<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1996
Commission File Number
33-88628
---------
FLORISTS' TRANSWORLD DELIVERY, INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
MICHIGAN 38-0546960
- ------------------------------- -------------------
(State or Other Jurisdiction of (I.R.S.Employer
Incorporation of Organization) Identification No.)
29200 NORTHWESTERN HIGHWAY
SOUTHFIELD, MICHIGAN 48034
--------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(810) 355-9300
(Registrant's Telephone Number, Including Area Code)
Indicate by check whether the registrant (1) has filed all reports
required to be filed by Section 13 and 15(d) of the Securities Exchange Action
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 X No
---- ----
As of February 10, 1997, there were outstanding 100 shares of the
Registrant's common stock, par value $.01 per share, which is the only class of
common stock of the Registrant.
1
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INDEX
FLORISTS' TRANSWORLD DELIVERY, INC.
PAGE
PAGE
Part I. Financial Information ----
Item 1. Financial Statements
Consolidated Condensed Statements of Financial Position at
December 31, 1996 and June 30, 1996 3
Consolidated Statements of Operations
For the Three Months Ended December 31, 1996 and 1995 4
For the Six Months Ended December 31, 1996 and 1995 5
Consolidated Condensed Statements of Cash Flows for the
Six Months Ended December 31, 1996 and 1995 6
Notes to Consolidated Financial Statements 7-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-11
Part II.Other Information
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
Exhibit Index 14
2
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Florists' Transworld Delivery, Inc.
Consolidated Condensed Statements of Financial Position
<TABLE>
<CAPTION>
December 31,
1996 June 30,
(Unaudited) 1996
------------- --------
ASSETS (In Thousands)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 28,749 $ 26,536
Accounts receivable, less allowance for doubtful accounts
of $1,628 at December 31, 1996 and $1,412 at June 30, 1996 36,215 24,068
Inventories, principally finished goods, net 19,414 12,467
Other current assets 9,380 7,286
-------- --------
Total current assets 93,758 70,357
Property and equipment, less accumulated depreciation
of $20,152 at December 31, 1996 and $15,158 at June 30, 1996 31,541 35,328
Other noncurrent assets:
Other noncurrent assets 6,714 6,856
Goodwill and other intangible assets, less accumulated amortization
of $6,565 at December 31, 1996 and $4,874 at June 30, 1996 81,453 83,414
-------- --------
Total other noncurrent assets 88,167 90,270
-------- --------
Total assets $213,466 $195,955
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term debt $ 10,982 $ 8,496
Accounts payable 49,400 30,765
Accrued member incentive programs 14,666 12,949
Accrued severance and related costs 847 1,319
Other accrued liabilities 5,791 5,931
Unearned income and members' deposits 12,568 10,584
-------- --------
Total current liabilities 94,254 70,044
Long-term debt 82,448 87,781
Employee benefit obligations 11,565 11,223
Minority interest in subsidiary 140 171
Stockholder's equity:
Common stock - -
Paid-in capital 33,000 33,000
Retained deficit (7,941) (6,264)
-------- --------
Total stockholder's equity 25,059 26,736
-------- --------
Total liabilities and stockholder's equity $213,466 $195,955
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
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Florists' Transworld Delivery, Inc.
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
December 31, December 3
1996 1995
----------- -----------
(In Thousands)
<S> <C> <C>
Revenues:
Marketplace $11,055 $16,898
Clearinghouse 9,992 10,791
Mercury Network 9,902 8,353
Other 10,691 9,823
------- -------
Total revenues 41,640 45,865
------- -------
Costs:
Products and distribution 8,400 11,334
Floral order transmissions and processing service 7,112 7,543
Member programs 8,908 9,731
------- -------
Total costs of goods sold & services provided 24,420 28,608
Selling, general and administrative 15,790 18,725
------- -------
Income (loss) from operations 1,430 (1,468)
Interest (income) (312) (331)
Interest expense 3,255 3,428
------- -------
Income (loss) before income taxes and
minority interest (1,513) (4,565)
Income taxes (benefit) (340) (1,468)
Minority interest in loss of subsidiary (19) (25)
------- -------
Net income (loss) ($1,154) ($3,072)
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
Florists' Transworld Delivery, Inc.
Consolidated Statements of
(Unaudited)
Six Months Six Months
Ended Ended
December 31, December 31,
1996 1995
------------ ------------
(In Thousands)
<TABLE>
<S> <C> <C>
Revenues:
Marketplace $24,694 $31,798
Clearinghouse 16,618 18,098
Mercury Network 18,400 15,574
Other 18,995 16,931
------- -------
Total revenues 78,707 82,401
------- -------
Costs:
Products and distribution 17,861 21,336
Floral order transmissions and processi 14,192 14,203
Member programs 15,720 16,040
------- -------
Total costs of goods sold & service 47,773 51,579
Selling, general and administrative 27,069 28,634
------- -------
Income from operations 3,865 2,188
Interest (income) (656) (620)
Interest expense 6,537 6,877
------- -------
Income (loss) before income taxes and
minority interest (2,016) (4,069)
Income taxes (benefit) (309) (1,064)
Minority interest in earnings (loss) of
Subsidiary (30) (32)
------- -------
Net Income (loss) ($1,677) ($2,973)
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
Florists' Transworld Delivery, Inc.
Consolidated Condensed Statements of
(Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
December 31, December 31,
1996 1995
----------- -----------
(In Thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities $ 7,304 $11,306
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2,086) (1,701)
------- -------
Net cash used in investing activities (2,086) (1,701)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt (3,005) (1,757)
------- -------
Net cash used in financing activities (3,005) (1,757)
Effect of exchange rate changes on cash - 11
------- -------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 2,213 7,859
CASH AND CASH EQUIVALENTS:
BEGINNING OF PERIOD 26,536 24,375
------- -------
END OF PERIOD $28,749 $32,234
======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Interest paid $ 6,020 $6,016
======= ======
Income taxes paid $ 148 $ 119
======= ======
</TABLE>
See accompanying to consolidated financial statements.
6
<PAGE> 7
FLORISTS' TRANSWORLD DELIVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. Basis of Presentation
The accompanying unaudited consolidated financial statements of the
Company have been prepared in accordance with generally accepted accounting
principles for interim financial information pursuant to the rules and
regulations of the Securities and Exchange Commission and do not contain all
information included in the audited consolidated financial statements and
notes for the year ended June 30, 1996. In the opinion of Company
management, all adjustments necessary for a fair presentation of the
financial position and results of operations have been included (and any
such adjustments are of a normal, recurring nature, except as disclosed
herein). Due to seasonal variations in the Company's business, operating
results for the three and six month periods ended December 31, 1996 are not
necessarily indicative of the results that might be expected for the year
ended June 30, 1997.
Certain amounts in the December 31, 1995 consolidated condensed
financial statements have been reclassified to conform to the current year
presentation.
NOTE 2. Accrued Severance and Related Costs
The following table reflects the changes to accrued severance and
related costs for the six months ended December 31, 1996 (in thousands):
Balance Balance
at at
June 30, Costs December 31,
1996 Paid 1996
------- ------ ------------
Severance benefits $1,050 $462 $588
Relocation costs 79 0 79
Other 190 10 180
------ ---- ----
Total $1,319 $472 $847
====== ==== ====
7
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FTD INC.
NOTE 3. Pension Costs
During the quarter ended December 31, 1996, the level of lump sum
distributions made to participants in the Company's defined benefit pension
plan caused a partial pension plan settlement, resulting in the recognition
of a pre-tax pension settlement gain of $429,000. As virtually all of these
distributions were accrued as part of the purchase price allocation in
connection with the Merger, the settlement gain was accounted for as a
reduction of goodwill as of December 31, 1996.
Note 4. Subsequent Events
The Company has established a new 401(k) savings plan for all its
employees to replace certain benefits eliminated under its defined benefit
pension plan. Effective January 1, 1997, amendments to the Company's
defined benefit pension plan included the elimination of accrual of future
benefits under the plan. As a result of these amendments, and the
corresponding remeasurement of the accumulated and projected benefit
obligations under the plan, a pre-tax pension curtailment gain of
approximately $2,665,000 is expected to be recognized in income during the
quarter ending March 31, 1997.
On January 3, 1997 the Board of Directors approved a plan to
consolidate corporate staff and operations into one facility, which should
enable the Company to improve program execution and to help achieve the
Company's goal to better serve its customers, the independent retail
florists, and to support their future success. The operations in
Southfield, Michigan and Boston, Massachusetts will be consolidated into the
Company's Downers Grove, Illinois facility. Non-recurring charges expected
to be incurred in the quarter ended March 31, 1997, in connection with the
consolidation include severance, employee retraining and relocation, asset
impairment losses, and related consulting and other costs. A final estimate
of such costs has not yet been determined, but is expected to range from
$3,500,000 to $4,500,000 on a pre-tax basis.
8
<PAGE> 9
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Except for the historical information contained in this report, certain
statements made herein are forward-looking statements that involve risks and
uncertainties and are subject to important factors that could cause actual
results to differ materially from these forward-looking statements, including,
without limitation, the effect of economic and market conditions and the
impact of competitive activities.
The following is a discussion of changes in the Company's financial
condition and results of operations for the three and six month periods
ended December 31, 1996 compared with the corresponding periods of 1995.
The Company generates its revenue from four principal areas of
operation. Marketplace represents the Company's wholesale distribution of
non-perishable hardgoods to retail florists in North America. The Company's
Clearinghouse operation provides order billing and collection services to
sending and receiving florists, and the Company receives a percentage of the
sales price for the service. Mercury Network is the Company's proprietary
telecommunications network used by florists to transmit floral orders
through Florists' Transworld Delivery, Inc. or competing clearinghouses.
Other revenue is derived from the 1-800-SEND-FTD direct marketing business,
credit card authorization and processing, publications and an after hours
order taking service.
THREE MONTHS ENDED DECEMBER 31, 1996 COMPARED TO THREE MONTHS ENDED DECEMBER
31, 1995.
Revenue decreased by $4.2 million, or 9.2%, to $41.6 million for the
three months ended December 31, 1996, compared to $45.9 million for the three
months ended December 31, 1995. Mercury Network revenue increased $1.5 million
due to increased transmissions revenue, other wire services revenue and sales
of Advantage floral business systems. Other revenue experienced a net increase
of $0.9 million, substantially the result of increased 1-800-SEND-FTD order
volume. Marketplace revenue experienced a net decrease of $5.9 million
primarily due to lower sales volume of holiday products. Clearinghouse revenue
decreased by $0.8 million, which resulted from a decline in the volume of
floral orders cleared through FTD.
The cost of goods sold and services provided decreased by $4.2 million,
or 14.6%, to $24.4 million for the three months ended December 31, 1996 from
$28.6 million for the three months ended December 31, 1995. The change
resulted primarily from lower cost of sales of Marketplace products as well
as lower costs for the member incentive program. This decrease was offset
by increased costs associated with the sale of Advantage floral business
systems. As a percent of revenue, cost of goods sold and services provided
decreased to 58.7% for the three months ended December 31, 1996 from 62.3%
for the three months ended December 31, 1995.
9
<PAGE> 10
Selling, general and administrative expenses decreased by $2.9 million,
or 15.7% for the three months ended December 31, 1996 compared to the same
period in 1995. The decrease is primarily due to the Company's investment
in increased advertising and promotional expenses for the comparable 1995
period.
Interest expense for the three months ended December 31, 1996 was $3.2
million as compared to $3.4 million in the prior year. The decrease was
attributable to lower average debt outstanding due to scheduled principal
payments.
Income taxes for the three months ended December 31, 1996 were a
benefit of $0.3 million compared to $1.5 million for the comparable period
in the prior year. The change resulted from the change in taxable income
(loss).
Net loss was $1.2 million for the three months ended December 31, 1996,
an improvement of $1.9 million, or 62.1%, from a loss of $3.1 million for
the three months ended December 31, 1995. The change is attributable to the
factors previously discussed.
SIX MONTHS ENDED DECEMBER 31, 1996 COMPARED TO SIX MONTHS ENDED DECEMBER 31,
1995
Revenue decreased by $3.7 million, or 4.5%, to $78.7 million for the
six months ended December 31, 1996, compared to $82.4 million for the six
months ended December 31, 1995.
Mercury Network revenue increased $2.8 million due to increased
transmissions revenue, other wire services revenue and sales of Advantage
floral business systems. Other revenue experienced a net increase of $2.1
million, substantially the result of increased 1-800-SEND-FTD order volume.
Marketplace revenue decreased by a net amount of $7.1 million from the
prior period due to lower sales volume of holiday products partially offset
by increased sales of gourmet baskets and greeting cards in the six month
period. Clearinghouse revenue decreased by $1.5 million which resulted from
a decline in the volume of floral orders cleared through FTD.
The cost of goods sold and services provided decreased by $3.8 million,
or 7.4%, to $47.8 million for the six months ended December 31, 1996 from
$57.6 million for the six months ended December 31, 1995. The decrease in
cost of goods sold is the result of lower cost of sales of Marketplace
products as well as lower costs for the member incentive program. This
decrease was offset by increased costs associated with the sale of
Advantage floral business systems. As a percent of revenue, cost of goods
sold and services provided decreased to 60.7% for the six months ended
December 31, 1996 from 62.6% for the six months ended December 31, 1995.
Selling, general and administrative expenses decreased by $1.6 million,
or 5.5% for the six months ended December 31, 1996 compared to the same
period in 1995. The decrease is primarily due to the Company's investment
in increased advertising and promotional expenses for the comparable 1995
period. This decrease was offset partially by an increase in general and
administrative expenses due to the Company's relocation and/or consolidation
efforts, recruiting fees and other costs.
10
<PAGE> 11
Interest expense for the six months ended December 31, 1996 was $6.5
million as compared to $6.9 million in the prior year. The decrease was
attributable to lower average debt outstanding due to scheduled principal
payments.
Income taxes for the six months ended December 31, 1996 were a benefit
of $0.3 million compared to $1.1 million for the comparable period in the
prior year. The change resulted from the change in taxable income (loss).
Net loss was $1.7 million for the six months ended December 31, 1996,
an improvement of $1.3 million, or 43.6%, from a loss of $3.0 million for
the six months ended December 31, 1995. The change is attributable to the
factors previously discussed.
LIQUIDITY AND CAPITAL RESOURCES
The Company has two sources of long-term debt consisting of a bank
credit agreement and senior subordinated notes. The bank credit agreement
consists of $45.0 million in term loans and a $25.0 million undrawn
revolving credit facility. The term loans bear interest at floating rates
and are to be repaid over five years. The Company has repaid $3.0 million
of these loans in the six months ended December 31, 1996. No borrowings
were made under the revolving credit facility during the six months ended
December 31, 1996. The Company has funded the interest and debt repayments
for the bank debt and notes through cash flow from operations.
For the six months ended December 31, 1996, cash flow reflected a net
increase in cash of $2.2 million, as compared to a $7.9 million increase in
cash for the six months ended December 31, 1995.
Cash provided by operating activities was $7.3 million for the six
months ended December 31, 1996 compared to $11.3 million for the six months
ended December 31, 1995. The decrease resulted primarily from the increase
in inventory over the prior year. Depreciation and amortization was $7.2
million for the six months ended December 31, 1996 and $7.1 million for the
six months ended December 31, 1995.
Cash used in investing activities, consisting solely of capital
expenditures, was $2.1 million for the six months ended December 31, 1996
compared to $1.7 million for the six months ended December 31, 1995. Cash
used in financing activities, reflecting the payment of principal on the
term loans, was $3.0 million for the six months ended December 31, 1996
compared to $1.8 million for the six months ended December 31, 1995.
11
<PAGE> 12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10 (a) Amendment No. 1 to Employment Agreement.
10 (b) Third Amendment to Credit Agreement
27 Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the quarter
ended December 31, 1996.
12
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SIGNATURES
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 on the 11th day of February, 1997.
FLORISTS' TRANSWORLD DELIVERY, INC.
By: /s/ Douglas L. Hagemann
----------------------------
Douglas L. Hagemann
Vice President Finance and Stockholder Relations
(Principal financial officer and officer duly authorized
to sign on behalf of registrant)
13
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EXHIBIT INDEX
Paper (P)
or
Exhibit Description Electronic (E)
-------- ----------- --------------
10 (a) Amendment No. 1 to Employment Agreement E
10 (b) Third Amendment to Credit Agreement E
27 Financial Data Schedule E
14
<PAGE> 1
EXHIBIT 10 (a)
AMENDMENT TO WHITMAN EMPLOYMENT AGREEMENT
Amendment No. 1, dated as of November 11, 1996, among FTD Corporation,
a Delaware corporation ("FTD Corporation"), Florists' Transworld Delivery,
Inc., a Michigan corporation ("the Company") and Margaret C. Whitman ("the
Executive"), amending the Employment Agreement dated as of March 31, 1995
(as amended, the "Agreement"), among FTD Corporation (formerly known as
Perry Capital Corp.), the Company and the Executive.
WITNESSETH:
WHEREAS, Executive, FTD Corporation and the Company deem it to be in
their respective best interests to amend certain terms and provisions of the
Agreement as set forth in this Amendment No. 1.
NOW, THEREFORE, in consideration of the premises and the mutual
promises and agreements contained herein, it is hereby agreed as follows:
1. Definitions. All terms used herein which are defined in the
Agreement and not otherwise defined herein are used herein as defined
therein.
2. Amendment of Section 3(a) of the Agreement. Subsection (a) of
Section 3 of the Agreement is hereby amended to increase to Base Salary to
$300,000 (such increase above the existing Base Salary being referred to
herein as the "Base Salary Increase"). The Base Salary Increase shall be
effective the 186th day of the Company's 1997 fiscal year (the "Increase
Date"), unless Executive's employment with the Company has been terminated
by Executive prior to such date. Upon its effectiveness, the Base Salary
Increase shall be applied retroactively to July 1, 1996. Notwithstanding
the foregoing, if Executive's employment is terminated by the Company prior
to the Increase Date, Executive shall be paid a pro rated portion of the
Base Salary Increase for the number of days Executive is employed by the
Company during the period from July 1, 1996 to the effective date of such
termination and such portion of the Base Salary Increase shall be paid
within ten days of the effective date of termination.
3. Amendment of Section 3 (b) of the Agreement. Subsection (b) of
Section 3 of the Agreement is hereby amended to read in its entirety as
follows:
"(b) Bonus. The Executive shall be eligible to receive the following
bonus payments:
(i) Executive shall be eligible for an annual bonus in
an amount up to $150,000 (the "Bonus") payable on last day of each fiscal
year during the Term of Employment, commencing with the fiscal year ending
June 30, 1997 (the "1997 Fiscal Year"): provided, that if Executive's
employment is terminated prior to the end of any fiscal year, the amount
of any Bonus paid for
<PAGE> 2
such fiscal year shall be pro rated for the number of days
Executive is employed by the Company during such
fiscal year and the Bonus for such period shall be paid
within ten days of the effective date of termination.
Notwithstanding the foregoing, no Bonus shall be paid for
the 1997 Fiscal Year if Executive's employment with the
Company has been terminated by Executive prior to the
Increase Date.
(ii) Executive shall be eligible for an additional
bonus (the "Additional Bonus") for the 1997 Fiscal Year
in an amount equal to the excess, if any of (i) $125,000
over (ii) the sum of the Base Salary Increase and Bonus paid
to Executive for the 1997 Fiscal Year. The Additional Bonus
shall be paid to Executive at the same time as the Bonus for
the 1997 Fiscal Year is paid to Executive. Notwithstanding
the foregoing, no Additional Bonus shall be paid for the
1997 Fiscal Year if Executive's employment with the Company
has been terminated by Executive prior to the Increase Date.
(iii) Executive shall be eligible for a
performance bonus (the "EBITDA Bonus") in an amount of
$200,000, payable within 90 days following the end of the
1997 Fiscal Year (whether or not Executive is employed by
the Company at such time) if the Company's EBITDA for the
1997 Fiscal Year is equal to or greater than $24,500,000.
Notwithstanding the foregoing, no EBITDA Bonus shall be paid
for the 1997 Fiscal Year if Executive's employment with the
Company has been terminated by Executive prior to the 230th
day of the 1997 Fiscal Year.
4. Amendment of Section 5 of the Agreement. (a) The
second proviso contained in the first paragraph of Section 5 of the Agreement
is hereby amended to read in its entirety as follows:
"and provided, further, notwithstanding the foregoing, that
the Term of Employment shall expire on the effective date of termination
specified in a written notice provided by Executive to the Company or by the
Company to Executive, as the case may be. Such written notice may be given by
either such party to the other at any time and for any reason."
(b) Each of the subsections (a) through (e), inclusive, of
Section 5 of the Agreement is hereby deleted in its entirety.
<PAGE> 3
(c) Subsection (f) of Section 5 of the Agreement is hereby amended to
read in its entirety as follows:
"In the event of the termination of Executive's employment
hereunder for any reason, the Executive shall be entitled
to receive (i) Base Salary accrued through the effective
date of such termination, (ii) payment of accrued but unused
vacation time, (iii) payment for unreimbursed business
expenses through the effective date of such termination and
(iv) payments with respect to the Executive's participation
in any fringe benefit programs through the effective date
of termination."
5. Amendment of Section 9 of the Agreement. Section 9 of
the Agreement is hereby amended by deleting the words "of Section 5(a) or (c)"
from the fourth line thereof.
6. Governing Law. This Amendment No. 1 shall be governed
by and construed in accordance with the internal laws of the State of Delaware
except to the extent governed by federal law.
7. Counterparts. This Amendment No. 1 may be executed in
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment No. 1 as of the day the year first above written.
EXECUTIVE FTD CORPORATION
/s/ Margaret C. Whitman By: /s/ Richard Perry
- ----------------------- -------------------------------
Margaret C. Whitman Name: Richard Perry
Title: Chairman of the Board
FLORISTS' TRANSWORLD
DELIVERY, INC.
By: /s/ Scott Levin
--------------------------------
Name: Scott Levin
Title: Vice President &
General Counsel
<PAGE> 1
EXHIBIT 10 (b)
THIRD AMENDMENT TO CREDIT AGREEMENT
THIRD AMENDMENT (this "Amendment"), dated as of November 21, 1996,
among FTD Corporation ("Holdings"), Florists' Transworld Delivery, Inc. (the
"Borrower"), the lenders party to the Credit Agreement referred to below
(the "Banks"), and Bankers Trust Company, as Agent (in such capacity, the
"Agent"). Unless otherwise defined herein, capitalized terms used herein
shall have the respective meanings provided such terms in the Credit
Agreement referred to below.
WITNESSETH:
WHEREAS, Holdings, the Borrower, the Banks and the Agent are parties to
a Credit Agreement, dated as of December 19, 1994 (as amended, modified or
supplemented through the date hereof, the "Credit Agreement"); and
WHEREAS, the parties hereto wish to further amend the Credit Agreement
as herein provided;
NOW THEREFORE, it is agreed:
1. Section 8.07 of the Credit Agreement is hereby amended by deleting
the words "former FTD Members following their termination of Membership in
the New Association" appearing in clause (iv) thereof and inserting the
words "former or current FTD Members" in lieu thereof.
2. Section 8.09 of the Credit Agreement is hereby amended by inserting
the words ",leased and/or relocated" after the words "until a Specified
Property is sold" appearing in the proviso of clause (d) thereof.
3. Section 8.10 of the Credit Agreement is hereby amended by deleting
the references to the amounts "$23,000,000", "$24,000,000", "$26,000,000"
and "$27,000,000" respectively set forth opposite the references to the
dates "September 30, 1996", "December 31, 1996", "March 31, 1997" and "June
30, 1997" appearing therein and inserting the amounts "$19,100,000",
"$19,000,000", "$20,000,000" and "$21,000,000" respectively in lieu thereof.
4. Section 8.11 of the Credit Agreement is hereby amended by deleting
the references to the ratios "1.70:1:00", "1.80:1:00", "2.00:1:00" and
"2.10:1:00" respectively set forth opposite the references to the dates
"September 30, 1996", "December 31, 1996", "March 31, 1997" and "June 30,
1997" appearing therein and inserting the ratios "1.56:1:00", "1.57:1:00",
"1.69:1:00" and "1.77:1:00" in lieu thereof.
5. Section 8.13 of the Credit Agreement is hereby amended by deleting
the references to
<PAGE> 2
the period "Fiscal year ending June 30, 1997" and the ratio "4.2:1.0"
appearing opposite such period, each in the chart appearing therein and
inserting the following periods and ratios in lieu thereof:
"July 1, 1996 through and including September 30, 1996 4.2:1.00
October 1, 1996 through and including December 31, 1996 4.25:1.00
January 1, 1997 through and including June 30, 1997 4.2:1.00"
6. Section 8.14 Fixed Charge Coverage. The Borrower will not permit
the Fixed Charge Coverage Ratio for any Test Period ending on a date set
forth below to be less than the ratio set forth opposite such date:
Date Ratio
---- -----
September 30, 1996 .87:1.00
December 31, 1996 .80:1.00
March 31, 1997 .84:1.00
June 30, 1997 .88:1.00
The last day of each fiscal quarter
of the Borrower thereafter 1.00:1.00"
7. Section 8.15 of the Credit Agreement is hereby deleted in its
entirety and the following new Section 8.15 is inserted in lieu thereof:
"8.15 Minimum Consolidated Net Worth. The Borrower will not permit its
Consolidated Net Worth at any time during a period set forth below to be
less than the amount set forth opposite such period:
<TABLE>
<S> <C>
Period Amount
July 1, 1996 through and including March 31, 1997 $22,000,000
April 1, 1997 through and including June 30, 1997 $21,300,000
Fiscal Year Ending June 30, 1998 $23,000,000
Fiscal Year Ending June 30, 1999 $28,000,000
Fiscal Year Ending June 30, 2000 $35,000,000
</TABLE>
8. Notwithstanding anything to the contrary contained in Section
8.08(iv) of the Credit Agreement, so long as the conditions set forth in
such Section are satisfied and either (x) Consolidated EBITDA for the Test
Period ending on June 30, 1997 is greater than or equal to $23,400,000, the
199% (i.e., $600,000) of the management fee payable to the Providers in
respect
<PAGE> 3
of the Borrower's fiscal year ending on June 30, 1997 shall be
permitted to be made or (y) Consolidated EBITDA for the Test Period ending
on June 30, 1997 is less than $23,400,000 but greater than or equal to
$22,200,000, then no more than 50% (i.e., no more than $300,000) of the
management fee payable to the Providers in respect of the Borrower's fiscal
year ending on June 30, 1997 shall be permitted to be made.
9. In order to induce the Banks to enter into this Amendment, each of
Holdings and the Borrower hereby represents and warrants that (x) no Default
or Event of Default exists on the Third Amendment Effective Date (as
hereinafter defined), both before and after giving effect to this Amendment
and (y) all of the representations and warranties contained in the Credit
Documents shall be true and correct in all material respects on the Third
Amendment Effective Date, both before and after giving effect to this
Amendment, with the same effect as though such representations and
warranties had been made on and as of the Third Amendment Effective Date (it
being understood that any representation or warranty made as of a specific
date shall be true and correct in all material respects as of such specific
date).
10. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement or any other Credit Document.
11. This Amendment may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument. A complete set
of counterparts shall be lodged with the Borrower and the Agent.
12. This Amendment and the rights and obligations of the parties
hereunder shall be construed in accordance with and governed by the law of
the State of New York.
13. This Amendment shall become effective on the date (the "Third
Amendment Effective Date") when (i) each of Holdings, the Borrower and the
Required Banks shall have signed a counterpart hereof (whether the same or
different counterparts) and shall have delivered (including by way of
telecopier) the same to the Agent at its Notice Office and (ii) the Borrower
shall have paid to the Agent for pro rata distribution to the Banks which
have signed a counterpart of this Amendment on or prior to 5:00 p.m. (New
York time) on November 22, 1996 an amendment fee equal to $116,793.
14. From and after the Third Amendment Effective Date, all references
in the Credit Agreement and each of the other Credit Documents to the Credit
Agreement shall be deemed to be references to the Credit Agreement after
giving effect to this Amendment.
* * *
<PAGE> 4
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Waiver to be duly executed and delivered as of the date
first above written.
FTD CORPORATION
By /s/ Scott D. Levin
-----------------------------------
Title: Vice President and Secretary
FLORISTS' TRANSWORLD
DELIVERY, INC.
By /s/ Scott D. Levin
------------------------------------
Title: Vice President, General Counsel
and Secretary
BANKERS TRUST COMPANY,
Individually and as Agent
By /s/ Christopher Kinslow
---------------- ------------------
Title: Vice President
MICHIGAN NATIONAL BANK
By /s/ Jeffrey W. Billig
--------------------------------------
Title: Relationship Manager
NBD BANK
By /s/ Gary C. Wilson
--------------------------------------
Title: First Vice President
COMERICA BANK
By /s/ Phyllis D. McCann
--------------------------------------
Title: Vice President
<PAGE> 5
HARRIS TRUST AND
SAVINGS BANK
By /s/ Peter J. Dancy
---------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF
CHICAGO
By /s/ Gary C. Wilson
-------------------------------
Title: First Vice President
IMPERIAL BANK
By /s/ Ray Vadalima
-------------------------------
Title: Senior Vice President
CAISSE NATIONAL DE
CREDIT AGRICOLE
By /s/ Dean Balice
-------------------------------
Title: Senior Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FTD INC. DECEMBER 31, 1996 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 28,749
<SECURITIES> 0
<RECEIVABLES> 37,844
<ALLOWANCES> 1,628
<INVENTORY> 19,414
<CURRENT-ASSETS> 93,758
<PP&E> 51,693
<DEPRECIATION> 20,152
<TOTAL-ASSETS> 213,466
<CURRENT-LIABILITIES> 94,254
<BONDS> 93,430
0
0
<COMMON> 0
<OTHER-SE> 25,059
<TOTAL-LIABILITY-AND-EQUITY> 213,466
<SALES> 11,055
<TOTAL-REVENUES> 41,640
<CGS> 8,400
<TOTAL-COSTS> 40,210
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,255
<INCOME-PRETAX> (1,513)
<INCOME-TAX> (340)
<INCOME-CONTINUING> (1,154)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,513)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
