<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
33-91582
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FTD CORPORATION
---------------
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 13-3711271
- ------------------------------- --------------------
(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
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(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 6,124,539 shares of the
Registrant's class A common stock, par value $.01 per share, and 1,566,686
shares of the Registrant's class B common stock, par value $.0005 per share.
1
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FTD CORPORATION
INDEX
PAGE
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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
FTD CORPORATION
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 $ 28,865 $ 26,650
Accounts receivable, less allowance for doubtful accounts
of $1,628 at December 31, 1996 and $1,412 at June 30, 1996 36,216 24,080
Inventories, principally finished goods, net 19,414 12,467
Other current assets 9,381 7,287
-------- --------
Total current assets 93,876 70,484
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 6,732 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 88,185 90,270
-------- --------
Total assets $213,602 $196,082
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 10,982 $ 8,496
Accounts payable 46,958 28,359
Accrued member incentive programs 14,666 12,949
Accrued severance and related costs 847 1,319
Other accrued liabilities 5,925 6,059
Unearned income and members' deposits 12,568 10,584
-------- --------
Total current liabilities 91,946 67,766
Long-term debt 82,448 87,781
Employee benefit obligations 11,565 11,223
Minority interest in subsidiary 140 171
Stockholders' equity:
Common stock:
Class A 62 62
Class B 1 1
Paid-in capital 35,607 35,607
Retained deficit (7,985) (6,274)
Notes receivable - (128)
Treasury stock (182) (127)
-------- --------
Total stockholders' equity 27,503 29,141
-------- --------
Total liabilities and stockholders' equity $213,602 $196,082
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
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FTD CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
December 31, December 31,
1996 1995
------------- -------------
(In Thousands, except per share data)
<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 services 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 15,803 18,720
------- -------
Income (loss) from operations 1,417 (1,463)
Interest (income) (313) (333)
Interest expense 3,255 3,428
------- -------
Income (loss) before income taxes and
minority interest (1,525) (4,558)
Income taxes (benefit) (344) (1,466)
Minority interest in loss of subsidiary (19) (25)
------- -------
Net income (loss) $(1,162) $(3,067)
======= =======
Primary and fully diluted earnings (loss) per share $ (0.15) $ (0.43)
</TABLE>
See accompanying notes to consolidated financial statements.
4
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FTD CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
December 31, December 31,
1996 1995
------------ ------------
(In Thousands, except per share data)
<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 processing services 14,192 14,203
Member programs 15,720 16,040
------- -------
Total costs of goods sold & services provided 47,773 51,579
Selling, general and administrative 27,116 28,633
------- -------
Income from operations 3,818 2,189
Interest (income) (658) (632)
Interest expense 6,537 6,877
------- -------
Income (loss) before income taxes and
minority interest (2,061) (4,056)
Income taxes (benefit) (321) (1,061)
Minority interest in earnings (loss) of subsidiary (30) (32)
------- -------
Net income (loss) $(1,710) $(2,963)
======= =======
Primary and fully diluted earnings (loss) per share $ (0.22) $ (0.42)
</TABLE>
See accompanying notes to consolidated financial statements.
5
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FTD CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(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 (used in) operating activities $ 7,233 $10,504
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)
Issuance (repurchase) of common stock (55) 683
Payments on notes receivable 128 124
------- -------
Net cash used in financing activities (2,932) (950)
Effect of exchange rate changes on cash - 11
------- -------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 2,215 7,864
CASH AND CASH EQUIVALENTS:
BEGINNING OF PERIOD 26,650 24,482
------- -------
END OF PERIOD $28,865 $32,346
======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Interest paid $ 6,020 $ 6,016
======= =======
Income taxes paid $ 148 $ 119
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
6
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FTD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. Basis of Presentation
The unaudited consolidated financial statements at December 31, 1996,
include the accounts of FTD Corporation and its wholly owned subsidiary,
Florists' Transworld Delivery, Inc. (collectively, the "Company"). These
statements 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):
<TABLE>
<CAPTION>
Balance Balance
at at
June 30, Costs December 31,
1996 Paid 1996
------- ----- ------------
<S> <C> <C> <C>
Severance benefits $1,050 $462 $588
Relocation costs 79 0 79
Other 190 10 180
------ ---- ----
Total $1,319 $472 $847
====== ==== ====
</TABLE>
7
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FTD CORP
NOTE 3. Capital Transactions
During the three months ended December 31, 1996, the Company repurchased
into treasury 3,100 shares and reissued 200 shares of class A common stock at a
net cost of approximately $16,085. In addition, pursuant to the terms of the
Company's 1994 Stock Award and Incentive Plan, options to purchase 255,000 class
A shares previously granted, were cancelled.
Note 4. Earnings Per Share
Primary and fully diluted earnings (loss) per common share and common
equivalent share has been computed based on the weighted average number of
common and common equivalent shares outstanding of 7,693,687 for the three
month period and 7,697,195 for the six month period ended December 31, 1996 and
7,040,178 for the three month and 6,989,239 for the six month periods ended
December 31, 1995.
Note 5. 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 6. 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
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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
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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 expenditures 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 $1.5 million, or
5.3% 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 expenditures 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 42.3%, 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 $7.2 million for the six months
ended December 31, 1996 compared to $10.5 million for the six months ended
December 31, 1995. 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
partially offset by capital stock transactions, was $2.9 million for the six
months ended December 31, 1996 compared to $0.9 million for the six months ended
December 31, 1995. The Company has agreed to repurchase 116,000 shares of Class
A Common Stock in future periods, for an aggregate purchase price of $617,000,
from a former executive under terms allowed by its debt agreement.
11
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description
----------- -----------
10 (a) Amendment No. 1 to Employment Agreement.
10 (b) Third Amendment to Credit Agreement.
11 Computation of Earnings Per Share.
11.1 Computation of Earnings Per Share.
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.
FTD CORPORATION
By: /s/ Douglas L. Hagemann
------------------------------------
Douglas L. Hagemann
Vice President Finance and Treasurer
(Principal financial officer and officer
duly authorized to sign on behalf of registrant)
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*EXHIBIT INDEX
Paper (P)
Exhibit or
Number Description Electronic (E)
- ------- ----------- --------------
10 (a) Amendment No. 1 to Employment Agreement. E
10 (b) Third Amendment to Credit Agreement. E
11 Computation of Earnings Per Share E
11.1 Computation of Earnings Per Share E
27 Financial Data Schedule E
14
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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 such fiscal year shall be pro
rated for the number of days Executive is employed
<PAGE> 2
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.
(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."
<PAGE> 3
5. Amendment of Section 9 of the Agreement. Section 9 of the
Agreement is hereby amended by deleting the words "or 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 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
<PAGE> 2
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:
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
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 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
<PAGE> 3
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
<PAGE> 1
EXHIBIT 11
FTD CORPORATION
COMPUTATION OF EARNINGS PER SHARE
(In thousands except per share data)
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
December 31, 1996 December 31, 1995
------------------ ------------------
(Unaudited) (Unaudited)
<S> <C> <C>
Primary Earnings Per Share:
Net earnings (loss) applicable to common stock, less
interest expense savings of $0.03 million for 1995 $(1,162) $(3,040)
======= =======
Average number of common shares outstanding 7,694 6,602
Common stock equivalents due to dilutive
affect of stock options and warrants 0 438
------- -------
Total average number of common shares
outstanding 7,694 7,040
======= =======
Primary earnings (loss) per share $ (0.15) $ (0.43)
======= =======
Fully Diluted Earnings Per Share:
Net earnings (loss) applicable to common stock $(1,162) $(3,040)
======= =======
Average number of common shares outstanding 7,694 6,602
Common stock equivalents due to dilutive
affect of stock options and warrants 0 438
------- -------
Total average number of common shares
outstanding 7,694 7,040
======= =======
Fully diluted earnings (loss) per share $ (0.15) $ (0.43)
======= =======
</TABLE>
<PAGE> 1
EXHIBIT 11.1
FTD CORPORATION
COMPUTATION OF EARNINGS PER SHARE
(In thousands except per share data)
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
December 31, 1996 December 31, 1995
----------------- -----------------
(Unaudited) (Unaudited)
<S> <C> <C>
Primary Earnings Per Share:
Net earnings (loss) applicable to common stock, less
interst expense savings of $0.05 million for 1995 $(1,710) $(2,913)
======= =======
Average number of common shares outstanding 7,697 6,551
Common stock equivalents due to dilutive
affect of stock options and warrants 0 438
------- -------
Total average number of common shares
outstanding 7,697 6,989
======= =======
Primary earnings (loss) per share $ (0.22) $ (0.42)
======= =======
Fully Diluted Earnings Per Share:
Net earnings (loss) applicable to common stock $(1,710) $(2,913)
======= =======
Average number of common shares outstanding 7,697 6,551
Common stock equivalents due to dilutive
affect of stock options and warrants 0 438
------- -------
Total average number of common shares
outstanding 7,697 6,989
======= =======
Fully diluted earnings (loss) per share $ (0.22) $ (0.42)
======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FTD
CORPORATION 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-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 28,865
<SECURITIES> 0
<RECEIVABLES> 37,844
<ALLOWANCES> 1,628
<INVENTORY> 19,414
<CURRENT-ASSETS> 93,876
<PP&E> 51,693
<DEPRECIATION> 20,152
<TOTAL-ASSETS> 213,062
<CURRENT-LIABILITIES> 91,946
<BONDS> 93,430
<COMMON> 63
0
0
<OTHER-SE> 27,440
<TOTAL-LIABILITY-AND-EQUITY> 213,062
<SALES> 11,055
<TOTAL-REVENUES> 41,640
<CGS> 8,400
<TOTAL-COSTS> 40,223
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,255
<INCOME-PRETAX> (1,525)
<INCOME-TAX> (344)
<INCOME-CONTINUING> (1,162)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,162)
<EPS-PRIMARY> (.15)
<EPS-DILUTED> (.15)
</TABLE>
