2004 Annual Report
Special Bonus
2005 Celebrations
appointment book
About 1-800-FLOWERS.COM®
For more than 25 years, 1-800-FLOWERS.COM, Inc. (NASDAQ: FLWS) has been the leading innovator in the floral industry,
taking the extra step to help people connect and express themselves quickly and easily with exquisite floral gifts crafted
with care by renowned artisans and the nation’s leading florists, as well as distinctive non-floral gifts appropriate for any
occasion or sentiment. The Company provides gift solutions same day, any day, offering an unparalleled selection of flowers,
plants, gourmet foods and confections, gift baskets and other expressive, unique gifts. As always, satisfaction is guaranteed,
and customer service is paramount with quick, convenient ordering options, fast and reliable delivery and gift advisors always
available. Customers can shop 1-800-FLOWERS.COM 24-hours a day, seven-days a week via the Internet (http://www.1800flowers.com);
by calling 1-800-FLOWERS® (1-800-356-9377); or by visiting a Company-operated or franchised store. The 1-800-FLOWERS.COM
family of brands also includes home decor and garden merchandise from Plow & Hearth® (1-800-627-1712 or
http://www.plowandhearth.com); premium popcorn and specialty treats from The Popcorn Factory® (1-800-541-2676 or
http://www.thepopcornfactory.com); gourmet foods from GreatFood.com® (http://www.greatfood.com); and children’s gifts
from HearthSong® (http://www.hearthsong.com) and Magic Cabin® (http://www.magiccabin.com).
Our Mission Statement
“1-800-FLOWERS.COM will be the leading provider of thoughtful gifts,
helping our customers connect with the important people in their lives.
We will continue to build on the trusted relationships with our customers
by providing them with ease of access, tasteful and appropriate gifts
and superior service.”
Special Note Regarding Forward-Looking Statements
Anumber of statements contained in this report, other than statements of historical fact, are forward-looking within the meaning
of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that could cause actual
results to differ materially from those expressed or implied in the applicable statements. These risks and uncertainties include,
but are not limited to: the Company’s ability to achieve cost efficient growth; its ability to maintain and enhance its online shopping
web sites to attract customers; its ability to successfully introduce new products and product categories; its ability to maintain and
enhance profit margins for its various products; its ability to provide timely fulfillment of customer orders; its ability to cost effectively
acquire and retain customers; its ability to continue growing revenues; its ability to compete against existing and new competitors; its
ability to manage expenses associated with necessary general and administrative and technology investments; its ability to cost effectively
manage inventories; its ability to improve its bottom line results; its ability to leverage its operating infrastructure; its ability to achieve
its stated results guidance for fiscal 2005 and general consumer sentiment and economic conditions that may affect levels of discretionary
customer purchases of the Company’s products. For a more detailed description of these and other risk factors, please refer to the Company’s
SEC filings including the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. The Company expressly disclaims
any intent or obligation to update any of the forward looking statements made in this report or in any of its SEC filings except as may be
otherwise stated by the Company.
Financial Highlights
Years Ended
June 27,
2004
June 29,
2003
June 30,
2002
July 1,
2001
July 2,
2000
(in thousands, except percentages and customer data)
$603,978
263,039
307,470
48%
41.9%
36,402
0.60**
23.9
$565,618
$497,205
$442,239
$379,528
271,071
265,278
49%
42.6%
27,510
0.18
21.2
248,931
218,179
46%
41.0%
11,396
(0.02)
18.1
230,723
182,924
41%
39.4%
227,380
116,810
32%
37.4%
(23,757)
(59,102)
(0.64)
13.4
(1.10)
9.1
Total Net Revenues
Telephonic Revenues
Online Revenues
Non-floral Revenues*
Gross Profit Margin Percentage
EBITDA
EPS
Customer Base (millions)
* As a percentage of combined online and telephonic net revenues.
** For the year ended June 27, 2004, EPS included a net income tax benefit of $19.2 million, or $0.28 per share.
Fiscal 2004 Achievements
Grew online revenues 16 percent to $307 million, representing 54 percent of combined online and telephonic revenues.
Achieved EPS of $0.60** per diluted share, compared with $0.18 per share in the prior year.
Grew our cash and investments position by $30 million to $111 million.
Cost effectively attracted 3.1 million new customers; simultaneously deepened our relationship with existing
customers and increased annual repeat order rate to approximately 45 percent.
Total Revenues
Online Revenue Growth
Online Percentage
(in $ millions)
(in $ millions)
As % of combined online
and telephonic revenues
.
5
9
7
3
$
.
2
2
4
4
$
.
2
7
9
4
$
.
6
5
6
5
$
.
9
3
0
6
$
.
8
6
1
1
$
.
9
2
8
1
$
.
2
8
1
2
$
.
3
5
6
2
$
.
5
7
0
3
$
%
4
3
%
4
4
%
7
4
%
9
4
%
4
5
FY00
FY01 FY02 FY03
FY04
FY00
FY01
FY02
FY03
FY04
FY00
FY01 FY02
FY03 FY04
To our shareholders
Fiscal 2004 was a year that included a
number of important accomplish-
ments for our Company. Foremost
among these was the deepening of the rela-
tionships we have with our customers who
increasingly view us as their leading provider
of thoughtful gifts and services for all of
their celebratory occasions. This is best
illustrated by our repeat order rate, which
increased to 45 percent during fiscal 2004
compared with 42 percent in the prior year.
Concurrent with this effort, we also cost-
effectively attracted more than three million
new customers, of which 58 percent came
to us online, up from 55 percent last year.
Importantly, our customer acquisition cost
remained below our $20 target – a level that
we believe is among the best in the specialty
retailing sector.
We believe these customer metrics
illustrate the successful leveraging of our
marketing investments in broadcast adver-
tising, direct mail and a broad range of
online programs. Customers increasingly
Thursday
7
8
14
15
Friday
Saturday
1 New Year’s Day
come to us
because of the
strength and
reliability of our
brand, the con-
venience of our
multi-channel
access and our
expanded offering
of gifts and services
that help them
connect with all
of the people who
are important in
their lives. We
plan to build on these relationships and
thereby continue growing our business
profitably during fiscal 2005.
22
21
29
28
Financial Highlights
Financial Highlights
In terms of financial results, for the year
we grew total revenues approximately
seven percent, or $38 million, to more
than $600 million. Highlighting this growth
was the strength of our floral gift business,
which grew 10 percent, compared with the
prior year. In addition, all of the comple-
mentary gift categories that we have identi-
fied as having the strongest growth potential
for our future – including gourmet food
gifts, gift baskets and children’s gifts – grew
at a double-digit pace. With that said, we
believe that our results could have and
should have been even stronger. As we
noted throughout the year, customer
demand in our home and garden gift category
was below our expectations. We believe
this can be attributed to a combination of
internal merchandising and marketing issues as
well as the increasingly competitive market
conditions within this sector.
Beginning in fiscal 2004 and continuing
into the current year, we conducted a thorough
review of our home and garden business
and implemented plans that, we believe, will
enhance its product offering, creative look
and feel, and marketing strategy. We expect
to begin to see the fruits of these efforts
during our fiscal 2005 second quarter, which
includes the year-end holiday period, the
largest, in terms of sales, for the category.
We are confident that we can reinvigorate
this segment of our business and achieve
sustainable revenue growth during fiscal 2005
and beyond.
While total revenue growth for the year
was at the lower end of our expectations,
it still represented solid, organic (or “same-
store”) growth. Importantly, revenue in our
online channel increased by approximately
16 percent to more than $300 million,
representing 54 percent of combined tele-
phonic and online revenues. As I’ve stated
in the past, this is important because, as
our customers increasingly migrate to our
online channels:
We have lower order processing costs;
We can introduce them to our expanded
range of gifts, which helps increase the
number of celebratory and connective
occasions that they can come to us for;
They get the opportunity to use our rich
service offerings, such as occasion-reminder,
gift search and our address book features, all
of which make shopping more convenient
and thereby increase customer loyalty
and frequency;
And, we have the opportunity to engage
them in an electronic dialog via cost-effective
e-marketing programs.
Last year, 1-800-FLOWERS.COM
customers and investors alike
enjoyed our annual report’s built-in
Celebrations Calendar. This year, as
a special bonus, we’ve made the
annual report even more interactive
by including the 2005 Celebrations
Appointment Book. Highlighting
important holidays throughout the
year, and filled with tips and descriptions
January 2005
The perfect gift
for all your celebrations
Sunday
Monday
Tuesday
Wednesday
Tip of the month
Water, a flower’s best friend.
Fresh cut flowers last longer and look healthier, even in winter...
if you keep them well-hydrated. Always be sure that stems are
submersed. If your tap water is less than pure, try adding
several drops of household bleach to counteract the negative
effects of minerals and sediments.
Start the new year off right.
Welcome to 2005. It’s sure to be a
great year, and 1-800-FLOWERS.COM
can make all your 2005 celebrations
and gifting occasions even better.
Visit www.1800flowers.com
for money-saving offers and
promotions each month featuring
some of the most distinctive gifts
you’ve ever seen. Also sign up for
our free members-only benefits,
such as Gift Reminders, Online
Order Tracking, Bill Me Later,
Express Checkout and much more.
2
9
16
23
30
3
10
4
11
17 Martin Luther King Jr.’s Birthday
(observed)
18
25
24
31
Want to send thanks for the holiday presents you received? Visit www.1800flowers.com
for thoughtful thank-you greetings.
5
12
19
26
6
13
20
27
Check the back pages of this appointment book for valuable coupons!
of all our great customer-engage-
ment services, the appointment book
is designed to make planning for all
your celebratory occasions fun and
easy. And, as an added value, we’ve
included discount coupons good for
our entire family of great gift brands.
So make an appointment today to
call, click or come in to one of our
stores so that we can help you
connect with all the important people
in your life.
Operating Leverage = Increased Profitability
During fiscal 2004 we further
leveraged our infrastructure and
reduced our operating expense
ratio by 220 basis points compared with
the prior year. We also maintained a
strong gross profit margin despite the
impact of lower sales in our higher margin
home and garden category. Together,
these factors enabled us to significantly
increase our profitability. For the year
we grew operating income by 77 percent
compared with the prior year, and, given
our low working capital and capital
expenditure needs, grew our cash and
investments position by $30 million to
$111 million.
Progress in Key Initiatives
In addition to the positive financial
growth accomplished during the
year, we made significant progress in
several of our key business initiatives:
We enhanced our fulfillment operations,
completing the roll-out of our Local
Fulfillment Center, or “LFC,” strategy
through our Bloomnet® network of profes-
sional florists. We now have these “mini-
distribution centers” covering all of the top 50
markets in the country. Other than the original
eight that we built, all of the LFCs are owned
and operated by independent Bloomnet
florists. We believe the LFCs, and our
enhanced Bloomnet network, give us a
significant competitive advantage, enabling
us to increase our same-day and next-day
delivery capabilities for both floral and
non- floral gifts. This is important as it makes
us far less reliant on third party carriers,
compared with many of our competitors.
In the merchandising area, we further
broadened our complementary gift offerings
with our “UCD” initiative. These are
“Unique, Creative & Differentiated”
products – including an expanded range
of gourmet-, spa- and sports-related gift
baskets. We also expanded our relationships
with premium gift partners Lenox,
Waterford and Godiva and added such new
partners as Yankee Candle and Swarovski,
among others. In bakery gifts, we saw con-
tinued strong customer acceptance for our
own Mama Moore’s BakeshopSM brand,
which is quickly becoming one of our best
selling gourmet food gift lines.
During the year, we expanded our industry-
leading floral offering with the successful
launch of our first “designer” collection
featuring the unique creations of floral artisan
Jane Carroll. Customer response to the
new gift line has been very positive and we plan
to expand this program. Combined with our
“Fresh from our GrowersSM” overnight
floral gift program and our Florist Designed
same-day delivery gifts, we offer our
customers a range of choices unique in
the floral gift industry.
On the corporate gifting front we added
personnel, extended our reach and
increased sales. This program, now known
as our Business Gift Services division,
added more than 1,000 new corporate
accounts during the fiscal year. We continue
to believe that this area offers us excellent
growth potential and we plan to further
expand our efforts here during fiscal 2005.
Focused on Growth and Profitability
Looking ahead, we believe we are well
positioned to grow our revenues
while delivering increasingly strong
profitability. We finished fiscal 2004 with
more than $100 million in cash and
investments on our balance sheet. This
positions us well to pursue our strategy of
growing our business through a combina-
tion of organic and acquisition growth.
On the acquisition front, we continue
to look for companies that will help us
expand and deepen our relationships
with our customers as their resource and
authority for all of their celebratory and
connective occasions. We believe we
have demonstrated our ability to efficiently
integrate acquisitions and leverage our
asset base – including our technology
and customer service platforms, our large
and growing customer database and our
unique fulfillment capabilities – to achieve
both accelerated revenue growth and
synergistic cost savings.
During fiscal 2005 we plan to focus our
marketing and merchandising efforts and
investments on achieving double-digit
revenue growth in our floral gift business
as well as in those complementary gift
categories that I have previously mentioned.
Furthermore, we expect the changes we
are implementing in marketing and mer-
chandising for our home and garden gift
category will result in a return to sustainable
revenue growth for that business. Based
on these expectations, we anticipate
achieving organic revenue growth in a
range of 8-to-10 percent during fiscal 2005
compared with fiscal 2004. In terms of
channels, we expect online sales to grow at
a double-digit rate during fiscal 2005, while
telephonic sales are expected to remain
relatively flat. We also expect to achieve
further reductions in our operating expense
ratio by continuing to leverage the
investments we have made in our brands,
technology platform, unique fulfillment
system and growing customer database.
Regarding capital spending plans, our
technology and customer service platforms
are robust and highly scalable and we do
not require significant capital for bricks
and mortar facilities. As such, we expect
capital expenditures to remain in a range
of $10-to-$12 million during fiscal 2005.
Based on anticipated net income growth,
combined with our business model’s low
working capital and capital expenditure
requirements, during fiscal 2005 we expect
to grow our cash and investments position
by approximately 30 percent compared
with last year. In summary, we believe we
are well positioned to grow our business
profitably and thereby build shareholder
value during fiscal 2005 and beyond.
We thank our associates, investors and
business partners for their continued support.
Most of all, we thank our customers for
trusting us to help them connect with the
people that are important in their lives for
all of their celebratory occasions.
Sincerely,
Jim McCann
Chairman and CEO
January 2005
Sunday
Monday
Tuesday
Tip of the month
Water, a flower’s best friend.
Fresh cut flowers last longer and look healthier, even in winter...
if you keep them well-hydrated. Always be sure that stems are
submersed. If your tap water is less than pure, try adding
several drops of household bleach to counteract the negative
effects of minerals and sediments.
Start the new year off right.
Welcome to 2005. It’s sure to be a
great year, and 1-800-FLOWERS.COM
can make all your 2005 celebrations
and gifting occasions even better.
Visit www.1800flowers.com
for money-saving offers and
promotions each month featuring
some of the most distinctive gifts
you’ve ever seen. Also sign up for
our free members-only benefits,
such as Gift Reminders, Online
Order Tracking, Bill Me Later,
Express Checkout and much more.
2
9
16
23
30
3
10
4
11
17 Martin Luther King Jr.’s Birthday
(observed)
18
25
24
31
Looking for ways to say thanks for the holiday presents you received? Visit www.1800flowers.com
for thoughtful thank-you greetings.
The perfect gift
for all your celebrations
Wednesday
Thursday
Friday
Saturday
1 New Year’s Day
5
12
19
26
6
13
20
27
7
14
21
28
8
15
22
29
Check the back pages of this appointment book for valuable coupons!
February 2005
Sunday
Monday
Tuesday
Tip of the month
Your sweetheart will be charmed, we’re sure.
Make your Valentine celebration extra romantic by dangling
a charm locket containing a picture of your loved one around
the neck of a decanter or bottle of wine. This personal touch
will create just the right mood.
Shakespeare couldn’t have
said it any better.
6
7
1
8
Searching for the perfect words to
express your Valentine emotions?
Look no further than Expressions
Exchange, a free service from
1-800-FLOWERS.COM. With
Expressions Exchange you can
borrow a broad range of eloquent
expressions wordsmithed by our
customers and ready to be sent
in a digital greeting or attached
to a gift.
13
20
27
14 Valentine’s Day
15
21 President’s Day
22
28
Searching for one-of-a-kind gifts that captivate the imagination? Visit www.1800flowers.com
to see the Jane Carroll collection of floral artistry.
Gifts from the heart
are always remembered
Wednesday
Thursday
Friday
Saturday
2 Groundhog Day
3
9
16
23
10
17
24
4
11
18
25
5
12
19
26
See the money saving coupons in the back pages of this appointment book.
March 2005
Sunday
Monday
Tuesday
Tip of the month
Make colorful Easter egg vases.
Using a pushpin, pierce each end of an egg then insert a wire
through the holes and gently blow out the egg white and yolk
into a bowl. Snip an opening at one end of the shell. Let the
shell dry, color it and fill with mini daffodils or grape hyacinths
for a festive Easter look.
Send greetings to
someone you care about.
6
At 1-800-FLOWERS.COM, sending
a greeting for Easter or any other
occasion is easy and fun! Create
personalized paper Greeting Cards
expressing your thoughts. You can
even upload your own photos or
artwork and we’ll include them
in your cards! Plus, with our
Email-A-Bouquet service, you
can build a beautiful virtual floral
bouquet that you can send for
free with a simple click. Visit
www.1800flowers.com today.
13
7
14
20 First Day of Spring
21
27 Easter
28
1
8
15
22
29
Know someone who would just love a gift basket? Log on to www.1800flowers.com and
www.1800giftbaskets.com for delectable Mama Moore’s BakeshopSM creations and much more.
Celebrate the start of spring
in thoughtful ways
Wednesday
Thursday
Friday
Saturday
2
9
16
23
30
3
10
4
11
17 St. Patrick’s Day
18
25
24
31
5
12
19
26
See the money saving coupons in the back pages of this appointment book.
April 2005
Sunday
Monday
Tuesday
Tip of the month
Put spring in the air with scented blooms.
Like magical perfumes ready to wake us from winter hibernation,
scented spring flowers signal that summer will be coming soon. Here are
some blooms you can place throughout your home to create glorious
springtime scents: daffodils, gardenias, hyacinths, lilacs, mimosas,
roses and muscari.
4
11
18
5
12
19
25
Administrative Professionals’
Week Begins
26
Looking for exceptional outdoor gifts and garden accents to welcome in spring?
Visit www.plowandhearth.com.
Remember all your gifting
occasions, the easy way.
3
Birthdays, anniversaries, graduations,
weddings, holidays – so many
celebrations and gifting occasions to
keep track of. 1-800-FLOWERS.COM
makes it simple to remember them
all! Visit www.1800flowers.com
today and sign up for our Gift
Reminder Service. You’ll receive
automatic email reminders
throughout the year!
10
17
24
Flowers are blooming,
and emotions are stirring
Wednesday
Thursday
Friday
Saturday
1 April Fool’s Day
8
15
22
29
2
9
16
23 Passover Begins at Sunset
30
6
13
20
7
14
21
27 Administrative Professionals’ Day
28
Check the back pages of this appointment book for valuable coupons!
May 2005
Sunday
Monday
Tuesday
Have your own gift advisor.
Not sure how to select the perfect
gift for Mother’s Day? Relax;
1-800-FLOWERS.COM has you
covered. Our personal Gift
Advisors are knowledgeable,
friendly and at your service! Log
on to www.1800flowers.com or
call 1-800-356-9377 and see how
easy we make it to choose a
gift that will have mom smiling
from ear to ear.
1
8 Mother’s Day
15
22
29
2
9
16
23
3
10
17
24
30 Memorial Day (observed)
31
Visit www.1800flowers.com for same-day or next-day delivery of stunning floral arrangements.
All our flowers come with a 100% satisfaction and freshness guarantee.
4
11
18
25
Give Mom a bunch
of reasons to smile
Wednesday
Thursday
Friday
Saturday
5 Cinco de Mayo
6 National Bring Your Mom to Work Day
7
12
19
26
13
20
27
14
21
28
Tip of the month
Color her world with this creative idea.
Of course, Mom will appreciate the floral bouquet you give her. She or
you can enhance the celebration of fresh flowers even more by adding
a drop or two of food coloring to the water in a clear glass vase. Choose
a color that complements the arrangement, but don’t overdo...the color
should barely tint the water.
See the money saving coupons in the back pages of this appointment book.
June 2005
Sunday
Monday
Tuesday
Tip of the month
Planning a Father’s Day celebration?
Maybe the whole family is coming over to salute dear old
dad. Add some excitement to your table’s centerpiece by filling
Mason jars with colorful fruit or vegetables. Or, float stemmed
multi-colored flowers in Mason jars full of water to add to
nature’s beauty.
6
13
7
14 Flag Day
Buy the perfect gift now,
pay later.
5
Dad taught you the importance
of shopping smart. Now you can
purchase gifts online for Father’s
Day without using your credit
card. Bill Me Later® service from
1-800-FLOWERS.COM is easy and
convenient! Just select your gifts
and choose the “Bill Me Later”
option during checkout. Visit
www.1800flowers.com for details.
12
19 Father’s Day
20
21 First Day of Summer
26
27
28
Does Dad have a sweet tooth? Visit www.1800giftbaskets.com for yummy Mama Moore’s BakeshopSM
bakery and confection gifts or www.thepopcornfactory.com for delicious popcorn and candy treats.
Let Dad know
how special he is
Wednesday
Thursday
Friday
Saturday
3
10
17
24
4
11
18
25
1
8
15
22
29
2
9
16
23
30
See the money saving coupons in the back pages of this appointment book.
July 2005
Sunday
Monday
Tuesday
Tip of the month
Set a fabulous July 4th table.
July is highlighted by warm weather celebrations, including
Independence Day. Here’s a tip for an outdoor party: wrap
sunglasses and suntan lotion in patriotic colored bandannas
and place a bundle at each table setting. Your guests will
love your ingenuity and thoughtfulness.
Fresh ideas for bringing
flowers into your life.
3
4 Independence Day
5
Love the beauty of fresh flowers,
but not certain how to create
floral arrangements yourself? Our
inspiring new book called A Year
Full of Flowers includes step-by-
step instructions and photos for
more than 30 easy
projects! To order
the book, visit
www.1800flowers.com
or find it at your
favorite bookstore.
10
17
11
18
24 Parents’ Day
25
31
12
19
26
Make summer days and nights even more enjoyable with delicious treats you’ll find at
www.1800giftbaskets.com and flavorful gourmet choices at www.greatfood.com.
Stars and stripes,
family and friends
Wednesday
Thursday
Friday
Saturday
6
13
20
27
1
8
7
14 Bastille Day
15
21
28
22
29
2
9
16
23
30
See the money saving coupons in the back pages of this appointment book.
August 2005
Sunday
Monday
Tuesday
1
8
2
9
15 National Friendship Week Begins
16
22
29
23
30
Shop online, stay informed.
Vacations, family gatherings, picnics.
There are many fun celebrations
on your mind during summer.
So why wonder about the status
of an online purchase? With
Online Order Tracking from
1-800-FLOWERS.COM, you can
check delivery information at
www.1800flowers.com any time,
in just a few simple steps!
7
14
21
28
Invited to a pool party? Hosting a barbeque? Visit www.1800flowers.com for our amazing
“Summer Celebrations” gift collections.
Summertime
is fun time
Wednesday
Thursday
Friday
Saturday
3
10
17
24
31
4
11
18
5
12
19
25
26
6
13
20
27
Tip of the month
Do your summer guests a favor.
August is a month of entertaining, from pool parties to
barbeques to intimate backyard gatherings. Jane Carroll, one of
the world’s most innovative floral designers, suggests filling little
boxes with miniature floral blossoms to give away as party
favors...providing a keepsake so guests remember your
celebration for months and years to come.
See the money saving coupons in the back pages of this appointment book.
September 2005
Sunday
Monday
Tuesday
Tip of the month
Dazzlingly different book covers.
School is starting and that means textbooks need to be covered.
Instead of boring plain covers, pump up the energy by using heavy-
duty gift wrapping paper adorned with action figures or mesmerizing
designs. Wrapping paper will give you more choices and you’ll
probably find that it’s cheaper than ready-made book covers.
Enhance your working
relationships.
4
5 Labor Day
6
Show your customers, prospects
and employees how important
they are to you by utilizing
Business Gift Services from
1-800-FLOWERS.COM. Call
1-888-755-7474 to speak with
an account manager about our
wide selection of impressive
gift ideas. The bottom line?
Thoughtful gifts can help you
celebrate business growth!
11
Patriot Day
Grandparents’ Day
12
18
25
19
26
13
20
27
In addition to school, September also means Grandparents’ Day. Log on to
www.1800giftbaskets.com for delicious gifts every grandparent will adore, and visit
www.magiccabin.com or www.hearthsong.com for wonderful children’s gifts.
Back to school,
back to business
Wednesday
Thursday
Friday
Saturday
1
8
2
9
15
16
22 First Day of Fall
23
29
30
7
14
21
28
3
10
17
24
Check the back pages of this appointment book for valuable coupons!
October 2005
Sunday
Monday
Tuesday
Tip of the month
Bewitching cookies for young and old.
For a fun treat that will make your Halloween celebration extra
delicious, serve “witch hats.” They’re simple to make: just ice a
cookie with chocolate frosting and place a Hershey®’s Kiss® in
the cookie’s center.
Take the trick out of
Halloween treating.
2
3 Rosh Hashanah Begins at Sunset
4
With so many ways to express your
Halloween spirit, choosing the
right gifts and decorations can be
frightening. 1-800-FLOWERS.COM
has the perfect solution. Visit
www.1800flowers.com for scrump-
tious gourmet treats, beautiful
floral arrangements, cuddly plush
toys and much more!
9 National Children’s Day
10 Columbus Day (observed)
11
16 National Bosses’ Day
17
23
30
24
31 Halloween
18
25
The perfect Halloween treat is just a click away. Visit www.thepopcornfactory.com for yummy
popcorn and confections and www.greatfood.com for a wide assortment of delectable goodies.
Ghoulishly clever gifts
for a delightful Halloween
Wednesday
Thursday
Friday
Saturday
1
8
15 Sweetest Day
22
29
5
6
12 Yom Kippur Begins at Sunset
13
19
26
20
27
7
14
21
28
See the money saving coupons in the back pages of this appointment book.
November 2005
Sunday
Monday
Tuesday
Tip of the month
Cook your Thanksgiving turkey to perfection.
Whether you’re planning a Thanksgiving celebration for 2 or 20,
turkey is likely to be the main event. If you stuff the bird, allow
2 hours more for cooking. And, use a meat thermometer, which
should register 180°F when the turkey is done. The center of the
stuffing should be 160°F.
Innovative designs,
imaginative gifts.
It’s a striking, unconventional
combination of art, sculpture and
premium flowers...it’s the world of
Jane Carroll, a wondrous collection
of unique gifts and decor available
from 1-800-FLOWERS.COM.
You may have seen Jane’s stylish
creations on Oprah®. To see more,
visit www.1800flowers.com.
6
13
20
27
7
14
21
28
1
8 Election Day
15
22
29
Visit www.plowandhearth.com to enhance home and hearth for a warm, inviting holiday look.
The holidays are here,
celebrate in style
Wednesday
Thursday
Friday
Saturday
2
9
16
23
30
3
10
17
4
5
11 Veteran’s Day
12
18
19
26
24 Thanksgiving Day
25
See the money saving coupons in the back pages of this appointment book.
December 2005
Sunday
Monday
Tuesday
Tip of the month
‘Tis the season for crafting.
Many people love to create homemade crafts for their holiday
celebrations. Typically a glue gun is used to assemble crafts.
Remember to keep glue sticks in the freezer to protect them
from heat and moisture that can cause the glue to form
“strings” and clog the nozzle.
So many people on your list,
so little time.
4
You don’t have a moment to spare,
especially during the busy holiday
shopping season. Express Checkout
from 1-800-FLOWERS.COM can
save you precious time by storing
your information so you can click
through checkout with speed and
ease! Visit www.1800flowers.com
and find out what fast is all about.
11
18
5
12
19
6
13
20
25 Christmas Day
Hanukkah Begins at Sunset
26 First Day of Kwanzaa
27
Nothing can match the glow on young faces during the holidays. Visit www.hearthsong.com
and www.magiccabin.com for unique, fun and educational children’s toys.
Season’s greetings
to you and yours
Wednesday
Thursday
Friday
Saturday
1
8
15
7
14
21 First Day of Winter
22
28
29
2
9
16
23
30
3
10
17
24
31
See the money saving coupons on the next page of this appointment book.
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Selected Financial Data
1-800-FLOWERS.COM, Inc. and Subsidiaries
The following tables summarize the Company’s consolidated statement of income and balance sheet data.
The Company acquired The Popcorn Factory in May 2002, The Children’s Group in June 2001, disposed of Floral
Works in January 2000, and acquired GreatFood.com and TheGift.com in November 1999. The following financial
data reflects the results of operations of these subsidiaries since their respective dates of acquisition and up through
the date of disposition. This information should be read together with the discussion in “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” and the Company’s consolidated financial state-
ments and notes to those statements included elsewhere in this Annual Report.
Years Ended
June 27, June 29, June 30, July 1, July 2,
2004 2003 2002 2001 2000
(in thousands, except per share data)
Consolidated Statement of Income Data:
Net revenues:
Telephonic
Online
Retail/fulfillment
Total net revenues
Cost of revenues
Gross profit
Operating expenses:
Marketing and sales
Technology and development
General and administrative
Depreciation and amortization
Total operating expenses
Operating income (loss)
Other income, net
Income (loss) before income taxes
and minority interests
Income tax benefit
Income (loss) before minority interests
Minority interests
Net income (loss)
Net income (loss) per common share:
$263,039
307,470
33,469
603,978
351,111
252,867
172,251
13,799
30,415
14,992
231,457
21,410
320
21,730
19,174
40,904
––
$271,071
265,278
29,269
565,618
324,565
241,053
170,013
13,937
29,593
15,389
228,932
12,121
117
$248,931
218,179
30,095
497,205
293,269
203,936
150,638
13,723
28,179
15,061
207,601
$230,723
182,924
28,592
442,239
267,779
174,460
154,321
16,853
27,043
21,716
219,933
$227,380
116,810
35,338
379,528
237,493
142,035
155,353
16,809
28,975
16,479
217,616
(3,665) (45,473) (75,581)
1,448
4,152
7,422
12,238
(2,217) (41,321) (68,159)
––
706
––
1,286
12,238
(1,511) (41,321) (66,873)
––
––
––
43
$ 40,904
$ 12,238
$ (1,511)
$ (41,321)
$ (66,830)
Basic
Diluted
$
$
.62
.60
$
$
0.19
0.18
$ (0.02)
$ (0.02)
$ (0.64)
$ (0.64)
$ (1.10)
$ (1.10)
Shares used in the calculation of net
income (loss) per common share:
Basic
Diluted
65,959
68,165
65,566
67,670
64,703
64,703
64,197
64,197
60,889
60,889
As of
June 27, June 29, June 30, July 1, July 2,
2004 2003 2002 2001 2000
(in thousands)
Consolidated Balance Sheet Data:
Cash and equivalents
and short-term investments
Working capital
Investments-non current
Total assets
Long-term liabilities
Total stockholders’ equity
$103,374
83,704
8,260
261,552
8,874
186,390
$ 61,218
26,875
19,471
214,796
12,820
137,288
$ 63,399
23,301
9,591
207,157
15,939
123,908
$ 63,896
27,409
16,284
195,257
16,029
117,816
$111,624
82,129
1,918
224,641
12,947
158,918
1
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
1-800-FLOWERS.COM, Inc. and Subsidiaries
Overview
For more than 25 years, 1-800-FLOWERS.COM, Inc.
(NASDAQ: FLWS) has been the leading innovator in
the floral industry, taking the extra step to help people
connect and express themselves quickly and easily
with exquisite floral gifts crafted with care by renowned
artisans and the nation’s leading florists, as well as
distinctive non-floral gifts appropriate for any occasion
or sentiment. The Company provides gift solutions same
day, any day, offering an unparalleled selection of
flowers, plants, gourmet foods and confections, gift
baskets and other impressive unique gifts. As always,
satisfaction is guaranteed, and customer service is
paramount with quick, convenient ordering options, fast
and reliable delivery, and gift advisors always available.
Customers can shop 1-800-FLOWERS.COM 24-
hours a day, seven-days a week via the Internet (http://
www.1800flowers.com); by calling 1-800-FLOWERS®
(1-800-356-9377); or by visiting a Company-operated or
franchised store. The 1-800-FLOWERS.COM family of
brands also includes home decor and garden merchan-
dise from Plow & Hearth® (1- 800-627-1712 or http://
www.plowandhearth.com); premium popcorn and
specialty treats from The Popcorn Factory® (1-800-541-
2676 or http://www.thepopcornfactory.com); gourmet
foods from GreatFood.com® (http://www.greatfood.com);
and children’s gifts from HearthSong® (http://
www.hearthsong.com) and Magic Cabin® (http://
www.magiccabin.com).
Most of the Company’s floral orders are fulfilled
through BloomNet® (comprised of independent florists
operating retail flower shops and Local Fulfillment
Centers (“LFC’s”), Company-owned stores and fulfill-
ment centers and franchise stores). The Company
transmits its orders either through BloomLink®, its
proprietary Internet-based electronic communication
system, or the communication system of a third-party.
A portion of the Company’s floral and gift merchandise;
as well as its home and garden merchandise, non-floral
gift products and gourmet food merchandise are
shipped by the Company, members of BloomNet®, or
third parties directly to the customer using common
carriers. Most of the Company’s home and garden
products are fulfilled from its Madison, Virginia fulfillment
center or its Vandalia, Ohio distribution facility, while the
Company’s children’s merchandise is fulfilled from its
Vandalia facility. The Company’s gourmet popcorn and
related merchandise is fulfilled primarily from its Lake
Forest, Illinois manufacturing facility.
As of June 27, 2004, the Company-owned retail
fulfillment operations consisted of 22 retail stores and
8 fulfillment centers. Retail fulfillment revenues also
includes fees paid to the Company by, and the sale of
wholesale products by the Company to, members of its
BloomNet® network as well as royalties, fees and
sublease rent paid to the Company by its 73 franchise
stores. Company-owned stores serve as local points of
fulfillment and enable the Company to test new products
and marketing programs. As such, a significant percent-
age of the revenues derived from Company-owned
stores and fulfillment centers represent fulfillment of its
telephonic and online sales channel floral orders and
are eliminated as inter-company revenues.
2
Results of Operations
The Company’s fiscal year is a 52- or 53-week
period ending on the Sunday nearest to June 30.
Fiscal years 2004, 2003 and 2002 which ended on
June 27, 2004, June 29, 2003 and June 30, 2002,
respectively, consisted of 52 weeks.
Net Revenues
Years Ended
June 27, June 29, June 30,
2004 % Change 2003 % Change 2002
(in thousands)
Net revenues:
Telephonic
$263,039
(3.0%)
$271,071
8.9% $248,931
Online
307,470 15.9%
265,278
21.6%
218,179
Retail/fulfillment
33,469
14.3%
29,269
(2.7%)
30,095
$603,978
6.8% $565,618
13.8% $497,205
Net revenues consist primarily of the selling price
of the merchandise, service or outbound shipping
charges, less discounts, returns and credits. The
Company’s combined telephonic and online revenue
growth of 6.4% and 14.8% during the fiscal years ended
June 27, 2004 and June 29, 2003, respectively, was
due to an increase in order volume resulting from: (i)
the Company’s strong brand name recognition, (ii)
continued leveraging of its existing customer base, and
(iii) the success of our marketing and merchandising
efforts to enhance revenue growth in our floral gift
category and in complimentary categories, including
gourmet food gifts, such as the Popcorn Factory line of
products acquired in May 2002, gift baskets, candy and
children’s gifts. This growth was offset, in part by, slower
sales in the home and garden gift product line as a
result of internal marketing and merchandising issues,
as well as increasingly competitive market conditions.
The Company has completed a review of this product
line and has begun to implement a marketing plan to
enhance product offerings, and the creative look and
feel of its catalogs and website.
The Company fulfilled approximately 9,322,000,
8,681,000 and 7,172,000 orders through its combined
telephonic and online sales channels during the fiscal
years ended June 27, 2004, June 29, 2003, and June
30, 2002, respectively, representing increases of 7.4%
and 21.0% over the respective prior fiscal years. The
growth resulted primarily from increases in online order
volume, which increased 15.6% and 24.1%, during the
years ended June 27, 2004 and June 29, 2003,
respectively, in comparison to prior years, driven by
improved conversion of qualified traffic through the
Company’s Web sites, and through third-party portals,
search engines and affiliates, and the continued
migration of customers from the Company’s telephonic
sales channel. During the fiscal year ended June 29,
2003, telephonic order volume increased 17.7% over
the comparative prior fiscal year, primarily as a result of
the acquisition of the Company’s gourmet popcorn
product line in May 2002. The Company’s combined
telephonic and online sales channel average order
value decreased 1.0% and 5.1% to $61.20 and $61.79
Management’s Discussion and Analysis (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
during the fiscal years ended June 27, 2004 and June
29, 2003, respectively, primarily as a result of product
sales mix, and, in fiscal 2003, the addition of the
gourmet popcorn product line which has a lower
average order value. The Company’s online sales
channel contributed 53.9%, 49.5% and 46.7% of the
total combined telephonic and online revenues during
the fiscal years ended June 27, 2004, June 29, 2003
and June 30, 2002, respectively. The Company intends
to continue to drive revenue growth through its online
sales channel and continue the migration of its custom-
ers from the telephone to the Web for several important
reasons: (i) online orders are less expensive to process
than telephonic orders, (ii) online customers can view
the Company’s full range of gift offerings, including non-
floral gifts, which yield higher gross margin opportuni-
ties, (iii) online customers can utilize all of the
Company’s services, such as the various gift search
functions, order status check and reminder service,
thereby deepening the relationship with its customers
and leading to increased order rates, and (iv) when
customers visit the Company online, it provides an
opportunity to interact with customers in an electronic
dialog via cost efficient marketing programs.
In order to improve overall demand, in response to
forecasted economic conditions and analysis of
consumer buying patterns within the Company’s
available product offerings, during the fiscal year ended
June 27, 2004, the Company reallocated its marketing
spending, reducing the circulation of certain home and
garden gift product catalogs and redirecting those funds
to various online and media programs featuring floral
gifts. As a result, during the fiscal year ended June 27,
2004, non-floral gift products accounted for 47.8% of
total combined telephonic and online net revenues,
compared to 49.5% and 45.8% during the years ended
June 29, 2003 and June 30, 2002, respectively. The
increase in the percentage of non-floral gift products
sold during the fiscal year ended June 29, 2003
resulted from the expansion of candy, gift basket and
gourmet foods, including the Popcorn Factory line in
May 2002. In the future, the Company will continue to
emphasize appropriate products and categories to
match consumer preferences and economic conditions.
Retail/fulfillment revenues for the fiscal year ended
June 27, 2004 increased compared to the prior year
primarily as a result of enhancements to our BloomNet®
network of fulfilling florists and to our Bloomlink commu-
nication system, as well as sales of wholesale products
to its BloomNet® members. During the fiscal year
ended June 29, 2003, retail/fulfillment revenues
decreased as compared to the prior year primarily as a
result of the sale, closure, or conversion of certain
company-owned retail stores into franchised operations.
Gross Profit
Years Ended
June 27, June 29, June 30,
2004 % Change 2003 % Change 2002
(in thousands)
Gross profit
$252,867 4.9% $241,053 18.2% $203,936
Gross margin % 41.9%
42.6%
41.0%
Gross profit consists of net revenues less cost of
revenues, which is comprised primarily of florist fulfill-
ment costs (fees paid directly to florists and fees paid to
wire service entities that serve as clearinghouses for
floral orders, net of wire service rebates), the cost of floral
and non-floral merchandise sold from inventory or
through third parties, and associated costs including
inbound and outbound shipping charges. Additionally,
cost of revenues include labor and facility costs related to
direct-to-consumer merchandise production operations,
as well as facility costs on properties that are sublet to the
Company’s franchisees. Gross profit increased during the
fiscal years ended June 27, 2004 and June 29, 2003 as
a result of increased order volume, and in fiscal 2003, as
a result of an improved gross margin percentage. During
the fiscal year ended June 27, 2004 gross margin
percentage declined by 70 basis points over the prior
fiscal year, primarily as a result of product mix, specifi-
cally, lower sales of home décor and garden merchan-
dise which generate higher gross margins in comparison
to the Company’s floral merchandise. Gross margin
percentage during the fiscal year ended June 29, 2003
increased over the comparative prior year due to several
factors including: (i) increased non-floral product sales,
which were further complemented by the acquisition of
the Popcorn Factory product line in May 2002 which
earns higher gross margins, (ii) improvements in product
shipping costs, inventory management and product
sourcing, (iii) increases in the Company’s service charge,
to align it with industry norms, and (iv) the Company’s
continued focus on customer service, whereby stricter
control standards and enforcement methods reduced the
rate of product credits/returns and replacements.
As the Company implements its plans to restore
sustainable growth in its home and garden gift line, the
Company expects that over the longer term it will continue
to grow its higher margin, non-floral business. During fiscal
2005, while varying by quarter due to seasonal changes in
product mix, the Company expects that its gross margin
percentage will remain consistent with results achieved
during the fiscal year ended June 27, 2004.
Marketing and Sales Expense
Years Ended
June 27, June 29, June 30,
2004 % Change 2003 % Change 2002
(in thousands)
Marketing and
sales
$172,251 1.3% $170,013 12.9% $150,638
Percentage of
sales
28.5%
30.1%
30.3%
Marketing and sales expense consists primarily of
advertising and promotional expenditures, catalog
costs, online portal agreements, retail store and
fulfillment operations (other than costs included in cost
of revenues) and customer service center expenses, as
well as the operating expenses of the Company’s
departments engaged in marketing, selling and mer-
chandising activities. Marketing and sales expenses
decreased as a percentage of net revenues as a result
of volume related operating efficiencies and a reduction
in order processing costs. During fiscal 2004, marketing
3
Management’s Discussion and Analysis (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
and sales expense, as a percentage of net revenue,
was further reduced as a result of a net reduction in
advertising cost per order, resulting from the aforemen-
tioned shift in the mix of products being promoted by the
Company, which enabled it to proportionately reduce
the circulation of higher cost per order catalogs in favor
of lower cost media and online advertising. As a result of
the Company’s cost efficient customer retention pro-
grams, of the 5.7 million customers who placed orders
during the fiscal year ended June 27, 2004, approxi-
mately 45.3% represented repeat customers, compared
to 42.4% in fiscal 2003 and 39.2% in fiscal 2002. In
addition, as a result of the strength of the Company’s
brands, combined with its cost-efficient marketing
programs, the Company added approximately 3.1
million new customers during the fiscal year ended
June 27, 2004, consistent with the prior fiscal year.
In order to further execute its business plan, the
Company expects to continue to invest in its marketing
and sales efforts to acquire new customers, while also
leveraging its already significant customer base through
cost effective customer retention initiatives. Such
spending will be within the context of the Company’s
overall marketing plan, which is continually evaluated
and revised to reflect the results of the Company’s most
recent market research, including the impact of chang-
ing economic conditions and consumer preferences,
and seeks to determine the most cost-efficient use of the
Company’s marketing dollars. Although the Company
believes that increased spending in the area of market-
ing and sales will be necessary for the Company to
continue to grow its revenues, the Company expects that,
on an annual basis, marketing and sales expense will
continue to decline as a percentage of net revenues.
Technology and Development Expense
Years Ended
June 27, June 29, June 30,
2004 % Change 2003 % Change 2002
(in thousands)
Technology and
development $13,799 (1.0)% $13,937 1.6% $13,723
Percentage of
sales
2.3%
2.5%
2.8%
Technology and development expense consists
primarily of payroll and operating expenses of the
Company’s information technology group, costs
associated with its Web sites, including hosting, design,
content development and maintenance and support
costs related to the Company’s order entry, customer
service, fulfillment and database systems. Technology
and development expense decreased as a percentage
of net revenue during the years ended June 27, 2004
and June 23, 2003, and in absolute spending in fiscal
2004, due to the Company’s ability to internalize its
development functions, thereby cost effectively enhanc-
ing the content and functionality of the Company’s Web
sites and improving the performance of the fulfillment and
database systems, while adding improved operational
flexibility and supplemental back-up and system redun-
dancy. During the fiscal years ended June 27, 2004, June
29, 2003, and June 30, 2002, the Company expended
$22.8 million, $22.2 million and $24.5 million on technol-
ogy and development, of which $9.0 million, $8.3 million
and $10.8 million, respectively, has been capitalized.
Although the Company believes that continued
investment in technology and development is critical to
attaining its strategic objectives, the Company expects
that its spending in comparison to prior fiscal years will
continue to decrease as a percentage of net revenues
due to the expected benefits from previous investments
in the Company’s current technology platform.
General and Administrative Expenses
Years Ended
June 27, June 29, June 30,
2004 % Change 2003 % Change 2002
(in thousands)
General and
administrative $30,415
2.8% $29,593 5.0% $28,179
Percentage of
sales
5.0%
5.2%
5.7%
General and administrative expense consists of
payroll and other expenses in support of the Company’s
executive, finance and accounting, legal, human
resources and other administrative functions, as well as
professional fees and other general corporate ex-
penses. Although declining as a percentage of net
revenues, general and administrative expenses
increased during the fiscal years ended June 27, 2004
and June 29, 2003, in comparison to their respective
prior years, primarily as a result of increased health and
business insurance costs, partially offset by various cost
reduction initiatives. The increase in fiscal 2003 was
also attributable to the incremental costs associated
with the acquisition of The Popcorn Factory in May 2002.
The Company believes that its current general and
administrative infrastructure is sufficient to support
existing requirements, and as such, while increasing in
absolute dollars, general and administrative expenses
on an annual basis are expected to continue to decline
as a percentage of net revenues.
Depreciation and Amortization
Years Ended
June 27, June 29, June 30,
2004 % Change 2003 % Change 2002
(in thousands)
Depreciation and
amortization $14,992 (2.6)% $15,389 2.2% $15,061
Percentage of
sales
2.5%
2.7%
3.0%
Depreciation and amortization expense decreased
during the fiscal year ended June 27, 2004, in compari-
son to the prior year, due to the declining rate of capital
additions, and that certain software components of the
Company’s order entry, customer service, fulfillment and
database systems, are now fully depreciated. The increase
in depreciation and amortization expense during the fiscal
year ended June 29, 2003, in comparison to the prior fiscal
year, was primarily the result of the incremental deprecia-
4
Management’s Discussion and Analysis (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
tion and amortization associated with The Popcorn Factory,
which was acquired in May 2002.
Although the Company believes that continued
investment in its infrastructure, primarily in the areas of
technology and development, is critical to attaining its
strategic objectives, the Company expects that deprecia-
tion and amortization will continue to decrease as a
percentage of net revenues in comparison to prior years.
Other Income (Expense)
Years Ended
June 27, June 29, June 30,
2004 % Change 2003 % Change 2002
(in thousands)
Interest income $ 1,324
14.4% $ 1,157
(57.0%) $ 2,688
Interest expense (663)
32.5% (982)
21.1% (1,245)
Other, net
(341) 487.9% (58) (126.0%)
5
$ 320 173.5% $
117 (91.9%) $ 1,448
Other income (expense) consists primarily of interest
income earned on the Company’s investments and
available cash balances, offset by interest expense,
primarily attributable to the Company’s capital leases
and other long-term debt. The increase in other income
(expense) during the fiscal year ended June 27, 2004,
in comparison to the prior fiscal year, resulted primarily
from: (i) an increase in interest income resulting from
higher invested cash balances generated from operations,
and (ii) a reduction in interest expense associated with the
refinancing of a series of fixed and variable rate mortgage
and equipment notes in June 2003, partially offset by
losses incurred upon closure/conversion of certain retail
stores. The decrease in other income (expense) during the
fiscal year ended June 29, 2003, in comparison to the prior
fiscal year, was primarily due to a decline in interest
income resulting from a decrease in cash and investment
balances in order to fund capital expenditures and the
acquisition of The Popcorn Factory in May 2002, as well as
the decline of the Company’s average rate of return on its
investments, partially offset by the decline of interest
expense due to the decline in interest rates on the
Company’s variable rate long-term debt.
Income Taxes
During the fiscal year ended June 27, 2004, the
Company recorded an income tax benefit of approximately
$19.2 million (net) due to the removal of the Company’s
valuation allowance on its deferred tax assets which
consisted primarily of net operating loss carryforwards
(see below), offset in part by income tax expense for
federal alternative minimum tax and various state taxes
resulting from state tax law changes that deferred the use
of available net operating losses for state purposes.
At June 27, 2004, management of the Company
reassessed the valuation allowance previously estab-
lished against its net deferred tax assets. Based on the
Company’s earnings history and projected future
taxable income, management determined that it is more
likely than not that the deferred tax assets would be
realized. Accordingly, the Company removed the
valuation allowance of approximately $30.0 million from
5
its deferred tax assets resulting in the recognition of an
income tax benefit of approximately $20.8 million, a
reduction of goodwill of approximately $3.1 million,
related to the acquired net operating losses of
GreatFood.com, and an increase in additional paid-in-
capital of approximately $6.1 million related to income
tax benefits associated with employee stock option
exercises. The favorable impact of the income tax
benefit has distorted the trends in our net income and
will impact the comparability of our net income with
other periods. During fiscal 2005, the Company
anticipates an effective rate of approximately 41%.
During the fiscal year ended June 29, 2003, the
Company provided no income tax provision due to the
availability of net operating loss carryforwards. During
the fiscal year ended June 30, 2002, the Company
recorded a tax benefit related to previously paid income
taxes of approximately $0.7 million as a result of tax law
changes which extended the period for which compa-
nies were allowed to carry-back losses.
At June 27, 2004, the Company’s federal and state
net operating loss carryforwards were approximately
$72.1 million, which, if not utilized, will begin to expire in
fiscal year 2020.
Liquidity and Capital Resources
At June 27, 2004, the Company had working capital
of $83.7 million, including cash and equivalents and
short-term investments of $103.4 million, compared to
working capital of $26.9 million, including cash and
equivalents and short-term investments of $61.2 million,
at June 29, 2003. In addition to cash and short-term
investments, at June 27, 2004 and June 29, 2003, the
Company maintained approximately $8.3 million and
$19.5 million of long-term investments, respectively,
consisting primarily of investment grade corporate and
U.S. government securities.
Net cash provided by operating activities of $42.1
million for the fiscal year ended June 27, 2004 was
primarily attributable to earnings, adjusted for deprecia-
tion and amortization, deferred income taxes and other
non-cash charges, which in total amounted to $35.8
million, as well as decreases in other assets, primarily
related to recoverable income taxes.
Net cash used in investing activities of $9.6 million
for the fiscal year ended June 27, 2004 was principally
comprised of capital expenditures related to the
Company’s technology infrastructure.
Net cash used in financing activities was $0.8 million
for the fiscal year ended June 27, 2004, resulting
primarily from the repayment of amounts outstanding
under the Company’s credit facilities and long-term
capital lease obligations, offset in part by the net
proceeds received upon the exercise of employee
stock options and employee stock purchase plan.
The Company has a $5.0 million revolving line of credit,
renewable November 30, 2004 (none outstanding at
any point during the fiscal year ending June 27, 2004),
available for working capital purposes.
Management’s Discussion and Analysis (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
At June 27, 2004, the Company’s contractual obligations consist of:
Payments due by period
Less than More than
Total 1 year 1 - 3 years 3 - 5 years 5 years
(in thousands)
Long-term debt
Capital lease obligations
Operating lease obligations
Sublease obligations
Other cash obligations (*)
Purchase commitments (**)
$
5,589
3,495
11,788
9,692
228
25,894
$
1,284
1,738
4,417
2,781
228
25,894
$
2,751
1,732
3,490
3,670
––
––
$
1,554
19
1,570
2,009
––
––
$
––
6
2,311
1,232
––
––
Total
$ 56,686
$ 36,342
$ 11,643
$
5,152
$
3,549
(*) Other cash obligations include $0.2 million of franchise lease guarantees.
(**) Purchase commitments consist primarily of inventory and equipment purchase orders made in the ordinary course of business.
On September 16, 2001, the Company’s Board of Directors approved the repurchase of up to $10.0 million of
the Company’s Class A common stock. Although no repurchases have been made as of June 27, 2004, any such
purchases could be made from time to time in the open market and through privately negotiated transactions,
subject to general market conditions. The repurchase program will be financed utilizing available cash.
Critical Accounting Policies and Estimates
The Company’s discussion and analysis of its
financial position and results of operations are based
upon the consolidated financial statements of 1-800-
FLOWERS.COM, Inc., which have been prepared in
accordance with accounting principles generally
accepted in the United States. The preparation of these
financial statements requires management to make
estimates and assumptions that affect the reported
amount of assets, liabilities, revenue and expenses, and
related disclosure of contingent assets and liabilities. On
an ongoing basis, management evaluates its estimates,
including those related to revenue recognition, inven-
tory and long-lived assets, including goodwill and other
intangible assets related to acquisitions. Management
bases its estimates and judgments on historical experi-
ence and on various other factors that are believed to
be reasonable under the circumstances, the results of
which form the basis for making judgments about the
carrying values of assets and liabilities. Actual results
may differ from these estimates under different assump-
tions or conditions. Management believes the following
critical accounting policies, among others, affect its
more significant judgments and estimates used in
preparation of its consolidated financial statements.
Revenue Recognition
Net revenues are generated by online, telephonic
and retail fulfillment operations and primarily consist of
the selling price of merchandise, service or outbound
shipping charges, less discounts, returns and credits.
Net revenues are recognized upon product shipment.
Accounts Receivable
The Company maintains allowances for doubtful
accounts for estimated losses resulting from the inability
of its customers or franchisees to make required
payments. If the financial condition of the Company’s
customers or franchisees were to deteriorate, resulting
in an impairment of their ability to make payments,
additional allowances may be required.
Inventory
The Company states inventory at the lower of cost or
market. In assessing the realization of inventories, we
are required to make judgments as to future demand
requirements and compare that with inventory levels.
It is possible that changes in consumer demand could
cause a reduction in the net realizable value of inventory.
Goodwill and Other Intangible Assets
Goodwill represents the excess of the purchase price
over the fair value of the net assets acquired and is evalu-
ated annually for impairment. The cost of intangible assets
with determinable lives is amortized to reflect the pattern of
economic benefits consumed, on a straight-line basis, over
the estimated periods benefited, ranging from 3 to 16 years.
The Company periodically evaluates acquired
businesses for potential impairment indicators. Judg-
ment regarding the existence of impairment indicators is
based on market conditions and operational perfor-
mance of the Company. Future events could cause the
Company to conclude that impairment indicators exist
and that goodwill and other intangible assets associ-
ated with our acquired businesses is impaired.
Capitalized Software
The carrying value of capitalized software, both pur-
chased and internally developed, is periodically reviewed
for potential impairment indicators. Future events could
cause the Company to conclude that impairment indicators
exist and that capitalized software is impaired.
Income Taxes
The Company has established deferred income tax
assets and liabilities for temporary differences between
the financial reporting bases and the income tax bases of
its assets and liabilities at enacted tax rates expected to
be in effect when such assets or liabilities are realized or
settled. The Company has recognized as a deferred tax
asset the tax benefits associated with losses related to
6
Management’s Discussion and Analysis (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
operations, which are expected to result in a future tax
benefit. Realization of this deferred tax asset assumes
that we will be able to generate sufficient future taxable
income so that these assets will be realized. The factors
that we consider in assessing the likelihood of realization
include the forecast of future taxable income and
available tax planning strategies that could be imple-
mented to realize the deferred tax assets.
Quantitative and Qualitative Disclosures
About Market Risk
The Company’s earnings and cash flows are subject
to fluctuations due to changes in interest rates primarily
from its investment of available cash balances in money
market funds and investment grade corporate and U.S.
government securities. Under its current policies, the
Company does not use interest rate derivative instru-
ments to manage exposure to interest rate changes.
Cautionary Note Regarding
Forward-Looking Statements
Certain of the matters and subject areas discussed
in this Annual Report contain “forward-looking state-
ments” within the meaning of the Private Securities
Litigation Reform Act of 1995. All statements other than
statements of historical information provided herein are
forward-looking statements and may contain information
about financial results, economic conditions, trends and
known uncertainties based on the Company’s current
expectations, assumptions, estimates and projections
about its business and the Company’s industry. These
forward-looking statements involve risks and uncertain-
ties. The Company’s actual results could differ materially
from those anticipated in these forward-looking state-
ments as a result of several factors, including those
more fully described under the caption “Business - Risk
Factors that May Affect Future Results” and elsewhere in
this Annual Report. Readers are cautioned not to place
undue reliance on these forward-looking statements,
which reflect management’s analysis, judgment, belief
or expectation only as of the date hereof. The
forward-looking statements made in this Annual Report
relate only to events as of the date on which the
statements are made. The Company undertakes no
obligation to publicly update any forward-looking
statements for any reason, even if new information
becomes available or other events occur in the future.
Quarterly Results of Operations
The following table provides unaudited quarterly consolidated results of operations for each quarter of fiscal years
2004 and 2003. The Company believes this unaudited information has been prepared substantially on the same basis as
the annual audited consolidated financial statements and all necessary adjustments, consisting of only normal recurring
adjustments, have been included in the amounts stated below to present fairly the Company’s results of operations.
The operating results for any quarter are not necessarily indicative of the operating results for any future period.
Three Months Ended
June 27, Mar. 28, Dec. 28, Sept. 28, June 29, Mar. 30, Dec. 29, Sep. 29,
2004 2004 2003 2003 2003 2003 2002 2002
(in thousands)
Net revenues:
Telephonic
Online
Retail fulfillment
Total net revenues
Cost of revenues
Gross Profit
Operating expenses:
$58,443
93,135
9,989
161,567
98,039
63,528
$50,851
74,521
8,697
134,069
79,429
54,640
$113,374 $ 40,371
48,936
5,853
95,160
56,093
39,067
90,878
8,930
213,182
117,550
95,632
$ 62,254
84,133
8,456
154,843
91,588
63,255
$52,287 $113,999
75,750
7,680
197,429
107,335
90,094
64,595
7,239
124,121
73,095
51,026
Marketing and sales
Technology and development
General and administrative
Depreciation and amortization
38,950
3,289
7,187
3,660
53,086
Total operating expenses
10,442
Operating income (loss)
Other income (expense), net
455
Income (loss) before income taxes 10,897
Income tax benefit (provision)
19,532
Net income (loss)
Net income (loss) per share:
37,693
66,762
3,576
3,503
7,872
7,577
3,572
3,843
52,713
81,685
13,947
1,927
82 23
13,970
(292)
$ 13,678
28,846
3,431
7,779
3,917
43,973
(4,906)
(240)
(5,146)
––
40,372
3,621
7,381
3,698
55,072
8,183
79
8,262
––
$ (5,146) $ 8,262
35,710
3,323
7,343
3,594
49,970
1,056
127
1,183
––
$ 1,183
64,978
3,415
7,462
4,068
79,923
10,171
(84)
10,087
––
$ 10,087
2,009
(66)
$30,429 $ 1,943
Basic
Diluted
$ 0.46 $ 0.03
$ 0.45 $ 0.03
$ 0.21
$ 0.20
$ (0.08) $
$ (0.08) $
0.13
0.12
$ 0.02
$ 0.02
$ 0.15
$ 0.15
$ (0.11)
$ (0.11)
The Company’s quarterly results may experience seasonal fluctuations. Due to the Company’s expansion into gift,
home, gourmet and other related products, the Thanksgiving through Christmas holiday season, which falls within the
Company’s second fiscal quarter, generates the highest proportion of the Company’s annual revenues. Additionally, as
the result of a number of major floral gifting occasions, including Mother’s Day, Administrative Professionals Week and
Easter, revenues also rise during the Company’s fiscal fourth quarter, in relation to its fiscal first and third quarters.
7
$42,531
40,800
5,894
89,225
52,547
36,678
28,953
3,578
7,407
4,029
43,967
(7,289)
(5)
(7,294)
––
$ (7,294)
Consolidated Balance Sheets
1-800-FLOWERS.COM, Inc. and Subsidiaries
(in thousands, except share data)
June 27, June 29,
2004 2003
Assets
Current Assets:
Cash and equivalents
Short-term investments
Receivables, net
Inventories
Deferred income taxes
Prepaid and other
Total current assets
Property, plant and equipment, net
Investments
Goodwill
Other intangibles, net
Deferred income taxes
Other assets
Total assets
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses
Current maturities of long-term debt and obligations under capital leases
Total current liabilities
Long-term debt and obligations under capital leases
Other liabilities
Total liabilities
Commitments and contingencies
Stockholders’ equity:
$ 80,824
22,550
9,013
19,625
16,463
1,517
149,992
42,460
8,260
34,529
2,598
13,548
10,165
$261,552
$ 63,266
3,022
66,288
6,062
2,812
75,162
$ 49,079
12,139
7,767
20,370
2,208
91,563
46,500
19,471
37,692
3,211
16,359
$ 214,796
$ 61,663
3,025
64,688
9,124
3,696
77,508
Preferred stock, $.01 par value, 10,000,000 shares authorized, none issued
Class A common stock, $.01 par value, 200,000,000 shares authorized,
29,428,143 and 28,679,848 shares issued in 2004 and 2003, respectively
295
287
Class B common stock, $.01 par value, 200,000,000 shares authorized,
42,144,465 and 42,399,915 shares issued in 2004 and 2003, respectively
424
421
247,636
255,829
Additional paid-in capital
Retained deficit
(67,047) (107,951)
Treasury stock, at cost – 52,800 Class A and 5,280,000 Class B shares (3,108) (3,108)
137,288
Total stockholders’ equity
186,390
Total liabilities and stockholders’ equity
$261,552
$214,796
See accompanying notes.
8
Consolidated Statements of Income
1-800-FLOWERS.COM, Inc. and Subsidiaries
(in thousands, except per share data)
Years Ended
June 27, June 29, June 30,
2004 2003 2002
Net revenues
Cost of revenues
Gross profit
$603,978
351,111
252,867
$565,618
324,565
241,053
$497,205
293,269
203,936
Operating expenses:
Marketing and sales
Technology and development
General and administrative
Depreciation and amortization
Total operating expenses
Operating income (loss)
172,251
13,799
30,415
14,992
231,457
21,410
170,013
13,937
29,593
15,389
228,932
12,121
150,638
13,723
28,179
15,061
207,601
(3,665)
Other income (expense):
Interest income
2,688
Interest expense (663) (982) (1,245)
5
Other, net
1,448
(341)
320
(58)
117
Total other income, net
1,157
1,324
Income (loss) before income taxes
Income tax benefit
21,730
19,174
12,238
––
(2,217)
706
Net income (loss)
$ 40,904
$ 12,238
$ (1,511)
Net income (loss) per common share:
Basic
Diluted
$
$
0.62
0.60
$
$
0.19
0.18
$ (0.02)
$ (0.02)
Weighted shares used in the calculation of net income (loss)
per common share:
Basic
Diluted
65,959
68,165
65,566
67,670
64,703
64,703
See accompanying notes.
9
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Consolidated Statements of Cash Flows
1-800-FLOWERS.COM, Inc. and Subsidiaries
(in thousands)
Years Ended
June 27, June 29, June 30,
2004 2003 2002
Operating activities:
Net income (loss)
Reconciliation of net income (loss) to net cash
$ 12,238
40,904
$ (1,511)
$
provided by operations:
Depreciation and amortization
Deferred income taxes
Bad debt expense
Other non-cash items
Changes in operating items, excluding the effects of
acquisitions:
Receivables
Inventories
Prepaid and other
Accounts payable and accrued expenses
Other assets
Other liabilities
Net cash provided by operating activities
Investing activities:
Acquisitions, net of cash acquired
Capital expenditures, net of non-cash expenditures –
$0, $0, and $2,894 in 2004, 2003 and 2002,
respectively
Purchases of investments
Proceeds from sales of investments
Other
Net cash used in investing activities
Financing activities:
Proceeds from employee stock options/stock purchase plan
Repayment of notes payable and bank borrowings
Payments of capital lease obligations
Net cash used in financing activities
14,992
(20,776)
437
250
(1,683)
745
691
1,624
5,829
(884)
42,129
(10,576)
(62,584)
63,384
217
(9,559)
2,126
(1,176)
(1,775)
(825)
15,389
15,061
426
72
107
425
1,152
(4,723)
12
(2,493)
(2,555)
1
19,519
(1,031)
(7)
(215)
2,264
(3,544)
59
11,608
(7,037)
(10,269)
(11,994)
(56,412) (22,798)
6,693
495
(9,100) (34,641)
57,191
390
1,142
(1,492)
(1,591)
(1,941)
2,618
(826)
(2,054)
(262)
Net change in cash and equivalents
Cash and equivalents:
Beginning of year
End of year
31,745
8,478
(23,295)
49,079
80,824
$
40,601
$ 49,079
63,896
$ 40,601
Supplemental Cash Flow Information:
- Interest paid amounted to $663, $982 and $1,245 for the years ended June 27, 2004, June 29, 2003 and
June 30, 2002, respectively.
- The Company received tax refunds, net of income taxes paid of approximately $1,476, $0 and $706 for the years ended
June 27, 2004, June 29, 2003 and June 30, 2002, respectively.
See accompanying notes.
11
Notes to Consolidated Financial Statements
1-800-FLOWERS.COM, Inc. and Subsidiaries
June 27, 2004
Note 1. Description of Business
1-800-FLOWERS.COM, Inc. (“1-800-FLOWERS.COM”)
is a leading gift retailer, providing a broad range of
thoughtful gift products including flowers, plants,
gourmet foods, candies, gift baskets, and other unique
gifts to our customers around the world. The 1-800-
FLOWERS.COM family of brands also includes Plow &
Hearth, a direct marketer of home decor and garden
merchandise, GreatFood.com, a source for gourmet
products, The Popcorn Factory, a manufacturer and
direct marketer of premium popcorn and specialty food
gifts, and HearthSong and Magic Cabin, direct market-
ers of unique children’s toys and games. The Company
operates in one business segment, providing its
customers with convenient, multi-channel access via
the Internet, telephone, catalogs and retail stores.
Note 2. Significant Accounting Policies
Fiscal Year
The Company’s fiscal year is a 52- or 53-week
period ending on the Sunday nearest to June 30th.
Fiscal years 2004, 2003 and 2002, which ended June
27, 2004, June 29, 2003 and June 30, 2002, respec-
tively, consisted of 52 weeks.
Basis of Presentation
The consolidated financial statements include
the accounts of 1-800-FLOWERS.COM and its wholly-
owned subsidiaries (collectively, the “Company”).
All significant intercompany accounts and transactions
have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity
with U.S. generally accepted accounting principles
requires management to make estimates and assump-
tions that affect the amounts reported in the financial
statements and accompanying notes. Actual results
could differ from those estimates.
Cash and Equivalents
Cash and equivalents consist of demand deposits
with banks, highly liquid money market funds, United
States government securities, overnight repurchase
agreements and commercial paper with maturities of
three months or less when purchased.
Inventories
Inventories are valued at the lower of cost or market
using the first-in, first-out method of accounting.
Property, Plant and Equipment
Property, plant and equipment is recorded at cost
reduced by accumulated depreciation. Depreciation
expense is recognized over the assets’ estimated useful
lives using the straight-line method. Amortization of
leasehold improvements and capital leases are calcu-
lated using the straight-line method over the shorter of
the lease terms, including renewal options expected to
be exercised, or estimated useful lives of the improve-
ments. Estimated useful lives are periodically reviewed,
and where appropriate, changes are made prospectively.
The Company’s property, plant and equipment is depreci-
ated using the following estimated lives:
Buildings
Leasehold improvements
Furniture, Fixtures and Equipment
Software
40 years
3 - 10 years
3 - 10 years
3 years
Goodwill and Other Intangible Assets
Goodwill and indefinite-lived intangibles are not
amortized, but are evaluated annually in the Company’s
fiscal fourth quarter for impairment. To date, there has
been no impairment of these assets.
The cost of intangible assets with determinable lives
is amortized to reflect the pattern of economic benefits
consumed, on a straight-line basis, over the estimated
periods benefited, ranging from 3 to 16 years.
Deferred Catalog Costs
The Company capitalizes the costs of producing and
distributing its catalogs. These costs are amortized in
direct proportion with actual sales from the correspond-
ing catalog over a period not to exceed 26-weeks.
Included within other assets was $3.8 million and $2.6
million at June 27, 2004 and June 29, 2003, respec-
tively, relating to prepaid catalog costs.
Investments
The Company considers all of its debt and equity
securities, for which there is a determinable fair market
value and no restrictions on the Company’s ability to sell
within the next 12 months, as available-for-sale. Avail-
able-for-sale securities are carried at fair value, with
unrealized gains and losses reported as a separate
component of stockholders’ equity. For the years ended
June 27, 2004, June 29, 2003 and June 30, 2002, there
were no significant unrealized gains or losses. Realized
gains and losses are included in other income. The cost
basis for realized gains and losses on available-for-sale
securities is determined on a specific identification basis.
Fair Values of Financial Instruments
The recorded amounts of the Company’s cash and
equivalents, short-term investments, receivables,
accounts payable, and accrued liabilities approximate
their fair values principally because of the short-term
nature of these items. The fair value of investments,
including available-for-sale securities, is based on
quoted market prices where available. The fair value of
the Company’s long-term obligations are estimated
based on the current rates offered to the Company for
obligations of similar terms and maturities. Under this
method, the Company’s fair value of long-term obliga-
tions was not significantly different than the carrying
values at June 27, 2004 and June 29, 2003.
Concentration of Credit Risk
Financial instruments that potentially subject the
Company to significant concentrations of credit risk
consist principally of cash and equivalents, investments
and accounts receivable. The Company maintains cash
12
Notes to Consolidated Financial Statements (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
and equivalents and investments with high credit,
quality financial institutions. Concentration of credit risk
with respect to accounts receivable are limited due to
the Company’s large number of customers and their
dispersion throughout the United States, and the fact
that a substantial portion of receivables are related to
balances owed by major credit card companies.
Allowances relating to consumer, corporate and
franchise accounts receivable ($1.4 million and $1.3
million at June 27, 2004 and June 29, 2003, respec-
tively) have been recorded based upon previous
experience and management’s evaluation.
Revenue Recognition
Net revenues are generated by online, telephonic
and retail fulfillment operations and primarily consist of
the selling price of merchandise, service or outbound
shipping charges, less discounts, returns and credits.
Net revenues are recognized upon product shipment.
Cost of Revenues
Cost of revenues consists primarily of florist fulfill-
ment costs (fees paid directly to florists and fees paid to
wire service entities that serve as clearinghouses for
floral orders, net of wire service rebates), the cost of
floral and non-floral merchandise sold from inventory or
through third parties, and associated costs including
inbound and outbound shipping charges. Additionally,
cost of revenues includes labor and facility costs related
to direct-to-consumer merchandise production opera-
tions, as well as facility costs on properties that are
sublet to the Company’s franchisees.
Marketing and Sales
Marketing and sales expense consists primarily of
advertising and promotional expenditures, catalog
costs, interactive marketing agreements, retail store and
fulfillment operations (other than costs included in cost
of revenues), and customer service center expenses, as
well as the operating expenses of the Company’s
departments engaged in marketing, selling and mer-
chandising activities.
The Company expenses all advertising costs, with
the exception of catalog costs (see Deferred Catalog
Costs above) at the time the advertisement is first
shown. Advertising expense was $91.1 million, $88.9
million and $69.6 million for the years ended June 27,
2004, June 29, 2003 and June 30, 2002, respectively.
Technology and Development
Technology and development expense consists
primarily of payroll and operating expenses of the
Company’s information technology group, costs
associated with its Web sites, including hosting, design,
content development and maintenance and support
costs related to the Company’s order entry, customer
service, fulfillment and database systems. Costs
associated with the acquisition or development of
software for internal use are capitalized if the software is
expected to have a useful life beyond one year and
amortized over the software’s useful life, typically three
years. Costs associated with repair, maintenance or the
development of Web site content are expensed as
incurred as the useful lives of such software modifica-
tions are less than one year.
13
Stock-Based Compensation
The Company accounts for its employee stock option
and stock purchase plans under the recognition and
measurement principles of Accounting Principles Board
Opinion (“APB”) No. 25, Accounting for Stock Issued to
Employees. Under APB No. 25, no stock-based compen-
sation is reflected in net income, as all options granted
under the plans had an exercise price equal to or greater
than the market value of the underlying common stock on
the date of grant and the related number of shares
granted is fixed at that point in time. The following table
illustrates the effect on net income (loss) per share as if
the Company had applied the fair value recognition
provisions of Statement of Financial Accounting Stan-
dards (“SFAS”) No. 123, Accounting for Stock-Based
Compensation, as amended by SFAS No. 148, Account-
ing for Stock-Based Compensation – Transition and
Disclosure (see Note 9, “Stock Option Plans”):
Years Ended
June 27, June 29, June 30,
2004 2003 2002
(in thousands, except per share data)
Net income (loss),
as reported
Less: FAS 123 stock based
$40,904
$12,238
$(1,511)
compensation (*)
1,339
7,803
5,447
Pro Forma
net income (loss)
$39,565
$ 4,435
$(6,958)
Net income (loss)
per share:
Basic - As reported
Basic - Pro forma
Diluted - As reported
Diluted - Pro forma
$ 0.62
$ 0.60
$ 0.60
$ 0.58
$
$
$
$
0.19
0.07
0.18
0.07
$ (0.02)
$ (0.11)
$ (0.02)
$ (0.11)
(*)Note: During fiscal 2004, FAS 123 stock based compensation is net of the
income tax benefit, of $6.1 million, associated with the removal of the valuation
allowance on deferred tax assets arising from employee stock option exercises.
Comprehensive Income (Loss)
For the years ended June 27, 2004, June 29, 2003
and June 30, 2002, the Company’s comprehensive
income (losses) were equal to the respective net
income (losses) for each of the periods presented.
Net Income (Loss) Per Share
Basic net income (loss) per common share is com-
puted using the weighted-average number of common
shares outstanding during the period. Diluted net income
per share is computed using the weighted-average
number of common and dilutive common equivalent
shares (consisting of employee stock options) outstand-
ing during the period. Diluted net loss per common share
is computed using the weighted-average number of
common shares and excludes dilutive potential common
shares outstanding, as their effect is antidilutive.
Reclassifications
Certain balances in the prior fiscal years have been
reclassified to conform with the presentation in the
current fiscal year.
Notes to Consolidated Financial Statements (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
Note 3. Acquisitions and Disposition
Acquisition of Selected Assets of
The Popcorn Factory
On May 3, 2002, the Company extended the breadth of
its gourmet food product assortment when it completed the
acquisition of selected operating assets and liabilities of
The Popcorn Factory, a manufacturer and direct marketer
of premium popcorn and specialty food gifts. The purchase
price of approximately $12.6 million, including $0.3 million
of transaction costs, was comprised of $7.3 million used to
retire The Popcorn Factory’s outstanding debt and the
issuance of 353,003 shares of the Company’s Class A
common stock, valued at approximately $5.0 million,
based upon the average closing price of the Company’s
common stock on the date of and the two days preceding
and following the closing of the transaction. The acquisition
was accounted for as a purchase and, accordingly,
acquired assets and liabilities are recorded at their fair
values, and the operating results of The Popcorn Factory
have been included in the Company’s consolidated results
of operations since the date of acquisition. The excess of
the purchase price over the fair market value of net assets
acquired of $12.0 million was allocated to goodwill.
The purchase price allocation of The Popcorn Factory
business resulted in the following condensed balance
sheet of assets acquired and liabilities assumed.
The Popcorn Factory
Purchase Price Allocation
were allocated to customer list, and is being amortized
over the asset’s determinable useful life of 3 years.
Pro forma Results of Operation
The following unaudited pro forma consolidated
financial information has been prepared as if the
acquisition of The Popcorn Factory had taken place at
the beginning of fiscal year 2002. The following unau-
dited pro forma information is not necessarily indicative
of the results of operations in future periods or results
that would have been achieved had the acquisition
taken place at the beginning of the periods presented.
Years Ended
June 27, June 29, June 30,
2004 2003 2002
(as reported) (as reported) (pro forma)
(in thousands, except per share data)
Net revenues
Income (loss) from
operations
Net income (loss)
Net income (loss) per
common share
$603,978
$565,618
$528,103
$ 21,410
$ 40,904
$ 12,121
$ 12,238
$ (6,407)
$ (4,688)
Basic
Diluted
$ 0.62
$ 0.60
$ 0.19
$ 0.18
$ (0.07)
$ (0.07)
Note 4. Goodwill and Intangible Assets
The change in the net carrying amount of goodwill is
as follows:
June 27, June 29,
2004 2003
(in thousands)
Goodwill - beginning of year
Removal of deferred tax asset
valuation allowance related to
net operating losses acquired
from GreatFood.com, Inc.
Other
Goodwill - end of year
$37,692
$37,772
(3,163)
––
$34,529
––
(80)
$37,692
(in thousands)
Current assets
Property, plant and equipment
Intangible assets
Goodwill(*)
Total assets acquired
Current liabilities
Non-current liabilities
Total liabilities assumed
Net assets acquired
$ 1,704
1,061
1,120
12,001
15,886
3,120
142
3,262
$12,624
(*) Approximately $12.0 million is expected to be deductible for tax
purposes.
The Popcorn Factory acquisition resulted in $1.1 million
in total intangible assets acquired, other than goodwill,
with $0.2 million allocated to trademarks with indefinite
lives. The remaining $0.9 million of acquired intangibles
14
Notes to Consolidated Financial Statements (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
The Company’s intangible assets consist of the following:
June 27, June 29,
2004 2003
Gross Gross
Amortization Carrying Accumulated Carryin g Accumulated
Period Amount Amortization Net Amo unt Amortization Net
(in thousands)
Intangible assets with determinable lives:
Investment in
licenses
Customer lists
Other
14-16 years
3 years
20 years
Trademarks with
indefinite lives
Total intangible assets
––
$4,927
910
194
6,031
476
$6,507
$3,115
657
137
3,909
––
$3,909
$1,812
253
57
2,122
476
$2,598
$4,927
910
171
6,008
476
$6,484
$2,792
354
127
3,273
––
$3,273
$2,135
556
44
2,735
476
$3,211
(in thousands)
Less current maturities of
The amortization of intangible assets for the years
ended June 27, 2004, June 29, 2003 and June 30,
2002 was $0.6 million, $0.9 million and $0.7 million,
respectively. Future estimated amortization expense is
as follows: 2005 - $0.6 million, 2006 - $0.3 million, 2007
- $0.3 million, 2008 - $0.3 million, and 2009 - $0.3
million, and thereafter - $0.3 million.
Note 5. Property, Plant and Equipment
June 27, June 29,
2004 2003
Computer equipment
Software
Telecommunication equipment
Leasehold improvements
Building and building improvements
Equipment
Furniture and fixtures
Land
Accumulated depreciation and
amortization
$41,173
36,321
6,842
11,767
12,038
8,016
3,755
666
$37,429
31,712
6,411
12,267
11,454
7,160
3,712
666
120,578 110,811
78,118 64,311
$46,500
$42,460
Note 6. Long-Term Debt
June 27, June 29,
2004 2003
(in thousands)
Commercial notes and
revolving credit line (1-2)
Seller financed acquisition
obligations (3-4)
Obligations under capital
leases (see Note 12)
long-term debt and obligations
under capital leases
$5,504
$6,612
85
145
3,495
9,084
5,392
12,149
3,022
$6,062
3,025
$9,124
The following notes and credit lines relate to
obligations arising from, and collateralized by, the
underlying assets of the Company’s Plow & Hearth
facility in Madison, Virginia.
(1)
$5,000,000 revolving credit line, renewable on
November 30, 2004 (none outstanding at June 27,
2004), bearing interest equal to the monthly LIBOR
Index plus 1.75% per annum (3.09% at June 27, 2004).
(2)
$6,612,000 note dated June 27, 2003,
($5,504,000 outstanding at June 27, 2004), bearing
15
Notes to Consolidated Financial Statements (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
interest at 5.44% per annum. The note, which resulted
from the consolidation and refinancing of a series of
fixed and variable rate mortgage and equipment notes
in June 2003, is payable in 60 equal monthly install-
ments of principal and interest commencing August 1,
2003.
The following notes relate to seller-financed acquisi-
tion obligations, all of which have been collateralized by
either the stock or assets of various subsidiaries of the
Company:
(3)
$275,000 promissory note dated November 1,
1994 ($16,000 outstanding at June 27, 2004), bearing
interest at 8% per annum. The note is payable in 120
equal monthly installments of principal and interest
commencing December 1, 1994.
(4)
$160,000 non-interest bearing promissory note
dated September 30, 1999 ($69,000 outstanding at
June 27, 2004). The note is payable in 8 annual
installments commencing August 2000.
As of June 27, 2004, long-term debt maturities,
excluding amounts relating to capital leases, are as
follows:
Year Debt Maturities
(in thousands)
2005
2006
2007
2008
$1,284
1,338
1,413
1,554
$5,589
Note 7. Income Taxes
Significant components of the income tax benefit are
as follows:
Years Ended
June 27, June 29, June 30,
2004 2003 2002
(in thousands)
Current provision (benefit):
Federal
State
Deferred benefit:
Federal
State
$
$
677
923
1,600
(15,796)
(4,980)
(20,776)
Income tax benefit
$ (19,174)
$
––
––
––
––
––
––
––
$ (706)
––
(706)
––
––
––
$ (706)
A reconciliation of the U.S. federal statutory tax rate
to the Company’s effective tax rate is as follows:
Years Ended
35.0%
June 27, June 29, June 30,
2004 2003 2002
Tax at U.S. statutory rates
State income taxes, net
of federal tax benefit
Goodwill amortization
Tax settlements
Change in tax rates
Change in valuation
(3.6)
5.9
1.0
13.8
2.7 –– ––
4.2 –– ––
2.8
.5
34.0%
(34.0)%
allowance
Other
(140.1)
6.7
(88.2)%
(39.7)
(1.2)
0.0%
(8.6)
0.6
(31.8)%
Deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes. The
significant components of the Company’s deferred
income tax assets (liabilities) are as follows:
Years Ended
June 27, June 29, June 30,
2004 2003 2002
(in thousands)
Deferred income tax assets:
Net operating loss
carryforwards
Accrued expenses
and reserves
Valuation allowance
Deferred tax liabilities:
$27,878
$34,247
$37,946
3,463
3,031
3,624
–– (36,523) (38,242)
Installment sales (39) (53) (54)
Tax in excess of
book depreciation (1,291) (1,295) (2,681)
Net deferred
income tax assets
$30,011
$ ––
$ ––
At June 27, 2004, management of the Company
reassessed the valuation allowance previously estab-
lished against its net deferred income tax assets. Based
on the Company’s earnings history and projected future
taxable income, management determined that it is more
likely than not that the deferred income tax assets would
be realized. Accordingly, the Company removed the
valuation allowance of approximately $30.0 million from
its deferred income tax assets resulting in the recogni-
tion of an income tax benefit of approximately $20.8
million, a reduction of goodwill of approximately $3.1
million, related to the acquired net operating losses of
GreatFood.com, and an increase in additional paid-in-
16
Notes to Consolidated Financial Statements (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
capital of approximately $6.1 million related to income tax
benefits associated with employee stock option exercises.
During the fiscal year ended June 30, 2002, the Com-
pany recorded a benefit related to previously paid income
taxes of approximately $0.7 million as a result of tax law
changes which extended the period for which companies
were allowed to carry-back losses.
At June 27, 2004, the Company’s federal and state
net operating loss carryforwards were approximately
$72.1 million, which, if not utilized, will begin to expire in
fiscal year 2020.
Note 8. Capital Stock
Holders of Class A common stock generally have
the same rights as the holders of Class B common
stock, except that holders of Class A common stock
have one vote per share and holders of Class B
common stock have 10 votes per share on all matters
submitted to the vote of stockholders. Holders of Class
A common stock and Class B common stock generally
vote together as a single class on all matters pre-
sented to the stockholders for their vote or approval,
except as may be required by Delaware law. Class B
common stock may be converted into Class A com-
mon stock at any time on a one-for-one share basis.
Each share of Class B common stock will automati-
cally convert into one share of Class A common stock
upon its transfer, with limited exceptions.
On September 16, 2001, the Company’s Board of
Directors approved the repurchase of up to $10.0 million
of the Company’s Class A common stock. Any such
purchases could be made from time to time in the open
market and through privately negotiated transactions,
subject to general market conditions. The repurchase
program will be financed utilizing available cash. No
repurchases had been made as of June 27, 2004.
Note 9. Stock Option Plans
In December 2003, the Company’s Board of Direc-
tors and shareholders approved the 1-800-
FLOWERS.COM 2003 Long Term Incentive and Share
Award Plan (the “Plan”). The Plan is a broad-based,
long-term incentive program that is intended to attract,
retain and motivate employees, consultants and
directors to achieve the Company’s long-term growth
and profitability objectives, and therefore align stock-
holder and employee interests. The Plan provides for
the grant to eligible employees, consultants and
directors of stock options, share appreciation rights
(“SARs”), restricted shares, restricted share units,
performance shares, performance units, dividend
equivalents, and other share-based awards (collectively
“Awards”). The Plan reserves 7,500,000 shares of
Common Stock, which is approximately the amount of
shares which had been previously available for issuance
under the Company’s 1999 Stock Incentive Plan. No
further awards will be issued under the 1999 Stock
Incentive Plan. During a calendar year i) the maximum
number of shares with respect to which options and
SARs may be granted to an eligible participant under the
Plan will be 1,000,000 shares, and ii) the maximum
number of shares with respect to which Awards intended
to qualify as performance-based compensation other
than options and SARs may be granted to an eligible
participant under the Plan will be 500,000 shares.
The Plan is administered by the Compensation
Committee or such other Board committee (or the entire
Board) as may be designated by the Board (the “Com-
mittee”). Unless otherwise determined by the Board, the
Committee will consist of two or more members of the
Board who are nonemployee directors within the
meaning of Rule 16b-3 of the Securities Exchange Act
of 1934 and “outside directors” within the meaning of
Section 162(m) of the Internal Revenue Code of 1986,
as amended. The Committee will determine which
eligible employees, consultants and directors receive
awards, the types of awards to be received and the
terms and conditions thereof. The Chief Executive
Officer shall have the power and authority to make
Awards under the Plan to employees and consultants
not subject to Section 16 of the Exchange Act, subject to
limitations imposed by the Committee.
At June 27, 2004, the Company has reserved
approximately 17,415,000 shares of common stock for
issuance under common stock option plans, including
options previously authorized for issuance under the
1999 Stock Incentive Plan.
The following table summarizes activity in stock
options:
Years Ended
June 27, June 29, June 30,
2004 2003 2002
Weighted Weighted Weighted
Shares Average Shares Average Shares Average
Under Exercise Under Exercise Under Exercise
Option Price Option Price Option Price
Balance,
beginning of year
10,001,345
Grants
154,800
Exercises (440,741)
Forfeitures (606,419)
8,113,144
$ 8.28
$10.15
3,036,705
$ 3.93 (228,666)
$ 9.38 (919,838)
6,455,262
$ 8.95
$ 6.55
2,897,950
$ 3.69 (788,008)
$ 9.43 (452,060)
Balance, end of year
9,108,985
$ 8.45
10,001,345
$ 8.28
8,113,144
$ 6.64
$12.43
$ 2.72
$ 9.94
$ 8.95
17
Notes to Consolidated Financial Statements (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
The following table summarizes information about stock options outstanding at June 27, 2004:
Options Outstanding Options Exercisable
Weighted- Weighted- Weighted-
Average Average Average
Options Remaining Exercise Options Exercise
Exercise Price Outstanding Contractual Life Price Exercisable Price
1.61 - 2.00
$
$
3.32 - 4.50
$ 4.95 - 6.70
$ 6.76 - 10.00
$ 10.20 - 14.69
$ 15.77 - 17.38
$ 21.00 - 23.10
297,325
2,664,927
2,615,853
164,900
2,725,080
1,100
639,800
9,108,985
4.0 years
6.2 years
8.2 years
8.1 years
7.0 years
7.5 years
4.9 years
6.9 years
$ 1.95
$ 4.05
$ 6.45
$ 8.39
$12.41
$15.92
$21.09
$ 8.45
297,325
1,879,829
24,724
50,000
1,356,950
440
639,800
4,249,068
$ 1.95
$ 4.08
$ 5.14
$ 8.24
$12.49
$15.92
$21.09
$ 9.23
Fair Value Disclosures
The exercise price of employee stock option grants is
set at the closing price of the Company’s common stock
on the date of grant and the related number of shares
granted is fixed at that point in time. Therefore, under the
principles of APB No. 25, the Company does not recog-
nize compensation expense associated with the grant of
employee stock options. SFAS No. 123 requires the use
of option valuation models to provide supplemental
information regarding options granted after 1994.
The weighted average fair value of stock options on
the date of grant, and the assumptions used to estimate
the fair value of the stock options using the Black-
Scholes option valuation model, were as follows:
Years Ended
June 27, June 29, June 30,
2004 2003 2002
Weighted average fair
value of options granted
$5.99
Risk-free interest rate
Expected life (in years)
Expected volatility
Expected dividend yield
3.61%
5.0
67.8%
0.0%
$3.95
3.95%
5.0
70.0%
0.0%
$7.32
4.50%
5.0
66.0%
0.0%
Note 10. Employee Stock Purchase Plan
In December 2000, the Company’s Board of
Director’s approved the 1-800-FLOWERS.COM, Inc.
2001 Employee Stock Purchase Plan (ESPP), a non-
compensatory employee stock purchase plan under
Section 423 of the Internal Revenue Code, to provide
substantially all employees who have completed six
months of service, an opportunity to purchase shares of
the Company’s Class A common stock. Employees may
contribute a maximum of 15% of eligible compensation,
but in no event can an employee purchase more than
500 shares on any purchase date. Offering periods
have a duration of six months, and the purchase price
per share will be the lower of: (i) 85% of the fair market
value of a share of Class A common stock on the last
trading day of the applicable offering period, or (ii) 85% of
the fair market value of a share of Class A common stock
on the last trading day before the commencement of the
offering period. At June 27, 2004, the Company has
reserved approximately 3,098,000 shares of common
stock for issuance under its ESPP. The share pool shall
be increased on the first trading day of each calendar
year, by a number equal to the lesser of (i) 1% of the total
number of shares of common stock then outstanding, or
(ii) 750,000 shares of Class A common stock.
Note 11. Profit Sharing Plan
The Company has a 401(k) Profit Sharing Plan
covering substantially all of its eligible employees. All
full-time employees who have attained the age of 21 are
eligible to participate upon completion of one year of
service. Participants may elect to make voluntary
contributions to the 401(k) plan in amounts not exceed-
ing federal guidelines. On an annual basis the Com-
pany, as determined by its board of directors, may make
certain discretionary contributions. Employees are
vested in the Company’s contributions based upon
years of service. The Company made contributions of
$0.3 million, $0.4 million and $0.3 million, for the years
ended June 27, 2004, June 29 2003 and June 30,
2002, respectively.
Note 12. Commitments and Contingencies
Leases
The Company currently leases office, store facilities,
and equipment under various operating leases through
fiscal 2019. As these leases expire, it can be expected
that in the normal course of business they will be
renewed or replaced. Most lease agreements contain
renewal options and rent escalation clauses and
require the Company to pay real estate taxes, insur-
ance, common area maintenance and operating
18
Notes to Consolidated Financial Statements (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
At June 27, 2004, the aggregate future sublease
rental income under long-term operating sub-leases for
land and buildings and corresponding rental expense
under long-term operating leases were as follows:
Sublease Sublease
Income Expense
(in thousands)
2005
2006
2007
2008
2009
Thereafter
$2,778
2,066
1,610
1,193
827
1,244
$9,718
$2,781
2,066
1,604
1,187
822
1,232
$9,692
In addition to the above, the Company has agreed to
provide rent guarantees for leases entered into by
certain franchisees with third party landlords. At June
27, 2004, the aggregate minimum rent payable by
franchisees guaranteed by the Company was approxi-
mately $0.2 million. Rent expense was approximately
$8.4 million, $9.0 million, and $8.7 million for the years
ended June 27, 2004, June 29, 2003 and June 30,
2002 respectively.
Litigation
There are various claims, lawsuits, and pending
actions against the Company and its subsidiaries
incident to the operations of its businesses. It is the
opinion of management, after consultation with counsel,
that the ultimate resolution of such claims, lawsuits and
pending actions will not have a material adverse effect
on the Company’s consolidated financial position,
results of operations or liquidity.
expenses applicable to the leased properties. The
Company has also entered into leases that are on a
month-to-month basis. All leases and subleases with an
initial term of greater than one year are accounted for
under SFAS No. 13, Accounting for Leases. These
leases are classified as either capital leases, operating
leases or subleases, as appropriate.
The Company leases certain computer, telecommu-
nication and related equipment under capital leases,
which are included in property and equipment with a
capitalized cost of approximately $18.4 million at June
27, 2004 and June 29, 2003, and accumulated amorti-
zation of $15.6 million and $14.1 million, respectively. In
addition, the Company subleases land and buildings
(which are leased from third parties) to certain of its
franchisees. Certain of the leases, other than land
leases which have been classified as operating leases,
are classified as capital leases and have initial lease
terms of approximately 20 years (including option
periods in some cases).
The Company has a $5.0 million equipment lease
line of credit with a bank. Interest under this line, which
is renewable annually, is determined on the date of
each commitment to borrow and is based on the bank’s
base rate on such date. At June 27, 2004, approximately
$3.5 million is outstanding. The borrowings, which bear
interest at rates ranging from 5.39% to 6.36% annually,
are payable in 60 monthly installments of principal and
interest commencing in February 2001. Borrowings
under the line are collateralized by the underlying
equipment purchased and an equal amount of pledged
investments.
As of June 27, 2004, future minimum payments
under non-cancelable capital lease obligations and
operating leases with initial terms of one year or more
consist of the following:
Obligations
Under
Capital Operating
Leases Leases
(in thousands)
$1,934
2005
1,440
2006
367
2007
12
2008
12
2009
7
Thereafter
Total minimum lease payments
3,772
Less amounts representing interest (277)
Present value of net minimum
lease payments
$3,495
$ 4,417
2,087
1,403
1,066
504
2,311
$11,788
19
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders of
1-800-FLOWERS.COM, Inc. and Subsidiaries
We have audited the accompanying consolidated
balance sheets of 1-800-FLOWERS.COM, Inc. and
Subsidiaries (the “Company”) as of June 27, 2004 and
June 29, 2003, and the related consolidated statements
of income, stockholders’ equity and cash flows for each
of the three years in the period ended June 27, 2004.
These financial statements are the responsibility of
the Company’s management. Our responsibility is to
express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with the
standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assur-
ance about whether the financial statements are free of
material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclo-
sures in the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the consoli-
dated financial position of 1-800-FLOWERS.COM, Inc.
and Subsidiaries at June 27, 2004 and June 29, 2003,
and the consolidated results of their operations and their
cash flows for each of the three years in the period ended
June 27, 2004, in conformity with U.S. generally accepted
accounting principles.
Melville, New York
July 30, 2004
Market for Common Equity and Related Stockholder Matters
Market Information
1-800-FLOWERS.COM’s Class A common stock
trades on The Nasdaq National Stock Market under the
ticker symbol “FLWS.” There is no established public
trading market for the Company’s Class B common
stock. The following table sets forth the reported high
and low sales prices for the Company’s Class A com-
mon stock for each of the fiscal quarters during the fiscal
years ended June 27, 2004 and June 29, 2003.
High Low
Year ended June 27, 2004
$10.14
June 30, 2003 – September 28, 2003
September 29, 2003 – December 28, 2003 $12.14
$12.10
December 29, 2003 – March 28, 2004
$11.15
March 29, 2004 – June 27, 2004
Year ended June 29, 2003
July 1, 2002 – September 29, 2002
$11.25
September 30, 2002 – December 29, 2002 $10.90
$ 7.50
December 30, 2002 – March 30, 2003
$ 8.91
March 31, 2003 – June 29, 2003
$ 7.55
$ 7.48
$ 8.90
$ 9.08
$ 4.75
$ 5.75
$ 5.61
$ 6.45
Rights of Common Stock
Holders of Class A common stock generally have
the same rights as the holders of Class B common
stock, except that holders of Class A common stock
have one vote per share and holders of Class B
common stock have 10 votes per share on all matters
submitted to the vote of stockholders. Holders of Class
A common stock and Class B common stock generally
vote together as a single class on all matters pre-
sented to the stockholders for their vote or approval,
except as may be required by Delaware law. Class B
common stock may be converted into Class A com-
mon stock at any time on a one-for-one share basis.
Each share of Class B common stock will automati-
cally convert into one share of Class A common stock
upon its transfer, with limited exceptions.
Holders
As of September 7, 2004, there were approxi-
mately 260 shareholders of record of the Company’s
Class A common stock, although the Company
believes that there is a significantly larger number of
beneficial owners. As of September 7, 2004, there
were approximately 14 shareholders of record of the
Company’s Class B common stock.
Dividend Policy
Although the Company has never declared or paid
any cash dividends on its Class A or Class B common
stock, the Company anticipates that it will generate
increasing free cash flow in excess of its capital
investment requirements. As such, although the
Company has no current intent to do so, the
Company may chose, at some future date, to use some
portion of its cash for the purpose of cash dividends.
Resales of Securities
40,613,080 shares of Class A and Class B com-
mon stock are “restricted securities” as that term is
defined in Rule 144 under the Securities Act. Re-
stricted securities may be sold in the public market
from time to time only if registered or if they qualify for
an exemption from registration under Rule 144 or 701
under the Securities Act. As of September 7, 2004, all
of such shares of the Company’s common stock could
be sold in the public market pursuant to and subject to
the limits set forth in Rule 144. Sales of a large
number of these shares could have an adverse effect
on the market price of the Company’s Class A com-
mon stock by increasing the number of shares
available on the public market.
Purchases of Equity Securities by the Issuer
On September 16, 2001, the Company’s Board of
Directors approved the repurchase of up to $10.0
million of the Company’s Class A common stock. Any
such purchases could be made from time to time in the
open market and through privately negotiated transac-
tions, subject to general market conditions. The
repurchase program will be financed utilizing avail-
able cash. No repurchases were made during the
fiscal year ended June 27, 2004.
20
Company Information
BOARD OF DIRECTORS
CORPORATE OFFICERS
STOCK EXCHANGE LISTING
James F. McCann
Chairman and Chief Executive Officer
1-800-FLOWERS.COM
James F. McCann
Chairman and Chief Executive Officer
1-800-FLOWERS.COM
NASDAQ National Market
Ticker Symbol: FLWS
T. Guy Minetti
Vice Chairman
1-800-FLOWERS.COM
Christopher G. McCann
President
1-800-FLOWERS.COM
Kevin J. O’Connor
Chairman
DoubleClick, Inc.
Jeffrey C. Walker
Managing Partner
JPMorgan Partners
Mary Lou Quinlan
CEO
JUST ASK A WOMAN
John J. Conefry
Vice Chairman
Astoria Financial Corporation
Leonard J. Elmore
Senior Counsel
LeBoeuf, Lamb,
Green and MacRae, LLP
T. Guy Minetti
Vice Chairman
Corporate Development
1-800-FLOWERS.COM
Christopher G. McCann
President
1-800-FLOWERS.COM
William E. Shea
Senior Vice President of Finance
and Administration, Treasurer and
Chief Financial Officer
1-800-FLOWERS.COM
Gerard M. Gallagher
Senior Vice President, General
Counsel and Secretary
1-800-FLOWERS.COM
Thomas G. Hartnett
Senior Vice President of Retail
and Fulfillment
1-800-FLOWERS.COM
Vincent J. McVeigh
Senior Vice President
1-800-FLOWERS.COM
Peter G. Rice
President
Plow & Hearth
Enzo J. Micali
Senior Vice President of
Information Technology
1-800-FLOWERS.COM
Monica L. Woo
Senior Vice President and
Chief Marketing Officer
1-800-FLOWERS.COM
TRANSFER AGENT AND REGISTRAR
American Stock Transfer
& Trust Company
6201 15th Avenue
Brooklyn, New York 11219
(718) 921-8200
INDEPENDENT AUDITORS
Ernst & Young LLP
395 North Service Road
Melville, New York 11747
(631) 752-6100
SEC COUNSEL
Cahill Gordon and Reindel
80 Pine Street
New York, NY 10005
(212) 701-3000
SHAREHOLDER INQUIRIES
Copies of the Company’s reports on
Forms 10-K and 10-Q as filed with
the Securities and Exchange Commission
and additional information about
1-800-FLOWERS.COM may
be obtained without charge by
calling 516-237-6113.
Information is also available via the
Internet in the Investor Relations
section at www.1800flowers.com,
or by writing to:
Investor Relations
1-800-FLOWERS.COM
1600 Stewart Avenue
Westbury, New York 11590
SM
1-800-FLOWERS.COM, Inc.
1600 Stewart Avenue
Westbury, NY 11590
(516) 237-6000