10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended June 30, 2018

Or

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

For the transition period fromto

Commission file number 001-35901

FTD Companies, Inc.

(Exact name of registrant as specified in its charter)

Delaware	32-0255852
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
3113 Woodcreek Drive, Downers Grove, Illinois (Address of principal executive offices)	60515 (Zip Code)

(630) 719-7800

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

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 x  No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	o	Accelerated filer	x
Non-accelerated filer	¨ (Do not check if a smaller reporting company)	Smaller reporting company	o
		Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨  No x

There were 27,938,332 shares of the Registrant’s common stock outstanding as of August 3, 2018.

FTD COMPANIES, INC.

INDEX TO FORM 10-Q

			Page
PART I.		FINANCIAL INFORMATION
	Item 1.	Financial Statements (Unaudited)	4
		Condensed Consolidated Balance Sheets as of June 30, 2018 and December 31, 2017	4
		Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2018 and 2017	5
		Condensed Consolidated Statements of Comprehensive Income/(Loss) for the Three and Six Months Ended June 30, 2018 and 2017	6
		Condensed Consolidated Statement of Stockholders’ Equity for the Six Months Ended June 30, 2018	7
		Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2018 and 2017	8
		Notes to Condensed Consolidated Financial Statements	9
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
	Item 4.	Controls and Procedures	42
PART II.		OTHER INFORMATION
	Item 1.	Legal Proceedings	43
	Item 1A.	Risk Factors	43
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
	Item 6.	Exhibits	46
SIGNATURES			47

In this document, references to “FTD Companies,” “FTD,” the “Company,” “we,” “us,” and “our” refer to FTD Companies, Inc. and its consolidated subsidiaries, unless the context otherwise requires.

2

Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains certain forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, as amended, based on our current expectations, estimates and projections about our operations, industry, financial condition, performance, results of operations, and liquidity. Statements containing words such as “may,” “believe,” “anticipate,” “expect,” “intend,” “plan,” “project,” “projections,” “business outlook,” “estimate,” or similar expressions constitute forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding the exploration of strategic alternatives; the strategic and financial evaluation of our business; our corporate restructuring and cost savings plan and other strategies; and future financial performance, including our 2018 financial outlook; our ability to continue as a going concern, repay or refinance indebtedness and invest in initiatives; expectations about future business plans, prospective performance and opportunities, including potential acquisitions; future financial performance; revenues; segment metrics; operating expenses; market trends, including those in the markets in which we compete; liquidity; cash flows and uses of cash; dividends; capital expenditures; depreciation and amortization; impairment charges; tax payments; foreign currency exchange rates; hedging arrangements; our products and services; pricing; marketing plans; competition; settlement of legal matters; and the impact of accounting changes and other pronouncements. Potential factors that could affect such forward-looking statements include, among others, uncertainties associated with being able to identify, evaluate or complete any strategic alternative or strategic transaction; the impact of the announcement of our review of strategic alternatives, as well as any strategic alternative or strategic transaction that may be pursued, on our business, including our financial and operating results and our employees, suppliers and customers; our ability to implement and realize anticipated benefits from our corporate restructuring and cost savings plan and other initiatives; our ability to repay, refinance or restructure our outstanding debt, and the other factors disclosed in the section entitled “Risk Factors” in our most recent Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”), and in this Quarterly Report on Form 10-Q, as updated from time to time in our subsequent filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. Such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that may cause actual performance and results to differ materially from those predicted. Reported results should not be considered an indication of future performance. Except as required by law, we undertake no obligation to publicly release the results of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

3

PART I—FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

FTD COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

(Unaudited)

	June 30, 2018			December 31, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	20,436		$	29,496
Accounts receivable, net of allowances of $6,242 and $4,957 as of June 30, 2018 and December 31, 2017, respectively	21,319			26,028
Inventories	24,816			25,356
Prepaid expenses and other current assets	11,705			14,911
Total current assets	78,276			95,791
Property and equipment, net	44,779			33,880
Intangible assets, net	104,958			181,965
Goodwill	211,978			277,041
Other assets	10,311			21,648
Total assets	$	450,302		$	610,325
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	69,943		$	70,480
Accrued liabilities	61,430			77,058
Accrued compensation	9,203			14,261
Deferred revenue	6,377			5,280
Income taxes payable	3,846			872
Current portion of long-term debt	189,690			189,666
Total current liabilities	340,489			357,617
Deferred tax liabilities, net	9,311			30,854
Other liabilities	7,538			7,330
Total liabilities	357,338			395,801
Commitments and contingencies (Note 14)
Stockholders’ equity:
Preferred stock, 5,000,000 shares, par value $0.0001, authorized; no shares issued and outstanding	—			—
Common stock, 60,000,000 shares, par value $0.0001, authorized; 30,364,811 and 30,073,087 shares issued as of June 30, 2018 and December 31, 2017, respectively	3			3
Treasury stock, 2,430,897 shares as of June 30, 2018 and December 31, 2017	(65,221		)	(65,221		)
Additional paid-in capital	710,750			705,388
Accumulated deficit	(508,913		)	(384,232		)
Accumulated other comprehensive loss	(43,655		)	(41,414		)
Total stockholders’ equity	92,964			214,524
Total liabilities and stockholders’ equity	$	450,302		$	610,325

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

FTD COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Revenues:
Products	$	268,006		$	293,228		$	551,009		$	574,192
Services	31,915			34,918			67,082			70,447
Total revenues	299,921			328,146			618,091			644,639
Operating expenses:
Cost of revenues—products	189,946			198,682			396,217			390,809
Cost of revenues—services	4,536			4,497			9,012			8,744
Sales and marketing	71,067			76,224			153,349			145,120
General and administrative	23,133			27,039			48,834			55,794
Amortization of intangible assets	1,495			3,819			2,997			7,639
Restructuring and other exit costs	—			136			—			944
Impairment of goodwill, intangible assets, and other long-lived assets	136,861			—			139,216			—
Total operating expenses	427,038			310,397			749,625			609,050
Operating income/(loss)	(127,117		)	17,749			(131,534		)	35,589
Interest income	120			122			241			237
Interest expense	(4,509		)	(2,562		)	(7,116		)	(4,950		)
Other income, net	160			223			136			198
Income/(loss) before income taxes	(131,346		)	15,532			(138,273		)	31,074
Provision for/(benefit from) income taxes	(13,261		)	5,816			(13,592		)	12,335
Net income/(loss)	$	(118,085	)	$	9,716		$	(124,681	)	$	18,739
Earnings/(loss) per common share:
Basic earnings/(loss) per share	$	(4.25	)	$	0.35		$	(4.49	)	$	0.67
Diluted earnings/(loss) per share	$	(4.25	)	$	0.35		$	(4.49	)	$	0.67

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

FTD COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(Unaudited, in thousands)

	Three Months Ended June 30,					Six Months Ended June 30,
	2018			2017		2018			2017
Net income/(loss)	$	(118,085	)	$	9,716	$	(124,681	)	$	18,739
Other comprehensive income/(loss):
Foreign currency translation	(6,396		)	4,124		(2,461		)	5,846
Cash flow hedges:
Changes in net gains on derivatives, net of tax of $23 and $53 for the three months ended June 30, 2018 and 2017, respectively, and $59 and $107 for the six months ended June 30, 2018 and 2017, respectively.	116			87		220			172
Other comprehensive income/(loss)	(6,280		)	4,211		(2,241		)	6,018
Total comprehensive income/(loss)	$	(124,365	)	$	13,927	$	(126,922	)	$	24,757

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

FTD COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(Unaudited, in thousands)

	Common Stock			Treasury Stock					Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Stockholders’ Equity
	Shares	Amount		Shares		Amount
Balance as of December 31, 2017	30,073	$	3	(2,431	)	$	(65,221	)	$	705,388		$	(41,414	)	$	(384,232	)	$	214,524
Net loss	—	—		—		—			—			—			(124,681		)	(124,681		)
Other comprehensive loss	—	—		—		—			—			(2,241		)	—			(2,241		)
Stock-based compensation	—	—		—		—			5,410			—			—			5,410
Vesting of restricted stock units and related repurchases of common stock	187	—		—		—			(460		)	—			—			(460		)
Issuance of common stock through employee stock purchase plan	105	—		—		—			412			—			—			412
Balance as of June 30, 2018	30,365	$	3	(2,431	)	$	(65,221	)	$	710,750		$	(43,655	)	$	(508,913	)	$	92,964

The accompanying notes are an integral part of these condensed consolidated financial statements.

7

FTD COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

	Six Months Ended June 30,
	2018			2017
Cash flows from operating activities:
Net income/(loss)	$	(124,681	)	$	18,739
Adjustments to reconcile net income/(loss) to net cash provided by/(used for) operating activities:
Depreciation and amortization	8,220			18,583
Impairment of goodwill, intangible assets, and other long-lived assets	139,216			—
Stock-based compensation	5,410			5,870
Provision for doubtful accounts receivable	1,067			779
Amortization of deferred financing fees	1,058			680
Deferred taxes, net	(20,432		)	1,758
Other, net	92			(69		)
Changes in operating assets and liabilities:
Accounts receivable, net	3,585			3,887
Inventories	529			170
Prepaid expenses and other assets	3,492			5,049
Accounts payable and accrued liabilities	(23,087		)	(36,060		)
Deferred revenue	1,144			1,154
Income taxes receivable or payable	2,514			66
Other liabilities	287			(997		)
Net cash provided by/(used for) operating activities	(1,586		)	19,609
Cash flows from investing activities:
Purchases of property and equipment	(16,280		)	(6,370		)
Proceeds from life insurance	10,003			—
Net cash used for investing activities	(6,277		)	(6,370		)
Cash flows from financing activities:
Proceeds from revolving lines of credit	185,000			70,000
Payments on term debt and revolving lines of credit	(182,000		)	(85,000		)
Purchases from employee stock plan	412			1,042
Payments for debt financing fees	(4,034		)	—
Repurchases of common stock withheld for taxes	(460		)	(1,969		)
Net cash used for financing activities	(1,082		)	(15,927		)
Effect of foreign currency exchange rate changes on cash and cash equivalents	(115		)	1,042
Change in cash and cash equivalents	(9,060		)	(1,646		)
Cash and cash equivalents, beginning of period	29,496			81,002
Cash and cash equivalents, end of period	$	20,436		$	79,356

The accompanying notes are an integral part of these condensed consolidated financial statements.

8

FTD COMPANIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, ACCOUNTING POLICIES, AND RECENT ACCOUNTING PRONOUNCEMENTS

Description of Business

FTD Companies, Inc. (together with its subsidiaries, “FTD” or the “Company”), is a premier floral and gifting company with a vision to be the world’s floral innovator and leader, creating products, brands, and technology-driven services its customers love. The Company provides floral, specialty foods, gift and related products and services to consumers, retail florists, and other retail locations and companies in need of floral and gifting solutions. The business uses the highly recognized FTD^® and Interflora^® brands, both supported by the iconic Mercury Man^® logo. While the Company operates primarily in the United States (“U.S.”) and the United Kingdom (“U.K.”), it has worldwide presence as its Mercury Man logo is displayed in approximately 35,000 floral shops in over 125 countries. The Company’s diversified portfolio of brands also includes ProFlowers^®, ProPlants^®, Shari’s Berries^®, Personal Creations^®, RedEnvelope^®, Flying Flowers^®, Ink Cards^™, Postagram^™, Gifts.com^™,and BloomThat^™. While floral arrangements and plants are its primary offerings, the Company also markets and sells gift items, including gourmet-dipped berries and other sweets, personalized gifts, gift baskets, wine and champagne, and jewelry.

The principal operating subsidiaries of FTD Companies, Inc. are Florists’ Transworld Delivery, Inc., FTD.COM Inc. (“FTD.com”), Interflora British Unit (“Interflora”), and Provide Commerce, Inc. (“Provide Commerce”). The operations of the Company include those of its subsidiary, Interflora, Inc., of which one-third is owned by a third party. The Company’s corporate headquarters is located in Downers Grove, Illinois. The Company also maintains offices in San Diego and San Francisco, California; Woodridge, Illinois; Centerbrook, Connecticut; Sleaford, England; and Hyderabad, India; and distribution centers in various locations throughout the U.S.

Basis of Presentation

The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”). All intercompany accounts and transactions have been eliminated in consolidation.

The preparation of financial statements in accordance with GAAP requires management to make accounting policy elections, estimates and assumptions that affect a number of reported amounts and related disclosures in the consolidated financial statements. Management bases its estimates on historical experience and assumptions that it believes are reasonable. Actual results could differ from those estimates and assumptions.

These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Form 10-K for the year ended December 31, 2017.

Going Concern

The condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern.

On May 31, 2018, the Company entered into the Third Amendment to Credit Agreement (the Credit Agreement, dated September 19, 2014, as previously amended and as further amended by the Third Amendment, is referred to in this Form 10-Q as the “Amended Credit Agreement”) with its lenders, which includes an agreement by the lenders to waive existing defaults caused by (1) the inclusion of a going concern uncertainty explanatory paragraph in the audit opinion of the Company’s financial statements for the year ended December 31, 2017 and (2) the breach of the consolidated net leverage ratio covenant for the quarter ended March 31, 2018. The Amended Credit Agreement also restricts the Company’s combined usage of the revolving credit facility portion of the Amended Credit Agreement to (1) $150 million during the period from May 31, 2018 through and including September 30, 2018; (2) $175 million during the period from October 1, 2018 through and including

9

FTD COMPANIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2018; and (3) $150 million during the period from January 1, 2019 through the September 19, 2019 maturity date, all subject to the Company’s obligation to make prepayments of the term loan portion of the Amended Credit Agreement with any net cash proceeds received from the sale of certain non-core or other assets. In addition, the consolidated net leverage ratio and fixed charge coverage ratio covenants were revised for each quarterly period through the September 19, 2019 maturity date as were the interest rates applicable to borrowings under the Amended Credit Agreement. See Note 6—“Financing Arrangements” for additional information regarding the Amended Credit Agreement.

    The Company was in compliance with the revised covenants under the Amended Credit Agreement as of June 30, 2018. The ability to continue as a going concern, however, is dependent on the Company generating profitable operating results and continuing to be in compliance with the revised covenants under the Amended Credit Agreement or refinancing, repaying, or obtaining new financing prior to maturity of the Amended Credit Agreement in September 2019. In this regard, on July 19, 2018, the Company announced that its board of directors has initiated a review of strategic alternatives. The strategic alternatives expected to be considered include, but are not limited to, a sale or merger of the Company, the Company continuing to pursue value-enhancing initiatives as a standalone company, a capital structure optimization that may involve potential financings, or the sale or other disposition of certain of FTD’s businesses or assets. The Company also announced a corporate restructuring and cost savings plan, under which opportunities to optimize operations, drive efficiency, and reduce costs have been identified.

Notwithstanding these initiatives, based on the Company’s 2018 year-to-date results of operations and outlook for the remainder of the term of the Amended Credit Agreement, the Company currently anticipates that its Adjusted EBITDA (as defined in the Amended Credit Agreement) and other sources of earnings or adjustments used to calculate Consolidated Adjusted EBITDA under the Amended Credit Agreement may result in (1) the Company’s consolidated net leverage ratio, as defined in the Amended Credit Agreement, exceeding the maximum permitted consolidated net leverage ratio during the remainder of the term of the Amended Credit Agreement and (2) the Company’s fixed charge coverage ratio, as defined in the Amended Credit Agreement, falling below the minimum requirement during the remainder of the term of the Amended Credit Agreement. If the Company is unable to meet the revised covenants under the Amended Credit Agreement and the Company is unable to obtain waivers or amendments from its lenders, the lenders could exercise remedies under the Amended Credit Agreement and repayment of the debt owed under the Amended Credit Agreement could be accelerated. The Company does not expect that it could repay all of its outstanding indebtedness if the repayment of such indebtedness was accelerated. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

There can be no assurance that the strategic alternatives review noted above will result in any particular strategic alternative or strategic transaction or that the Company will be able to refinance its outstanding indebtedness or obtain alternative financing on acceptable terms, when required or if at all. If the Company is not successful in its initiatives, the Company may be forced to limit its business activities or be unable to continue as a going concern, which would have a material adverse effect on its results of operations and financial condition. The financial statements included in this Form 10-Q do not include any adjustments that might result from the outcome of these uncertainties.

Accounting Policies

With the exception of the Company’s revenue recognition policy as noted below, refer to the Company’s audited consolidated financial statements included in the Company’s Form 10-K for the year ended December 31, 2017 for a discussion of the Company’s accounting policies, as updated below for recently adopted accounting standards.

Revenue Recognition

The Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 606 (“ASC 606”), Revenue from Contracts with Customers effective January 1, 2018, using the modified retrospective method. This method requires that the cumulative effect of the initial application is recognized as an adjustment to the opening balance of the Company’s retained earnings at January 1, 2018. However, the adoption did not have a material impact on the Company’s revenue recognition. As such, the Company did not record an adjustment to its beginning balance of retained earnings as of January 1, 2018.

10

FTD COMPANIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company recognizes revenue from short-term contracts for the sale of various products and services to its customers, which include consumers, floral network members, and wholesale customers. Sales to consumers are generated via the Company’s websites, mobile sites, or over the telephone with payment made either at the time the order is placed or upon shipment. Product revenues from these short-term contracts are single performance obligations and are considered complete upon delivery to the recipient. Amounts collected from customers upon placement of an order are recorded as deferred revenue and recognized upon delivery of the product. Products revenues, less discounts and refunds, and the related cost of revenues are recognized when control of the goods is transferred to the recipient, which is generally upon delivery. Product sales are not refundable other than as related to customer service issues. Shipping and service fees charged to customers are recognized at the time the related products revenues are recognized and are included in products revenues. Shipping and delivery costs are included in cost of revenues. Sales taxes are collected from customers and remitted to the appropriate taxing authorities and are not reflected in the Company’s condensed consolidated statements of operations as revenues.

The Company generally recognizes revenues for sales to consumers on a gross basis because the Company controls the goods before they are transferred to the recipient as the Company (i) bears primary responsibility for fulfilling the promise to the customer; (ii) bears inventory risk before and/or after the good or service is transferred to the customer; and (iii) has discretion in establishing the price for the sale of the good or service to the customer.

Services revenues related to orders sent through the floral network are variable based on either the number of orders or the value of orders and are recognized in the period in which the orders are delivered. Membership and other subscription-based fees are recognized monthly as earned, on a month-to-month basis. Each service offered by the Company is separate and distinct from other services and represents an individual performance obligation.

The Company also sells point-of-sale systems and related technology services to its floral network members and recognizes revenue in accordance with ASC 606. For hardware sales that include software, revenues are recognized when delivery, installation and customer acceptance have all occurred. The transaction price for point-of-sale systems is based on the equipment and the software modules ordered by the customer and include installation and training for the system. The sale of the system is considered a single performance obligation since the installation and training are a significant part of the sale in order for the floral network member to access the clearinghouse to send and receive floral orders. The Company recognizes revenues on hardware which is sold without software at the time of delivery.    

Probability of collection for both products and services revenue is assessed based on a number of factors, including past transaction history with the customer and the creditworthiness of the customer. If it is determined that collectability is not reasonably assured, revenues are not recognized until collectability becomes reasonably assured.

The Company incurs contract costs that are incremental costs incurred for obtaining a contract. These contract costs are short-term (less than a year) and are expensed as incurred based on the practical expedient provided in ASC 606. As such, the Company does not capitalize costs incurred for obtaining a contract.    

Recent Accounting Pronouncements

Recently Adopted Accounting Standards

In March 2018, the FASB issued Accounting Standards Update (“ASU”) 2018-05, Income Taxes (Topic 740)—Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118, which provides guidance from the SEC allowing for the recognition of provisional amounts in the financial statements for the year ended December 31, 2017 as a result of the U.S. Tax Cuts and Jobs Act (“TCJA”) that was signed into law in December 2017. The guidance allows for a measurement period of up to one year from the enactment date to finalize the accounting related to the TCJA. The Company has applied the guidance in this update in its financial statements for the six months ended June 30, 2018 and will finalize and record any adjustments related to the TCJA within the one year measurement period.

11

FTD COMPANIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and issued subsequent amendments to the initial guidance in August 2015, March 2016, April 2016, May 2016, and December 2016 within ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12, and ASU 2016-20, respectively (collectively, “Topic 606”). Topic 606 supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of Topic 606 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The Company adopted the guidance under this topic as of January 1, 2018 with no material impact to its consolidated financial statements. See Accounting Policies—Revenue Recognition above. The disclosures required by ASC 606 have been included in Note 2—Segment Information.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments—Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10). The updated guidance enhances the reporting model for financial instruments, and includes amendments to address aspects of recognition, measurement, presentation and disclosure. The Company adopted the guidance under this topic as of January 1, 2018 with no impact to its consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This update was issued to address the diversity in practice related to the classification of certain cash receipts and payments in the statement of cash flows by adding or clarifying guidance on eight specific cash flow issues. The Company adopted the guidance under this topic as of January 1, 2018 with no impact to its consolidated financial statements.

In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting. This update was issued to provide clarity and reduce diversity in practice as well as cost and complexity when applying the guidance in Topic 718 to the modification of terms or conditions of a share-based payment award. The amendments provide guidance on determining which changes to the terms and conditions of share-based payment awards would require an entity to apply modification accounting under Topic 718. The Company adopted the guidance under this topic as of January 1, 2018 with no impact to its consolidated financial statements.

Recently Issued Accounting Standards

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This update requires the recognition of certain lease assets and lease liabilities on the balance sheet as well as the disclosure of key information about leasing arrangements. The amendments in this ASU require the recognition and measurement of leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients which may be elected by the Company. The amendments in this ASU will be effective for the Company for fiscal years, and the interim periods within those years, beginning after December 15, 2018, with early adoption permitted. The Company is currently assessing the impact of this update on its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326). This update seeks to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments, including trade receivables, and other commitments to extend credit held by a reporting entity at each reporting date. The amendments require an entity to replace the incurred loss impairment methodology in current GAAP with a methodology that reflects current expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The amendments will be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which guidance is effective, which is a modified-retrospective approach. The Company is currently assessing the impact of this update on its consolidated financial statements.

12

FTD COMPANIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This update seeks to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements and make certain targeted improvements to simplify the application of the hedge accounting guidance in current GAAP. The amendments in this update better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and presentation of hedge results. For cash flow and net investment hedges as of the adoption date, this ASU requires a modified retrospective approach. The amended presentation and disclosure guidance is required only prospectively. The amendments in this ASU are effective for the Company’s fiscal year beginning after December 31, 2018, with early adoption permitted. The Company is currently assessing the impact of this update on its consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This update allows for a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the TCJA. This update also requires certain disclosures about stranded tax effects. The amendments in this ASU will be effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company is currently assessing the impact of this update on its consolidated financial statements.

In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. This update allows existing employee guidance to apply to non-employee share-based transactions (as long as the transaction is not effectively a form of financing), with the exception of specific guidance related to the attribution of compensation cost. The cost of nonemployee awards will continue to be recorded as if the grantor had paid cash for the goods or services. The amendments in this ASU will be effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company is currently assessing the impact of this update on its consolidated financial statements.

2. SEGMENT INFORMATION

The Company reports its business in three reportable segments: U.S. Consumer, Florist, and International. Prior to January 1, 2018, the Company reported its business in four reportable segments. As a result of a change in the information provided to and utilized by the Company’s then-current Chief Executive Officer (who was also the Company’s Chief Operating Decision Maker (“CODM”)) to assess the performance of the business, the Company combined the previous Provide Commerce and Consumer segments into one reportable segment. There have been no changes to the Company’s reporting units, which remain FTD.com (previously referred to as Consumer), Florist, International, ProFlowers/Gourmet Foods, and Personal Creations.

The Company follows the reporting requirements of ASC 280, Segment Reporting. Management measures and reviews the Company’s operating results by segment in accordance with the “management approach” defined in ASC 280. The reportable segments identified below were the segments of the Company for which separate financial information was available and for which segment results were regularly reviewed by the Company’s CODM to make decisions about the allocation of resources and to assess performance. The CODM uses segment operating income to evaluate the performance of the business segments and make decisions about allocating resources among segments. Segment operating income is operating income excluding depreciation, amortization, litigation and dispute settlement charges or gains, transaction-related costs, restructuring and other exit costs, and impairment of goodwill, intangible assets and other long-lived assets. Stock-based and incentive compensation and general corporate expenses are not allocated to the segments. Segment operating income is prior to intersegment eliminations and excludes other expense, net.

13

FTD COMPANIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Below is a reconciliation of segment revenues to consolidated revenues (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Products revenues:
U.S. Consumer	$	233,082		$	259,804		$	456,443		$	488,476
Florist	11,703			12,813			26,474			28,982
International	27,319			25,446			76,411			65,887
Segment products revenues	272,104			298,063			559,328			583,345
Services revenues:
Florist	28,213			31,277			57,658			61,614
International	3,795			3,755			9,618			9,051
Segment services revenues	32,008			35,032			67,276			70,665
Intersegment eliminations	(4,191		)	(4,949		)	(8,513		)	(9,371		)
Consolidated revenues	$	299,921		$	328,146		$	618,091		$	644,639

Intersegment revenues represent amounts charged from one segment to the other for services provided based on order volume at a set rate per order. Intersegment revenues by segment were as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Intersegment revenues:
U.S. Consumer	$	(4,098	)	$	(4,835	)	$	(8,319	)	$	(9,153	)
Florist	(93		)	(114		)	(194		)	(218		)
Total intersegment revenues	$	(4,191	)	$	(4,949	)	$	(8,513	)	$	(9,371	)

The U.S. Consumer segment is comprised of the FTD.com, ProFlowers, Gourmet Foods, and Personal Creations business units. The revenues for the business units were as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
U.S. Consumer segment revenues:
FTD.com	$	65,881	$	80,113	$	137,599	$	152,917
ProFlowers	96,963		106,515		176,786		197,226
Gourmet Foods	45,536		49,205		96,617		101,198
Personal Creations	24,702		23,971		45,441		37,135
Total U.S. Consumer segment revenues	$	233,082	$	259,804	$	456,443	$	488,476

Geographic revenues from sales to external customers were as follows for the periods presented (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
U.S.	$	268,807	$	298,945	$	532,062	$	569,701
U.K.	31,114		29,201		86,029		74,938
Consolidated revenues	$	299,921	$	328,146	$	618,091	$	644,639

14

FTD COMPANIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Below is a reconciliation of segment operating income/(loss) to consolidated operating income/(loss) and income/(loss) before income taxes (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Segment operating income/(loss)(a)
U.S. Consumer	$	6,474		$	21,120		$	(1,761	)	$	40,227
Florist	10,849			12,248			23,115			26,202
International	2,710			3,066			9,765			8,598
Total segment operating income	20,033			36,434			31,119			75,027
Unallocated expenses(b)	(6,171		)	(9,400		)	(15,217		)	(20,855		)
Impairment of goodwill, intangible assets, and other long-lived assets	(136,861		)	—			(139,216		)	—
Depreciation expense and amortization of intangible assets	(4,118		)	(9,285		)	(8,220		)	(18,583		)
Operating income/(loss)	(127,117		)	17,749			(131,534		)	35,589
Interest expense, net	(4,389		)	(2,440		)	(6,875		)	(4,713		)
Other income, net	160			223			136			198
Income/(loss) before income taxes	$	(131,346	)	$	15,532		$	(138,273	)	$	31,074

(a) Segment operating income/(loss) is operating income/(loss) excluding depreciation, amortization, impairment of goodwill, intangible assets, and other long-lived assets, litigation and dispute settlement charges and gains, transaction-related costs, and restructuring and other exit costs. In addition, stock-based and incentive compensation and general corporate expenses are not allocated to the segments. Segment operating income is prior to intersegment eliminations and excludes other income/(expense), net.

(b) Unallocated expenses include various corporate costs, such as executive management, corporate finance, and legal costs. In addition, unallocated expenses include stock-based and incentive compensation, restructuring and other exit costs, transaction-related costs, and litigation and dispute settlement charges and gains.

3. FINANCING RECEIVABLES

The Company has financing receivables related to equipment sales to its floral network members. The current and noncurrent portions of financing receivables are included in accounts receivable and other assets, respectively, in the condensed consolidated balance sheets. The Company assesses financing receivables individually for balances due from current floral network members and collectively for balances due from terminated floral network members.

The credit quality and the aging of financing receivables was as follows (in thousands):

	June 30, 2018		December 31, 2017
Current	$	9,589	$	10,571
Past due:
1 - 150 days past due	229		167
151 - 364 days past due	168		213
365 - 730 days past due	234		184
731 or more days past due	380		357
Total	$	10,600	$	11,492

Financing receivables on nonaccrual status totaled $1.1 million and $1.0 million at June 30, 2018 and December 31, 2017, respectively.

15

FTD COMPANIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The allowance for credit losses and the recorded investment in financing receivables were as follows (in thousands):

	Six Months Ended June 30,
	2018			2017
Allowance for credit losses:
Balance as of January 1	$	912		$	846
Provision	178			184
Write-offs charged against allowance	(102		)	(249		)
Balance at June 30	$	988		$	781
Ending balance collectively evaluated for impairment	$	944		$	745
Ending balance individually evaluated for impairment	$	44		$	36
Recorded investments in financing receivables:
Balance collectively evaluated for impairment	$	1,093		$	856
Balance individually evaluated for impairment	$	9,507		$	11,044

Individually evaluated impaired loans, including the recorded investment in such loans, the unpaid principal balance, and the allowance related to such loans, each totaled less than $0.1 million as of both June 30, 2018 and December 31, 2017. The average recorded investment in such loans was less than $0.1 million for both the six months endedJune 30, 2018 and 2017. Interest income recognized on impaired loans was less than $0.1 million for both the six months endedJune 30, 2018 and 2017.

4. TRANSACTIONS WITH RELATED PARTIES

Transactions with Qurate

As of June 30, 2018, Qurate Retail, Inc. (“Qurate”), formerly Liberty Interactive Corporation, owned 36.5% of the issued and outstanding shares of FTD common stock. An Investor Rights Agreement governs certain rights of and restrictions on Qurate in connection with the shares of FTD common stock that Qurate owns.

The I.S. Group Limited

Interflora holds an equity investment of 20.4% in The I.S. Group Limited (“I.S. Group”). The investment was $1.7 million as of both June 30, 2018 and December 31, 2017, and is included in other assets in the condensed consolidated balance sheets. I.S. Group supplies floral-related products to Interflora’s floral network members in both the U.K. and the Republic of Ireland as well as to other customers. Interflora derives revenues from I.S. Group from (i) the sale of products (sourced from third-party suppliers) to I.S. Group for which revenue is recognized on a gross basis, (ii) commissions on products sold by I.S. Group (sourced from third-party suppliers) to floral network members, and (iii) commissions for acting as a collection agent on behalf of I.S. Group. Revenues related to products sold to and commissions earned from I.S. Group were $0.4 million for each of the three months ended June 30, 2018 and 2017, and $1.3 million and $1.1 million for the six months ended June 30, 2018 and 2017, respectively. In addition, Interflora purchases products from I.S. Group for sale to consumers. The cost of revenues related to products purchased from I.S. Group was $0.1 million for each of the three months ended June 30,2018 and 2017, and $0.2 million and $0.1 million for the six months ended June 30,2018 and 2017, respectively. Amounts due from I.S. Group were $0.2 million and $0.3 million at June 30, 2018 and December 31, 2017, respectively, and amounts payable to the I.S. Group were $0.8 million and $1.0 million at June 30, 2018 and December 31, 2017, respectively.

16

FTD COMPANIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5. GOODWILL, INTANGIBLE ASSETS, AND OTHER LONG-LIVED ASSETS

Goodwill is tested for impairment at the reporting unit level. A reporting unit is a business or a group of businesses for which discrete financial information is available and is regularly reviewed by management. An operating segment is made up of one or more reporting units. The Company reports its business operations in three operating and reportable segments: U.S. Consumer, Florist, and International. Each of the Florist and International segments is a reporting unit. The U.S Consumer segment is comprised of three reporting units: FTD.com, ProFlowers/Gourmet Foods, and Personal Creations.

The Company tests goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter of each year at the reporting unit level and on an interim basis if events or substantive changes in circumstances indicate that the carrying amount of a reporting unit or an indefinite-lived asset may exceed its fair value (i.e. that a triggering event has occurred). Additionally, the Company evaluates finite-lived intangible assets and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset groupings may not be recoverable.

During the quarter ended June 30, 2018, due to continued declines in financial results and reductions in the projected results for the remainder of 2018, the Company determined that a triggering event had occurred that required an interim impairment assessment for all of its reporting units other than the International reporting unit, as that reporting unit’s year-to-date and projected results were relatively in line with expectations. The intangible assets and other long-lived assets associated with the reporting units assessed were also reviewed for impairment. Impairment charges are included in operating expenses in the condensed consolidated statement of operations under the caption impairment of goodwill, intangible assets, and other long-lived assets.

The Company performed a quantitative interim test. In calculating the fair value of the reporting units, the Company used a combination of the income approach and the market approach valuation methodologies. For all reporting units other than the ProFlowers/Gourmet Foods reporting unit, the income approach was used primarily, as management believes that a discounted cash flow approach is the most reliable indicator of the fair values of the businesses. Under the market approach, the guideline company method was used, which focuses on comparing the Company’s risk profile and growth prospects to select reasonably similar companies based on business description, revenue size, markets served, and profitability. For the ProFlowers/Gourmet Foods reporting unit, the cost approach was used.

The interim test resulted in the Company’s determination that the fair value of the Florist reporting unit exceeded its carrying value and, therefore, its goodwill was not impaired. The reporting unit’s fair value exceeded its carrying value by approximately 6%. The fair values of the FTD.com, ProFlowers/Gourmet Foods, and Personal Creations reporting units were less than their carrying values and, as such, goodwill impairment charges of $35.2 million, $14.8 million, and $12.5 million, respectively, were recorded during the three months ended June 30, 2018 related to these reporting units. Such goodwill impairment charges are not deductible for tax purposes. The remaining goodwill balances for the U.S Consumer, Florist, and International segments are as noted in the table below. The ProFlowers/Gourmet Foods reporting unit’s goodwill was fully impaired as of June 30, 2018. Within the U.S. Consumer segment, the remaining goodwill balances for the FTD.com and Personal Creations reporting units were $29.3 million and $13.8 million, respectively, as of June 30, 2018.

Goodwill

The changes in the net carrying amount of goodwill for the six months endedJune 30, 2018 were as follows (in thousands):

	U.S. Consumer			Florist		International			Total
Goodwill as of December 31, 2017	$	106,356		$	90,651	$	80,034		$	277,041
Purchase accounting adjustment - Bloom That acquisition	(792		)	—		—			(792		)
Foreign currency translation	—			—		(1,812		)	(1,812		)
Impairment of Goodwill	(62,459		)	—		—			(62,459		)
Goodwill as of June 30, 2018	$	43,105		$	90,651	$	78,222		$	211,978

17

FTD COMPANIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In 2017, 2016, 2015, and 2008, the Company recorded goodwill impairment charges of $196.7 million, $84.0 million, $85.0 million, and $116.3 million, respectively. The table above reflects the Company’s June 30, 2018 goodwill balances, net of the previously recorded impairment charges. The total accumulated goodwill impairment was $544.5 million as of June 30, 2018.

Intangible Assets

Intangible assets are primarily related to the acquisition of the Company by United Online, Inc. in August 2008 and the acquisition of Provide Commerce in December 2014, and consist of the following (in thousands):

	June 30, 2018							December 31, 2017
	Gross Value (a)		Accumulated Amortization			Net		Gross Value (a)		Accumulated Amortization			Net
Complete technology	$	60,584	$	(60,584	)	$	—	$	61,274	$	(60,653	)	$	621
Customer contracts and relationships	193,298		(193,298		)	—		193,775		(193,667		)	108
Trademarks and trade names:
Finite-lived	41,466		(27,772		)	13,694		93,593		(24,875		)	68,718
Indefinite-lived (b)	91,264		—			91,264		112,518		—			112,518
Total	$	386,612	$	(281,654	)	$	104,958	$	461,160	$	(279,195	)	$	181,965

(a) Gross value has been reduced by the impairments recorded as follows (in thousands):

	Three Months Ended June 30, 2018		Year Ended December 31, 2017
Complete technology	$	561	$	16,335
Customer contracts and relationships	90		—
Trademarks and trade names:
Finite-lived	52,108		27,000
Indefinite-lived (b)	20,400		38,300

(b) As indefinite-lived assets are not amortized, the indefinite-lived trademarks and trade names have no associated amortization expense or accumulated amortization.

As of June 30, 2018, estimated future intangible assets amortization expense for each of the next five years and thereafter was as follows (in thousands):

For the Year Ended	Future Amortization Expense
2018 (remainder of the year)	$	628
2019	1,256
2020	1,248
2021	1,244
2022	1,188
Thereafter	8,130
Total	$	13,694

18

FTD COMPANIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Other Long-Lived Assets

Property and equipment consisted of the following (in thousands):

	June 30, 2018			December 31, 2017
Land and improvements	$	1,578		$	1,583
Buildings and improvements	17,265			16,375
Leasehold improvements	10,976			10,883
Equipment	13,590			13,122
Computer equipment	25,736			25,208
Computer software	72,589			58,991
Furniture and fixtures	3,269			3,215
Property and equipment, gross (a)	145,003			129,377
Accumulated depreciation	(100,224		)	(95,497		)
Property and equipment, net	$	44,779		$	33,880

(a) Impairment charges of $3.6 million recorded during the six months ended June 30, 2018 and $22.0 million recorded during the year ended December 31, 2017 are reflected as reductions in the gross balances as of June 30, 2018.

During the year ended December 31, 2017, the other long-lived assets related to the ProFlowers/Gourmet Foods reporting unit were fully impaired as the projected undiscounted cash flows of that reporting unit were less than the carrying amount of such assets. Additional impairment charges of $1.2 million and $3.6 million were recorded during the three and six months ended June 30, 2018, respectively, related to capital additions for that reporting unit as the undiscounted cash flows continue to be less than the carrying amount of the assets of that asset group.

Depreciation expense, including the amortization of leasehold improvements, was $2.6 million and $5.5 million for the three months ended June 30, 2018 and 2017, respectively, and $5.2 million and $10.9 million for the six months ended June 30, 2018 and 2017, respectively.

6. FINANCING ARRANGEMENTS

Credit Agreement

On September 19, 2014, the Company entered into a credit agreement (the “Credit Agreement”) with Interflora, certain wholly owned domestic subsidiaries of FTD Companies, Inc. party thereto as guarantors, the financial institutions party thereto from time to time, Bank of America Merrill Lynch and Wells Fargo Securities, LLC, as joint lead arrangers and book managers, and Bank of America, N.A., as administrative agent for the lenders. The Credit Agreement provided for a term loan in an aggregate principal amount of $200 million, the proceeds of which were used to repay a portion of outstanding revolving loans, and also provided for a $350 million revolving credit facility. On December 31, 2014, the Company borrowed $120 million under the revolving credit facility to fund the cash portion of the acquisition purchase price of Provide Commerce.

The obligations under the Credit Agreement are guaranteed by certain of FTD Companies, Inc.’s wholly owned domestic subsidiaries (together with FTD Companies, Inc., the “U.S. Loan Parties”). In addition, the obligations under the Credit Agreement are secured by a lien on substantially all of the assets of the U.S. Loan Parties, including a pledge of all of the outstanding capital stock of certain direct subsidiaries of the U.S. Loan Parties (except with respect to foreign subsidiaries and certain domestic subsidiaries whose assets consist primarily of foreign subsidiary equity interests, in which case such pledge is limited to 66% of the outstanding capital stock).

19

FTD COMPANIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Credit Agreement contains customary representations and warranties, events of default, affirmative covenants and negative covenants, that, among other things, require the Company to maintain compliance with a maximum net leverage ratio and a minimum consolidated fixed charge coverage ratio, and impose restrictions and limitations on, among other things, investments, dividends, share repurchases, asset sales, and the Company’s ability to incur additional debt and additional liens.

On May 31, 2018, the Company entered into the Amended Credit Agreement with its lenders, which includes an agreement by the lenders to waive existing defaults caused by (1) the inclusion of a going concern uncertainty explanatory paragraph in the audit opinion of the Company’s financial statements for the year ended December 31, 2017 and (2) the breach of the consolidated net leverage ratio covenant for the quarter ended March 31, 2018. The Amended Credit Agreement also restricts the Company’s combined usage of the revolving credit facility portion of the Amended Credit Agreement to (1) $150 million during the period from May 31, 2018 through and including September 30, 2018; (2) $175 million during the period from October 1, 2018 through and including December 31, 2018; and (3) $150 million during the period from January 1, 2019 through the September 19, 2019 maturity date, all subject to the Company’s obligation to make prepayments of the term loan portion of the Amended Credit Agreement with any net cash proceeds received from the sale of certain non-core or other assets. In addition, the consolidated net leverage ratio and fixed charge coverage ratio covenants were revised for each quarterly period through the September 19, 2019 maturity date, as were the interest rates, as noted below. The Company is also required to pay a quarterly fee of 0.125% times the actual daily amount of the revolver commitments and outstanding loans beginning October 1, 2018 through December 31, 2018, which fee increases to 0.25% beginning January 1, 2019 through the maturity date. The Company paid an amendment fee of 0.625% times the revolver commitments and outstanding term loan ($1.9 million) in addition to a $0.5 million work fee related to the structuring and arranging of the amendment.

The Company was in compliance with the revised covenants under the Amended Credit Agreement as of June 30, 2018. The ability to continue as a going concern is dependent on the Company generating profitable operating results and continuing to be in compliance with its revised covenants under the Amended Credit Agreement or refinancing, repaying, or obtaining new financing prior to maturity of the Amended Credit Agreement in September 2019, as discussed in Note 1—“Description of Business, Basis of Presentation, Accounting Policies, and Recent Accounting Pronouncements.” 

The interest rates applicable to borrowings under the Amended Credit Agreement are based on either LIBOR plus a margin ranging from 2.50% per annum to 7.50% per annum, or a base rate plus a margin ranging from 1.50% per annum to 6.50% per annum, calculated according to the Company’s net leverage ratio. In addition, under the Amended Credit Agreement, the Company pays a commitment fee of 0.50% per annum on the unused portion of the revolving credit facility and a letters of credit fee ranging between 2.50% per annum to 7.50% per annum.

The stated interest rates (based on LIBOR) as of June 30, 2018 under the term loan and the revolving credit facility were 7.83% and 7.74%, respectively. The effective interest rates as of June 30, 2018 under the term loan and the revolving credit facility portions of the Amended Credit Agreement were 10.46% and 10.97%, respectively. The effective interest rates include the amortization of both the debt issuance costs and the effective portion of the interest rate swap and commitment fees. The commitment fee rate as of June 30, 2018 was 0.50%.

As of June 30, 2018, the remaining borrowing capacity under the Amended Credit Agreement, which was reduced by $1.8 million in outstanding letters of credit, was $83.2 million.

The changes in the Company’s debt balances for the six months endedJune 30, 2018 were as follows (in thousands):

	December 31, 2017			Draw Down of Debt		Repayments of Debt			June 30, 2018
Credit Agreement:
Revolving Credit Facility	$	52,000		$	185,000	$	(172,000	)	$	65,000
Term Loan	140,000			—		(10,000		)	130,000
Total Principal Outstanding	192,000			$	185,000	$	(182,000	)	195,000
Deferred Financing Fees	(2,334		)						(5,310		)
Total Debt, Net of Deferred Financing Fees	$	189,666							$	189,690

The term loan is subject to amortization payments of $5 million per quarter and customary mandatory prepayments under certain conditions.

20

FTD COMPANIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. DERIVATIVE INSTRUMENTS

In March 2012, the Company purchased, for $1.9 million, forward starting interest rate cap instruments based on 3-month LIBOR, effective January 2015 through June 2018. The forward starting interest rate cap instruments had aggregated notional values totaling $130 million. The interest rate cap instruments were designated as cash flow hedges against expected future cash flows attributable to future 3-month LIBOR interest payments on a portion of the outstanding borrowings under the Credit Agreement. The gains or losses on the instruments were reported in other comprehensive income/(loss) to the extent that they were effective and were reclassified into earnings when the cash flows attributable to 3-month LIBOR interest payments were recognized in earnings.

The estimated fair values and notional values of outstanding derivative instruments as of June 30, 2018 and December 31, 2017 were as follows (in thousands):

		Estimated Fair Value of Derivative Instruments				Notional Value of Derivative Instruments
	Balance Sheet Location	June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017
Derivative Assets:
Interest rate caps	Other assets	$	—	$	—	$	—	$	130,000

The Company recognized the following losses from derivatives, before tax, in other comprehensive income/(loss) (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Derivatives Designated as Cash Flow Hedging Instruments:
Interest rate caps	$	—	$	—	$	—	$	(1	)

As of June 30, 2018, the interest rate caps had matured. As of December 31, 2017, the effective portion, before tax effect, of the Company’s interest rate caps designated as cash flow hedging instruments was $0.3 million. During the three months ended June 30, 2018 and 2017, respectively, $0.1 million and $0.2 million was reclassified from accumulated other comprehensive income/(loss) to interest expense in the condensed consolidated statements of operations. During each of the six months ended June 30, 2018 and 2017, $0.3 million was reclassified from accumulated other comprehensive income/(loss) to interest expense in the condensed consolidated statement of operations.

8. FAIR VALUE MEASUREMENTS

The following table presents estimated fair values of financial assets and liabilities and derivative instruments that were required to be measured at fair value on a recurring basis (in thousands):

	June 30, 2018						December 31, 2017
	Total		Level 1		Level 2		Total		Level 1		Level 2
Assets:
Cash equivalents	$	3,584	$	3,584	$	—	$	2,705	$	2,705	$	—
Total	$	3,584	$	3,584	$	—	$	2,705	$	2,705	$	—
Liabilities:
Non-qualified deferred compensation plan	$	927	$	—	$	927	$	1,228	$	—	$	1,228
Total	$	927	$	—	$	927	$	1,228	$	—	$	1,228

21

FTD COMPANIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Provide Commerce, Inc. has an executive deferred compensation plan for key management level employees under which such employees could elect to defer receipt of current compensation. This plan is intended to be an unfunded, non-qualified deferred compensation plan that complies with the provisions of section 409A of the Internal Revenue Code. At the time of the acquisition of Provide Commerce, contributions to the plan were suspended except those relating to any compensation earned but not yet paid as of the same date. The plan assets consist primarily of life insurance contracts recorded at their cash surrender value. During the three months ended June 30, 2018, the Company cancelled certain of the life insurance contracts and received proceeds totaling $10.0 million from the cash surrender value. At June 30, 2018 and December 31, 2017, the life insurance policies had cash surrender values of $1.7 million and $11.7 million, respectively, and are included in other assets in the accompanying condensed consolidated balance sheets.

As a result of triggering events within the periods, the Company performed impairment tests of its intangible and other long-lived assets during the three months ended June 30, 2018 and the year ended December 31, 2017. Based on these tests, the Company determined that the carrying value of certain intangible assets and other long-lived assets exceeded their fair values as determined using the income approach as of June 30, 2018 and December 31, 2017. As such, non-cash, pre-tax impairment charges of $76.7 million (excluding goodwill impairment charges of $62.5 million) were recorded during the six months ended June 30, 2018 and $103.6 million (excluding goodwill impairment charges of $196.7 million) were recorded during the year ended December 31, 2017. The determination of fair value is subjective in nature and requires the use of significant estimates and assumptions, considered to be Level 3 inputs, including projected cash flows over the estimated projection period and the discount rate. See Note 5—“Goodwill, Intangible Assets, and Other Long-Lived Assets” for additional information.

The Company estimated the fair value of its outstanding debt using a discounted cash flow approach that incorporates a market interest yield curve with adjustments for duration and risk profile. In determining the market interest yield curve, the Company considered, among other factors, its estimated credit spread. As of June 30, 2018, the Company estimated its credit spread as 6.9% and 8.6% for the term loan and revolving credit facility, respectively, resulting in yield-to-maturity estimates for the term loan and revolving credit facility of 9.2% and 11.0%, respectively. As of December 31, 2017, the Company estimated its credit spread as 1.0% and 1.6% for the term loan and revolving credit facility, respectively, resulting in yield-to-maturity estimates for the term loan and revolving credit facility of 2.9% and 3.4%, respectively. The table below summarizes the carrying amounts and estimated fair values for the Company’s debt (in thousands):

	June 30, 2018				December 31, 2017
			Level 2				Level 2
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Debt outstanding	$	195,000	$	195,000	$	192,000	$	192,000

Fair value approximates the carrying amount of financing receivables because such receivables are discounted at a rate comparable to market. Fair values of cash and cash equivalents, short-term accounts receivable, accounts payable, and accrued liabilities approximate their carrying amounts because of their short-term nature.

9. STOCKHOLDERS’ EQUITY

Common Stock Repurchases

Upon the exercise of stock options or the vesting of restricted stock units (“RSUs”) or other equity compensation awards, the Company does not collect withholding taxes in cash from employees. Instead, the Company automatically withholds, from the awards that vest or stock options that are exercised, the portion of those shares with a fair market value equal to the amount of the minimum statutory withholding taxes due. The withheld shares are accounted for as repurchases of common stock but are not counted against the limits under a repurchase program. The Company then pays the minimum statutory withholding taxes in cash. During the six months endedJune 30, 2018, 0.3 million RSUs vested for which 0.1 million shares were withheld to cover the minimum statutory withholding taxes of $0.5 million.

22

FTD COMPANIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. INCENTIVE COMPENSATION PLANS

In June 2018, stockholders approved the amendment to the FTD Companies, Inc. Third Amended and Restated 2013 Incentive Compensation Plan (as so amended, the “Amended Plan”), which provides for the granting of awards to employees and non-employee directors, including stock options, stock appreciation rights, restricted stock units (“RSUs”), and other stock based awards. As of June 30, 2018, the Company had 5.0 million shares available for issuance under the Amended Plan.

During the six months ended June 30, 2018, the Company granted RSUs, performance stock units (“PSUs”), and stock options to certain employees totaling 0.9 million shares, 1.3 million shares, and 0.8 million shares, respectively. The RSUs and stock options granted will generally vest in four equal annual installments. The per share weighted average fair market value of the underlying stock on the grant date of the RSUs and PSUs was $6.39 and $6.64, respectively. The options were granted with a weighted average exercise price of $6.64 per share. The following weighted average assumptions were used to estimate the fair value of the stock options at the grant date:

Risk-free interest rate	2.5%
Expected term (in years)	6.21
Dividend yield	0.0%
Expected volatility	37.7%

Vesting of the PSUs is based on the achievement of certain performance criteria, as specified in the plan, at the end of a three-year performance period ending on December 31, 2020. The actual number of shares that will ultimately vest is dependent upon the level of achievement of the performance conditions. If the minimum targets are not achieved, none of the shares will vest and any compensation expense previously recognized will be reversed. The Company recognizes stock-based compensation expense related to performance awards based upon the Company’s estimate of the likelihood of achievement of the performance targets at each reporting date. As of June 30, 2018, the Company does not expect the PSUs to vest. As such, no expense was recorded during the six months ended June 30, 2018 related to these awards.

In addition to the equity awards noted above, eligible employees of the Company are able to participate in the FTD Companies, Inc. 2015 Employee Stock Purchase Plan (“ESPP Plan”) through which employees may purchase shares of FTD common stock at a purchase price equal to 85% of the lower of (i) the closing market price per share of FTD common stock on the first day of the offering period or (ii) the closing market price per share of FTD common stock on the purchase date. Each offering period has a six-month duration and purchase interval. The purchase dates are January 1 and July 1. As of June 30, 2018, the Company had 0.2 million shares available for grant under the ESPP Plan.

The stock-based compensation expense incurred for all equity plans in the three months ended June 30, 2018 and 2017 and the six months ended June 30, 2018 and 2017 have been included in the condensed consolidated statements of operations as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Cost of revenues	$	48	$	63	$	105	$	134
Sales and marketing	933		1,615		1,865		2,330
General and administrative	1,623		1,851		3,440		3,406
Total stock-based compensation expense	$	2,604	$	3,529	$	5,410	$	5,870

23

FTD COMPANIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. INCOME TAXES

During the three months ended June 30, 2018, the Company recorded a tax benefit of $13.3 million on a pre-tax loss of $131.3 million, compared to a tax provision of $5.8 millionon pre-tax income of $15.5 million for the three months ended June 30, 2017. During the three months ended June 30, 2018, management determined that the future reversals of existing taxable temporary differences and available tax strategies would not generate sufficient future taxable income to be able to realize its state net operating loss carryforward tax assets prior to their expiration and, therefore, a valuation allowance of $1.6 million was recorded. In addition, the goodwill impairment charges recorded during the three months ended June 30, 2018 are not tax deductible and, therefore, there was no tax benefit recorded on such charges.

During the six months ended June 30, 2018, the Company recorded a tax benefit of $13.6 million on a pre-tax loss of $138.3 million, compared to a tax provision of $12.3 millionon pre-tax income of $31.1 million for the six months ended June 30, 2017. The placement of a valuation allowance on the state net operating loss carryforwards and shortfalls related to vesting of equity awards increased tax expense by $1.6 million and $2.6 million, respectively, for the six months ended June 30, 2018. For the six months ended June 30, 2017, shortfalls related to vesting of equity awards were $1.4 million. In addition, the goodwill impairment charges recorded during the six months ended June 30, 2018 are not tax deductible and, therefore, there was no tax benefit recorded on such charges.

12. EARNINGS/(LOSS) PER SHARE

Certain of the Company’s RSUs and PSUs are considered participating securities because they contain a non-forfeitable right to dividends irrespective of whether dividends are actually declared or paid or whether the awards ultimately vest. Accordingly, the Company computes earnings/(loss) per share pursuant to the two-class method in accordance with ASC 260, Earnings Per Share.

The following table sets forth the computation of basic and diluted earnings/(loss) per common share (in thousands, except per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Numerator:
Net income/(loss)	$	(118,085	)	$	9,716		$	(124,681	)	$	18,739
Income allocated to participating securities	—			(228		)	—			(434		)
Net income/(loss) attributable to common stockholders	$	(118,085	)	$	9,488		$	(124,681	)	$	18,305
Denominator:
Basic average common shares outstanding	27,785			27,452			27,749			27,415
Add: Dilutive effect of securities	—			—			—			34
Diluted average common shares outstanding	27,785			27,452			27,749			27,449
Basic earnings/(loss) per common share	$	(4.25	)	$	0.35		$	(4.49	)	$	0.67
Diluted earnings/(loss) per common share	$	(4.25	)	$	0.35		$	(4.49	)	$	0.67

The diluted earnings/(loss) per common share computations exclude stock options and RSUs which are antidilutive. Weighted-average antidilutive shares for the three months ended June 30, 2018 and 2017 were 4.5 million and 4.1 million, respectively, and for the six months ended June 30, 2018 and 2017, were 3.9 million and 3.5 million, respectively.

24

FTD COMPANIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. RESTRUCTURING AND OTHER EXIT COSTS

Restructuring and other exit costs were as follows (in thousands):

	Employee Termination Costs			Facility Closure Costs			Total
Accrued as of December 31, 2017	$	184		$	193		$	377
Charges	—			—			—
Cash paid	(172		)	(168		)	(340		)
Other – non-cash	(12		)	—			(12		)
Accrued as of June 30, 2018	$	—		$	25		$	25

14. CONTINGENCIES—LEGAL MATTERS

 Commencing on August 19, 2009, the first of a series of putative consumer class action lawsuits was brought against Provide Commerce, Inc. and co-defendant Regent Group, Inc. d/b/a Encore Marketing International (“EMI”). These cases were ultimately consolidated during the next three years into Case No. 09 CV 2094 in the United States District Court for the Southern District of California under the title In re EasySaver Rewards Litigation. Plaintiffs’ claims arise from their online enrollment in subscription based membership programs known as EasySaver Rewards, RedEnvelope Rewards, and Preferred Buyers Pass (collectively, the “Membership Programs”). Plaintiffs claim that after they ordered items from certain of Provide Commerce’s websites, they were presented with an offer to enroll in one of the Membership Programs, each of which is offered and administered by EMI. Plaintiffs purport to represent a nationwide class of consumers allegedly damaged by Provide Commerce’s purported unauthorized or otherwise allegedly improper transferring of billing information to EMI, who then posted allegedly unauthorized charges to their credit or debit card accounts for membership fees for the Membership Programs. In the operative fourth amended complaint, plaintiffs asserted ten claims against Provide Commerce and EMI: (1) breach of contract (against Provide Commerce only); (2) breach of contract (against EMI only); (3) breach of implied covenant of good faith and fair dealing; (4) fraud; (5) violations of the California Consumers Legal Remedies Act; (6) unjust enrichment; (7) violation of the Electronic Funds Transfer Act (against EMI only); (8) invasion of privacy; (9) negligence; and (10) violations of the Unfair Competition Law. Plaintiffs seek damages, attorneys’ fees, and costs. After motion practice regarding the claims asserted and numerous settlement conferences and mediations in an effort to informally resolve the matter, the parties reached an agreement on the high level terms of a settlement on April 9, 2012, conditioned on the parties negotiating and executing a complete written agreement. In the weeks following April 9, 2012, the parties negotiated a formal written settlement agreement (the “Settlement”), which the court preliminarily approved on June 13, 2012. After notice to the purported class and briefing by the parties, the court conducted a final approval hearing (also known as a fairness hearing) on January 28, 2013, but did not rule. On February 4, 2013, the court entered its final order approving the Settlement, granting plaintiffs’ motion for attorneys’ fees, costs, and incentive awards, and overruling objections filed by a single objector. The court entered judgment on the Settlement on February 21, 2013. The objector filed a notice of appeal with the Ninth Circuit Court of Appeals on March 4, 2013. After the completion of briefing, the Ninth Circuit set oral argument for February 2, 2015. But on January 29, 2015, the Ninth Circuit entered an order deferring argument and resolution of the appeal pending the Ninth Circuit’s decision in a matter captioned Frank v. Netflix, No. 12 15705+. On March 19, 2015, the Ninth Circuit entered an order vacating the judgment in this matter and remanding it to the district court for further proceedings consistent with its opinion in Frank v.Netflix issued on February 27, 2015. The district court ordered supplemental briefing on the issue of final Settlement approval May 21, 2015. After briefing, the district court conducted a hearing on July 27, 2016 and took the matter under submission. On August 9, 2016, the district court entered an order reapproving the Settlement without any changes, and accordingly entered judgment and dismissed the case with prejudice. On September 6, 2016, the objector filed a notice of appeal. On November 22, 2016, plaintiffs filed a motion for summary affirmance of the district court’s judgment, to which the objector responded and filed a

25

FTD COMPANIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

cross-motion for sanctions. Plaintiffs’ motion for summary affirmance temporarily stayed briefing on the appeal. On March 2, 2017, the Ninth Circuit denied plaintiffs’ motion for summary affirmance and objector’s cross-motion for sanctions, and reset the briefing schedule. The Objector filed his opening brief on May 1, 2017. Thirteen state Attorneys General filed an amicus brief in support of the Objector on May 8, 2017. The parties filed their answering briefs on June 30, 2017. Various legal aid organizations filed an amicus brief in support of no party regarding cy pres relief also on June 30, 2017. The Objector’s optional reply brief was filed on August 14, 2017. The Ninth Circuit heard oral arguments on May 17, 2018, but has not yet made its ruling.

There are no assurances that other legal actions or governmental investigations will not be instituted in connection with the Company’s current or former business practices. The Company cannot predict the outcome of governmental investigations or other legal actions or their potential implications for its business.

The Company records a liability when it believes that it is both probable that a loss has been incurred, and the amount of loss can be reasonably estimated. The Company evaluates, at least quarterly, developments in its legal matters that could affect the assessment of the probability of loss or the amount of liability and makes adjustments as appropriate. Significant judgment is required to determine both probability and the estimated amount. The Company may be unable to estimate a possible loss or range of possible loss due to various reasons, including, among others: (i) if the damages sought are indeterminate, (ii) if the proceedings are in early stages, (iii) if there is uncertainty as to the outcome of pending appeals, motions or settlements, (iv) if there are significant factual issues to be determined or resolved, and (v) if there are novel or unsettled legal theories presented. In such instances, there is considerable uncertainty regarding the ultimate resolution of such matters, including a possible eventual loss, if any. As of June 30, 2018 and December 31, 2017, the Company had reserves totaling $2.8 million and $2.5 million for estimated losses related to certain legal matters. With respect to other legal matters, the Company has determined, based on its current knowledge, that the amount of possible loss or range of loss, including any reasonably possible losses in excess of amounts already accrued, is not reasonably estimable. However, legal matters are inherently unpredictable and subject to significant uncertainties, some of which are beyond the Company’s control. As such, there can be no assurance that the final outcome of these matters will not materially and adversely affect the Company’s business, financial condition, results of operations, or cash flows.

15. SUPPLEMENTAL CASH FLOW INFORMATION

The following table sets forth supplemental cash flow disclosures (in thousands):

	Six Months Ended June 30,
	2018		2017
Cash paid for interest	$	5,733	$	4,074
Cash paid for income taxes, net	3,781		10,517

At June 30, 2018, non-cash investing items included $6.3 million of purchases of property and equipment that were included in accounts payable and other liabilities in the Company’s consolidated balance sheet. These purchases will be reflected in investing activities in the consolidated statement of cash flows in the periods in which they are paid.

16. SUBSEQUENT EVENTS

On July 18, 2018, the Company announced that its board of directors initiated a review of strategic alternatives focused on maximizing stockholder value, including but not limited to, a sale or merger of the Company, the Company pursuing value-enhancing initiatives as a standalone company, a capital structure optimization that may involve potential financings, or the sale or other disposition of certain of the Company’s businesses or assets.

In addition, the Company’s board of directors appointed Scott D. Levin, the Company’s then-current Executive Vice President, General Counsel and Secretary, as interim President and Chief Executive Officer. Mr. Levin succeeds John C. Walden, who has stepped down from these positions and from FTD’s board of directors.

26

FTD COMPANIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Under the terms of Mr. Walden’s employment agreement, he is entitled to the severance and other benefits described in such agreement, including cash severance payments, as well as accelerated vesting of a portion of his outstanding nonvested restricted stock units and unvested stock options, subject in each case to his compliance with certain covenants in his employment agreement. In addition, in the event of a change in control involving the Company during 2018, Mr. Walden will be entitled to receive a pro-rated target bonus calculated under the terms of his employment agreement. The foregoing description of Mr. Walden’s employment agreement is qualified in its entirety by reference to (1) the Employment Agreement between FTD Companies, Inc. and John C. Walden (the “Walden Employment Agreement”), filed as Exhibit 10.38 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, and (2) the First Amendment to the Walden Employment Agreement, filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018.

The Company also announced a corporate restructuring and cost savings plan, under which it has identified opportunities to optimize its operations, drive efficiency, and reduce costs. In conjunction with the corporate restructuring and cost savings plan, the Company expects to incur pre-tax restructuring and corporate reorganization costs ranging between approximately $23.5 million and approximately $29.5 million. The restructuring costs will include cash severance payments ranging from approximately $12.0 million to approximately $15.0 million and non-cash stock-based compensation related to the acceleration of certain equity awards ranging from approximately $5.5 million to approximately $6.5 million. Other costs associated with the corporate reorganization and cost savings plan, such as costs to retain key employees, are expected to range from approximately $6.0 million to approximately $8.0 million.

27

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

FTD Companies, Inc.  (which together with its subsidiaries may be referred to herein as the “Company,” “FTD,” “we,” “us,” or “our”) is a premier floral and gifting company with a vision to be the world’s floral innovator and leader, creating products, brands, and technology-driven services our customers love. We provide floral, specialty foods, gift, and related products and services to consumers, retail florists, and other retail locations and companies in need of floral and gifting solutions. Our business uses the highly recognized FTD^® and Interflora^® brands, both supported by the iconic Mercury Man^® logo. While we operate primarily in the United States (“U.S.”) and the United Kingdom (“U.K.”), we have worldwide presence as our Mercury Man logo is displayed in approximately 35,000 floral shops in over 125 countries. Our diversified portfolio of brands also includes ProFlowers^®, ProPlants^®, Shari’s Berries^®, Personal Creations^®, RedEnvelope^®, Flying Flowers^®, Ink Cards™, Postagram™, Gifts.com™, and BloomThat™. While floral arrangements and plants are our primary offerings, we also market and sell gift items, including gourmet-dipped berries and other sweets, personalized gifts, gift baskets, wine and champagne, and jewelry.

Reportable Segments

We report our business operations in three reportable segments: U.S. Consumer, Florist, and International. Prior to January 1, 2018, we reported our business in four reportable segments. As a result of a change in the information provided to and utilized by the Company’s then-current Chief Executive Officer (who was also the Company’s Chief Operating Decision Maker) to assess the performance of the business, the Company combined the previous Provide Commerce and Consumer segments into one reportable segment.

Through our U.S. Consumer segment, we are a leading direct marketer of floral and gift products for consumers, including food gifts, personalized gifts, and other gifting products, primarily in the U.S. Our U.S. Consumer segment operates primarily through our www.ftd.com, www.proflowers.com, www.berries.com, www.personalcreations.com, www.proplants.com,www.gifts.com, and www.bloomthat.com websites, associated mobile sites and applications, and the 1-800-SEND-FTD and various other telephone numbers. Through our Florist segment, we are a leading provider of products and services to our floral network members, including services that enable our floral network members to send, receive, and deliver floral orders. Floral network members include traditional retail florists, as well as other non-florist retail locations, primarily in the U.S. Our Florist segment also provides products and services to other companies in need of floral and gifting solutions. Our International segment consists of Interflora, which operates primarily in the U.K. Interflora is a leading direct marketer of floral and gift products, and operates primarily through the www.interflora.co.uk,www.flyingflowers.co.uk, and www.interflora.ie websites, associated mobile sites and applications, and various telephone numbers. Interflora also provides products and services to floral network members and to other companies in need of floral and gifting solutions.

Subsequent Events

On July 18, 2018, we announced that our board of directors initiated a review of strategic alternatives focused on maximizing stockholder value, including but not limited to, a sale or merger of the Company, the Company pursuing value-enhancing initiatives as a standalone company, a capital structure optimization that may involve potential financings, or the sale or other disposition of certain of our businesses or assets.

In addition, our board of directors appointed Scott D. Levin, our then-current Executive Vice President, General Counsel and Secretary, as interim President and Chief Executive Officer. Mr. Levin succeeds John C. Walden, who has stepped down from these positions and from FTD’s board of directors.

28

Under the terms of Mr. Walden’s employment agreement, he is entitled to the severance and other benefits described in such agreement, including cash severance payments, as well as accelerated vesting of a portion of his outstanding nonvested restricted stock units and unvested stock options, subject in each case to his compliance with certain covenants in his employment agreement. In addition, in the event of a change in control involving the Company during 2018, Mr. Walden will be entitled to receive a pro-rated target bonus calculated under the terms of his employment agreement. The foregoing description of Mr. Walden’s employment agreement is qualified in its entirety by reference to (1) the Employment Agreement between FTD Companies, Inc. and John C. Walden (the “Walden Employment Agreement”), filed as Exhibit 10.38 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, and (2) the First Amendment to the Walden Employment Agreement, filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018.

The Company also announced a corporate restructuring and cost savings plan, under which it has identified opportunities to optimize its operations, drive efficiency, and reduce costs. In conjunction with the corporate restructuring and cost savings plan, the Company expects to incur pre-tax restructuring and corporate reorganization costs ranging between approximately $23.5 million and approximately $29.5 million. The restructuring costs will include cash severance payments ranging from approximately $12.0 million to approximately $15.0 million and non-cash stock-based compensation related to the acceleration of certain equity awards ranging from approximately $5.5 million to approximately $6.5 million. Other costs associated with the corporate reorganization and cost savings plan, such as costs to retain key employees, are expected to range from approximately $6.0 million to approximately $8.0 million.

KEY BUSINESS METRICS

We review a number of key business metrics to help us monitor our performance and trends affecting our segments, and to develop forecasts and budgets. These key metrics include the following:

Segment operating income.  Our Chief Operating Decision Maker uses segment operating income to evaluate the performance of our business segments and to make decisions about allocating resources among segments. Segment operating income is operating income excluding depreciation, amortization, litigation and dispute settlement charges and gains, transaction and integration costs, restructuring and other exit costs, and impairment of goodwill, intangible assets, and other long-lived assets. In addition, stock-based and incentive compensation and general corporate expenses are not allocated to the segments. Segment operating income is prior to intersegment eliminations and excludes other income/(expense), net. See Note 2—“Segment Information” of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for a reconciliation of segment operating income to consolidated operating income and consolidated income before income taxes.

Consumer orders.  We monitor the number of consumer orders for floral, gift, and related products during a given period. Consumer orders are individual units delivered during the period that were originated through our consumer websites, associated mobile sites and applications, and various telephone numbers. The number of consumer orders is not adjusted for non-delivered orders that are refunded on or after the scheduled delivery date. Orders originating with a florist or other retail location for delivery to consumers are not included as part of this number.

Average order value.  We monitor the average value for consumer orders delivered in a given period, which we refer to as the average order value. Average order value represents the average amount received for consumer orders delivered during a period. The average order value of consumer orders within our U.S. Consumer and International segments is tracked in their local currency, which is the U.S. Dollar (“USD”) for the U.S. Consumer segment and the British Pound (“GBP”) for the International segment. The local currency amounts received for the International segment are then translated into USD at the average currency exchange rate for the period. Average order value includes merchandise revenues and shipping or service fees paid by the consumer, less discounts and refunds (net of refund-related fees charged to floral network members).

Average revenues per member.  We monitor average revenues per member for our floral network members in the Florist segment. Average revenues per member represents the average revenues earned from a member of our floral network during a period. Revenues include services revenues and products revenues, but exclude revenues from sales to non-members. Floral network members include our retail florists and other non-florist retail locations who offer floral and gifting solutions. Average revenues per member is calculated by dividing Florist segment revenues for the period, excluding sales to non-members, by the average number of floral network members for the period.

29

The table below sets forth, for the periods presented, our consolidated revenues, segment revenues, segment operating income, consumer orders, average order values, average revenues per member, and average currency exchange rates.

	Three Months Ended June 30,				Change					Six Months Ended June 30,					Change
	2018		2017		$			%		2018			2017		$			%
	(in thousands, except for percentages, average order values, average revenues per member, and average currency exchange rates)
Consolidated:
Consolidated revenues	$	299,921	$	328,146	$	(28,225	)	(9	)%	$	618,091		$	644,639	$	(26,548	)	(4	)%
U.S. Consumer:
Segment revenues(a)	$	233,082	$	259,804	$	(26,722	)	(10	)%	$	456,443		$	488,476	$	(32,033	)	(7	)%
Segment operating income/(loss)	$	6,474	$	21,120	$	(14,646	)	(69	)%	$	(1,761	)	$	40,227	$	(41,988	)	(104	)%
Consumer orders	4,214		4,654		(440		)	(9	)%	8,092			8,501		(409		)	(5	)%
Average order value	$	53.83	$	54.39	$	(0.56	)	(1	)%	$	54.93		$	55.97	$	(1.04	)	(2	)%
Florist:
Segment revenues(a)	$	39,916	$	44,090	$	(4,174	)	(9	)%	$	84,132		$	90,596	$	(6,464	)	(7	)%
Segment operating income	$	10,849	$	12,248	$	(1,399	)	(11	)%	$	23,115		$	26,202	$	(3,087	)	(12	)%
Average revenues per member	$	3,873	$	3,981	$	(108	)	(3	)%	$	8,055		$	8,122	$	(67	)	(1	)%
International:
In USD:
Segment revenues	$	31,114	$	29,201	$	1,913		7	%	$	86,029		$	74,938	$	11,091		15	%
Segment operating income	$	2,710	$	3,066	$	(356	)	(12	)%	$	9,765		$	8,598	$	1,167		14	%
Consumer orders	550		532		18			3	%	1,477			1,374		103			7	%
Average order value	$	45.89	$	45.57	$	0.32		1	%	$	47.45		$	44.91	$	2.54		6	%
In GBP:
Segment revenues	£	22,880	£	22,798	£	82		—	%	£	62,264		£	59,679	£	2,585		4	%
Average order value	£	33.77	£	35.61	£	(1.84	)	(5	)%	£	34.36		£	35.79	£	(1.43	)	(4	)%
Average currency exchange rate: GBP to USD	1.36		1.28							1.38			1.26

(a) Segment revenues are prior to intersegment eliminations. See Note 2—“Segment Information” of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for a reconciliation of segment revenues to consolidated revenues.

30

CONSOLIDATED OPERATING RESULTS

The following table sets forth selected historical consolidated financial data. The information contained in the table below should be read in conjunction with “Liquidity and Capital Resources,” included in this Item 2, and the Condensed Consolidated Financial Statements and accompanying notes thereto included in Part I, Item 1 of this Form 10-Q.

	Three Months Ended June 30,						Change					Six Months Ended June 30,						Change
	2018			2017			$			%		2018			2017			$			%
	(in thousands, except percentages)
Revenues	$	299,921		$	328,146		$	(28,225	)	(9	)%	$	618,091		$	644,639		$	(26,548	)	(4	)%
Operating expenses:
Cost of revenues	194,482			203,179			(8,697		)	(4	)%	405,229			399,553			5,676			1	%
Sales and marketing	71,067			76,224			(5,157		)	(7	)%	153,349			145,120			8,229			6	%
General and administrative	23,133			27,039			(3,906		)	(14	)%	48,834			55,794			(6,960		)	(12	)%
Amortization of intangible assets	1,495			3,819			(2,324		)	(61	)%	2,997			7,639			(4,642		)	(61	)%
Restructuring and other exit costs	—			136			(136		)	(100	)%	—			944			(944		)	(100	)%
Impairment of goodwill, intangible assets, and other long-lived assets	136,861			—			136,861			NM		139,216			—			139,216			NM
Total operating expenses	427,038			310,397			116,641			38	%	749,625			609,050			140,575			23	%
Operating income/(loss)	(127,117		)	17,749			(144,866		)	NM		(131,534		)	35,589			(167,123		)	NM
Interest expense, net	(4,389		)	(2,440		)	(1,949		)	80	%	(6,875		)	(4,713		)	(2,162		)	46	%
Other income, net	160			223			(63		)	(28	)%	136			198			(62		)	(31	)%
Income/(loss) before income taxes	(131,346		)	15,532			(146,878		)	NM		(138,273		)	31,074			(169,347		)	NM
Provision for/(benefit from) income taxes	(13,261		)	5,816			(19,077		)	NM		(13,592		)	12,335			(25,927		)	NM
Net income/(loss)	$	(118,085	)	$	9,716		$	(127,801	)	NM		$	(124,681	)	$	18,739		$	(143,420	)	NM

NM = not meaningful

Consolidated Revenues

Consolidated revenues decreased $28.2 million, or 9%, for the three months ended June 30, 2018 compared to the three months ended June 30, 2017, primarily due to a $26.7 milliondecrease in revenues from our U.S. Consumer segment and a $4.2 milliondecrease in revenues from our Florist segment. In constant currency, International segment revenues were flat for the three months ended June 30, 2018 as compared to the three months ended June 30, 2017. Foreign currency exchange rates had a $1.8 million favorable impact on our consolidated revenues during the three months ended June 30, 2018 as the average exchange rate was higher when compared to the three months ended June 30, 2017.

Consolidated revenues decreased $26.5 million, or 4%, for the six months ended June 30, 2018 compared to the six months ended June 30, 2017, primarily due to a $32.0 milliondecrease in revenues from our U.S. Consumer segment and a $6.5 milliondecrease in revenues from our Florist segment, which were partially offset by an $11.1 millionincrease ($3.2 million in constant currency) in revenues from our International segment. Foreign currency exchange rates had a $7.9 million favorable impact on our consolidated revenues during the six months ended June 30, 2018 as the average exchange rate was higher when compared to the six months ended June 30, 2017.

Consolidated Cost of Revenues

Consolidated cost of revenues decreased $8.7 million, or 4%, for the three months ended June 30, 2018 compared to the three months ended June 30, 2017. The decrease was primarily due to a $9.9 milliondecrease in costs associated with our U.S. Consumer segment, which was partially offset by a $1.8 million increase ($0.5 million in constant currency) in our International segment. Foreign currency exchange rates had a $1.3 million unfavorable impact on our consolidated cost of revenues during the three months ended June 30, 2018. Gross margin was 35% for the three months ended June 30, 2018, as compared to 38% for the three months ended June 30, 2017.

31

Consolidated cost of revenues increased $5.7 million, or 1%, for the six months ended June 30, 2018 compared to the six months ended June 30, 2017. The increase was primarily due to a $9.0 millionincrease ($3.4 million in constant currency) in our International segment, which was partially offset by a $2.3 milliondecrease in costs associated with our U.S. Consumer segment. Foreign currency exchange rates had a $5.6 million unfavorable impact on our consolidated cost of revenues during the six months ended June 30, 2018. Gross margin was 34% for the six months ended June 30, 2018, as compared to 38% for the six months ended June 30, 2017.

Consolidated Sales and Marketing

Consolidated sales and marketing expenses decreased $5.2 million, or 7%, during the three months ended June 30, 2018 compared to the three months ended June 30, 2017 due to decreases of $3.2 million and $2.2 million in costs associated with our Florist and U.S. Consumer segments, respectively. Consolidated sales and marketing expenses, as a percentage of consolidated revenues, was 24% for the three months ended June 30, 2018 compared to 23% for the three months ended June 30, 2017.

Consolidated sales and marketing expenses increased $8.2 million, or 6%, during the six months ended June 30, 2018 compared to the six months ended June 30, 2017 due to a $10.8 millionincrease in costs associated with our U.S. Consumer segment, which was partially offset by a $3.9 milliondecrease in our Florist segment. Consolidated sales and marketing expenses, as a percentage of consolidated revenues, was 25% for the six months ended June 30, 2018 compared to 23% for the six months ended June 30, 2017.

Consolidated General and Administrative

Consolidated general and administrative expenses decreased $3.9 million, or 14%, for the three months ended June 30, 2018 compared to the three months ended June 30, 2017. The decrease was primarily due to a $2.4 million decrease in depreciation expense and a $1.8 million decrease in costs related to corporate strategic planning. These decreases were partially offset by a $0.4 million increase in bad debt expense.

Consolidated general and administrative expenses decreased $7.0 million, or 12%, for the six months ended June 30, 2018 compared to the six months ended June 30, 2017. The decrease was primarily due to decreases of $4.9 million in depreciation expense, $1.9 million in personnel-related costs, $1.8 million in costs related to corporate strategic planning, and $0.9 million in transaction and integration costs. These decreases were partially offset by increases of $1.9 million in legal and professional fees expense and $0.3 million in bad debt expense.

Amortization of Intangible Assets

Amortization expense related to intangible assets decreased $2.3 million and $4.6 million, respectively, for the three and six months ended June 30, 2018 compared to the three and six months ended June 30, 2017 as certain intangible assets were impaired during the year ended December 31, 2017.

Restructuring and Other Exit Costs

The Company did not incur any restructuring and other exit costs during the three and six months ended June 30, 2018. During the three and six months ended June 30, 2017, restructuring and other exit costs of $0.1 million and $0.9 million, respectively, were incurred. Such restructuring costs were primarily related to employee termination and facility closure costs.

Impairment of Goodwill, Intangible Assets, and Other Long-Lived Assets

During the three and six months ended June 30, 2018, the Company recorded pre-tax impairment charges of $136.9 million and $139.2 million, respectively. See Note 5—“Goodwill, Intangible Assets, and Other Long-Lived Assets” of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1, of this Form 10-Q, for a further description of these charges.     

32

Provision for Income Taxes

During the three months ended June 30, 2018, the Company recorded a tax benefit of $13.3 million on a pre-tax loss of $131.3 million, compared to a tax provision of $5.8 millionon pre-tax income of $15.5 million for the three months ended June 30, 2017. During the three months ended June 30, 2018, management determined that the future reversals of existing taxable temporary differences and available tax strategies would not generate sufficient future taxable income to be able to realize its state net operating loss carryforward tax assets prior to their expiration and, therefore, a valuation allowance of $1.6 million was recorded. In addition, the goodwill impairment charges recorded during the three months ended June 30, 2018 are not tax deductible and, therefore, there was no tax benefit recorded on such charges.

During the six months ended June 30, 2018, the Company recorded a tax benefit of $13.6 million on a pre-tax loss of $138.3 million, compared to a tax provision of $12.3 millionon pre-tax income of $31.1 million for the six months ended June 30, 2017. The placement of a valuation allowance on the state net operating loss carryforwards and shortfalls related to vesting of equity awards increased tax expense by $1.6 million and $2.6 million, respectively, for the six months ended June 30, 2018. For the six months ended June 30, 2017, shortfalls related to vesting of equity awards were $1.4 million. In addition, the goodwill impairment charges recorded during the six months ended June 30, 2018 are not tax deductible and, therefore, there was no tax benefit recorded on such charges.

BUSINESS SEGMENT OPERATING RESULTS

The Company reports its business in three reportable segments: U.S. Consumer, Florist, and International. Segment operating income is operating income excluding depreciation, amortization, litigation and dispute settlement charges and gains, transaction and integration costs, restructuring and other exit costs, and impairment of goodwill, intangible assets, and other long-lived assets. In addition, stock-based and incentive compensation and general corporate expenses are not allocated to the segments. Segment operating income is prior to intersegment eliminations and excludes other income/(expense), net.

U.S. CONSUMER SEGMENT

	Three Months Ended June 30,						Change					Six Months Ended June 30,						Change
	2018			2017			$			%		2018			2017			$			%
	(in thousands, except percentages and average order values)
Segment revenues	$	233,082		$	259,804		$	(26,722	)	(10	)%	$	456,443		$	488,476		$	(32,033	)	(7	)%
Segment operating income/(loss)	$	6,474		$	21,120		$	(14,646	)	(69	)%	$	(1,761	)	$	40,227		$	(41,988	)	(104	)%
Key metrics and other financial data:
Consumer orders	4,214			4,654			(440		)	(9	)%	8,092			8,501			(409		)	(5	)%
Average order value	$	53.83		$	54.39		$	(0.56	)	(1	)%	$	54.93		$	55.97		$	(1.04	)	(2	)%
Segment operating margin	3		%	8		%						—		%	8		%

U.S. Consumer Segment Revenues

U.S. Consumer segment revenues decreased $26.7 million, or 10%, for the three months ended June 30, 2018 compared to the three months ended June 30, 2017, driven by a 9% decrease in order volume and a 1% decrease in average order value. The decrease in order volume was primarily due to lower traffic and conversion on our websites. The Easter holiday shift to the first quarter of 2018 also contributed to the lower order volume during the second quarter of 2018. The decrease in average order value was primarily due to increased promotional offers and a shift in the product mix to lower priced products. Revenues decreased 18%, 9%, and 7% for the FTD.com, ProFlowers, and Gourmet Foods businesses, respectively, for the three months ended June 30, 2018 compared to the three months ended June 30, 2017. Partially offsetting these decreases, was a 3% increase in revenues for the Personal Creations reporting unit for the three months ended June 30, 2018 compared to the 2017 period.

33

U.S. Consumer segment revenues decreased $32.0 million, or 7%, for the six months ended June 30, 2018 compared to the six months ended June 30, 2017, driven by a 5% decrease in order volume and a 2% decrease in average order value. The decrease in order volume was primarily due to lower traffic and conversion on our websites. The decrease in average order value was primarily due to increased promotional offers and a shift in the product mix to lower priced products. Revenues decreased 10%, 10%, and 5% for the ProFlowers, FTD.com, and Gourmet Foods businesses, respectively, for the six months ended June 30, 2018 compared to the six months ended June 30, 2017. Partially offsetting these decreases was a 22% increase in revenues for the Personal Creations reporting unit for the six months ended June 30, 2018 compared to the 2017 period.

U.S. Consumer Segment Operating Income/(Loss)

U.S. Consumer segment operating income decreased $14.6 million for the three months ended June 30, 2018 compared to the three months ended June 30, 2017. The gross margin for the U.S. Consumer segment decreased to 32% for the three months ended June 30, 2018, as compared to 36% for the three months ended June 30, 2017, primarily due to the reduced pricing noted above, higher product costs, and higher average shipping costs. Sales and marketing expenses decreased $2.2 million for the three months ended June 30, 2018 compared to the three months ended June 30, 2017, primarily due to a decrease in media-based marketing spend partially offset by increases in paid social media, professional fees, and personnel-related costs during the quarter. U.S. Consumer segment operating margin was 3% for the three months ended June 30, 2018 compared to 8% for the three months ended June 30, 2017.    

For the six months ended June 30, 2018, the U.S. Consumer segment reported an operating loss of $1.8 million compared to operating income of $40.2 million for the six months ended June 30, 2017. The gross margin for the U.S. Consumer segment decreased to 32% for the six months ended June 30, 2018, as compared to 36% for the six months ended June 30, 2017, primarily due to the reduced pricing and increased shipping costs noted above and increased inventory write-offs from lower than anticipated Valentine’s Day orders during the first quarter of 2018. Sales and marketing expenses increased $10.8 million for the six months ended June 30, 2018 compared to the six months ended June 30, 2017, primarily due to media-based marketing and increased variable marketing spend during the first quarter of 2018 and increases in professional fees and personnel-related costs. U.S. Consumer segment operating margin was approximately break even for the six months ended June 30, 2018 compared to 8% for the six months ended June 30, 2017.        

FLORIST SEGMENT

	Three Months Ended June 30,						Change					Six Months Ended June 30,						Change
	2018			2017			$			%		2018			2017			$			%
	(in thousands, except percentages and average revenues per member)
Segment revenues	$	39,916		$	44,090		$	(4,174	)	(9	)%	$	84,132		$	90,596		$	(6,464	)	(7	)%
Segment operating income	$	10,849		$	12,248		$	(1,399	)	(11	)%	$	23,115		$	26,202		$	(3,087	)	(12	)%
Key metrics and other financial data:
Average revenues per member	$	3,873		$	3,981		$	(108	)	(3	)%	$	8,055		$	8,122		$	(67	)	(1	)%
Segment operating margin	27		%	28		%						27		%	29		%

Florist Segment Revenues

Florist segment revenues for the three months ended June 30, 2018decreased $4.2 million, or 9%, compared to the three months ended June 30, 2017. The decline was primarily due to a $3.1 milliondecrease in services revenues due to lower clearinghouse order volume and a decline in online services revenues. Products revenues decreased $1.1 million, primarily related to a planned reduction in container offerings and related pricing and a decline in technology system sales. Average revenues per member decreased 3% for the three months ended June 30, 2018 compared to the three months ended June 30, 2017, primarily due to the decline in clearinghouse order volume.

Florist segment revenues for the six months ended June 30, 2018decreased $6.5 million, or 7%, compared to the six months ended June 30, 2017. The decline was primarily due to a $4.0 milliondecrease in services revenue due to lower clearinghouse order volume and declines in online services and support fees. Products revenues decreased $2.5 million, primarily related to a planned reduction in container offerings and related pricing and a decline in technology system sales, which were partially offset by an increase in fresh flower sales. Average revenues per member decreased 1% for the six months ended June 30, 2018 compared to the six months ended June 30, 2017, primarily due to the decline in clearinghouse order volume and products revenues.

34

Florist Segment Operating Income

Florist segment operating income decreased $1.4 million, or 11%, for the three months ended June 30, 2018 compared to the three months ended June 30, 2017. The gross margin for the Florist segment decreased to 66% for the three months ended June 30, 2018, as compared to 68% for the three months ended June 30, 2017, primarily due to declines in high-margin clearinghouse order-related revenues. Sales and marketing expenses decreased $3.2 million for the three months ended June 30, 2018 compared to the three months ended June 30, 2017, primarily due to fewer incentives paid to member florists. General and administrative expenses increased $0.7 million for the three months ended June 30, 2018 compared to the three months ended June 30, 2017, primarily due to bad debt expense. The Florist segment operating margin was 27% for the three months ended June 30, 2018 compared to 28% for the three months ended June 30, 2017.

Florist segment operating income decreased $3.1 million, or 12%, for the six months ended June 30, 2018 compared to the six months ended June 30, 2017. The gross margin for the Florist segment decreased to 65% for the six months ended June 30, 2018, as compared to 67% for the six months ended June 30, 2017, primarily due to declines in high-margin clearinghouse order-related revenues and product related revenues. Sales and marketing expenses decreased $3.9 million for the six months ended June 30, 2018 compared to the six months ended June 30, 2017, primarily due to fewer incentives paid to member florists. General and administrative expenses increased $0.8 million for the six months ended June 30, 2018 compared to the six months ended June 30, 2017, primarily due to bad debt expense. The Florist segment operating margin was 27% for the six months ended June 30, 2018 compared to 29% for the six months ended June 30, 2017.

INTERNATIONAL SEGMENT

	Three Months Ended June 30,						Change					Six Months Ended June 30,						Change
	2018			2017			$			%		2018			2017			$			%
	(in thousands, except percentages, average order values, and average currency exchange rates)
In USD:
Segment revenues	$	31,114		$	29,201		$	1,913		7	%	$	86,029		$	74,938		$	11,091		15	%
Impact of foreign currency	(1,807		)	—			(1,807		)			(7,877		)	—			(7,877		)
Segment revenues (in constant currency)(a)	$	29,307		$	29,201		$	106		—	%	$	78,152		$	74,938		$	3,214		4	%
Segment operating income	$	2,710		$	3,066		$	(356	)	(12	)%	$	9,765		$	8,598		$	1,167		14	%
Impact of foreign currency	(157		)	—			(157		)			(943		)	—			(943		)
Segment operating income (in constant currency)(a)	$	2,553		$	3,066		$	(513	)	(17	)%	$	8,822		$	8,598		$	224		3	%
Key metrics and other financial data:
Consumer orders	550			532			18			3	%	1,477			1,374			103			7	%
Average order value	$	45.89		$	45.57		$	0.32		1	%	$	47.45		$	44.91		$	2.54		6	%
Segment operating margin	9		%	10		%						11		%	11		%
In GBP:
Segment revenues	£	22,880		£	22,798		£	82		—	%	£	62,264		£	59,679		£	2,585		4	%
Average order value	£	33.77		£	35.61		£	(1.84	)	(5	)%	£	34.36		£	35.79		£	(1.43	)	(4	)%
Average currency exchange rate: GBP to USD	1.36			1.28								1.38			1.26

(a) USD at prior year foreign currency exchange rate.

We present certain results from our International segment on a constant currency basis. Constant currency information permits comparison of results between periods as if foreign currency exchange rates had remained constant period-over-period. Our International segment operates principally in the U.K. We calculate constant currency by applying the foreign currency exchange rate for the prior period to the local currency results for the current period.

35

International Segment Revenues

International segment revenues increased $1.9 million, or 7%, (flat in constant currency) for the three months ended June 30, 2018 compared to the three months ended June 30, 2017 as a 3% increase in consumer orders was offset by a 5% decrease in average order value. The decrease in average order value was driven by an unfavorable product mix and reduced pricing, the loss of credit card fee income due to statutory regulations, and increased discounts. Foreign currency exchange rates had a $1.8 million favorable impact on our International segment revenues during the three months ended June 30, 2018 as the average exchange rate was higher when compared to the three months ended June 30, 2017.

International segment revenues increased $11.1 million, or 15%, ($3.2 million, or 4%, in constant currency) for the six months ended June 30, 2018 compared to the six months ended June 30, 2017. The increase in revenues in constant currency was due to an increase in consumer orders of 7%, primarily from increased holiday orders during the first quarter of 2018 and lower pricing on non-peak orders. Partially offsetting the increase in orders was a decrease in average order value of 4% due to an unfavorable product mix and reduced pricing, the loss of credit card fee income due to statutory regulations, and increased discounts and refunds.

International Segment Operating Income

International segment operating income decreased $0.4 million, or 12%, ($0.5 million, or 17%, in constant currency) for the three months ended June 30, 2018 compared to the three months ended June 30, 2017. The gross margin for the International segment decreased to 31% for the three months ended June 30, 2018 compared to 32% for the three months ended June 30, 2017. Sales and marketing expenses increased $0.2 million (stable in constant currency) due to the impact of foreign exchange rates. General and administrative expenses increased $0.3 million ($0.1 million in constant currency), primarily due to personnel-related costs partially offset by a decrease in professional fees. International segment operating margin decreased to 9% for the three months ended June 30, 2018 compared to 10% for the three months ended June 30, 2017.

International segment operating income increased $1.2 million, or 14%, ($0.2 million, or 3%, in constant currency) for the six months ended June 30, 2018 compared to the six months ended June 30, 2017. The gross margin for the International segment decreased to 29% for the six months ended June 30, 2018 compared to 31% for the six months ended June 30, 2017. Sales and marketing expenses increased $0.9 million (stable in constant currency) due to the impact of foreign exchange rates. General and administrative expenses were stable (decreased $0.5 million, or 8%, in constant currency). The decreases in constant currency were primarily due to decreases in personnel-related costs and professional fees partially offset by an increase in technology costs. International segment operating margin was stable at 11% for the six months ended June 30, 2018 and 2017.

UNALLOCATED EXPENSES

	Three Months Ended June 30,				Change					Six Months Ended June 30,				Change
	2018		2017		$			%		2018		2017		$			%
	(in thousands, except percentages)
Unallocated expenses	$	6,171	$	9,400	$	(3,229	)	(34	)%	$	15,217	$	20,855	$	(5,638	)	(27	)%

Unallocated expenses include various corporate costs, such as executive management, corporate finance, and legal costs. In addition, unallocated expenses include stock-based and incentive compensation, restructuring and other exit costs, transaction and integration costs, and litigation and dispute settlement charges and gains.

Unallocated expenses decreased $3.2 million for the three months ended June 30, 2018 compared to the three months ended June 30, 2017. This decrease was primarily due to reduced spending of $1.8 million related to costs associated with corporate strategic planning and $1.3 million in personnel-related expenses. These decreases were partially offset by a $1.0 million increase in legal, audit, and consulting fees for the three months ended June 30, 2018 compared to the three months ended June 30, 2017.

Unallocated expenses decreased $5.6 million for the six months ended June 30, 2018 compared to the six months ended June 30, 2017. This decrease was primarily due to $3.9 million in personnel-related expenses, $1.8 million related to costs associated with corporate strategic planning, and $0.9 million in transaction and integration costs. In addition, we did not incur restructuring costs during the six months ended June 30, 2018 compared to $0.9 million incurred during the six months ended June 30, 2017. These decreases were partially offset by a $3.0 million increase in legal, audit, and consulting fees for the six months ended June 30, 2018 compared to the six months ended June 30, 2017.

36

LIQUIDITY AND CAPITAL RESOURCES

Credit Agreement

On September 19, 2014, FTD Companies, Inc. entered into a credit agreement (the “Credit Agreement”) with Interflora British Unit, certain wholly owned domestic subsidiaries of FTD Companies, Inc. party thereto as guarantors, the financial institutions party thereto from time to time, Bank of America Merrill Lynch and Wells Fargo Securities, LLC, as joint lead arrangers and book managers, and Bank of America, N.A., as the administrative agent for the lenders, which provided for a term loan in an aggregate principal amount of $200 million, the proceeds of which were used to repay a portion of outstanding revolving loans and also provided for a $350 million revolving credit facility. On December 31, 2014, we borrowed $120 million under the revolving credit facility to fund the cash portion of the Provide Commerce purchase price.

The obligations under the Credit Agreement are guaranteed by the U.S. Loan Parties. In addition, the obligations under the Credit Agreement are secured by a lien on substantially all of the assets of the U.S. Loan Parties, including a pledge of all of the outstanding capital stock of certain direct subsidiaries of the U.S. Loan Parties (except with respect to foreign subsidiaries and certain domestic subsidiaries whose assets consist primarily of foreign subsidiary equity interests, in which case such pledge is limited to 66% of the outstanding capital stock).

The Credit Agreement contains customary representations and warranties, events of default, affirmative covenants, and negative covenants, that, among other things, require the Company to maintain compliance with a maximum net leverage ratio and a minimum consolidated fixed charge coverage ratio, and impose restrictions and limitations on, among other things, investments, dividends, share repurchases, asset sales, and the Company’s ability to incur additional debt and additional liens.

On May 31, 2018, we entered into the Third Amendment to Credit Agreement (the Credit Agreement, as previously amended and as further amended by the Third Amendment, is referred to in this Form 10-Q as the “Amended Credit Agreement”) with our lenders, which includes an agreement by the lenders to waive certain existing defaults, as described in Note 6—“Financing Arrangements” of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q. The Amended Credit Agreement also restricts our combined usage of the revolving credit facility portion of the Amended Credit Agreement to (1) $150 million during the period from May 31, 2018 through and including September 30, 2018; (2) $175 million during the period from October 1, 2018 through and including December 31, 2018; and (3) $150 million during the period from January 1, 2019 through the September 19, 2019 maturity date, all subject to our obligation to make prepayments of the term loan portion of the Amended Credit Agreement with any net cash proceeds received from the sale of certain non-core assets. In addition, the consolidated net leverage ratio and fixed charge coverage ratio covenants were revised for each quarterly period through the September 19, 2019 maturity date, as were the interest rates, as noted below. We are also required to pay a quarterly fee of 0.125% times the actual daily amount of the revolver commitments and outstanding loans beginning October 1, 2018 through December 31, 2018, which increases to 0.25% beginning January 1, 2019 through the maturity date. We paid an amendment fee of 0.625% times the revolver commitments and outstanding term loan ($1.9 million) in addition to a $0.5 million work fee related to the structuring and arranging of the amendment.

We were in compliance with the revised covenants under the Amended Credit Agreement as of June 30, 2018. Our ability to continue as a going concern, however, is dependent on our generating profitable operating results and continued compliance with our revised covenants under the Amended Credit Agreement or refinancing, repaying, or obtaining new financing prior to maturity of the Amended Credit Agreement in September 2019, as discussed below under “—Going Concern.” 

The interest rates applicable to borrowings under the Amended Credit Agreement are based on either LIBOR plus a margin ranging from 2.50% per annum to 7.50% per annum, or a base rate plus a margin ranging from 1.50% per annum to 6.50% per annum, calculated according to our net leverage ratio. In addition, under the Amended Credit Agreement, we pay a commitment fee of 0.50% on the unused portion of the revolving credit facility and a letters of credit fee ranging between 2.50% per annum to 7.50% per annum.

The stated interest rates (based on LIBOR) as of June 30, 2018 under the term loan and the revolving credit facility portions of the Amended Credit Agreement were 7.83% and 7.74%, respectively. The effective interest rates as of June 30, 2018 under the term loan and the revolving credit facility were 10.46% and 10.97%, respectively. The effective interest rates include the amortization of both the debt issuance costs and the effective portion of the interest rate swap and commitment fees. The commitment fee rate as of June 30, 2018 was 0.50%.

37

The term loan is subject to amortization payments of $5 million per quarter and customary mandatory prepayments under certain conditions. During the six months ended June 30, 2018, the Company made scheduled payments of $10 million under the term loan. The Company had net borrowings of $13 million on the revolving credit facility during the six months ended June 30, 2018. The outstanding balance of the term loan and all amounts outstanding under the revolving credit facility are due upon maturity in September 2019.

As of June 30, 2018, the remaining borrowing capacity under the Amended Credit Agreement, which was reduced by $1.8 million in outstanding letters of credit, was $83.2 million.

The degree to which our assets are leveraged and the terms of our debt could materially and adversely affect our ability to obtain additional capital, as well as the terms at which such capital might be offered to us. If we seek to raise additional capital through public or private debt or equity financings, strategic relationships, or other arrangements as part of the strategic alternatives review discussed elsewhere in this Form 10-Q, this capital might not be available to us in a timely manner, on acceptable terms, or at all. Our failure to raise sufficient capital when needed could severely constrain or prevent us from, among other factors, developing new or enhancing existing services or products or funding necessary capital expenditures and may have a material adverse effect on our business, financial position, results of operations, and cash flows, as well as impair our ability to service our debt obligations. If additional funds were raised through the issuance of equity or convertible debt securities, the percentage of stock owned by the then-current stockholders could be reduced. Furthermore, such equity or any debt securities that we issue might have rights, preferences, or privileges senior to holders of our common stock. In addition, trends in the securities and credit markets may restrict our ability to raise any such additional funds, at least in the near term.

Going Concern

As described above, the financial statements included in this Form 10-Q have been prepared assuming the Company will continue as a going concern.

On May 31, 2018, we entered into the Amended Credit Agreement with our lenders, which includes an agreement by the lenders to waive certain existing defaults and other amendments described above under “—Credit Agreement.” Our ability to continue as a going concern is dependent on our generating profitable operating results and continued compliance with the revised covenants under the Amended Credit Agreement or refinancing, repaying, or obtaining new financing prior to maturity of the Amended Credit Agreement in September 2019. In this regard, on July 19, 2018, we announced that our board of directors has initiated a review of strategic alternatives. The strategic alternatives expected to be considered include, but are not limited to, a sale or merger of the Company, the Company continuing to pursue value-enhancing initiatives as a standalone company, a capital structure optimization that may involve potential financings, or the sale or other disposition of certain of our businesses or assets. We also announced a corporate restructuring and cost savings plan, under which opportunities to optimize operations, drive efficiency, and reduce costs have been identified.

Notwithstanding these initiatives, based on our 2018 year-to-date results of operations and outlook for the remainder of the term of the Amended Credit Agreement, we currently anticipate that we may be unable to meet certain of the revised covenants during the remainder of the term of the Amended Credit Agreement, as discussed elsewhere in this Form 10-Q. If we are unable to meet the revised covenants under the Amended Credit Agreement and we are unable to obtain waivers or amendments from our lenders, the lenders could exercise remedies under the Amended Credit Agreement and repayment of the debt owed under the Amended Credit Agreement could be accelerated. We do not expect that we could repay all of our outstanding indebtedness if the repayment of such indebtedness was accelerated. These conditions raise substantial doubt about our ability to continue as a going concern.

There can be no assurance that the strategic alternatives review will result in any particular strategic alternative or strategic transaction or that we will be able to refinance our outstanding indebtedness or obtain alternative financing on acceptable terms, when required or if at all. If such plans are not realized, we may be forced to limit our business activities or be unable to continue as a going concern, which would have a material adverse effect on our results of operations and financial condition. The financial statements included in this Form 10-Q do not include any adjustments that might result from the outcome of these uncertainties.

38

Six Months Ended June 30, 2018 compared to Six Months Ended June 30, 2017

Our total cash and cash equivalents balance decreased by $9.1 million to $20.4 million as of June 30, 2018, compared to $29.5 million as of December 31, 2017. Our summary cash flows for the periods presented were as follows (in thousands):

	Six Months Ended June 30,
	2018			2017
Net cash provided by/(used for) operating activities	$	(1,586	)	$	19,609
Net cash used for investing activities	$	(6,277	)	$	(6,370	)
Net cash used for financing activities	$	(1,082	)	$	(15,927	)

Net cash used for operating activities was $1.6 million for the six months ended June 30, 2018 compared to net cash provided by operating activities of $19.6 million for the six months ended June 30, 2017. The decrease in cash from operating activities was primarily driven by our net loss of $124.7 million for the six months ended June 30, 2018 compared to net income of $18.7 million for the comparable 2017 period and was partially offset by an increase in net operating assets and liabilities of $15.2 million. Changes in working capital can cause variations in our cash flows used for operating activities due to seasonality, timing, and other factors. In addition, non-cash items, which include but are not limited to depreciation and amortization, impairment of assets, stock-based compensation, deferred taxes, and provision for doubtful accounts receivable, increased $107.0 million.

Net cash used for investing activities for the six months ended June 30, 2018 included purchases of property and equipment totaling $16.3 million, which were partially offset by $10.0 million of proceeds from the surrender of corporate-owned life insurance policies. Net cash used for investing activities for the six months ended June 30, 2017 included purchases of property and equipment totaling $6.4 million. We currently anticipate total capital expenditures for 2018 between $35 and $40 million. The actual amount of future capital expenditures may fluctuate due to a number of factors, including, without limitation, capital expenditures related to potential future acquisitions and new business initiatives, which are difficult to predict and which could change significantly over time. Additionally, we may choose to invest in technological advances in support of our business initiatives or make capital expenditures to develop or acquire new equipment or technology in order to replace aging or technologically obsolete equipment.

Net cash used for financing activitiesdecreased $14.8 million, primarily due to net proceeds from borrowings under the Credit Agreement totaling $3.0 million during the six months ended June 30, 2018 compared to net repayments of $15.0 million during the six months ended June 30, 2017. Partially offsetting the net proceeds from borrowings was the payment of deferred financing costs totaling $4.0 million during the 2018 period. In addition, repurchases of common stock related to tax withholdings on vested stock awards decreased by $1.5 million during the six months ended June 30, 2018 compared to the six months ended June 30, 2017.

Contractual Obligations and Other Commitments

During the first quarter of 2018, the Company entered into a lease for office space in Chicago, Illinois for our new corporate headquarters. The lease expires in 2030 with future contractual obligations totaling $17.0 million over the term of the agreement. There have been no other material changes, outside the ordinary course of business, related to the Company’s contractual obligations or other commitments as disclosed in Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

Off-Balance Sheet Arrangements

At June 30, 2018, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated by the SEC, that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures, or capital resources.

39

CRITICAL ACCOUNTING POLICIES, ESTIMATES AND ASSUMPTIONS

Our Annual Report on Form 10-K for the year ended December 31, 2017,describes the critical accounting policies for which management uses significant judgments and estimates in the preparation of our consolidated financial statements. Except for the accounting policy for revenue recognition that was updated as a result of adopting ASC Topic 606 on January 1, 2018, as discussed in Note 1—“Description of Business, Basis of Presentation, Accounting Policies, and Recent Accounting Pronouncements” of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q, and as noted below, there have been no significant changes to our critical accounting policies since December 31, 2017.

Goodwill, Intangible Assets, and Other Long-Lived Assets

Goodwill is tested for impairment at the reporting unit level. A reporting unit is a business or a group of businesses for which discrete financial information is available and is regularly reviewed by management. An operating segment is made up of one or more reporting units. We report our business operations in three operating and reportable segments: U.S. Consumer, Florist, and International. Each of the Florist and International segments is a reporting unit. The U.S. Consumer segment is comprised of three reporting units: FTD.com, ProFlowers/Gourmet Foods, and Personal Creations. The ProFlowers and Gourmet Foods businesses have similar margins and share operations and business team structure, among other similarities. Therefore, these businesses meet the aggregation criteria, and as such, we have aggregated these two businesses into one reporting unit.

Goodwill represents the excess of the purchase price of an acquired entity over the fair value of the net tangible and intangible assets acquired and liabilities assumed. Indefinite-lived intangible assets acquired in a business combination are initially recorded at management’s estimate of their fair value. We account for goodwill and indefinite-lived intangible assets in accordance with ASC 350, Intangibles, Goodwill and Other.

Goodwill and indefinite-lived intangible assets are not subject to amortization but are reviewed for impairment in the fourth quarter of each year, or more frequently if events or substantive changes in circumstances indicate that the carrying value of a reporting unit may exceed its fair value (i.e. that a triggering event has occurred). Testing goodwill, intangible assets, and other long-lived assets for impairment involves comparing the fair value of the reporting unit or intangible asset to its carrying value. If the carrying amount of a reporting unit, intangible asset, or other long-lived asset exceeds its fair value, an impairment loss is recognized in an amount equal to the excess, up to the amount of goodwill in the case of a reporting unit.

In calculating the fair value of all of the reporting units except the ProFlowers/Gourmet Foods reporting unit, we used a combination of the income approach and the market approach valuation methodologies. For the ProFlowers/Gourmet Foods reporting unit, the cost approach was used as the net asset value method provided the highest indication of value for that reporting unit. The income approach was used primarily, as we believe that a discounted cash flow approach is the most reliable indicator of the fair values of the businesses. Under the market approach, we used the guideline company method, which focuses on comparing our risk profile and growth prospects to select reasonably similar companies based on business description, revenue size, markets served, and profitability. The key assumptions used in the income approach discounted cash flow valuation model included discount rates, growth rates, cash flow projections, and terminal growth rates. The discount rates utilized are indicative of the return an investor would expect to receive for investing in a similar business. Considering industry and company specific historical data and internal forecasts and projections, management developed growth rates and cash flow projections for each reporting unit. In determining the terminal growth rates, we considered GDP growth, consumer price inflation, and the long term growth prospects of each reporting unit. The discount rate, growth rates, royalty rates, cash flow projections, and terminal growth rates are also significant estimates used in the determination of the fair value of the indefinite-lived intangible assets. Under the cost approach, we used the net asset value method, which is based on the premise that a prudent investor would pay no more for an asset than its replacement or reproduction cost.    

The assessment of whether or not goodwill and/or indefinite-lived intangible assets are impaired involves a significant level of judgment and estimates in selecting the assumptions used to determine the fair values of our reporting units and indefinite-lived intangible assets. We believe our analysis included sufficient tolerance for sensitivity in key assumptions. We believe the assumptions and rates used in our impairment assessments are reasonable, but they are judgmental, and variations in any assumptions could result in materially different calculations of fair value. Factors that have the potential to create variances in the estimated fair value of the reporting units include, but are not limited to, fluctuations in (1) forecasted order volumes and average order values, which can be driven by multiple external factors affecting demand, including macroeconomic factors, competitive dynamics, and changes in consumer preferences; (2) marketing costs to generate orders; (3) product and fulfillment costs; (4) operational efficiency; and (5) equity valuations of peer companies.

40

During the quarter ended June 30, 2018, due to continued declines in financial results and reductions in the projected results for the remainder of 2018, we determined that a triggering event had occurred that required an interim impairment assessment for all of our reporting units other than the International reporting unit, as that reporting unit’s results were relatively in line with expectations. The intangible assets and other long-lived assets associated with the reporting units assessed were also reviewed for impairment. We performed a quantitative interim test which resulted in our determination that the fair value of our Florist reporting unit exceeded its carrying value and, therefore, its goodwill was not impaired. The Florist reporting unit fair value exceeded its carrying value by 6%. The fair values of the FTD.com, ProFlowers/Gourmet Foods, and Personal Creations reporting units were less than their carrying values and, as such, goodwill impairment charges of $35.2 million, $14.8 million, and $12.5 million, respectively, were recorded during the three months ended June 30, 2018 related to these reporting units.

Certain key assumptions used in determining the fair value for our reporting units were as follows:    

	Discount Rates		Terminal Growth Rates
FTD.com	26.5	%	2.0	%
Florist	20.0	%	0.5	%
International	13.5	%	2.0	%
ProFlowers/Gourmet Foods	26.5	%	2.0	%
Personal Creations	26.5	%	2.5	%

In conjunction with the interim goodwill impairment test, we also reviewed the fair values of our indefinite-lived intangible assets for impairment. The FTD.com reporting unit and the Florist segment share a trademark and trade name and, therefore, share the related indefinite-lived asset. The interim impairment test for that indefinite-lived intangible asset was performed by comparing the fair value of the asset to its carrying value and resulted in the determination that the fair value was less than its carrying value, and, accordingly, a pre-tax impairment charge of $20.4 million was recorded during the three months ended June 30, 2018. Certain key assumptions used in determining the fair value of the indefinite-lived intangible assets were discount rates of 20.0% to 26.5% and average royalty rates of 2.5% to 5.0%.

We account for finite-lived intangible assets and other long-lived assets in accordance with ASC 360, Property, Plant and Equipment. Intangible assets acquired in a business combination are initially recorded at management’s estimate of their fair values. We evaluate the recoverability of identifiable intangible assets and other long-lived assets, other than indefinite-lived intangible assets, for impairment when events occur or circumstances change that would indicate that the carrying amount of an asset may not be recoverable. Events or circumstances that may indicate that an asset is impaired include, but are not limited to, significant decreases in the market value of an asset, significant underperformance relative to expected historical or projected future operating results, a change in the extent or manner in which an asset is used, shifts in technology, significant negative industry or economic trends, changes in our operating model or strategy, and competitive forces. In determining if an impairment exists, we estimate the undiscounted cash flows to be generated from the use and ultimate disposition of these assets. If an impairment is indicated, based on a comparison of the asset’s carrying amount and the undiscounted cash flows, the impairment loss is measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset. Finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives, ranging from five to fifteen years. Our identifiable intangible assets were acquired primarily in connection with business combinations.

The process of evaluating the potential impairment of long-lived intangible assets is subjective and requires significant judgment on matters such as, but not limited to, the asset group to be tested for recoverability. We are also required to make estimates that may significantly impact the outcome of the analyses. Such estimates include, but are not limited to, future operating performance and cash flows, cost of capital, terminal values, and remaining economic lives of assets.

In conjunction with the interim goodwill impairment test, we also reviewed our finite-lived intangible assets for potential impairment. The impairment evaluation of the finite-lived intangible assets indicated that the carrying amount of the ProFlowers trade name was not recoverable when compared to the expected undiscounted future cash flows. As such, a pre-tax impairment charge of $51.9 million was recorded related to the ProFlowers trade name during the three months ended June 30, 2018. In addition, due to a management decision to cease operations of BloomThat, a business acquired in 2017 that was included in the ProFlowers/Gourmet Foods reporting unit, a pre-tax impairment charge of $0.9 million was recorded related to the remaining carrying value of the finite-lived intangible assets associated with that business.

41

Also in conjunction with the interim goodwill impairment test, we performed an impairment evaluation of our other long-lived assets by comparing the expected undiscounted future cash flows to the carrying amounts of the assets. During the year ended December 31, 2017, the other long-lived assets related to the ProFlowers/Gourmet Foods reporting unit were fully impaired as the projected undiscounted cash flows of that reporting unit were less than the carrying amount of such assets. Additional impairment charges of $1.2 million and $3.6 million were recorded during the three and six months ended June 30, 2018, respectively, related to capital additions for that reporting unit as its undiscounted cash flows continue to be less than the carrying amount of the assets of that asset group.

We are currently completing a review of strategic alternatives for our businesses. Given the uncertainties regarding the related impact on financial performance, there can be no assurance that the estimates and assumptions made for purposes of the interim impairment testing will prove to be accurate predictions of the future. If our projections of future cash flows and financial performance are not achieved, or if our market capitalization declines further, we may be required to record impairment charges on our goodwill, intangible assets, or other long-lived assets in future periods, whether in connection with our next annual impairment testing in the fourth quarter of 2018, or on an interim basis, if any such change constitutes a triggering event outside of the quarter when we regularly performs our annual impairment tests. It is not possible at this time to determine if any such additional future impairment charge would result or, if it does, whether such charge would be material. See Note 5—“Goodwill, Intangible Assets, and Other Long-Lived Assets” of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for the remaining balances of goodwill by reporting unit and intangible assets.

RECENT ACCOUNTING PRONOUNCEMENTS

For information about recently adopted and recently issued accounting pronouncements refer to Note 1—“Description of Business, Basis of Presentation, Accounting Policies, and Recent Accounting Pronouncements” of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes related to the Company’s market risk as disclosed in Item 7A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

ITEM 4.  CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective in recording, processing, summarizing, and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended June 30, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

42

PART II—OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

For a description of our material pending legal proceedings, please refer to Note 14—“Contingencies—Legal Matters” of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

ITEM 1A.  RISK FACTORS

Our business and common stock are subject to a number of risks and uncertainties. The information presented below updates, and should be read in conjunction with, the risks summarized under the caption “Risk Factors” in Part I, Item 1A of our most recent Form 10-K. There is no material change in the information reported under “Part I - Item 1A - Risk Factors” contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 with the exception of the following:

1. The risk factor “Our management has concluded, and our independent registered public accounting firm has emphasized in their report on our financial statements as of and for the fiscal year ended December 31, 2017, that, due to our anticipated failure to satisfy financial covenant requirements and uncertainties surrounding our ability to amend or refinance our current credit facility, substantial doubt exists as to our ability to continue as a going concern” is deleted and replaced as follows:

Our plans to alleviate the substantial doubt about our ability to continue as a going concern may not be successful. If we are not successful in these plans, we may be forced to limit our business activities or be unable to continue as a going concern, which would have a material adverse effect on our results of operations and financial condition.

The condensed consolidated financial statements included in this Form 10-Q have been prepared on a going concern basis. Our ability to continue as a going concern is dependent on our generating profitable operating results and continued compliance with the revised covenants under the Amended Credit Agreement or refinancing, repaying, or obtaining new financing prior to maturity of the Amended Credit Agreement in September 2019. In this regard, our board of directors has initiated a review of strategic alternatives. The strategic alternatives expected to be considered include, but are not limited to, a sale or merger of the Company, the Company continuing to pursue value-enhancing initiatives as a standalone company, a capital structure optimization that may involve potential financings, or the sale or other disposition of certain of our businesses or assets. We also announced a corporate restructuring and cost savings plan, under which we have identified opportunities to optimize our operations, drive efficiency, and reduce costs.

Notwithstanding these initiatives, based on our 2018 year-to-date results of operations and outlook for the remainder of the term of the Amended Credit Agreement, we currently anticipate that we my be unable to meet certain of the revised covenants during the remainder of the term of the Amended Credit Agreement. For additional information regarding the Amended Credit Agreement see Note 6—“Financing Arrangements” of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” included in Part I, Item 2 of this Form 10-Q. If we are unable to meet these revised covenants and we are unable to obtain waivers or amendments from our lenders, the lenders could exercise remedies under the Amended Credit Agreement and the debt owed under the Amended Credit Agreement could be accelerated. We do not expect that we could repay all of our outstanding indebtedness if the repayment of such indebtedness was accelerated.

As a result, while we continue to evaluate our plans to alleviate the substantial doubt about our ability to continue as a going concern, we cannot assert that it is probable that our plans will mitigate the conditions identified. In this regard, our remediation plans depend on conditions and matters that may be outside of our control. In particular, there can be no assurance that the strategic alternatives review will result in any particular strategic alternative or strategic transaction or that we will be successful in our corporate restructuring and cost savings plan, or our plans to refinance our debt or to obtain alternative financing on acceptable terms, when required or if at all. If such initiatives are not successful, or if negotiations with our lenders are not successful, we may be forced to limit our business activities or be unable to continue as a going concern, which would have a material adverse effect on our results of operations and financial condition. Our condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

43

2. The risk factor “We have a substantial amount of indebtedness. This level of indebtedness could adversely affect our ability to raise additional capital to fund operations, our flexibility in operating our business, and our ability to react to changes in the economy or our industry, including implementation of our strategic plan” is restated in its entirety as follows:

We have a substantial amount of indebtedness. This level of indebtedness could adversely affect our ability to raise additional capital to fund operations, our flexibility in operating our business, and our ability to react to changes in the economy or our industry, including implementation of our strategic plan.

At June 30, 2018, we had $195.0 million of principal indebtedness outstanding, all of which is considered current due to the uncertainties described above. Such indebtedness includes $130.0 million outstanding under a term loan and $65.0 million outstanding under revolving loans. Our substantial indebtedness could have significant consequences for our business and financial condition. For example:

• If we fail to meet payment obligations or otherwise default under our debt or the Amended Credit Agreement, the lenders will have the right to accelerate the indebtedness and exercise other rights and remedies against us.

• We may be required to dedicate a greater percentage of our cash flows to payments on our debt, thereby reducing the availability of cash flows to fund our strategic initiatives, capital expenditures, pursue acquisitions or investments in new technologies, and fund other general corporate requirements.

• Our ability to obtain additional financing to fund future working capital needs, strategic initiatives, capital expenditures, acquisitions, and other general corporate requirements could be limited. If we are unable to raise additional capital when required, it could affect our liquidity, business, financial condition, results of operations, and cash flows. In addition, our ability to borrow additional amounts under our revolving credit facility, which is a significant source of liquidity, is subject to restrictions on our usage of the revolving credit facility and an obligation to make regularly scheduled payments, and in some circumstances prepayments, of the term loan portion of the Amended Credit Agreement. Failure to meet our borrowing conditions under our revolving credit facility could materially and adversely impact our liquidity.

• Our debt imposes operating and financial covenants and restrictions on us, including limitations on our ability to use cash flows for the benefit of our subsidiaries. Compliance with such covenants and restrictions may adversely affect our ability to adequately finance our operations or capital needs, pursue attractive business opportunities that may arise, sell assets, and make capital expenditures.

• Our failure to comply with the terms of the Amended Credit Agreement, including failure as a result of events beyond our control, could result in an event of default on our debt. Upon an event of default, our lenders could elect to cause all amounts outstanding with respect to that debt to become immediately due and payable, and we would be unable to access our revolving credit facility. An event of default could materially and adversely affect our operating results, financial condition, and liquidity.

• We may continue to experience increased vulnerability to and limited flexibility in planning for or reacting to changes in or challenges relating to our business and industry, thus creating competitive disadvantages compared to other competitors with lower debt levels and borrowing costs.

• We may continue to experience increased vulnerability to general adverse economic conditions, including the increases in interest rates under the Amended Credit Agreement, and if our borrowings bear interest at variable rates or if such indebtedness is refinanced at a time when interest rates are higher.

We cannot assure you that our cash flows, combined with additional borrowings under the current and any future credit agreements, will be available in an amount sufficient to enable us to repay our indebtedness or to fund other liquidity needs. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. For additional information regarding our credit agreement see Note 6—“Financing Arrangements” of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q and Note 6—“Financing Arrangements” of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of our Annual Report on Form 10-K.

44

Depending on the results of our recently announced strategic alternatives review process, we may need to refinance all or a portion of our indebtedness on or before the September 2019 maturity date of the Amended Credit Agreement. We cannot assure you that we will be able to refinance any of our indebtedness or obtain alternative financing on commercially reasonable terms or at all. The terms of any alternative debt may give the holders rights, preferences, and privileges senior to those of holders of our common stock, particularly in the event of liquidation. The terms of any new debt may also impose additional and more stringent restrictions on our operations than are currently in place. If we are unable to refinance our debt, we may default under the terms of our indebtedness, which could lead to an acceleration of the debt. We do not expect that we could repay all of our outstanding indebtedness if the repayment of such indebtedness was accelerated.

3. The risk factor “If we are unable to successfully implement our strategic initiatives, our business, financial condition, results of operations, and cash flows could be materially and adversely affected” is restated in its entirety as follows:

If we are unable to successfully implement our strategic alternatives review or our corporate restructuring and cost savings plan, our business, financial condition, results of operations, and cash flows could be materially and adversely affected.

We recently announced that our board of directors has initiated a review of strategic alternatives focused on maximizing stockholder value. The strategic alternatives expected to be considered include, but are not limited to, a sale or merger of the Company, the Company continuing to pursue value-enhancing initiatives as a standalone company, a capital structure optimization that may involve potential financings, or the sale or other disposition of certain of our businesses or assets. We also recently announced a corporate restructuring and cost savings plan, under which we have identified opportunities to optimize our operations, drive efficiency, and reduce costs.

The results of our efforts will not be known until sometime in the future. Successful execution of any particular strategic alternative or strategic transaction or our corporate restructuring and cost savings plan requires sustained management focus, organization, and coordination over time, as well as success in building relationships with third parties. If we are unable to execute our strategy or our corporate restructuring and cost savings plan successfully, our business, financial position, results of operations, and cash flows could be adversely affected.

4. The risk factor “Our operations could be adversely affected if we fail to integrate and retain our executive leadership team” is restated in its entirety as follows:

Our operations could be adversely affected if we fail to integrate and retain our executive leadership team or face difficulties attracting and retaining qualified personnel.

Since early 2016, we have undergone significant transitions in our chief executive officer, chief financial officer, and other key executive positions. Our success depends, in part, upon the performance of our executive leadership team. If we are unable to integrate new senior executives, if they fail to perform effectively, if we are unable to retain them, or if we are unable to attract additional qualified senior executives as needed, our strategic and other initiatives could be adversely impacted and our business, financial condition, results of operations and cash flows could be materially and adversely affected. Further, if we are unable to recruit, retain, and motivate key personnel to maintain the current business of the Company and support our strategic and other initiatives, our business, financial conditions, results of operations and cash flows similarly could be materially and adversely affected.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

45

ITEM 6.  EXHIBITS

			Incorporated by Reference to
No.	Exhibit Description	Filed with this Form 10-Q	Form	File No.	Date Filed	Exhibit Number (if different)
10.1	Form of Restricted Stock Unit Issuance Agreement for Non-Employee Directors (Annual Grant)**	X
10.2	Third Amendment to Credit Agreement		8-K	001-35901	06/01/18	10.1
10.3	First Amendment to the FTD Companies, Inc. Third Amended and Restated 2013 Incentive Compensation Plan (amended and restated as of June 6, 2017)**		DEF 14A	001-35901	04/26/18
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002	X
31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002	X
32.1	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002	X
32.2	Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002	X
101.INS	XBRL Instance Document	X
101.SCH	XBRL Taxonomy Extension Schema Document	X
101.CAL	XBRL Taxonomy Calculation Linkbase Document	X
101.LAB	XBRL Taxonomy Label Linkbase Document	X
101.PRE	XBRL Taxonomy Presentation Linkbase Document	X
101.DEF	XBRL Taxonomy Extension Definition Document	X

**     Management contract or compensatory plan or arrangement.

46

SIGNATURES

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

Date: August 9, 2018	FTD Companies, Inc. (Registrant)
	By:	/s/ Steven D. Barnhart
		Steven D. Barnhart
		Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

47

EX-10.1

Exhibit 31.1

FTD COMPANIES, INC.

THIRD AMENDED AND RESTATED

2013 INCENTIVE COMPESATION PLAN, AS AMENDED

RESTRICTED STOCK UNIT ISSUANCE AGREEMENT

RECITALS

A.The Board has adopted the FTD Companies, Inc. Third Amended and Restated 2013 Incentive Compensation Plan, as amended (the “Plan”) for the purpose of retaining the services of selected Employees and consultants, non-employee Board members and other independent advisors who provide services to the Corporation (or any Parent or Subsidiary).

B.The Participant is a member of the Board, and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in providing a meaningful incentive for the Participant to continue to serve as a Board member.

C.All capitalized terms in this Agreement shall have the meanings assigned to them in the Plan unless otherwise defined in this Agreement, including on Appendix A attached hereto.

NOW, THEREFORE, it is hereby agreed as follows:

1.Grant of Restricted Stock Units. The Corporation has awarded to the Participant, as of the Award Date, restricted stock units (“Restricted Stock Units”) under the Plan. Each Restricted Stock Unit represents the right to receive one share of Common Stock on the applicable issuance date following the vesting of that Restricted Stock Unit. The number of shares of Common Stock subject to the awarded Restricted Stock Units, the applicable vesting schedule for the Restricted Stock Units, the dates on which those vested Restricted Stock Units shall become payable to the Participant and the remaining terms and conditions governing the award (the “Award”) shall be as set forth in this Agreement.

AWARD SUMMARY

Award Date:	<Grant Date>
Number of Restricted Stock Units Subject to Award:	<Shares Granted> Restricted Stock Units
Vesting Schedule:	The Restricted Stock Units shall vest in full upon the Participant’s continued service as a Board member through June 1, 20__ (the “Vesting Date”). The Restricted Stock Units shall also be subject to accelerated vesting in whole or in part in accordance with the provisions of Paragraphs 4 and 6 of this Agreement.

Issuance Schedule:	Subject to Paragraphs 6 and 7 of this Agreement, each Restricted Stock Unit in which the Participant vests in accordance with the Vesting Schedule or pursuant to the acceleration provision of either Paragraph 4 or Paragraph 6 of this Agreement shall be settled in shares of Common Stock on the earliest to occur of:
	(i) the Vesting Date; (ii) the date of the Participant’s Separation from Service; and (iii) the effective date of a Qualifying Change in Control (in the absence of such a Qualifying Change in Control, the distribution shall not be made until the date or dates on which those amounts are otherwise to be distributed under (i) or (ii) above).
	The date on which the vested Restricted Stock Units are to be settled in accordance with the foregoing is hereby designated the “Issuance Date.”

2.Limited Transferability. Prior to the vesting of the Restricted Stock Units and actual receipt of the underlying shares of Common Stock issued hereunder, the Participant may not transfer any interest in the Award or the underlying shares of Common Stock. Any Restricted Stock Units that vest hereunder but which otherwise remain unpaid at the time of the Participant’s death may be transferred pursuant to the provisions of the Participant’s will or the laws of inheritance or to the Participant’s designated beneficiary or beneficiaries of this Award. The Participant may also direct the Corporation to re-issue the stock certificates for any shares of Common Stock that were issued under the Award during his or her lifetime to one or more designated family members or a trust established for the Participant and/or his or her family members. The Participant may make such a beneficiary designation or certificate directive at any time by filing the appropriate form with the Plan Administrator or its designee.

3.Cessation of Service. Except as otherwise provided in Paragraphs 4 and 6 below, should the Participant cease to serve as a Board member for any reason prior to vesting in the Restricted Stock Units subject to this Award, then the unvested Restricted Stock Units will be immediately cancelled, and the Participant shall thereupon cease to have any right or entitlement to receive any shares of Common Stock under those cancelled Restricted Stock Units.

4.Accelerated Vesting.

(a)Should the Participant cease to serve as a Board member by reason of death or Permanent Disability, then all of the Restricted Stock Units at the time subject to this Award shall immediately vest in full.

(b)Should the Participant voluntarily resign from the Board under circumstances that would not otherwise trigger the vesting acceleration provisions of Paragraph 4(a) or Paragraph 6, then the Participant shall immediately vest in the number of Restricted Stock Units in which the Participant would have been vested at the time of such resignation had the Restricted Stock Units subject to this Award vested in a series of successive equal monthly installments over the duration of the Vesting Schedule.

(c)Any Restricted Stock Units which become vested pursuant to Paragraph 4 by reason of the Participant’s cessation of Service shall be distributed to the Participant pursuant to the Issuance Schedule set forth in Paragraph 1.

5.Stockholder Rights and Dividend Equivalents

(a)The holder of this Award shall not have any stockholder rights, including voting or dividend rights, with respect to the Restricted Stock Units subject to this Award until the Participant becomes the record holder of the underlying shares of Common Stock following their actual issuance.

(b)Notwithstanding the foregoing, should any dividend or other distribution, whether regular or extraordinary, payable in cash or other property (other than shares of Common Stock) be declared and paid on the outstanding Common Stock while one or more Restricted Stock Units remain subject to this Award (i.e., shares are not otherwise issued and outstanding for purposes of entitlement to the dividend or distribution), then a special book account shall be established for the Participant and credited with a phantom dividend equivalent to the actual dividend or distribution which would have been paid on the underlying shares of Common Stock at the time subject to this Award had they been issued and outstanding and entitled to that dividend or distribution. As and to the extent that the Restricted Stock Units subsequently vest hereunder, the phantom dividend equivalents so credited to those Restricted Stock Units in the book account shall also vest, and those vested dividend equivalents shall be distributed to the Participant (in the same form the actual dividend or distribution was paid to the holders of the Common Stock entitled to that dividend or distribution) concurrently with the issuance of the vested Restricted Stock Units to which those phantom dividend equivalents relate. In no event, however, shall any such phantom dividend equivalents vest or become distributable unless the Restricted Stock Units to which they relate vest in accordance with the terms of this Agreement.

6.    Change in Control.

(a)Any Restricted Stock Units subject to this Award at the time of a Change in Control may be assumed, converted or replaced by the successor entity (or parent thereof) or otherwise continued in full force and effect or may be replaced with a cash program of the successor entity (or parent thereof) on terms as required under the Plan (a “Replacement Award”). In the event of such Replacement Award, no accelerated vesting of the Restricted Stock Units (the “Replaced Award”) shall occur at the time of the Change in Control. Notwithstanding the foregoing, no such cash program shall be established for the Replaced Award to the extent such program would otherwise be deemed to constitute a deferred compensation arrangement subject to the requirements of Code Section 409A and the Treasury Regulations thereunder. Notwithstanding the foregoing, a Replacement Award may be granted only to the extent it does not result in the Replaced Award or Replacement Award failing to comply with or be exempt from Section 409A of the Code.

(b)For purposes of this Agreement, a “Replacement Award” means an award: (i) of the same type (e.g., time-based restricted stock units) as the Replaced Award; (ii) that has a value at least equal to the value of the Replaced Award; (iii) that relates to publicly traded equity securities of the Corporation or its successor in the Change in Control or another entity that is affiliated with the Corporation or its successor following the Change in Control; (iv) if the Participant holding the Replaced Award is subject to U.S. federal income tax under the Code, the tax consequences of which to such Participant under the Code are not less favorable to such Participant than the tax consequences of the Replaced Award; and (v) the other terms and conditions of which are not less favorable to the Participant holding the Replaced Award than the terms and conditions of the Replaced Award (including the provisions that would apply in the event of a subsequent Change in Control). Without limiting the generality of the foregoing, the Replacement Award may take the form of a continuation of the Replaced Award if the requirements of the two preceding sentences are satisfied. The determination of whether the conditions of this Paragraph 6(b)

are satisfied will be made by the Plan Administrator, as constituted immediately before the Change in Control, in its sole discretion.

(c)In the event of a Replacement Award, the Replaced Award shall be adjusted immediately after the consummation of the Change in Control so as to apply to the number and class of securities into which the shares of Common Stock subject to the Replaced Award immediately prior to the Change in Control would have been converted in consummation of that Change in Control had those shares of Common Stock actually been issued and outstanding at that time. To the extent the actual holders of the outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Change in Control, the successor entity (or parent thereof) may, in connection with the Replacement Award at that time, but subject to the Plan Administrator’s approval prior to the Change in Control, substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in the Change in Control transaction, provided the substituted common stock is readily tradable on an established U.S. securities exchange.

(d)Any Replacement Award shall be subject to accelerated vesting in accordance with the following provisions: If an Involuntary Termination of the Participant’s Service occurs within twelve (12) months after the Change in Control event, then the Participant shall immediately vest in the Replacement Award. In the event of a replacement cash program under Paragraph 6(a), the foregoing provisions shall be applied to the proceeds of such replacement program attributable to the Replaced Award had the Award been assumed or otherwise continued in effect. The vested portion of the Replacement Award will be payable in accordance with the Issuance Schedule set forth in Paragraph 1.

(e)If no Replacement Award is provided, then the Restricted Stock Units shall vest immediately prior to the closing of the Change in Control. The vested Restricted Stock Units shall be converted into the right to receive for each such Restricted Stock Unit the same consideration per share of Common Stock payable to the other stockholders of the Corporation in consummation of that Change in Control. The vested Restricted Stock Units will be payable in accordance with the Issuance Schedule set forth in Paragraph 1.

(f)This Agreement shall not in any way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. Additionally, if a Replacement Award is provided, notwithstanding anything in this Agreement to the contrary, any outstanding Restricted Stock Units that at the time of the Change in Control are not subject to a “substantial risk of forfeiture” (within the meaning of Section 409A of the Code) will be deemed to be vested at the time of such Change in Control and will be payable in accordance with the Issuance Schedule set forth in Paragraph 1.

7.Adjustment in Shares. The total number and/or class of securities issuable pursuant to this Award and the other terms of this Award shall be subject to adjustment upon certain corporate events as set forth in Article One, Section V(E) of the Plan. The adjustments shall be made in such manner as the Plan Administrator deems appropriate, and those adjustments shall be final, binding and conclusive.

8.Issuance of Shares of Common Stock.

(a)On the applicable Issuance Date for the Restricted Stock Units which vest in accordance with the provisions of this Agreement, the Corporation shall issue to or on behalf of the Participant a certificate (which may be in electronic form) or provide for book entry for the shares of

Common Stock to be issued on such date and shall concurrently distribute to the Participant any accrued phantom dividend equivalents with respect to those vested Restricted Stock Units.

(b)Except as otherwise provided in Paragraph 6 or by reason of Paragraph 7, the settlement of all Restricted Stock Units which vest under the Award shall be made solely in shares of Common Stock. No fractional share of Common Stock shall be issued pursuant to this Award, and any fractional share resulting from any calculation made in accordance with the terms of this Agreement shall be rounded down to the next whole share of Common Stock.

9.Compliance with Laws and Regulations. The issuance of shares of Common Stock pursuant to the Award shall be subject to compliance by the Corporation and the Participant with all applicable requirements of law relating thereto and with all applicable regulations of the Stock Exchange on which the Common Stock is listed for trading at the time of such issuance.

10.Notices. Any notice required to be given or delivered to the Corporation under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal corporate offices, and directed to the attention of Stock Plan Administrator. Any notice required to be given or delivered to the Participant shall be in writing and addressed to the Participant at the most current address then indicated for the Participant on the Corporation’s records or delivered electronically to the Participant through the Corporation’s electronic mail system. All notices shall be deemed effective upon personal delivery or delivery through the Corporation’s electronic mail system or upon deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified.

11.Governing Law. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Delaware without resort to that state’s conflict-of-laws rules.

12.Successors and Assigns. Except to the extent otherwise provided in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and the Participant, the Participant’s assigns, the legal representatives, heirs and legatees of the Participant’s estate and any beneficiaries of the Award designated by the Participant.

13.Construction. This Agreement and the Award evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. All decisions of the Plan Administrator with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in the Award.

14.No Impairment of Rights. Nothing in this Agreement shall in any way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise make changes in its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. In addition, this Agreement shall not in any way be construed or interpreted so as to affect adversely or otherwise impair the right of the Corporation or the stockholders to remove the Participant from the Board at any time in accordance with the provisions of applicable law.

15.Code Section 409A. It is the intention of the parties that the provisions of this Agreement comply with the requirements of Section 409A of the Code and, this Agreement shall be interpreted and applied in accordance with such intent. Notwithstanding anything in this Agreement to the contrary, if any amounts under this Agreement become payable upon a Separation from Service other than

due to death, and at the time of such Separation from Service the Participant is a “specified employee” (as such term is defined in Section 409A of the code and using the identification methodology selected by the Corporation from time to time), such amounts will be paid on the earlier to occur of (a) the first business day of the seventh month after such Separation from Service and (b) the Participant’s death.

IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first indicated above.

FTD COMPANIES, INC.

By: Scott D. Levin

Title: Executive Vice President and General Counsel

PARTICIPANT

Name: <Participant Name>

Signature: <Electronic Signature>

APPENDIX A

The following definitions shall be in effect under the Agreement:

a.Agreement shall mean this Restricted Stock Unit Issuance Agreement.

b.Award shall mean the award of restricted stock units made to the Participant pursuant to the terms of this Agreement.

c.Award Date shall mean the date the restricted stock units are awarded to the Participant pursuant to the Agreement and shall be the date indicated in Paragraph 1 of the Agreement.

d.Involuntary Termination shall mean the termination of the Participant’s Service that occurs by reason of the Participant’s involuntary termination of Service by the Corporation for reasons other than Cause.

e.Participant shall mean the person to whom the Award is made pursuant to the Agreement.

f.Permanent Disability shall mean the inability of the Participant to perform his or her usual duties as a member of the Board by reason of any medically determinable physical or mental impairment which is expected to result in death or has lasted or can be expected to last for a continuous period of twelve (12) months or more.

g.Separation from Serviceshall mean the Participant’s cessation of Service that constitutes a “separation from service” as defined in Code Section 409A and determined in accordance with the applicable Treasury Regulations or other guidance issued under Code Section 409A.

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

SECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Scott D. Levin, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of FTD Companies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and we have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and to the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: August 9, 2018	/s/ Scott D. Levin
	Scott D. Levin
	Interim President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

SECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Steven D. Barnhart, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of FTD Companies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and we have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and to the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: August 9, 2018	/s/ Steven D. Barnhart
	Steven D. Barnhart
	Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Scott D. Levin, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(a) The Quarterly Report on Form 10-Q of FTD Companies, Inc. for the quarter ended June 30, 2018, as filed with the Securities and Exchange Commission, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b) The information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 9, 2018

/s/ Scott D. Levin

Scott D. Levin

Interim President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Steven D. Barnhart, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(a) The Quarterly Report on Form 10-Q of FTD Companies, Inc. for the quarter ended June 30, 2018, as filed with the Securities and Exchange Commission, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b) The information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 9, 2018

/s/ Steven D. Barnhart

Steven D. Barnhart

Executive Vice President and Chief Financial Officer

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Aug. 03, 2018
Document and Entity Information
Entity Registrant Name	FTD Companies, Inc.
Entity Central Index Key	0001575360
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		27,938,332
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 20,436	$ 29,496
Accounts receivable, net of allowances of $6,242 and $4,957 as of June 30, 2018 and December 31, 2017, respectively	21,319	26,028
Inventories	24,816	25,356
Prepaid expenses and other current assets	11,705	14,911
Total current assets	78,276	95,791
Property and equipment, net	44,779	33,880
Intangible assets, net	104,958	181,965
Goodwill	211,978	277,041
Other assets	10,311	21,648
Total assets	450,302	610,325
Current liabilities:
Accounts payable	69,943	70,480
Accrued liabilities	61,430	77,058
Accrued compensation	9,203	14,261
Deferred revenue	6,377	5,280
Income taxes payable	3,846	872
Current portion of long-term debt	189,690	189,666
Total current liabilities	340,489	357,617
Deferred tax liabilities, net	9,311	30,854
Other liabilities	7,538	7,330
Total liabilities	357,338	395,801
Commitments and contingencies (Note 14)
Stockholders’ equity:
Preferred stock, 5,000,000 shares, par value $0.0001, authorized; no shares issued and outstanding	0	0
Common stock, 60,000,000 shares, par value $0.0001, authorized; 30,364,811 and 30,073,087 shares issued as of June 30, 2018 and December 31, 2017, respectively	3	3
Treasury stock, 2,430,897 shares as of June 30, 2018 and December 31, 2017	(65,221)	(65,221)
Additional paid-in capital	710,750	705,388
Accumulated deficit	(508,913)	(384,232)
Accumulated other comprehensive loss	(43,655)	(41,414)
Total stockholders’ equity	92,964	214,524
Total liabilities and stockholders’ equity	$ 450,302	$ 610,325

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts (in dollars)	$ 6,242	$ 4,957
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, shares authorized	60,000,000	60,000,000
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares issued	30,364,811	30,073,087
Treasury stock, shares issued	2,430,897	2,430,897

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Revenues:
Products	$ 268,006	$ 293,228	$ 551,009	$ 574,192
Services	31,915	34,918	67,082	70,447
Total revenues	299,921	328,146	618,091	644,639
Operating expenses:
Cost of revenues—products	189,946	198,682	396,217	390,809
Cost of revenues—services	4,536	4,497	9,012	8,744
Sales and marketing	71,067	76,224	153,349	145,120
General and administrative	23,133	27,039	48,834	55,794
Amortization of intangible assets	1,495	3,819	2,997	7,639
Restructuring and other exit costs	0	136	0	944
Impairment of goodwill, intangible assets, and other long-lived assets	136,861	0	139,216	0
Total operating expenses	427,038	310,397	749,625	609,050
Operating income/(loss)	(127,117)	17,749	(131,534)	35,589
Interest income	120	122	241	237
Interest expense	(4,509)	(2,562)	(7,116)	(4,950)
Other income, net	160	223	136	198
Income/(loss) before income taxes	(131,346)	15,532	(138,273)	31,074
Provision for/(benefit from) income taxes	(13,261)	5,816	(13,592)	12,335
Net income/(loss)	$ (118,085)	$ 9,716	$ (124,681)	$ 18,739
Earnings/(loss) per common share:
Basic earnings/(loss) per share (in dollars per share)	$ (4.25)	$ 0.35	$ (4.49)	$ 0.67
Diluted earning/(loss) per share (in dollars per share)	$ (4.25)	$ 0.35	$ (4.49)	$ 0.67

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Statement of Comprehensive Income [Abstract]
Net income/(loss)	$ (118,085)	$ 9,716	$ (124,681)	$ 18,739
Other comprehensive income/(loss):
Foreign currency translation	(6,396)	4,124	(2,461)	5,846
Cash flow hedges:
Changes in net gains on derivatives, net of tax of $23 and $53 for the three months ended June 30, 2018 and 2017, respectively, and $59 and $107 for the six months ended June 30, 2018 and 2017, respectively.	116	87	220	172
Other comprehensive income/(loss)	(6,280)	4,211	(2,241)	6,018
Total comprehensive income/(loss)	$ (124,365)	$ 13,927	$ (126,922)	$ 24,757

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Statement of Comprehensive Income [Abstract]
Changes in net gains on cash flow hedge derivatives, tax	$ 23	$ 53	$ 59	$ 107

XML

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - 6 months ended Jun. 30, 2018 - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Treasury Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Loss	Accumulated Deficit
Balance at the beginning of the period at Dec. 31, 2017	$ 214,524	$ 3	$ (65,221)	$ 705,388	$ (41,414)	$ (384,232)
Balance at the beginning of the period (in shares) at Dec. 31, 2017		30,073	(2,431)
Increase (Decrease) in Equity
Net loss	(124,681)					(124,681)
Other comprehensive loss	(2,241)				(2,241)
Stock-based compensation	5,410			5,410
Vesting of restricted stock units and related repurchases of common stock	(460)			(460)
Vesting of restricted stock units and related repurchases of common stock (in shares)		187
Stock Issued During Period, Shares, Employee Stock Purchase Plans		105
Stock Issued During Period, Value, Employee Stock Purchase Plan	412			412
Balance at the end of the period at Jun. 30, 2018	$ 92,964	$ 3	$ (65,221)	$ 710,750	$ (43,655)	$ (508,913)
Balance at the end of the period (in shares) at Jun. 30, 2018		30,365	(2,431)

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Cash flows from operating activities:
Net income/(loss)	$ (124,681)	$ 18,739
Adjustments to reconcile net income/(loss) to net cash provided by/(used for) operating activities:
Depreciation and amortization	8,220	18,583
Impairment of goodwill, intangible assets, and other long-lived assets	139,216	0
Stock-based compensation	5,410	5,870
Provision for doubtful accounts receivable	1,067	779
Amortization of deferred financing fees	1,058	680
Deferred taxes, net	(20,432)	1,758
Other, net	92	(69)
Changes in operating assets and liabilities:
Accounts receivable, net	3,585	3,887
Inventories	529	170
Prepaid expenses and other assets	3,492	5,049
Accounts payable and accrued liabilities	(23,087)	(36,060)
Deferred revenue	1,144	1,154
Income taxes receivable or payable	2,514	66
Other liabilities	287	(997)
Net cash provided by/(used for) operating activities	(1,586)	19,609
Cash flows from investing activities:
Purchases of property and equipment	(16,280)	(6,370)
Proceeds from life insurance	10,003	0
Net cash used for investing activities	(6,277)	(6,370)
Cash flows from financing activities:
Proceeds from revolving lines of credit	185,000	70,000
Payments on term debt and revolving lines of credit	(182,000)	(85,000)
Purchases from employee stock plan	412	1,042
Payments for debt financing fees	(4,034)	0
Repurchases of common stock withheld for taxes	(460)	(1,969)
Net cash used for financing activities	(1,082)	(15,927)
Effect of foreign currency exchange rate changes on cash and cash equivalents	(115)	1,042
Change in cash and cash equivalents	(9,060)	(1,646)
Cash and cash equivalents, beginning of period	29,496	81,002
Cash and cash equivalents, end of period	$ 20,436	$ 79,356

XML

DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, ACCOUNTING POLICIES, AND RECENT ACCOUNTING PRONOUNCEMENTS

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, ACCOUNTING POLICIES, AND RECENT ACCOUNTING PRONOUNCEMENTS

DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, ACCOUNTING POLICIES, AND RECENT ACCOUNTING PRONOUNCEMENTS

Description of Business

FTD Companies, Inc. (together with its subsidiaries, “FTD” or the “Company”), is a premier floral and gifting company with a vision to be the world’s floral innovator and leader, creating products, brands, and technology-driven services its customers love. The Company provides floral, specialty foods, gift and related products and services to consumers, retail florists, and other retail locations and companies in need of floral and gifting solutions. The business uses the highly recognized FTD^® and Interflora^® brands, both supported by the iconic Mercury Man^® logo. While the Company operates primarily in the United States (“U.S.”) and the United Kingdom (“U.K.”), it has worldwide presence as its Mercury Man logo is displayed in approximately 35,000 floral shops in over 125 countries. The Company’s diversified portfolio of brands also includes ProFlowers^®, ProPlants^®, Shari’s Berries^®, Personal Creations^®, RedEnvelope^®, Flying Flowers^®, Ink Cards^™, Postagram^™, Gifts.com^™,and BloomThat^™. While floral arrangements and plants are its primary offerings, the Company also markets and sells gift items, including gourmet-dipped berries and other sweets, personalized gifts, gift baskets, wine and champagne, and jewelry.

The principal operating subsidiaries of FTD Companies, Inc. are Florists’ Transworld Delivery, Inc., FTD.COM Inc. (“FTD.com”), Interflora British Unit (“Interflora”), and Provide Commerce, Inc. (“Provide Commerce”). The operations of the Company include those of its subsidiary, Interflora, Inc., of which one-third is owned by a third party. The Company’s corporate headquarters is located in Downers Grove, Illinois. The Company also maintains offices in San Diego and San Francisco, California; Woodridge, Illinois; Centerbrook, Connecticut; Sleaford, England; and Hyderabad, India; and distribution centers in various locations throughout the U.S.

Basis of Presentation

The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”). All intercompany accounts and transactions have been eliminated in consolidation.

The preparation of financial statements in accordance with GAAP requires management to make accounting policy elections, estimates and assumptions that affect a number of reported amounts and related disclosures in the consolidated financial statements. Management bases its estimates on historical experience and assumptions that it believes are reasonable. Actual results could differ from those estimates and assumptions.

These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Form 10-K for the year ended December 31, 2017.

Going Concern

The condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern.

On May 31, 2018, the Company entered into the Third Amendment to Credit Agreement (the Credit Agreement, dated September 19, 2014, as previously amended and as further amended by the Third Amendment, is referred to in this Form 10-Q as the “Amended Credit Agreement”) with its lenders, which includes an agreement by the lenders to waive existing defaults caused by (1) the inclusion of a going concern uncertainty explanatory paragraph in the audit opinion of the Company’s financial statements for the year ended December 31, 2017 and (2) the breach of the consolidated net leverage ratio covenant for the quarter ended March 31, 2018. The Amended Credit Agreement also restricts the Company’s combined usage of the revolving credit facility portion of the Amended Credit Agreement to (1) $150 million during the period from May 31, 2018 through and including September 30, 2018; (2) $175 million during the period from October 1, 2018 through and including

December 31, 2018; and (3) $150 million during the period from January 1, 2019 through the September 19, 2019 maturity date, all subject to the Company’s obligation to make prepayments of the term loan portion of the Amended Credit Agreement with any net cash proceeds received from the sale of certain non-core or other assets. In addition, the consolidated net leverage ratio and fixed charge coverage ratio covenants were revised for each quarterly period through the September 19, 2019 maturity date as were the interest rates applicable to borrowings under the Amended Credit Agreement. See Note 6—“Financing Arrangements” for additional information regarding the Amended Credit Agreement.

    The Company was in compliance with the revised covenants under the Amended Credit Agreement as of June 30, 2018. The ability to continue as a going concern, however, is dependent on the Company generating profitable operating results and continuing to be in compliance with the revised covenants under the Amended Credit Agreement or refinancing, repaying, or obtaining new financing prior to maturity of the Amended Credit Agreement in September 2019. In this regard, on July 19, 2018, the Company announced that its board of directors has initiated a review of strategic alternatives. The strategic alternatives expected to be considered include, but are not limited to, a sale or merger of the Company, the Company continuing to pursue value-enhancing initiatives as a standalone company, a capital structure optimization that may involve potential financings, or the sale or other disposition of certain of FTD’s businesses or assets. The Company also announced a corporate restructuring and cost savings plan, under which opportunities to optimize operations, drive efficiency, and reduce costs have been identified.

Notwithstanding these initiatives, based on the Company’s 2018 year-to-date results of operations and outlook for the remainder of the term of the Amended Credit Agreement, the Company currently anticipates that its Adjusted EBITDA (as defined in the Amended Credit Agreement) and other sources of earnings or adjustments used to calculate Consolidated Adjusted EBITDA under the Amended Credit Agreement may result in (1) the Company’s consolidated net leverage ratio, as defined in the Amended Credit Agreement, exceeding the maximum permitted consolidated net leverage ratio during the remainder of the term of the Amended Credit Agreement and (2) the Company’s fixed charge coverage ratio, as defined in the Amended Credit Agreement, falling below the minimum requirement during the remainder of the term of the Amended Credit Agreement. If the Company is unable to meet the revised covenants under the Amended Credit Agreement and the Company is unable to obtain waivers or amendments from its lenders, the lenders could exercise remedies under the Amended Credit Agreement and repayment of the debt owed under the Amended Credit Agreement could be accelerated. The Company does not expect that it could repay all of its outstanding indebtedness if the repayment of such indebtedness was accelerated. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

There can be no assurance that the strategic alternatives review noted above will result in any particular strategic alternative or strategic transaction or that the Company will be able to refinance its outstanding indebtedness or obtain alternative financing on acceptable terms, when required or if at all. If the Company is not successful in its initiatives, the Company may be forced to limit its business activities or be unable to continue as a going concern, which would have a material adverse effect on its results of operations and financial condition. The financial statements included in this Form 10-Q do not include any adjustments that might result from the outcome of these uncertainties.

Accounting Policies

With the exception of the Company’s revenue recognition policy as noted below, refer to the Company’s audited consolidated financial statements included in the Company’s Form 10-K for the year ended December 31, 2017 for a discussion of the Company’s accounting policies, as updated below for recently adopted accounting standards.

Revenue Recognition

The Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 606 (“ASC 606”), Revenue from Contracts with Customers effective January 1, 2018, using the modified retrospective method. This method requires that the cumulative effect of the initial application is recognized as an adjustment to the opening balance of the Company’s retained earnings at January 1, 2018. However, the adoption did not have a material impact on the Company’s revenue recognition. As such, the Company did not record an adjustment to its beginning balance of retained earnings as of January 1, 2018.

The Company recognizes revenue from short-term contracts for the sale of various products and services to its customers, which include consumers, floral network members, and wholesale customers. Sales to consumers are generated via the Company’s websites, mobile sites, or over the telephone with payment made either at the time the order is placed or upon shipment. Product revenues from these short-term contracts are single performance obligations and are considered complete upon delivery to the recipient. Amounts collected from customers upon placement of an order are recorded as deferred revenue and recognized upon delivery of the product. Products revenues, less discounts and refunds, and the related cost of revenues are recognized when control of the goods is transferred to the recipient, which is generally upon delivery. Product sales are not refundable other than as related to customer service issues. Shipping and service fees charged to customers are recognized at the time the related products revenues are recognized and are included in products revenues. Shipping and delivery costs are included in cost of revenues. Sales taxes are collected from customers and remitted to the appropriate taxing authorities and are not reflected in the Company’s condensed consolidated statements of operations as revenues.

The Company generally recognizes revenues for sales to consumers on a gross basis because the Company controls the goods before they are transferred to the recipient as the Company (i) bears primary responsibility for fulfilling the promise to the customer; (ii) bears inventory risk before and/or after the good or service is transferred to the customer; and (iii) has discretion in establishing the price for the sale of the good or service to the customer.

Services revenues related to orders sent through the floral network are variable based on either the number of orders or the value of orders and are recognized in the period in which the orders are delivered. Membership and other subscription-based fees are recognized monthly as earned, on a month-to-month basis. Each service offered by the Company is separate and distinct from other services and represents an individual performance obligation.

The Company also sells point-of-sale systems and related technology services to its floral network members and recognizes revenue in accordance with ASC 606. For hardware sales that include software, revenues are recognized when delivery, installation and customer acceptance have all occurred. The transaction price for point-of-sale systems is based on the equipment and the software modules ordered by the customer and include installation and training for the system. The sale of the system is considered a single performance obligation since the installation and training are a significant part of the sale in order for the floral network member to access the clearinghouse to send and receive floral orders. The Company recognizes revenues on hardware which is sold without software at the time of delivery.    

Probability of collection for both products and services revenue is assessed based on a number of factors, including past transaction history with the customer and the creditworthiness of the customer. If it is determined that collectability is not reasonably assured, revenues are not recognized until collectability becomes reasonably assured.

The Company incurs contract costs that are incremental costs incurred for obtaining a contract. These contract costs are short-term (less than a year) and are expensed as incurred based on the practical expedient provided in ASC 606. As such, the Company does not capitalize costs incurred for obtaining a contract.    

Recent Accounting Pronouncements

Recently Adopted Accounting Standards

In March 2018, the FASB issued Accounting Standards Update (“ASU”) 2018-05, Income Taxes (Topic 740)—Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118, which provides guidance from the SEC allowing for the recognition of provisional amounts in the financial statements for the year ended December 31, 2017 as a result of the U.S. Tax Cuts and Jobs Act (“TCJA”) that was signed into law in December 2017. The guidance allows for a measurement period of up to one year from the enactment date to finalize the accounting related to the TCJA. The Company has applied the guidance in this update in its financial statements for the six months ended June 30, 2018 and will finalize and record any adjustments related to the TCJA within the one year measurement period.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and issued subsequent amendments to the initial guidance in August 2015, March 2016, April 2016, May 2016, and December 2016 within ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12, and ASU 2016-20, respectively (collectively, “Topic 606”). Topic 606 supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of Topic 606 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The Company adopted the guidance under this topic as of January 1, 2018 with no material impact to its consolidated financial statements. See Accounting Policies—Revenue Recognition above. The disclosures required by ASC 606 have been included in Note 2—Segment Information.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments—Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10). The updated guidance enhances the reporting model for financial instruments, and includes amendments to address aspects of recognition, measurement, presentation and disclosure. The Company adopted the guidance under this topic as of January 1, 2018 with no impact to its consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This update was issued to address the diversity in practice related to the classification of certain cash receipts and payments in the statement of cash flows by adding or clarifying guidance on eight specific cash flow issues. The Company adopted the guidance under this topic as of January 1, 2018 with no impact to its consolidated financial statements.

In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting. This update was issued to provide clarity and reduce diversity in practice as well as cost and complexity when applying the guidance in Topic 718 to the modification of terms or conditions of a share-based payment award. The amendments provide guidance on determining which changes to the terms and conditions of share-based payment awards would require an entity to apply modification accounting under Topic 718. The Company adopted the guidance under this topic as of January 1, 2018 with no impact to its consolidated financial statements.

Recently Issued Accounting Standards

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This update requires the recognition of certain lease assets and lease liabilities on the balance sheet as well as the disclosure of key information about leasing arrangements. The amendments in this ASU require the recognition and measurement of leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients which may be elected by the Company. The amendments in this ASU will be effective for the Company for fiscal years, and the interim periods within those years, beginning after December 15, 2018, with early adoption permitted. The Company is currently assessing the impact of this update on its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326). This update seeks to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments, including trade receivables, and other commitments to extend credit held by a reporting entity at each reporting date. The amendments require an entity to replace the incurred loss impairment methodology in current GAAP with a methodology that reflects current expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The amendments will be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which guidance is effective, which is a modified-retrospective approach. The Company is currently assessing the impact of this update on its consolidated financial statements.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This update seeks to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements and make certain targeted improvements to simplify the application of the hedge accounting guidance in current GAAP. The amendments in this update better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and presentation of hedge results. For cash flow and net investment hedges as of the adoption date, this ASU requires a modified retrospective approach. The amended presentation and disclosure guidance is required only prospectively. The amendments in this ASU are effective for the Company’s fiscal year beginning after December 31, 2018, with early adoption permitted. The Company is currently assessing the impact of this update on its consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This update allows for a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the TCJA. This update also requires certain disclosures about stranded tax effects. The amendments in this ASU will be effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company is currently assessing the impact of this update on its consolidated financial statements.

In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. This update allows existing employee guidance to apply to non-employee share-based transactions (as long as the transaction is not effectively a form of financing), with the exception of specific guidance related to the attribution of compensation cost. The cost of nonemployee awards will continue to be recorded as if the grantor had paid cash for the goods or services. The amendments in this ASU will be effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company is currently assessing the impact of this update on its consolidated financial statements.

XML

SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

The Company reports its business in three reportable segments: U.S. Consumer, Florist, and International. Prior to January 1, 2018, the Company reported its business in four reportable segments. As a result of a change in the information provided to and utilized by the Company’s then-current Chief Executive Officer (who was also the Company’s Chief Operating Decision Maker (“CODM”)) to assess the performance of the business, the Company combined the previous Provide Commerce and Consumer segments into one reportable segment. There have been no changes to the Company’s reporting units, which remain FTD.com (previously referred to as Consumer), Florist, International, ProFlowers/Gourmet Foods, and Personal Creations.

The Company follows the reporting requirements of ASC 280, Segment Reporting. Management measures and reviews the Company’s operating results by segment in accordance with the “management approach” defined in ASC 280. The reportable segments identified below were the segments of the Company for which separate financial information was available and for which segment results were regularly reviewed by the Company’s CODM to make decisions about the allocation of resources and to assess performance. The CODM uses segment operating income to evaluate the performance of the business segments and make decisions about allocating resources among segments. Segment operating income is operating income excluding depreciation, amortization, litigation and dispute settlement charges or gains, transaction-related costs, restructuring and other exit costs, and impairment of goodwill, intangible assets and other long-lived assets. Stock-based and incentive compensation and general corporate expenses are not allocated to the segments. Segment operating income is prior to intersegment eliminations and excludes other expense, net.

Below is a reconciliation of segment revenues to consolidated revenues (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Products revenues:
U.S. Consumer	$	233,082		$	259,804		$	456,443		$	488,476
Florist	11,703			12,813			26,474			28,982
International	27,319			25,446			76,411			65,887
Segment products revenues	272,104			298,063			559,328			583,345
Services revenues:
Florist	28,213			31,277			57,658			61,614
International	3,795			3,755			9,618			9,051
Segment services revenues	32,008			35,032			67,276			70,665
Intersegment eliminations	(4,191		)	(4,949		)	(8,513		)	(9,371		)
Consolidated revenues	$	299,921		$	328,146		$	618,091		$	644,639

Intersegment revenues represent amounts charged from one segment to the other for services provided based on order volume at a set rate per order. Intersegment revenues by segment were as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Intersegment revenues:
U.S. Consumer	$	(4,098	)	$	(4,835	)	$	(8,319	)	$	(9,153	)
Florist	(93		)	(114		)	(194		)	(218		)
Total intersegment revenues	$	(4,191	)	$	(4,949	)	$	(8,513	)	$	(9,371	)

The U.S. Consumer segment is comprised of the FTD.com, ProFlowers, Gourmet Foods, and Personal Creations business units. The revenues for the business units were as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
U.S. Consumer segment revenues:
FTD.com	$	65,881	$	80,113	$	137,599	$	152,917
ProFlowers	96,963		106,515		176,786		197,226
Gourmet Foods	45,536		49,205		96,617		101,198
Personal Creations	24,702		23,971		45,441		37,135
Total U.S. Consumer segment revenues	$	233,082	$	259,804	$	456,443	$	488,476

Geographic revenues from sales to external customers were as follows for the periods presented (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
U.S.	$	268,807	$	298,945	$	532,062	$	569,701
U.K.	31,114		29,201		86,029		74,938
Consolidated revenues	$	299,921	$	328,146	$	618,091	$	644,639

Below is a reconciliation of segment operating income/(loss) to consolidated operating income/(loss) and income/(loss) before income taxes (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Segment operating income/(loss)(a)
U.S. Consumer	$	6,474		$	21,120		$	(1,761	)	$	40,227
Florist	10,849			12,248			23,115			26,202
International	2,710			3,066			9,765			8,598
Total segment operating income	20,033			36,434			31,119			75,027
Unallocated expenses(b)	(6,171		)	(9,400		)	(15,217		)	(20,855		)
Impairment of goodwill, intangible assets, and other long-lived assets	(136,861		)	—			(139,216		)	—
Depreciation expense and amortization of intangible assets	(4,118		)	(9,285		)	(8,220		)	(18,583		)
Operating income/(loss)	(127,117		)	17,749			(131,534		)	35,589
Interest expense, net	(4,389		)	(2,440		)	(6,875		)	(4,713		)
Other income, net	160			223			136			198
Income/(loss) before income taxes	$	(131,346	)	$	15,532		$	(138,273	)	$	31,074

(a) Segment operating income/(loss) is operating income/(loss) excluding depreciation, amortization, impairment of goodwill, intangible assets, and other long-lived assets, litigation and dispute settlement charges and gains, transaction-related costs, and restructuring and other exit costs. In addition, stock-based and incentive compensation and general corporate expenses are not allocated to the segments. Segment operating income is prior to intersegment eliminations and excludes other income/(expense), net.

(b) Unallocated expenses include various corporate costs, such as executive management, corporate finance, and legal costs. In addition, unallocated expenses include stock-based and incentive compensation, restructuring and other exit costs, transaction-related costs, and litigation and dispute settlement charges and gains.

XML

FINANCING RECEIVABLES

6 Months Ended

Jun. 30, 2018

Balance Sheet Related Disclosures [Abstract]

FINANCING RECEIVABLES

FINANCING RECEIVABLES

The Company has financing receivables related to equipment sales to its floral network members. The current and noncurrent portions of financing receivables are included in accounts receivable and other assets, respectively, in the condensed consolidated balance sheets. The Company assesses financing receivables individually for balances due from current floral network members and collectively for balances due from terminated floral network members.

The credit quality and the aging of financing receivables was as follows (in thousands):

	June 30, 2018		December 31, 2017
Current	$	9,589	$	10,571
Past due:
1 - 150 days past due	229		167
151 - 364 days past due	168		213
365 - 730 days past due	234		184
731 or more days past due	380		357
Total	$	10,600	$	11,492

Financing receivables on nonaccrual status totaled $1.1 million and $1.0 million at June 30, 2018 and December 31, 2017, respectively.

The allowance for credit losses and the recorded investment in financing receivables were as follows (in thousands):

	Six Months Ended June 30,
	2018			2017
Allowance for credit losses:
Balance as of January 1	$	912		$	846
Provision	178			184
Write-offs charged against allowance	(102		)	(249		)
Balance at June 30	$	988		$	781
Ending balance collectively evaluated for impairment	$	944		$	745
Ending balance individually evaluated for impairment	$	44		$	36
Recorded investments in financing receivables:
Balance collectively evaluated for impairment	$	1,093		$	856
Balance individually evaluated for impairment	$	9,507		$	11,044

Individually evaluated impaired loans, including the recorded investment in such loans, the unpaid principal balance, and the allowance related to such loans, each totaled less than $0.1 million as of both June 30, 2018 and December 31, 2017. The average recorded investment in such loans was less than $0.1 million for both the six months endedJune 30, 2018 and 2017. Interest income recognized on impaired loans was less than $0.1 million for both the six months endedJune 30, 2018 and 2017.

XML

TRANSACTIONS WITH RELATED PARTIES

6 Months Ended

Jun. 30, 2018

Related Party Transactions [Abstract]

TRANSACTIONS WITH RELATED PARTIES

TRANSACTIONS WITH RELATED PARTIES

Transactions with Qurate

As of June 30, 2018, Qurate Retail, Inc. (“Qurate”), formerly Liberty Interactive Corporation, owned 36.5% of the issued and outstanding shares of FTD common stock. An Investor Rights Agreement governs certain rights of and restrictions on Qurate in connection with the shares of FTD common stock that Qurate owns.

The I.S. Group Limited

Interflora holds an equity investment of 20.4% in The I.S. Group Limited (“I.S. Group”). The investment was $1.7 million as of both June 30, 2018 and December 31, 2017, and is included in other assets in the condensed consolidated balance sheets. I.S. Group supplies floral-related products to Interflora’s floral network members in both the U.K. and the Republic of Ireland as well as to other customers. Interflora derives revenues from I.S. Group from (i) the sale of products (sourced from third-party suppliers) to I.S. Group for which revenue is recognized on a gross basis, (ii) commissions on products sold by I.S. Group (sourced from third-party suppliers) to floral network members, and (iii) commissions for acting as a collection agent on behalf of I.S. Group. Revenues related to products sold to and commissions earned from I.S. Group were $0.4 million for each of the three months ended June 30, 2018 and 2017, and $1.3 million and $1.1 million for the six months ended June 30, 2018 and 2017, respectively. In addition, Interflora purchases products from I.S. Group for sale to consumers. The cost of revenues related to products purchased from I.S. Group was $0.1 million for each of the three months ended June 30,2018 and 2017, and $0.2 million and $0.1 million for the six months ended June 30,2018 and 2017, respectively. Amounts due from I.S. Group were $0.2 million and $0.3 million at June 30, 2018 and December 31, 2017, respectively, and amounts payable to the I.S. Group were $0.8 million and $1.0 million at June 30, 2018 and December 31, 2017, respectively.

XML

GOODWILL, INTANGIBLE ASSETS, AND OTHER LONG-LIVED ASSETS

6 Months Ended

Jun. 30, 2018

Goodwill Tangible and Intangible Assets Disclosure [Abstract]

GOODWILL, INTANGIBLE ASSETS, AND OTHER LONG-LIVED ASSETS

GOODWILL, INTANGIBLE ASSETS, AND OTHER LONG-LIVED ASSETS

Goodwill is tested for impairment at the reporting unit level. A reporting unit is a business or a group of businesses for which discrete financial information is available and is regularly reviewed by management. An operating segment is made up of one or more reporting units. The Company reports its business operations in three operating and reportable segments: U.S. Consumer, Florist, and International. Each of the Florist and International segments is a reporting unit. The U.S Consumer segment is comprised of three reporting units: FTD.com, ProFlowers/Gourmet Foods, and Personal Creations.

The Company tests goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter of each year at the reporting unit level and on an interim basis if events or substantive changes in circumstances indicate that the carrying amount of a reporting unit or an indefinite-lived asset may exceed its fair value (i.e. that a triggering event has occurred). Additionally, the Company evaluates finite-lived intangible assets and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset groupings may not be recoverable.

During the quarter ended June 30, 2018, due to continued declines in financial results and reductions in the projected results for the remainder of 2018, the Company determined that a triggering event had occurred that required an interim impairment assessment for all of its reporting units other than the International reporting unit, as that reporting unit’s year-to-date and projected results were relatively in line with expectations. The intangible assets and other long-lived assets associated with the reporting units assessed were also reviewed for impairment. Impairment charges are included in operating expenses in the condensed consolidated statement of operations under the caption impairment of goodwill, intangible assets, and other long-lived assets.

The Company performed a quantitative interim test. In calculating the fair value of the reporting units, the Company used a combination of the income approach and the market approach valuation methodologies. For all reporting units other than the ProFlowers/Gourmet Foods reporting unit, the income approach was used primarily, as management believes that a discounted cash flow approach is the most reliable indicator of the fair values of the businesses. Under the market approach, the guideline company method was used, which focuses on comparing the Company’s risk profile and growth prospects to select reasonably similar companies based on business description, revenue size, markets served, and profitability. For the ProFlowers/Gourmet Foods reporting unit, the cost approach was used.

The interim test resulted in the Company’s determination that the fair value of the Florist reporting unit exceeded its carrying value and, therefore, its goodwill was not impaired. The reporting unit’s fair value exceeded its carrying value by approximately 6%. The fair values of the FTD.com, ProFlowers/Gourmet Foods, and Personal Creations reporting units were less than their carrying values and, as such, goodwill impairment charges of $35.2 million, $14.8 million, and $12.5 million, respectively, were recorded during the three months ended June 30, 2018 related to these reporting units. Such goodwill impairment charges are not deductible for tax purposes. The remaining goodwill balances for the U.S Consumer, Florist, and International segments are as noted in the table below. The ProFlowers/Gourmet Foods reporting unit’s goodwill was fully impaired as of June 30, 2018. Within the U.S. Consumer segment, the remaining goodwill balances for the FTD.com and Personal Creations reporting units were $29.3 million and $13.8 million, respectively, as of June 30, 2018.

Goodwill

The changes in the net carrying amount of goodwill for the six months endedJune 30, 2018 were as follows (in thousands):

	U.S. Consumer			Florist		International			Total
Goodwill as of December 31, 2017	$	106,356		$	90,651	$	80,034		$	277,041
Purchase accounting adjustment - Bloom That acquisition	(792		)	—		—			(792		)
Foreign currency translation	—			—		(1,812		)	(1,812		)
Impairment of Goodwill	(62,459		)	—		—			(62,459		)
Goodwill as of June 30, 2018	$	43,105		$	90,651	$	78,222		$	211,978

In 2017, 2016, 2015, and 2008, the Company recorded goodwill impairment charges of $196.7 million, $84.0 million, $85.0 million, and $116.3 million, respectively. The table above reflects the Company’s June 30, 2018 goodwill balances, net of the previously recorded impairment charges. The total accumulated goodwill impairment was $544.5 million as of June 30, 2018.

Intangible Assets

Intangible assets are primarily related to the acquisition of the Company by United Online, Inc. in August 2008 and the acquisition of Provide Commerce in December 2014, and consist of the following (in thousands):

	June 30, 2018							December 31, 2017
	Gross Value (a)		Accumulated Amortization			Net		Gross Value (a)		Accumulated Amortization			Net
Complete technology	$	60,584	$	(60,584	)	$	—	$	61,274	$	(60,653	)	$	621
Customer contracts and relationships	193,298		(193,298		)	—		193,775		(193,667		)	108
Trademarks and trade names:
Finite-lived	41,466		(27,772		)	13,694		93,593		(24,875		)	68,718
Indefinite-lived (b)	91,264		—			91,264		112,518		—			112,518
Total	$	386,612	$	(281,654	)	$	104,958	$	461,160	$	(279,195	)	$	181,965

(a) Gross value has been reduced by the impairments recorded as follows (in thousands):

	Three Months Ended June 30, 2018		Year Ended December 31, 2017
Complete technology	$	561	$	16,335
Customer contracts and relationships	90		—
Trademarks and trade names:
Finite-lived	52,108		27,000
Indefinite-lived (b)	20,400		38,300

(b) As indefinite-lived assets are not amortized, the indefinite-lived trademarks and trade names have no associated amortization expense or accumulated amortization.

As of June 30, 2018, estimated future intangible assets amortization expense for each of the next five years and thereafter was as follows (in thousands):

For the Year Ended	Future Amortization Expense
2018 (remainder of the year)	$	628
2019	1,256
2020	1,248
2021	1,244
2022	1,188
Thereafter	8,130
Total	$	13,694

Other Long-Lived Assets

Property and equipment consisted of the following (in thousands):

	June 30, 2018			December 31, 2017
Land and improvements	$	1,578		$	1,583
Buildings and improvements	17,265			16,375
Leasehold improvements	10,976			10,883
Equipment	13,590			13,122
Computer equipment	25,736			25,208
Computer software	72,589			58,991
Furniture and fixtures	3,269			3,215
Property and equipment, gross (a)	145,003			129,377
Accumulated depreciation	(100,224		)	(95,497		)
Property and equipment, net	$	44,779		$	33,880

(a) Impairment charges of $3.6 million recorded during the six months ended June 30, 2018 and $22.0 million recorded during the year ended December 31, 2017 are reflected as reductions in the gross balances as of June 30, 2018.

During the year ended December 31, 2017, the other long-lived assets related to the ProFlowers/Gourmet Foods reporting unit were fully impaired as the projected undiscounted cash flows of that reporting unit were less than the carrying amount of such assets. Additional impairment charges of $1.2 million and $3.6 million were recorded during the three and six months ended June 30, 2018, respectively, related to capital additions for that reporting unit as the undiscounted cash flows continue to be less than the carrying amount of the assets of that asset group.

Depreciation expense, including the amortization of leasehold improvements, was $2.6 million and $5.5 million for the three months ended June 30, 2018 and 2017, respectively, and $5.2 million and $10.9 million for the six months ended June 30, 2018 and 2017, respectively.

XML

FINANCING ARRANGEMENTS

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

FINANCING ARRANGEMENTS

FINANCING ARRANGEMENTS

Credit Agreement

On September 19, 2014, the Company entered into a credit agreement (the “Credit Agreement”) with Interflora, certain wholly owned domestic subsidiaries of FTD Companies, Inc. party thereto as guarantors, the financial institutions party thereto from time to time, Bank of America Merrill Lynch and Wells Fargo Securities, LLC, as joint lead arrangers and book managers, and Bank of America, N.A., as administrative agent for the lenders. The Credit Agreement provided for a term loan in an aggregate principal amount of $200 million, the proceeds of which were used to repay a portion of outstanding revolving loans, and also provided for a $350 million revolving credit facility. On December 31, 2014, the Company borrowed $120 million under the revolving credit facility to fund the cash portion of the acquisition purchase price of Provide Commerce.

The obligations under the Credit Agreement are guaranteed by certain of FTD Companies, Inc.’s wholly owned domestic subsidiaries (together with FTD Companies, Inc., the “U.S. Loan Parties”). In addition, the obligations under the Credit Agreement are secured by a lien on substantially all of the assets of the U.S. Loan Parties, including a pledge of all of the outstanding capital stock of certain direct subsidiaries of the U.S. Loan Parties (except with respect to foreign subsidiaries and certain domestic subsidiaries whose assets consist primarily of foreign subsidiary equity interests, in which case such pledge is limited to 66% of the outstanding capital stock).

The Credit Agreement contains customary representations and warranties, events of default, affirmative covenants and negative covenants, that, among other things, require the Company to maintain compliance with a maximum net leverage ratio and a minimum consolidated fixed charge coverage ratio, and impose restrictions and limitations on, among other things, investments, dividends, share repurchases, asset sales, and the Company’s ability to incur additional debt and additional liens.

On May 31, 2018, the Company entered into the Amended Credit Agreement with its lenders, which includes an agreement by the lenders to waive existing defaults caused by (1) the inclusion of a going concern uncertainty explanatory paragraph in the audit opinion of the Company’s financial statements for the year ended December 31, 2017 and (2) the breach of the consolidated net leverage ratio covenant for the quarter ended March 31, 2018. The Amended Credit Agreement also restricts the Company’s combined usage of the revolving credit facility portion of the Amended Credit Agreement to (1) $150 million during the period from May 31, 2018 through and including September 30, 2018; (2) $175 million during the period from October 1, 2018 through and including December 31, 2018; and (3) $150 million during the period from January 1, 2019 through the September 19, 2019 maturity date, all subject to the Company’s obligation to make prepayments of the term loan portion of the Amended Credit Agreement with any net cash proceeds received from the sale of certain non-core or other assets. In addition, the consolidated net leverage ratio and fixed charge coverage ratio covenants were revised for each quarterly period through the September 19, 2019 maturity date, as were the interest rates, as noted below. The Company is also required to pay a quarterly fee of 0.125% times the actual daily amount of the revolver commitments and outstanding loans beginning October 1, 2018 through December 31, 2018, which fee increases to 0.25% beginning January 1, 2019 through the maturity date. The Company paid an amendment fee of 0.625% times the revolver commitments and outstanding term loan ($1.9 million) in addition to a $0.5 million work fee related to the structuring and arranging of the amendment.

The Company was in compliance with the revised covenants under the Amended Credit Agreement as of June 30, 2018. The ability to continue as a going concern is dependent on the Company generating profitable operating results and continuing to be in compliance with its revised covenants under the Amended Credit Agreement or refinancing, repaying, or obtaining new financing prior to maturity of the Amended Credit Agreement in September 2019, as discussed in Note 1—“Description of Business, Basis of Presentation, Accounting Policies, and Recent Accounting Pronouncements.” 

The interest rates applicable to borrowings under the Amended Credit Agreement are based on either LIBOR plus a margin ranging from 2.50% per annum to 7.50% per annum, or a base rate plus a margin ranging from 1.50% per annum to 6.50% per annum, calculated according to the Company’s net leverage ratio. In addition, under the Amended Credit Agreement, the Company pays a commitment fee of 0.50% per annum on the unused portion of the revolving credit facility and a letters of credit fee ranging between 2.50% per annum to 7.50% per annum.

The stated interest rates (based on LIBOR) as of June 30, 2018 under the term loan and the revolving credit facility were 7.83% and 7.74%, respectively. The effective interest rates as of June 30, 2018 under the term loan and the revolving credit facility portions of the Amended Credit Agreement were 10.46% and 10.97%, respectively. The effective interest rates include the amortization of both the debt issuance costs and the effective portion of the interest rate swap and commitment fees. The commitment fee rate as of June 30, 2018 was 0.50%.

As of June 30, 2018, the remaining borrowing capacity under the Amended Credit Agreement, which was reduced by $1.8 million in outstanding letters of credit, was $83.2 million.

The changes in the Company’s debt balances for the six months endedJune 30, 2018 were as follows (in thousands):

	December 31, 2017			Draw Down of Debt		Repayments of Debt			June 30, 2018
Credit Agreement:
Revolving Credit Facility	$	52,000		$	185,000	$	(172,000	)	$	65,000
Term Loan	140,000			—		(10,000		)	130,000
Total Principal Outstanding	192,000			$	185,000	$	(182,000	)	195,000
Deferred Financing Fees	(2,334		)						(5,310		)
Total Debt, Net of Deferred Financing Fees	$	189,666							$	189,690

The term loan is subject to amortization payments of $5 million per quarter and customary mandatory prepayments under certain conditions.

XML

DERIVATIVE INSTRUMENTS

6 Months Ended

Jun. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS

DERIVATIVE INSTRUMENTS

In March 2012, the Company purchased, for $1.9 million, forward starting interest rate cap instruments based on 3-month LIBOR, effective January 2015 through June 2018. The forward starting interest rate cap instruments had aggregated notional values totaling $130 million. The interest rate cap instruments were designated as cash flow hedges against expected future cash flows attributable to future 3-month LIBOR interest payments on a portion of the outstanding borrowings under the Credit Agreement. The gains or losses on the instruments were reported in other comprehensive income/(loss) to the extent that they were effective and were reclassified into earnings when the cash flows attributable to 3-month LIBOR interest payments were recognized in earnings.

The estimated fair values and notional values of outstanding derivative instruments as of June 30, 2018 and December 31, 2017 were as follows (in thousands):

		Estimated Fair Value of Derivative Instruments				Notional Value of Derivative Instruments
	Balance Sheet Location	June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017
Derivative Assets:
Interest rate caps	Other assets	$	—	$	—	$	—	$	130,000

The Company recognized the following losses from derivatives, before tax, in other comprehensive income/(loss) (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Derivatives Designated as Cash Flow Hedging Instruments:
Interest rate caps	$	—	$	—	$	—	$	(1	)

As of June 30, 2018, the interest rate caps had matured. As of December 31, 2017, the effective portion, before tax effect, of the Company’s interest rate caps designated as cash flow hedging instruments was $0.3 million. During the three months ended June 30, 2018 and 2017, respectively, $0.1 million and $0.2 million was reclassified from accumulated other comprehensive income/(loss) to interest expense in the condensed consolidated statements of operations. During each of the six months ended June 30, 2018 and 2017, $0.3 million was reclassified from accumulated other comprehensive income/(loss) to interest expense in the condensed consolidated statement of operations.

XML

FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

The following table presents estimated fair values of financial assets and liabilities and derivative instruments that were required to be measured at fair value on a recurring basis (in thousands):

	June 30, 2018						December 31, 2017
	Total		Level 1		Level 2		Total		Level 1		Level 2
Assets:
Cash equivalents	$	3,584	$	3,584	$	—	$	2,705	$	2,705	$	—
Total	$	3,584	$	3,584	$	—	$	2,705	$	2,705	$	—
Liabilities:
Non-qualified deferred compensation plan	$	927	$	—	$	927	$	1,228	$	—	$	1,228
Total	$	927	$	—	$	927	$	1,228	$	—	$	1,228

Provide Commerce, Inc. has an executive deferred compensation plan for key management level employees under which such employees could elect to defer receipt of current compensation. This plan is intended to be an unfunded, non-qualified deferred compensation plan that complies with the provisions of section 409A of the Internal Revenue Code. At the time of the acquisition of Provide Commerce, contributions to the plan were suspended except those relating to any compensation earned but not yet paid as of the same date. The plan assets consist primarily of life insurance contracts recorded at their cash surrender value. During the three months ended June 30, 2018, the Company cancelled certain of the life insurance contracts and received proceeds totaling $10.0 million from the cash surrender value. At June 30, 2018 and December 31, 2017, the life insurance policies had cash surrender values of $1.7 million and $11.7 million, respectively, and are included in other assets in the accompanying condensed consolidated balance sheets.

As a result of triggering events within the periods, the Company performed impairment tests of its intangible and other long-lived assets during the three months ended June 30, 2018 and the year ended December 31, 2017. Based on these tests, the Company determined that the carrying value of certain intangible assets and other long-lived assets exceeded their fair values as determined using the income approach as of June 30, 2018 and December 31, 2017. As such, non-cash, pre-tax impairment charges of $76.7 million (excluding goodwill impairment charges of $62.5 million) were recorded during the six months ended June 30, 2018 and $103.6 million (excluding goodwill impairment charges of $196.7 million) were recorded during the year ended December 31, 2017. The determination of fair value is subjective in nature and requires the use of significant estimates and assumptions, considered to be Level 3 inputs, including projected cash flows over the estimated projection period and the discount rate. See Note 5—“Goodwill, Intangible Assets, and Other Long-Lived Assets” for additional information.

The Company estimated the fair value of its outstanding debt using a discounted cash flow approach that incorporates a market interest yield curve with adjustments for duration and risk profile. In determining the market interest yield curve, the Company considered, among other factors, its estimated credit spread. As of June 30, 2018, the Company estimated its credit spread as 6.9% and 8.6% for the term loan and revolving credit facility, respectively, resulting in yield-to-maturity estimates for the term loan and revolving credit facility of 9.2% and 11.0%, respectively. As of December 31, 2017, the Company estimated its credit spread as 1.0% and 1.6% for the term loan and revolving credit facility, respectively, resulting in yield-to-maturity estimates for the term loan and revolving credit facility of 2.9% and 3.4%, respectively. The table below summarizes the carrying amounts and estimated fair values for the Company’s debt (in thousands):

	June 30, 2018				December 31, 2017
			Level 2				Level 2
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Debt outstanding	$	195,000	$	195,000	$	192,000	$	192,000

Fair value approximates the carrying amount of financing receivables because such receivables are discounted at a rate comparable to market. Fair values of cash and cash equivalents, short-term accounts receivable, accounts payable, and accrued liabilities approximate their carrying amounts because of their short-term nature.

XML

STOCKHOLDERS' EQUITY

6 Months Ended

Jun. 30, 2018

Stockholders' Equity Note [Abstract]

STOCKHOLDERS' EQUITY

STOCKHOLDERS’ EQUITY

Common Stock Repurchases

Upon the exercise of stock options or the vesting of restricted stock units (“RSUs”) or other equity compensation awards, the Company does not collect withholding taxes in cash from employees. Instead, the Company automatically withholds, from the awards that vest or stock options that are exercised, the portion of those shares with a fair market value equal to the amount of the minimum statutory withholding taxes due. The withheld shares are accounted for as repurchases of common stock but are not counted against the limits under a repurchase program. The Company then pays the minimum statutory withholding taxes in cash. During the six months endedJune 30, 2018, 0.3 million RSUs vested for which 0.1 million shares were withheld to cover the minimum statutory withholding taxes of $0.5 million.

XML

INCENTIVE COMPENSATION PLANS

6 Months Ended

Jun. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

INCENTIVE COMPENSATION PLANS

INCENTIVE COMPENSATION PLANS

In June 2018, stockholders approved the amendment to the FTD Companies, Inc. Third Amended and Restated 2013 Incentive Compensation Plan (as so amended, the “Amended Plan”), which provides for the granting of awards to employees and non-employee directors, including stock options, stock appreciation rights, restricted stock units (“RSUs”), and other stock based awards. As of June 30, 2018, the Company had 5.0 million shares available for issuance under the Amended Plan.

During the six months ended June 30, 2018, the Company granted RSUs, performance stock units (“PSUs”), and stock options to certain employees totaling 0.9 million shares, 1.3 million shares, and 0.8 million shares, respectively. The RSUs and stock options granted will generally vest in four equal annual installments. The per share weighted average fair market value of the underlying stock on the grant date of the RSUs and PSUs was $6.39 and $6.64, respectively. The options were granted with a weighted average exercise price of $6.64 per share. The following weighted average assumptions were used to estimate the fair value of the stock options at the grant date:

Risk-free interest rate	2.5%
Expected term (in years)	6.21
Dividend yield	0.0%
Expected volatility	37.7%

Vesting of the PSUs is based on the achievement of certain performance criteria, as specified in the plan, at the end of a three-year performance period ending on December 31, 2020. The actual number of shares that will ultimately vest is dependent upon the level of achievement of the performance conditions. If the minimum targets are not achieved, none of the shares will vest and any compensation expense previously recognized will be reversed. The Company recognizes stock-based compensation expense related to performance awards based upon the Company’s estimate of the likelihood of achievement of the performance targets at each reporting date. As of June 30, 2018, the Company does not expect the PSUs to vest. As such, no expense was recorded during the six months ended June 30, 2018 related to these awards.

In addition to the equity awards noted above, eligible employees of the Company are able to participate in the FTD Companies, Inc. 2015 Employee Stock Purchase Plan (“ESPP Plan”) through which employees may purchase shares of FTD common stock at a purchase price equal to 85% of the lower of (i) the closing market price per share of FTD common stock on the first day of the offering period or (ii) the closing market price per share of FTD common stock on the purchase date. Each offering period has a six-month duration and purchase interval. The purchase dates are January 1 and July 1. As of June 30, 2018, the Company had 0.2 million shares available for grant under the ESPP Plan.

The stock-based compensation expense incurred for all equity plans in the three months ended June 30, 2018 and 2017 and the six months ended June 30, 2018 and 2017 have been included in the condensed consolidated statements of operations as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Cost of revenues	$	48	$	63	$	105	$	134
Sales and marketing	933		1,615		1,865		2,330
General and administrative	1,623		1,851		3,440		3,406
Total stock-based compensation expense	$	2,604	$	3,529	$	5,410	$	5,870

XML

INCOME TAXES

6 Months Ended

Jun. 30, 2018

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

During the three months ended June 30, 2018, the Company recorded a tax benefit of $13.3 million on a pre-tax loss of $131.3 million, compared to a tax provision of $5.8 millionon pre-tax income of $15.5 million for the three months ended June 30, 2017. During the three months ended June 30, 2018, management determined that the future reversals of existing taxable temporary differences and available tax strategies would not generate sufficient future taxable income to be able to realize its state net operating loss carryforward tax assets prior to their expiration and, therefore, a valuation allowance of $1.6 million was recorded. In addition, the goodwill impairment charges recorded during the three months ended June 30, 2018 are not tax deductible and, therefore, there was no tax benefit recorded on such charges.

During the six months ended June 30, 2018, the Company recorded a tax benefit of $13.6 million on a pre-tax loss of $138.3 million, compared to a tax provision of $12.3 millionon pre-tax income of $31.1 million for the six months ended June 30, 2017. The placement of a valuation allowance on the state net operating loss carryforwards and shortfalls related to vesting of equity awards increased tax expense by $1.6 million and $2.6 million, respectively, for the six months ended June 30, 2018. For the six months ended June 30, 2017, shortfalls related to vesting of equity awards were $1.4 million. In addition, the goodwill impairment charges recorded during the six months ended June 30, 2018 are not tax deductible and, therefore, there was no tax benefit recorded on such charges.

XML

EARNINGS/(LOSS) PER SHARE

6 Months Ended

Jun. 30, 2018

Earnings Per Share [Abstract]

EARNINGS/(LOSS) PER SHARE

EARNINGS/(LOSS) PER SHARE

Certain of the Company’s RSUs and PSUs are considered participating securities because they contain a non-forfeitable right to dividends irrespective of whether dividends are actually declared or paid or whether the awards ultimately vest. Accordingly, the Company computes earnings/(loss) per share pursuant to the two-class method in accordance with ASC 260, Earnings Per Share.

The following table sets forth the computation of basic and diluted earnings/(loss) per common share (in thousands, except per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Numerator:
Net income/(loss)	$	(118,085	)	$	9,716		$	(124,681	)	$	18,739
Income allocated to participating securities	—			(228		)	—			(434		)
Net income/(loss) attributable to common stockholders	$	(118,085	)	$	9,488		$	(124,681	)	$	18,305
Denominator:
Basic average common shares outstanding	27,785			27,452			27,749			27,415
Add: Dilutive effect of securities	—			—			—			34
Diluted average common shares outstanding	27,785			27,452			27,749			27,449
Basic earnings/(loss) per common share	$	(4.25	)	$	0.35		$	(4.49	)	$	0.67
Diluted earnings/(loss) per common share	$	(4.25	)	$	0.35		$	(4.49	)	$	0.67

The diluted earnings/(loss) per common share computations exclude stock options and RSUs which are antidilutive. Weighted-average antidilutive shares for the three months ended June 30, 2018 and 2017 were 4.5 million and 4.1 million, respectively, and for the six months ended June 30, 2018 and 2017, were 3.9 million and 3.5 million, respectively.

XML

RESTRUCTURING AND OTHER EXIT COSTS

6 Months Ended

Jun. 30, 2018

Restructuring and Related Activities [Abstract]

RESTRUCTURING AND OTHER EXIT COSTS

RESTRUCTURING AND OTHER EXIT COSTS

Restructuring and other exit costs were as follows (in thousands):

	Employee Termination Costs			Facility Closure Costs			Total
Accrued as of December 31, 2017	$	184		$	193		$	377
Charges	—			—			—
Cash paid	(172		)	(168		)	(340		)
Other – non-cash	(12		)	—			(12		)
Accrued as of June 30, 2018	$	—		$	25		$	25

XML

CONTINGENCIES - LEGAL MATTERS

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

CONTINGENCIES-LEGAL MATTERS

CONTINGENCIES—LEGAL MATTERS

 Commencing on August 19, 2009, the first of a series of putative consumer class action lawsuits was brought against Provide Commerce, Inc. and co-defendant Regent Group, Inc. d/b/a Encore Marketing International (“EMI”). These cases were ultimately consolidated during the next three years into Case No. 09 CV 2094 in the United States District Court for the Southern District of California under the title In re EasySaver Rewards Litigation. Plaintiffs’ claims arise from their online enrollment in subscription based membership programs known as EasySaver Rewards, RedEnvelope Rewards, and Preferred Buyers Pass (collectively, the “Membership Programs”). Plaintiffs claim that after they ordered items from certain of Provide Commerce’s websites, they were presented with an offer to enroll in one of the Membership Programs, each of which is offered and administered by EMI. Plaintiffs purport to represent a nationwide class of consumers allegedly damaged by Provide Commerce’s purported unauthorized or otherwise allegedly improper transferring of billing information to EMI, who then posted allegedly unauthorized charges to their credit or debit card accounts for membership fees for the Membership Programs. In the operative fourth amended complaint, plaintiffs asserted ten claims against Provide Commerce and EMI: (1) breach of contract (against Provide Commerce only); (2) breach of contract (against EMI only); (3) breach of implied covenant of good faith and fair dealing; (4) fraud; (5) violations of the California Consumers Legal Remedies Act; (6) unjust enrichment; (7) violation of the Electronic Funds Transfer Act (against EMI only); (8) invasion of privacy; (9) negligence; and (10) violations of the Unfair Competition Law. Plaintiffs seek damages, attorneys’ fees, and costs. After motion practice regarding the claims asserted and numerous settlement conferences and mediations in an effort to informally resolve the matter, the parties reached an agreement on the high level terms of a settlement on April 9, 2012, conditioned on the parties negotiating and executing a complete written agreement. In the weeks following April 9, 2012, the parties negotiated a formal written settlement agreement (the “Settlement”), which the court preliminarily approved on June 13, 2012. After notice to the purported class and briefing by the parties, the court conducted a final approval hearing (also known as a fairness hearing) on January 28, 2013, but did not rule. On February 4, 2013, the court entered its final order approving the Settlement, granting plaintiffs’ motion for attorneys’ fees, costs, and incentive awards, and overruling objections filed by a single objector. The court entered judgment on the Settlement on February 21, 2013. The objector filed a notice of appeal with the Ninth Circuit Court of Appeals on March 4, 2013. After the completion of briefing, the Ninth Circuit set oral argument for February 2, 2015. But on January 29, 2015, the Ninth Circuit entered an order deferring argument and resolution of the appeal pending the Ninth Circuit’s decision in a matter captioned Frank v. Netflix, No. 12 15705+. On March 19, 2015, the Ninth Circuit entered an order vacating the judgment in this matter and remanding it to the district court for further proceedings consistent with its opinion in Frank v.Netflix issued on February 27, 2015. The district court ordered supplemental briefing on the issue of final Settlement approval May 21, 2015. After briefing, the district court conducted a hearing on July 27, 2016 and took the matter under submission. On August 9, 2016, the district court entered an order reapproving the Settlement without any changes, and accordingly entered judgment and dismissed the case with prejudice. On September 6, 2016, the objector filed a notice of appeal. On November 22, 2016, plaintiffs filed a motion for summary affirmance of the district court’s judgment, to which the objector responded and filed a

cross-motion for sanctions. Plaintiffs’ motion for summary affirmance temporarily stayed briefing on the appeal. On March 2, 2017, the Ninth Circuit denied plaintiffs’ motion for summary affirmance and objector’s cross-motion for sanctions, and reset the briefing schedule. The Objector filed his opening brief on May 1, 2017. Thirteen state Attorneys General filed an amicus brief in support of the Objector on May 8, 2017. The parties filed their answering briefs on June 30, 2017. Various legal aid organizations filed an amicus brief in support of no party regarding cy pres relief also on June 30, 2017. The Objector’s optional reply brief was filed on August 14, 2017. The Ninth Circuit heard oral arguments on May 17, 2018, but has not yet made its ruling.

There are no assurances that other legal actions or governmental investigations will not be instituted in connection with the Company’s current or former business practices. The Company cannot predict the outcome of governmental investigations or other legal actions or their potential implications for its business.

The Company records a liability when it believes that it is both probable that a loss has been incurred, and the amount of loss can be reasonably estimated. The Company evaluates, at least quarterly, developments in its legal matters that could affect the assessment of the probability of loss or the amount of liability and makes adjustments as appropriate. Significant judgment is required to determine both probability and the estimated amount. The Company may be unable to estimate a possible loss or range of possible loss due to various reasons, including, among others: (i) if the damages sought are indeterminate, (ii) if the proceedings are in early stages, (iii) if there is uncertainty as to the outcome of pending appeals, motions or settlements, (iv) if there are significant factual issues to be determined or resolved, and (v) if there are novel or unsettled legal theories presented. In such instances, there is considerable uncertainty regarding the ultimate resolution of such matters, including a possible eventual loss, if any. As of June 30, 2018 and December 31, 2017, the Company had reserves totaling $2.8 million and $2.5 million for estimated losses related to certain legal matters. With respect to other legal matters, the Company has determined, based on its current knowledge, that the amount of possible loss or range of loss, including any reasonably possible losses in excess of amounts already accrued, is not reasonably estimable. However, legal matters are inherently unpredictable and subject to significant uncertainties, some of which are beyond the Company’s control. As such, there can be no assurance that the final outcome of these matters will not materially and adversely affect the Company’s business, financial condition, results of operations, or cash flows.

XML

SUPPLEMENTAL CASH FLOW INFORMATION

6 Months Ended

Jun. 30, 2018

Supplemental Cash Flow Elements [Abstract]

SUPPLEMENTAL CASH FLOW INFORMATION

SUPPLEMENTAL CASH FLOW INFORMATION

The following table sets forth supplemental cash flow disclosures (in thousands):

	Six Months Ended June 30,
	2018		2017
Cash paid for interest	$	5,733	$	4,074
Cash paid for income taxes, net	3,781		10,517

At June 30, 2018, non-cash investing items included $6.3 million of purchases of property and equipment that were included in accounts payable and other liabilities in the Company’s consolidated balance sheet. These purchases will be reflected in investing activities in the consolidated statement of cash flows in the periods in which they are paid.

XML

SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2018

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

On July 18, 2018, the Company announced that its board of directors initiated a review of strategic alternatives focused on maximizing stockholder value, including but not limited to, a sale or merger of the Company, the Company pursuing value-enhancing initiatives as a standalone company, a capital structure optimization that may involve potential financings, or the sale or other disposition of certain of the Company’s businesses or assets.

In addition, the Company’s board of directors appointed Scott D. Levin, the Company’s then-current Executive Vice President, General Counsel and Secretary, as interim President and Chief Executive Officer. Mr. Levin succeeds John C. Walden, who has stepped down from these positions and from FTD’s board of directors.

Under the terms of Mr. Walden’s employment agreement, he is entitled to the severance and other benefits described in such agreement, including cash severance payments, as well as accelerated vesting of a portion of his outstanding nonvested restricted stock units and unvested stock options, subject in each case to his compliance with certain covenants in his employment agreement. In addition, in the event of a change in control involving the Company during 2018, Mr. Walden will be entitled to receive a pro-rated target bonus calculated under the terms of his employment agreement. The foregoing description of Mr. Walden’s employment agreement is qualified in its entirety by reference to (1) the Employment Agreement between FTD Companies, Inc. and John C. Walden (the “Walden Employment Agreement”), filed as Exhibit 10.38 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, and (2) the First Amendment to the Walden Employment Agreement, filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018.

The Company also announced a corporate restructuring and cost savings plan, under which it has identified opportunities to optimize its operations, drive efficiency, and reduce costs. In conjunction with the corporate restructuring and cost savings plan, the Company expects to incur pre-tax restructuring and corporate reorganization costs ranging between approximately $23.5 million and approximately $29.5 million. The restructuring costs will include cash severance payments ranging from approximately $12.0 million to approximately $15.0 million and non-cash stock-based compensation related to the acceleration of certain equity awards ranging from approximately $5.5 million to approximately $6.5 million. Other costs associated with the corporate reorganization and cost savings plan, such as costs to retain key employees, are expected to range from approximately $6.0 million to approximately $8.0 million.

XML

DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, ACCOUNTING POLICIES, AND RECENT ACCOUNTING PRONOUNCEMENTS (Policies)

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”). All intercompany accounts and transactions have been eliminated in consolidation.

The preparation of financial statements in accordance with GAAP requires management to make accounting policy elections, estimates and assumptions that affect a number of reported amounts and related disclosures in the consolidated financial statements. Management bases its estimates on historical experience and assumptions that it believes are reasonable. Actual results could differ from those estimates and assumptions.

These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Form 10-K for the year ended December 31, 2017.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Recently Adopted Accounting Standards

In March 2018, the FASB issued Accounting Standards Update (“ASU”) 2018-05, Income Taxes (Topic 740)—Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118, which provides guidance from the SEC allowing for the recognition of provisional amounts in the financial statements for the year ended December 31, 2017 as a result of the U.S. Tax Cuts and Jobs Act (“TCJA”) that was signed into law in December 2017. The guidance allows for a measurement period of up to one year from the enactment date to finalize the accounting related to the TCJA. The Company has applied the guidance in this update in its financial statements for the six months ended June 30, 2018 and will finalize and record any adjustments related to the TCJA within the one year measurement period.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and issued subsequent amendments to the initial guidance in August 2015, March 2016, April 2016, May 2016, and December 2016 within ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12, and ASU 2016-20, respectively (collectively, “Topic 606”). Topic 606 supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of Topic 606 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The Company adopted the guidance under this topic as of January 1, 2018 with no material impact to its consolidated financial statements. See Accounting Policies—Revenue Recognition above. The disclosures required by ASC 606 have been included in Note 2—Segment Information.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments—Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10). The updated guidance enhances the reporting model for financial instruments, and includes amendments to address aspects of recognition, measurement, presentation and disclosure. The Company adopted the guidance under this topic as of January 1, 2018 with no impact to its consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This update was issued to address the diversity in practice related to the classification of certain cash receipts and payments in the statement of cash flows by adding or clarifying guidance on eight specific cash flow issues. The Company adopted the guidance under this topic as of January 1, 2018 with no impact to its consolidated financial statements.

In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting. This update was issued to provide clarity and reduce diversity in practice as well as cost and complexity when applying the guidance in Topic 718 to the modification of terms or conditions of a share-based payment award. The amendments provide guidance on determining which changes to the terms and conditions of share-based payment awards would require an entity to apply modification accounting under Topic 718. The Company adopted the guidance under this topic as of January 1, 2018 with no impact to its consolidated financial statements.

Recently Issued Accounting Standards

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This update requires the recognition of certain lease assets and lease liabilities on the balance sheet as well as the disclosure of key information about leasing arrangements. The amendments in this ASU require the recognition and measurement of leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients which may be elected by the Company. The amendments in this ASU will be effective for the Company for fiscal years, and the interim periods within those years, beginning after December 15, 2018, with early adoption permitted. The Company is currently assessing the impact of this update on its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326). This update seeks to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments, including trade receivables, and other commitments to extend credit held by a reporting entity at each reporting date. The amendments require an entity to replace the incurred loss impairment methodology in current GAAP with a methodology that reflects current expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The amendments will be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which guidance is effective, which is a modified-retrospective approach. The Company is currently assessing the impact of this update on its consolidated financial statements.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This update seeks to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements and make certain targeted improvements to simplify the application of the hedge accounting guidance in current GAAP. The amendments in this update better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and presentation of hedge results. For cash flow and net investment hedges as of the adoption date, this ASU requires a modified retrospective approach. The amended presentation and disclosure guidance is required only prospectively. The amendments in this ASU are effective for the Company’s fiscal year beginning after December 31, 2018, with early adoption permitted. The Company is currently assessing the impact of this update on its consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This update allows for a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the TCJA. This update also requires certain disclosures about stranded tax effects. The amendments in this ASU will be effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company is currently assessing the impact of this update on its consolidated financial statements.

In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. This update allows existing employee guidance to apply to non-employee share-based transactions (as long as the transaction is not effectively a form of financing), with the exception of specific guidance related to the attribution of compensation cost. The cost of nonemployee awards will continue to be recorded as if the grantor had paid cash for the goods or services. The amendments in this ASU will be effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company is currently assessing the impact of this update on its consolidated financial statements.

XML

SEGMENT INFORMATION (Tables)

6 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

Schedule of reconciliation of segment revenues to consolidated revenues

Below is a reconciliation of segment revenues to consolidated revenues (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Products revenues:
U.S. Consumer	$	233,082		$	259,804		$	456,443		$	488,476
Florist	11,703			12,813			26,474			28,982
International	27,319			25,446			76,411			65,887
Segment products revenues	272,104			298,063			559,328			583,345
Services revenues:
Florist	28,213			31,277			57,658			61,614
International	3,795			3,755			9,618			9,051
Segment services revenues	32,008			35,032			67,276			70,665
Intersegment eliminations	(4,191		)	(4,949		)	(8,513		)	(9,371		)
Consolidated revenues	$	299,921		$	328,146		$	618,091		$	644,639

Schedule of intersegment revenues by segment

Intersegment revenues represent amounts charged from one segment to the other for services provided based on order volume at a set rate per order. Intersegment revenues by segment were as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Intersegment revenues:
U.S. Consumer	$	(4,098	)	$	(4,835	)	$	(8,319	)	$	(9,153	)
Florist	(93		)	(114		)	(194		)	(218		)
Total intersegment revenues	$	(4,191	)	$	(4,949	)	$	(8,513	)	$	(9,371	)

Schedule of revenues for business units

The U.S. Consumer segment is comprised of the FTD.com, ProFlowers, Gourmet Foods, and Personal Creations business units. The revenues for the business units were as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
U.S. Consumer segment revenues:
FTD.com	$	65,881	$	80,113	$	137,599	$	152,917
ProFlowers	96,963		106,515		176,786		197,226
Gourmet Foods	45,536		49,205		96,617		101,198
Personal Creations	24,702		23,971		45,441		37,135
Total U.S. Consumer segment revenues	$	233,082	$	259,804	$	456,443	$	488,476

Schedule of geographic revenues to external customers

Geographic revenues from sales to external customers were as follows for the periods presented (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
U.S.	$	268,807	$	298,945	$	532,062	$	569,701
U.K.	31,114		29,201		86,029		74,938
Consolidated revenues	$	299,921	$	328,146	$	618,091	$	644,639

Schedule of reconciliation of segment operating income/(loss) to consolidated operating income/(loss) and income/(loss) before income taxes

Below is a reconciliation of segment operating income/(loss) to consolidated operating income/(loss) and income/(loss) before income taxes (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Segment operating income/(loss)(a)
U.S. Consumer	$	6,474		$	21,120		$	(1,761	)	$	40,227
Florist	10,849			12,248			23,115			26,202
International	2,710			3,066			9,765			8,598
Total segment operating income	20,033			36,434			31,119			75,027
Unallocated expenses(b)	(6,171		)	(9,400		)	(15,217		)	(20,855		)
Impairment of goodwill, intangible assets, and other long-lived assets	(136,861		)	—			(139,216		)	—
Depreciation expense and amortization of intangible assets	(4,118		)	(9,285		)	(8,220		)	(18,583		)
Operating income/(loss)	(127,117		)	17,749			(131,534		)	35,589
Interest expense, net	(4,389		)	(2,440		)	(6,875		)	(4,713		)
Other income, net	160			223			136			198
Income/(loss) before income taxes	$	(131,346	)	$	15,532		$	(138,273	)	$	31,074

(a) Segment operating income/(loss) is operating income/(loss) excluding depreciation, amortization, impairment of goodwill, intangible assets, and other long-lived assets, litigation and dispute settlement charges and gains, transaction-related costs, and restructuring and other exit costs. In addition, stock-based and incentive compensation and general corporate expenses are not allocated to the segments. Segment operating income is prior to intersegment eliminations and excludes other income/(expense), net.

(b) Unallocated expenses include various corporate costs, such as executive management, corporate finance, and legal costs. In addition, unallocated expenses include stock-based and incentive compensation, restructuring and other exit costs, transaction-related costs, and litigation and dispute settlement charges and gains.

XML

FINANCING RECEIVABLES (Tables)

6 Months Ended

Jun. 30, 2018

Balance Sheet Related Disclosures [Abstract]

Schedule of aging of past due financing receivables

The credit quality and the aging of financing receivables was as follows (in thousands):

	June 30, 2018		December 31, 2017
Current	$	9,589	$	10,571
Past due:
1 - 150 days past due	229		167
151 - 364 days past due	168		213
365 - 730 days past due	234		184
731 or more days past due	380		357
Total	$	10,600	$	11,492

Schedule of allowance for credit losses and the recorded investment in financing receivables

The allowance for credit losses and the recorded investment in financing receivables were as follows (in thousands):

	Six Months Ended June 30,
	2018			2017
Allowance for credit losses:
Balance as of January 1	$	912		$	846
Provision	178			184
Write-offs charged against allowance	(102		)	(249		)
Balance at June 30	$	988		$	781
Ending balance collectively evaluated for impairment	$	944		$	745
Ending balance individually evaluated for impairment	$	44		$	36
Recorded investments in financing receivables:
Balance collectively evaluated for impairment	$	1,093		$	856
Balance individually evaluated for impairment	$	9,507		$	11,044

XML

GOODWILL, INTANGIBLE ASSETS, AND OTHER LONG-LIVED ASSETS (Tables)

6 Months Ended

Jun. 30, 2018

Goodwill Tangible and Intangible Assets Disclosure [Abstract]

Schedule of changes in the net carrying amount of goodwill

The changes in the net carrying amount of goodwill for the six months endedJune 30, 2018 were as follows (in thousands):

	U.S. Consumer			Florist		International			Total
Goodwill as of December 31, 2017	$	106,356		$	90,651	$	80,034		$	277,041
Purchase accounting adjustment - Bloom That acquisition	(792		)	—		—			(792		)
Foreign currency translation	—			—		(1,812		)	(1,812		)
Impairment of Goodwill	(62,459		)	—		—			(62,459		)
Goodwill as of June 30, 2018	$	43,105		$	90,651	$	78,222		$	211,978

Schedule of finite-lived intangible assets

Intangible assets are primarily related to the acquisition of the Company by United Online, Inc. in August 2008 and the acquisition of Provide Commerce in December 2014, and consist of the following (in thousands):

	June 30, 2018							December 31, 2017
	Gross Value (a)		Accumulated Amortization			Net		Gross Value (a)		Accumulated Amortization			Net
Complete technology	$	60,584	$	(60,584	)	$	—	$	61,274	$	(60,653	)	$	621
Customer contracts and relationships	193,298		(193,298		)	—		193,775		(193,667		)	108
Trademarks and trade names:
Finite-lived	41,466		(27,772		)	13,694		93,593		(24,875		)	68,718
Indefinite-lived (b)	91,264		—			91,264		112,518		—			112,518
Total	$	386,612	$	(281,654	)	$	104,958	$	461,160	$	(279,195	)	$	181,965

(a) Gross value has been reduced by the impairments recorded as follows (in thousands):

	Three Months Ended June 30, 2018		Year Ended December 31, 2017
Complete technology	$	561	$	16,335
Customer contracts and relationships	90		—
Trademarks and trade names:
Finite-lived	52,108		27,000
Indefinite-lived (b)	20,400		38,300

(b) As indefinite-lived assets are not amortized, the indefinite-lived trademarks and trade names have no associated amortization expense or accumulated amortization.

Schedule of indefinite-lived intangible assets

Intangible assets are primarily related to the acquisition of the Company by United Online, Inc. in August 2008 and the acquisition of Provide Commerce in December 2014, and consist of the following (in thousands):

	June 30, 2018							December 31, 2017
	Gross Value (a)		Accumulated Amortization			Net		Gross Value (a)		Accumulated Amortization			Net
Complete technology	$	60,584	$	(60,584	)	$	—	$	61,274	$	(60,653	)	$	621
Customer contracts and relationships	193,298		(193,298		)	—		193,775		(193,667		)	108
Trademarks and trade names:
Finite-lived	41,466		(27,772		)	13,694		93,593		(24,875		)	68,718
Indefinite-lived (b)	91,264		—			91,264		112,518		—			112,518
Total	$	386,612	$	(281,654	)	$	104,958	$	461,160	$	(279,195	)	$	181,965

(a) Gross value has been reduced by the impairments recorded as follows (in thousands):

	Three Months Ended June 30, 2018		Year Ended December 31, 2017
Complete technology	$	561	$	16,335
Customer contracts and relationships	90		—
Trademarks and trade names:
Finite-lived	52,108		27,000
Indefinite-lived (b)	20,400		38,300

(b) As indefinite-lived assets are not amortized, the indefinite-lived trademarks and trade names have no associated amortization expense or accumulated amortization.

Schedule of estimated future intangible assets amortization expense

As of June 30, 2018, estimated future intangible assets amortization expense for each of the next five years and thereafter was as follows (in thousands):

For the Year Ended	Future Amortization Expense
2018 (remainder of the year)	$	628
2019	1,256
2020	1,248
2021	1,244
2022	1,188
Thereafter	8,130
Total	$	13,694

Schedule of property and equipment

Property and equipment consisted of the following (in thousands):

	June 30, 2018			December 31, 2017
Land and improvements	$	1,578		$	1,583
Buildings and improvements	17,265			16,375
Leasehold improvements	10,976			10,883
Equipment	13,590			13,122
Computer equipment	25,736			25,208
Computer software	72,589			58,991
Furniture and fixtures	3,269			3,215
Property and equipment, gross (a)	145,003			129,377
Accumulated depreciation	(100,224		)	(95,497		)
Property and equipment, net	$	44,779		$	33,880

(a) Impairment charges of $3.6 million recorded during the six months ended June 30, 2018 and $22.0 million recorded during the year ended December 31, 2017 are reflected as reductions in the gross balances as of June 30, 2018.

XML

FINANCING ARRANGEMENTS (Tables)

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Schedule of changes in debt balances

The changes in the Company’s debt balances for the six months endedJune 30, 2018 were as follows (in thousands):

	December 31, 2017			Draw Down of Debt		Repayments of Debt			June 30, 2018
Credit Agreement:
Revolving Credit Facility	$	52,000		$	185,000	$	(172,000	)	$	65,000
Term Loan	140,000			—		(10,000		)	130,000
Total Principal Outstanding	192,000			$	185,000	$	(182,000	)	195,000
Deferred Financing Fees	(2,334		)						(5,310		)
Total Debt, Net of Deferred Financing Fees	$	189,666							$	189,690

XML

DERIVATIVE INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of estimated fair values and notional values of outstanding derivative instruments

The estimated fair values and notional values of outstanding derivative instruments as of June 30, 2018 and December 31, 2017 were as follows (in thousands):

		Estimated Fair Value of Derivative Instruments				Notional Value of Derivative Instruments
	Balance Sheet Location	June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017
Derivative Assets:
Interest rate caps	Other assets	$	—	$	—	$	—	$	130,000

Schedule of losses from derivatives, before tax, recognized in other comprehensive loss

The Company recognized the following losses from derivatives, before tax, in other comprehensive income/(loss) (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Derivatives Designated as Cash Flow Hedging Instruments:
Interest rate caps	$	—	$	—	$	—	$	(1	)

XML

FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Schedule of estimated fair values of financial assets and derivative instruments measured at fair value on a recurring basis

The following table presents estimated fair values of financial assets and liabilities and derivative instruments that were required to be measured at fair value on a recurring basis (in thousands):

	June 30, 2018						December 31, 2017
	Total		Level 1		Level 2		Total		Level 1		Level 2
Assets:
Cash equivalents	$	3,584	$	3,584	$	—	$	2,705	$	2,705	$	—
Total	$	3,584	$	3,584	$	—	$	2,705	$	2,705	$	—
Liabilities:
Non-qualified deferred compensation plan	$	927	$	—	$	927	$	1,228	$	—	$	1,228
Total	$	927	$	—	$	927	$	1,228	$	—	$	1,228

Summary of the carrying amount and estimated fair values for long-term debt

The table below summarizes the carrying amounts and estimated fair values for the Company’s debt (in thousands):

	June 30, 2018				December 31, 2017
			Level 2				Level 2
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Debt outstanding	$	195,000	$	195,000	$	192,000	$	192,000

XML

INCENTIVE COMPENSATION PLANS (Tables)

6 Months Ended

Jun. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of valuation assumptions

The following weighted average assumptions were used to estimate the fair value of the stock options at the grant date:

Risk-free interest rate	2.5%
Expected term (in years)	6.21
Dividend yield	0.0%
Expected volatility	37.7%

Summary of the stock-based compensation incurred

The stock-based compensation expense incurred for all equity plans in the three months ended June 30, 2018 and 2017 and the six months ended June 30, 2018 and 2017 have been included in the condensed consolidated statements of operations as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Cost of revenues	$	48	$	63	$	105	$	134
Sales and marketing	933		1,615		1,865		2,330
General and administrative	1,623		1,851		3,440		3,406
Total stock-based compensation expense	$	2,604	$	3,529	$	5,410	$	5,870

XML

EARNINGS/(LOSS) PER SHARE (Tables)

6 Months Ended

Jun. 30, 2018

Earnings Per Share [Abstract]

Schedule of computation of basic and diluted earnings per common share

The following table sets forth the computation of basic and diluted earnings/(loss) per common share (in thousands, except per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Numerator:
Net income/(loss)	$	(118,085	)	$	9,716		$	(124,681	)	$	18,739
Income allocated to participating securities	—			(228		)	—			(434		)
Net income/(loss) attributable to common stockholders	$	(118,085	)	$	9,488		$	(124,681	)	$	18,305
Denominator:
Basic average common shares outstanding	27,785			27,452			27,749			27,415
Add: Dilutive effect of securities	—			—			—			34
Diluted average common shares outstanding	27,785			27,452			27,749			27,449
Basic earnings/(loss) per common share	$	(4.25	)	$	0.35		$	(4.49	)	$	0.67
Diluted earnings/(loss) per common share	$	(4.25	)	$	0.35		$	(4.49	)	$	0.67

XML

RESTRUCTURING AND OTHER EXIT COSTS (Tables)

6 Months Ended

Jun. 30, 2018

Restructuring and Related Activities [Abstract]

Schedule of restructuring and other exit costs

Restructuring and other exit costs were as follows (in thousands):

	Employee Termination Costs			Facility Closure Costs			Total
Accrued as of December 31, 2017	$	184		$	193		$	377
Charges	—			—			—
Cash paid	(172		)	(168		)	(340		)
Other – non-cash	(12		)	—			(12		)
Accrued as of June 30, 2018	$	—		$	25		$	25

XML

SUPPLEMENTAL CASH FLOW INFORMATION (Tables)

6 Months Ended

Jun. 30, 2018

Supplemental Cash Flow Elements [Abstract]

Schedule of supplemental cash flow disclosures

The following table sets forth supplemental cash flow disclosures (in thousands):

	Six Months Ended June 30,
	2018		2017
Cash paid for interest	$	5,733	$	4,074
Cash paid for income taxes, net	3,781		10,517

XML

DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, ACCOUNTING POLICIES, AND RECENT ACCOUNTING PRONOUNCEMENTS (Details) floral_shop in Thousands, $ in Millions	6 Months Ended
	Jun. 30, 2018 country floral_shop	Jan. 01, 2019 USD ($)	Oct. 01, 2018 USD ($)	May 31, 2018 USD ($)
Description of business
Number of floral shops | floral_shop	35
Number of countries in which floral shops are located | country	125
Revolving Credit Facility | Credit Agreement
Description of business
Maximum borrowing capacity				$ 150
Revolving Credit Facility | Credit Agreement | Forecast
Description of business
Maximum borrowing capacity		$ 150	$ 175
Interflora, Inc.
Description of business
Portion of operation of subsidiary owned by third party (as a percent)	33.00%

XML

SEGMENT INFORMATION - Segment revenues (Details) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) reportable_segment	Jun. 30, 2017 USD ($) reportable_segment	Dec. 31, 2017 reportable_segment
Segment revenues
Number of reportable segments | reportable_segment			3	4	4
Products revenues	$ 268,006	$ 293,228	$ 551,009	$ 574,192
Services revenues	31,915	34,918	67,082	70,447
Total revenues	299,921	328,146	618,091	644,639
Operating segments
Segment revenues
Products revenues	272,104	298,063	559,328	583,345
Services revenues	32,008	35,032	67,276	70,665
Intersegment eliminations
Segment revenues
Total revenues	(4,191)	(4,949)	(8,513)	(9,371)
U.S. Consumer | Operating segments
Segment revenues
Products revenues	233,082	259,804	456,443	488,476
Total revenues	233,082	259,804	456,443	488,476
U.S. Consumer | Intersegment eliminations
Segment revenues
Total revenues	(4,098)	(4,835)	(8,319)	(9,153)
U.S. Consumer | FTD.com | Operating segments
Segment revenues
Total revenues	65,881	80,113	137,599	152,917
U.S. Consumer | ProFlowers | Operating segments
Segment revenues
Total revenues	96,963	106,515	176,786	197,226
U.S. Consumer | Gourmet Foods | Operating segments
Segment revenues
Total revenues	45,536	49,205	96,617	101,198
U.S. Consumer | Personal Creations | Operating segments
Segment revenues
Total revenues	24,702	23,971	45,441	37,135
Florist | Operating segments
Segment revenues
Products revenues	11,703	12,813	26,474	28,982
Services revenues	28,213	31,277	57,658	61,614
Florist | Intersegment eliminations
Segment revenues
Total revenues	(93)	(114)	(194)	(218)
International | Operating segments
Segment revenues
Products revenues	27,319	25,446	76,411	65,887
Services revenues	$ 3,795	$ 3,755	$ 9,618	$ 9,051

XML

SEGMENT INFORMATION - Geographic revenues (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Segment information
Revenues	$ 299,921	$ 328,146	$ 618,091	$ 644,639
U.S.
Segment information
Revenues	268,807	298,945	532,062	569,701
U.K.
Segment information
Revenues	$ 31,114	$ 29,201	$ 86,029	$ 74,938

XML

SEGMENT INFORMATION - Operating income reconciliation (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Segment operating income/(loss) before income taxes
Impairment of goodwill, intangible assets, and other long-lived assets	$ (136,861)	$ 0	$ (139,216)	$ 0
Depreciation expense and amortization of intangible assets			(8,220)	(18,583)
Operating income/(loss)	(127,117)	17,749	(131,534)	35,589
Interest expense, net	(4,389)	(2,440)	(6,875)	(4,713)
Other income, net	160	223	136	198
Income/(loss) before income taxes	(131,346)	15,532	(138,273)	31,074
Operating segments
Segment operating income/(loss) before income taxes
Operating income/(loss)	20,033	36,434	31,119	75,027
Unallocated amounts
Segment operating income/(loss) before income taxes
Unallocated expenses	(6,171)	(9,400)	(15,217)	(20,855)
Reconciling items
Segment operating income/(loss) before income taxes
Impairment of goodwill, intangible assets, and other long-lived assets	(136,861)	0	(139,216)	0
Depreciation expense and amortization of intangible assets	(4,118)	(9,285)	(8,220)	(18,583)
U.S. Consumer | Operating segments
Segment operating income/(loss) before income taxes
Operating income/(loss)	6,474	21,120	(1,761)	40,227
Florist | Operating segments
Segment operating income/(loss) before income taxes
Operating income/(loss)	10,849	12,248	23,115	26,202
International | Operating segments
Segment operating income/(loss) before income taxes
Operating income/(loss)	$ 2,710	$ 3,066	$ 9,765	$ 8,598

XML

FINANCING RECEIVABLES - Credit quality and aging of past due receivables (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	$ 9,589	$ 10,571
Total	10,600	11,492
1 - 150 days past due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past due	229	167
151 - 364 days past due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past due	168	213
365 - 730 days past due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past due	234	184
731 or more days past due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past due	$ 380	$ 357

XML

FINANCING RECEIVABLES - Credit losses and Recorded investment (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Allowance for credit losses:
Balance at the beginning of the period	$ 912	$ 846
Provision	178	184
Write-offs charged against allowance	(102)	(249)
Balance at the end of the period	988	781
Ending balance collectively evaluated for impairment	944	745
Ending balance individually evaluated for impairment	44	36
Recorded investments in financing receivables:
Balance collectively evaluated for impairment	1,093	856
Balance individually evaluated for impairment	$ 9,507	$ 11,044

XML

FINANCING RECEIVABLES - Impaired receivables (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017
Individually evaluated impaired loans
Financing Receivable, Recorded Investment, Nonaccrual Status	$ 1,100	$ 1,000
Allowance related to individually evaluated impaired loans	44		$ 36
Maximum
Individually evaluated impaired loans
Recorded investment in individually evaluated impaired loans	100	100
Unpaid principal balance related to individually evaluated impaired loans	100	100
Allowance related to individually evaluated impaired loans	$ 100	$ 100

XML

FINANCING RECEIVABLES - Impaired receivables - Average recorded investment and Interest income (Details) - Maximum - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Individually evaluated impaired loans
Average recorded investment in individually evaluated impaired loans	$ 0.1	$ 0.1
Interest income recognized on impaired loans	$ 0.1	$ 0.1

XML

TRANSACTIONS WITH RELATED PARTIES (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Qurate Retail, Inc. | FTD Common Stock [Member]
Transactions with related parties
Ownership percentage	36.50%	36.50%
Interflora | I.S. Group
Transactions with related parties
Ownership percentage	20.40%	20.40%
Amount of investment in related party	$ 1.7	$ 1.7		$ 1.7
I.S. Group | Interflora
Transactions with related parties
Revenues from related party	0.4	1.3	$ 1.1
Cost of revenues related to products purchased	$ 0.1	$ 0.2	$ 0.1

XML

TRANSACTIONS WITH RELATED PARTIES - Receivable and Payable (Details) - I.S. Group - Interflora - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017
Transactions with related parties
Amounts due from related party	$ 0.2	$ 0.3
Amounts payable to related party	$ 0.8	$ 1.0

XML

GOODWILL, INTANGIBLE ASSETS, AND OTHER LONG-LIVED ASSETS - Schedule of Goodwill (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2008
Changes in the net carrying amount of goodwill
Balance at the beginning of the period	$ 277,041
Purchase accounting adjustment - Bloom That acquisition	(792)
Foreign currency translation	(1,812)
Impairment of Goodwill	62,459	$ 196,700	$ 84,000	$ 85,000	$ 116,300
Balance at the end of the period	211,978	277,041
U.S. Consumer
Changes in the net carrying amount of goodwill
Balance at the beginning of the period	106,356
Purchase accounting adjustment - Bloom That acquisition	(792)
Foreign currency translation	0
Impairment of Goodwill	62,459
Balance at the end of the period	43,105	106,356
Florist
Changes in the net carrying amount of goodwill
Balance at the beginning of the period	90,651
Purchase accounting adjustment - Bloom That acquisition	0
Foreign currency translation	0
Balance at the end of the period	90,651	90,651
International
Changes in the net carrying amount of goodwill
Balance at the beginning of the period	80,034
Purchase accounting adjustment - Bloom That acquisition	0
Foreign currency translation	(1,812)
Balance at the end of the period	$ 78,222	$ 80,034

XML

GOODWILL, INTANGIBLE ASSETS, AND OTHER LONG-LIVED ASSETS - Goodwill, Narrative (Details) $ in Thousands	3 Months Ended	6 Months Ended		12 Months Ended
	Jun. 30, 2018 USD ($)	Jun. 30, 2018 USD ($) reportable_segment	Jun. 30, 2017 reportable_segment	Dec. 31, 2017 USD ($) reportable_segment	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2008 USD ($)
Goodwill [Line Items]
Number of reportable segments | reportable_segment		3	4	4
Impairment of goodwill		$ 62,459		$ 196,700	$ 84,000	$ 85,000	$ 116,300
Goodwill impairment	$ 544,500	544,500
Impairment charges		3,600		22,000
Goodwill	211,978	211,978		277,041
ProFlowers/Gourmet Foods
Goodwill [Line Items]
Impairment charges	$ 1,200	$ 3,600
Florist
Goodwill [Line Items]
Reporting Unit, Percentage of Fair Value in Excess of Carrying Amount	6.00%	6.00%
Goodwill	$ 90,651	$ 90,651		90,651
U.S. Consumer
Goodwill [Line Items]
Impairment of goodwill		62,459
Goodwill	43,105	43,105		$ 106,356
U.S. Consumer | FTD.com
Goodwill [Line Items]
Impairment of goodwill	35,200
Goodwill	29,300	29,300
U.S. Consumer | ProFlowers/Gourmet Foods
Goodwill [Line Items]
Impairment of goodwill	14,800
U.S. Consumer | Personal Creations
Goodwill [Line Items]
Impairment of goodwill	12,500
Goodwill	$ 13,800	$ 13,800

XML

GOODWILL, INTANGIBLE ASSETS, AND OTHER LONG-LIVED ASSETS - Schedule of Intangible Assets (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Indefinite-lived intangibles
Amortization expense	$ 1,495,000	$ 3,819,000	$ 2,997,000	$ 7,639,000
Intangible assets
Gross Value	386,612,000		386,612,000		$ 461,160,000
Accumulated Amortization	(281,654,000)		(281,654,000)		(279,195,000)
Net	104,958,000		104,958,000		181,965,000
Trademarks and trade names
Indefinite-lived intangibles
Indefinite-lived	91,264,000		91,264,000		112,518,000
Impairment of intangible assets, indefinite-lived (excluding goodwill)	20,400,000				38,300,000
Amortization expense			0
Complete technology
Intangible assets
Gross Value	60,584,000		60,584,000		61,274,000
Accumulated Amortization	(60,584,000)		(60,584,000)		(60,653,000)
Net	0		0		621,000
Impairment of intangible assets, finite-lived	561,000				16,335,000
Customer contracts and relationships
Intangible assets
Gross Value	193,298,000		193,298,000		193,775,000
Accumulated Amortization	(193,298,000)		(193,298,000)		(193,667,000)
Net	0		0		108,000
Impairment of intangible assets, finite-lived	90,000				0
Trademarks and trade names
Intangible assets
Gross Value	41,466,000		41,466,000		93,593,000
Accumulated Amortization	(27,772,000)		(27,772,000)		(24,875,000)
Net	13,694,000		$ 13,694,000		68,718,000
Impairment of intangible assets, finite-lived	$ 52,108,000				$ 27,000,000

XML

GOODWILL, INTANGIBLE ASSETS, AND OTHER LONG-LIVED ASSETS - Intangible Assets Future Amortization (Details) $ in Thousands	Jun. 30, 2018 USD ($)
Estimated future intangible assets amortization expense
2018 (remainder of the year)	$ 628
2019	1,256
2020	1,248
2021	1,244
2022	1,188
Thereafter	8,130
Total	$ 13,694

XML

GOODWILL, INTANGIBLE ASSETS, AND OTHER LONG-LIVED ASSETS - Schedule of Other Long-Lived Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Property, Plant and Equipment [Line Items]
Impairment of Long-Lived Assets Held-for-use			$ 3,600		$ 22,000
Property, plant and equipment, gross	$ 145,003		145,003		129,377
Accumulated depreciation	(100,224)		(100,224)		(95,497)
Total	44,779		44,779		33,880
Impairment charges	136,861	$ 0	139,216	$ 0
Land and Land Improvements
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	1,578		1,578		1,583
Building and Building Improvements
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	17,265		17,265		16,375
Leasehold Improvements
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	10,976		10,976		10,883
Equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	13,590		13,590		13,122
Computer Equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	25,736		25,736		25,208
Software and Software Development Costs
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	72,589		72,589		58,991
Furniture and Fixtures
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	3,269		3,269		$ 3,215
ProFlowers/Gourmet Foods
Property, Plant and Equipment [Line Items]
Impairment of Long-Lived Assets Held-for-use	$ 1,200		$ 3,600

XML

GOODWILL, INTANGIBLE ASSETS, AND OTHER LONG-LIVED ASSETS - Other Long-Lived Assets, Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Goodwill Tangible and Intangible Assets Disclosure [Abstract]
Depreciation	$ 2.6	$ 5.5	$ 5.2	$ 10.9

XML

FINANCING ARRANGEMENTS - Narrative (Details) - USD ($)		6 Months Ended		12 Months Ended
	May 31, 2018	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2014	Jan. 01, 2019	Oct. 01, 2018	Sep. 19, 2014
Financing arrangements
Draw down of debt		$ 185,000,000	$ 70,000,000
Credit Agreement
Financing arrangements
Letters of credit outstanding		1,800,000
Remaining borrowing capacity		$ 83,200,000
Credit Agreement | Maximum
Financing arrangements
Percentage of outstanding capital stock of foreign subsidiaries that is pledged as collateral for borrowings		66.00%
Credit Agreement | LIBOR | Maximum
Financing arrangements
Basis spread on variable rate		7.50%
Credit Agreement | LIBOR | Minimum
Financing arrangements
Basis spread on variable rate		2.50%
Credit Agreement | Base Rate | Maximum
Financing arrangements
Basis spread on variable rate		6.50%
Credit Agreement | Base Rate | Minimum
Financing arrangements
Basis spread on variable rate		1.50%
Credit Agreement | Revolving Credit Facility
Financing arrangements
Face amount of debt							$ 350,000,000
Draw down of debt		$ 185,000,000		$ 120,000,000
Maximum borrowing capacity	$ 150,000,000
Amendment fee rate (as a percent)	0.625%
Amendment fee	$ 1,900,000
Arrangement fee	$ 500,000
Commitment fee (as a percent)		0.50%
Credit Agreement | Revolving Credit Facility | Maximum
Financing arrangements
Letter of credit fee rate (as a percent)	7.50%
Credit Agreement | Revolving Credit Facility | Minimum
Financing arrangements
Commitment fee (as a percent)		0.50%
Letter of credit fee rate (as a percent)	2.50%
Credit Agreement | Revolving Credit Facility | LIBOR
Financing arrangements
Interest rate (as a percent)		7.74%
Effective interest rate (as a percent)		10.97%
Credit Agreement | Revolving Credit Facility | Forecast
Financing arrangements
Maximum borrowing capacity					$ 150,000,000	$ 175,000,000
Quarterly fee rate (as a percent)					0.25%	0.125%
Term Loan | Credit Agreement
Financing arrangements
Face amount of debt							$ 200,000,000
Draw down of debt		$ 0
Quarterly amortization payment amount		$ 5,000,000
Term Loan | Credit Agreement | LIBOR
Financing arrangements
Reference rate for variable interest rate		LIBOR
Interest rate (as a percent)		7.83%
Effective interest rate (as a percent)		10.46%

XML

FINANCING ARRANGEMENTS - Change in the Company's debt balances, net of discounts (Details) - USD ($) $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2014	Dec. 31, 2017
Changes in debt balances, net of discounts
Long-term debt, gross	$ 195,000			$ 192,000
Draw down of debt	185,000	$ 70,000
Repayments of Debt	(182,000)	$ (85,000)
Debt Issuance Costs	(5,310)			(2,334)
Total Debt, Net of Debt Issuance Costs	189,690			189,666
Term Loan | Credit Agreement
Changes in debt balances, net of discounts
Long-term debt, gross	130,000			140,000
Draw down of debt	0
Repayments of Debt	(10,000)
Revolving credit facility | Credit Agreement
Changes in debt balances, net of discounts
Long-term debt, gross	65,000			$ 52,000
Draw down of debt	185,000		$ 120,000
Repayments of Debt	$ (172,000)

XML

DERIVATIVE INSTRUMENTS - Fair value and notional amounts (Details) - Derivatives designated as hedging instruments - Cash flow hedging instruments - Interest rate caps - USD ($) $ in Thousands	1 Months Ended
	Mar. 31, 2012	Jun. 30, 2018	Dec. 31, 2017
Estimated fair values and notional values of outstanding derivative instruments
Purchase of derivative instruments	$ 1,900
Notional Value of Derivative Instruments	$ 130,000
Other assets.
Estimated fair values and notional values of outstanding derivative instruments
Estimated Fair Value of Derivative Instruments		$ 0	$ 0
Notional Value of Derivative Instruments		$ 0	$ 130,000

XML

DERIVATIVE INSTRUMENTS - Cash flow hedge disclosures (Details) - Derivatives designated as hedging instruments - Cash flow hedging instruments - Interest rate caps - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Effect of derivative instruments
Gains (losses) from derivatives, before tax, recognized in other comprehensive income (loss)	$ 0	$ 0	$ 0	$ (1)
Effective loss portion, before tax effect, of the derivative instruments					$ 300
Reclassifications out of accumulated other comprehensive loss
Effect of derivative instruments
Gains (losses) from derivatives, before tax, recognized in other comprehensive income (loss)	$ (100)		$ (300)	$ (300)

XML

FAIR VALUE MEASUREMENTS - Summary of Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - Recurring basis - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Assets:
Cash equivalents	$ 3,584	$ 2,705
Total	3,584	2,705
Liabilities:
Non-qualified deferred compensation plan	927	1,228
Total	927	1,228
Level 1
Assets:
Cash equivalents	3,584	2,705
Total	3,584	2,705
Liabilities:
Non-qualified deferred compensation plan	0	0
Total	0	0
Level 2
Assets:
Cash equivalents	0	0
Total	0	0
Liabilities:
Non-qualified deferred compensation plan	927	1,228
Total	$ 927	$ 1,228

XML

FAIR VALUE MEASUREMENTS - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2008
Assets measured at fair value
Proceeds from life insurance cash surrender values		$ 10,003	$ 0
Impairment of intangible assets (excluding goodwill) and tangible assets		76,700		$ 103,600
Impairment of goodwill		$ 62,459		$ 196,700	$ 84,000	$ 85,000	$ 116,300
Term Loan
Assets measured at fair value
Credit spread (as a percent)		6.90%		1.00%
Estimated yield-to maturity (as a percent)		9.20%		2.90%
Revolving credit facility
Assets measured at fair value
Credit spread (as a percent)		8.60%		1.60%
Estimated yield-to maturity (as a percent)		11.00%		3.40%
Other assets.
Assets measured at fair value
Deferred compensation plan assets	$ 1,700	$ 1,700		$ 11,700
U.S. Consumer
Assets measured at fair value
Impairment of goodwill		$ 62,459
ProFlowers/Gourmet Foods | U.S. Consumer
Assets measured at fair value
Impairment of goodwill	$ 14,800

XML

FAIR VALUE MEASUREMENTS - Long Term Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Assets measured at fair value
Long-term debt	$ 189,690	$ 189,666
Carrying Amount
Assets measured at fair value
Long-term debt	195,000	192,000
Level 2 | Estimated Fair Value
Assets measured at fair value
Long-term debt outstanding, including current portion	$ 195,000	$ 192,000

XML

STOCKHOLDERS' EQUITY (Details) - RSUs shares in Millions, $ in Millions	6 Months Ended
	Jun. 30, 2018 USD ($) shares
Restricted Stock Units Vesting and Tax Withholdings
Awards vested during the period (in shares)	0.3
Shares withheld to pay employee tax withholding	0.1
Value of shares withheld to pay employee tax withholding | $	$ 0.5

XML

INCENTIVE COMPENSATION PLANS - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percent of awards expected to vest	0.000		0.000
Share-based compensation expense	$ 2,604	$ 3,529	$ 5,410	$ 5,870
Amended and Restated 2013 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for issuance	5,000,000		5,000,000
Amended and Restated 2013 Plan | RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
RSUs granted (in shares)			900,000
Vesting period			4 years
RSUs grant price (in dollars per share)			$ 6.39
Amended and Restated 2013 Plan | PSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
RSUs granted (in shares)			1,300,000
Vesting period			3 years
RSUs grant price (in dollars per share)			$ 6.64
Share-based compensation expense			$ 0
Amended and Restated 2013 Plan | Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted in the period (in shares)			800,000
Vesting period			4 years
Weighted average exercise price (in dollars per share)			$ 6.64
Employee Stock Purchase Plan 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for issuance	200,000		200,000
Employee Stock Purchase Plan 2015 | Employee Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee stock purchase price, percentage of fair market value			85.00%

XML

INCENTIVE COMPENSATION PLANS - Schedule of valuation assumptions (Details) - Amended and Restated 2013 Plan - Stock Options	6 Months Ended
	Jun. 30, 2018 Rate
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	2.50%
Expected term (in years)	6 years 77 days
Dividend yield	0.00%
Expected volatility	37.70%

XML

INCENTIVE COMPENSATION PLANS - Allocation of stock-based compensation (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Stock-Based Compensation
Total stock-based compensation expense	$ 2,604	$ 3,529	$ 5,410	$ 5,870
Cost of revenues
Stock-Based Compensation
Total stock-based compensation expense	48	63	105	134
Sales and marketing
Stock-Based Compensation
Total stock-based compensation expense	933	1,615	1,865	2,330
General and administrative
Stock-Based Compensation
Total stock-based compensation expense	$ 1,623	$ 1,851	$ 3,440	$ 3,406

XML

INCOME TAXES - Provision (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Income before income taxes
Provision for/(benefit from) income taxes	$ (13,261)	$ 5,816	$ (13,592)	$ 12,335
Income (loss) before income taxes	(131,346)	$ 15,532	(138,273)	31,074
Valuation allowance for state net operating loss carryforwards	$ 1,600		1,600
Accounting Standards Update 2016-09, Statutory Tax Withholding Component [Member]
Income before income taxes
Share-based compensation, excess tax expense, amount			$ (2,600)	$ (1,400)

XML

EARNINGS/(LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Numerator:
Net income/(loss)	$ (118,085)	$ 9,716	$ (124,681)	$ 18,739
Income allocated to participating securities	0	(228)	0	(434)
Net income/(loss) attributable to common stockholders	$ (118,085)	$ 9,488	$ (124,681)	$ 18,305
Denominator:
Basic average common shares outstanding	27,785	27,452	27,749	27,415
Add: Dilutive effect of securities	0	0	0	34
Diluted average common shares outstanding	27,785	27,452	27,749	27,449
Basic earnings/(loss) per share (in dollars per share)	$ (4.25)	$ 0.35	$ (4.49)	$ 0.67
Diluted earning/(loss) per share (in dollars per share)	$ (4.25)	$ 0.35	$ (4.49)	$ 0.67
Weighted-average antidilutive shares	4,500	4,100	3,900	3,500

XML

RESTRUCTURING AND OTHER EXIT COSTS (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Changes in restructuring and other exit costs
Accrued restructuring at the beginning of the period			$ 377
Charges	$ 0	$ 136	0	$ 944
Cash paid			(340)
Other – non-cash			(12)
Accrued restructuring at the end of the period	25		25
Employee Termination Costs
Changes in restructuring and other exit costs
Accrued restructuring at the beginning of the period			184
Charges			0
Cash paid			(172)
Other – non-cash			(12)
Accrued restructuring at the end of the period	0		0
Facility Closure Costs
Changes in restructuring and other exit costs
Accrued restructuring at the beginning of the period			193
Charges			0
Cash paid			(168)
Other – non-cash			0
Accrued restructuring at the end of the period	$ 25		$ 25

XML

CONTINGENCIES - Legal Matters (Details) $ in Millions	May 08, 2017 stateattorneygeneral	Dec. 14, 2011 claim_filed	Aug. 19, 2009	Jun. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)
Contingencies-legal matters
Reserve for estimated losses related to certain of the matters | $				$ 2.8	$ 2.8
Provide Commerce
Contingencies-legal matters
Period for consolidation of cases filed since the original August 19, 2009 lawsuit			3 years
Number of claims | claim_filed		10
number of state attorneys filing an amicus brief | stateattorneygeneral	13

XML

SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Supplemental cash flow disclosures:
Cash paid for interest	$ 5,733	$ 4,074
Cash paid for income taxes, net	3,781	$ 10,517
Purchases of property and equipment included in accounts payable and other liabilities	$ 6,300

XML

SUBSEQUENT EVENTS (Details) - Subsequent Event $ in Millions	Jul. 18, 2018 USD ($)
Minimum
Subsequent event
Expected restructuring and reorganization cost	$ 23.5
Maximum
Subsequent event
Expected restructuring and reorganization cost	29.5
Cash Severance Payments | Minimum
Subsequent event
Expected restructuring and reorganization cost	12.0
Cash Severance Payments | Maximum
Subsequent event
Expected restructuring and reorganization cost	15.0
Non-Cash Stock-Based Compensation | Minimum
Subsequent event
Expected restructuring and reorganization cost	5.5
Non-Cash Stock-Based Compensation | Maximum
Subsequent event
Expected restructuring and reorganization cost	6.5
Other Costs | Minimum
Subsequent event
Expected restructuring and reorganization cost	6.0
Other Costs | Maximum
Subsequent event
Expected restructuring and reorganization cost	$ 8.0