Mail Stop 3561
September 27,
2018
Steven D. Barnhart
Executive Vice President and Chief Financial Officer
FTD Companies, Inc.
3113 Woodcreek Drive
Downers Grove, Illinois 60515
Re: FTD Companies, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2017
Filed April 2, 2018
Form 10-Q for the Quarterly Period Ended June 30, 2018
Filed August 9, 2018
File No. 001-35901
Dear Mr. Barnhart:
We have reviewed your filing and have the following comments. In some
of our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If you
do not believe our
comments apply to your facts and circumstances, please tell us why in your
response.
After reviewing your response to these comments, we may have
additional comments.
Form 10-K for the Fiscal Year Ended December 31, 2017
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of
Operations
Year Ended December 31, 2017 compared to Year Ended December 31, 2016, page
41
1. We note you present certain results from your International segment
on a constant
currency basis. Please revise your disclosure to clarify that
presenting results on a
constant currency basis is a non-GAAP presentation in accordance with
Item
10(e)(1)(ii)(e) of Regulation S-K.
Steven D. Barnhart
FTD Companies, Inc.
September 27, 2018
Page 2
Critical Accounting Policies, Estimates, and Assumptions
Goodwill, Indefinite-Lived Intangible Assets, and Long-Lived Asset, page 55
2. We note that you performed goodwill impairment assessments as of
September 30, 2017,
December 31, 2017, and June 30, 2018 using a combination of the income,
cost, and
market valuation methodologies which led to material goodwill impairment
charges.
Please address the following comments:
Please tell us what, if any, cautionary disclosures regarding the
potential for a
material goodwill impairment charge you provided in filings prior to
your third
quarter Form 10-Q ended September 30, 2017. In this regard, we did
not observe any
update to your critical accounting policies in the second quarter
Form 10-Q ended
June 30, 2017. To the extent prior disclosures were not provided,
please explain why.
We note your disclosure at December 31, 2017 that the fair value of
your Personal
Creations reporting unit "reasonably" exceeded its carrying value.
Please tell us what
you meant by reasonably exceeded and the percentage by which the
fair value of the
Personal Creations reporting unit exceeded its carrying value at
December 31, 2017.
Please further explain the factors that led to the reduction of the
fair value of the
Personal Creations reporting unit such that you recognized an
impairment charge in
the second quarter of fiscal 2018.
We note that you recorded impairment charges for the
ProFlowers/Gourmet Foods
and the Consumer reporting units, which you now refer to as FTD.com,
in the third
and fourth quarters of fiscal 2017 and the second quarter of fiscal
2018. Summarize
for us the changes in circumstances and/or assumptions that led to
the multiple
impairment charges at these reporting units over a relatively short
period of time. If
you utilized multiple valuation approaches in determining fair value
for these two
reporting units, please tell us the relative weighting assigned to
each method and how
you determined the weighting was appropriate. Also, tell us whether
the weighting
changed or remained the same at each assessment date, and your basis
for any
change.
We note that in the second quarter of 2018 you state that you used
the cost approach
to calculate the fair value of the reporting unit for the
ProFlowers/Gourmet Foods
reporting unit although prior to that time you had used a
combination of the market
and income approaches. Please specifically address why you changed
to the cost
approach and why you believe that it provides the highest indication
of value for that
reporting unit.
Given the multiple impairment charges you recognized, tell us how
you considered
disclosing a sensitivity analysis that demonstrates how changes in
the key
Steven D. Barnhart
FTD Companies, Inc.
September 27, 2018
Page 3
assumptions that you disclose would impact your estimate of the fair
value of each
reporting unit. Please refer to Section V of SEC Release No.
33-8350.
3. We note you have indefinite-lived trade names and trademarks totaling
$112.5 million
and $91.3 million as of December 31, 2017 and June 30, 2018,
respectively. In the third
and fourth quarters of fiscal 2017, and the second quarter of fiscal
2018, you recorded
pre-tax impairment charges of $13.1 million, $25.2 million, and $20.4
million,
respectively. Please tell us about your evaluation of the remaining
useful life of trade
names and trademarks as of December 31, 2017 and June 30, 2018 to
determine whether
events and circumstances continue to support an indefinite useful life.
Refer to ASC 350-
30-35-16.
Income Taxes, page 58
4. Please consider expanding your disclosure to provide a more
comprehensive discussion
and analysis of the specific positive and negative evidence you
considered in determining
the realizability of the material components of your deferred tax
assets. In this regard, we
note the Company is in a cumulative three year net loss position at the
end of fiscal 2017.
Please tell us how you concluded that no significant valuation allowance
was needed.
Item 9A Controls and Procedures, page 60
5. We note the material weakness related to the control over the review of
inputs used in the
determination of the reporting unit carrying values that you identified
subsequent to the
original September 30, 2017 Form 10-Q filing. Explain to us the facts
and circumstances
that lead to the identification of this material weakness. Additionally,
tell us in more
detail the changes you made to your controls and procedures to remediate
this material
weakness. Lastly, tell us how you were able to remediate this material
weakness by year
end fiscal 2017 especially since your amended Form 10-Q for the quarter
ended
September 30, 2017 was not filed until February 26, 2018.
Form 10-Q for the Quarterly Period Ended June 30, 2018
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Liquidity and Capital Resources
Credit Agreement, page 37
6. We note that your amended credit facility entered into on May 31, 2018
revised the
consolidated net leverage ratio and fixed charge coverage ratio
covenants for each
quarterly period through the September 19, 2019 maturity date. Tell us
your
consideration of disclosing the actual and required ratios as of each
reporting date for any
material debt covenants for which it is reasonably likely that you will
not be able to meet
Steven D. Barnhart
FTD Companies, Inc.
September 27, 2018
Page 4
or which could impact your ability to obtain additional debt or equity
financing to a
material extent. See Sections I.D and IV.C of the SEC Release No.
33-8350.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Robert Babula, Staff Accountant at (202) 551-3339, or
Elizabeth
Sellars, Staff Accountant at (202) 551-3348, if you have questions regarding
comments on the
financial statements and related matters. Please contact me at (202) 551-3737
with any other
questions.
Sincerely,
/s/ Jennifer
Thompson
Jennifer Thompson
Accounting Branch
Chief
Office of Consumer
Products