Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Nov. 10, 2014 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'FTD Companies, Inc. | ' |
Entity Central Index Key | '0001575360 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Non-accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 18,987,996 |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $62,783 | $48,162 |
Accounts receivable, net of allowances of $8,814 and $8,757 at September 30, 2014 and December 31, 2013, respectively | 25,794 | 25,493 |
Inventories | 6,527 | 8,451 |
Deferred tax assets, net | 9,427 | 5,359 |
Prepaid expenses | 6,623 | 7,898 |
Total current assets | 111,154 | 95,363 |
Property and equipment, net | 29,911 | 32,254 |
Intangible assets, net | 159,522 | 172,097 |
Goodwill | 338,902 | 340,940 |
Other assets | 17,139 | 14,610 |
Total assets | 656,628 | 655,264 |
Current liabilities: | ' | ' |
Accounts payable | 34,018 | 53,266 |
Accrued liabilities | 17,423 | 14,908 |
Accrued compensation | 9,378 | 9,922 |
Deferred revenue | 8,212 | 6,363 |
Income taxes payable | 2,299 | 1,674 |
Current portion of long-term debt | 15,000 | ' |
Total current liabilities | 86,330 | 86,133 |
Long-term debt | 205,000 | 220,000 |
Deferred tax liabilities, net | 52,224 | 55,823 |
Other liabilities | 2,721 | 2,786 |
Total liabilities | 346,275 | 364,742 |
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; 18,949,011 and 18,829,454 shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively | 2 | 2 |
Additional paid-in capital | 309,318 | 304,870 |
Retained earnings | 22,820 | 3,877 |
Accumulated other comprehensive loss | -21,787 | -18,227 |
Total stockholders' equity | 310,353 | 290,522 |
Total liabilities and stockholders' equity | $656,628 | $655,264 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
CONDENSED CONSOLIDATED BALANCE SHEETS | ' | ' |
Accounts receivable, allowance for doubtful accounts (in dollars) | $8,814 | $8,757 |
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 60,000,000 | 60,000,000 |
Common stock, shares issued | 18,949,011 | 18,829,454 |
Common stock, shares outstanding | 18,949,011 | 18,829,454 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Revenues: | ' | ' | ' | ' |
Products | $94,052 | $88,633 | $379,498 | $370,980 |
Services | 31,048 | 29,894 | 103,549 | 102,109 |
Total revenues | 125,100 | 118,527 | 483,047 | 473,089 |
Operating expenses: | ' | ' | ' | ' |
Cost of revenues-products | 71,097 | 67,667 | 290,049 | 283,427 |
Cost of revenues-services | 4,983 | 4,802 | 15,343 | 14,519 |
Sales and marketing | 22,650 | 21,184 | 82,596 | 79,194 |
General and administrative | 19,737 | 16,709 | 52,674 | 45,823 |
Amortization of intangible assets | 2,777 | 5,721 | 11,618 | 18,524 |
Restructuring and other exit costs | -67 | ' | 220 | ' |
Total operating expenses | 121,177 | 116,083 | 452,500 | 441,487 |
Operating income | 3,923 | 2,444 | 30,547 | 31,602 |
Interest income | 144 | 153 | 442 | 496 |
Interest expense | -1,557 | -4,067 | -4,336 | -10,450 |
Other (expense) income, net | -74 | 25 | 398 | 265 |
Income (loss) before income taxes | 2,436 | -1,445 | 27,051 | 21,913 |
Provision (benefit) for income taxes | -2,178 | -1,625 | 8,108 | 6,958 |
Net income | $4,614 | $180 | $18,943 | $14,955 |
Earnings per common share: | ' | ' | ' | ' |
Basic earnings per share (in dollars per share) | $0.24 | $0.01 | $0.98 | $0.80 |
Diluted earnings per share (in dollars per share) | $0.24 | $0.01 | $0.98 | $0.80 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ' | ' | ' | ' |
Net Income | $4,614 | $180 | $18,943 | $14,955 |
Other comprehensive (loss) income: | ' | ' | ' | ' |
Foreign currency translation | -7,678 | 8,336 | -3,141 | 4,503 |
Cash flow hedges: | ' | ' | ' | ' |
Changes in net (losses) gains on derivatives, net of tax of $(3) and $(142) for the quarters ended September 30, 2014 and 2013 and $(268) and $183 for the nine months ended September 30, 2014 and 2013, respectively | -4 | -226 | -419 | 286 |
Other hedges: | ' | ' | ' | ' |
Changes in net (losses) gains on derivatives, net of tax of $(24) for the quarter ended September 30, 2013 and $39 for the nine months ended September 30, 2013 | ' | -37 | ' | 62 |
Other comprehensive (loss) income | -7,682 | 8,073 | -3,560 | 4,851 |
Comprehensive (loss) income | ($3,068) | $8,253 | $15,383 | $19,806 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ' | ' | ' | ' |
Changes in net gains (losses) on derivatives, tax | ($3) | ($142) | ($268) | $183 |
Changes in net gains (losses) on derivatives, tax | ' | ($24) | ' | $39 |
CONDENSED_CONSOLIDATED_STATEME3
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (USD $) | Total | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss |
In Thousands, except Share data, unless otherwise specified | |||||
Balance at the beginning of the period at Dec. 31, 2013 | $290,522 | $2 | $304,870 | $3,877 | ($18,227) |
Balance at the beginning of the period (in shares) at Dec. 31, 2013 | 18,829,454 | 18,829,000 | ' | ' | ' |
Increase (Decrease) in Equity | ' | ' | ' | ' | ' |
Net income | 18,943 | ' | ' | 18,943 | ' |
Other comprehensive loss | -3,560 | ' | ' | ' | -3,560 |
Stock-based compensation | 5,509 | ' | 5,509 | ' | ' |
Tax benefits from equity awards | 387 | ' | 387 | ' | ' |
Vesting of restricted stock units (in shares) | ' | 108,000 | ' | ' | ' |
Repurchases of common stock | -1,760 | ' | -1,760 | ' | ' |
Exercise of stock options and purchases from employee stock plans | 312 | ' | 312 | ' | ' |
Exercise of stock options and purchases from employee stock plans (in shares) | ' | 12,000 | ' | ' | ' |
Balance at the end of the period at Sep. 30, 2014 | $310,353 | $2 | $309,318 | $22,820 | ($21,787) |
Balance at the end of the period (in shares) at Sep. 30, 2014 | 18,949,011 | 18,949,000 | ' | ' | ' |
CONDENSED_CONSOLIDATED_STATEME4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Cash flows from operating activities: | ' | ' |
Net income | $18,943 | $14,955 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 19,297 | 25,151 |
Stock-based compensation | 5,509 | 3,598 |
Provision for doubtful accounts receivable | 1,342 | 1,200 |
Accretion of discounts and amortization of deferred financing and debt issue costs | 598 | 664 |
Loss on extinguishment of debt | 101 | 2,348 |
Non-cash allocations from parent company, net | ' | 715 |
Deferred taxes, net | -7,212 | -6,991 |
Excess tax benefits from equity awards | -387 | -122 |
Other, net | 24 | 227 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable, net | -1,751 | -2,289 |
Inventories | 1,907 | 1,908 |
Other assets | 1,447 | 371 |
Accounts payable and accrued liabilities | -17,562 | -25,040 |
Deferred revenue | 1,914 | 1,690 |
Income taxes payable | 1,040 | -4,424 |
Intercompany payable to United Online, Inc. | ' | 1,267 |
Other liabilities | -106 | -660 |
Net cash provided by operating activities | 25,104 | 14,568 |
Cash flows from investing activities: | ' | ' |
Purchases of property and equipment | -5,364 | -6,473 |
Proceeds from sales of investments | ' | 124 |
Purchases of investments | ' | -61 |
Net cash used for investing activities | -5,364 | -6,410 |
Cash flows from financing activities: | ' | ' |
Proceeds from issuance of long-term debt | 200,000 | 220,000 |
Payments on long-term debt | -200,000 | -246,013 |
Payments for debt issue costs | -3,806 | -2,924 |
Exercise of stock options and purchases from employee stock plans | 312 | ' |
Repurchases of common stock | -1,760 | ' |
Excess tax benefits from equity awards | 387 | 122 |
Dividends paid to United Online, Inc. | ' | -18,201 |
Net cash used for financing activities | -4,867 | -47,016 |
Effect of foreign currency exchange rate changes on cash and cash equivalents | -252 | -142 |
Change in cash and cash equivalents | 14,621 | -39,000 |
Cash and cash equivalents, beginning of period | 48,162 | 67,347 |
Cash and cash equivalents, end of period | $62,783 | $28,347 |
DESCRIPTION_OF_BUSINESS_BASIS_
DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, ACCOUNTING POLICIES, AND RECENT ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2014 | |
DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, ACCOUNTING POLICIES, AND RECENT ACCOUNTING PRONOUNCEMENTS | ' |
DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, ACCOUNTING POLICIES, AND RECENT ACCOUNTING PRONOUNCEMENTS | ' |
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"), a Delaware corporation, through its operating subsidiaries, is a leading provider of floral, gift and related products and services to consumers, retail florists, and other retail locations and companies in need of floral and gifting solutions primarily in the United States ("U.S."), Canada, the United Kingdom ("U.K."), and the Republic of Ireland. 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 U.S., Canada, the U.K., and the Republic of Ireland, the Company has worldwide presence as its Mercury Man logo is displayed in nearly 40,000 floral shops in approximately 150 countries. The Company's portfolio of brands also includes Flying Flowers, Flowers Direct, and Drake Algar in the U.K. FTD does not currently own or operate any retail locations, with the exception of one retail shop located in the U.K. While floral arrangements and plants are FTD's primary offerings, the Company also markets and sells gift items, including jewelry, chocolate dip delights™ and other sweets, gift baskets, wine and champagne, fruit, and spa products. | |
FTD Group, Inc. ("FTD Group") is a wholly-owned subsidiary of FTD Companies, Inc. and has as its principal operating subsidiaries, Florists' Transworld Delivery, Inc., FTD.COM Inc. ("FTD.COM"), and Interflora British Unit ("Interflora"). The operations of the Company include those of its subsidiary, Interflora, Inc., of which one-third is owned by an outside third party. The minority interest related to Interflora, Inc. is not material for separate presentation. The Company's corporate headquarters is located in Downers Grove, Illinois. The Company also maintains offices in Centerbrook, Connecticut; Medford, Oregon; Sleaford, England; Quebec, Canada; and Hyderabad, India. | |
Separation from United Online | |
Prior to November 1, 2013, FTD was a wholly-owned subsidiary of United Online, Inc. ("United Online"). On November 1, 2013, United Online separated into two independent, publicly-traded companies: FTD Companies, Inc. and United Online, Inc. (the "Separation"). The Separation was consummated through a tax-free dividend involving the distribution of all shares of FTD Companies, Inc. common stock (FTD common stock) to United Online's stockholders. Following completion of the Separation, FTD Companies, Inc. became an independent, publicly-traded company on the NASDAQ Global Select Market utilizing the symbol "FTD". | |
Proposed Acquisition | |
On July 30, 2014, FTD entered into a stock purchase agreement (the "Stock Purchase Agreement") with Liberty Interactive Corporation ("Liberty") and Provide Commerce Inc. ("Provide Commerce") pursuant to which the Company will acquire from Liberty all of the issued and outstanding shares of Provide Commerce's common stock (the "Acquisition") for an aggregate purchase price of approximately $430 million. The purchase price consists of $121 million in cash and 10.2 million shares of FTD common stock, which is the number of shares that would equal 35% of the post-closing issued and outstanding shares of FTD common stock (based on the number of shares issued and outstanding on July 29, 2014). On September 4, 2014 FTD received notice of early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, with respect to the proposed Acquisition. Termination of the waiting period satisfies one of the conditions required for completion of the Acquisition. The closing of the Acquisition is subject to customary closing conditions, including the approval of FTD stockholders of the issuance of shares of FTD common stock in connection with the Acquisition. The definitive proxy statement related to the special meeting of our stockholders to be held on December 11, 2014 to obtain this approval was filed with the U.S. Securities and Exchange Commission (the "SEC") on November 3, 2014. The Company expects the Acquisition to be completed by January 1, 2015, although there can be no assurance that the Acquisition will occur within the expected timeframe or at all. The Stock Purchase Agreement contains certain termination rights for both FTD and Liberty. | |
Basis of Presentation | |
These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"), including those for interim financial information, and with the instructions for Quarterly Reports on Form 10-Q and Article 10 of Regulation S-X issued by the SEC. Accordingly, such financial statements do not include all of the information and disclosures required by GAAP for complete financial statements. Significant intercompany accounts and transactions, other than those with the Company's former parent, United Online, have been eliminated in consolidation. The condensed consolidated financial statements, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair presentation of financial position and operating results for the periods presented. The results of operations for such periods are not necessarily indicative of the results expected for any future periods. The condensed consolidated balance sheet information at December 31, 2013, was derived from the Company's audited consolidated financial statements, included in the Company's Annual Report on Form 10-K ("Form 10-K") for the year ended December 31, 2013, but does not include all of the disclosures required by GAAP. | |
The condensed consolidated financial statements reflect the historical financial position, results of operations, and cash flows of the Company. The condensed consolidated financial statements for the period prior to the Separation include expense allocations for certain corporate functions performed by United Online. Management believes the assumptions underlying such financial statements, including the assumptions regarding the allocation of corporate expenses from United Online, are reasonable. Nevertheless, the condensed consolidated financial statements may not reflect the Company's consolidated financial position, results of operations, and cash flows, had the Company been a stand-alone company prior to the Separation. For additional information related to costs allocated to the Company by United Online and the settlement of such costs, see Note 4—"Transactions with Related Parties." Actual costs that would have been incurred if the Company had been a stand-alone company prior to the Separation, would depend on multiple factors, including organizational structures and strategic decisions made in various areas, including information technology and infrastructure. | |
The preparation of condensed consolidated 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 condensed 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. The most significant areas of the condensed consolidated financial statements that require management's judgment include the Company's revenue recognition, goodwill, indefinite-lived intangible assets and other long-lived assets, allowance for doubtful accounts, income taxes, software capitalization, and legal contingencies. | |
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, 2013. | |
"Emerging Growth Company" Reporting Requirements | |
The Company qualifies as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act. As an "emerging growth company," the Company has elected to take advantage of the extended transition period for complying with new or revised accounting standards until such standards are also applicable to private companies. As a result of this election, the Company's consolidated financial statements may not be comparable to companies that comply with non-emerging growth companies' effective dates for such new or revised standards. | |
Accounting Policies | |
Refer to the Company's audited consolidated financial statements included in the Company's Form 10-K for the year ended December 31, 2013 for a discussion of the Company's accounting policies. | |
Recent Accounting Pronouncements | |
In July 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, as codified in FASB Accounting Standards Codification ("ASC") 740, Income Taxes. The amendments in this update state that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. However, to the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. This ASU applies to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. The amendments in this ASU will be effective for the Company for fiscal years, and interim periods within those years, beginning after December 15, 2014. Early adoption is permitted. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. The Company does not expect this update to have a material impact on its consolidated financial statements. | |
In May 2014, FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, as codified in ASC 606. The amendments in this update affect any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. The amendments in this update require an entity to recognize revenue related to the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in this ASU will be effective for the Company for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is not permitted. The Company is currently assessing the impact of this update on its consolidated financial statements. | |
SEGMENT_INFORMATION
SEGMENT INFORMATION | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
SEGMENT INFORMATION | ' | |||||||||||||
SEGMENT INFORMATION | ' | |||||||||||||
2. SEGMENT INFORMATION | ||||||||||||||
Prior to the Separation, the Company reported its business in one operating and reportable segment. Effective with the management changes that occurred in conjunction with the Separation, the Company began reporting its business in three operating and reportable segments: Consumer, Florist and International. The segment reporting for all periods presented reflects these reportable segments. | ||||||||||||||
Below is a reconciliation of segment revenues to consolidated revenues (in thousands): | ||||||||||||||
Quarter Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Products revenues: | ||||||||||||||
Consumer | $ | 54,714 | $ | 52,820 | $ | 238,383 | $ | 244,092 | ||||||
Florist | 10,123 | 10,606 | 37,023 | 37,977 | ||||||||||
International | 32,381 | 28,291 | 117,454 | 102,912 | ||||||||||
| | | | | | | | | | | | | | |
Segment products revenues | $ | 97,218 | $ | 91,717 | $ | 392,860 | $ | 384,981 | ||||||
Services revenues: | ||||||||||||||
Florist | $ | 26,115 | $ | 25,477 | $ | 87,038 | $ | 87,009 | ||||||
International | 4,998 | 4,472 | 16,757 | 15,305 | ||||||||||
| | | | | | | | | | | | | | |
Segment services revenues | 31,113 | $ | 29,949 | 103,795 | $ | 102,314 | ||||||||
Intersegment eliminations | (3,231 | ) | (3,139 | ) | (13,608 | ) | (14,206 | ) | ||||||
| | | | | | | | | | | | | | |
Consolidated revenues | $ | 125,100 | $ | 118,527 | $ | 483,047 | $ | 473,089 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
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 were as follows (in thousands): | ||||||||||||||
Quarter Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Intersegment revenues: | ||||||||||||||
Consumer | $ | (3,166 | ) | $ | (3,084 | ) | $ | (13,362 | ) | $ | (14,001 | ) | ||
Florist | (65 | ) | (55 | ) | (246 | ) | (205 | ) | ||||||
| | | | | | | | | | | | | | |
Total intersegment revenues | $ | (3,231 | ) | $ | (3,139 | ) | $ | (13,608 | ) | $ | (14,206 | ) | ||
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| | | | | | | | | | | | | | |
Below is a reconciliation of segment operating income to consolidated operating income and income before income taxes (in thousands): | ||||||||||||||
Quarter Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Segment operating income(a): | ||||||||||||||
Consumer | $ | 5,060 | $ | 5,361 | $ | 23,738 | $ | 27,262 | ||||||
Florist | 10,660 | 10,094 | 35,906 | 36,004 | ||||||||||
International | 3,763 | 3,508 | 15,330 | 13,560 | ||||||||||
| | | | | | | | | | | | | | |
Total segment operating income | 19,483 | 18,963 | 74,974 | 76,826 | ||||||||||
Unallocated expenses(b) | (10,292 | ) | (8,596 | ) | (25,130 | ) | (20,073 | ) | ||||||
Depreciation expense and amortization of intangible assets | (5,268 | ) | (7,923 | ) | (19,297 | ) | (25,151 | ) | ||||||
| | | | | | | | | | | | | | |
Operating income | 3,923 | 2,444 | 30,547 | 31,602 | ||||||||||
Interest expense, net | (1,413 | ) | (3,914 | ) | (3,894 | ) | (9,954 | ) | ||||||
Other (expense) income, net | (74 | ) | 25 | 398 | 265 | |||||||||
| | | | | | | | | | | | | | |
Income (loss) before income taxes | $ | 2,436 | $ | (1,445 | ) | $ | 27,051 | $ | 21,913 | |||||
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(a) | ||||||||||||||
Segment operating income is operating income excluding depreciation, amortization, litigation and dispute settlement charges or gains, transaction-related costs, and restructuring and other exit costs. Stock-based compensation and general corporate expenses are not allocated to the segments. Segment operating income is prior to intersegment eliminations and excludes other income (expense). | ||||||||||||||
(b) | ||||||||||||||
Unallocated expenses include various corporate costs, such as corporate finance, legal, and human resources costs, and certain direct and general corporate costs allocated from United Online prior to the Separation. In addition, unallocated expenses include stock-based compensation for all eligible Company employees, as well as stock-based compensation for employees of United Online who provided services to the Company prior to the Separation, restructuring and other exit costs, transaction-related costs, and litigation and dispute settlement charges or gains. | ||||||||||||||
Geographic revenues to external customers were as follows for the periods presented (in thousands): | ||||||||||||||
Quarter Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
U.S. | $ | 87,721 | $ | 85,764 | $ | 348,836 | $ | 354,872 | ||||||
U.K. | 37,379 | 32,763 | 134,211 | 118,217 | ||||||||||
| | | | | | | | | | | | | | |
Consolidated revenues | $ | 125,100 | $ | 118,527 | $ | 483,047 | $ | 473,089 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Assets and liabilities are reviewed at the consolidated level by management. Segment assets are not reported to, or used by, the Company's chief operating decision maker to allocate resources to or assess performance of the segments, and therefore, total segment assets have not been disclosed. Geographic information for long-lived assets, which consist of property and equipment and other assets, was as follows (in thousands): | ||||||||||||||
September 30, | December 31, | |||||||||||||
2014 | 2013 | |||||||||||||
U.S. | $ | 39,285 | $ | 38,439 | ||||||||||
U.K. | 7,765 | 8,425 | ||||||||||||
| | | | | | | | |||||||
Total long-lived assets | $ | 47,050 | $ | 46,864 | ||||||||||
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BALANCE_SHEET_COMPONENTS
BALANCE SHEET COMPONENTS | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
BALANCE SHEET COMPONENTS | ' | |||||||
BALANCE SHEET COMPONENTS | ' | |||||||
3. BALANCE SHEET COMPONENTS | ||||||||
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. | ||||||||
Credit quality of financing receivables was as follows (in thousands): | ||||||||
September 30, | December 31, | |||||||
2014 | 2013 | |||||||
Current | $ | 11,091 | $ | 11,649 | ||||
Past due | 3,254 | 3,295 | ||||||
| | | | | | | | |
Total | $ | 14,345 | $ | 14,944 | ||||
| | | | | | | | |
| | | | | | | | |
The aging of past due financing receivables was as follows (in thousands): | ||||||||
September 30, | December 31, | |||||||
2014 | 2013 | |||||||
1 - 150 days past due | 202 | 169 | ||||||
151 - 364 days past due | 151 | 159 | ||||||
365 - 730 days past due | 236 | 335 | ||||||
731 or more days past due | 2,665 | 2,632 | ||||||
| | | | | | | | |
Total | $ | 3,254 | $ | 3,295 | ||||
| | | | | | | | |
| | | | | | | | |
Financing receivables on nonaccrual status at September 30, 2014 and December 31, 2013 totaled $3.3 million and $3.4 million, respectively. | ||||||||
The allowance for credit losses and the recorded investment in financing receivables were as follows (in thousands): | ||||||||
Nine Months Ended | ||||||||
September 30, | ||||||||
2014 | 2013 | |||||||
Allowance for credit losses: | ||||||||
Balance at January 1 | $ | 3,213 | $ | 3,464 | ||||
Provision | 178 | 74 | ||||||
Write-offs charged against allowance | (216 | ) | (237 | ) | ||||
| | | | | | | | |
Balance at September 30 | $ | 3,175 | $ | 3,301 | ||||
| | | | | | | | |
| | | | | | | | |
Ending balance collectively evaluated for impairment | $ | 3,157 | $ | 3,297 | ||||
| | | | | | | | |
| | | | | | | | |
Ending balance individually evaluated for impairment | $ | 18 | $ | 4 | ||||
| | | | | | | | |
| | | | | | | | |
Recorded investments in financing receivables: | ||||||||
Balance collectively evaluated for impairment | $ | 3,294 | $ | 3,414 | ||||
| | | | | | | | |
| | | | | | | | |
Balance individually evaluated for impairment | $ | 11,051 | $ | 11,845 | ||||
| | | | | | | | |
| | | | | | | | |
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 at both September 30, 2014 and December 31, 2013. The average recorded investment in such loans was less than $0.1 million in each of the nine months ended September 30, 2014 and 2013. Interest income recognized on impaired loans was less than $0.1 million in each of the nine months ended September 30, 2014 and 2013. | ||||||||
Property and Equipment | ||||||||
Property and equipment consisted of the following (in thousands): | ||||||||
September 30, | December 31, | |||||||
2014 | 2013 | |||||||
Land and improvements | $ | 1,623 | $ | 1,628 | ||||
Buildings and improvements | 16,243 | 16,168 | ||||||
Computer equipment | 22,270 | 20,545 | ||||||
Computer software | 33,002 | 29,977 | ||||||
Furniture and fixtures | 3,808 | 3,958 | ||||||
| | | | | | | | |
76,946 | 72,276 | |||||||
Accumulated depreciation | (47,035 | ) | (40,022 | ) | ||||
| | | | | | | | |
Total | $ | 29,911 | $ | 32,254 | ||||
| | | | | | | | |
| | | | | | | | |
Depreciation expense, including the amortization of leasehold improvements, was $2.5 million and $2.2 million for the quarters ended September 30, 2014 and 2013, respectively, and $7.7 million and $6.6 million for the nine months ended September 30, 2014 and 2013, respectively. | ||||||||
TRANSACTIONS_WITH_RELATED_PART
TRANSACTIONS WITH RELATED PARTIES | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
TRANSACTIONS WITH RELATED PARTIES | ' | |||||||
TRANSACTIONS WITH RELATED PARTIES | ' | |||||||
4. TRANSACTIONS WITH RELATED PARTIES | ||||||||
Transactions with United Online-Prior to Separation | ||||||||
Prior to the Separation, the condensed consolidated financial statements include direct costs of the Company incurred by United Online on the Company's behalf and allocations of certain general corporate costs incurred by United Online. Direct costs include finance, legal, human resources, technology development, and other services and were determined based on the level of services expended by United Online for services provided to the Company. General corporate costs include, without limitation, executive oversight, accounting, internal audit, treasury, tax, and legal. The allocations of these general corporate costs were based primarily on estimated time incurred and/or activities associated with the Company. Management believes the allocations of these corporate costs from United Online were reasonable and does not believe the Company's costs would have been significantly different on a stand-alone basis prior to the Separation. However, the allocated costs may not include all of the costs that would have been incurred had the Company been a stand-alone company during the periods prior to the Separation, and accordingly, the Company's condensed consolidated financial statements may not reflect the financial position, results of operations, and cash flows had the Company been a stand-alone company during the periods prior to the Separation. | ||||||||
Costs incurred and allocated by United Online were included in the condensed consolidated statements of operations as follows (in thousands): | ||||||||
Quarter Ended | Nine Months Ended | |||||||
September 30, 2013 | ||||||||
Cost of revenues—products | $ | 62 | $ | 242 | ||||
Cost of revenues—services | 112 | 495 | ||||||
Sales and marketing | 28 | 89 | ||||||
General and administrative | 4,839 | 10,516 | ||||||
| | | | | | | | |
Total allocated expenses | $ | 5,041 | $ | 11,342 | ||||
| | | | | | | | |
| | | | | | | | |
Prior to the Separation, United Online allocated both direct costs for services provided and general corporate costs to the Company. Allocations for direct costs were reflected in the intercompany payable to United Online and were due upon demand. During the nine months ended September 30, 2013, the Company made payments totaling $7.7 million to United Online to settle intercompany charges. Allocations of general corporate costs were not settled in cash, but rather were reflected in the parent company investment. | ||||||||
In addition, in the nine months ended September 30, 2013, a dividend totaling $18.2 million was declared by FTD Companies, Inc. and paid to United Online, of which $3.2 million represented reimbursement for certain equity-related compensation expenses, as defined and permitted under the terms of the 2011 Credit Agreement (as defined in Note 6—"Financing Arrangements"). | ||||||||
Transactions with United Online for the nine months ended September 30, 2013, including both direct and general corporate costs discussed above, are summarized as follows (in thousands): | ||||||||
Cash transactions: | ||||||||
Dividends paid | $ | 18,201 | ||||||
Allocated expenses settled in cash | 8,743 | |||||||
Non-cash transactions: | ||||||||
Stock-based compensation and tax benefits from equity awards | 3,776 | |||||||
Allocated expenses not settled in cash, net | 715 | |||||||
Transactions with United Online—Post-Separation | ||||||||
In connection with the Separation, FTD entered into various agreements with United Online, including The Separation and Distribution Agreement, The Transition Services Agreement, The Tax Sharing Agreement, and The Employee Matters Agreement. These agreements, which became effective on November 1, 2013, govern the relationship between United Online and the Company after the Separation, and set forth, among other things, the rights and obligations of FTD and United Online regarding the Separation including: the rights and obligations related to tax payments and the administration of tax matters post-Separation; transitional services to be provided by United Online after the Separation; the rights and authority of United Online to control and settle certain litigation as disclosed in Note 14—"Contingencies—Legal Matters;" and the treatment of certain employee matters. The transition services were completed on April 15, 2014. | ||||||||
The I.S. Group Limited | ||||||||
Interflora holds a 20.4% investment in The I.S. Group Limited ("I.S. Group"), which totaled $1.8 million and $1.6 million at September 30, 2014 and December 31, 2013, respectively, and is included in other assets in the condensed consolidated balance sheets. The share of equity earnings was not material for separate presentation in these condensed consolidated financial statements. 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) the sale of products (sourced from a subsidiary of I.S. Group) to I.S. Group for which revenue is recognized on a net basis, (iii) commissions on products sold by I.S. Group (sourced from third-party suppliers) to floral network members, and (iv) 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 $0.7 million and $0.6 million in the quarters ended September 30, 2014 and 2013, respectively, and $2.3 million and $2.1 million for the nine months ended September 30, 2014 and 2013, 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 less than $0.1 million in the quarters ended September 30, 2014 and 2013, and was $0.2 million and $0.3 million for the nine months ended September 30, 2014 and 2013, respectively. Amounts due from I.S. Group were $0.5 million at both September 30, 2014, and December 31, 2013 and amounts payable to I.S. Group were $1.4 million at both September 30, 2014 and December 31, 2013. | ||||||||
GOODWILL_INTANGIBLE_ASSETS_AND
GOODWILL, INTANGIBLE ASSETS, AND OTHER LONG-LIVED ASSETS | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||
GOODWILL, INTANGIBLE ASSETS, AND OTHER LONG-LIVED ASSETS | ' | |||||||||||||||||||
GOODWILL, INTANGIBLE ASSETS, AND OTHER LONG-LIVED ASSETS | ' | |||||||||||||||||||
5. GOODWILL, INTANGIBLE ASSETS, AND OTHER LONG-LIVED ASSETS | ||||||||||||||||||||
Goodwill | ||||||||||||||||||||
The changes in the net carrying amount of goodwill for the nine months ended September 30, 2014 were as follows (in thousands): | ||||||||||||||||||||
Consumer | Florist | International | Total | |||||||||||||||||
Segment | Segment | Segment | ||||||||||||||||||
Goodwill at December 31, 2013 | $ | 133,226 | $ | 109,651 | $ | 98,063 | $ | 340,940 | ||||||||||||
Foreign currency translation | — | — | (2,038 | ) | (2,038 | ) | ||||||||||||||
| | | | | | | | | | | | | | |||||||
Goodwill at September 30, 2014 | $ | 133,226 | $ | 109,651 | 96,025 | 338,902 | ||||||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
In 2008, the Company recorded an impairment charge of $116.3 million. The table above reflects the Company's goodwill balances net of this accumulated impairment charge. The gross goodwill balance was $455.2 million at September 30, 2014. | ||||||||||||||||||||
Intangible Assets | ||||||||||||||||||||
Intangible assets are primarily related to the acquisition of the Company by United Online in August 2008 and consist of the following (in thousands): | ||||||||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||||||||
Gross | Accumulated | Net | Gross | Accumulated | Net | |||||||||||||||
Value | Amortization | Value | Amortization | |||||||||||||||||
Complete technology | $ | 41,815 | $ | (41,714 | ) | $ | 101 | $ | 41,959 | $ | (41,761 | ) | $ | 198 | ||||||
Customer contracts and relationships | 105,974 | (105,669 | ) | 305 | 106,409 | (94,679 | ) | 11,730 | ||||||||||||
Trademarks and trade names | 159,359 | (243 | ) | 159,116 | 160,340 | (171 | ) | 160,169 | ||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | $ | 307,148 | $ | (147,626 | ) | $ | 159,522 | $ | 308,708 | $ | (136,611 | ) | $ | 172,097 | ||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
The Company's trademarks and trade names are primarily indefinite-lived for which there is no associated amortization expense or accumulated amortization. At September 30, 2014 and December 31, 2013, such indefinite-lived assets, after impairment and foreign currency translation adjustments, totaled $158.4 million and $159.3 million, respectively. | ||||||||||||||||||||
Estimated future intangible assets amortization expense at September 30, 2014 was as follows (in thousands): | ||||||||||||||||||||
October - December 2014 | $ | 154 | ||||||||||||||||||
Year ending December 31, 2015 | 334 | |||||||||||||||||||
Year ending December 31, 2016 | 142 | |||||||||||||||||||
Year ending December 31, 2017 | 102 | |||||||||||||||||||
Year ending December 31, 2018 | 101 | |||||||||||||||||||
Year ending December 31, 2019 | 101 | |||||||||||||||||||
Thereafter | 234 | |||||||||||||||||||
| | | | | ||||||||||||||||
Total | $ | 1,168 | ||||||||||||||||||
| | | | | ||||||||||||||||
| | | | | ||||||||||||||||
FINANCING_ARRANGEMENTS
FINANCING ARRANGEMENTS | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
FINANCING ARRANGEMENTS | ' | ||||
FINANCING ARRANGEMENTS | ' | ||||
6. FINANCING ARRANGEMENTS | |||||
Amended and Restated Credit Agreement | |||||
On July 17, 2013, FTD Companies, Inc. entered into a credit agreement (the "2013 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 (in such capacity, the "Administrative Agent"), which provided for a $350 million five-year revolving credit facility. On July 17, 2013, FTD Companies, Inc. drew $220 million of the new $350 million revolving credit facility and used this, together with approximately $19 million of its existing cash balance, to repay amounts outstanding under the 2011 Credit Agreement (as defined below) in full and pay fees and expenses related to the 2013 Credit Agreement. The 2011 Credit Agreement was terminated in connection with the entry into the 2013 Credit Agreement. | |||||
In connection with the signing of the Stock Purchase Agreement relating to the Acquisition, the Company entered into a financing commitment letter (the "Commitment Letter"). Pursuant to the terms of the Commitment Letter, on September 19, 2014, the Company entered into an amendment to the 2013 Credit Agreement (the "Credit Agreement Amendment"), with Interflora, the guarantors party thereto, the lenders party thereto (the "Lenders"), and the Administrative Agent. The Credit Agreement Amendment amended and restated the 2013 Credit Agreement in its entirety (as amended and restated, the "Amended and Restated Credit Agreement"). Among other things, the Amended and Restated Credit Agreement provides for a term loan in an aggregate principal amount of $200 million and sets forth the terms and conditions under which a revolving loan advance (the "Acquisition Advance") would be made available to finance the cash portion of the Acquisition purchase price. | |||||
The proceeds of the term loan were used to repay a portion of outstanding revolving loans under the Amended and Restated Credit Agreement. The commitments of the Lenders to fund the Acquisition Advance are subject to certain limited conditions set forth in the Amended and Restated Credit Agreement. | |||||
The obligations under the Amended and Restated 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 Amended and Restated 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 interest rates applicable to borrowings under the Amended and Restated Credit Agreement are based on either LIBOR plus a margin ranging from 1.50% per annum to 2.50% per annum, or a base rate plus a margin ranging from 0.50% per annum to 1.50% per annum, calculated according to the Company's net leverage ratio. The initial base rate margin was 0.75% per annum and the initial LIBOR margin was 1.75% per annum. In addition, the Company pays a commitment fee ranging from 0.20% per annum to 0.40% per annum on the unused portion of the revolving credit facility. The interest rates (based on LIBOR) at September 30, 2014 under the term loan and the revolving credit facility were 1.98% and 1.90%, respectively. The commitment fee rate at September 30, 2014 was 0.25%. The Amended and Restated 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, and asset sales, and the Company's ability to incur additional debt and additional liens. | |||||
The term loan is subject to quarterly amortization payments and customary mandatory prepayments under certain conditions. The outstanding balance of the term loan and all amounts outstanding under the revolving credit facility are due upon maturity in September 2019. The future minimum principal payments through the maturity date of the Amended and Restated Credit Agreement were as follows at September 30, 2014 (in thousands): | |||||
Year Ending December 31 | |||||
2015 | $ | 20,000 | |||
2016 | 20,000 | ||||
2017 | 20,000 | ||||
2018 | 20,000 | ||||
2019 | 140,000 | ||||
| | | | | |
Total | $ | 220,000 | |||
| | | | | |
| | | | | |
At September 30, 2014, the remaining borrowing capacity under the Amended and Restated Credit Agreement, which was reduced by $1.3 million in outstanding letters of credit, was $328.7 million, of which $121 million was designated to fund the Acquisition Advance. | |||||
2011 Credit Agreement | |||||
Prior to entering into the 2013 Credit Agreement, the Company had outstanding debt under the 2011 Credit Agreement. On September 10, 2011, FTD Group entered into a credit agreement (the "2011 Credit Agreement") with Wells Fargo Bank, National Association, as Administrative Agent for the lenders, to refinance its previously outstanding credit facility. The 2011 Credit Agreement provided FTD Group with a $315 million senior secured credit facility consisting of (i) a $265 million seven-year term loan (the "2011 Term Loan") and (ii) a $50 million five-year revolving credit facility (the "2011 Revolving Credit Facility"), and certain other financial accommodations, including letters of credit. | |||||
The interest rates on both the 2011 Term Loan and the 2011 Revolving Credit Facility under the 2011 Credit Agreement were either a base rate plus 2.5% per annum, or LIBOR plus 3.5% per annum (with a LIBOR floor of 1.25% in the case of the 2011 Term Loan and step downs in the LIBOR margin on the 2011 Revolving Credit Facility depending on FTD Group's net leverage ratio). In addition, there was a commitment fee, which was equal to 0.45% per annum on the unused portion of the 2011 Revolving Credit Facility. | |||||
The refinancing of both the 2013 Credit Agreement and the 2011 Credit Agreement were accounted for in accordance with ASC 470, Debt. Losses on extinguishment of debt of $0.1 million and $2.3 million were recorded in interest expense in connection with the refinancing of the 2013 Credit Agreement and the 2011 Credit Agreement during the quarters ended September 30, 2014 and September 30, 2013, respectively. | |||||
DERIVATIVE_INSTRUMENTS
DERIVATIVE INSTRUMENTS | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
DERIVATIVE INSTRUMENTS | ' | |||||||||||||||
DERIVATIVE INSTRUMENTS | ' | |||||||||||||||
7. DERIVATIVE INSTRUMENTS | ||||||||||||||||
In March 2012, the Company entered into forward starting interest rate cap instruments based on 3-month LIBOR that are effective from January 2015 to June 2018 and have aggregated notional values totaling $130 million. The interest rate cap instruments are designated as cash flow hedges against expected future cash flows attributable to future 3-month LIBOR interest payments on a portion of the Company's outstanding borrowings. The gains or losses on the instruments are reported in other comprehensive income to the extent that they are effective and will be reclassified into earnings when the expected future cash flows, beginning in January 2015 through June 2018 and attributable to future 3-month LIBOR interest payments, are recognized in earnings. | ||||||||||||||||
The estimated fair values and notional values of outstanding derivative instruments were as follows (in thousands): | ||||||||||||||||
Estimated Fair Value of | Notional Value of | |||||||||||||||
Derivative Instruments | Derivative Instruments | |||||||||||||||
Balance Sheet | September 30, | December 31, | September 30, | December 31, | ||||||||||||
Location | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Derivative Assets: | ||||||||||||||||
Interest rate caps | Other assets | $ | 557 | $ | 1,244 | $ | 130,000 | $ | 130,000 | |||||||
Forward foreign currency exchange contracts | Other assets | $ | 2 | $ | — | $ | 2,430 | $ | — | |||||||
The Company recognized the following gains (losses) from derivatives, before tax, in other comprehensive loss (in thousands): | ||||||||||||||||
Quarter Ended | Nine Months | |||||||||||||||
September 30, | Ended | |||||||||||||||
September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Derivatives Designated as Cash Flow Hedging Instruments: | ||||||||||||||||
Interest rate caps | $ | (7 | ) | $ | (368 | ) | $ | (687 | ) | $ | 469 | |||||
Derivatives Designated as Net Investment Hedging Instruments: | ||||||||||||||||
Forward foreign currency exchange contracts | $ | — | $ | (61 | ) | $ | — | $ | 101 | |||||||
The effective portion, before tax effect, of the Company's interest rate caps designated as cash flow hedging instruments was $1.4 million and $0.7 million at September 30, 2014 and December 31, 2013, respectively. No amounts were reclassified out of accumulated other comprehensive loss during the nine months ended September 30, 2014. There was no ineffectiveness related to the Company's forward foreign currency exchange contracts designated as net investment hedging instruments for the nine months ended September 30, 2013. | ||||||||||||||||
In September 2014, the Company entered into a forward foreign currency exchange contract, notional value of $2.4 million, which was not designated as a hedging instrument. Accordingly, gains and losses related to changes in the fair value of such contract are reflected in other income (expense) in the condensed consolidated statement of operations for the quarter ended September 30, 2014. | ||||||||||||||||
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||
FAIR VALUE MEASUREMENTS | ' | |||||||||||||||||||
FAIR VALUE MEASUREMENTS | ' | |||||||||||||||||||
8. FAIR VALUE MEASUREMENTS | ||||||||||||||||||||
The following table presents estimated fair values of financial assets and derivative instruments that were required to be measured at fair value on a recurring basis (in thousands): | ||||||||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||||||||
Total | Level 1 | Level 2 | Total | Level 1 | Level 2 | |||||||||||||||
Assets: | ||||||||||||||||||||
Money market funds | $ | 61,333 | $ | 61,333 | $ | — | $ | 46,736 | $ | 46,736 | $ | — | ||||||||
Derivative assets | 559 | — | 559 | 1,244 | — | 1,244 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | $ | 61,892 | $ | 61,333 | $ | 559 | $ | 47,980 | $ | 46,736 | $ | 1,244 | ||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
The Company estimated the fair value of its long-term 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. The Company estimated a credit spread of 1.8% and 2.4% at September 30, 2014 for its term loan and revolving credit facility, respectively, and estimated a credit spread of 2.0% at December 31, 2013 for the revolving credit facility. The resulting yield-to-maturity estimate for the term loan and the revolving credit facility was 3.6% and 4.2%, respectively, at September 30, 2014 and was 3.5% for the revolving credit facility at December 31, 2013. The table below summarizes the carrying amounts and estimated fair values for long-term debt (in thousands): | ||||||||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||||||||
Estimated | Estimated | |||||||||||||||||||
Carrying | Fair Value | Carrying | Fair Value | |||||||||||||||||
Amount | Level 2 | Amount | Level 2 | |||||||||||||||||
Total debt | $ | 220,000 | $ | 220,000 | $ | 220,000 | $ | 220,658 | ||||||||||||
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. | ||||||||||||||||||||
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2014 | |
STOCKHOLDERS' EQUITY | ' |
STOCKHOLDERS' EQUITY | ' |
9. STOCKHOLDERS' EQUITY | |
Common Stock Repurchases | |
On February 27, 2014, the Company's Board of Directors authorized a common stock repurchase program (the "Program") that allows FTD Companies, Inc. to repurchase up to $50 million of FTD common stock from time to time over a two-year period in both open market and privately negotiated transactions. As of September 30, 2014, the Company had not repurchased any shares under the Program. | |
Upon vesting of restricted stock units ("RSUs") or exercise of stock options, the Company does not collect the minimum statutory withholding taxes in cash from employees. Instead, the Company automatically withholds, from the RSUs that vest or stock options 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 considered repurchases under the Program. The Company then pays the minimum statutory withholding taxes in cash. During the nine months ended September 30, 2014, 164,786 RSUs vested for which 57,200 shares were withheld to cover the minimum statutory withholding taxes of $1.8 million. | |
INCENTIVE_COMPENSATION_PLANS
INCENTIVE COMPENSATION PLANS | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
INCENTIVE COMPENSATION PLANS | ' | |||||||||||||
INCENTIVE COMPENSATION PLANS | ' | |||||||||||||
10. INCENTIVE COMPENSATION PLANS | ||||||||||||||
The FTD Companies, Inc. Amended and Restated 2013 Incentive Compensation Plan (the "2013 Plan"), which became effective upon the Separation, authorizes the granting of awards to employees and non-employee directors, including stock options, stock appreciation rights, RSUs and other stock-based awards. Under the 2013 Plan, 1.6 million shares of FTD common stock have been reserved for issuance of awards. At September 30, 2014, 0.3 million shares were available for issuance under the 2013 Plan. In addition, in January 2014, eligible employees of the Company were able to begin participating in the FTD Amended and Restated 2013 Employee Stock Purchase Plan (the "ESPP"). On October 30, 2014, the FTD Board of Directors approved the termination of the ESPP, which termination will be effective as of May 1, 2015, following the close of the six-month purchase interval under the ESPP that ends on April 30, 2015. | ||||||||||||||
On March 11, 2014, the Company granted RSUs and stock options to certain employees totaling 0.2 million and 0.2 million shares, respectively. The RSUs and stock options granted will generally vest in four equal annual installments beginning on February 15, 2015. The stock options were granted with an exercise price of $31.40, the market value of the underlying stock on the grant date. | ||||||||||||||
Prior to November 1, 2013, the Company's employees were generally eligible to participate in the stock-based compensation plans of United Online. Under these plans, certain employees of the Company received grants of RSUs and stock options for United Online common stock. In connection with the Separation, equity awards previously granted under these stock-based compensation plans, and outstanding at the Separation date, were adjusted and converted into new equity awards under the 2013 Plan. Additionally, all eligible Company employees were provided the opportunity to participate in United Online's employee stock purchase plan prior to the Separation. | ||||||||||||||
The following table summarizes the non-cash stock-based compensation incurred under the 2013 Plan and the United Online stock-based compensation plans that has been included in the condensed consolidated statements of operations (in thousands): | ||||||||||||||
Quarter Ended | Nine Months | |||||||||||||
September 30, | Ended | |||||||||||||
September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Cost of revenues | $ | 39 | $ | 11 | $ | 98 | $ | 42 | ||||||
Sales and marketing | 668 | 475 | 1,828 | 1,349 | ||||||||||
General and administrative | 1,239 | 500 | 3,583 | 1,428 | ||||||||||
| | | | | | | | | | | | | | |
Total stock-based compensation | $ | 1,946 | $ | 986 | $ | 5,509 | $ | 2,819 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
For the quarter and nine months ended September 30, 2013, allocated expenses from United Online include stock-based compensation of $0.3 million and $0.8 million, respectively, for the employees of United Online whose cost of services were partially allocated to the Company. These costs are not reflected in the table above; however, these costs are included in general and administrative expenses in the condensed consolidated statements of operations. For additional information related to costs allocated to the Company by United Online, see Note 4—"Transactions with Related Parties." | ||||||||||||||
INCOME_TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2014 | |
INCOME TAXES | ' |
INCOME TAXES | ' |
11. INCOME TAXES | |
The Company recorded a $2.2 million tax benefit for the quarter ended September 30, 2014 on pre-tax income of $2.4 million. The benefit resulted primarily from the release of $2.8 million of the valuation allowance related to foreign tax credits during the quarter, partially offset by the treatment of non-deductible costs related to the Acquisition. | |
The Company's effective income tax rate for the nine months ended September 30, 2014 of 30% was lower than the U.S. federal statutory tax rate of 35% primarily due to the reduction in the valuation allowance during the period, partially offset by the treatment of non-deductible costs related to the Acquisition. | |
EARNINGS_PER_SHARE
EARNINGS PER SHARE | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
EARNINGS PER SHARE | ' | |||||||||||||
EARNINGS PER SHARE | ' | |||||||||||||
12. EARNINGS PER SHARE | ||||||||||||||
Certain of the Company's RSUs are considered participating securities because they contain a non-forfeitable right to dividends, irrespective of whether dividends are actually declared or paid or the awards ultimately vest. Accordingly, the Company computes earnings 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 per common share (in thousands, except per share amounts): | ||||||||||||||
Quarter Ended | Nine Months | |||||||||||||
September 30, | Ended | |||||||||||||
September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Numerator: | ||||||||||||||
Net income | $ | 4,614 | $ | 180 | $ | 18,943 | $ | 14,955 | ||||||
Income allocated to participating securities | (108 | ) | — | (420 | ) | — | ||||||||
| | | | | | | | | | | | | | |
Net income attributable to common stockholders | $ | 4,506 | $ | 180 | $ | 18,523 | $ | 14,955 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Denominator: | ||||||||||||||
Basic average common shares outstanding | 18,949 | 18,584 | 18,921 | 18,584 | ||||||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Add: Dilutive effect of non-participating securities | 63 | — | 51 | — | ||||||||||
| | | | | | | | | | | | | | |
Diluted average common shares outstanding | 19,012 | 18,584 | 18,972 | 18,584 | ||||||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Basic earnings per common share | $ | 0.24 | $ | 0.01 | $ | 0.98 | $ | 0.8 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Diluted earnings per common share | $ | 0.24 | $ | 0.01 | $ | 0.98 | $ | 0.8 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Immediately prior to the Separation, the authorized shares of FTD Companies, Inc. capital stock were increased from 10,000 to 65,000,000, divided into 60,000,000 shares of FTD common stock, par value $0.0001 per share, and 5,000,000 shares of preferred stock, par value $0.0001 per share. The 10,000 shares of FTD common stock, par value $0.01 per share, that were previously issued and outstanding were, upon the Separation, automatically reclassified as and became 18,583,927 shares of FTD common stock, par value $0.0001 per share. In connection with the Separation, on November 1, 2013, holders of United Online common stock received one share of FTD common stock for every five shares of United Online common stock held on October 10, 2013, the record date. The same number of shares was used to calculate basic and diluted earnings per share for the periods prior to the Separation since no FTD stock-based awards were outstanding prior to the Separation. | ||||||||||||||
The diluted earnings per common share computations exclude stock options and RSUs, which are antidilutive. Weighted-average antidilutive shares for the quarter and nine months ended September 30, 2014 were 0.3 million and 0.2 million, respectively. | ||||||||||||||
RESTRUCTURING_AND_OTHER_EXIT_C
RESTRUCTURING AND OTHER EXIT COSTS | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
RESTRUCTURING AND OTHER EXIT COSTS | ' | ||||
RESTRUCTURING AND OTHER EXIT COSTS | ' | ||||
13. RESTRUCTURING AND OTHER EXIT COSTS | |||||
Restructuring and other exit costs were as follows (in thousands): | |||||
Accrued restructuring and other exit costs at December 31, 2013 | $ | 166 | |||
Restructuring and other exit costs | 220 | ||||
Cash paid for restructuring and other exit costs | (370 | ) | |||
Other | (16 | ) | |||
| | | | | |
Accrued restructuring and other exit costs at September 30, 2014 | $ | — | |||
| | | | | |
| | | | | |
During the nine months ended September 30, 2014, the Company paid $0.4 million of restructuring and other exit costs related to the closure of all six concession stands located within garden centers in the U.K. of which $0.2 million was accrued at December 31, 2013. The Company did not record or pay any restructuring and other exit costs during the nine months ended September 30, 2013. | |||||
CONTINGENCIESLEGAL_MATTERS
CONTINGENCIES-LEGAL MATTERS | 9 Months Ended |
Sep. 30, 2014 | |
CONTINGENCIES-LEGAL MATTERS | ' |
CONTINGENCIES-LEGAL MATTERS | ' |
14. CONTINGENCIES—LEGAL MATTERS | |
In 2010, FTD.COM and Classmates, Inc. (a wholly-owned subsidiary of United Online) received subpoenas from the Attorney General for the State of Kansas and the Attorney General for the State of Maryland, respectively. These subpoenas were issued on behalf of a Multistate Work Group that consists of the Attorneys General for the following states: Alabama, Alaska, Delaware, Florida, Idaho, Illinois, Kansas, Maine, Maryland, Michigan, Nebraska, New Mexico, New Jersey, North Dakota, Ohio, Oregon, Pennsylvania, South Dakota, Texas, Vermont, Washington, and Wisconsin. The primary focus of the inquiry concerns certain post-transaction sales practices in which these companies previously engaged with certain third-party vendors. In the second quarter of 2012, FTD.COM and Classmates, Inc. received an offer of settlement from the Multistate Work Group consisting of certain injunctive relief and the consideration of two areas of monetary relief: (1) restitution to consumers and (2) a $20 million payment by these companies for the violations alleged by the Multistate Work Group and to reimburse the Multistate Work Group for its investigation costs. FTD.COM and Classmates, Inc. rejected the Multistate Work Group's offer. FTD.COM and Classmates, Inc. have since had ongoing discussions with the Multistate Work Group regarding a negotiated resolution, with the most recent proposal made by the companies on September 19, 2014 to resolve the matter without admitting liability by making a settlement payment of $7 million and $2 million (capped) restitution by Classmates, Inc. to a group of purchasers of its subscription services. On October 20, 2014, the Multistate Work Group responded to the companies' September 19, 2014 offer with a counter offer seeking a payment from FTD.COM and Classmates, Inc. of $9 million and restitution from Classmates, Inc. of $4 million. FTD.COM and Classmates, Inc. have not yet responded to the Multistate Work Group's latest counter offer. While the companies anticipate that settlement discussions will be ongoing, there can be no assurances as to the terms on which the companies and the Multistate Work Group may agree to settle this matter, or that any settlement of this matter may be reached. If no settlement is reached, certain Attorneys General of the Multistate Work Group may file litigation against FTD.COM and Classmates, Inc. and, in the event of litigation, FTD.COM intends to vigorously defend itself. | |
The Company cannot predict the outcome of these or any other governmental investigations or other legal actions or their potential implications for its business. There are no assurances that additional governmental investigations or other legal actions will not be instituted in connection with the Company's former post-transaction sales practices or other current or former business practices. | |
In December 2008, Interflora, Inc. (in which the Company has a two- thirds ownership interest) and Interflora issued proceedings against Marks and Spencer plc ("Marks and Spencer") seeking injunctive relief, damages, interest, and costs in an action claiming infringement of U.K. trademark registration number 1329840 and European Community trademark registration number 909838, both for the word "Interflora". Marks and Spencer did not make a counterclaim. In July 2009, the High Court of Justice of England and Wales (the "High Court"), referred certain questions to the Court of Justice of European Union ("CJEU") for a preliminary ruling. In September 2011, the CJEU handed down its judgment on the questions referred by the High Court. In February 2012, the High Court scheduled the trial for April 2013. In September 2012, Interflora executed an indemnity agreement by which Interflora agreed to indemnify Interflora, Inc. against all losses and expenses arising out of this action which Interflora, Inc. may incur after July 10, 2012. The trial in this matter concluded in April 2013. In May 2013, the High Court ruled that Marks and Spencer infringed the Interflora trademarks. In June 2013, the High Court issued an injunction prohibiting Marks and Spencer from infringing the Interflora trademarks in specified jurisdictions and ordered Marks and Spencer to provide certain disclosures in order for damages to be quantified. The High Court granted Marks and Spencer permission to appeal the ruling. The appeal was heard by the Court of Appeal at a hearing held July 8-10, 2014. On November 5, 2014, the Court of Appeal issued its judgment upholding the appeal but did not determine the case in favor of either party, and instead remitted the case for a retrial by the High Court. On November 12, 2014, the Court of Appeal determined the order from its judgment, which will become effective as of November 18, 2014, setting aside the order of the High Court from June of 2013. Pursuant to the order, Interflora must make an interim payment of $0.3 million to Marks and Spencer towards the cost of the appeal and repay the $1.8 million payment on account of its costs of the first High Court trial that Marks and Spencer was ordered to pay to Interflora in 2013. The part of the order lifting the injunction prohibiting Marks and Spencer from infringing the Interflora trademarks is suspended until November 21, 2014. On November 12, 2014, Interflora made an application to the High Court to extend the injunction until the retrial of the action. The hearing for such application has been set for November 19, 2014. No date has been set for the retrial. | |
The Separation and Distribution Agreement which was executed between FTD and United Online in connection with the Separation provides United Online with the right to control the litigation and settlement of certain litigation matters that relate to United Online, its predecessors and its consolidated subsidiaries and the Company, its predecessors and its consolidated subsidiaries, and which were asserted before the Separation, as well as specified litigation matters which are asserted after the Separation. These matters include the ongoing matters relating to the Company's former post-transaction sales practices or other current or former business practices described above. The Separation and Distribution Agreement also provides for the allocation of liabilities and expenses between United Online and the Company with respect to these matters. It also establishes procedures with respect to claims subject to indemnification, insurance claims, and related matters. The Company and United Online may not prevail in existing or future claims and any judgments against the Company, or settlement or resolution of such claims may involve the payment of significant sums, including damages, fines, penalties, or assessments, or changes to the Company's business practices. | |
The Company records a liability when it believes that it is both probable that a loss will be 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 amount of liability that has been previously accrued, 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. At September 30, 2014 and December 31, 2013, the Company had reserves totaling $2.7 million and $0.8 million, respectively, 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. | |
SUPPLEMENTAL_CASH_FLOW_INFORMA
SUPPLEMENTAL CASH FLOW INFORMATION | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
SUPPLEMENTAL CASH FLOW INFORMATION | ' | |||||||
SUPPLEMENTAL CASH FLOW INFORMATION | ' | |||||||
15. SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||
The following table sets forth supplemental cash flow disclosures (in thousands): | ||||||||
Nine Months Ended | ||||||||
September 30, | ||||||||
2014 | 2013 | |||||||
Cash paid for interest | $ | 4,307 | $ | 6,620 | ||||
Cash paid for income taxes, net | 14,281 | 19,300 |
DESCRIPTION_OF_BUSINESS_BASIS_1
DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, ACCOUNTING POLICIES, AND RECENT ACCOUNTING PRONOUNCEMENTS (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, ACCOUNTING POLICIES, AND RECENT ACCOUNTING PRONOUNCEMENTS | ' |
Proposed Acquisition | ' |
Proposed Acquisition | |
On July 30, 2014, FTD entered into a stock purchase agreement (the "Stock Purchase Agreement") with Liberty Interactive Corporation ("Liberty") and Provide Commerce Inc. ("Provide Commerce") pursuant to which the Company will acquire from Liberty all of the issued and outstanding shares of Provide Commerce's common stock (the "Acquisition") for an aggregate purchase price of approximately $430 million. The purchase price consists of $121 million in cash and 10.2 million shares of FTD common stock, which is the number of shares that would equal 35% of the post-closing issued and outstanding shares of FTD common stock (based on the number of shares issued and outstanding on July 29, 2014). On September 4, 2014 FTD received notice of early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, with respect to the proposed Acquisition. Termination of the waiting period satisfies one of the conditions required for completion of the Acquisition. The closing of the Acquisition is subject to customary closing conditions, including the approval of FTD stockholders of the issuance of shares of FTD common stock in connection with the Acquisition. The definitive proxy statement related to the special meeting of our stockholders to be held on December 11, 2014 to obtain this approval was filed with the U.S. Securities and Exchange Commission (the "SEC") on November 3, 2014. The Company expects the Acquisition to be completed by January 1, 2015, although there can be no assurance that the Acquisition will occur within the expected timeframe or at all. The Stock Purchase Agreement contains certain termination rights for both FTD and Liberty. | |
Basis of Presentation | ' |
Basis of Presentation | |
These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"), including those for interim financial information, and with the instructions for Quarterly Reports on Form 10-Q and Article 10 of Regulation S-X issued by the SEC. Accordingly, such financial statements do not include all of the information and disclosures required by GAAP for complete financial statements. Significant intercompany accounts and transactions, other than those with the Company's former parent, United Online, have been eliminated in consolidation. The condensed consolidated financial statements, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair presentation of financial position and operating results for the periods presented. The results of operations for such periods are not necessarily indicative of the results expected for any future periods. The condensed consolidated balance sheet information at December 31, 2013, was derived from the Company's audited consolidated financial statements, included in the Company's Annual Report on Form 10-K ("Form 10-K") for the year ended December 31, 2013, but does not include all of the disclosures required by GAAP. | |
The condensed consolidated financial statements reflect the historical financial position, results of operations, and cash flows of the Company. The condensed consolidated financial statements for the period prior to the Separation include expense allocations for certain corporate functions performed by United Online. Management believes the assumptions underlying such financial statements, including the assumptions regarding the allocation of corporate expenses from United Online, are reasonable. Nevertheless, the condensed consolidated financial statements may not reflect the Company's consolidated financial position, results of operations, and cash flows, had the Company been a stand-alone company prior to the Separation. For additional information related to costs allocated to the Company by United Online and the settlement of such costs, see Note 4—"Transactions with Related Parties." Actual costs that would have been incurred if the Company had been a stand-alone company prior to the Separation, would depend on multiple factors, including organizational structures and strategic decisions made in various areas, including information technology and infrastructure. | |
The preparation of condensed consolidated 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 condensed 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. The most significant areas of the condensed consolidated financial statements that require management's judgment include the Company's revenue recognition, goodwill, indefinite-lived intangible assets and other long-lived assets, allowance for doubtful accounts, income taxes, software capitalization, and legal contingencies. | |
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, 2013. | |
Emerging Growth Company Reporting Requirements | ' |
"Emerging Growth Company" Reporting Requirements | |
The Company qualifies as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act. As an "emerging growth company," the Company has elected to take advantage of the extended transition period for complying with new or revised accounting standards until such standards are also applicable to private companies. As a result of this election, the Company's consolidated financial statements may not be comparable to companies that comply with non-emerging growth companies' effective dates for such new or revised standards. | |
Recent Accounting Pronouncements | ' |
Recent Accounting Pronouncements | |
In July 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, as codified in FASB Accounting Standards Codification ("ASC") 740, Income Taxes. The amendments in this update state that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. However, to the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. This ASU applies to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. The amendments in this ASU will be effective for the Company for fiscal years, and interim periods within those years, beginning after December 15, 2014. Early adoption is permitted. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. The Company does not expect this update to have a material impact on its consolidated financial statements. | |
In May 2014, FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, as codified in ASC 606. The amendments in this update affect any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. The amendments in this update require an entity to recognize revenue related to the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in this ASU will be effective for the Company for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is not permitted. The Company is currently assessing the impact of this update on its consolidated financial statements. | |
SEGMENT_INFORMATION_Tables
SEGMENT INFORMATION (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
SEGMENT INFORMATION | ' | |||||||||||||
Schedule of reconciliation of segment revenues to consolidated revenues | ' | |||||||||||||
Below is a reconciliation of segment revenues to consolidated revenues (in thousands): | ||||||||||||||
Quarter Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Products revenues: | ||||||||||||||
Consumer | $ | 54,714 | $ | 52,820 | $ | 238,383 | $ | 244,092 | ||||||
Florist | 10,123 | 10,606 | 37,023 | 37,977 | ||||||||||
International | 32,381 | 28,291 | 117,454 | 102,912 | ||||||||||
| | | | | | | | | | | | | | |
Segment products revenues | $ | 97,218 | $ | 91,717 | $ | 392,860 | $ | 384,981 | ||||||
Services revenues: | ||||||||||||||
Florist | $ | 26,115 | $ | 25,477 | $ | 87,038 | $ | 87,009 | ||||||
International | 4,998 | 4,472 | 16,757 | 15,305 | ||||||||||
| | | | | | | | | | | | | | |
Segment services revenues | 31,113 | $ | 29,949 | 103,795 | $ | 102,314 | ||||||||
Intersegment eliminations | (3,231 | ) | (3,139 | ) | (13,608 | ) | (14,206 | ) | ||||||
| | | | | | | | | | | | | | |
Consolidated revenues | $ | 125,100 | $ | 118,527 | $ | 483,047 | $ | 473,089 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Schedule of intersegment revenues | ' | |||||||||||||
Intersegment revenues were as follows (in thousands): | ||||||||||||||
Quarter Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Intersegment revenues: | ||||||||||||||
Consumer | $ | (3,166 | ) | $ | (3,084 | ) | $ | (13,362 | ) | $ | (14,001 | ) | ||
Florist | (65 | ) | (55 | ) | (246 | ) | (205 | ) | ||||||
| | | | | | | | | | | | | | |
Total intersegment revenues | $ | (3,231 | ) | $ | (3,139 | ) | $ | (13,608 | ) | $ | (14,206 | ) | ||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Schedule of reconciliation of segment operating income to consolidated operating income and income before income taxes | ' | |||||||||||||
Below is a reconciliation of segment operating income to consolidated operating income and income before income taxes (in thousands): | ||||||||||||||
Quarter Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Segment operating income(a): | ||||||||||||||
Consumer | $ | 5,060 | $ | 5,361 | $ | 23,738 | $ | 27,262 | ||||||
Florist | 10,660 | 10,094 | 35,906 | 36,004 | ||||||||||
International | 3,763 | 3,508 | 15,330 | 13,560 | ||||||||||
| | | | | | | | | | | | | | |
Total segment operating income | 19,483 | 18,963 | 74,974 | 76,826 | ||||||||||
Unallocated expenses(b) | (10,292 | ) | (8,596 | ) | (25,130 | ) | (20,073 | ) | ||||||
Depreciation expense and amortization of intangible assets | (5,268 | ) | (7,923 | ) | (19,297 | ) | (25,151 | ) | ||||||
| | | | | | | | | | | | | | |
Operating income | 3,923 | 2,444 | 30,547 | 31,602 | ||||||||||
Interest expense, net | (1,413 | ) | (3,914 | ) | (3,894 | ) | (9,954 | ) | ||||||
Other (expense) income, net | (74 | ) | 25 | 398 | 265 | |||||||||
| | | | | | | | | | | | | | |
Income (loss) before income taxes | $ | 2,436 | $ | (1,445 | ) | $ | 27,051 | $ | 21,913 | |||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
(a) | ||||||||||||||
Segment operating income is operating income excluding depreciation, amortization, litigation and dispute settlement charges or gains, transaction-related costs, and restructuring and other exit costs. Stock-based compensation and general corporate expenses are not allocated to the segments. Segment operating income is prior to intersegment eliminations and excludes other income (expense). | ||||||||||||||
(b) | ||||||||||||||
Unallocated expenses include various corporate costs, such as corporate finance, legal, and human resources costs, and certain direct and general corporate costs allocated from United Online prior to the Separation. In addition, unallocated expenses include stock-based compensation for all eligible Company employees, as well as stock-based compensation for employees of United Online who provided services to the Company prior to the Separation, restructuring and other exit costs, transaction-related costs, and litigation and dispute settlement charges or gains. | ||||||||||||||
Schedule of geographic revenues to external customers | ' | |||||||||||||
Geographic revenues to external customers were as follows for the periods presented (in thousands): | ||||||||||||||
Quarter Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
U.S. | $ | 87,721 | $ | 85,764 | $ | 348,836 | $ | 354,872 | ||||||
U.K. | 37,379 | 32,763 | 134,211 | 118,217 | ||||||||||
| | | | | | | | | | | | | | |
Consolidated revenues | $ | 125,100 | $ | 118,527 | $ | 483,047 | $ | 473,089 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Schedule of geographic information for long-lived assets | ' | |||||||||||||
Geographic information for long-lived assets, which consist of property and equipment and other assets, was as follows (in thousands): | ||||||||||||||
September 30, | December 31, | |||||||||||||
2014 | 2013 | |||||||||||||
U.S. | $ | 39,285 | $ | 38,439 | ||||||||||
U.K. | 7,765 | 8,425 | ||||||||||||
| | | | | | | | |||||||
Total long-lived assets | $ | 47,050 | $ | 46,864 | ||||||||||
| | | | | | | | |||||||
| | | | | | | | |||||||
BALANCE_SHEET_COMPONENTS_Table
BALANCE SHEET COMPONENTS (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
BALANCE SHEET COMPONENTS | ' | |||||||
Schedule of credit quality of financing receivables | ' | |||||||
Credit quality of financing receivables was as follows (in thousands): | ||||||||
September 30, | December 31, | |||||||
2014 | 2013 | |||||||
Current | $ | 11,091 | $ | 11,649 | ||||
Past due | 3,254 | 3,295 | ||||||
| | | | | | | | |
Total | $ | 14,345 | $ | 14,944 | ||||
| | | | | | | | |
| | | | | | | | |
Schedule of aging of past due financing receivables | ' | |||||||
The aging of past due financing receivables was as follows (in thousands): | ||||||||
September 30, | December 31, | |||||||
2014 | 2013 | |||||||
1 - 150 days past due | 202 | 169 | ||||||
151 - 364 days past due | 151 | 159 | ||||||
365 - 730 days past due | 236 | 335 | ||||||
731 or more days past due | 2,665 | 2,632 | ||||||
| | | | | | | | |
Total | $ | 3,254 | $ | 3,295 | ||||
| | | | | | | | |
| | | | | | | | |
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): | ||||||||
Nine Months Ended | ||||||||
September 30, | ||||||||
2014 | 2013 | |||||||
Allowance for credit losses: | ||||||||
Balance at January 1 | $ | 3,213 | $ | 3,464 | ||||
Provision | 178 | 74 | ||||||
Write-offs charged against allowance | (216 | ) | (237 | ) | ||||
| | | | | | | | |
Balance at September 30 | $ | 3,175 | $ | 3,301 | ||||
| | | | | | | | |
| | | | | | | | |
Ending balance collectively evaluated for impairment | $ | 3,157 | $ | 3,297 | ||||
| | | | | | | | |
| | | | | | | | |
Ending balance individually evaluated for impairment | $ | 18 | $ | 4 | ||||
| | | | | | | | |
| | | | | | | | |
Recorded investments in financing receivables: | ||||||||
Balance collectively evaluated for impairment | $ | 3,294 | $ | 3,414 | ||||
| | | | | | | | |
| | | | | | | | |
Balance individually evaluated for impairment | $ | 11,051 | $ | 11,845 | ||||
| | | | | | | | |
| | | | | | | | |
Schedule of property and equipment | ' | |||||||
Property and equipment consisted of the following (in thousands): | ||||||||
September 30, | December 31, | |||||||
2014 | 2013 | |||||||
Land and improvements | $ | 1,623 | $ | 1,628 | ||||
Buildings and improvements | 16,243 | 16,168 | ||||||
Computer equipment | 22,270 | 20,545 | ||||||
Computer software | 33,002 | 29,977 | ||||||
Furniture and fixtures | 3,808 | 3,958 | ||||||
| | | | | | | | |
76,946 | 72,276 | |||||||
Accumulated depreciation | (47,035 | ) | (40,022 | ) | ||||
| | | | | | | | |
Total | $ | 29,911 | $ | 32,254 | ||||
| | | | | | | | |
| | | | | | | | |
TRANSACTIONS_WITH_RELATED_PART1
TRANSACTIONS WITH RELATED PARTIES (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
TRANSACTIONS WITH RELATED PARTIES | ' | |||||||
Schedule of costs incurred and allocated by United Online, included in the condensed consolidated statements of operations | ' | |||||||
Costs incurred and allocated by United Online were included in the condensed consolidated statements of operations as follows (in thousands): | ||||||||
Quarter Ended | Nine Months Ended | |||||||
September 30, 2013 | ||||||||
Cost of revenues—products | $ | 62 | $ | 242 | ||||
Cost of revenues—services | 112 | 495 | ||||||
Sales and marketing | 28 | 89 | ||||||
General and administrative | 4,839 | 10,516 | ||||||
| | | | | | | | |
Total allocated expenses | $ | 5,041 | $ | 11,342 | ||||
| | | | | | | | |
| | | | | | | | |
Summary of transactions with United Online, including both direct and general corporate costs | ' | |||||||
Transactions with United Online for the nine months ended September 30, 2013, including both direct and general corporate costs discussed above, are summarized as follows (in thousands): | ||||||||
Cash transactions: | ||||||||
Dividends paid | $ | 18,201 | ||||||
Allocated expenses settled in cash | 8,743 | |||||||
Non-cash transactions: | ||||||||
Stock-based compensation and tax benefits from equity awards | 3,776 | |||||||
Allocated expenses not settled in cash, net | 715 |
GOODWILL_INTANGIBLE_ASSETS_AND1
GOODWILL, INTANGIBLE ASSETS, AND OTHER LONG-LIVED ASSETS (Tables) | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||
GOODWILL, INTANGIBLE ASSETS, AND OTHER LONG-LIVED ASSETS | ' | |||||||||||||||||||
Schedule of changes in the net carrying amount of goodwill | ' | |||||||||||||||||||
The changes in the net carrying amount of goodwill for the nine months ended September 30, 2014 were as follows (in thousands): | ||||||||||||||||||||
Consumer | Florist | International | Total | |||||||||||||||||
Segment | Segment | Segment | ||||||||||||||||||
Goodwill at December 31, 2013 | $ | 133,226 | $ | 109,651 | $ | 98,063 | $ | 340,940 | ||||||||||||
Foreign currency translation | — | — | (2,038 | ) | (2,038 | ) | ||||||||||||||
| | | | | | | | | | | | | | |||||||
Goodwill at September 30, 2014 | $ | 133,226 | $ | 109,651 | 96,025 | 338,902 | ||||||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
Schedule of intangible assets | ' | |||||||||||||||||||
Intangible assets are primarily related to the acquisition of the Company by United Online in August 2008 and consist of the following (in thousands): | ||||||||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||||||||
Gross | Accumulated | Net | Gross | Accumulated | Net | |||||||||||||||
Value | Amortization | Value | Amortization | |||||||||||||||||
Complete technology | $ | 41,815 | $ | (41,714 | ) | $ | 101 | $ | 41,959 | $ | (41,761 | ) | $ | 198 | ||||||
Customer contracts and relationships | 105,974 | (105,669 | ) | 305 | 106,409 | (94,679 | ) | 11,730 | ||||||||||||
Trademarks and trade names | 159,359 | (243 | ) | 159,116 | 160,340 | (171 | ) | 160,169 | ||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | $ | 307,148 | $ | (147,626 | ) | $ | 159,522 | $ | 308,708 | $ | (136,611 | ) | $ | 172,097 | ||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Schedule of estimated future intangible assets amortization expense | ' | |||||||||||||||||||
Estimated future intangible assets amortization expense at September 30, 2014 was as follows (in thousands): | ||||||||||||||||||||
October - December 2014 | $ | 154 | ||||||||||||||||||
Year ending December 31, 2015 | 334 | |||||||||||||||||||
Year ending December 31, 2016 | 142 | |||||||||||||||||||
Year ending December 31, 2017 | 102 | |||||||||||||||||||
Year ending December 31, 2018 | 101 | |||||||||||||||||||
Year ending December 31, 2019 | 101 | |||||||||||||||||||
Thereafter | 234 | |||||||||||||||||||
| | | | | ||||||||||||||||
Total | $ | 1,168 | ||||||||||||||||||
| | | | | ||||||||||||||||
| | | | | ||||||||||||||||
FINANCING_ARRANGEMENTS_Tables
FINANCING ARRANGEMENTS (Tables) | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
FINANCING ARRANGEMENTS | ' | ||||
Schedule of future minimum principal payments | ' | ||||
The future minimum principal payments through the maturity date of the Amended and Restated Credit Agreement were as follows at September 30, 2014 (in thousands): | |||||
Year Ending December 31 | |||||
2015 | $ | 20,000 | |||
2016 | 20,000 | ||||
2017 | 20,000 | ||||
2018 | 20,000 | ||||
2019 | 140,000 | ||||
| | | | | |
Total | $ | 220,000 | |||
| | | | | |
| | | | | |
DERIVATIVE_INSTRUMENTS_Tables
DERIVATIVE INSTRUMENTS (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
DERIVATIVE INSTRUMENTS | ' | |||||||||||||||
Schedule of estimated fair values and notional values of outstanding derivative instruments | ' | |||||||||||||||
The estimated fair values and notional values of outstanding derivative instruments were as follows (in thousands): | ||||||||||||||||
Estimated Fair Value of | Notional Value of | |||||||||||||||
Derivative Instruments | Derivative Instruments | |||||||||||||||
Balance Sheet | September 30, | December 31, | September 30, | December 31, | ||||||||||||
Location | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Derivative Assets: | ||||||||||||||||
Interest rate caps | Other assets | $ | 557 | $ | 1,244 | $ | 130,000 | $ | 130,000 | |||||||
Forward foreign currency exchange contracts | Other assets | $ | 2 | $ | — | $ | 2,430 | $ | — | |||||||
Schedule of gains (losses) from derivatives, before tax, recognized in other comprehensive loss | ' | |||||||||||||||
The Company recognized the following gains (losses) from derivatives, before tax, in other comprehensive loss (in thousands): | ||||||||||||||||
Quarter Ended | Nine Months | |||||||||||||||
September 30, | Ended | |||||||||||||||
September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Derivatives Designated as Cash Flow Hedging Instruments: | ||||||||||||||||
Interest rate caps | $ | (7 | ) | $ | (368 | ) | $ | (687 | ) | $ | 469 | |||||
Derivatives Designated as Net Investment Hedging Instruments: | ||||||||||||||||
Forward foreign currency exchange contracts | $ | — | $ | (61 | ) | $ | — | $ | 101 |
FAIR_VALUE_MEASUREMENTS_Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||
FAIR VALUE MEASUREMENTS | ' | |||||||||||||||||||
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 derivative instruments that were required to be measured at fair value on a recurring basis (in thousands): | ||||||||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||||||||
Total | Level 1 | Level 2 | Total | Level 1 | Level 2 | |||||||||||||||
Assets: | ||||||||||||||||||||
Money market funds | $ | 61,333 | $ | 61,333 | $ | — | $ | 46,736 | $ | 46,736 | $ | — | ||||||||
Derivative assets | 559 | — | 559 | 1,244 | — | 1,244 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | $ | 61,892 | $ | 61,333 | $ | 559 | $ | 47,980 | $ | 46,736 | $ | 1,244 | ||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
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 long-term debt (in thousands): | ||||||||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||||||||
Estimated | Estimated | |||||||||||||||||||
Carrying | Fair Value | Carrying | Fair Value | |||||||||||||||||
Amount | Level 2 | Amount | Level 2 | |||||||||||||||||
Total debt | $ | 220,000 | $ | 220,000 | $ | 220,000 | $ | 220,658 |
INCENTIVE_COMPENSATION_PLANS_T
INCENTIVE COMPENSATION PLANS (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
INCENTIVE COMPENSATION PLANS | ' | |||||||||||||
Summary of the non-cash stock-based compensation, incurred under the 2013 Plan and the United Online stock-based compensation plans | ' | |||||||||||||
The following table summarizes the non-cash stock-based compensation incurred under the 2013 Plan and the United Online stock-based compensation plans that has been included in the condensed consolidated statements of operations (in thousands): | ||||||||||||||
Quarter Ended | Nine Months | |||||||||||||
September 30, | Ended | |||||||||||||
September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Cost of revenues | $ | 39 | $ | 11 | $ | 98 | $ | 42 | ||||||
Sales and marketing | 668 | 475 | 1,828 | 1,349 | ||||||||||
General and administrative | 1,239 | 500 | 3,583 | 1,428 | ||||||||||
| | | | | | | | | | | | | | |
Total stock-based compensation | $ | 1,946 | $ | 986 | $ | 5,509 | $ | 2,819 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
EARNINGS_PER_SHARE_Tables
EARNINGS PER SHARE (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
EARNINGS PER SHARE | ' | |||||||||||||
Schedule of computation of basic and diluted earnings per common share | ' | |||||||||||||
The following table sets forth the computation of basic and diluted earnings per common share (in thousands, except per share amounts): | ||||||||||||||
Quarter Ended | Nine Months | |||||||||||||
September 30, | Ended | |||||||||||||
September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Numerator: | ||||||||||||||
Net income | $ | 4,614 | $ | 180 | $ | 18,943 | $ | 14,955 | ||||||
Income allocated to participating securities | (108 | ) | — | (420 | ) | — | ||||||||
| | | | | | | | | | | | | | |
Net income attributable to common stockholders | $ | 4,506 | $ | 180 | $ | 18,523 | $ | 14,955 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Denominator: | ||||||||||||||
Basic average common shares outstanding | 18,949 | 18,584 | 18,921 | 18,584 | ||||||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Add: Dilutive effect of non-participating securities | 63 | — | 51 | — | ||||||||||
| | | | | | | | | | | | | | |
Diluted average common shares outstanding | 19,012 | 18,584 | 18,972 | 18,584 | ||||||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Basic earnings per common share | $ | 0.24 | $ | 0.01 | $ | 0.98 | $ | 0.8 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Diluted earnings per common share | $ | 0.24 | $ | 0.01 | $ | 0.98 | $ | 0.8 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
RESTRUCTURING_AND_OTHER_EXIT_C1
RESTRUCTURING AND OTHER EXIT COSTS (Tables) | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
RESTRUCTURING AND OTHER EXIT COSTS | ' | ||||
Schedule of restructuring and other exit costs | ' | ||||
Restructuring and other exit costs were as follows (in thousands): | |||||
Accrued restructuring and other exit costs at December 31, 2013 | $ | 166 | |||
Restructuring and other exit costs | 220 | ||||
Cash paid for restructuring and other exit costs | (370 | ) | |||
Other | (16 | ) | |||
| | | | | |
Accrued restructuring and other exit costs at September 30, 2014 | $ | — | |||
| | | | | |
| | | | | |
SUPPLEMENTAL_CASH_FLOW_INFORMA1
SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
SUPPLEMENTAL CASH FLOW INFORMATION | ' | |||||||
Schedule of supplemental cash flow disclosures | ' | |||||||
The following table sets forth supplemental cash flow disclosures (in thousands): | ||||||||
Nine Months Ended | ||||||||
September 30, | ||||||||
2014 | 2013 | |||||||
Cash paid for interest | $ | 4,307 | $ | 6,620 | ||||
Cash paid for income taxes, net | 14,281 | 19,300 |
DESCRIPTION_OF_BUSINESS_BASIS_2
DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, ACCOUNTING POLICIES, AND RECENT ACCOUNTING PRONOUNCEMENTS (Details) (USD $) | 9 Months Ended | 0 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Jul. 30, 2014 | Jul. 30, 2014 | Nov. 02, 2013 | Sep. 30, 2014 |
item | Provide Commerce | Provide Commerce | United Online | Interflora, Inc. | |
Forecast Acquisition | item | ||||
Description of business | ' | ' | ' | ' | ' |
Number of floral shops | 40,000 | ' | ' | ' | ' |
Number of countries in which floral shops are located | 150 | ' | ' | ' | ' |
Number of retail shops owned or operated | 1 | ' | ' | ' | ' |
Portion of operation of subsidiary owned by third party (as a percent) | ' | ' | ' | ' | 33.00% |
Number of independent publicly traded companies | ' | ' | ' | 2 | ' |
Aggregate purchase price | ' | $430 | ' | ' | ' |
Cash paid | ' | ' | $121 | ' | ' |
Number of shares issued as consideration | ' | ' | 10.2 | ' | ' |
Stock portion of purchase price as percentage of issued and outstanding total number of shares of common stock of the entity | ' | ' | 35.00% | ' | ' |
SEGMENT_INFORMATION_Details
SEGMENT INFORMATION (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
item | ||||
SEGMENT INFORMATION | ' | ' | ' | ' |
Number of operating and reportable segments prior to the separation | ' | ' | 1 | ' |
Number of operating and reportable segments | ' | ' | 3 | ' |
Segment revenues | ' | ' | ' | ' |
Products revenues | $94,052 | $88,633 | $379,498 | $370,980 |
Services revenues | 31,048 | 29,894 | 103,549 | 102,109 |
Total revenues | 125,100 | 118,527 | 483,047 | 473,089 |
Operating segments | ' | ' | ' | ' |
Segment revenues | ' | ' | ' | ' |
Products revenues | 97,218 | 91,717 | 392,860 | 384,981 |
Services revenues | 31,113 | 29,949 | 103,795 | 102,314 |
Operating segments | Consumer | ' | ' | ' | ' |
Segment revenues | ' | ' | ' | ' |
Products revenues | 54,714 | 52,820 | 238,383 | 244,092 |
Operating segments | Florist | ' | ' | ' | ' |
Segment revenues | ' | ' | ' | ' |
Products revenues | 10,123 | 10,606 | 37,023 | 37,977 |
Services revenues | 26,115 | 25,477 | 87,038 | 87,009 |
Operating segments | International | ' | ' | ' | ' |
Segment revenues | ' | ' | ' | ' |
Products revenues | 32,381 | 28,291 | 117,454 | 102,912 |
Services revenues | 4,998 | 4,472 | 16,757 | 15,305 |
Intersegment eliminations | ' | ' | ' | ' |
Segment revenues | ' | ' | ' | ' |
Total revenues | -3,231 | -3,139 | -13,608 | -14,206 |
Intersegment eliminations | Consumer | ' | ' | ' | ' |
Segment revenues | ' | ' | ' | ' |
Total revenues | -3,166 | -3,084 | -13,362 | -14,001 |
Intersegment eliminations | Florist | ' | ' | ' | ' |
Segment revenues | ' | ' | ' | ' |
Total revenues | ($65) | ($55) | ($246) | ($205) |
SEGMENT_INFORMATION_Details_2
SEGMENT INFORMATION (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Income before income taxes | ' | ' | ' | ' |
Operating income | $3,923 | $2,444 | $30,547 | $31,602 |
Depreciation expense and amortization of intangible assets | -5,268 | -7,923 | -19,297 | -25,151 |
Interest expense, net | -1,413 | -3,914 | -3,894 | -9,954 |
Other (expense) income, net | -74 | 25 | 398 | 265 |
Income (loss) before income taxes | 2,436 | -1,445 | 27,051 | 21,913 |
Operating segments | ' | ' | ' | ' |
Income before income taxes | ' | ' | ' | ' |
Operating income | 19,483 | 18,963 | 74,974 | 76,826 |
Operating segments | Consumer | ' | ' | ' | ' |
Income before income taxes | ' | ' | ' | ' |
Operating income | 5,060 | 5,361 | 23,738 | 27,262 |
Operating segments | Florist | ' | ' | ' | ' |
Income before income taxes | ' | ' | ' | ' |
Operating income | 10,660 | 10,094 | 35,906 | 36,004 |
Operating segments | International | ' | ' | ' | ' |
Income before income taxes | ' | ' | ' | ' |
Operating income | 3,763 | 3,508 | 15,330 | 13,560 |
Unallocated amounts | ' | ' | ' | ' |
Income before income taxes | ' | ' | ' | ' |
Unallocated expenses | ($10,292) | ($8,596) | ($25,130) | ($20,073) |
SEGMENT_INFORMATION_Details_3
SEGMENT INFORMATION (Details 3) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 |
Segment information | ' | ' | ' | ' | ' |
Revenues | $125,100 | $118,527 | $483,047 | $473,089 | ' |
Long-lived assets | 47,050 | ' | 47,050 | ' | 46,864 |
U.S. | ' | ' | ' | ' | ' |
Segment information | ' | ' | ' | ' | ' |
Revenues | 87,721 | 85,764 | 348,836 | 354,872 | ' |
Long-lived assets | 39,285 | ' | 39,285 | ' | 38,439 |
U.K. | ' | ' | ' | ' | ' |
Segment information | ' | ' | ' | ' | ' |
Revenues | 37,379 | 32,763 | 134,211 | 118,217 | ' |
Long-lived assets | $7,765 | ' | $7,765 | ' | $8,425 |
BALANCE_SHEET_COMPONENTS_Detai
BALANCE SHEET COMPONENTS (Details) (USD $) | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Credit quality of financing receivables | ' | ' | ' |
Current | $11,091,000 | ' | $11,649,000 |
Past due | 3,254,000 | ' | 3,295,000 |
Total | 14,345,000 | ' | 14,944,000 |
Past due: | ' | ' | ' |
1-150 days past due | 202,000 | ' | 169,000 |
151-364 days past due | 151,000 | ' | 159,000 |
365-730 days past due | 236,000 | ' | 335,000 |
731 or more days past due | 2,665,000 | ' | 2,632,000 |
Total | 3,254,000 | ' | 3,295,000 |
Financing receivables on nonaccrual status | 3,300,000 | ' | 3,400,000 |
Allowance for credit losses: | ' | ' | ' |
Balance at the beginning of the period | 3,213,000 | 3,464,000 | ' |
Provision | 178,000 | 74,000 | ' |
Write-offs charged against allowance | -216,000 | -237,000 | ' |
Balance at the end of the period | 3,175,000 | 3,301,000 | ' |
Ending balance collectively evaluated for impairment | 3,157,000 | 3,297,000 | ' |
Ending balance individually evaluated for impairment | 18,000 | 4,000 | ' |
Recorded investments in financing receivables: | ' | ' | ' |
Balance collectively evaluated for impairment | 3,294,000 | 3,414,000 | ' |
Balance individually evaluated for impairment | 11,051,000 | 11,845,000 | ' |
Individually evaluated impaired loans | ' | ' | ' |
Allowance related to individually evaluated impaired loans | 18,000 | 4,000 | ' |
Maximum | ' | ' | ' |
Allowance for credit losses: | ' | ' | ' |
Ending balance individually evaluated for impairment | 100,000 | ' | 100,000 |
Individually evaluated impaired loans | ' | ' | ' |
Recorded investment in individually evaluated impaired loans | 100,000 | ' | 100,000 |
Unpaid principal balance related to individually evaluated impaired loans | 100,000 | ' | 100,000 |
Allowance related to individually evaluated impaired loans | 100,000 | ' | 100,000 |
Average recorded investment in individually evaluated impaired loans | 100,000 | 100,000 | ' |
Interest income recognized on impaired loans | $100,000 | $100,000 | ' |
BALANCE_SHEET_COMPONENTS_Detai1
BALANCE SHEET COMPONENTS (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Property and equipment | ' | ' | ' | ' | ' |
Property and equipment, gross | $76,946,000 | ' | $76,946,000 | ' | $72,276,000 |
Accumulated depreciation | -47,035,000 | ' | -47,035,000 | ' | -40,022,000 |
Total | 29,911,000 | ' | 29,911,000 | ' | 32,254,000 |
Depreciation expense | 2,500,000 | 2,200,000 | 7,700,000 | 6,600,000 | ' |
Land and improvements | ' | ' | ' | ' | ' |
Property and equipment | ' | ' | ' | ' | ' |
Property and equipment, gross | 1,623,000 | ' | 1,623,000 | ' | 1,628,000 |
Buildings and improvements | ' | ' | ' | ' | ' |
Property and equipment | ' | ' | ' | ' | ' |
Property and equipment, gross | 16,243,000 | ' | 16,243,000 | ' | 16,168,000 |
Computer equipment | ' | ' | ' | ' | ' |
Property and equipment | ' | ' | ' | ' | ' |
Property and equipment, gross | 22,270,000 | ' | 22,270,000 | ' | 20,545,000 |
Computer software | ' | ' | ' | ' | ' |
Property and equipment | ' | ' | ' | ' | ' |
Property and equipment, gross | 33,002,000 | ' | 33,002,000 | ' | 29,977,000 |
Furniture and fixtures | ' | ' | ' | ' | ' |
Property and equipment | ' | ' | ' | ' | ' |
Property and equipment, gross | $3,808,000 | ' | $3,808,000 | ' | $3,958,000 |
TRANSACTIONS_WITH_RELATED_PART2
TRANSACTIONS WITH RELATED PARTIES (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Transactions with related parties | ' | ' | ' | ' | ' |
Cost of revenues - products | $71,097,000 | $67,667,000 | $290,049,000 | $283,427,000 | ' |
Cost of revenues - services | 4,983,000 | 4,802,000 | 15,343,000 | 14,519,000 | ' |
Sales and marketing | 22,650,000 | 21,184,000 | 82,596,000 | 79,194,000 | ' |
General and administrative | 19,737,000 | 16,709,000 | 52,674,000 | 45,823,000 | ' |
Total operating expenses | 121,177,000 | 116,083,000 | 452,500,000 | 441,487,000 | ' |
Cash transactions: | ' | ' | ' | ' | ' |
Dividends paid | ' | ' | ' | 18,201,000 | ' |
Non-cash transactions: | ' | ' | ' | ' | ' |
Allocated expenses not settled in cash | ' | ' | ' | 715,000 | ' |
United Online | ' | ' | ' | ' | ' |
Transactions with related parties | ' | ' | ' | ' | ' |
Cost of revenues - products | ' | 62,000 | ' | 242,000 | ' |
Cost of revenues - services | ' | 112,000 | ' | 495,000 | ' |
Sales and marketing | ' | 28,000 | ' | 89,000 | ' |
General and administrative | ' | 4,839,000 | ' | 10,516,000 | ' |
Total operating expenses | ' | 5,041,000 | ' | 11,342,000 | ' |
Payments made to settle intercompany charges | ' | ' | ' | 7,700,000 | ' |
Reimbursement for certain equity-related compensation expenses | ' | ' | ' | 3,200,000 | ' |
Cash transactions: | ' | ' | ' | ' | ' |
Dividends paid | ' | ' | ' | 18,201,000 | ' |
Allocated expenses settled in cash | ' | ' | ' | 8,743,000 | ' |
Non-cash transactions: | ' | ' | ' | ' | ' |
Stock-based compensation and tax benefits from equity awards | ' | ' | ' | 3,776,000 | ' |
Allocated expenses not settled in cash | ' | ' | ' | 715,000 | ' |
I.S. Group | Interflora | ' | ' | ' | ' | ' |
Non-cash transactions: | ' | ' | ' | ' | ' |
Ownership investment in related party (as a percent) | ' | ' | 20.40% | ' | ' |
Amount of investment in related party | ' | ' | 1,800,000 | ' | 1,600,000 |
Revenues related to products sold to and commissions earned | 700,000 | 600,000 | 2,300,000 | 2,100,000 | ' |
Cost of revenues related to products purchased | ' | ' | 200,000 | 300,000 | ' |
Amounts due from related party | 500,000 | ' | 500,000 | ' | 500,000 |
Amounts payable to related party | 1,400,000 | ' | 1,400,000 | ' | 1,400,000 |
I.S. Group | Maximum | Interflora | ' | ' | ' | ' | ' |
Non-cash transactions: | ' | ' | ' | ' | ' |
Cost of revenues related to products purchased | $100,000 | $100,000 | ' | ' | ' |
GOODWILL_INTANGIBLE_ASSETS_AND2
GOODWILL, INTANGIBLE ASSETS, AND OTHER LONG-LIVED ASSETS (Details) (USD $) | 9 Months Ended | 9 Months Ended | |||||
Sep. 30, 2014 | Dec. 31, 2008 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | |
Consumer Segment | Consumer Segment | Florist Segment | Florist Segment | International Segment | |||
Changes in the net carrying amount of goodwill | ' | ' | ' | ' | ' | ' | ' |
Balance at the beginning of the period | $340,940,000 | ' | $133,226,000 | $133,226,000 | $109,651,000 | $109,651,000 | $98,063,000 |
Foreign currency translation | -2,038,000 | ' | ' | ' | ' | ' | -2,038,000 |
Balance at the end of the period | 338,902,000 | ' | 133,226,000 | 133,226,000 | 109,651,000 | 109,651,000 | 96,025,000 |
Impairment charge | ' | 116,300,000 | ' | ' | ' | ' | ' |
Gross goodwill | $455,200,000 | ' | ' | ' | ' | ' | ' |
GOODWILL_INTANGIBLE_ASSETS_AND3
GOODWILL, INTANGIBLE ASSETS, AND OTHER LONG-LIVED ASSETS (Details 2) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Intangible assets | ' | ' |
Gross Value | $307,148 | $308,708 |
Accumulated Amortization | -147,626 | -136,611 |
Net | 159,522 | 172,097 |
Complete technology | ' | ' |
Intangible assets | ' | ' |
Gross Value | 41,815 | 41,959 |
Accumulated Amortization | -41,714 | -41,761 |
Net | 101 | 198 |
Customer contracts and relationships | ' | ' |
Intangible assets | ' | ' |
Gross Value | 105,974 | 106,409 |
Accumulated Amortization | -105,669 | -94,679 |
Net | 305 | 11,730 |
Trademarks and trade names | ' | ' |
Intangible assets | ' | ' |
Gross Value | 159,359 | 160,340 |
Accumulated Amortization | -243 | -171 |
Net | $159,116 | $160,169 |
GOODWILL_INTANGIBLE_ASSETS_AND4
GOODWILL, INTANGIBLE ASSETS, AND OTHER LONG-LIVED ASSETS (Details 3) (USD $) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | |
Indefinite-lived trademarks and trade names | Indefinite-lived trademarks and trade names | |||||
FTD Group | FTD Group | |||||
United Online | United Online | |||||
Acquired indefinite-lived intangible assets | ' | ' | ' | ' | ' | ' |
Amortization expense | $2,777,000 | $5,721,000 | $11,618,000 | $18,524,000 | $0 | ' |
Acquired indefinite-lived intangible assets, net of impairment and foreign currency translation adjustments | ' | ' | ' | ' | 158,400,000 | 159,300,000 |
Estimated future intangible assets amortization expense | ' | ' | ' | ' | ' | ' |
October-December 2014 | 154,000 | ' | 154,000 | ' | ' | ' |
Year ending December 31, 2015 | 334,000 | ' | 334,000 | ' | ' | ' |
Year ending December 31, 2016 | 142,000 | ' | 142,000 | ' | ' | ' |
Year ending December 31, 2017 | 102,000 | ' | 102,000 | ' | ' | ' |
Year ending December 31, 2018 | 101,000 | ' | 101,000 | ' | ' | ' |
Year ending December 31, 2019 | 101,000 | ' | 101,000 | ' | ' | ' |
Thereafter | 234,000 | ' | 234,000 | ' | ' | ' |
Total | $1,168,000 | ' | $1,168,000 | ' | ' | ' |
FINANCING_ARRANGEMENTS_Details
FINANCING ARRANGEMENTS (Details) (USD $) | 9 Months Ended | 0 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 0 Months Ended | 0 Months Ended | ||||||||||||||||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Jul. 17, 2013 | Jul. 17, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 10, 2011 | Sep. 10, 2011 | Sep. 10, 2011 | Sep. 10, 2011 | Sep. 30, 2014 | Sep. 19, 2014 | Sep. 10, 2011 | Sep. 10, 2011 | Sep. 10, 2011 | |
Liberty and Provide Commerce | Amended and Restated Credit Agreement | Amended and Restated Credit Agreement | Amended and Restated Credit Agreement | Amended and Restated Credit Agreement | Amended and Restated Credit Agreement | Amended and Restated Credit Agreement | Amended and Restated Credit Agreement | Amended and Restated Credit Agreement | Amended and Restated Credit Agreement | Amended and Restated Credit Agreement | Amended and Restated Credit Agreement | Amended and Restated Credit Agreement | Amended and Restated Credit Agreement | Amended and Restated Credit Agreement | Amended and Restated Credit Agreement | Amended and Restated Credit Agreement | 2011 Credit Agreement | 2011 Credit Agreement | 2011 Credit Agreement | 2011 Credit Agreement | Term loan | Term loan | Term loan | Term loan | Term loan | |||
Forecast Acquisition | Maximum | Revolving credit facility | Revolving credit facility | Revolving credit facility | Revolving credit facility | Revolving credit facility | Revolving credit facility | Revolving credit facility | Revolving credit facility | Revolving credit facility | Revolving credit facility | Revolving credit facility | Revolving credit facility | Revolving credit facility | Revolving credit facility | Revolving credit facility | Revolving credit facility | Revolving credit facility | Amended and Restated Credit Agreement | Amended and Restated Credit Agreement | 2011 Credit Agreement | 2011 Credit Agreement | 2011 Credit Agreement | |||||
Maximum | Minimum | Base rate | Base rate | Base rate | Base rate | LIBOR | LIBOR | LIBOR | LIBOR | Base rate | LIBOR | Base rate | LIBOR | |||||||||||||||
Maximum | Minimum | Maximum | Minimum | |||||||||||||||||||||||||
Financing arrangements | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum borrowing capacity | ' | ' | ' | ' | ' | $350,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $50,000,000 | ' | ' | ' | ' | ' | ' | ' |
Term of debt instrument | ' | ' | ' | ' | ' | '5 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '5 years | ' | ' | ' | ' | '7 years | ' | ' |
Amount borrowed under the Revolving Credit Facility | ' | ' | ' | ' | ' | 220,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Repayments of previously outstanding credit facilities in full and fees and expenses | ' | ' | ' | ' | ' | 19,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Aggregate principal amount of term loan | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 315,000,000 | ' | ' | ' | ' | 200,000,000 | 265,000,000 | ' | ' |
Percentage of outstanding capital stock of foreign subsidiaries that is pledged as collateral for borrowings | ' | ' | ' | ' | 66.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reference rate for variable interest rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'base rate | 'base rate | ' | ' | 'LIBOR | 'LIBOR | ' | ' | ' | ' | 'base rate | 'LIBOR | ' | ' | ' | 'base rate | 'LIBOR |
Percentage points added to the reference rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.50% | 0.50% | ' | ' | 2.50% | 1.50% | ' | ' | 2.50% | 3.50% | ' | ' | ' | 2.50% | 3.50% |
Percentage points initially added to the reference rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.75% | ' | ' | ' | 1.75% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest rate (as a percent) | ' | ' | ' | ' | ' | ' | 1.90% | ' | 1.90% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.98% | ' | ' | ' | ' |
Commitment fee (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | 0.25% | 0.40% | 0.20% | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.45% | ' | ' | ' | ' | ' | ' | ' |
Future minimum principal payments, excluding required prepayments based on excess cash flows | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2015 | ' | ' | ' | 20,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2016 | ' | ' | ' | 20,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2017 | ' | ' | ' | 20,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2018 | ' | ' | ' | 20,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2019 | ' | ' | ' | 140,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total | ' | ' | ' | 220,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Letters of credit outstanding | ' | ' | ' | ' | ' | ' | 1,300,000 | ' | 1,300,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Remaining borrowing capacity | ' | ' | ' | ' | ' | ' | 328,700,000 | ' | 328,700,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Available borrowing capacity designated to fund the Acquisition Advance | ' | ' | 121,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Floor rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.25% | ' | ' |
Losses on extinguishment of debt | $101,000 | $2,348,000 | ' | ' | ' | ' | $100,000 | $2,300,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
DERIVATIVE_INSTRUMENTS_Details
DERIVATIVE INSTRUMENTS (Details) (Derivatives designated as hedging instruments, Cash flow hedging instruments, USD $) | Mar. 31, 2012 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 |
In Thousands, unless otherwise specified | Interest rate caps | Interest rate caps | Interest rate caps | Forward foreign currency exchange contracts |
Other assets | Other assets | Other assets | ||
Estimated fair values and notional values of outstanding derivative instruments | ' | ' | ' | ' |
Estimated Fair Value of Derivative Instruments, Derivative Assets | ' | $557 | $1,244 | $2 |
Notional Value of Derivative Instruments, Derivative Assets | $130,000 | $130,000 | $130,000 | $2,430 |
DERIVATIVE_INSTRUMENTS_Details1
DERIVATIVE INSTRUMENTS (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Mar. 31, 2012 | |
Derivatives designated as hedging instruments | Cash flow hedging instruments | Interest rate caps | ' | ' | ' | ' | ' | ' |
Effect of derivative instruments | ' | ' | ' | ' | ' | ' |
Gains (losses) from derivatives, before tax, recognized in other comprehensive loss | ($7,000) | ($368,000) | ($687,000) | $469,000 | ' | ' |
Effective portion, before tax effect, of the derivative instruments | 1,400,000 | ' | ' | ' | 700,000 | ' |
Notional Value of Derivative Instruments, Derivative Assets | ' | ' | ' | ' | ' | 130,000,000 |
Derivatives designated as hedging instruments | Cash flow hedging instruments | Interest rate caps | Reclassifications out of accumulated other comprehensive loss | ' | ' | ' | ' | ' | ' |
Effect of derivative instruments | ' | ' | ' | ' | ' | ' |
Gains (losses) from derivatives, before tax, recognized in other comprehensive loss | ' | ' | 0 | ' | ' | ' |
Derivatives designated as hedging instruments | Net investment hedging instruments | Forward foreign currency exchange contracts | ' | ' | ' | ' | ' | ' |
Effect of derivative instruments | ' | ' | ' | ' | ' | ' |
Gains (losses) from derivatives, before tax, recognized in other comprehensive loss | ' | -61,000 | ' | 101,000 | ' | ' |
Ineffectiveness related to the company's forward foreign currency exchange contracts | ' | ' | ' | 0 | ' | ' |
Derivatives not designated as hedging instruments | Forward foreign currency exchange contracts | ' | ' | ' | ' | ' | ' |
Effect of derivative instruments | ' | ' | ' | ' | ' | ' |
Notional Value of Derivative Instruments, Derivative Assets | $2,400,000 | ' | $2,400,000 | ' | ' | ' |
FAIR_VALUE_MEASUREMENTS_Detail
FAIR VALUE MEASUREMENTS (Details) (USD $) | 9 Months Ended | 12 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Dec. 31, 2013 |
Assets: | ' | ' |
Total debt, Carrying Amount | 205,000 | 220,000 |
Term loan | ' | ' |
Assets: | ' | ' |
Credit spread (as a percent) | 1.80% | ' |
Estimated yield-to maturity (as a percent) | 3.60% | ' |
Revolving credit facility | ' | ' |
Assets: | ' | ' |
Credit spread (as a percent) | 2.40% | 2.00% |
Estimated yield-to maturity (as a percent) | 4.20% | 3.50% |
Level 2 | ' | ' |
Assets: | ' | ' |
Total debt, Carrying Amount | 220,000 | 220,000 |
Total debt, Estimated Fair Value | 220,000 | 220,658 |
Recurring basis | Total | ' | ' |
Assets: | ' | ' |
Money market funds | 61,333 | 46,736 |
Derivative assets | 559 | 1,244 |
Total | 61,892 | 47,980 |
Recurring basis | Level 1 | ' | ' |
Assets: | ' | ' |
Money market funds | 61,333 | 46,736 |
Total | 61,333 | 46,736 |
Recurring basis | Level 2 | ' | ' |
Assets: | ' | ' |
Derivative assets | 559 | 1,244 |
Total | 559 | 1,244 |
STOCKHOLDERS_EQUITY_Details
STOCKHOLDERS' EQUITY (Details) (USD $) | 0 Months Ended | 9 Months Ended |
In Millions, except Share data, unless otherwise specified | Feb. 27, 2014 | Sep. 30, 2014 |
RSUs | ||
Common Stock Repurchases | ' | ' |
Amount authorized under stock repurchase program | $50 | ' |
Period under share repurchase programs | '2 years | ' |
Stockholders' equity | ' | ' |
Awards vested during the period (in shares) | ' | 164,786 |
Shares withheld to pay employee tax withholding | ' | 57,200 |
Value of shares withheld to pay employee tax withholding | ' | $1.80 |
INCENTIVE_COMPENSATION_PLANS_D
INCENTIVE COMPENSATION PLANS (Details) (USD $) | Sep. 30, 2014 | Mar. 11, 2014 | Mar. 11, 2014 | Oct. 30, 2014 |
In Millions, except Per Share data, unless otherwise specified | 2013 Plan | 2013 Plan | 2013 Plan | ESPP |
RSUs | Employee stock options | |||
item | item | |||
Incentive Compensation Plan | ' | ' | ' | ' |
Shares reserved for issuance | 1.6 | ' | ' | ' |
Shares available for issuance | 0.3 | ' | ' | ' |
Length of purchase interval | ' | ' | ' | '6 months |
Awards granted to certain employees (in shares) | ' | 0.2 | ' | ' |
Awards granted to certain employees (in shares) | ' | ' | 0.2 | ' |
Number of equal installments for vesting of stock awards beginning on February 15, 2015 | ' | 4 | 4 | ' |
Exercise price of awards granted (in dollars per share) | ' | ' | $31.40 | ' |
INCENTIVE_COMPENSATION_PLANS_D1
INCENTIVE COMPENSATION PLANS (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Stock-Based Compensation | ' | ' | ' | ' |
Total stock-based compensation | $1,946 | $986 | $5,509 | $2,819 |
Cost of revenues | ' | ' | ' | ' |
Stock-Based Compensation | ' | ' | ' | ' |
Total stock-based compensation | 39 | 11 | 98 | 42 |
Sales and marketing | ' | ' | ' | ' |
Stock-Based Compensation | ' | ' | ' | ' |
Total stock-based compensation | 668 | 475 | 1,828 | 1,349 |
General and administrative | ' | ' | ' | ' |
Stock-Based Compensation | ' | ' | ' | ' |
Total stock-based compensation | 1,239 | 500 | 3,583 | 1,428 |
General and administrative | United Online | ' | ' | ' | ' |
Stock-Based Compensation | ' | ' | ' | ' |
Total stock-based compensation | ' | $300 | ' | $800 |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
INCOME TAXES | ' | ' | ' | ' |
Tax benefit | ($2,178,000) | ($1,625,000) | $8,108,000 | $6,958,000 |
Pre-tax income | 2,436,000 | -1,445,000 | 27,051,000 | 21,913,000 |
Tax benefit from the release of a valuation allowance related to foreign tax credits | $2,800,000 | ' | ' | ' |
Effective income tax rate (as a percent) | ' | ' | 30.00% | ' |
U.S. federal statutory tax rate (as a percent) | ' | ' | 35.00% | ' |
EARNINGS_PER_SHARE_Details
EARNINGS PER SHARE (Details) (USD $) | 3 Months Ended | 9 Months Ended | 0 Months Ended | |||||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Oct. 31, 2013 | Nov. 02, 2013 | Oct. 31, 2013 |
United Online | Before the Separation | |||||||
Numerator: | ' | ' | ' | ' | ' | ' | ' | ' |
Net income | $4,614 | $180 | $18,943 | $14,955 | ' | ' | ' | ' |
Income allocated to participating securities | -108 | ' | -420 | ' | ' | ' | ' | ' |
Net income attributable to common stockholders | $4,506 | $180 | $18,523 | $14,955 | ' | ' | ' | ' |
Denominator: | ' | ' | ' | ' | ' | ' | ' | ' |
Basic average common shares outstanding | 18,949,000 | 18,584,000 | 18,921,000 | 18,584,000 | ' | ' | ' | ' |
Add: Dilutive effect of non-participating securities (in shares) | 63,000 | ' | 51,000 | ' | ' | ' | ' | ' |
Diluted average common shares outstanding | 19,012,000 | 18,584,000 | 18,972,000 | 18,584,000 | ' | ' | ' | ' |
Basic earnings per common share (in dollars per share) | $0.24 | $0.01 | $0.98 | $0.80 | ' | ' | ' | ' |
Diluted earnings per common share (in dollars per share) | $0.24 | $0.01 | $0.98 | $0.80 | ' | ' | ' | ' |
Earnings per share | ' | ' | ' | ' | ' | ' | ' | ' |
Aggregate number of shares authorized | ' | ' | ' | ' | ' | 65,000,000 | ' | ' |
Common shares authorized | 60,000,000 | ' | 60,000,000 | ' | 60,000,000 | 60,000,000 | ' | 10,000 |
Common shares, par value (in dollars per share) | $0.00 | ' | $0.00 | ' | $0.00 | $0.00 | ' | $0.01 |
Shares of preferred stock authorized | 5,000,000 | ' | 5,000,000 | ' | 5,000,000 | 5,000,000 | ' | ' |
Preferred shares, par value (in dollars per share) | $0.00 | ' | $0.00 | ' | $0.00 | $0.00 | ' | ' |
Common shares issued | 18,949,011 | ' | 18,949,011 | ' | 18,829,454 | 18,583,927 | ' | 10,000 |
Common shares outstanding | 18,949,011 | ' | 18,949,011 | ' | 18,829,454 | ' | ' | 10,000 |
Stockholders Equity Note Separation Transaction Exchange Ratio | ' | ' | ' | ' | ' | ' | 0.2 | ' |
Stock-based awards outstanding | ' | ' | ' | ' | ' | ' | ' | 0 |
Weighted-average antidilutive shares | 300,000 | ' | 200,000 | ' | ' | ' | ' | ' |
RESTRUCTURING_AND_OTHER_EXIT_C2
RESTRUCTURING AND OTHER EXIT COSTS (Details) (USD $) | 3 Months Ended | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2014 |
Changes in restructuring and other exit costs | ' | ' |
Accrued restructuring and other exit costs at the beginning of the period | ' | $166 |
Restructuring and other exit costs | -67 | 220 |
Cash paid for restructuring and other exit costs | ' | -370 |
Other | ' | ($16) |
Concession Closure Costs | ' | ' |
Restructuring and other exit costs | ' | ' |
Number of concession stands | ' | 6 |
CONTINGENCIESLEGAL_MATTERS_Det
CONTINGENCIES-LEGAL MATTERS (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2008 | Oct. 20, 2014 | Sep. 19, 2014 | Jun. 30, 2012 | Nov. 18, 2014 |
In Millions, unless otherwise specified | Interflora, Inc. | Offer of settlement with Multistate Work Group | Offer of settlement with Multistate Work Group | Offer of settlement with Multistate Work Group | Infringement of trademarks | ||
item | Interflora | ||||||
Contingencies-legal matters | ' | ' | ' | ' | ' | ' | ' |
Number of areas of monetary relief | ' | ' | ' | ' | ' | 2 | ' |
Initial amount sought by plaintiffs as payment | ' | ' | ' | ' | ' | $20 | ' |
Litigation settlement offered | ' | ' | ' | ' | 7 | ' | ' |
Revised counter offer by Multistate Work Group | ' | ' | ' | 9 | ' | ' | ' |
Litigation settlement restitution amount offered | ' | ' | ' | ' | 2 | ' | ' |
Litigation settlement restitution amount offered by counterparty | ' | ' | ' | 4 | ' | ' | ' |
Ownership interest (as a percent) | ' | ' | 66.00% | ' | ' | ' | ' |
Interim payment to be made towards cost of appeal | ' | ' | ' | ' | ' | ' | 0.3 |
Repayment of costs of first High Court trial that Marks and Spencer was ordered to pay to Interflora in 2013 | ' | ' | ' | ' | ' | ' | 1.8 |
Reserve for estimated losses related to certain of the matters | $2.70 | $0.80 | ' | ' | ' | ' | ' |
SUPPLEMENTAL_CASH_FLOW_INFORMA2
SUPPLEMENTAL CASH FLOW INFORMATION (Details) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Supplemental cash flow disclosures: | ' | ' |
Cash paid for interest | $4,307 | $6,620 |
Cash paid for income taxes, net | $14,281 | $19,300 |