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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2004

FOR THE TRANSITION PERIOD FROM              to             

Commission File Number 333-113807

FTD, Inc.

(Exact Name of Registrant as Specified in Its Charter)

3113 WOODCREEK DRIVE

DOWNERS GROVE, IL 60515-5420

(Address of Principal Executive Offices)

(630) 719-7800

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No x

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

As of May 19, 2004, there were 100 outstanding shares of the Registrant’s common stock, par value $.01 per share.

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FTD, Inc.

INDEX TO FORM 10-Q

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PART I. FINANCIAL INFORMATION

FTD, Inc.

CONSOLIDATED BALANCE SHEETS

(in thousands)

See accompanying Notes to Consolidated Financial Statements.

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FTD, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(in thousands)

See accompanying Notes to Consolidated Financial Statements.

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FTD, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(in thousands)

See accompanying Notes to Consolidated Financial Statements.

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FTD, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

See accompanying Notes to Consolidated Financial Statements.

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FTD, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Note 1. Description of Business

FTD, Inc. (the “Registrant” or the “Company”) is a Delaware corporation that commenced operations in 1994. As used in the Notes to the Consolidated Financial Statements, the terms the “Registrant” or the “Company” refer to FTD, Inc., including its wholly-owned subsidiary, Florists’ Transworld Delivery, Inc., a Michigan corporation (“FTD” or the “Operating Company”). The operations of FTD, the Company’s principal operating subsidiary, include those of its wholly-owned subsidiaries, FTD.COM INC. (“FTD.COM”) and Florists’ Transworld Delivery Association of Canada, Ltd., and its indirect wholly-owned subsidiary, Renaissance Greeting Cards, Inc. (“Renaissance”). Substantially all of the Company’s operations are conducted through FTD and its subsidiaries.

On February 24, 2004 the Company completed a merger transaction with an affiliate of Leonard Green & Partners, L.P. In the merger, Nectar Merger Corporation, which was a wholly-owned subsidiary of Mercury Man Holdings Corporation, merged with and into FTD, Inc. with FTD, Inc. continuing as the surviving corporation (“the 2004 Merger”). As a result of the 2004 Merger, the Company ceased to have its equity publicly traded and became a wholly owned subsidiary of Mercury Man Holdings Corporation, an affiliate of Green Equity Investors IV, L.P., a private investment fund affiliated with Leonard Green & Partners, L.P. See Note 3 for further detail. The results of operations presented herein for all periods prior to the 2004 Merger are sometimes referred to as the results of operations of the “Predecessor.”

Note 2. Basis of Presentation

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission, and do not contain all information included in the audited consolidated financial statements and notes thereto for the fiscal year ended June 30, 2003. The interim unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Predecessor’s Annual Report on Form 10-K, as amended, for the fiscal year ended June 30, 2003. The accompanying consolidated financial statements include the Company’s operations for the period from February 24, 2004 through March 31, 2004 and the Predecessor’s operations prior to the 2004 Merger. In the opinion of management, the information furnished herein reflects all adjustments (consisting only of normal, recurring adjustments) necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented.

Certain amounts in the consolidated financial statements for the nine-month period ended March 31, 2003 have been reclassified to conform to the current period presentation.

Note 3. 2004 Merger with Nectar Merger Corporation

As described above, effective February 24, 2004, the Company completed the 2004 Merger with an affiliate of Leonard Green & Partners, L.P. for $421.9 million, which excludes fees that were expensed by the Predecessor. Upon consummation of the 2004 Merger, each issued and outstanding share of FTD, Inc. common stock, other than treasury shares and shares owned by Mercury Man Holdings Corporation, was cancelled and converted automatically into the right to receive $24.85 per share in cash.

The transaction was financed by a $185.4 million equity investment in the preferred and common stock of Mercury Man Holdings Corporation by Green Equity Investors IV, L.P., an affiliate of Leonard Green & Partners, L.P., and certain members of the Company’s senior management, including $0.9 million in the form of an exchange of a portion of management’s ownership in the Predecessor’s common stock, the proceeds from the issuance of $175.0 million in senior subordinated notes due 2014 (the “Notes”) and borrowings under a new $135.0 million senior secured credit facility, comprised of an $85.0 million senior secured term loan facility and a $50.0 million revolving credit facility.

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The Company accounted for the 2004 Merger using the purchase method of accounting. The purchase price was allocated to the assets acquired and the liabilities assumed as follows (in thousands):

In accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 142, Goodwill and Other Intangible Assets, the $337.1 million in goodwill recorded as part of the 2004 Merger will not be amortized and will be tested for impairment at least annually. The goodwill is not deductible for tax purposes.

The unaudited pro forma results of operations data for the three- and nine-month periods ended March 31, 2004 and 2003 as if the 2004 Merger had occurred on July 1, 2002, and excluding costs related to the 2004 Merger, are as follows (in thousands):

The above results may not be representative of future periods.

Note 4. Revenues from Sale of Floral Selections Guide

As a condition of FTD membership, all FTD florists must purchase a Floral Selections Guide, a counter display catalog featuring FTD products for all occasions, and related workbook upon the publication of a new Floral Selections Guide or upon initial membership. The purchase of the Floral Selections Guide entitles the FTD florist to a non-exclusive, non-transferable right for on-premise use of the Floral Selections Guide for as long as the purchaser remains an FTD florist in good standing. There are no refund provisions associated with the purchase of the Floral Selections Guide. Historically, the Company has provided de minimis refunds in isolated cases. Revenue from the sales of the Floral Selections Guide during the three-and nine-month periods ended March 31, 2003 was $0.1 million and $5.1 million, respectively.

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Beginning in fiscal year 2004, new FTD members are charged a monthly fee, and beginning with the distribution of the next Floral Selections Guide in fiscal year 2005, all FTD members will be charged a monthly fee for the use of the Floral Selections Guide while an active FTD member. Accordingly, revenues are recorded on a monthly basis consistent with monthly fee revenues. During the three- and nine-month periods ended March 31, 2004, there were $60,000 and $111,000, of revenues related to the Floral Selections Guide, respectively.

Note 5. Financing Arrangements

$135.0 million Senior Secured Credit Facilities

In connection with the consummation of the 2004 Merger, the Company terminated its then existing senior secured credit facility and entered into a new senior secured credit facility (the “2004 Credit Agreement”) with a syndicate of financial institutions, including Credit Suisse First Boston, acting through its Cayman Islands Branch, as administrative agent, UBS Securities LLC, as syndication agent, and Wells Fargo Bank, N.A., as documentation agent.

The 2004 Credit Agreement provides for aggregate borrowings of up to $135.0 million and consists of a five-year $50.0 million revolving credit facility and a seven-year $85.0 million term loan. A portion of the revolving credit facility is available as a letter of credit sub-facility and as a swing-line facility.

Borrowings under the 2004 Credit Agreement generally bear interest based on a margin over, at the Company’s option, either the base rate (generally the applicable prime lending rate of Credit Suisse First Boston, as announced from time to time) or the London Interbank Offered Rate (“LIBOR”). For the first six months following the 2004 Merger on February 24, 2004, the applicable margin for base rate loans will be 175 basis points and for LIBOR loans will be 275 basis points. Beginning six months after the consummation of the 2004 Merger, the applicable margin for borrowings under the 2004 Credit Agreement will vary based upon the consolidated leverage ratio, as defined in the 2004 Credit Agreement.

The 2004 Credit Agreement includes covenants that, among other things, require that the Company maintain a specific ratio of consolidated earnings before interest, taxes, depreciation and amortization (subject to certain adjustments) to consolidated interest expense at the end of any fiscal quarter of no less than 2.1 to 1.0, a fixed charge coverage ratio of no less than 1.4 to 1.0 and a leverage ratio not to exceed 6.0 to 1.0. The Company was in compliance with all debt covenants as of March 31, 2004.

The Credit Agreement imposes various restrictions on the Company, including restrictions that limit the Company’s ability to incur liens or encumbrances, make investments or acquisitions, incur additional debt, enter into sale leaseback transactions, incur certain contingent liabilities, make certain restricted junior payments and other similar distributions, enter into mergers, consolidations and similar combinations, sell assets or engage in similar transfers, amend certain material agreements, including the indenture governing the notes, make capital expenditures and engage in transactions with affiliates.

There was $100.5 million in outstanding debt at March 31, 2004 under the 2004 Credit Agreement. The Company is permitted to voluntarily repay principal amounts outstanding or reduce commitments under the 2004 Credit Agreement at any time, in whole or in part, without premium or penalty, upon the giving of proper notice and subject to minimum amount requirements. In addition, subject to certain exceptions, the Company is required to prepay outstanding amounts under the 2004 Credit Agreement with a portion of its excess cash flow, the net proceeds of certain asset dispositions, casualty insurance and condemnation recovery events and upon the issuance of certain securities or debt. The term loan amortizes at $850,000 per year with the remaining balance due at maturity.

As a result of entering into the 2004 Credit Agreement, the Company recorded $4.0 million of deferred financing costs, which were allocated, pro rata, to the five-year revolving credit facility and the seven-year term loan and are being amortized straight-line over the respective terms. Additionally, $0.4 million of unamortized deferred financing costs associated with the previous credit agreement were expensed in the Predecessor’s period ended February 23, 2004. This expense is reflected in other expense in the accompanying Consolidated Statements of Operations and Comprehensive Income (Loss).

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$175.0 million 7.75% Senior Subordinated Notes due 2014

On February 6, 2004, Nectar Merger Corporation completed the issuance and sale of $175.0 million in aggregate principal amount of the Notes. The Notes will mature on February 15, 2014 and interest is payable on February 15 and August 15 of each year. The proceeds from the issuance of the Notes were used in the financing of the 2004 Merger. Upon consummation of the 2004 Merger, the Company assumed Nectar Merger Corporation’s obligations under the Notes.

The Notes are unsecured, senior subordinated obligations, ranking junior in right of payment to all of the Company’s existing and future senior indebtedness and equal in right of payment to all of the Company’s existing and future senior subordinated indebtedness. The Notes rank senior in right of payment to all of the Company’s existing and future subordinated indebtedness and are unconditionally guaranteed by the Company’s subsidiary guarantors on a senior subordinated basis.

The terms of the Notes provide for certain limitations on the Company’s ability to incur additional indebtedness and issue disqualified capital stock, make restricted payments, permit restrictions on dividends or other payment restrictions affecting subsidiaries, layer indebtedness, enter into liens securing indebtedness, enter into transactions with affiliates, enter into certain merger, sale or consolidation transactions, guarantors and the release of guarantors.

As a result of issuing the Notes, the Company recorded $6.4 million of deferred financing costs, which are being amortized straight-line over the ten-year term of the Notes.

On April 9, 2004, the Company commenced an exchange offer for the Notes pursuant to which holders of the Notes have the option of exchanging their Notes for a new series of registered notes with substantially identical terms. The exchange offer is scheduled to expire on May 20, 2004, at 5:00 p.m., Eastern Time, subject to extension at the Company’s discretion.

Note 6. Related Party Transactions

For the period January 1, 2004 to February 23, 2004 and July 1, 2003 to February 23, 2004, the Predecessor incurred expenses of $0.3 million and $1.3 million, respectively, related to the payment for management, financial and other corporate advisory services and expenses to parties related to each of Perry Acquisition Partners, L.P., Bain Capital Investors LLC and Fleet Growth Resources III, Inc., which were stockholders or affiliates of the Company prior to the 2004 Merger. The Company’s management consulting services agreement with these parties required payments aggregating $2.0 million, each fiscal year plus reimbursement of reasonable out-of-pocket expenses. The management consulting services agreement with the above listed parties terminated on February 24, 2004 upon the consummation of the 2004 Merger.

In connection with the 2004 Merger, the Company entered into a management services agreement with Leonard Green & Partners, L.P. Under the management services agreement, Leonard Green & Partners, L.P. provides management, consulting and financial planning services in exchange for an annual management fee of $2.0 million, payable in equal monthly installments commencing in March 2004. Payment of the management fees on any monthly payment date is contingent upon the Company achieving Consolidated EBITDA, as defined in the indenture governing the Notes, equal to or greater than $46.8 million for the last consecutive twelve-month period ended immediately prior to that payment date. In the event any portion of the management fee is not so paid, such amount will accrue and become due and payable in the next month when the targeted Consolidated EBITDA is obtained. The management services agreement has a ten-year term, which extends automatically on each anniversary of the agreement for one additional year unless either party gives prior notice that the term will not be extended. For the period February 24, 2004 to March 31, 2004, the Company incurred expenses of $0.2 million related to the management services agreement with Leonard Green & Partners, L.P.

In addition, the management services agreement provides for the payment to Leonard Green & Partners, L.P. of customary fees for services provided in connection with major transactions, reimbursement for reasonable out-of-pocket expenses and a closing fee of $7.0 million, which was paid upon consummation of the 2004 Merger.

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Note 7. Stock Awards and Incentive Plans

The Predecessor’s 2002 Long-Term Equity Incentive Plan (the “2002 Equity Incentive Plan”) provided for the issuance of up to 1,250,000 shares of Class A common stock, par value $0.01 per share (the “Class A Common Stock”) in connection with the granting of incentive or non-qualified stock options, stock appreciation rights (“SARs”), either alone or in tandem with options, restricted stock, performance awards, or any combination of the foregoing. The 2002 Equity Incentive Plan was terminated in connection with the 2004 Merger.

The Predecessor had not granted any SARs, limited stock appreciation rights, deferred shares, or performance awards under the 2002 Equity Incentive Plan.

Outstanding nonqualified stock options were exercisable during a ten-year period beginning one to five years after the date of grant. All outstanding options were granted with an exercise price equal to either the fair market value on the date of grant of the optionee’s first date of employment with the Predecessor.

The Predecessor would have recognized additional income, net of taxes, of $5.0 million and $4.7 million for the period from January 1, 2004 through February 23, 2004 and July 1, 2003 through February 23, 2004, respectively, and additional compensation expense, net of taxes of $0.2 million for both the three- and nine-months ended March 31, 2003 if the estimated costs of the outstanding stock options had been recorded in the Predecessor’s consolidated financial statements. As such, net income would have been reduced to the pro forma amounts shown in the table below (the pro forma disclosures shown are not representative of the future effects on net income):

The options granted during fiscal year 2003 vested equally each year over a three-year period from the date of grant. As a result, the estimated cost indicated above reflected only a partial vesting of such options. If full vesting were assumed, the estimated pro forma costs for the year would have been higher than indicated above.

During the period from July 1, 2003 through February 23, 2004, no options were granted, options to purchase 43,540 shares previously granted were canceled and options to purchase 3,360 shares were exercised. During the nine-month period ended March 31, 2003, pursuant to the terms of the 2002 Equity Incentive Plan, the options to purchase 620,200 shares of Class A Common Stock were granted at fair value, options to purchase 35,500 shares previously granted were canceled and options to purchase 23,150 shares were exercised.

During the period from July 1, 2003 through February 23, 2004, 1,218 shares of restricted stock were granted and for the nine month period ended March 31, 2003, 11,992 restricted shares were issued, at fair value, of Class A Common Stock. During the period from July 1, 2003 through February 23, 2004, 10,000 restricted shares were canceled. No restricted shares where canceled during the nine-month period ended March 31, 2003.

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Compensation expense of $51,000 and $1.3 million for the period from July 1, 2003 through February 23, 2004 and the nine months ended March 31, 2003, respectively, related to restricted stock and options is included in general and administrative expenses.

Note 8. Capital Transactions

During the period from July 1, 2003 through February 23, 2004, the Predecessor did not repurchase any shares of its Class A Common Stock. During the nine-month period ended March 31, 2003, the Predecessor repurchased 169,544 shares of Class A Common Stock at an approximate cost of $2.3 million. In addition, during the nine-month period ended March 31, 2003, the Company paid $2.0 million related to certain treasury stock repurchases made at the end of fiscal year 2002 that were payable as of June 30, 2002.

In November 2003, the Predecessor issued 139,493 shares of Class A Common Stock valued at $3.4 million in as payment for a portion of the $10.7 million settlement related to “In RE FTD.COM Inc. Shareholders Litigation.” See Note 9, Commitments and Contingencies, for additional information.

Note 9. Commitment and Contingencies

The Company, FTD, FTD.COM and the directors of the Company and FTD.COM were named as defendants in five class action lawsuits filed in the Court of Chancery for New Castle County in Wilmington, Delaware by individual stockholders of FTD.COM on behalf of all former public stockholders of FTD.COM: Frances Howland v. FTD.COM et al., Civil Action No. 19458 NC; Johnathon Anderson v. Richard Perry et al., Civil Action No. 19459 NC; Stephen Gluck v. Richard C. Perry, Civil Action No. 19461 NC; Geoff Mott v. IOS Brands Corp., Civil Action No. 19468 NC; and Highwood Partners, L.P. v. IOS Brands Corp., Civil Action No. 19556 NC. These lawsuits were filed beginning on March 5, 2002, after the press release announcing the 2002 merger with FTD.COM was issued. Shortly thereafter, the lawsuits were consolidated by the Court into a single lawsuit: Highwood Partners, L.P. v. IOS Brands, Civil Action No. 19556 NC. Subsequently, the case was renamed: “In RE FTD.COM Inc. Shareholders Litigation.” Following the consolidation of the cases, plaintiffs voluntarily dismissed one of the five combined cases with prejudice. The complaints generally make essentially the same allegations, namely that:

The Company, on behalf of all defendants, reached an agreement to settle the consolidated shareholder class actions pending in the Court of Chancery for New Castle County in Wilmington, Delaware, titled “In RE FTD.COM Inc. Shareholders Litigation.” A Stipulation and Agreement of Compromise, Settlement and Release relating to this matter has been executed (the “Stipulation and Settlement Agreement”).

The terms of the Stipulation and Settlement Agreement include no finding of wrongdoing on the part of any of the defendants, or any other finding that the claims alleged had merit. The Stipulation and Settlement Agreement was approved by the Court on November 13, 2003. The Company and the other defendants have denied, and continue to deny, that they have committed any violation of federal securities or other laws.

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Pursuant to the Stipulation and Settlement Agreement, the Company has agreed to issue shares of Class A Common Stock valued at $10.7 million in full and final settlement of the case. In connection with the settlement, the Company recorded an $11.0 million charge in the fourth quarter of fiscal year 2003 with respect to the settlement and costs related to issuing and distributing the settlement shares. In November 2003, pursuant to the court approved Stipulation and Settlement Agreement, the Company, on behalf of all defendants, distributed 139,493 shares of Class A Common Stock valued at $3.4 million as payment for a portion of the $10.7 million settlement liability. Pursuant to the terms of the Stipulation and Settlement Agreement, the Company is obligated to pay the remaining $7.3 million in cash, which payment is scheduled to be due later in 2004. Pursuant to the terms of the 2004 Credit Agreement, the Company placed $7.3 million into an escrow account at the consummation of the 2004 Merger to fund this obligation.

The Company pursued claims against the two insurance carriers, one that provided coverage to FTD and its directors and officers and another that provided coverage to FTD.COM and its directors and officers. In the second quarter of fiscal year 2004, the Company recorded a gain of $1.5 million as a result of a settlement with the insurance carrier that maintained a policy covering FTD and its directors and officers. The insurance carrier that maintained the policy covering FTD.COM and its directors and officers initiated litigation seeking to deny coverage for the shareholder lawsuits that are the subjects of the settlement, while the Company believes that FTD.COM and the individual defendants are entitled to coverage and has filed responsive pleadings accordingly including an answer and counterclaim. A motion to dismiss FTD’s counterclaims has been filed by the insurance carrier, which has been opposed by FTD.COM. The motion has been fully briefed and is awaiting judgment by the court. In the meantime, the parties are conducting necessary discovery including depositions of representatives of both parties, which are scheduled to be concluded by May 30, 2004. Any further recoveries from the insurance providers relating to the settlement will be recorded as Other Income in the period realized.

On December 30, 2003, Teleflora LLC filed a complaint in the U.S. District Court for the Northern District of California in San Jose against FTD. The complaint alleges, among other things, misappropriation of trade secrets, copyright infringement, unfair competition, intentional interference with contracts and various counts of fraud, through, among other things, unauthorized access to Teleflora LLC software by FTD. Among other things, Teleflora LLC claims that FTD “hacked” into certain of Teleflora LLC’s flower shop management software and systems licensed by individual florists and improperly modified Teleflora LLC software to permit florists to use the FTD network to process orders or credit card transactions. Teleflora LLC also claims that some florists who have licensed a Teleflora LLC shop management system were improperly induced by FTD sales representatives to cancel their agreements with Teleflora LLC and install an FTD system. Teleflora LLC is seeking compensatory damages in excess of $5.0 million as well as punitive damages and injunctive relief. FTD is completing the final stages of limited accelerated discovery in connection with a motion for preliminary injunction brought by Teleflora relating to the allegations of hacking into and modifying Teleflora flower shop software and systems to permit florists licensed on such software and systems to use the FTD network to process orders and credit card transactions. Teleflora notified FTD that it is no longer seeking preliminary injunctive relief on its contractual interference claim. Such preliminary injunction motion is presently scheduled for hearing on June 21, 2004. FTD has filed a motion to dismiss several of the claims by Teleflora in its complaint, which has been fully briefed by both sides. FTD intends to defend itself vigorously against any claims that remain in the case after the ruling on the motion to dismiss. FTD is also investigating asserting its own claims against Teleflora LLC.

In addition, the Company is involved in various lawsuits and other matters arising in the normal course of business. In the opinion of management of the Company, although the outcome of these claims and suits are uncertain, they should not have a material adverse effect on the Company’s financial condition, liquidity or results of operations.

Note 10. Segment Information

Operating segments are components of the business for which separate financial information is available that is regularly reviewed by the enterprise’s chief operating decision maker to make decisions about resources to be allocated to each segment and to assess its performance.

For purposes of managing the Company, management reviews segment financial performance to the operating income level for each of its reportable business segments. Accordingly, interest income, interest expense and tax expense are recorded on a consolidated corporate basis.

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The florist business segment includes all products and services sold to FTD member florists and other retail locations offering floral products, encompassing clearinghouse services, publishing products and services, technology sales and leases and specialty wholesaling product sales. The consumer business segment encompasses floral and specialty gift items primarily sold to consumers through the www.ftd.com Web site or the 1-800-SEND-FTD toll-free telephone number.

The Company is currently in the process of allocating its assets to the respective business segments as a result of the 2004 Merger.

The Company’s accounting policies for segments are the same as those on a consolidated basis described in Note 1, Summary of Significant Accounting Policies, of the Predecessor’s Annual Report on Form 10-K for the fiscal year ended June 30, 2003.

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The following tables detail the Company’s and the Predecessor’s operating results by reportable business segment for the three- and nine-month periods ended March 31, 2004 and 2003: