Net
	Amount		Amortization		Carrying Amount		Amount		Amortization		Carrying Amount
Amortizable Intangible Assets:
Customer lists	$	14,636	$	8,267	$	6,369	$	12,836	$	5,940	$	6,896
Non-compete agreements		100		78		22		100		53		47
Total	$	14,736	$	8,345	$	6,391	$	12,936	$	5,993	$	6,943

On July 28, 2006, in connection with the Interflora acquisition, FTD, Inc. entered into a new senior secured credit facility consisting of a $150.0 million term loan and a $75.0 million revolving credit facility. Borrowings under the 2006 Credit Agreement bear interest based on a margin over, at FTD, Inc.’s option, either the base rate or the London Interbank Offered Rate (“LIBOR”). The applicable margin for borrowings varies based on the Company’s consolidated leverage ratio, as defined in the 2006 Credit Agreement. The interest rate at December 31, 2007 and 2006 on the term loan was 6.60% and 7.35%, respectively. The Credit Agreement also requires the Company to pay commitment fees on the unused portion of the revolving credit facility. For the three-month and six-month periods ended December 31, 2007 and 2006, the commitment fees were not significant. The Agreement also includes covenants that, among other things, require that FTD, Inc. maintain a certain ratio of consolidated total debt to consolidated earnings before interest, taxes, depreciation and amortization (subject to certain adjustments), as well as a certain fixed charge ratio. Such ratios adjust quarterly in accordance with the terms of the Agreement. FTD, Inc. was in compliance with all debt covenants as of December 31, 2007.

~~Also~~On ~~included~~February 20, ~~within~~2007, ~~Intangible~~the ~~Assets~~Board onof Directors of the ~~balance~~Company ~~sheet~~approved, isand athe ~~URL~~Company ~~asset~~entered into, ~~valued~~an atamendment ~~$7.8 million~~to the 2006 Credit Agreement, which, isamong another ~~indefinite~~things, ~~lived~~allows ~~asset~~the Company to make certain restricted junior payments, including dividend payments, subject to certain conditions.

Estimated amortization expense (in thousands):
For the remaining three-month period ending June 30, 2007	$	800
For the year ending June 30, 2008	$	3,181
For the year ending June 30, 2009	$	2,333
For the year ending June 30, 2010	$	77

Both the 2006 Credit Agreement and the indenture governing the 7.75% Senior Subordinated Notes (the “Notes”) impose various restrictions on the Company, including restrictions that limit FTD, Inc.’s ability to incur liens or encumbrances, make investments or acquisitions, incur additional debt, enter into sale leaseback transactions, incur certain contingent liabilities, make certain restricted junior payments and other similar distributions, enter into mergers, consolidations and similar combinations, sell assets or engage in similar transfers, amend certain material agreements, make capital expenditures and engage in transactions with affiliates.

~~Goodwill~~In ~~and~~conjunction ~~other~~with ~~indefinite-lived~~the ~~intangible~~Company’s ~~assets~~completion ~~are~~of ~~tested~~a ~~for~~going ~~impairment~~private attransaction ~~least~~on February 24, ~~annually~~2004, FTD, Inc. ~~The~~entered ~~annual~~into ~~assessment~~a ~~occurs~~senior secured credit facility (the “2004 Credit Agreement”). There was $50.0 million in outstanding debt at June 30, 2006 under the ~~fourth~~2004 ~~quarter~~Credit Agreement, which was subsequently paid off on July 28, 2006 with the proceeds from the 2006 Credit Agreement. As a result of ~~each~~repaying amounts borrowed under the 2004 Credit Agreement, the Company wrote off $1.8 million of deferred financing costs, net of accumulated amortization, during the first quarter of fiscal year 2007. ~~All~~This ~~intangible~~expense ~~assets~~is recorded in interest expense in the accompanying Condensed ~~are~~Consolidated ~~tested~~Statements ~~for~~of ~~impairment~~Income ifand ~~events~~Comprehensive orIncome. ~~circumstances~~In ~~indicate~~connection with the ~~carrying~~2006 ~~value~~Credit Agreement, ~~may~~the ~~not~~Company beincurred $1.5 million of deferred financing costs, which were allocated, pro ~~recoverable~~rata, to the six-year revolving credit facility and the seven-year term loan and are being amortized using the effective interest method.

~~Note~~ At 6December 31, 2007, the Company had $170.1 million ~~Financing~~of ~~Arrangements~~Notes outstanding, $130.2 million outstanding under the 2006 Credit Agreement, $1.7 million of notes payable related to the acquisition of Interflora and an additional $1.3 million in outstanding letters of credit and, as a result, approximately $72.0 million of the revolving credit facility was available.

On July 28, 2006, in connection with the Interflora acquisition, FTD, Inc. entered into a new senior secured credit facility consisting of a $150.0 million term loan and a $75.0 million revolving credit facility (the “2006 Credit Agreement”). Borrowings under the 2006 Credit Agreement bear interest based on a margin over, at FTD, Inc.’s option, either the base rate or the London Bank Offered Rate (“LIBOR”). The applicable margin for borrowings varies based on the Company’s consolidated leverage ratio, as defined in the 2006 Credit Agreement. The weighted average interest rate at March 31, 2007 on the term loan was 7.36%. The Credit Agreement also requires the Company to pay commitment fees on the unused portion of the revolving credit facility. Commitment fees totaled $0.1 million and $0.2 million for the three-month and nine-month periods ended March 31, 2007, respectively. The 2006 Credit Agreement also includes covenants that, among other things, require that FTD, Inc. maintain a ratio of consolidated total debt to consolidated earnings before interest, taxes, depreciation and amortization (subject to certain adjustments) of no more than 5.75 to 1.00 and a fixed charge ratio of no less than 1.30 to 1.00. Such ratios adjust quarterly in accordance with the terms of the 2006 Credit Agreement. FTD, Inc. was in compliance with all debt covenants as of March 31, 2007.

On February 20, 2007, the Board of Directors of the Company approved, and the Company entered into, an amendment to the 2006 Credit Agreement, which, among other things, amended certain restrictions to allow the Company to make certain restricted junior payments, including dividend payments.

The 2006 Credit Agreement imposes various restrictions on the Company, including restrictions that limit FTD, Inc.’s ability to incur liens or encumbrances, make investments or acquisitions, incur additional debt, enter into sale

~~leaseback~~Note transactions, incur certain contingent liabilities, make certain restricted junior payments and other similar distributions, enter into mergers, consolidations and similar combinations, sell assets or engage in similar transfers, amend certain material agreements, including the indenture governing the 75.~~75%~~ ~~Senior~~Net ~~Subordinated~~Income ~~Notes (the~~Per ~~“Notes”),~~Common ~~make capital expenditures and engage in transactions with affiliates.~~Share

InThe ~~conjunction~~computations ~~with the Company’s completion~~ of abasic ~~going~~and ~~private~~diluted ~~transaction~~net onincome ~~February 24, 2004,~~per ~~FTD,~~common ~~Inc.~~share ~~entered~~for ~~into a senior secured credit facility (~~the ~~“2004~~three-month ~~Credit Agreement”). There~~and ~~was~~six-month ~~$50.0 million~~periods inended ~~outstanding debt at June~~December 3031, 2006 under the 2004 Credit Agreement, which was subsequently paid off on July 28, 2006. As a result of repaying amounts borrowed under the 2004 Credit Agreement, the Company wrote off $1.8 million of deferred financing costs, net of accumulated amortization, during the first quarter of fiscal year 2007. ~~This expense is recorded in interest expense in the accompanying Condensed Consolidated Statements of Income~~ and ~~Comprehensive~~ ~~Income. In connection with the~~ 2006 ~~Credit~~are ~~Agreement,~~as ~~the~~follows ~~Company~~(in ~~incurred $1.5 million of deferred financing costs~~thousands, ~~which~~except ~~were~~per ~~allocated, pro rata, to the six-year revolving~~share ~~credit facility and the seven-year term loan and are being amortized using the effective interest~~amounts): ~~method.~~

At March 31, 2007, the Company had $142.3 million outstanding under the 2006 Credit Agreement and $26.0 million in outstanding letters of credit, $24.5 million of which related to the notes payable from the acquisition of Interflora, and, as a result, the revolving credit facility had availability of approximately $49.0 million.


	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2007		2006		2007		2006
Net income	$	8,966	$	6,107	$	17,122	$	11,550


Weighted average common shares outstanding — basic		29,509		28,335		29,287		28,283
Effect of dilutive securities — stock options and restricted stock		249		1,427		366		1,196

Weighted average common shares outstanding — diluted		29,758		29,762		29,653		29,479


Net income per share of Common Stock — basic	$	0.30	$	0.22	$	0.58	$	0.41


Net income per share of Common Stock - diluted	$	0.30	$	0.21	$	0.58	$	0.39

~~Note~~ For 7.the ~~Net~~three-month ~~Income~~and ~~Per~~six-month periods ended December 31, 2007 there were 1,010,028 and 977,927 outstanding stock options, respectively, that were not included in the computation of diluted earnings per share because the exercise prices of the options were greater than the average market prices of the Company’s Common ~~Share~~Stock during the periods and, therefore, were anti-dilutive. For the three-month and six-month periods ended December 31, 2006, there were 12,500 and 1,015,217, respectively, outstanding stock options which were not included in the computation of diluted earnings per share because their effect was anti-dilutive.

~~The~~Note ~~computations~~6. ~~of basic and diluted net income per common share for the three~~Stock-~~month~~Based ~~and~~Compensation ~~nine-month periods ended March 31, 2007 and 2006 are as follows (in thousands, except per share amounts):~~

	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2007		2006		2007		2006
Net income	$	9,615	$	7,421	$	21,165	$	16,749
Weighted average common shares outstanding — basic		28,462		28,111		28,343		28,989
Effect of dilutive securities — stock options		1,365		920		1,167		1,036
Weighted average common shares outstanding — diluted		29,827		29,031		29,510		30,025
Net income per share of Common Stock — basic	$	0.34	$	0.26	$	0.75	$	0.58
Net income per share of Common Stock — diluted	$	0.32	$	0.26	$	0.72	$	0.56

During the three-month period ended December 31, 2007, the Company granted 15,000 options to various directors of the Company in accordance with the Company’s director compensation plan. In addition to such grants, during the six-month period ended December 31, 2007, the Company granted 300,000 shares of restricted stock to certain members of management. During the three-month and six-month periods ended December 31, 2006, the Company granted 12,500 and 1,380,217 options, respectively, to various employees and directors of the Company. The restricted shares vest equally each year over a five-year service period. Outstanding non-qualified stock options have an expiration date ten years from the date of grant and begin vesting as early as the date of grant, depending upon the individual agreements. All stock options were granted with an exercise price equal to the fair market value of the Company’s stock on the date of grant.

~~For~~During the three-month ~~period~~and six-month periods ended ~~March~~December 31, 2007, ~~all~~176,332 ~~outstanding~~and ~~stock~~ 216,332 options, respectively, were ~~included~~forfeited. ~~in the~~During ~~computation of diluted earnings per share because~~ the ~~average~~three-month ~~market~~and ~~price~~six-month ofperiods ~~the~~ended ~~Company’s~~December ~~Common~~31, ~~Stock~~2007, ~~during~~20,000 ~~the~~shares ~~period~~of ~~was~~restricted ~~greater~~stock ~~than~~were ~~the exercise price of the options~~forfeited. ~~For~~During the ~~nine~~ six-month period ended ~~March~~ December 31, ~~2007~~2006, ~~there~~116,666 options were 12forfeited,~~500~~ ~~outstanding~~none ~~stock~~of ~~options~~ which were ~~not included~~forfeited induring the three-month ~~computation~~period ofended ~~diluted~~December 31, ~~earnings per share because their effect was anti-dilutive~~2006. ~~For~~ During the three-month and ~~nine~~six-month periods ended ~~March~~ December 31, ~~2006~~2007, ~~there were 212~~21,~~500~~700 and ~~195~~555,~~000 outstanding~~264 ~~stock~~ options, respectively, ~~which~~ were ~~not~~exercised. ~~included~~During in the ~~computation~~six-month period ofended ~~diluted earnings~~December 31, ~~per~~2006, ~~share~~140,780 ~~because~~options ~~their~~were ~~effect~~exercised, ~~was~~none ~~anti~~of which were exercised during the three-~~dilutive~~month period ended December 31, 2006.

~~Note~~ Stock-based 8compensation expense was $0.6 million ~~Pension~~and $1.3 million, and ~~Other~~$0.6 million ~~Post~~and $1.0 million for the three-~~Retirement~~month ~~Benefit~~and ~~Plans~~six-month periods ended December 31, 2007, and 2006, respectively.

~~The~~Note ~~Company’s defined benefit pension plan and post-retirement benefit plan relate to a limited number of employees and retirees~~7. ~~Such~~Commitments ~~plans were frozen in 1997. The table below provides the components of pension expense for the defined benefit plan for the three-month~~ and ~~nine-month~~ ~~periods ended March 31, 2007 and 2006 (in thousands):~~Contingencies

The Company is involved in various claims and lawsuits and other matters arising in the normal course of business. In the opinion of management of the Company, although the outcomes of these matters are uncertain, they are not expected to have a material adverse effect on the Company’s financial condition, results of operations and cash flows.

	Salaried Employees’ Pension Plan
	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2007			2006			2007			2006
Service cost	$	13		$	13		$	39		$	41
Interest cost		26			28			78			83
Expected return on assets		(23	)		(22	)		(69	)		(67	)
Amortization		1			9			3			27
Net periodic benefit cost	$	17		$	28		$	51		$	84

Note 8. Segment Information

~~The~~Operating ~~following~~segments ~~table~~are ~~provides the~~ components of ~~net~~the ~~periodic~~business ~~post-retirement~~for ~~benefit~~which ~~costs~~separate ~~for~~financial information is available that is regularly reviewed by the ~~three-month~~enterprise’s chief operating decision maker to make decisions about resources to be allocated to each segment and ~~nine-month~~to ~~periods~~assess ~~ended~~its ~~March 31,~~performance. ~~2007~~Revenue earned and ~~2006~~expenses ~~(in~~charged ~~thousands):~~between segments are recorded at fair value and eliminated in consolidation.

	Retiree Medical Plan
	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2007		2006		2007		2006
Interest cost	$	22	$	20	$	66	$	60
Net periodic benefit cost	$	22	$	20	$	66	$	60

During the first quarter of the fiscal year ending June 30, 2008, the Company eliminated certain allocations of costs between its consumer and florist segments in order to simplify financial reporting and to reflect how the Company now manages its businesses. Certain reclassifications have been made to the basis of presentation to reflect the elimination of these allocations to facilitate comparable reporting. Such changes do not impact the consolidated financial statements.

~~Note~~ For 9purposes of managing the Company, management reviews segment financial performance to the operating income level for each of its reportable segments. ~~Stock-Based~~As ~~Compensation~~such, interest income, interest expense and tax expense are recorded on a consolidated corporate basis.

The ~~Company~~consumer ~~adopted~~segment ~~SFAS~~encompasses ~~123~~sales ~~(R),~~of ~~Share-Based~~floral ~~Payment (“SFAS 123 (R)”) on July 1, 2005 using the modified prospective method~~ and ~~Black-Scholes~~specialty asgift ~~the option valuation model. No stock options were granted during the three-month period ended March 31~~products, ~~2007.~~which ~~The~~are ~~Company granted 1,380,217~~sold ~~options during the nine-month period ended March 31, 2007~~ to ~~various~~consumers ~~employees~~primarily ~~and~~in ~~directors of~~ the ~~Company~~ U.S. ~~During the three-month~~ and ~~nine-month~~Canada ~~periods~~through ~~ended March 31, 2006,~~ the Company’s ~~granted 35,000~~web ~~and 97~~site,~~500~~ ~~options, respectively~~www. ~~Outstanding non-qualified stock options have an expiration date ten years from the date of grant and begin vesting as early as the date of grant~~ftd.com, ~~dependent~~ ~~upon the individual agreements. All stock options were granted with an exercise price~~in ~~equal~~addition to ~~the~~its ~~fair~~toll-free ~~market~~telephone ~~value~~number, ~~of the Company’s stock on the date of grant~~1-800-SEND-FTD.

~~During~~The ~~the~~florist ~~three-month~~segment ~~and~~includes ~~nine-month~~all ~~periods~~products ~~ended March 31, 2007~~ and ~~2006,~~services ~~39,000~~sold ~~and 155,666~~to ~~and~~FTD ~~18,667~~members and ~~169,334~~other ~~options, respectively, were forfeited. During the nine-month period~~retail ~~ended~~locations ~~March 31,~~offering ~~2007,~~floral ~~746,659~~products ~~options~~primarily ~~were~~in ~~exercised, 605,879 of which were exercised during~~ the ~~quarter~~ ~~ended March 31, 2007~~U. ~~Of the 605,879 options exercised during the three-month period ended March 31, 2007, 549,373 were exercised as part of the secondary offering discussed in Note 2~~S. ~~The Company reissued shares of Treasury Stock in connection with the exercise of all vested stock options during the three-month~~ and ~~nine-month periods ended March 31~~Canada, ~~2007.~~encompassing ~~During the nine-month~~clearinghouse ~~period ended March 31~~services, ~~2006,~~publishing ~~the~~products ~~Company~~and ~~issued 30~~services,~~391~~ ~~shares~~online ~~of Common Stock in connection with the exercise of vested stock options. In addition~~services, ~~during~~technology ~~the~~sales ~~three-month~~ and ~~nine-month~~leases, ~~periods~~fresh ~~ended~~flower ~~March 31,~~sales ~~2006, the Company reissued 8,408~~ and ~~39,520~~other ~~shares,~~specialty ~~respectively,~~wholesale ~~of Treasury Stock in connection with the exercise of vested stock options~~products.

~~Stock-based~~The ~~compensation~~international ~~expense~~segment ~~was~~is $0primarily comprised of Interflora, a U.~~5 million~~K. based provider of floral-related products and $1services to consumers and retail floral locations in the U.~~5 million,~~K. and $0the Republic of Ireland.~~2 million~~ Interflora’s products and $0services enable its members to send and deliver floral orders.5 It is also an Internet and telephone marketer of flowers and specialty gift items ~~million~~to ~~for~~consumers, operating primarily thorough the ~~three-month~~www.interflora.co.uk ~~and~~Web ~~nine~~site as well as a toll-~~month~~free telephone ~~periods~~number. ~~ended~~Interflora ~~March~~was acquired by the Company on July 31, ~~2007,~~2006. ~~and~~As ~~2006~~such, ~~respectively.~~the six ~~Stock-based~~months ~~compensation~~ended ~~expense~~December 31, in2007 ~~any~~includes ~~period~~the ~~may~~results ~~not~~of beoperations ~~indicative~~ of Interflora for six months whereas the ~~expense~~six ~~for~~months ended December 31, 2006 includes the ~~entire~~results of Interflora’s operations for ~~fiscal~~only ~~year~~five months.

~~Note~~ The ~~10.~~Company’s ~~Commitments~~total ~~and~~assets ~~Contingencies~~by segment are as follows (in thousands):

The Company is involved in various claims and lawsuits and other matters arising in the normal course of business. In the opinion of management of the Company, although the outcome of these claims and suits are uncertain, they are not expected to have a material adverse effect on the Company’s financial condition, liquidity or results of operations.


	December 31,
	2007		2006
Consumer segment	$	263,567	$	264,957
Florist segment*		324,062		322,171
International segment		177,529		193,300

Total	$	765,158	$	780,428


*		Includes corporate assets.

The following tables report the Company’s operating results by reportable segment for the three-month and six-month periods ended December 31, 2007 and 2006:

Note 11. Segment Information


	Three Months Ended December 31,
	2007									2006
	Gross Segment			Eliminations			Consolidated			Gross Segment			Eliminations			Consolidated
(In thousands)
Revenues:
Consumer segment	$	67,441		$	(2,807	)	$	64,634		$	72,551		$	(3,076	)	$	69,475
Florist segment		44,727			(126	)		44,601			44,701			(123	)		44,578
International segment		46,137			117			46,254			37,422			65			37,487

Total		158,305			(2,816	)		155,489			154,674			(3,134	)		151,540


Cost of Products Sold and Services Provided:
Consumer segment		45,656			(126	)		45,530			50,163			(123	)		50,040
Florist segment		14,146			—			14,146			13,064			—			13,064
International segment		31,852			(41	)		31,811			25,740			(24	)		25,716
Corporate		474			—			474			498			—			498

		92,128			(167	)		91,961			89,465			(147	)		89,318


Gross Profit:
Consumer segment		21,785			(2,681	)		19,104			22,388			(2,953	)		19,435
Florist segment		30,581			(126	)		30,455			31,637			(123	)		31,514
International segment		14,285			158			14,443			11,682			89			11,771
Corporate		(474	)		—			(474	)		(498	)		—			(498	)

Total		66,177			(2,649	)		63,528			65,209			(2,987	)		62,222


Advertising and Selling:
Consumer segment		7,470			—			7,470			8,855			—			8,855
Florist segment		14,022			(2,807	)		11,215			15,850			(3,076	)		12,774
International segment		4,234			17			4,251			3,296			(70	)		3,226

Total		25,726			(2,790	)		22,936			28,001			(3,146	)		24,855


General and Administrative
Consumer segment		4,473			—			4,473			5,747			—			5,747
Florist segment		2,179			—			2,179			2,031			—			2,031
International segment		6,110			(7	)		6,103			5,722			121			5,843
Corporate		7,677			—			7,677			6,733			—			6,733

Total		20,439			(7	)		20,432			20,233			121			20,354


Operating Income (Loss) before Corporate Allocations:
Consumer segment		9,842			(2,681	)		7,161			7,786			(2,953	)		4,833
Florist segment		14,380			2,681			17,061			13,756			2,953			16,709
International segment		3,941			148			4,089			2,664			38			2,702
Corporate		(8,151	)		—			(8,151	)		(7,231	)		—			(7,231	)

Total		20,012			148			20,160			16,975			38			17,013


Corporate Allocations:
Consumer segment		1,042			—			1,042			1,053			—			1,053
Florist segment		2,991			—			2,991			2,331			—			2,331
International segment		—			—			—			—			—			—
Corporate		(4,033	)		—			(4,033	)		(3,384	)		—			(3,384	)

Total		—			—			—			—			—			—


Operating Income (Loss):
Consumer segment		8,800			(2,681	)		6,119			6,733			(2,953	)		3,780
Florist segment		11,389			2,681			14,070			11,425			2,953			14,378
International segment		3,941			148			4,089			2,664			38			2,702
Corporate		(4,118	)		—			(4,118	)		(3,847	)		—			(3,847	)

Total	$	20,012		$	148		$	20,160		$	16,975		$	38		$	17,013


Depreciation and Amortization:
Consumer segment	$	862		$	—		$	862		$	993		$	—		$	993
Florist segment		644			—			644			797			—			797
International segment		1,037			—			1,037			1,129			—			1,129
Corporate		655			—			655			966			—			966

Total	$	3,198		$	—		$	3,198		$	3,885		$	—		$	3,885

For purposes of managing the Company, management reviews segment financial performance to the operating income level for each of its reportable segments. As such, interest income, interest expense and tax expense are reviewed on a consolidated corporate basis. Revenue and expenses earned and charged between segments are eliminated in consolidation.

The consumer segment is an Internet and telephone marketer of flowers and specialty gifts, which sells products directly to consumers primarily through the www.ftd.com Web site and the 1-800-SEND-FTD toll-free telephone number.

The florist segment includes all services and products sold to FTD members and other retail locations offering floral products. Services include clearinghouse, membership, technology access and support and online services. Products include containers, technology systems and fresh flowers.

The international segment is primarily comprised of Interflora, which has both a florist business and consumer business. Interflora provides products and services to enable its members to send and deliver floral orders and is also an Internet and telephone marketer of flowers and specialty gift items to consumers, operating primarily through the www.interflora.co.uk Web site as well as toll-free telephone numbers.

The corporate segment includes costs related to corporate headquarters, including accounting, executive, legal, facilities, information technology and credit and collections. Costs related to facilities, information technology and credit and collections are allocated to the consumer and florist segments.

Of the Company’s assets totaling $779.4 million at March 31, 2007, the assets of the Company’s consumer segment totaled approximately $266.0 million, the assets of the Company’s international segment totaled $197.2 million and the assets of the Company’s florist segment and corporate headquarters totaled $316.2 million.

The following tables report the Company’s operating results by reportable segment for the three-month and nine-month periods ended March 31, 2007 and 2006:

Three Months Ended March 31,

Six Months Ended December 31,

2007

2006

Gross Segment

Eliminations

Consolidated

Gross Segment

Eliminations

Consolidated

(in thousands)

(In thousands)

Revenues:

Consumer segment

84115,~~642~~377

(45,~~426~~023

)

80110,~~216~~354

80122,~~883~~193

(5,~~203~~325

)

75116,~~680~~868

Florist segment

4987,~~290~~652

(~~167~~230

)

4987,~~123~~422

5288,~~979~~613

(74214

)

5288,~~905~~399

International segment

5381,~~476~~257

84201

5381,~~560~~458

—54,946

—98

—55,044

Total

~~187~~284,~~408~~286

(45,~~509~~052

)

~~182~~279,~~899~~234

~~133~~265,~~862~~752

(5,~~277~~441

)

~~128~~260,~~585~~311

Cost of Products Sold and Services Provided:

Consumer segment

5777,~~721~~679

(~~741~~230

)

5677,~~980~~449

5683,~~156~~701

(~~747~~214

)

5583,~~409~~487

Florist segment

1729,~~465~~328

~~(826~~—

)

1629,~~639~~328

1827,~~849~~528

~~(828~~—

)

1827,~~021~~528

International segment

3755,~~528~~468

(3768

)

3755,~~491~~400

—37,752

—(40

)

—37,712

Corporate

~~493~~953

—

~~493~~953

~~533~~1,014

—

~~533~~1,014

Total

113,207

(1,604

)

111,603

75,538

(1,575

)

73,963

163,428

(298

)

163,130

149,995

(254

)

149,741

Gross Profit:

Consumer segment

2637,~~921~~698

(34,~~685~~793

)

2332,~~236~~905

2438,~~727~~492

(45,~~456~~111

)

2033,~~271~~381

Florist segment

3158,~~825~~324

~~659~~(230

)

3258,~~484~~094

3461,~~130~~085

~~754~~(214

)

3460,~~884~~871

International segment

1525,~~948~~789

~~121~~269

1626,~~069~~058

—17,194

—138

—17,332

Corporate

(~~493~~953

)

—

(~~493~~953

)

(~~533~~1,014

)

—

(~~533~~1,014

)

Total

74120,~~201~~858

(24,~~905~~754

)

71116,~~296~~104

58115,~~324~~757

(35,~~702~~187

)

54110,~~622~~570

Advertising and Selling:

Consumer segment

1112,~~346~~234

—

1112,~~346~~234

1013,~~401~~741

—

1013,~~401~~741

Florist segment

1425,~~821~~386

(35,~~028~~023

)

1120,~~793~~363

1628,~~044~~574

(35,~~702~~325

)

1223,~~342~~249

International segment

46,~~292~~956

~~(83~~35

)

46,~~209~~991

—4,542

—(113

)

—4,429

Total

3044,~~459~~576

(34,~~111~~988

)

2739,~~348~~588

2646,~~445~~857

(35,~~702~~438

)

2241,~~743~~419

General and Administrative

Consumer segment

78,~~311~~878

~~(786~~—

)

68,~~525~~878

610,~~881~~225

~~(735~~—

)

610,~~146~~225

Florist segment

24,~~052~~278

—

24,~~052~~278

24,~~377~~296

—

24,~~377~~296

International segment

611,~~486~~947

6132

611,~~547~~979

—8,745

—257

—9,002

Corporate

514,~~588~~368

~~786~~—

614,~~374~~368

513,~~790~~241

~~735~~—

613,~~525~~241

Total

2139,~~437~~471

6132

2139,~~498~~503

1536,~~048~~507

—257

1536,~~048~~764

Operating Income (Loss) before Corporate Allocations:

Consumer segment

816,~~264~~586

(24,~~899~~793

)

511,~~365~~793

714,~~445~~526

(35,~~721~~111

)

39,~~724~~415

Florist segment

1428,~~952~~660

34,~~687~~793

1833,~~639~~453

1528,~~709~~215

45,~~456~~111

2033,~~165~~326

International segment

56,~~170~~886

~~143~~202

57,~~313~~088

—3,907

—(6

)

—3,901

Corporate

(615,~~081~~321

)

~~(786~~—

)

(615,~~867~~321

)

(614,~~323~~255

)

~~(735~~—

)

(714,~~058~~255

)

Total

2236,~~305~~811

~~145~~202

2237,~~450~~013

1632,~~831~~393

—(6

)

1632,~~831~~387

Corporate Allocations:

Consumer segment

12,~~151~~028

—

12,~~151~~028

~~849~~1,870

—

~~849~~1,870

Florist segment

25,~~284~~560

—

25,~~284~~560

24,~~868~~723

—

24,~~868~~723

International segment

—

Corporate

(37,~~435~~588

)

—

(37,~~435~~588

)

(36,~~717~~593

)

—

(36,~~717~~593

)

Total

—

Operating Income (Loss):

Consumer segment

714,~~113~~558

(24,~~899~~793

)

49,~~214~~765

612,~~596~~656

(35,~~721~~111

)

27,~~875~~545

Florist segment

1223,~~668~~100

34,~~687~~793

1627,~~355~~893

1223,~~841~~492

45,~~456~~111

1728,~~297~~603

International segment

56,~~170~~886

~~143~~202

57,~~313~~088

—3,907

—(6

)

—3,901

Corporate

(27,~~646~~733

)

~~(786~~—

)

(37,~~432~~733

)

(27,~~606~~662

)

~~(735~~—

)

(37,~~341~~662

)

Total

2236,~~305~~811

~~145~~202

2237,~~450~~013

1632,~~831~~393

—(6

)

1632,~~831~~387

Depreciation and Amortization:

Consumer segment

~~950~~1,768

—

~~950~~1,768

~~836~~1,933

—

~~836~~1,933

Florist segment

~~799~~1,310

—

~~799~~1,310

~~821~~1,631

—

~~821~~1,631

International segment

12,~~078~~031

—

12,~~078~~031

—1,705

—

—1,705

Corporate

~~862~~1,310

—

~~862~~1,310

~~967~~1,932

—

~~967~~1,932

Total

36,~~689~~419

—

36,~~689~~419

27,~~624~~201

—

27,~~624~~201

	Nine Months Ended March 31,
	2007									2006
	Gross Segment			Eliminations			Consolidated			Gross Segment			Eliminations			Consolidated
							(in thousands)
Revenues:
Consumer segment	$	209,451		$	(12,367	)	$	197,084		$	193,836		$	(13,315	)	$	180,521
Florist segment		137,873			(351	)		137,522			143,323			(205	)		143,118
International segment		108,422			182			108,604			—			—			—
Total		455,746			(12,536	)		443,210			337,159			(13,520	)		323,639
Cost of Products Sold and Services Provided:
Consumer segment		142,335			(1,868	)		140,467			134,073			(1,809	)		132,264
Florist segment		46,664			(2,497	)		44,167			49,485			(2,524	)		46,961
International segment		75,280			(77	)		75,203			—			—			—
Corporate		1,507			—			1,507			1,718			—			1,718
Total		265,786			(4,442	)		261,344			185,276			(4,333	)		180,943
Gross Profit:
Consumer segment		67,116			(10,499	)		56,617			59,763			(11,506	)		48,257
Florist segment		91,209			2,146			93,355			93,838			2,319			96,157
International segment		33,142			259			33,401			—			—			—
Corporate		(1,507	)		—			(1,507	)		(1,718	)		—			(1,718	)
Total		189,960			(8,094	)		181,866			151,883			(9,187	)		142,696
Advertising and Selling:
Consumer segment		25,087			—			25,087			22,768			—			22,768
Florist segment		43,395			(8,353	)		35,042			48,703			(9,187	)		39,516
International segment		8,834			(196	)		8,638			—			—			—
Total		77,316			(8,549	)		68,767			71,471			(9,187	)		62,284
General and Administrative
Consumer segment		18,690			(1,940	)		16,750			15,407			(1,785	)		13,622
Florist segment		6,348			—			6,348			5,607			—			5,607
International segment		15,231			318			15,549			—			—			—
Corporate		17,675			1,940			19,615			17,430			1,785			19,215
Total		57,944			318			58,262			38,444			—			38,444
Operating Income (Loss) before Corporate Allocations:
Consumer segment		23,339			(8,559	)		14,780			21,588			(9,721	)		11,867
Florist segment		41,466			10,499			51,965			39,528			11,506			51,034
International segment		9,077			137			9,214			—			—			—
Corporate		(19,182	)		(1,940	)		(21,122	)		(19,148	)		(1,785	)		(20,933	)
Total		54,700			137			54,837			41,968			—			41,968
Corporate Allocations:
Consumer segment		3,021			—			3,021			2,451			—			2,451
Florist segment		7,007			—			7,007			8,364			—			8,364
International segment		—			—			—			—			—			—
Corporate		(10,028	)		—			(10,028	)		(10,815	)		—			(10,815	)
Total		—			—			—			—			—			—
Operating Income (Loss):
Consumer segment		20,318			(8,559	)		11,759			19,137			(9,721	)		9,416
Florist segment		34,459			10,499			44,958			31,164			11,506			42,670
International segment		9,077			137			9,214			—			—			—
Corporate		(9,154	)		(1,940	)		(11,094	)		(8,333	)		(1,785	)		(10,118	)
Total	$	54,700		$	137		$	54,837		$	41,968		$	—		$	41,968
Depreciation and Amortization:
Consumer segment	$	2,883		$	—		$	2,883		$	2,293		$	—		$	2,293
Florist segment		2,430			—			2,430			2,551			—			2,551
International segment		2,783			—			2,783			—			—			—
Corporate		2,794			—			2,794			2,896			—			2,896
Total	$	10,890		$	—		$	10,890		$	7,740		$	—		$	7,740

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Information

Unless the context otherwise indicates, as used in this Form 10-Q, the term “Company” refers to FTD Group, Inc. and its consolidated subsidiaries, taken as a whole. This ~~quarterly~~Quarterly ~~report~~Report on Form 10-Q 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”), 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. ~~These~~The international business includes the operations of Interflora. 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 materially differ from those contained in any forward-looking statements as a result of: the Company’s ability to acquire and retain FTD and Interflora members and continued recognition by members of the value of the Company’s products and services; the acceptance by members of new or modified service offerings recently introduced; the Company’s ability to sell additional products and services to FTD and Interflora members; the Company’s ability to expand existing marketing partnerships and secure new marketing partners within the domestic and international consumer businesses; the success of the Company’s marketing campaigns; the ability to retain customers and maintain average order value within the domestic and international consumer businesses; the ability to manage foreign currency exchange rate risk; the Company’s performance during key holiday selling ~~seasons~~ 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~~ 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; the Company’s ability to integrate ~~Interflora and~~ additional partners or acquisitions, if any are identified; and other factors described in this Quarterly Report on Form 10-Q and in the Company’s Annual Report on Form 10-K, including under Item 1A — “Risk Factors,” as well as other potential risks and uncertainties, which are discussed in the Company’s other reports and documents filed with the Securities and Exchange Commission ~~(“SEC”)~~. The Company expressly disclaims any obligation to update its forward-looking statements.

The following discussion should be read in conjunction with the ~~consolidated~~condensed ~~financial~~consolidated financial statements and notes to those statements that appear elsewhere in this Quarterly Report on Form 10-Q. The following discussion contains forward-looking statements that reflect the Company’s plans, estimates and beliefs. The Company’s actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to any differences include, but are not limited to, those discussed under the captions “Forward-Looking Information,” “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q.

Overview

FTD Group, Inc. is a leading provider of floral~~-related~~ ~~products~~ and ~~services~~specialty gift products to consumers and retail florists, as well as other retail locations offering floral products, primarily 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. ~~Throughout~~The ~~the fiscal year 2006, the~~ Company ~~conducted~~conducts ~~its~~ business through ~~two~~three operating segments, the consumer segment, ~~and~~ the florist segment. ~~Beginning~~and in the ~~first~~ ~~quarter of fiscal year 2007, the Company began conducting business through a third operating segment relating to its~~ international ~~operations, which includes the operations of Interflora Holdings Limited (“Interflora”)~~segment.

~~Please~~Consumer ~~refer~~Segment. toThe ~~the~~consumer ~~Overview~~segment ~~section~~is ofan ~~Management’s~~Internet ~~Discussion~~ and ~~Analysis~~telephone ofmarketer ~~Financial Condition and Results~~ of ~~Operations~~flowers ~~in FTD Group, Inc.’s Annual Report on Form 10-K for the year~~and ~~ended~~specialty ~~June 30,~~gift ~~2006~~items, which ~~was~~sells ~~filed~~products ~~with~~directly ~~the~~to ~~SEC~~consumers onprimarily ~~September 13,~~through ~~2006 and to~~ the ~~Company’s~~www.ftd.com ~~Registration~~Web ~~Statement~~site, ~~on Form S-3. Except as discussed~~ in ~~this~~addition ~~Item 2,~~to the ~~Company~~1-800-SEND-FTD istoll-free ~~not~~telephone ~~aware of any material changes to such information~~number.

~~Consumer~~Florist Segment. The ~~consumer~~florist segment isprovides ana ~~Internet~~comprehensive suite of products and ~~telephone~~services that ~~marketer~~enable ofFTD ~~flowers~~members to send and ~~specialty~~ ~~gifts,~~deliver ~~which~~floral ~~sells~~orders. ~~products~~The ~~directly~~Company provides these services to its ~~consumers~~network of independent members located primarily ~~through~~in the ~~www~~U.~~ftd~~S.~~com~~ ~~Web~~and Canada, which includes ~~site~~traditional ~~and~~retail ~~the~~florists ~~1-800-SEND-FTD~~as ~~toll-free~~well ~~telephone~~as ~~number~~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, corporate information technology and credit and collections are charged to Corporate. Costs related to facilities, corporate information technology and credit and collections are then 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.

Three Months Ended December 31, 2007 compared to the Three Months Ended December 31, 2006

Revenues


	Three Months Ended
	December 31,
(In thousands)	2007		2006		% Change
Consumer segment	$	64,634	$	69,475		(7.0	%)
Florist segment		44,601		44,578		0.1	%
International segment		46,254		37,487		23.4	%

Total revenues	$	155,489	$	151,540		2.6	%

Total revenue grew $4.0 million, or 2.6%, to $155.5 million for the second quarter of fiscal year 2008, compared to total revenues of $151.5 million for the same period of fiscal year 2007. Interflora, which is included in the Company’s international segment, accounted for $8.8 million of the increase in revenue, approximately $3 million of which related to the impact of foreign currency rate changes. This increase was partially offset by a decline in the Company’s consumer segment revenues totaling $4.9 million.

Revenues in the consumer segment decreased $4.9 million, or 7.0% to $64.6 million in the second quarter of fiscal year 2008, compared to revenues of $69.5 million in the same period of fiscal year 2007. This decline was driven by a 12.2% decrease in order volumes, which totaled 998,000 during the second quarter of fiscal year 2008 compared to 1,136,000 orders in the same period of fiscal year 2007. This decline was partially offset by an increase in average order value to $63.23 for the second quarter of fiscal year 2008, compared to $60.01 for the same period of fiscal year 2007. The percentage of Internet orders increased to 89.1% in the second quarter of fiscal year 2008 from 88.5% in the second quarter of fiscal year 2007.

Revenues in the florist segment remained consistent at $44.6 million in comparison to the same period of the prior fiscal year. Revenues from fresh flower sales and online services increased, while clearinghouse order volumes and other services decreased.

Revenues in the international segment increased $8.8 million, or 23.4%, to $46.3 million in the second quarter of fiscal year 2008, compared to revenues of $37.5 million in the same period of fiscal year 2007. The increase was driven by increased order volume in Interflora’s consumer business and an increase in average order value which was primarily related to favorable foreign currency movements between the U.S. dollar and the British pound. Consumer orders in the international segment were 542,000 in the second quarter of 2008, compared to orders of

~~Florist~~473,000 ~~Segment~~in the prior year. ~~The~~Average ~~florist~~order ~~segment~~value ~~markets~~increased ~~floral~~to ~~products~~$69.66 ~~and~~in ~~services~~the tosecond ~~FTD~~quarter ~~members~~of ~~and~~fiscal 2008 ~~other~~compared ~~retail~~to ~~locations~~$64.07 ~~offering~~of ~~floral~~the ~~products~~prior inyear, driven by the Ufavorable exchange rate trend, as well as price and product mix.S The percentage of Internet orders increased to 71.8% ~~and~~from ~~Canada~~69.3% in the prior year.

~~International~~Gross ~~Segment. The international segment, a new segment in fiscal year 2007, is~~profit primarily comprised of Interflora, a U.K.-based provider of floral and gift products and services to consumers and retail floral locations in the U.K. and the Republic of Ireland, which was acquired by the Company on July 31, 2006.

Corporate Segment. The corporate segment includes costs related to corporate headquarters, including accounting, executive, legal, facilities, information technology and credit and collections. Costs related to facilities, information technology and credit and collections are allocated to the consumer and florist segments.


	Three Months Ended
	December 31,
(In thousands)	2007			2006			% Change
Consumer segment	$	19,104		$	19,435			(1.7	%)
Florist segment		30,455			31,514			(3.4	%)
International segment		14,443			11,771			22.7	%
Corporate		(474	)		(498	)		(4.8	%)

Total gross profit	$	63,528		$	62,222			2.1	%

~~Seasonality.~~Gross Inprofit ~~view~~increased ofby ~~seasonal variations in the revenues and operating results of the Company’s florist~~$1.3 million, ~~consumer~~or ~~and~~2.1% ~~international~~to ~~business~~$63.5 million ~~segments,~~for the ~~Company~~second ~~believes~~quarter ~~that~~of ~~comparisons~~fiscal ofyear ~~its~~2008, ~~revenues~~compared ~~and~~to ~~operating~~gross ~~results~~profit for ~~any period with those of~~ the ~~immediately preceding~~second ~~period,~~quarter ~~or in some instances, the same period~~ of ~~the preceding~~ fiscal year ~~may~~2007 be of $62.2 ~~limited~~million. ~~relevance~~Total ingross ~~evaluating~~margin ~~the~~decreased ~~Company’s~~slightly ~~historical~~to ~~performance~~40.9% ~~and~~for ~~predicting~~ the ~~Company’s future~~second ~~financial~~quarter ~~performance.~~of ~~The~~fiscal ~~Company’s~~year ~~working~~2008 from ~~capital,~~41.1% ~~cash~~for ~~and~~the ~~short-term~~same ~~borrowings~~period ~~also fluctuate~~in ~~during~~fiscal ~~the~~ year ~~as a result of the factors set forth below~~2007.

~~Revenues~~Gross ~~and~~profit ~~operating~~associated ~~results~~with ~~tend~~the toconsumer besegment ~~lower~~decreased ~~for~~by ~~the~~$0.3 million, ~~quarter~~or ~~ending~~1.7%, ~~September 30~~to ~~because~~$19.1 ~~none~~million offor the ~~most~~second ~~popular~~quarter ~~floral~~of ~~and~~fiscal ~~gift~~year ~~holidays~~2008, ~~which~~compared ~~include~~to ~~Valentine’s~~$19.4 million ~~Day,~~for ~~Easter,~~the ~~Mother’s~~second ~~Day,~~quarter ~~Thanksgiving~~of ~~and~~fiscal ~~Christmas,~~year ~~fall within that quarter~~2007. InGross ~~addition,~~margin ~~depending~~for on the ~~year,~~consumer ~~the popular~~segment ~~floral~~increased ~~holidays~~to ~~of Easter and Mother’s Day in the U~~29.K.6% ~~sometimes~~for ~~fall within~~ the second quarter ~~ending~~ ~~March 31~~of ~~and~~fiscal ~~sometimes~~year ~~fall~~2008, ~~within~~compared ~~the~~to ~~quarter~~28.0% ~~ending~~for ~~June 30.~~same ~~Easter~~period ~~and~~in ~~Mother’s~~fiscal ~~Day~~year in2007, ~~the~~primarily ~~U.K.~~due ~~both~~to ~~fell~~increases in ~~the~~average ~~quarter~~order ~~ended~~value ~~March 31 for fiscal year 2007~~ and ~~fiscal~~advertising ~~year 2006~~revenue.

~~Three~~ Gross ~~Months~~profit ~~Ended~~associated ~~March~~with the florist segment decreased by $1.0 31million, or 3.4%, to $30.5 million for the second quarter of fiscal year 2008, compared to $31.5 million for the second quarter of fiscal year 2007. Gross margin for the florist segment decreased to 68.3% for the second quarter of fiscal year 2008, compared to 70.7% for the ~~Three~~same ~~Months~~period ~~Ended~~in ~~March 31~~fiscal year 2007, ~~2006~~primarily due to a shift in the mix of products and services sold.

~~Total~~ Gross ~~revenues~~profit associated with the international segment increased by $2.6 million, or 22.7%, to $14.4 million for the second quarter of fiscal year 2008, compared to $11.8 million for the prior year quarter ended December 31, 2006. Gross margin for the international segment decreased to 31.2% for the second quarter of fiscal year 2008, compared to 31.4% for the same period in fiscal year 2007, primarily due to the mix of products and services sold.

	Three Months Ended
	March 31,
	2007		2006		% Change
	(in thousands)
Consumer segment	$	80,216	$	75,680		6.0	%
Florist segment		49,123		52,905		(7.1	%)
International segment		53,560		—		N/A
Total revenues	$	182,899	$	128,585		42.2	%

Advertising and selling costs

Third quarter fiscal year 2007 consolidated revenue grew $54.3 million, or 42.2%, to $182.9 million, compared to revenue of $128.6 million for the same period of fiscal year 2006. The Company acquired Interflora on July 31, 2006 and reports its results within the Company’s international segment. The international segment accounted for $53.6 million of the increase in revenue for the period. Growth in the Company’s domestic consumer segment of $4.5 million offset by a decline in the Company’s domestic florist segment of $3.8 million contributed the remaining $0.7 million increase.


	Three Months Ended
	December 31,
(In thousands)	2007		2006		% Change
Consumer segment	$	7,470	$	8,855		(15.6	%)
Florist segment		11,215		12,774		(12.2	%)
International segment		4,251		3,226		31.8	%

Total advertising and selling costs	$	22,936	$	24,855		(7.7	%)

~~The~~Advertising ~~consumer~~and ~~segment~~selling ~~achieved~~costs ~~revenues~~decreased of $~~80.~~2.0 million, inor ~~the third quarter of fiscal year 2007~~7.7%, ~~compared~~ to ~~revenues of~~ $7522.79 million infor the ~~same~~second quarter ~~period~~ of fiscal year ~~2006~~2008, ~~representing~~compared ~~a 6.0%~~to ~~increase~~$24.9 million ~~Growth~~for ~~was driven by a 4.1% increase in order volume, which totaled 1,243,000 during~~ the ~~third~~second quarter of fiscal year 2007. As ~~compared~~a topercentage ~~1,194,000 orders in the same period~~ of ~~fiscal~~ ~~year~~revenue, ~~2006.~~advertising ~~Average~~and ~~order~~selling ~~value~~costs ~~increased~~decreased to ~~$63~~14.048% for the ~~third~~second quarter ~~of fiscal year~~ ~~2007, compared to $62.18 for the same period~~ of fiscal year ~~2006.~~2008 ~~The~~compared ~~percentage of Internet orders increased~~ to 9116.64% ~~from~~for ~~91.3% in~~ the ~~third~~second quarter of fiscal year ~~2006~~2007.

~~Florist~~Advertising ~~segment revenues are comprised of products~~ and ~~service~~selling ~~offerings~~costs toassociated ~~FTD~~with ~~members~~the ~~and other~~consumer ~~retail~~segment ~~locations~~decreased ~~offering~~$1.4 million, ~~floral products~~or 15.6%, ~~The~~to ~~florist segment achieved revenues of~~ $497.1 5 million infor the ~~third~~second quarter of fiscal year ~~2007~~2008, compared to ~~revenues of~~ $528.9 million infor the ~~same~~ ~~period~~second quarter of fiscal year ~~2006~~2007. The ~~decline~~decrease in ~~florist~~advertising ~~segment~~and ~~revenues~~selling costs was primarily due to ~~decreased clearinghouse order volume and~~ a decrease in ~~fresh~~spending ~~flower~~on ~~sales,~~direct marketing

~~resulting~~and ~~primarily~~a ~~from~~decrease ~~one~~in ~~mass~~online ~~market~~marketing ~~customer~~costs. Advertising ~~contract~~and inselling ~~the~~costs ~~prior~~as ~~year~~a ~~that~~percentage ~~was~~of ~~not~~revenue associated with the consumer segment ~~renewed~~decreased into 11.6% for the ~~current~~second quarter of fiscal year ~~(due~~2008 compared to ~~unfavorable~~12.7% ~~margins~~for on the ~~contract),~~second quarter ~~and~~of ~~reduced~~fiscal ~~container sales~~year 2007.

~~The~~Advertising ~~international~~and ~~segment~~selling ~~achieved~~costs ~~revenues~~associated ofwith the florist segment decreased $531.6 million, inor 12.2%, to $11.2 million for the ~~third~~second quarter of fiscal year ~~2007~~2008, ~~driven~~compared byto ~~sales~~$12.8 million ~~volume~~for the insecond ~~Interflora’s~~quarter ~~consumer~~of ~~and~~fiscal ~~florist~~year ~~businesses~~2007. ~~Consumer~~The ~~orders~~ decrease in ~~the~~advertising ~~international~~and ~~segment~~selling ~~totaled~~costs ~~665~~was primarily due to a decrease in rebates,~~000~~ ~~with~~which anare ~~average~~earned ~~order~~by ~~value~~FTD ofmembers ~~$66.87.~~under ~~Internet~~a customer incentive program ~~orders~~and ~~comprised~~a ~~73.4%~~decrease ofin ~~the~~certain ~~total~~selling ~~order~~expenses ~~volume~~incurred in fiscal year 2007 which were not repeated in fiscal year 2008.

~~Total~~ Advertising ~~gross~~and ~~profit~~selling costs associated with the international segment increased $1.1 million, or 31.8%, to $4.3 million for the second quarter of fiscal year 2008, compared to $3.2 million for the same period of the prior fiscal year. The increase is primarily related to the impact of foreign exchange and an increase in marketing costs per order. As a percentage of revenue, advertising and selling costs increased to 9.2% for the second quarter of fiscal year 2008 compared to 8.6% for the prior year period.

	Three Months Ended
	March 31,
	2007			2006			% Change
	(in thousands)
Consumer segment	$	23,236		$	20,271			14.6	%
Florist segment		32,484			34,884			(6.9	%)
International segment		16,069			—			N/A
Corporate		(493	)		(533	)		(7.5	%)
Total gross profit	$	71,296		$	54,622			30.5	%

General and administrative costs

Gross profit increased by $16.7 million, or 30.5% to $71.3 million for the third quarter of fiscal year 2007, compared to gross profit for the third quarter of fiscal year 2006 of $54.6 million. Total gross margin decreased to 39.0% for the third quarter of fiscal year 2007 from 42.5% for the same period in fiscal year 2006. This change is primarily a result of the addition of the international segment.


	Three Months Ended
	December 31,
(In thousands)	2007		2006		% Change
Consumer segment	$	4,473	$	5,747		(22.2	%)
Florist segment		2,179		2,031		7.3	%
International segment		6,103		5,843		4.4	%
Corporate		7,677		6,733		14.0	%

Total general and administrative costs	$	20,432	$	20,354		0.4	%

~~Gross~~General ~~profit~~and ~~associated~~administrative ~~with~~costs ~~the~~remained ~~consumer~~consistent ~~segment~~at ~~increased by~~ $220.94 million, ~~or 14.6%, to $23.2 million~~ for the ~~third~~second quarter ~~of fiscal year 2007, compared to $20.3 million for the third~~ ~~quarter~~ of fiscal year ~~2006.~~2008 ~~Gross~~when ~~margin for the consumer segment increased to 29.0% for the third quarter of fiscal year 2007,~~ compared to ~~26.8% for~~ the same period inof ~~fiscal year 2006, primarily due to an increase in average order values, an increase in advertising revenue and savings in product guarantee expense in~~ the ~~current~~prior fiscal year ~~due to process improvements implemented since the second quarter of fiscal year 2006~~.

~~Gross~~General ~~profit~~and administrative costs associated with the ~~florist~~consumer segment decreased by $21.42 million, or 622.92%, to $324.5 million for the ~~third~~second quarter of fiscal year ~~2007~~2008, compared to $345.97 million for the ~~third~~second quarter of fiscal year ~~2006~~2007. ~~Gross~~This ~~margin~~decrease ~~for~~was ~~the~~primarily ~~florist~~due ~~segment~~to ~~increased~~reduced ~~slightly~~customer service ~~to 66~~costs.1% ~~for~~General ~~the~~and ~~third~~administrative costs as a ~~quarter~~percentage of ~~fiscal~~revenue ~~year~~also ~~2007,~~decreased ~~compared~~ to 656.9% for the ~~same~~second ~~period~~quarter inof fiscal year ~~2006, primarily~~2008 ~~due~~compared to ~~favorable~~8.3% ~~mix~~for ~~and~~the ~~cost~~prior ~~containment~~year ~~measures~~period.

~~For~~General and administrative costs associated with the ~~third~~florist segment were $2.2 million for the second quarter of fiscal year ~~2007~~2008, ~~gross~~compared ~~profit~~to ~~associated~~$2.0 million ~~with~~for the ~~international segment~~second ~~was~~quarter ~~$16~~of fiscal year 2007.~~1 million~~ ~~and~~This ~~gross~~increase ~~margin~~is ~~for~~primarily related to an increase in personnel-related costs in the ~~international~~second quarter ~~segment~~of ~~was~~fiscal 30year 2008.0 As a percentage of revenue, general and administrative costs increased to 4.9% compared with 4.6% in the prior year quarter.

~~Costs~~General and administrative costs associated with ~~corporate~~the ~~activities~~international ~~remained~~segment ~~consistent~~increased atby $0.53 million, or 4.4%, to $6.1 million for the ~~third~~ second quarter of fiscal year ~~2007~~2008, ~~and~~compared to $5.8 million for the prior year quarter ended December 31, 2006. ~~These~~The ~~costs~~increase ~~are~~is primarily related to the impact ~~development~~of foreign exchange. As a percentage of revenue, general and ~~maintenance~~administrative costs declined ofto ~~internal~~13.2% ~~corporate~~compared ~~technology~~with ~~platforms~~15.6% ~~supporting~~in the ~~florist~~prior ~~and~~year ~~consumer~~second ~~segments~~quarter.

~~Advertising~~ Corporate general and ~~selling~~administrative costs were $7.7 million for the second quarter of fiscal year 2008, compared to $6.7 million for the second quarter of fiscal year 2007. The increase in general and administrative costs was primarily due to an increase in bad debt expense, legal costs and other expenses.

	Three Months Ended
	March 31,
	2007		2006		% Change
	(in thousands)
Consumer segment	$	11,346	$	10,401		9.1	%
Florist segment		11,793		12,342		(4.4	%)
International segment		4,209		—		N/A
Total advertising and selling costs	$	27,348	$	22,743		20.2	%

Advertising and selling costs increased $4.6 million, or 20.2%, to $27.3 million for the third quarter of fiscal year 2007, compared to $22.7 million for the third quarter of fiscal year 2006. As a percentage of revenue,

~~advertising and selling costs decreased to 15.0% for the third quarter of fiscal year 2007~~Other ~~compared to 17.7% for the third quarter of fiscal year 2006. This decrease is 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 $0.9 million, or 9.1%, to $11.3 million for the third quarter of fiscal year 2007, compared to $10.4 million for the third quarter of fiscal year 2006. Advertising and selling costs as a percentage of revenue associated with the consumer segment increased to 14.1% for the third quarter of fiscal year 2007 compared to 13.7% for the third quarter of fiscal year 2006. This increase was primarily due to a higher mix of online search order volume and an increase in cost per order.


	Three Months Ended
	December 31,
(In thousands)	2007			2006			% Change
Interest income	$	(319	)	$	(339	)		(5.9	%)
Interest expense		6,155			7,009			(12.2	%)
Other (income) expense, net		(138	)		249			(155.4	%)

Total other (income) and expenses	$	5,698		$	6,919			(17.6	%)

~~Advertising~~Interest ~~and~~income ~~selling~~remained ~~costs~~consistent ~~associated~~at ~~with the florist segment decreased~~ $0.53 million, ~~or 4.4%, to $11.8 million~~ for the ~~third~~second quarter of fiscal ~~year 2007 compared to $12.3 million for the~~years ~~third~~2008 ~~quarter of fiscal year 2006. Advertising~~ and ~~selling costs were impacted by marketing programs in the period and a decrease in volume-based rebates associated with orders sent through the FTD clearinghouse~~2007.

~~Advertising~~Interest ~~and~~expense ~~selling~~decreased ~~costs~~by ~~associated~~$0.8 million, ~~with~~or ~~the~~12.2%, ~~international~~to ~~segment totaled~~ $46.2 million~~, or~~ ~~7.9%~~for the second quarter of ~~international~~fiscal ~~segment~~year ~~revenue~~2008, compared to $7.0 million for the ~~third~~second quarter of fiscal year 2007. The decrease is related to a decrease in outstanding indebtedness and a decrease in interest rates.

~~General~~ Other ~~and~~income ~~administrative~~increased ~~costs~~to $0.1 million for the second quarter of fiscal year 2008, compared to $0.2 million of expense for the second quarter of fiscal year 2007.

	Three Months Ended
	March 31,
	2007		2006		% Change
	(in thousands)
Consumer segment	$	6,525	$	6,146		6.2	%
Florist segment		2,052		2,377		(13.7	%)
International segment		6,547		—		N/A
Corporate		6,374		6,525		(2.3	%)
Total general and administrative costs	$	21,498	$	15,048		42.9	%

The effective tax rate was 38.0% for the three-months ended December 31, 2007. For the same period of fiscal year 2007, the effective tax rate was 39.5%.

~~General~~Six ~~and~~Months ~~administrative~~Ended ~~costs increased by $6.5~~December ~~million~~31, ~~or 42.9%, to $21.5 million for the third quarter of fiscal year~~ 2007, compared to ~~$15.0 million for~~ the ~~third~~Six ~~quarter~~Months ~~of fiscal~~Ended ~~year~~December 31, 2006.

~~General~~The ~~and~~Company ~~administrative~~acquired ~~costs~~Interflora ~~associated~~on ~~with~~July 31, ~~the consumer segment increased by $0.4 million~~2006, ~~or 6.2%~~and, toas ~~$6.5 million~~a ~~for~~result, ~~the~~five ~~third~~months ~~quarter~~ of Interflora’s ~~fiscal~~financial ~~year~~results ~~2007,~~are ~~compared~~included toin ~~$6.1 million for~~ the ~~third~~six-month ~~quarter~~period ofended ~~fiscal year 2006. This increase is primarily due to increased salaries and headcount. However~~December 31, ~~general and administrative costs as a percentage of revenue remained consistent between fiscal years 2007 and~~ 2006 ~~at 8~~.~~1%.~~

~~General and administrative costs associated with the florist segment decreased by $0.3 million~~Revenues to $2.1 million for the third quarter of fiscal year 2007, compared to $2.4 million for the third quarter of fiscal year 2006, primarily due to a decrease in personnel related costs. As a percentage of revenue, general and administrative costs declined to 4.2% compared with 4.5% in the prior year quarter.

General and administrative costs associated with the international segment were $6.5 million, or 12.2% of revenue, for the third quarter of fiscal year 2007.


	Six Months Ended
	December 31,
(In thousands)	2007		2006		% Change
Consumer segment	$	110,354	$	116,868		(5.6	%)
Florist segment		87,422		88,399		(1.1	%)
International segment		81,458		55,044		48.0	%

Total revenues	$	279,234	$	260,311		7.3	%

~~Corporate~~For ~~general~~the ~~and~~six-month ~~administrative~~period ~~costs~~ended ~~decreased~~December 31, by2007 consolidated revenue increased $018.19 million, or 27.3%, to $6279.42 million , compared to revenue of $260.3 million for the ~~third~~same ~~quarter~~period of the prior fiscal year. ~~2007,~~The ~~compared~~international tosegment accounted for $626.5 million ~~for~~of ~~the~~this ~~third~~increase ~~quarter~~in revenue, approximately $5 million of ~~fiscal~~which related to the impact of foreign currency rate changes. This ~~year~~increase ~~2006~~was partially offset by declines in the Company’s consumer and florist segments totaling $7.5 million.

Revenues in the consumer segment decreased $6.5 million, or 5.6%, to $110.4 million in the six-month period ended December 31, 2007, compared to revenue of $116.9 million in the same period of fiscal year 2007. This decrease was driven by a 10.7% decrease in order volume, which totaled 1,701,000 during the six-month period ended December 31, 2007, compared to 1,904,000 orders in the same period of the prior fiscal year. This decline was partially offset by an increase in average order value to $63.28 for the six-month period ended December 31, 2007, compared to $60.22 for the same period of the prior fiscal year. The percentage of Internet orders for the six-month period ended December 31, 2007 increased slightly to 89.3% from 88.3% for the six-month period ended December 31, 2006.

Revenues in the florist segment decreased $1.0 million, or 1.1%, to $87.4 million in the six-month period ended December 31, 2007, compared to $88.4 million in the same period of the prior fiscal year. This decline was primarily driven by a decrease in clearinghouse order volumes and other services and reduced container sales, partially offset by an increase in fresh flower sales and online services.

~~Other~~ Revenues ~~income~~in the international segment were $81.5 million in the six-month period ended December 31, 2007. Second quarter fiscal year 2007 revenues were $55.0 million, which represented only five months of financial results as Interflora was acquired by the Company on July 31, 2006. Revenues for the six-month period ended December 31, 2007 included approximately $5 million related to favorable foreign currency movements between the U.S. dollar and ~~expenses~~the British pound. Consumer orders in the international segment increased during the six-month period ended December 31, 2007 to 950,000, compared to 701,000 orders in the five-month period of the prior fiscal year. Average order value increased to $69.84 for the six-month period ended December 31, 2007, compared to $64.33 in the five-month period of the prior fiscal year. Internet orders comprised 71.8% of the total order volume for the period, compared to 69.4% in the five-month period of the prior fiscal year.

	Three Months Ended
	March 31,
	2007			2006			% Change
	(in thousands)
Interest income	$	(489	)	$	(233	)		109.9	%
Interest expense		6,444			4,829			33.4	%
Other expense (income), net		570			(118	)		(583.1	%)
Total other expenses, net	$	6,525		$	4,478			45.7	%

Gross profit

Interest income increased to $0.5 million for the third quarter of fiscal year 2007 compared to $0.2 million for the third quarter of fiscal year 2006 primarily due to increased average cash balances and an increase in interest rates in fiscal year 2007.


	Six Months Ended
	December 31,
(In thousands)	2007			2006			% Change
Consumer segment	$	32,905		$	33,381			(1.4	%)
Florist segment		58,094			60,871			(4.6	%)
International segment		26,058			17,332			50.3	%
Corporate		(953	)		(1,014	)		(6.0	%)

Total gross profit	$	116,104		$	110,570			5.0	%

~~Interest~~Gross ~~expense~~profit increased by $15.65 million, or 335.40%, to $6116.41 million for the ~~third~~six-month ~~quarter of~~period ~~fiscal~~ended ~~year~~December 31, 2007, compared to ~~$4.8 million~~gross profit for the ~~third~~same ~~quarter~~period of the prior fiscal year ~~2006~~of $110.6 million. ~~The~~Total ~~increase related~~gross margin decreased to an41.6% ~~increase~~for inthe ~~outstanding~~six-month ~~indebtedness~~period ~~related~~ended toDecember 31, 2007 from 42.5% for the ~~July 2006~~same ~~acquisition~~period of ~~Interflora~~ the prior fiscal year.

~~Other~~Gross ~~expense~~profit ~~(income),~~associated ~~net~~with ~~increased~~the toconsumer segment decreased by $0.65 million, ofor ~~expense~~1.4%, to $32.9 million for the ~~third~~six-month ~~quarter~~period ~~of fiscal~~ended ~~year~~December 31, 2007, compared to ~~income of~~ $033.14 million for the ~~third~~same period ~~quarter~~ of the prior fiscal year ~~2006~~. ~~The~~ ~~increase~~Gross inmargin ~~expense~~for isthe ~~primarily~~consumer ~~related~~segment increased to ~~secondary~~29.8% ~~offering~~for ~~costs~~the six-month ofperiod ~~$0.8~~ended December ~~million~~31, ~~net~~2007, compared to 28.6% for the same period of the prior fiscal ~~foreign~~year, ~~currency~~primarily ~~gains~~due ~~recognized~~to ~~during~~an ~~the~~increase ~~third~~in ~~quarter~~average oforder ~~fiscal~~value ~~year~~and ~~2007~~advertising revenue.

~~Nine~~ Gross ~~Months~~profit ~~Ended~~associated ~~March~~with the florist segment decreased by $2.8 million, or 4.6%, to $58.1 million for the six-month period ended December 31, 2007, compared to $60.9 million for the ~~Nine~~same period ~~Months~~of ~~Ended~~the ~~March~~prior fiscal year. Gross margin for the florist segment decreased to 66.5% for the six-month period ended December 31, ~~2006~~2007, compared to 68.9% for the same period in the prior fiscal year, primarily due to the mix of products and services sold in the six-month period ended December 31, 2007 compared to the same period in fiscal 2007.

~~The~~Gross ~~Company~~profit ~~acquired~~associated ~~Interflora~~with onthe ~~July~~international segment increased by $8.8 31million, ~~2006,~~or ~~and~~50.3%, asto $26.1 million afor ~~result~~the six-month period ended December 31, ~~eight~~2007, ~~months~~compared ofto $17.3 million for the ~~Interflora’s~~five ~~financial~~months ~~results~~ended ~~are~~December 31, ~~included~~2006. inFor the ~~nine~~six-month period ended ~~March~~December 31, 2007, gross margin associated with the international segment increased to 32.0%, compared to 31.5% for the five-month period in the prior fiscal year. The increase was primarily driven by increases in average order value and advertising revenue.

~~Total~~Advertising ~~revenues~~and selling costs

	Nine Months Ended
	Six Months Ended
	March 31,
	December 31,
	2007		2006		% Change
(In thousands)	2007		2006		% Change
	(in thousands)
Consumer segment	$	12,234	$	13,741		(11.0	%)
Consumer segment	$	197,084	$	180,521		9.2	%
Florist segment		20,363		23,249		(12.4	%)
Florist segment		137,522		143,118		(3.9	%)
International segment		6,991		4,429		57.8	%
International segment		108,604		—		N/A
Total advertising and selling costs	$	39,588	$	41,419		(4.4	%)
Total revenues	$	443,210	$	323,639		36.9	%

~~Consolidated~~Advertising ~~revenue~~and inselling ~~the~~costs ~~nine-month~~decreased ~~period~~by ~~ended March 31, 2007 grew~~ $~~119~~1.68 million, or 364.94%, to $~~443~~39.~~2 million, compared to revenue of $323.~~6 million for the six-month ~~same~~ period ofended ~~the~~December 31, ~~prior fiscal~~2007, ~~year.~~compared ~~The~~to ~~international segment accounted for~~ $~~108~~41.64 million offor ~~this increase in revenue. Growth in~~ the ~~Company’s~~same ~~domestic~~period ~~consumer segment~~ of ~~$16.6 million offset by a decline in~~ the ~~Company’s~~prior ~~domestic~~fiscal ~~florist segment of $5~~year.~~6 million~~ ~~contributed~~As ~~the~~a ~~remaining $11.0 million~~percentage ~~increase.~~

The consumer segment achieved revenues of $197.1 million in the nine-month period ended March 31, 2007, compared to revenues of $180.5 million in the same period of the prior fiscal year, representing a 9.2% increase. Growth was driven by a 6.9% increase in order volume, which totaled 3,147,000 during the nine-month period ended March 31, 2007 compared to 2,943,000 orders in the same period of the prior fiscal year. Average order value increased to $61.33 for the nine-month period ended March 31, 2007, compared to $60.71 for the same period of the prior fiscal year. The percentage of Internet orders for the nine-month period ended March 31, 2007 decreased slightly to 89.6% from 89.8% for the nine-month period ended March 31, 2006. Also contributing to the increase in revenue is advertising revenue, which is related to a program the Company initiated in December 2005.

Florist segment revenues are comprised of products and service offerings to FTD members and other retail locations offering floral products. The florist segment achieved revenues of $137.5 million in the nine-month period

~~ended~~of ~~March 31~~revenue, ~~2007,~~advertising ~~compared~~and toselling ~~revenues~~costs ofdecreased ~~$143.1 million~~to ~~in the same period of the prior fiscal year~~14.2% ~~Revenues~~for in the ~~nine~~six-month period ended ~~March~~ December 31, ~~2006~~2007 ~~included~~compared ~~$3.9 million of revenue related~~ to ~~Renaissance Greeting Cards, Inc (“Renaissance”)~~15.9% ~~The~~for ~~Company sold substantially all~~ the ~~assets and certain liabilities of Renaissance in December 2005. Excluding the revenue from the prior year related to Renaissance, revenues from the florist segment decreased 1.2% over the~~ same period of the prior ~~year~~fiscal ~~primarily due to declines in sales of containers, decreased clearinghouse order volume, a decrease in fresh flower sales, and a decrease in publications revenue~~year. ~~These declines were partially offset by an increase in sales related to the Company’s~~ ~~online services and an increase in the number of technology systems sold.~~

~~The~~Advertising ~~international~~and selling costs associated with the consumer segment ~~achieved~~decreased ~~revenues~~by of$1.5 million, or 11.0%, to $~~108~~12.62 million infor the ~~nine~~six-month period ended ~~March~~ December 31, 2007, ~~driven~~compared byto ~~sales~~$13.7 million ~~volume~~for inthe ~~Interflora’s~~same ~~consumer~~period ~~and~~of ~~florist~~the ~~businesses~~prior fiscal year. ~~Consumer~~Advertising and selling costs as a ~~orders~~percentage inof revenue associated with the ~~international~~consumer segment ~~totaled~~decreased to 11.1% for the six-month period ended December 31,~~366~~ 2007,~~000~~ ~~during~~compared to 11.8% for the six-month period ended December 31, ~~with~~2006. The andecrease ~~average~~in ~~order value~~advertising ofand ~~$64.86.~~selling ~~Internet~~costs ~~orders~~was ~~comprised~~primarily ~~71.3%~~due ofto ~~the~~a ~~total~~decrease ~~order~~in ~~volume~~spending ~~for~~on ~~the~~direct marketing ~~period~~and a decrease in online marketing costs.

~~Total~~ Advertising ~~gross~~and ~~profit~~selling costs associated with the florist segment decreased $2.8 million, or 12.4%, to $20.4 million for the six-month period ended December 31, 2007, compared to $23.2 million for the same period of the prior fiscal year. The decrease in advertising and selling costs was primarily due to a decrease in rebates, which are earned by FTD members under a customer incentive program, and certain selling expenses incurred in fiscal year 2007 which were not repeated in fiscal year 2008.

	Nine Months Ended
	March 31,
	2007			2006			% Change
	(in thousands)
Consumer segment	$	56,617		$	48,257			17.3	%
Florist segment		93,355			96,157			(2.9	%)
International segment		33,401			—			N/A
Corporate		(1,507	)		(1,718	)		(12.3	%)
Total gross profit	$	181,866		$	142,696			27.4	%

Advertising and selling costs associated with the international segment increased by $2.6 million, or 57.8%, to $7.0 million for the six-month period ended December 31, 2007, compared to $4.4 million for the five-month period of the prior fiscal year. The increase is primarily related to the additional month of operations included in the current year period versus the prior year, the impact of foreign currency rate changes and an increase in marketing costs per order. As a percentage of revenue, advertising and selling costs for the international segment increased to 8.6% for the six-month period ended December 31, 2007, compared to 8.0% for the five-month period ended December 31, 2006.

~~Gross~~General ~~profit~~and ~~increased~~administrative ~~by $39.2 million, or 27.4%, to $181.9 million for the nine-month~~costs ~~period ended March 31, 2007, compared to gross profit for the same period of the prior fiscal year~~ of $142.7 million. Total gross margin decreased to 41.0% for the nine-month period ended March 31, 2007 from 44.1% for the same period of the prior fiscal year, primarily due to the addition of the international segment. Gross margin for the domestic segments in the nine month period ended March 31, 2007 was 44.4%.

Gross profit associated with the consumer segment increased by $8.3 million, or 17.3%, to $56.6 million for the nine-month period ended March 31, 2007, compared to $48.3 million for the same period of the prior fiscal year. Gross margin for the consumer segment increased to 28.7% for the nine-month period ended March 31, 2007, compared to 26.7% for same period of the prior fiscal year, primarily due to an increase in average order value and advertising revenue and savings in product guarantee expense in the current fiscal year period due to process improvements implemented since December 31, 2005.


	Six Months Ended
	December 31,
(In thousands)	2007		2006		% Change
Consumer segment	$	8,878	$	10,225		(13.2	%)
Florist segment		4,278		4,296		(0.4	%)
International segment		11,979		9,002		33.1	%
Corporate		14,368		13,241		8.5	%

Total general and administrative costs	$	39,503	$	36,764		7.5	%

~~Gross~~General ~~profit~~and ~~associated~~administrative ~~with~~costs ~~the~~increased ~~florist segment decreased~~ by $2.87 million, or 27.95%, to $9339.4 5 million for the ~~nine~~ six-month period ended ~~March~~December 31, 2007, compared to $9636.28 million for the same period of the prior fiscal year. ~~Gross margin for the florist segment increased to 67.9% for the~~ ~~nine-month period ended March 31, 2007, compared to 67.2% for the same period in the prior fiscal year, primarily due to the revenue decreases described above as these are lower margin product lines.~~

~~For~~General and administrative costs associated with the ~~nine~~consumer segment decreased by $1.3 million, or 13.2%, to $8.9 million for the six-month period ended ~~March~~December 31, 2007, ~~gross~~compared ~~profit~~to $10.2 million ~~associated~~for ~~with~~the same period of the ~~international segment~~prior fiscal year. This decrease was ~~$33~~primarily due to reduced customer service costs.~~4 million~~ General and ~~gross~~administrative ~~margin~~costs as a percentage of revenue also decreased to 8.0% for the ~~international~~second ~~segment~~quarter ~~was~~of ~~30.~~fiscal year 2008 compared to 8.7% for the prior year period.

~~Costs~~General ~~associated~~and ~~with~~administrative ~~corporate~~costs ~~activities~~associated ~~decreased~~with ~~$0.2 million,~~the orflorist ~~12.3%,~~segment toremained consistent at $14.53 million for the ~~nine~~six-month ~~period~~periods ended ~~March~~December 31, 2007, ~~compared~~and ~~to $1~~2006.~~7 million~~ ~~for~~As ~~the~~a ~~same~~percent ~~period~~ of ~~the~~revenue, ~~prior~~general ~~fiscal~~and ~~year.~~administrative ~~This~~costs ~~decrease~~also isremained ~~primarily~~consistent ~~related~~between tofiscal ayears ~~decrease~~2008 inand ~~depreciation~~2007 ~~expense due to~~at ~~assets becoming fully depreciated~~4.9%.

General and administrative costs associated with the international segment increased by $3.0 million, or 33.1%, to $12.0 million for the six-month period ended December 31, 2007, compared to $9.0 million for the five-month period of the prior fiscal year. The increase is primarily related to the additional month of operations included in the current year period versus the prior year and the impact of foreign exchange movement. As a percentage of revenue, general and administrative costs declined to 14.7% compared with 16.4% for the five-month period of the prior fiscal year.

Corporate general and administrative costs increased by $1.2 million, or 8.5%, to $14.4 million for the six-month period ended December 31, 2007, compared to $13.2 million for the same period of the prior fiscal year. The

~~Advertising~~increase in general and ~~selling~~administrative costs was primarily due to increases in bad debt expense, legal, personnel-related costs and other expenses.

	Nine Months Ended
	March 31,
	2007		2006		% Change
	(in thousands)
Consumer segment	$	25,087	$	22,768		10.2	%
Florist segment		35,042		39,516		(11.3	%)
International segment		8,638		—		N/A
Total advertising and selling costs	$	68,767	$	62,284		10.4	%

Other

Advertising and selling costs increased $6.5 million, or 10.4%, to $68.8 million for the nine-month period ended March 31, 2007, compared to $62.3 million for the same period of the prior fiscal year. As a percentage of revenue, advertising and selling costs decreased to 15.5% for the nine-month period ended March 31, 2007 compared to 19.2% for the same period of the prior fiscal year.


	Six Months Ended
	December 31,
(In thousands)	2007			2006			% Change
Interest income	$	(621	)	$	(637	)		(2.5	%)
Interest expense		12,542			15,235			(17.7	%)
Other (income) expense, net		(348	)		(1,295	)		(73.1	%)

Total other (income) and expenses	$	11,573		$	13,303			(13.0	%)

~~Advertising~~Interest ~~and~~income ~~selling~~remained ~~costs~~consistent ~~associated~~at ~~with the consumer segment increased~~ $20.36 million, ~~or 10.2%, to $25.1 million~~ for the ~~nine~~six-month ~~period~~periods ended ~~March~~ December 31, 2007, ~~compared to $22.8 million for the same period of the prior fiscal year. Advertising~~ and ~~selling costs as a percentage of revenue associated with the consumer segment remained consistent at 12~~2006.~~7% for the nine-month period~~ ~~ended March 31, 2007 compared to 12.6% for the same period of the prior fiscal year.~~

~~Advertising~~Interest ~~and~~expense ~~selling costs associated with the florist segment~~ decreased by $42.57 million, or 11 17.37%, to $3512.05 million for the ~~nine~~six-month period ended ~~March~~December 31, 2007, compared to $3915.52 million for the same period of the prior fiscal year. The decrease infrom ~~advertising~~the ~~and~~prior ~~selling~~year ~~costs~~is ~~was primarily~~related ~~due~~ to ~~the~~a ~~sale~~decrease ofin ~~Renaissance~~outstanding ~~which~~indebtedness ~~accounted for $2.5 million of advertising~~ and a ~~selling~~decrease ~~costs~~ in ~~the~~interest ~~nine-month~~rates, ~~period~~as ~~ended~~well ~~March 31,~~as ~~2006,~~a ~~with~~$1.8 million ~~the~~write-off ~~remaining~~of ~~decrease~~unamortized ~~related~~deferred tofinancing acosts ~~decrease in volume-based rebates~~ associated with ~~orders~~refinancing ~~sent through~~ the ~~FTD~~Company’s ~~clearinghouse, planned~~credit ~~cost~~facility ~~reductions,~~in ~~and~~the afirst ~~shift~~quarter toof ~~more efficient member marketing programs~~2007.

~~Advertising~~Other ~~and~~income ~~selling~~decreased ~~costs~~to ~~associated~~$0.3 million ~~with~~for the ~~international~~six-month ~~segment~~period ~~totaled~~ended December 31, 2007, compared to $81.63 million, for the same period of the prior fiscal year. The decrease is primarily orrelated 8to a foreign currency contract in the amount of £51.0% million that was settled on July 28, 2006 and resulted in a gain of ~~revenue~~$1.4 million ~~for~~in the ~~nine-month~~first ~~period~~quarter ~~ended~~of ~~March 31,~~fiscal year 2007.

~~General~~ Taxes ~~and~~on ~~administrative~~earnings ~~costs~~reflect the estimated annual effective rates, excluding the effect of significant unusual items. Tax expense for the six-months ended December 31, 2007 includes $1.3 million 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 six-months ended December 31, 2007. For the same period of fiscal year 2007, the effective rate was 39.5%.

	Nine Months Ended
	March 31,
	2007		2006		% Change
	(in thousands)
Consumer segment	$	16,750	$	13,622		23.0	%
Florist segment		6,348		5,607		13.2	%
International segment		15,549		—		N/A
Corporate		19,615		19,215		2.1	%
Total general and administrative costs	$	58,262	$	38,444		51.6	%

Liquidity and Capital Resources

~~General~~As ~~and~~of ~~administrative~~December 31, ~~costs~~2007, ~~increased~~the byCompany’s debt balance totaled $19302.90 million, ordown 51from $313.6%7 million as of June 30, to2007. The Company’s principal sources of liquidity are cash from operations and funds available for borrowing under FTD, Inc.’s senior secured credit facility (the “2006 Credit Agreement”), which consists of a seven-year $58150.30 million ~~for~~ ~~the~~term ~~nine~~loan and a six-~~month~~year ~~period~~$75.0 million ~~ended~~revolving ~~March~~credit facility. As of December 31, 2007, ~~compared~~the tobalance outstanding under the 2006 Credit Agreement was $38130.42 million. ~~for~~The Company also had $170.1 million of 7.75% Senior Subordinated Notes outstanding, notes payable related to the ~~same~~acquisition ~~period~~of Interflora of $1.7 million and an additional $1.3 million in outstanding letters of credit. The revolving credit facility had availability of approximately $72.0 million at December 31, 2007. Borrowings under the ~~prior~~revolving ~~fiscal~~credit ~~year~~facility are used to finance working capital, capital expenditures, acquisitions and letter of credit needs.

~~General~~Cash and ~~administrative~~cash ~~costs~~equivalents ~~associated with the consumer segment~~ increased by $3.2 ~~million, or 23~~.0%, million to $1627.85 million ~~for~~at ~~the nine-month period ended March~~December 31, 2007, ~~compared to~~from $1325.65 million ~~for~~at ~~the same period of the prior fiscal year. This increase is primarily due to investment spending in the consumer segment’s technology infrastructure~~June 30, ~~including increased headcount and an increase in amortization expense associated with technology improvements put in service over the last year~~2007. ~~Also contributing to the increase in general and administrative~~ expense is an increase in salaries and headcount in other administrative areas. As a percentage of revenue, general and administrative costs increased to 8.5% from 7.5% in the prior year nine-month period.

Net cash provided by operating activities was $22.2 million for the six-month period ended December 31, 2007 and $19.0 million for the six-month period ended December 31, 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 $3.6 million for the six-month period ended December 31, 2007, which was comprised of capital expenditures, primarily related to continued technology developments and improvements.

Net cash used in investing activities was $101.6 million for the six-month period ended December 31, 2006, which included $96.7 million of cash used for the Interflora acquisition and $4.8 million of capital expenditures, primarily related to continued technology developments and improvements.

~~General~~Net ~~and~~cash ~~administrative~~used ~~costs~~in ~~associated~~financing ~~with~~activities ~~the~~was ~~florist segment increased by~~ $016.~~7 million, or 13.2%, to $6.3~~8 million for the ~~nine~~six-month period ended ~~March~~ December 31, 2007, ~~compared~~which toprimarily consisted of $59.6 5 million ~~for the same period~~ of ~~the~~dividends ~~prior~~paid ~~fiscal~~and ~~year~~$11.8 million ~~The~~of repayments ~~increase~~under isthe ~~primarily~~2006 ~~due~~Credit toAgreement, anpartially offset ~~in the~~by ~~prior year related to the~~ $12.02 million ~~gain recognized as a result~~ of ~~the~~proceeds ~~sale~~from ~~of Renaissance.~~stock Asoption aexercises ~~percentage of revenue, general~~ and ~~administrative~~$2.3 million ~~costs~~of ~~increased~~excess totax ~~4.6%~~benefits from ~~3.9% in the prior year nine~~stock-~~month~~based ~~period~~compensation.

~~General~~Net ~~and~~cash ~~administrative~~provided ~~costs~~by ~~associated~~financing ~~with~~activities was $99.2 million for the ~~international~~six-month ~~segment~~period ~~were~~ended December 31, 2006, which primarily consisted of $15148.5 million, of net proceeds received from the or2006 14Credit Agreement, offset by $50.3%0 million of ~~revenue,~~repayments ~~for~~under the ~~nine-month~~2004 ~~period~~Credit ~~ended~~Agreement ~~March~~and $0.4 ~~31,~~million ~~2007~~of repayments under the 2006 Credit Agreement. Net cash proceeds from financing activities were used to fund the acquisition of Interflora.

~~Corporate~~In ~~general~~addition ~~and~~to ~~administrative~~its ~~costs~~debt ~~increased~~service ~~by $0.4 million~~obligations, orthe ~~2.1%,~~Company’s toremaining ~~$19.6~~liquidity requirements ~~million~~are primarily for ~~the~~working ~~nine-month~~capital ~~period~~needs ~~ended~~and ~~March 31~~capital expenditures. The Company believes, ~~2007~~based on current circumstances, ~~compared~~that toits ~~$19.2 million~~existing ~~for~~and ~~the~~future ~~same~~cash flows from operations, together with ~~period~~borrowings ofunder the ~~prior~~2006 ~~fiscal~~Credit ~~year.~~Agreement, ~~This~~will ~~increase~~be ~~was~~sufficient ~~primarily~~to ~~the~~fund ~~result~~its ofworking ancapital ~~increase~~needs, capital inexpenditures ~~salaries~~ and ~~stock-based~~to ~~compensation~~make ~~expense,~~interest ~~partially~~and ~~offset~~principal bypayments aas ~~decrease~~they inbecome ~~legal~~due ~~and~~under ~~insurance~~the ~~expense~~terms inof the ~~current~~long-term ~~year~~indebtedness ~~period~~for the foreseeable future.

~~Other~~ On ~~income~~November 14, 2007, the Company’s Board of Directors declared a quarterly cash dividend of $0.1625 per share. The dividend was paid on January 7, 2008 to stockholders of record as of the close of business on December 24, 2007. The continued payment of cash dividends in the future is at the discretion of the Company’s Board of Directors and ~~expenses~~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.

	Nine Months Ended
	March 31,
	2007			2006			% Change
	(in thousands)
Interest income	$	(1,126	)	$	(528	)		113.3	%
Interest expense		21,679			14,596			48.5	%
Other expense (income), net		(725	)		(206	)		251.9	%
Total other expenses, net	$	19,828		$	13,862			43.0	%

Critical Accounting Policies and Estimates

~~Interest~~The ~~income~~Company’s ~~increased~~condensed toconsolidated ~~$1.1 million~~financial ~~for~~statements have been prepared in accordance with accounting principles generally accepted in the ~~nine-month~~United ~~period~~States ~~ended~~of ~~March 31,~~America. ~~2007~~The preparation of ~~compared~~these financial statements requires management to ~~$0.5 million~~make ~~for~~estimates ~~the~~and ~~same~~assumptions ~~period~~that ofaffect the reported ~~prior~~amounts ~~fiscal~~of ~~year~~assets ~~primarily~~and ~~due~~liabilities toand anthe ~~increase~~disclosure of contingent assets and liabilities inat ~~average~~the ~~cash~~date ~~balances~~of anthe ~~increase~~financial instatements ~~interest~~and ~~rates~~the inreported ~~fiscal~~amounts ~~year~~of ~~2007~~revenues and expenses during the reporting period.

~~Interest~~Management ~~expense~~bases ~~increased~~its byestimates ~~$7.1 million,~~and orjudgments ~~48.5%,~~on tohistorical ~~$21.7 million~~experience ~~for~~and ~~the~~on ~~nine-month~~various other ~~period~~factors ~~ended~~that ~~March 31,~~are ~~2007,~~believed ~~compared~~ to ~~$14.6 million~~be ~~for~~reasonable under the ~~same~~circumstances, ~~period of~~ the ~~prior~~results ~~fiscal year.~~of ~~The~~which ~~increase~~form ~~related to an increase in outstanding indebtedness during~~ the basis ~~current~~for ~~year period~~making ~~resulting~~judgments ~~from~~about the ~~purchase~~carrying values of ~~Interflora~~assets asand ~~well as a $1~~liabilities.~~8 million~~ ~~write-off~~Actual ofresults ~~unamortized~~may ~~deferred~~differ ~~financing~~from ~~costs~~these ~~associated~~estimates ~~with~~under ~~the~~different ~~refinancing~~assumptions ofor ~~the Company’s previous credit facility~~conditions.

~~Other~~See ~~expense~~the ~~(income),~~information ~~net~~concerning ~~increased~~the toCompany’s ~~$0.7 million~~critical ofaccounting ~~income~~policies ~~for~~included ~~the~~under ~~nine-month period~~Note ~~ended~~1 ~~March 31,~~and ~~2007, compared to $0.2~~Item ~~million~~7 ofin ~~income for~~ the ~~same~~Company’s ~~period~~Annual ofReport ~~the prior fiscal year. This increase is primarily related to recognized gains~~ on ~~foreign~~Form ~~currency~~10-K ~~forward~~for ~~exchange contracts~~ the ~~Company~~fiscal ~~entered~~year ~~into~~ended ~~in connection with the Interflora acquisition~~June 30, ~~partially offset by costs related to the secondary offering totaling $0~~2007.~~8 million.~~

Liquidity and Capital Resources

Cash and cash equivalents increased by $30.4 million to $41.4 million at March 31, 2007 from $11.0 million at June 30, 2006.

As of March 31, 2007, the Company’s debt balance totaled $336.9 million, including notes payable of $24.5 million related to the Interflora acquisition, up from $220.1 million as of June 30, 2006. The Company’s principal sources of liquidity are cash from operations and funds available for borrowing under FTD, Inc.’s senior secured credit facility (the “2006 Credit Agreement”) that was entered into on July 28, 2006, which replaced the 2004 senior secured credit facility (the “2004 Credit Agreement”) and provides for aggregate borrowings of up to $225 million, consisting of a seven-year $150.0 million term loan and a six-year $75.0 million revolving credit facility. As of March 31, 2007, the balance of the term loan under the 2006 Credit Agreement was $142.3 million and the Company had $26.0 million of outstanding letters of credit, $24.5 million of which are related to the notes payable the Company issued in conjunction with the Interflora acquisition and are included in the total debt balance reported above. Borrowings under the revolving credit facility are used to finance working capital, capital expenditures, acquisitions, certain expenses associated with the bank credit facilities and letter of credit needs. The revolving credit facility had availability of $49.0 million as of March 31, 2007.

Net cash provided by operating activities was $37.4 million for the nine-month period ended March 31, 2007 and $20.7 million for the nine-month period ended March 31, 2006. Net income, adjusted for non-cash items, continues to be an important source of funds to finance operating needs and capital expenditures, repay indebtedness, pay dividends and make other strategic investments. Additionally, cash provided by operating activities for the nine-month period ended March 31, 2007 includes the results of Interflora.

Net cash used in investing activities was $102.7 million for the nine-month period ended March 31, 2007, which included $96.7 million of cash used for the Interflora acquisition and $6.0 million of capital expenditures, primarily related to continued technology developments and improvements. Net cash used in investing activities was $3.9 million for the nine-month period ended March 31, 2006, which consisted of $7.4 million of capital expenditures, primarily related to a new call center which was opened in October 2005 and other technology developments and improvements, partially offset by the proceeds received from the sale of Renaissance in December 2005.

Net cash provided by financing activities was $95.0 million for the nine-month period ended March 31, 2007, which primarily consisted of $148.5 million of net proceeds received from the 2006 Credit Agreement, offset by $50.0 million of repayments under the 2004 Credit Agreement and $7.8 million of repayments under the 2006 Credit Agreement. Net cash proceeds from financing activities were used to fund the acquisition of Interflora. Net cash used in financing activities was $25.7 million for the nine-month period ended March 31, 2006, which primarily consisted of $11.1 million of principal repayments under the 2004 Credit Agreement and $15.0 million of repurchases of the Company’s common stock.

The Company believes that its current capital resources, including cash and cash equivalents, cash generated from operations and funds available from its revolving credit facility will be sufficient to finance its operations and capital expenditures for the foreseeable future.

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. The Company has repurchased 1.5 million shares of common stock under this plan. No shares were repurchased under this program during the nine-month period ended March 31, 2007.

On April 24, 2007, the Company’s Board of Directors declared a cash dividend of $0.1625 to be paid on July 6, 2007, to stockholders of record as of the close of business on June 22, 2007.

Critical Accounting Policies and Estimates

The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about

the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions.

See the information concerning the Company’s critical accounting policies included under Note 1 and Item 7 in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2006 as filed with the SEC.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company’s exposure to interest rate risk is primarily the result of borrowings under its bank credit facilities. At ~~March~~December 31, 2007, $~~142~~130.32 million of debt was outstanding under the ~~2006~~ 2006 Credit Agreement and is subject to variable interest rates. Borrowings under the 2006 Credit Agreement are secured by first priority security interests in, and mortgages on, substantially all of the Company’s tangible and intangible assets. The Company’s results of operations are affected by changes in market interest rates on these borrowings. ~~The~~Approximately ~~variable~~43.1% ~~interest~~(or ~~rate borrowings comprised 42~~$130.2% million aggregate principal amount) of the Company’s $~~336~~302.90 million aggregate principal amount of indebtedness as of ~~March~~ December 31, 2007 bore interest at variable rates. A 1% increase in the variable interest rate would result in additional annual interest expense of approximately $1.4 3 million.

The financial position and results of operations of the Company’s isforeign subsidiaries are measured using the subsidiaries’ local currencies as their functional currencies. Balance sheet accounts of the Company’s foreign operations are translated from foreign currency into U.S. dollars at the rate of exchange on the last day of the period presented. Income and expenses of the Company’s foreign operations are translated at the weighted average rates of exchange for the period presented. Translation gains or losses are included in other comprehensive income. Gains and losses resulting from foreign currency transactions are included in net income in other (income) expense, net. Through the six-month period ended December 31, 2007, the Company was exposed to foreign currency exchange rate risk with respect to the British pound, the Canadian dollar and the Euro. ~~The~~Substantially ~~resulting~~all ~~foreign~~of ~~currency~~the ~~exchange~~revenue ~~adjustments~~of ~~are~~the Company’s U.K. subsidiary, ~~included~~Interflora, is received and substantially all expenses are incurred in British pounds, which increases or decreases the ~~other~~related ~~comprehensive~~U.S. ~~income~~dollar ~~caption~~reported revenues and expenses depending on the trend ~~consolidated~~in ~~statements~~currency. ofBecause ~~operations~~revenues are recognized and expenses are incurred in British pounds, ~~comprehensive~~gross ~~income~~margin percentages generally are not affected by currency fluctuations.

In conjunction with the acquisition of Interflora, the Company entered into forward exchange contracts totaling £61.8 million to hedge the acquisition price. A contract in the amount of £51.0 million was settled on July 28, 2006 and resulted in a gain of $1.4 million, which has been recorded in other ~~expense~~ (income) expense, net within the Condensed Consolidated Statements of Income and Comprehensive Income. ~~The~~A ~~remaining~~contract ~~forward~~in ~~contracts~~the ~~include~~amount aof ~~contract for~~ £10.0 million was settled on May 1, 2007 and ~~expected~~resulted toin bea ~~settled~~gain ~~during~~of $1.4 million which offset the ~~fourth~~foreign ~~quarter~~currency ofloss ~~fiscal~~on ~~year~~the ~~2007~~notes ~~and~~in athe same amount. The remaining forward contract for £0.8 million, is expected to be settled during the first quarter of fiscal year 2009. ~~The settlement of~~ ~~these contracts coincide with the due dates of the notes payable related to the acquisition of Interflora.~~

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Based on their evaluation for the period covered by this Quarterly Report on Form 10-Q, the Chief Executive Officer and the Chief Financial Officer of FTD Group, Inc. have concluded that, as of the end of such period, FTD Group, Inc.’s disclosure controls and procedures (as defined in Rules 13a-1415(ce) and 15d-1415(ce) under the Exchange Act) are effective to ensure that information required to be disclosed by FTD Group, Inc. in the reports that it files or submits under the Exchange Act ~~are~~is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Changes in Internal Control over Financial Reporting

~~The~~During ~~Company~~the ~~acquired~~quarter ~~Interflora~~ended ~~on July~~December 31, ~~2006 and~~2007, asthere awere ~~result~~no ofchanges ~~the~~in ~~acquisition,~~ the Company’s internal control ~~controls~~ over financial reporting ~~with~~(as ~~respect~~defined toin ~~the~~Rule 13a-15(f) ~~consolidation~~under ~~of its financial statements have changed. Management of~~ the ~~Company~~Exchange ~~expects~~Act) that ongoing processes and controls related to consolidation will continue to be modified during fiscal year 2007. There are no other changes in internal control over financial reporting that occurred during the period that have materially affected, or are reasonably likely to materially affect, the Company’s internal ~~control~~ control over financial reporting.

2322

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company is involved in various claims and lawsuits and other matters arising in the normal course of business. In the opinion of management of the Company, although the ~~outcome~~outcomes of these ~~claims~~matters ~~and suits~~ are uncertain, they are not expected to have a material adverse effect on the Company’s financial condition, ~~liquidity or~~ results of operations and cash flows.

Item 1A. Risk Factors

The Company’s business, financial condition, results of operations or cash flows can be impacted by a number of factors, any one of which could cause actual results to vary materially from anticipated future results. See the discussion in “Forward-Looking Information,”, “Risk Factors” and elsewhere in the ~~Company’s~~most recent Annual Report on Form 10-K ~~for the year ended June 30, 2006~~ and in “Forward-Looking Information” and elsewhere in this Quarterly Report on Form 10-Q. ~~There~~Except as noted below, there have been no ~~material~~ changes to such risk factors ~~provided~~since inJune 30, ~~the~~2007. ~~Company’s~~The ~~Annual~~following ~~Report~~risk onfactor ~~Form~~has been ~~10-K~~updated ~~for~~since ~~the year ended June~~September 30, ~~2006.~~2007:

International, federal, state and local governments may attempt to impose additional sales and use taxes, value added taxes or other taxes on the business activities conducted by the Company, including its past sales, which could decrease the Company’s ability to compete with traditional retailers, reduce its sales and have a material adverse effect on the Company’s business, financial condition, results of operations and cash flows.

In accordance with current industry practice by domestic floral and specialty gift order gatherers and the Company’s interpretation of applicable law, the Company’s subsidiary, FTD.COM, is an internet order gatherer that collects and remits sales taxes in only a limited number of states where it has a physical presence, based on where the orders are delivered. If states successfully challenge this practice and impose sales and use taxes on orders delivered in states where the Company does not have physical presence, it could incur substantial tax liabilities for past sales and lose sales in the future. In addition, future changes in the operation of the Company’s online and telephonic sales channels could result in the imposition of additional sales and use tax obligations. Moreover, a number of states, as well as the U.S. Congress, have been considering various legislative initiatives that could result in the imposition of additional sales and use taxes on sales over the Internet, which if enacted could require the Company to collect additional sales and use taxes. The imposition of sales or use tax liability for past or future sales could decrease the Company’s ability to compete with traditional retailers and have a material adverse effect on the Company’s business, financial condition, results of operations and cash flow.

In 1998, the Internet Tax Freedom Act was enacted, which generally placed a three-year moratorium on state and local taxes on Internet access and on multiple or discriminatory state and local taxes on electronic commerce. This moratorium has been extended several times, most recently until November 1, 2014.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) On July 31, 2006, in connection with the acquisition of Interflora, the Company sold 216,374 shares of its common stock (from its treasury), to certain senior managers of Interflora, in exchange for shares of common stock of FTD, IncNone. ~~These shares of common stock of FTD, Inc. were~~ acquired by the Interflora senior managers in exchange for 216,374 preferred shares of FTD UK Holdings Limited. These preferred shares of FTD UK Holdings Limited were acquired by the Interflora senior managers as partial consideration for their equity securities in Interflora.

~~The 216,374 shares of common stock of FTD Group, Inc. were valued at $14.77 per share,~~23 ~~representing the closing price of such shares on the New York stock exchange on July 28, 2006, for aggregate consideration of $3.2 million.~~

TheseTable shares of common stock of FTD Group, Inc. were issued in reliance upon the exemption contained in Section 4(2) of the Securities Act of 1933, as amended, in reliance, among other factors, upon various representations and warranties made by the senior managers of Interflora with respect to their investment intentions, investment experience, financial capabilities and other matters. Contents

~~(c)~~Item On4. ~~October 25,~~Submission ~~2005, the Company’s Board~~ of ~~Directors~~Matters ~~authorized a share repurchase program totaling $30.0 million, effective through September 30, 2007. These purchases may be made from time~~ to ~~time in both open market and private transactions, dependent upon market and other conditions. The Company may repurchase shares pursuant to~~ a ~~10b5-1~~Vote 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. The Company has repurchased 1.5 million shares of ~~common~~Security ~~stock~~Holders ~~under this plan. There were no purchases made by, or on behalf of, the Company, or shares of the~~ ~~Company’s common stock during the nine-month period ended March 31, 2007.~~

	(a)		The Annual Meeting of the Stockholders was held on November 14, 2007.

	(b)		At the Annual Meeting of Stockholders, the stockholders voted to elect ten directors to the Board of Directors of the Company to serve for a term of one year. The votes for the director nominees were as follows:


Director Nominee	For	Withhold
Peter J. Nolan	20,872,485	7,633,662
Robert S. Apatoff	19,687,021	8,819,126
Adam M. Aron	26,052,947	2,453,200
John R. Baumer	20,842,485	7,663,662
William J. Chardavoyne	26,924,496	1,581,651
Timothy J. Flynn	19,671,693	8,834,454
Ted C. Nark	26,924,496	1,581,651
Michael J. Soenen	21,040,327	7,465,820
Thomas M. White	26,077,922	2,428,225
Carrie A. Wolfe	20,842,813	7,663,334

(c)

The results of stockholder voting on Proposal 2 were as follows:

Proposal 2 – The ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending June 30, 2007.


For	Against	Abstain
28,467,131	18,866	11,150

Item 6. Exhibits

	31.1		Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.

	31.2		Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.

	32		Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~SIGNATURES~~SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		FTD Group, Inc.
Date: May 9, 2007	By:	/S/ BECKY A. SHEEHAN
Date: February 5, 2008	By:	/s/ BECKY A. SHEEHAN
		Becky A. Sheehan
		Chief Financial Officer (principal financial officer)

EXHIBIT INDEX


Exhibit Number		Description of Document

31.1		Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.

32		Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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Filing Compare · FTD Group, Inc.