The U.S. Department of Commerce estimates that the U.S. retail floral industry was an approximately $18 billion market in 2002 and has grown on average 4.3% per year over the last ten years.

There are an estimated 51,500 retail florists in the U.S. It is estimated that retail florists represent between 46% and 50% of the floral retail market. Approximately 50% of these florists are sole proprietorships with no external payroll.

Floral direct marketers take floral orders from consumers by telephone or through the Internet. These direct marketers represent a rapidly growing portion of the overall floral retail market and have become increasingly important in the floral delivery and direct-from-grower markets, benefiting from national exposure, online presence and prominent toll-free phone numbers. Within the floral marketing channel, Internet-sourced orders have been experiencing significantly higher growth than telephone orders due to several key factors, including consumers' preference for previewing floral orders prior to making a purchase, the ability to obtain detailed product information, the convenience of shopping online and the ability to be personally reminded of upcoming purchasing occasions.

Food retailers are becoming an increasingly important distribution channel in the floral retail market. As food retailers increasingly focus on serving a full range of everyday customer needs, supermarkets often include flowers in their merchandise assortment. There are approximately 23,000 supermarkets that sell flowers in the U.S. It is estimated that food retailers represent between 20% and 24% of the floral retail market.

The Company conducts its business through two operating segments. The Company’s Consumer Segment, primarily through the Company’s Web site and the Company’s toll-free telephone number, offers same-day delivery of floral orders to nearly 100% of the U.S. and Canadian populations. As a result of the Company’s same-day delivery capability and the Company’s broad product selection, Consumer Segment is one of the largest direct marketers of floral arrangements and specialty gifts in the U.S., generating 3.6 million orders from consumers in the fiscal year ended June 30, 2004.

The Company’s Florist Segment provides a comprehensive suite of products and services to a network of approximately 20,000 FTD-member florists. The Company’s member florists are able to expand their revenues and reduce their operating costs by participating in the inter-city floral delivery market and utilizing the Company’s business services, technology, branded merchandise and improved operating practices.

The Company’s business segments are highly complementary, as floral orders generated by the Company’s Consumer Segment are delivered by the Company’s network of member florists.

The Company’s Consumer Segment is an Internet and telephone marketer of flowers and specialty gift items to consumers, operating primarily through the Company’s Web site and the Company’s toll-free telephone number. The Company typically offers over 400 floral arrangements and over 800 specialty gift items, including plants, gourmet gifts, holiday gifts, bath and beauty products, dried flowers, gifts for the home, garden products and stuffed animals.

Costs of goods sold and services provided for the period from February 24, 2004 through June 30, 2004 and for the period from July 1, 2003 through February 23, 2004 were $88.4 million and $138.1 million, respectively.

Advertising and selling costs for the period from February 24, 2004 through June 30, 2004 and for the period from July 1, 2003 through February 23, 2004 were $29.7 million and $50.2 million, respectively.

General and administrative costs for the period from February 24, 2004 through June 30, 2004 and for the period from July 1, 2003 through February 23, 2004 were $20.2 million and $56.7 million, respectively.