Juno 2012 Annual Report Download - page 37
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Table of Contents
FTD's business is seasonal, and our quarterly revenues and operating results typically exhibit seasonality. For example, revenues and operating
results tend to be lower for the quarter ending September 30 because none of the most popular floral and gift holidays, which include Valentine's Day,
Easter, Mother's Day, Thanksgiving, and Christmas, fall within that quarter. In addition, depending on the year, Easter and the U.K. Mother's Day
sometimes fall within the quarter ending March 31 and sometimes fall within the quarter ending June 30.
Our operating results may suffer if revenues during our peak seasons do not meet expectations, as we may not generate sufficient revenues to
offset increased costs incurred in preparation for peak seasons. Our working capital, cash and short-term borrowings also fluctuate during the year as a
result of the factors set forth above. Moreover, the operational risks described elsewhere in these risk factors may be significantly exacerbated if those
risks were to occur during a peak season.
The cost of revenues associated with our products revenues is generally higher than that associated with our services revenues. In addition, the cost
of revenues associated with certain products and services may be higher than that associated with other products and services. As a result, changes in
the proportion of FTD segment revenues that is represented by products revenues versus services revenues, and certain types of products and services
versus others, may adversely affect our revenues, cost of revenues, cost of revenues as a percentage of revenues, and segment income from operations.
Due to economic conditions and for competitive and other reasons, we have been offering broader and greater discounts to the consumer, both on a
promotional basis to consumers generally, as well as through strategic arrangements with third parties that have a fixed, and in certain cases greater,
discount or other associated costs. We also offer discounts on our floral network service fees from time to time on a promotional basis. Shifts in the mix
of products and services sold that have resulted in increases in the proportion of products and services sold at a discount, and at times at greater
discounts, including through such strategic arrangements, have resulted, and may in the future result, in reduced revenues, an increase in cost of
revenues as a percentage of revenues, and a decrease in segment income from operations. We currently intend to continue selling a portion of our
products and services at a discount, including through such strategic arrangements, and there are no assurances that the portion of products and services
sold at a discount will not continue to increase. The continued use of discounts, including through such strategic arrangements, for our products and
services may result in our becoming more reliant upon offering discounts in order to sell our products and services, which could result in our having to
reduce our standard pricing, and may adversely impact our financial results.
Many factors, such as weather conditions, agricultural limitations, restrictions relating to the management of pests and disease, and fair trade and
other social or environmental issues, affect the supply of flowers and the price of our floral products. If the supply of flowers available for sale is
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