2013 Annual Report
Getting
Social
Social
Delivering
Smiles
Smiles
About 1-800-FLOWERS.COM, Inc.
1-800-FLOWERS.COM, Inc. is the world’s leading florist and gift shop. For more than 35 years, 1-800-FLOWERS®
(1-800-356-9377 or www.1800flowers.com) has been helping deliver smiles for our customers with gifts for every
occasion, including fresh flowers and the finest selection of plants, gift baskets, gourmet foods, confections, candles,
balloons and plush stuffed animals. As always, our 100% Smile Guarantee backs every gift. 1-800-FLOWERS.COM
has been honored in Internet Retailer’s “Hot 500 Guide” for 2013. 1-800-FLOWERS.COM was recognized for our
mobile site with a Gold Award in the Ecommerce/Shopping category of the 2012 Horizon Interactive Awards.
1-800-FLOWERS.COM was also rated number one vs. competitors for customer service by STELLAService in 2011
and named by the E-Tailing Group as one of only nine online retailers out of 100 benchmarked to meet the criteria
for Excellence in Online Customer Service in 2011. The Company’s BloomNet® international floral wire service
(www.mybloomnet.net) provides a broad range of quality products and value-added services designed to help
professional florists grow their businesses profitably. The 1-800-FLOWERS.COM “Gift Shop” also includes gourmet gifts
such as popcorn and specialty treats from The Popcorn Factory® (1-800-541-2676 or www.thepopcornfactory.com);
cookies and baked gifts from Cheryl’s® (1-800-443-8124 or www.cheryls.com); premium chocolates and confections
from Fannie May® confections brands (www.fanniemay.com and www.harrylondon.com); gift baskets and
towers from 1-800-Baskets.com® (www.1800baskets.com); carved fresh fruit arrangements from FruitBouquets.comsm
(www.fruitbouquets.com); top quality steaks and chops from Stock Yards® (www.stockyards.com); as well as premium
branded customizable invitations and personal stationery from FineStationery.com® (www.finestationery.com). The
Company’s Celebrations® brand (www.celebrations.com) is a source for creative party ideas, must-read articles, online
invitations and ecards, all created to help people celebrate holidays and the everyday. 1-800-FLOWERS.COM, Inc.
is involved in a broad range of corporate social responsibility initiatives including continuous expansion and
enhancement of its environmentally-friendly “green” programs as well as various philanthropic and charitable
efforts. Shares in 1-800-FLOWERS.COM, Inc. are traded on the NASDAQ Global Select Market, ticker symbol: FLWS.
The 1800Flowers.com®
100% Smile GuaranteeSM
Everyone at 1-800-FLOWERS.COM is passionate about delivering flowers and gifts that bring
smiles. If you OR the person who received your gift calls us with any sort of issue, it’s a big deal to
us. All of us. And we’ll jump to make it right – no matter what, no questions asked. We’re happy
when you’re smiling.
Getting Social
In fiscal 2013, we continued to enhance our position as an industry pacesetter in social media programs designed
to broaden brand exposure and deepen customer relationships. On Facebook, we have generated nearly a million
Likes and people are also connecting with us in rapidly growing numbers via Twitter, Pinterest, Google+, YouTube,
Instagram, Vine and numerous other social destinations. In addition, many influential bloggers have become “brand
ambassadors” in touting the attributes of our gifting products to readers across the social landscape.
Building on our social initiatives during fiscal 2013, we launched our in-
novative #JustBecause campaign, inspiring customers to share memorable
moments and celebrate the special people in their lives “just because”
those special someones deserve the kind of smiles thoughtful gifts can
bring. And speaking of smiles, we also extended our “Summer of a Million
Smiles” campaign this past year through the volunteer efforts of associates
from each of our brands as well as our BloomNet Florists – delivering more
than a million smiles to local communities across America and sharing
those smile stories through our social networks.
Financial Highlights
(From Continuing Operations(1))
Years Ended
JUNE 30, JULY 1, JULY 3, JUNE 27, JUNE 28,
2011
2010
2012
2013
2009
(in millions, except percentages and per share data)
Total Net Revenues
Gross Profit Margin
Operating Expense Ratio
Adjusted EBITDA (excluding stock based compensation) $ 48.9 $ 44.3(2) $ 38.3
EPS
$735.5 $707.5 $661.4 $644.9 $702.1
41.4% 41.6% 40.5% 39.6%
41.5%
49.1%
38.5% 39.5% 39.6%
38.0%
$ 0.24 $ 0.20 $ 0.10 ($ 0.01) ($ 0.88)
$ 33.2(2) $ 39.4(2)
(1) During the fourth quarter of fiscal 2013, the Company made the strategic decision to divest its Winetasting.com business. Therefore, the operating
results of Winetasting.com have been classified as a discontinued operation for all periods presented. Refer to the Company’s Annual Reports on Form
10-K for the fiscal years included in the tables and charts on this page for further discussion of this change as well as changes made in prior year periods
herein included.
(2) Fiscal 2012, 2010 and 2009 EBITDA is adjusted for non-recurring charges which impact comparability. Refer to the Company’s Annual Report on Form
10-K for a reconciliation of net income (loss) from continuing operations to EBITDA, EBITDA excluding stock-based compensation and Adjusted EBITDA
excluding stock-based compensation. These items were excluded from the calculation of Adjusted EBITDA excluding stock-based compensation in the
table above and throughout the enclosed Financial Highlights.
Total Revenues
(From Continuing Operations(1))
(In Millions)
$735.5
$707.5
FY13
$644.9
$661.4
FY12
FY10
FY11
$702.1
FY09
$48.9
$44.3
$39.4
$38.3
$33.2
Adjusted EBITDA(2)
Financial Report Insert
See inside rear cover pocket
2013 % Revenues
by Category
by Season
11%
33%
56%
26%
24%
16%
34%
1800Flowers.com® Consumer Floral
Jul-Sep (Fiscal 1st Quarter)
BloomNet® Wire Service
Oct-Dec (Fiscal 2nd Quarter)
Gourmet Food & Gift Baskets
Jan-Mar (Fiscal 3rd Quarter)
Apr-Jun (Fiscal 4th Quarter)
Fiscal 2013 Achievements
• Grew total revenues from continuing operations 4.0% to $735.5 million.
• Continued positive trends in the 1-800-Flowers.com Consumer Floral
segment, including revenue growth of 3.4%, a 90 basis point
improvement in gross profit margin and an increase of more than
20.0% in contribution margin.
• Grew adjusted EBITDA 10.2% to $48.9 million.
• Grew EPS 20.0% to $0.24 per share.
• Finished year with debt-free balance sheet and more than $14 million
in free cash flow.
To Our Shareholders
Fiscal 2013 represented a third consecutive year of solid top and bottom-
line results for our Company. During the year we continued to build
on the positive trends that we have been seeing in our business and
thereby achieved:
result, category contribution margin in this area increased more than 20
percent for the year, to $47.2 million. We believe these results, coupled
with the past two years’ gains, have enabled us to further extend our
market leadership in the Consumer Floral category.
n Solid revenue growth in a lackluster consumer economy,
n Increased gross margin and reduced operating expense ratio,
n Double-digit growth in Adjusted EBITDA and EPS,
n A debt-free balance sheet,
n Significantly enhanced financial flexibility through a new credit facility.
Throughout the year we continued to innovate and invest for the future in
key areas including: new product development programs; our technology
platform; BloomNet; and our Social and Mobile initiatives, among others.
Most important, we continued to deepen the relationships we have with
our customers by engaging directly with
them to help them deliver smiles.
We achieved ecommerce growth across
all of our key brands through a combina-
tion of solid unit growth and strong
average order values as customers
embrace our truly original product offer-
ings. Concurrently, we further reduced
our costs as a percent of total revenues
by continuing to leverage our operating
platform.
Focusing on Profitable Growth
Importantly, we achieved these results
despite a lackluster consumer environ-
ment that was buffeted throughout the
year by headwinds from Super Storm
Sandy, the distraction of a contentious
national election and the subsequent
“fiscal cliff” stalemate in Washington.
We believe that this is a testament to
the strength of our brands and our focus on managing those aspects of
our business where we can exert control and drive consistent, incremental
improvements. These include:
n Our marketing initiatives that are designed to engage directly with
our customers – increasingly through the fast evolving Social and
Mobile channels, to deepen our relationships with them and help
them deliver smiles,
n Our merchandising programs featuring truly original products and
designs that have helped drive increased orders, higher average
order values and growing gross profit margins, and
n Our efforts in manufacturing, sourcing and shipping that have
helped absorb rising commodity and fuel costs and enhance our
operating cost leverage.
Expanding Market Leadership
During the year, we were particularly pleased with the strong performance
of our flagship 1-800-FLOWERS.COM brand, where our ecommerce sales
increased 4 percent through a combination of both order growth and aver-
age order value. In this area we again increased our gross margin, adding
another 90 basis points on top of last year’s significant gains, for a strong,
full-year gross margin of 39.8 percent.
This was achieved despite the highly promotional nature of the competi-
tive marketplace and reflects our efforts to drive enhanced returns across
all of our online and offline marketing and advertising programs. As a
During the year, we also continued to grow the market position for Bloom-
Net, which has established itself as the industry’s “go to” wire service for
unsurpassed quality, service and innovation. In addition to a number of
enhancements to its unique Digital Directory, BloomNet also expanded its
suite of online marketing services designed to help florists grow their busi-
ness, including the introduction of the industry’s first mobile point-of-sale
(POS) tablet app that integrates with BloomNet’s cloud based POS solution.
Deepening Florist Relationships
BloomNet continued to deepen its relation-
ships with professional florists through
community-building programs including:
s a new, digital version of the popular
Floriology magazine featuring profiles of
florists from around the country,
s and, the new “Fresh Forum On The Road”
seminar program – which builds on the suc-
cess of our Floriology Institute in Jacksonville,
Florida by taking its educational programs di-
rectly to florists in markets across the country.
BloomNet’s educational programs were
further expanded early in fiscal 2014 with
the launch of a comprehensive web-based
education platform offering online instruction
through a partnership with Udemy, a global
online education marketplace.
Through this unique program, BloomNet
florists have access to hand-selected courses
focusing on customer service, sales, social me-
dia, marketing, entrepreneurship, finance and
accounting, office productivity, human resources and other best business
practices as well as custom developed courses in floral design, product
care and handling and several other floral-specific categories.
BloomNet achieved gross margin improvement of 400 basis points to 50.9
percent, primarily driven by the mix of products and services and a nearly
15 percent increase in category contribution margin to $25.6 million for
the year. This despite revenues that were essentially flat year-over-year
due to the challenging economic environment for florists. We believe
BloomNet is poised to further increase its market penetration and drive
solid top and bottom line growth in fiscal 2014.
Growing Market Position In Gourmet Food and Gift Baskets
During fiscal 2013, we achieved revenue growth in this area of nearly 7
percent, reflecting strong ecommerce growth, particularly in our Cheryl’s
and The Popcorn Factory brands. Revenues also benefited from year-
over-year growth in our wholesale gift baskets business which showed a
solid turnaround after several years of declining sales. Importantly, “sell
throughs” by our mass market customers were strong during the key
holiday period last year. This has led to higher demand for the upcoming
holiday season. As such, we’re confident that our wholesale gift baskets
business will continue to rebound nicely in fiscal 2014.
In our Fannie May Fine Chocolates brand, while we achieved continued
ecommerce growth, the business did not perform up to our expectations
during fiscal 2013 due primarily to operational issues at our production
facility and a distribution center. As a result, during the second half of the
year, we implemented a number of initiatives to address these issues:
facility is comprised entirely of a $200 million revolving line of credit and
features a highly advantageous interest rate of LIBOR plus a range of
150 to 225 basis points.
n We replaced several members of senior management,
n We realigned reporting lines throughout the company, and
n We added new personnel focused on upgrading operating
processes at both the factory and the distribution center.
The costs associated with these issues, combined with the investments
we have made to address them, resulted in impacts to both gross margin
and category contribution margin for the overall Gourmet Foods and Gift
Baskets segment. However, we are confident that the initiatives we have
put in place will enable Fannie May to bounce back and perform well –
from both a top and bottom line perspective – in fiscal 2014.
Also within this category, we made the decision during the fourth quarter
of the year to divest our Winetasting.com business which has proven
to be difficult to grow at an acceptable rate due primarily to the many
conflicting interstate shipping regulations that apply to wine. This strategic
decision will help enhance our bottom-line performance as we focus on
our existing brands and, increasingly, develop our new growth initiatives
in the gourmet sector.
Delicious New Growth Opportunities
Strong customer response to our expanding line of fruit gifts, specifically
to our FruitBouquets and new Fannie May Berries lines, has increased our
excitement for the growth opportunities we see here.
In FruitBouquets, during fiscal 2013 we continued to leverage our floral
franchise and BloomNet network to increase delivery coverage around the
country. Feedback on the FruitBouquets line – from both customers and
the florists fulfilling the product for us – has been very positive and we are
excited by the long-term opportunity to capture share in a growing market
that is already more than half a billion dollars in sales in the U.S. alone.
Equally exciting has been the launch of our new Fannie May Berries line
– incredible strawberries, specially selected for their size and freshness
that are dipped in REAL Fannie May chocolate. We launched Fannie May
Berries in time for the 2013 Valentine holiday and customer demand has
continued to grow. Throughout fiscal 2014 we will be working to scale our
production and distribution capabilities for this new line and developing
marketing campaigns to help drive brand awareness nationwide. Here
again, we believe we are well positioned to capture share in an already
large and growing market for strawberries, as well as other fruits, dipped
in real chocolate…products our customers are increasingly embracing as
great gifts, and a great way to deliver a smile.
Strengthening Our Balance Sheet – Zero Debt and
Growing Cash
We finished fiscal 2013 with a debt-free balance sheet, having paid off a
total of approximately $29.3 million during the year and more than $130
million since fiscal 2008. We accomplished this through solid cash flows –
even through an unprecedented recessionary economy – combined with
proceeds from divesting non-strategic assets – all while continuing to
invest in our core business platform as well as a broad range of initiatives
designed to drive long-term growth. During the year, we also continued to
return value to shareholders in the form of nearly $10 million used to buy
approximately 2.5 million shares of our stock. We believe we are building
significant value in our company and, as such, we plan to continue our
stock buyback program during fiscal 2014.
During fiscal 2013, we also closed on a new credit facility, providing us
with considerable flexibility to grow our business going forward. The
Growth Guidance Reflects Building On Positive Trends
For fiscal 2014, we expect to achieve revenue growth across all three of
our business segments with consolidated revenue growth for the year
in the mid-single-digit range. We also expect to grow EBITDA and EPS at
rates in excess of the expected revenue growth, reflecting our anticipa-
tion for continued improvements in gross profit margin and operating
leverage across the Company.
We will also continue to invest in key strategic areas that can provide
long-term growth, including:
n Our Social and Mobile customer engagement initiatives;
n Our FruitBouquets and Fannie May Chocolate Dipped
Strawberries lines;
n Our new #JustBecause collection of social gifts, and
n Our programs to accelerate BloomNet’s market penetration.
In terms of Free Cash Flow, we expect to generate approximately $20 mil-
lion during fiscal 2014 – this despite an expected increase in our Capital
Expenditures for the year to approximately $23 million from our recent $17-
$18 million range – which reflects an investment associated with the start
of a plant expansion to double capacity for our fast growing Cheryl’s brand.
While we remain cognizant of the uncertainty in the global economy, we
believe the efforts we have underway will help us deepen our relationship
with our customers, helping them deliver smiles, and build value for all of
our stakeholders. We thank you for your continued support.
Jim McCann
Chairman and CEO
Chris McCann
President
1-800-Flowers.com Brand
Featured on Saturday Night Live
1-800-FLOWERS.COM
achieved strong performance
for the fiscal 2013 Mother’s
Day Holiday, with solid
growth in revenues and gross
profit margin. Highlighting
the great holiday performance
was one of the best compli-
ments any brand can receive.
1-800-Flowers.com’s place in
America’s cultural fabric was
confirmed, in hilarious fashion, by Saturday Night Live alumna
Kristen Wiig who kicked off her highly touted return to the iconic
television show by featuring us in a great spoof of Mother’s Day
family relations (vimeo.com/72110478). This very funny surprise
perfectly illustrated the strength of the 1-800-FLOWERS.COM
brand – something that we’ve built our business on for more
than 35 years.
J A N U A R Y
2014
In fiscal 2013, 1-800-FLOWERS.COM®
accelerated its social marketing
initiatives, further deepening
relationships with customers.
Underscoring this strategy was
the creation of the #JustBecause
campaign which began with the
Company’s appearance on the
AMC reality show The Pitch.
#JustBecause was designed to
be social by nature, leveraging
an existing conversation...and
engaging directly with customers,
encouraging them to celebrate
life’s special moments by sharing
their own stories, memories and
all their “just because” reasons
for giving. 1-800-FLOWERS.COM
has implemented its #JustBecause
campaign throughout the social
landscape on Facebook, Twitter,
Instagram, YouTube, Google+, Vine
and other destinations, as well as
on its own social hub where content
is collected. The Company has also
created a #JustBecause collection of
gifts, enhancing sales opportunities
across all of its brands.
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TUES DAY
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Martin Luther King Jr.’s
Birthday (observed)
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WE DNESDAY
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New Year’s Day
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THURSDAY
FRI DAY
SATURDAY
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F E B R U A R Y
2014
1
SU NDAY
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TUES DAY
When it comes to helping people
deliver smiles to the important people
in their lives, 1-800-FLOWERS.COM®
believes that customers should never
settle for less, regardless of how
much they want to spend. Illustrat-
ing this approach is the Company’s
“good-better-best” merchandising
strategy designed to accommodate
any gifting budget while placing the
focus on “better and “best” products
that provide both creativity and
real value. Embodying this strategy
are truly original products designed
to “wow” gift recipients, such as
Cheryl’s hit cookie flower pots and
delectable Fannie May® Berries
featuring large and luscious
strawberries dipped in 100% real
Fannie May fine chocolate.
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Groundhog Day
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Presidents’ Day
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SATURDAY
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Valentine’s Day
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M A R C H
2014
Getting Social means Going Mobile.
In fiscal 2013, 1-800-FLOWERS.COM®
continued to invest in the devel-
opment of innovative mobile
technologies designed to engage
customers on their mobile devices.
The Company rolled out another
floral industry-first, providing a
unified experience across its award
winning mobile-enabled website
and its apps for iOS (iPhone) and
Android mobile devices. This assures
brand consistency while enabling
customers to quickly find the perfect
gift whether they’re using a mobile
browser or if they download an app
from an app store. These initiatives
captured a coveted Horizon
Interactive® “Gold Award” in the
Global Electronic Commerce/Shopping
category. 1-800-FLOWERS.COM
also launched mobile sites for The
Popcorn Factory®, Fannie May® and
Cheryl’s®, creating a fully mobilized
shopping experience on smartphones
for its great gourmet gift brands.
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SU NDAY
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TUES DAY
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St. Patrick’s Day
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WE DNESDAY
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THURSDAY
FRI DAY
SATURDAY
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First Day of Spring
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A P R I L
2014
Continuing education is vital to
the growth of the floral industry
and during fiscal 2013 BloomNet®
further solidified its relationships
with thousands of local, professional
florists by widening its offering of
educational opportunities. Comple-
menting its industry-accredited
Floriology Institute in Jacksonville,
Florida, BloomNet has teamed
with Udemy to create Floriology
Institute Online. Udemy is a trusted
source for learning, offering over
11,000 on-demand courses to more
than a million users. Through the
Floriology Institute in Jacksonville
combined with the new Floriology
Institute Online, retail florists can
take advantage of an extensive and
versatile educational curriculum
designed to increase their profitabil-
ity...including courses in customer
service, sales, and marketing as
well as custom-developed courses
in floral design, product care and
handling and several other floral-
specific categories.
SU NDAY
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TUES DAY
1
April Fools Day
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Passover Begins at Sunset
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Easter
21
Administrative Professionals’
Week Begins
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THURSDAY
FRI DAY
SATURDAY
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Professionals’ Day
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M A Y
2014
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4
1-800-FLOWERS.COM® is commit-
ted to providing an unparalleled
gift buying experience. Backing
that commitment is a caring team
of associates obsessed with service
and a 100% “Smile Guarantee” that
ensures only the freshest and most
beautiful flowers as well as the
finest gourmet foods. The Company
has been rated number-one versus
competitors for customer service
by STELLAService and ranked
number-two by Conversocial for
social customer service satisfac-
tion as compared to 100 of the top
Internet retailers. Perhaps at no
other time of the year is customer
service more important than
Mother’s Day, an occasion near and
dear to the hearts of millions. Dur-
ing the 2013 Mother’s Day holiday,
1-800-FLOWERS.COM recorded its
lowest customer issues and highest
customer satisfaction ratings on
record, speaking volumes to the
attention to detail and teamwork
of the Company’s customer service
representatives.
1
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Cinco dé Mayo
11
Mother’s Day
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Memorial Day
(observed)
27
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WE DNESDAY
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1
THURSDAY
FRI DAY
SATURDAY
2
National Bring Your Mom
to Work Day
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J U N E
2014
SU NDAY
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TUES DAY
During fiscal 2013, for the second
summer in a row, 1-800-FLOWERS.COM®
accomplished (and exceeded!) its
goal of delivering a million smiles
through its “Summer of a Million
Smiles” program. The community-
based outreach program involves
associates across all of the
Company’s brands, and BloomNet®
florists, giving back to local neigh-
borhoods by volunteering their time
and sharing their smile stories via
1-800-FLOWERS.COM’s growing
social networks. Among the
inspirational stories was the
Company’s assistance in raising
tens of thousands of dollars for the
Make-A-Wish® Foundation, col-
laboration with the YMCA to send
underprivileged kids to summer
camp, donations for local food
banks, visits to hospitals and
nursing homes, and many other
efforts. Furthering its commitment
beyond the summer months,
1-800-FLOWERS.COM is extend-
ing the “Million Smiles” program
throughout the year.
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Father’s Day
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Flag Day
21
First Day of Summer
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J U LY
2014
SU NDAY
MO N DAY
TUES DAY
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8
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Bastille Day
15
Creating a smile with the right gift,
for the right person, at the right
time should be a very personal
experience. 1-800-FLOWERS.COM®
is increasingly adding personal-
ization capabilities to its product
line as a way of helping customers
express themselves perfectly to all
the special people on their gift list.
For example: with the Company’s
Message in a Bottle® customers
can convey their deepest feelings
straight from the heart by choosing
thoughtful pre-printed poems and
also custom-creating a message
of their own. Vase Expressions® en-
ables customers to upload photos
and messages to create personal-
ized vases and make floral arrange-
ments truly original. Customers can
also choose personalized tins from
The Popcorn Factory® filled with
scrumptious treats and adorned
with customer-uploaded photos.
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Parents’ Day
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WE DNESDAY
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THURSDAY
FRI DAY
Independence Day
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SATURDAY
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A U G U S T
2014
SU NDAY
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As the world’s leading florist and
gift shop, 1-800-FLOWERS.COM®
offers an unmatched array of gifts
for all the celebratory occasions
in our customers’ lives. Making it
easy to choose the perfect gift is the
Company’s multi-brand website.
Shoppers can add items to their
shopping cart from any (or all) of six
brands and conveniently complete
check-out from one location.
Shared account information allows
customers to log-in and retrieve
their account data across each of
the brands – accessing securely
stored addresses, “Fresh Rewards”
incentives and “Passport” pay-one-
price shipping discounts. Besides its
customer advantages, the multi-
brand portal provides cross-brand
awareness and added merchan-
dising opportunities while also
enabling all the brands to simultane-
ously benefit from new technical
and functional developments.
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24
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National Friendship
Week Begins
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SATURDAY
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S E P T E M B E R
2014
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2
1
1
Labor Day
The BloomNet® wire service
continues to fortify its position
as the floral industry’s foremost
resource for innovative services and
products designed to broaden profit
potential for retail florists. Helping
to drive BloomNet’s success is a
commitment to building commu-
nity. This was exemplified by the
2013 1-800-Flowers Floral Conven-
tion, which for the second straight
year achieved record attendance.
Another key element in BloomNet’s
efforts to enhance community in
the floral industry is the monthly
Floriology® magazine – available
both in print and digitally – offering
design ideas and business insights
submitted by florists from across
the nation and internationally. Also
setting BloomNet apart is the best-
in-class technology it provides to
florists, including the industry’s first
online directory, a state of the art
business management system, and
a feature-rich interactive tablet app.
7
Grandparents Day
8
14
21
28
15
22
29
2
9
16
23
First Day of Fall
30
2
WE DNESDAY
3
4
THURSDAY
FRI DAY
SATURDAY
5
19
26
11
Patriot Day
12
10
17
18
24
Rosh Hashanah
Begins at Sunset
25
6
13
20
27
O C T O B E R
2014
1
SU NDAY
MO N DAY
TUES DAY
In fiscal 2013, 1-800-FLOWERS.COM®
initiated a comprehensive social
merchandising strategy stemming
from the Company’s #JustBecause
marketing campaign. #JustBecause
was inspired by conversations
already taking place in the social
landscape. The campaign celebrates
all of life’s moments...big, small and
in between...providing customers
with many thoughtful ways to
express their feelings and share gifts
“just because” someone deserves
a smile. Customers can select from
a wide assortment of gifts avail-
able for as little as $5 throughout
the 1-800-FLOWERS.COM family of
brands, including taste-tempting
choices from Fannie May® Fine
Chocolates, Cheryl’s® baked
goods, 1-800-Baskets.com® and
The Popcorn Factory® as well as
imaginative floral gifts from
1800Flowers.com®.
5
12
19
26
6
7
13
Columbus Day
(observed)
14
20
27
21
28
1
WE DNESDAY
1
2 2
THURSDAY
FRI DAY
SATURDAY
3
Yom Kippur
Begins at Sunset
4
8
National Children’s Day
9
10
11
15
22
29
16
National Boss’s Day
17
18
Sweetest Day
23
30
24
25
31
Halloween
N O V E M B E R
2014
The Business Gift Services division of
1-800-FLOWERS.COM® redesigned
its website in fiscal 2013, creating a
true one-stop shopping experience
that enables customers to purchase
gifts from all of the Company’s
brands more conveniently than
ever before. In addition, the division
implemented several other new
initiatives including: bulk order
processing that makes it easy for
corporate customers to submit
large recipient lists while maintain-
ing a database for gifting remind-
ers; partnership agreements with
member-based organizations such
as AARP; floral subscription services
providing management of weekly
deliveries for the hospitality indus-
try; a platform whereby airlines,
credit card companies and other
businesses that offer loyalty and
reward programs can earn redeem-
able points; and the enhancement
of the division’s physical presence
via regional account executives
who support business partnerships
and grow brand awareness on a
local level.
2
1
2
9
16
23
SU NDAY
MO N DAY
TUES DAY
1
4
Election Day
11
Veterans Day
18
25
3
10
17
24
30
2
WE DNESDAY
1
THURSDAY
FRI DAY
SATURDAY
5
12
19
6
13
20
7
14
21
26
27
Thanksgiving Day
28
1
8
15
22
29
D E C E M B E R
2014
SU NDAY
MO N DAY
TUES DAY
1
8
2
9
15
16
Hanukkah Begins
at Sunset
Customers who are looking for
uniquely designed gifts that are
sure to be greatly appreciated dur-
ing the holidays and throughout
the year know they can look to
1-800-FLOWERS.COM®. Among the
Company’s truly original products
are exclusive hand-crafted floral
collections including irresistible
a-DOG-able® “puppy” arrange-
ments and whimsical Happy Hour
Bouquets® creatively designed to look
like actual “cocktails.” Also a favorite
choice of customers at holiday time
and for a myriad of other occasions
during the rest of the year are incred-
ible, carved fresh fruit arrangements
from FruitBouquets.comSM. These
enticing gifts boast succulent straw-
berries, melons, grapes, pineapples
and oranges all expertly “arranged”
in gift baskets and customized
containers.
7
14
21
First Day of Winter
22
28
29
23
30
WE DNESDAY
THURSDAY
FRI DAY
SATURDAY
4
11
18
5
12
19
6
13
20
25
Christmas Day
26
First Day of Kwanzaa
27
0 3
10
17
24
31
Board of Directors
Corporate Officers
James F. McCann
Chairman and Chief Executive Officer
1-800-FLOWERS.COM, Inc.
Christopher G. McCann
President
1-800-FLOWERS.COM, Inc.
William E. Shea
Senior Vice President,
Treasurer and Chief Financial Officer
1-800-FLOWERS.COM, Inc.
Gerard M. Gallagher
Senior Vice President,
General Counsel and Corporate Secretary
1-800-FLOWERS.COM, Inc.
Stephen Bozzo
Chief Information Officer
1-800-FLOWERS.COM, Inc.
Thomas Hartnett
President
Consumer Floral Brand
1-800-FLOWERS.COM, Inc.
David Taiclet
President
Gourmet Food & Gift Baskets
1-800-FLOWERS.COM, Inc.
Mark Nance
President
BloomNet
1-800-FLOWERS.COM, Inc.
James F. McCann
Chairman and
Chief Executive Officer
1-800-FLOWERS.COM, Inc.
Christopher G. McCann
President
1-800-FLOWERS.COM, Inc.
Geralyn R. Breig
Former President
Avon North America
James A. Cannavino
IBM Company
Senior Vice President
Retired
Eugene F. DeMark
Area Managing Partner
KPMG LLP, Retired
BankUnited Director
Leonard J. Elmore
Network Television
Sports Analyst
Attorney at Law
Lawrence V. Calcano
Founder
i1 Biometrics, Inc.
Chairman, Bite Tech
Larry Zarin
Express Scripts, Inc.
Senior Vice President,
Chief Marketing Officer
Retired
Fiscal Year 2013
Financial Report
Selected Financial Data
1-800-FLOWERS.COM, Inc. and Subsidiaries
The selected consolidated statement of operations data for the years ended June 30, 2013, July 1, 2012 and July 3,
2011 and the consolidated balance sheet data as of June 30, 2013 and July 1, 2012, have been derived from the
Company’s audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K. The
selected consolidated statement of operations data for the years ended June 27, 2010 and June 28, 2009, and the
selected consolidated balance sheet data as of July 3, 2011, June 27, 2010 and June 28, 2009, are derived from the
Company’s audited consolidated financial statements which are not included in this Annual Report.
The following tables summarize the Company’s consolidated statement of operations and balance sheet data.
The Company acquired Pingg Corp in May 2013, Flowerama in August 2011, Fine Stationery, Inc. in May 2011 and
Mrs. Beasley’s Bakery LLC in March 2011. The following financial data reflects the results of operations of these
subsidiaries since their respective dates of acquisition. On September 6, 2011, the Company completed the sale of
certain assets of its wine fulfillment services business operated by its Winetasting Network subsidiary. During the
fourth quarter of fiscal 2013, the Company made the strategic decision to divest the e-commerce and procurement
business of the Winetasting Network to focus on growth opportunities in its Gourmet Foods and Gift Baskets business
segment. Consequently, the Company has classified the results of its wine fulfillment services business as a discon-
tinued operation for fiscal 2012 and 2011, and the e-commerce and procurement business of Winetasting Network as
a discontinued operation for all periods presented. 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 statements and notes to those statements included elsewhere in this Annual Report.
Years Ended
June 30, July 1, July 3, June 27, June 28,
2013 2012 2011 2010 2009
(in thousands, except per share data)
Net revenues
Cost of revenues
Gross profit
Operating expenses:
Marketing and sales
Technology and development
General and administrative
Depreciation and amortization
Goodwill and intangible impairment
Total operating expenses
Gain on sale of stores
Operating income (loss)
Interest expenses, net
Income (loss) from continuing operations
before income taxes
Income tax expense (benefit) from
continuing operations
Income (loss) from continuing operations
Income (loss) from discontinued operations,
net of tax
(3,401)
Net income (loss) $ 12,321
Net income (loss) per common share (basic):
9,073
15,722
From continuing operations
From discontinued operations
Net income (loss) per common share (basic)
Net income (loss) per common share (diluted):
From continuing operations
From discontinued operations
Net income (loss) per common share (diluted)
Weighted average shares used in the calculation
of net income (loss) per common share:
Basic
Diluted
$ 0.24
$ (0.05)
$ 0.19
$ 0.24
$ (0.05)
$ 0.19
$735,497
430,305
305,192
186,720
21,700
52,188
18,798
––
279,406
––
25,786
(991)
$707,517
414,940
292,577
181,199
20,426
51,474
19,540
––
272,639
3,789
23,727
(2,635)
$661,389
386,296
275,093
171,960
20,109
48,701
20,237
––
261,007
––
14,086
(3,993)
$644,913
383,981
260,932
169,396
17,581
48,468
20,257
––
255,702
––
5,230
(5,548)
$702,145
424,115
278,030
173,617
20,649
48,634
19,741
82,462
345,103
––
(67,073)
(9,297)
24,795
21,092
10,093
(318)
(76,370)
7,771
13,321
4,325
$ 17,646
$ 0.21
$ 0.07
$ 0.27
$ 0.20
$ 0.07
$ 0.27
3,903
6,190
(468)
$ 5,722
$
0.10
$ (0.01)
$ 0.09
$ 0.10
$ (0.01)
$ 0.09
465
(783)
(3,437)
$ (4,220)
$ (0.01)
$ (0.05)
$ (0.07)
$ (0.01)
$ (0.05)
$ (0.07)
(20,715)
(55,655)
(41,912)
$ (97,567)
$ (0.88)
$ (0.66)
$ (1.53)
$ (0.88)
$ (0.66)
$ (1.53)
64,369
66,792
64,697
66,239
64,001
65,153
63,635
63,635
63,565
63,565
2
Selected Financial Data (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
As of
June 30, July 1, July 3, June 27, June 28,
2013 2012 2011 2010 2009
(in thousands)
Consolidated Balance Sheet Data:
Cash and cash equivalents
and short-term investments
Working capital
Total assets
Long-term liabilities
Total stockholders’ equity
$
154
16,886
250,073
5,039
169,271
$ 28,854
29,721
262,213
17,080
161,748
$ 21,442
17,303
259,075
32,242
142,511
$ 27,843
22,963
256,936
48,745
133,476
$ 29,562
43,679
286,977
73,945
134,633
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
1-800-FLOWERS.COM, Inc. and Subsidiaries
Description of Business
1-800-FLOWERS.COM, Inc. is the world’s leading
florist and gift shop. For more than 35 years, 1-800-
FLOWERS® (1-800-356-9377 or www.1800flowers.com)
has been helping deliver smiles for our customers with
gifts for every occasion, including fresh flowers and
the finest selection of plants, gift baskets, gourmet
foods, confections, candles, balloons and plush stuffed
animals. As always, our 100% Smile Guarantee
backs every gift. 1-800-FLOWERS.COM has been
honored in Internet Retailer’s “Hot 500 Guide” for 2013.
The 1-800-FLOWERS.COM mobile commerce site was
recognized with a Gold Award in the Ecommerce/
Shopping category of the 2012 Horizon Interactive
Awards. 1-800-FLOWERS.COM was also rated
number one vs. competitors for customer service by
STELLAService in 2011 and named by the E-Tailing
Group as one of only nine online retailers out of 100
benchmarked to meet the criteria for Excellence in Online
Customer Service in 2011. The Company’s BloomNet®
international floral wire service (www.mybloomnet.net)
provides a broad range of quality products and value-
added services designed to help professional florists
grow their businesses profitably.
The 1-800-FLOWERS.COM “Gift Shop” also
includes gourmet gifts such as popcorn and specialty
treats from: The Popcorn Factory® (1-800-541-2676 or
www.thepopcornfactory.com); cookies and baked gifts
from Cheryl’s® (1-800-443-8124 or www.cheryls.com);
premium chocolates and confections from Fannie May®
confections brands (www.fanniemay.com and
www.harrylondon.com); gift baskets and towers
from 1-800-Baskets.com® (www.1800baskets.com);
incredible, carved fresh fruit arrangements from
FruitBouquets.com (www.fruitbouquets.com);
top quality steaks and chops from Stock Yards®
(www.stockyards.com); as well as premium
branded customizable invitations and personal
stationery from FineStationery.com®
(www.finestationery.com). The Company’s Celebrations®
brand (www.celebrations.com) is a premier online
destination for fabulous party ideas and planning tips.
1-800-FLOWERS.COM, Inc. is involved in a broad range
of corporate social responsibility initiatives including
continuous expansion and enhancement of its environ-
mentally-friendly “green” programs as well as various
philanthropic and charitable efforts.
On September 6, 2011, the Company completed the
sale of certain assets of its wine fulfillment services business
operated by its Winetasting Network subsidiary. During the
fourth quarter of fiscal 2013, the Company made the
strategic decision to divest the e-commerce and procure-
ment business of the Winetasting Network to focus on
growth opportunities in its Gourmet Foods & Gift Baskets
business segment. The Company anticipates completing
the sale of the Winetasting Network business in fiscal 2014.
Consequently, the Company has classified the results of its
wine fulfillment services business as a discontinued
operation for fiscal 2012 and 2011, and the e-commerce
and procurement business of Winetasting Network as a
discontinued operation for all periods presented.
Shares in 1-800-FLOWERS.COM, Inc. are traded on
the NASDAQ Global Select Market, ticker symbol: FLWS.
As a provider of gifts to consumers and wholesalers
for resale to consumers, the Company is subject to
changes in consumer confidence and the economic
conditions that impact our customers. Demand for the
Company’s products is affected by the financial health of
our customers, which is influenced by macro economic
issues such as unemployment, fuel and energy costs,
weakness in the housing market and unavailability of
consumer credit. During the recent economic downturn,
the demand for our products, and accordingly our
financial results, compared to pre-recessionary levels,
has been adversely affected by the reduction in con-
sumer spending.
During fiscal 2013 the Company continued to recover
from the effects of the recession which began in fiscal
2009, building on last year’s improved financial perfor-
mance. As a result of cost reductions and productivity
improvements, as well as marketing efficiency and
3
Management’s Discussion and Analysis (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
merchandising innovation which has driven cost effective
revenue growth, the Company has been able to make
significant annual improvements in EBITDA compared
to the low point of the recession during fiscal 2010.
As stated in prior years, a key tenet of the Company’s
strategy during this period was to stabilize the Consumer
Floral operations and minimize business risk during the
current recessionary period. In order to improve earnings
during this recessionary period, the Company took a
more conservative view of the economy, and its expecta-
tions of demand, in order to minimize the risk of investing
marketing and operating spend for revenue growth too
early in the economic recovery cycle. This strategy was
designed to protect earnings growth that was expected
to be achieved through operational improvements and
business resizing programs, including a rationalization of
marketing spending, but driven by more effective cam-
paigns, that focused on the Company’s ability to “wow” our
customers with differentiated, non-commoditized higher
value products. While the economic recovery continues at
a slow pace, and the future of the recovery remains
uncertain, the Company believes that its sales “bottomed-
out” in the first half of fiscal 2011, as it then began to
experience modest year-over-year revenue growth.
Recognizing the need to balance the Company’s
short and long-term operating and financial goals, the
Company’s primary objective during fiscal 2014 is to
continue to build on the revenue and earnings momen-
tum generated over the past several years, while minimiz-
ing business risk during the uncertain economic environ-
ment. Tempered by the current economic climate, during
fiscal 2014, the Company expects to achieve revenue
growth across all three of its business segments with
consolidated revenue growth for the year anticipated to
be in the mid-single-digit range. The Company expects to
grow EBITDA and EPS at rates in excess of expected
revenue growth, reflecting anticipated continued improve-
ments in gross profit margin and operating leverage.
The Company’s fiscal 2014 guidance is based on the
positive trends —both top and bottom-line —that the
Company has seen over the past three years, balanced
by the continued uncertainty in the global economy. The
Company plans to continue to focus on managing those
aspects of the business where it can drive revenue
growth and enhanced earnings results, including:
• merchandising initiatives featuring truly original
products and designs that have helped drive
increased orders, average order value and gross
profit margins;
• marketing programs that are designed to engage
directly with our customers to deepen our relation-
ships with them and help them deliver smiles;
• efforts in manufacturing, sourcing and shipping that
have helped absorb rising commodity and fuel costs,
combined with enhanced operating cost leverage;
• initiatives to improve the operational performance of
our Fannie May brand; and
• innovation for the future, including its industry
leading efforts in Social and Mobile arenas,
BloomNet, Fruit Bouquets and Fannie May Berries.
4
The Company believes these efforts, and others
underway, will help continue the positive trends seen in
the business as the Company deepens its relationships
with its customers, helping them deliver smiles, and build
shareholder value.
Category Information
The following table presents the contribution of net
revenues, gross profit and category contribution margin
from each of the Company’s business segments, as well as
consolidated EBITDA and Adjusted EBITDA. As noted
previously, the Company’s wine fulfillment services busi-
ness, as well as its e-commerce and procurement busi-
nesses of The Winetasting Network, which had previously
been included within its Gourmet Foods & Gift Baskets
category, has been classified as discontinued operations
and therefore excluded from category information below.
Net Revenues from Continuing Operations:
Years Ended
June 30, July 1, July 3,
2013 % Change 2012 % Change 2011
(dollars in thousands)
Net revenues from continuing operations:
Consumer
Floral
BloomNet
Wire Service
Gourmet Food &
Gift Baskets
Corporate(*)
Intercompany
eliminations
$411,526
3.4% $398,184
7.9% $369,199
81,822 (0.9%)
82,582
12.7%
73,282
243,225 6.7% 228,002 4.0% 219,174
1,150
789 2.1% 773 (32.8%)
(1,865)
7.9% (2,024) (42.9%)
(1,416)
Total net revenues
from continuing
operations
$735,497
4.0% $707,517
7.0% $661,389
Gross Profit from Continuing Operations:
Years Ended
June 30, July 1, July 3,
2013 % Change 2012 % Change 2011
(dollars in thousands)
Gross profit:
Consumer
Floral
BloomNet
Wire Service
Gourmet Food &
Gift Baskets
Corporate(*)
Intercompany
eliminations
Total gross profit
from continuing
operations
$163,726
39.8%
5.7% $ 154,892
38.9%
10.5% $ 140,163
38.0%
41,674
50.9%
7.6%
98,839
40.6%
953
0.5%
68.4%
––
5.0%
0.9%
(1.2%)
38,737
46.9%
98,382
43.1%
566
––
36,877
50.3%
97,480
44.5%
573
––
$305,192
4.3% $292,577
6.4% $275,093
41.5%
41.4%
41.6%
Management’s Discussion and Analysis (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
Adjusted EBITDA(**) from Continuing Operations:
Years Ended
June 30, July 1, July 3,
2013 % Change 2012 % Change 2011
(dollars in thousands)
Segment Contribution Margin(**):
Consumer
Floral
BloomNet
Wire Service
Gourmet Food &
$ 47,193
20.6% $ 39,147
19.8% $ 32,669
25,611
14.6%
22,339
10.6%
20,195
Gift Baskets(***) 20,345
(32.6%)
30,193
5.8%
28,544
Segment Contribution
Margin Subtotal 93,149
(48,565)
1.6%
(0.3%)
91,679
12.6%
81,408
(48,412) (2.8%) (47,085)
Corporate(*)
EBITDA from
continuing
operations
Add: Stock-based
compensation
EBITDA from
44,584
3.0%
43,267
26.1%
34,323
4,283
(11.7%)
4,850
22.4%
3,961
continuing operations,
excluding stock-based
compensation
48,867
1.6%
48,117
25.7%
38,284
Adjusted for:
Gain on sale
of stores(***)
Adjusted EBITDA
–– ––
(3,789) ––
––
from continuing operations,
excluding stock-based
compensation $ 48,867 10.2% $ 44,328 15.8% $ 38,284
Discontinued Operations:
Years Ended
EBITDA, and adjusted financial information, as a performance measurement
tool because it considers such information a meaningful supplemental
measure of its performance and believes it is frequently used by the
investment community in the evaluation of companies with comparable
market capitalization. The Company also uses EBITDA and adjusted
financial information as one of the factors used to determine the total
amount of bonuses available to be awarded to executive officers and other
employees. The Company’s credit agreement uses EBITDA and adjusted
financial information to measure compliance with covenants such as
interest coverage and debt incurrence. EBITDA and adjusted financial
information is also used by the Company to evaluate and price potential
acquisition candidates. EBITDA and adjusted financial information have
limitations as an analytical tool, and should not be considered in isolation
or as a substitute for analysis of the Company’s results as reported under
GAAP. Some of these limitations are: (a) EBITDA does not reflect changes
in, or cash requirements for, the Company’s working capital needs; (b)
EBITDA does not reflect the significant interest expense, or the cash
requirements necessary to service interest or principal payments, on the
Company’s debts; and (c) although depreciation and amortization are non-
cash charges, the assets being depreciated and amortized may have to be
replaced in the future, and EBITDA does not reflect any cash requirements
for such capital expenditures. Because of these limitations, EBITDA should
only be used on a supplemental basis combined with GAAP results when
evaluating the Company’s performance.
(***)Gourmet Food & Gift Baskets segment contribution margin during the
fiscal year ended July 1, 2012, includes a $3.8 million gain ($2.4 million,
net of tax) on the sale of 17 Fannie May retail stores, which are being
operated as franchised locations post-sale.
Due to certain one-time charges, the following Non-
GAAP reconciliation table has been included within MD&A.
Reconciliation of Net Income from
Continuing Operations to Adjusted EBITDA from
Continuing Operations:
Years Ended
June 30, July 1, July 3,
2013 2012 2011
June 30, July 1, July 3,
2013 2012 2011
(dollars in thousands)
Net revenues
from discontinued
operations $ 5,154
Gross profit
from discontinued
operations
149
Adjusted EBITDA
from discontinued
operations $ (2,769)
$ 10,743
$ 28,399
1,787
4,992
$ (672)
$ (194)
(*) Corporate expenses consist of the Company’s enterprise shared service
cost centers, and include, among other items, Information Technology,
Human Resources, Accounting and Finance, Legal, Executive and Customer
Service Center functions, as well as Stock-Based Compensation. In order to
leverage the Company’s infrastructure, these functions are operated under a
centralized management platform, providing support services throughout the
organization. The costs of these functions, other than those of the Customer
Service Center, which are allocated directly to the above categories based
upon usage, are included within corporate expenses as they are not directly
allocable to a specific segment.
(**) Performance is measured based on segment contribution margin or
segment Adjusted EBITDA, reflecting only the direct controllable revenue
and operating expenses of the segment. As such, management’s measure
of profitability for these segments does not include the effect of corporate
overhead, described above, depreciation and amortization, other income
(net), nor does it include one-time gains or charges. Management utilizes
(in thousands)
Net income from
continuing
operations
Add:
Interest
$ 15,722
$ 13,321
$ 6,190
expense, net
Depreciation and
amortization
Income tax
expense
EBITDA from
continuing
operations
Add: Stock-based
compensation
EBITDA from
991
18,798
9,073
44,584
4,283
continuing operations,
excluding stock-based
compensation
48,867
2,635
19,540
7,771
43,267
4,850
3,993
20,237
3,903
34,323
3,961
48,117
38,284
Less:
Gain on sale
of stores(**)
Adjusted EBITDA
from continuing
operations
5
––
3,789
––
$ 48,867
$ 44,328
$ 38,284
Management’s Discussion and Analysis (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
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
2013 and 2012 consisted of 52 weeks which ended on
June 30, 2013 and July 1, 2012, respectively, whereas
fiscal year 2011 consisted of 53 weeks, which ended on
July 3, 2011.
Net Revenues
Years Ended
June 30, July 1, July 3,
2013 % Change 2012 % Change 2011
(dollars in thousands)
Net revenues:
E-Commerce $536,550
198,947
Other
$735,497
4.7%
1.9%
4.0%
$512,247
195,270
$707,517
6.4% $481,403
8.5%
179,986
7.0% $661,389
Net revenues consist primarily of the selling price of
the merchandise, service or outbound shipping charges,
less discounts, returns and credits.
During the fiscal year ended June 30, 2013, revenues
increased by 4.0% in comparison to the prior year as a
result of: (i) continued growth within the Consumer Floral
segment, specifically due to strong 1-800-Flowers brand
sales during the key floral holidays, and (ii) growth within
the Gourmet Food & Gift Baskets segment, attributable to
strong e-commerce growth from Cheryl’s and The
Popcorn Factory brands, as well as by DesignPac’s
wholesale gift baskets business, which rebounded after
several years of declines, (iii) partially offset by a decline
within the BloomNet segment.
During the fiscal year ended July 1, 2012 revenues
increased by 7.0% over the prior year period, as a result
of growth across all segments, including the Consumer
Floral category, reversing the trend after two years of
revenue declines. These improvements were due to
growth within the Consumer Floral category, which
increased 7.9% as a result of strong year over year
growth during the Company’s key floral holidays, as well
as contributions from several small acquisitions, including
Fine Stationery in May 2011 and Flowerama in August
2011. Further contributing to the revenue growth were: (i)
an increase in shop-to-shop order volume and wholesale
product sales within the BloomNet Wire Service category,
(ii) higher sales from the Gourmet Food & Gift Baskets
category, including contributions from Mrs. Beasley’s,
which was acquired in March 2011, and Stockyards.com,
whose brandname the Company licensed in late Novem-
ber 2011, offset in part by the impact of the 53rd week in
fiscal 2011, and the sale of 17 Fannie May stores which
are currently being operated as franchised locations.
Excluding the impact of the acquisitions and new license
agreements noted above, net of the impact of the Fannie
May store sales, and adjusting for the 53rd week in fiscal
2011, the Company’s revenues increased by 5.5% during
the fiscal year ended July 1, 2012.
E-commerce revenues (combined online and tele-
phonic) increased by 4.7% and 6.4% during the years
6
ended June 30, 2013 and July 1, 2012, respectively.
The Company fulfilled approximately 8.7 million, 8.2
million and 8.1 million e-commerce orders during fiscal
2013, 2012 and 2011, respectively, while average order
value was $61.60 in fiscal 2013 compared to $62.26 in
fiscal 2012 and $59.38 in fiscal 2011. Revenue growth
was attributed to improved merchandising programs,
including the development of innovative and original
products such as the expanded line of a-DOG-ables,
Cheryl’s cookie cards and Fannie May Berries, designed
to “wow” our customers’ gift recipients and our “Never
Settle For Less” marketing campaigns, which also
enabled the Company to reduce its promotional activities.
Other revenues, comprised of the Company’s
BloomNet Wire Service category, as well as the whole-
sale and retail channels of its Consumer Floral and
Gourmet Food and Gift Baskets categories, increased
by 1.9% and 8.5% during fiscal 2013 and fiscal 2012,
respectively. The increase in this sales channel during
fiscal 2013, compared to fiscal 2012, was primarily
attributable to growth by the DesignPac wholesale gift
baskets business, partially offset by a decline in Fannie
May wholesale volume. The increase in this sales
channel during fiscal 2012, in comparison to the prior
year, was primarily due to growth in the BloomNet Wire
Service business, as well as the contributions from
Flowerama, a floral franchise operation purchased in
August 2011.
Additionally, during the second quarter of fiscal 2012,
the Company completed a 62-store franchise agreement
between Fannie May and GB Chocolates. The agreement
includes development rights for 45 new stores to be
opened over the next three years in several mid-west
states as well as specific cities in Florida and Ohio, as
well as the sale of 17 existing Fannie May retail stores
located in areas outside of its core Chicago market. While
the sale of these stores reduced our fiscal 2012 revenues
in comparison to fiscal 2011, it provides a platform for our
franchisor to successfully complete its Fannie May
development plan, while providing the Company with
future revenue streams through franchise and area
development fees and product sales.
The Consumer Floral category includes the opera-
tions of the 1-800-Flowers brand which derives revenue
from the sale of consumer floral products through its e-
commerce sales channels (telephonic and online sales),
royalties from its franchise operations, as well as the
operations of Fine Stationery, an e-commerce retailer of
personalized stationery, invitations and announcements.
Net revenues during the fiscal years ended June 30,
2013 and July 1, 2012, increased by 3.4% and 7.9% over
the respective prior year periods, due to a combination of
increased order volumes and a higher average order
value, driven by enhanced marketing and merchandising
programs that encourage our customers to “wow” their gift
recipients and “Never Settle For Less.” Fiscal 2012 also
benefited from the better Tuesday date placement of the
Valentine’s Day holiday, compared to Monday in fiscal
2011, as well as the revenue contributions of several
small acquisitions, including Fine Stationery in May 2011
Management’s Discussion and Analysis (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
and Flowerama in August 2011, offset in part by the
impact of the 53rd week in fiscal 2011. For the fiscal year
ended July 1, 2012, revenue growth for the Consumer
Floral category, excluding the impact of the above
acquisitions and the 53rd week in fiscal 2011, was
approximately 5.6%.
The BloomNet Wire Service category includes
revenues from membership fees as well as other product
and service offerings to florists. Net revenues during the
fiscal year ended June 30, 2013 decreased by 0.9%,
compared to the prior year, as a result of a decline in
lower margin shop-to-shop order volume and a decline
in wholesale product sales, partially offset by growth in
high margin services, including web marketing, directory
advertising and the florist selection guide. Revenue
during the year ended July 1, 2012 increased by 12.7%
in comparison to the prior year, primarily as a result of
increased shop-to-shop order volume and wholesale
product sales. While shop-to-shop order volume has an
impact on revenues, as noted below, the impact of these
revenue increases/decreases on gross profit and
contribution margin is significantly less than BloomNet’s
normal product/service revenue.
The Gourmet Food & Gift Baskets category includes
the operations of 1-800-Baskets, Cheryl’s (which includes
Mrs. Beasley’s), Fannie May Confections, The Popcorn
Factory, Stockyards.com and DesignPac businesses.
Revenue is derived from the sale of gift baskets, cookies,
baked gifts, premium chocolates and confections,
gourmet popcorn, and prime steaks and chops through
its e-commerce sales channels (telephonic and online
sales) and company-owned and operated retail stores
under the Cheryl’s and Fannie May brand names,
royalties from Fannie May franchise operations, as well
as wholesale operations. Net revenue during the fiscal
year ended June 30, 2013 and July 1, 2012, increased by
6.7% and 4.0%, respectively, in comparison to the prior
years. Growth during the fiscal year ended June 30, 2013
was primarily due to: (i) e-commerce growth from Cheryl’s
and The Popcorn Factory brands due to new product
introductions, including items such as, “cookie bouquets”
and “cookie cards”, and (ii) recovery within DesignPac’s
wholesale gift baskets business, which rebounded after
several years of declines, partially offset by a decline in
Fannie May wholesale volume. Growth during the fiscal
year ended July 1, 2012 was primarily due to: (i) e-
commerce growth from 1-800-Baskets.com, Cheryl’s and
The Popcorn Factory brands, (ii) increased wholesale
revenue from the Fannie May brand, and (iii) revenue
contributions from the acquisitions of Mrs. Beasley’s, a
baker and marketer of cakes, muffins and gourmet gift
baskets, acquired in March 2011, and Stockyards.com, a
purveyor of USDA prime and choice meats, poultry and
seafood, whose brandname the Company licensed in
late November 2011. This growth was largely offset by
reduced DesignPac wholesale basket volume during the
December holiday season, and the impact of the conver-
sion of 17 Fannie May retail stores into franchised
operations. During the fiscal year ended July 1, 2012,
revenue growth for the Gourmet Food & Gift Baskets
category, excluding the impact of above acquisitions, the
7
net effect of the sale of the Fannie May retail stores noted
above, and the impact of the 53rd week in fiscal 2011, was
approximately 3.3%.
For fiscal 2014, the Company expects to grow
revenues across all three of its business segments with
consolidated revenue growth for the year anticipated to
be in the mid-single-digit range.
Gross Profit
Years Ended
June 30, July 1, July 3,
2013 % Change 2012 % Change 2011
(dollars in thousands)
Gross profit $305,192
Gross margin % 41.5%
4.3% $292,577
41.4%
6.4% $275,093
41.6%
Gross profit consists of net revenues less cost of
revenues, which is comprised primarily of florist fulfillment
costs (primarily fees paid directly to florists), 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 and wholesale production operations.
Gross profit increased during the fiscal years ended
June 30, 2013, in comparison to the prior year period,
due to the aforementioned revenue growth, combined
with gross margin expansion. The Company’s gross
margin percentage increased 10 basis points as a result
of improvements within the Consumer Floral segment, as
well as BloomNet, partially related to sales mix, offset in
part by an overall decrease in the gross margin percent-
age achieved by the Gourmet Food & Gift Baskets
segment, resulting from operational difficulties experi-
enced by the Fannie May brand. During fiscal 2012, the
Company’s gross margin percentage decreased 20 basis
points, in comparison to the prior year, reflecting the
impact of product mix and lower gross margins from the
Company’s BloomNet operations and wholesale baskets
business within the Gourmet Food and Gift Basket
category, partially offset by improvements within the
Consumer Floral segment.
The Consumer Floral category gross profit increased
by 5.7% and 10.5% during the fiscal years ended June
30, 2013 and July 1, 2012, respectively, as compared to
the respective prior year periods, due to the higher
revenue, as described above, as well as gross margin
improvements of 90 basis points in each year, resulting
from merchandising sourcing and logistics initiatives,
combined with reductions in promotional activity. Addi-
tionally, gross profit during fiscal 2012 was favorably
impacted by the incremental gross profit generated by the
acquisitions of Fine Stationery and Flowerama.
The BloomNet Wire Service category gross profit
increased by 7.6% and 5.0% during the fiscal years
ended June 30, 2013 and July 1, 2012, respectively.
The gross profit increases are primarily the result of an
Management’s Discussion and Analysis (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
increase in high margin service offerings, including web
marketing, directory advertising, and the product selec-
tion guide. Gross margin percentage, which increased to
50.9% during fiscal 2013, compared to 46.9% in fiscal
2012 and 50.3% in fiscal 2011, reflects the sales mix
impact of wholesale product orders and low margin shop-
to-shop order volume, both of which increased in fiscal
2012, but declined in fiscal 2013.
The Gourmet Food & Gift Baskets category gross
profit increased by 0.5% and 0.9% during the fiscal years
ended June 30, 2013 and July 1, 2012, in comparison
to the prior years, due to the above mentioned revenue
increases, partially offset by gross margin percentage
decreases of 250 basis points and 140 basis points,
respectively. The decrease in gross margin percentage
during fiscal 2013 was primarily attributable to produc-
tion/distribution issues at Fannie May, combined with the
impact of product mix which reflected an increase in
lower margin DesignPac wholesale gift baskets, and a
decrease in higher margin Fannie May retail volume due
to the prior year sale of 17 Fannie May stores. The
decrease in gross margin percentage during fiscal 2012
was driven primarily by lower gross margins from the
wholesale basket business, as well as the impact of the
sale of the Fannie May stores and increases in commod-
ity and shipping costs.
For fiscal 2014, the Company expects its gross margin
percentage will improve in comparison to fiscal 2013 as a
result of expected changes in sales mix, and improve-
ments in product sourcing, supply chain and manufactur-
ing efficiencies.
Marketing and Sales Expense
Years Ended
June 30, July 1, July 3,
2013 % Change 2012 % Change 2011
(dollars in thousands)
Marketing and
sales $186,720 3.0% $181,199 5.4% $171,960
Percentage of
sales
25.4%
25.6%
26.0%
Marketing and sales expense consists primarily of
advertising and promotional expenditures, catalog costs,
online portal and search costs, 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 merchandising activities.
During the fiscal year ended June 30, 2013, marketing
and sales expense increased by 3.0%, compared to the
prior year, as a result of: (i) higher advertising costs
incurred by the 1-800-Flowers brand, which drove cost
efficient revenue growth, and for the successful launch of
Fannie May Berries, (ii) increased labor due to growth
initiatives within the 1-800-Flowers brand, and incremen-
tal labor required to support the growth achieved by the
DesignPac wholesale business. However, as a result of
the Company’s continued focus on improving its mer-
chandising programs, refocusing marketing messages,
and enhancing the efficiency of advertising efforts,
marketing and sales expense, as a percentage of net
revenues, decreased from 25.6% in fiscal 2012 to 25.4%
in fiscal 2013.
During the fiscal year ended July 1, 2012, marketing
and sales expense increased by 5.4% compared to the
prior year, as a result of: (i) increased advertising,
primarily related to the 1-800-Flowers.com Consumer
Floral brand during the key floral holidays, which helped
to drive the improving revenue trends, (ii) increased labor
due to several growth initiatives for franchising, BloomNet
and the Mobile and Social commerce area, and incre-
mental labor associated with the acquisitions of Mrs.
Beasley’s, Fine Stationery and Flowerama, as well as the
operation of the Stockyards direct-to-consumer business,
offset in part by the franchise conversion of 17 Fannie
May retail stores, and (iii) higher facility costs, due to the
aforementioned acquisitions and licensing arrangement.
As a result of spending efficiencies achieved during the
year, marketing and sales expense, as a percentage of
net revenues, decreased from 26.0% in fiscal 2011 to
25.6% in fiscal 2012.
During the fiscal year ended June 30, 2013, the
Company added approximately 2.3 million new e-
commerce customers, compared to 2.0 million in fiscal
2012, and 2.3 million in fiscal 2011. Of the 4.9 million
total customers who placed e-commerce orders during
fiscal 2013, approximately 52% were repeat customers,
(56% in fiscal 2012), reflecting the Company’s growth in
new customer acquisition.
Technology and Development Expense
Years Ended
June 30, July 1, July 3,
2013 % Change 2012 % Change 2011
(dollars in thousands)
Technology and
development
Percentage of
$21,700
6.2% $20,426 1.6% $20,109
sales
3.0%
2.9%
3.0%
Technology and development expense consists
primarily of payroll and operating expenses of the
Company’s information technology group, costs associ-
ated 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.
During the fiscal year ended June 30, 2013, technol-
ogy and development expense increased by 6.2%,
compared to the prior year, as a result of increased labor
costs required to support and implement new strategic
architecture programs, including website and supply
chain improvement initiatives.
During the fiscal year ended July 1, 2012, technology
and development expense increased by 1.6% compared
to the prior year, as a result of the incremental costs
associated with the acquisitions of Mrs. Beasley’s,
Fine Stationery and Flowerama.
8
Management’s Discussion and Analysis (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
During the fiscal years ended June 30, 2013, July 1,
2012, and July 3, 2011 the Company expended $37.3
million, $32.7 million, and $32.2 million, respectively,
on technology and development, of which $15.6 million,
$12.3 million, and $12.1 million, respectively, has
been capitalized.
General and Administrative Expense
Years Ended
June 30, July 1, July 3,
2013 % Change 2012 % Change 2011
(dollars in thousands)
General and
administrative
$52,188 1.4%
$51,474 5.7% $48,701
Percentage of
sales
7.1%
7.3%
7.4%
General and administrative expense consists of
payroll and other expenses in support of the Company’s
executive, finance and accounting, legal, human re-
sources and other administrative functions, as well as
professional fees and other general corporate expenses.
General and administrative expense increased by
1.4% during the fiscal year ended June 30, 2013,
compared to the prior year, as a result of increased health
insurance and worker’s compensation claims, and annual
compensation rate increases, partially offset by a
reduction in performance-based bonuses.
General and administrative expense increased by
5.7% during the fiscal year ended July 1, 2012, compared
to the prior year, due to: (i) incremental costs associated
with the acquisitions of Mrs. Beasley’s, Fine Stationery
and Flowerama, (ii) annual compensation rate increases,
and (iii) an increase in expenses associated with
franchise expansion plans, partially offset by reductions
in bad debt expense.
Depreciation and Amortization
Years Ended
June 30, July 1, July 3,
2013 % Change 2012 % Change 2011
(dollars in thousands)
Depreciation and
amortization
Percentage of
$18,798 (3.8%)
$19,540 (3.4%) $20,237
sales
2.6%
2.8%
3.1%
Depreciation and amortization expense decreased by
3.8% and 3.4% during the fiscal years ended June 30,
2013 and July 1, 2012, respectively, compared to the
prior year periods, as a result of the Company’s efforts in
prior years to reduce capital expenditures as the Com-
pany continues to leverage its technology platform.
Gain on Sale of Stores
On November 21, 2011, the Company and GB
Chocolates LLC (GB Chocolates) entered into an
agreement whereby the Company sold 17 existing
Fannie May stores, to be operated as franchised locations
9
by GB Chocolates, for $5.6 million, recognizing a gain on
the sale of $3.8 million. Upon completion of the sale, the
Company also recognized initial franchise fees associ-
ated with these 17 stores in the amount of $0.5 million. In
conjunction with the sale of stores, the Company and GB
Chocolates entered into an area development agreement
whereby GB Chocolates will open a minimum of 45 new
Fannie May franchise stores. The agreement provides
exclusive development rights for several Midwestern
states, as well as specific cities in Florida and Ohio. The
terms of the agreement include a non-refundable area
development fee of $0.9 million, store opening fees of
$0.5 million, assuming successful opening of 45 stores,
and a non-performance promissory note in the amount of
$1.2 million, which becomes due and payable only if GB
Chocolates does not open all 45 stores as set forth in the
development agreement. The Company has deferred
recognition of $0.7 million, of the original $0.9 million
area development fee associated with the 45 store area
development agreement, based upon the number of
stores opened by GB Chocolates as of June 30, 2013.
The Company will recognize the remaining deferred
revenue of $0.7 million on a pro-rata basis, when the
conditions for revenue recognition under the area
development agreement are met. Both store opening fees
and area development fees are generally recognized
upon the opening of a franchise store, or upon termina-
tion of the agreement between the Company and the
franchisee. The Company recognized approximately $0.2
million, of the $1.2 million promissory note in the second
quarter of fiscal 2012, based upon its assessment of the
likelihood that the performance criteria under the agree-
ment will be achieved.
Interest Expense, net
Years Ended
June 30, July 1, July 3,
2013 % Change 2012 % Change 2011
(dollars in thousands)
Interest
expense, net
$ (991)
62.4% $ (2,635) 34.0% $ (3,993)
Interest expense, net consists primarily of interest
expense, and amortization of deferred financing costs
attributable to the Company’s long-term debt and
revolving line of credit, net of income earned on the
Company’s available cash balances.
Net interest expense decreased during the fiscal years
ended June 30, 2013 and July 1, 2012, in comparison to
the respective prior years, due to scheduled repayments of
amounts outstanding under the Company’s term loan,
combined with reduced borrowing rates. Additionally,
fiscal 2013 benefited from the payoff of its term loan in the
fourth quarter. On April 11, 2013, the Company entered into
a Third Amended and Restated Credit Agreement (the
“2013 Credit Facility”), consisting of a revolving line of
credit, with a seasonally adjusted limit, ranging from
$150.0 to $200.0 million and a working capital sublimit
ranging from $25.0 to $75.0 million. Outstanding amounts
under the 2013 Credit Facility, which matures on April 10,
Management’s Discussion and Analysis (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
Liquidity and Capital Resources
Cash Flows
At June 30, 2013, the Company had working capital
of $16.9 million, including cash and cash equivalents of
$0.2 million, compared to working capital of $29.7 million,
including cash and cash equivalents of $28.9 million, at
July 2, 2012. (Refer to “Credit Facility” below. During the
quarter ended June 30, 2013, the Company repaid all
amounts previously outstanding under its term loan.)
Net cash provided by operating activities of $34.6
million for the fiscal year ended June 30, 2013 was
primarily related to net income, adjusted for non-cash
charges for depreciation and amortization, deferred
income taxes, and stock-based compensation, offset in
part by a net increase in working capital, including
inventory, accounts receivable and prepaid expenses.
Increases in inventory and accounts payable relate to
an increase in wholesale volume and earlier delivery
requirements for DesignPac gift basket customers, as
well as earlier manufacturing of Cheryl’s components
due to production capacity constraints.
Net cash used in investing activities of $24.5 million
for the fiscal year ended June 30, 2013 was primarily
attributable to capital expenditures related to the
Company’s technology infrastructure, as well as the
acquisition of Pingg Corp., and payments related to the
acquisition of 1-800-Flowers’ European trademarks.
As noted above, as a result of production capacity
constraints at the Company’s Cheryl’s manufacturing
facility, the Company will be expanding the facility during
fiscal 2014, resulting in incremental capital of approxi-
mately $5.0 million. The Company believes that it will be
able to fund this incremental capital requirement through
cash generated from operations.
Net cash used in financing activities of $38.8 million
for the fiscal year ended June 30, 2013 reflects: (i)
scheduled repayments of the Company’s term loan, and
(ii) the prepayment of the $13.5 million balance, which
would have been remaining on its term loan at June 30,
2013, during the fourth quarter of fiscal 2013, as well as
(iii) the acquisition of $9.6 million of treasury stock under
the Company’s stock repurchase plan.
Credit Facility
On April 16, 2010, the Company entered into a
Second Amended and Restated Credit Agreement (the
“2010 Credit Facility”) with JPMorgan Chase Bank N.A.,
as administrative agent, and a group of lenders. The 2010
2018, will bear interest at the Company’s option at either:
(i) LIBOR, plus a spread of between 150 and 225 basis
points, as determined by the Company’s leverage ratio, or
(ii) the agent bank’s prime rate plus a margin. At June 30,
2013, the Company had no outstanding debt.
Income Taxes
During the fiscal years ended June 30, 2013, July 1,
2012 and July 3, 2011, the Company recorded income tax
expense of $9.1 million, $7.8 million and $3.9 million,
respectively, resulting in an effective tax rate of 36.6%,
36.8% and 38.7%, respectively. The Company’s effective
tax rate differed from the U.S. federal statutory rate of 35%
primarily due to the impact of state income taxes, non-
deductible stock-based compensation and goodwill
amortization, combined with various tax credits/settlements.
At June 30, 2013, the Company’s federal net operating
loss carryforwards were approximately $3.1 million, which,
if not utilized, will begin to expire in fiscal year 2025.
Discontinued Operations
On September 6, 2011, the Company completed the
sale of certain assets of its wine fulfillment services
business operated by its Winetasting Network subsidiary.
The sales price consisted of $12.0 million of cash pro-
ceeds at closing, resulting in a gain on sale of $8.7 million
($4.5 million, net of tax). During the fourth quarter of fiscal
2013, the Company made the strategic decision to divest
the e-commerce and procurement businesses of The
Winetasting Network in order to focus on growth opportuni-
ties in its Gourmet Foods and Gift Baskets business
segment. The Company anticipates completing the sale of
its Winetasting Network business in fiscal 2014, at an
anticipated loss of $2.3 million ($1.5 million, net of tax).
Consequently, the Company has classified the results of its
wine fulfillment services business as a discontinued
operation for fiscal 2012 and 2011, and the e-commerce
and procurement business of Winetasting Network as a
discontinued operation for all periods presented.
Results for discontinued operations are as follows:
Years Ended
June 30, July 1, July 3,
2013 2012 2011
(dollars in thousands)
Net revenues
from discontinued
operations
Gross profit
$ 5,154
from discontinued
$
operations
149
$10,743 $28,399
$ 1,787
$ 4,992
Loss from
discontinued
operations,
net of tax
Gain (loss)
on sale of
discontinued
operations,
net of tax
Income (loss)
$ (1,889)
$ (217) $
(468)
$ (1,512)
$ 4,542 $ ––
from discontinued
operations
$ (3,401)
$ 4,325 $ (468)
10
Management’s Discussion and Analysis (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
Credit Facility consisted of a $60.0 million term loan with
a maturity date of March 30, 2014, and a revolving credit
line which extended through April 16, 2014, and included
a seasonally adjusted limit which ranged from $40.0 to
$75.0 million. The term loan was payable in sixteen
quarterly installments of principal and interest beginning in
June 2010, with escalating principal payments at the rate
of 20% in year one, 25% in years two and three and 30%
in year four. Interest on outstanding amounts under the
2010 Credit Facility was calculated under: (i) LIBOR plus a
defined margin, or (ii) the agent bank’s prime rate plus a
margin. The applicable margins for the Company’s term
loans and revolving credit facility ranged from 3.00% to
3.75% for LIBOR loans and 2.00% to 2.75% for ABR loans
with pricing based upon the Company’s leverage ratio.
On April 10, 2013, the Company entered into a Third
Amended and Restated Credit Agreement (the “2013
Credit Facility”). The 2013 Credit Facility consists of a
revolving line of credit with a seasonally adjusted limit
ranging from $150.0 to $200.0 million and a working
capital sublimit ranging from $25.0 to $75.0 million.
Outstanding amounts under the 2013 Credit Facility,
which matures on April 10, 2018, will bear interest at the
Company’s option at either: (i) LIBOR, plus a spread of
between 150 and 225 basis points, as determined by the
Company’s leverage ratio, or (ii) the agent bank’s prime
rate plus a margin. The obligations of the Company and its
subsidiaries under the 2013 Credit Facility were secured
by liens on all personal property of the Company and its
domestic subsidiaries. There were no amounts outstanding
under the 2013 Credit Facility as of June 30, 2013.
Despite the current challenging economic environ-
ment, the Company believes that cash flows from
operations along with available borrowings from its
2013 Credit Facility will be a sufficient source of liquidity.
The Company typically borrows against the facility to
fund working capital requirements related to pre-holiday
manufacturing and inventory purchases which peak
during its fiscal second quarter before being repaid prior
to the end of that quarter.
Stock Repurchase Program
The Company has a stock repurchase plan through
which purchases can be made from time to time in the
open market and through privately negotiated transac-
tions, subject to general market conditions. The repur-
chase program is financed utilizing available cash. In
March 2013, the Company’s Board of Directors autho-
rized an increase of $20 million to its stock repurchase
plan. The Company repurchased a total of $9.6 million
(2,490,065 shares), $3.3 million (1,133,913 shares) and
$0.5 million (168,207 shares) during the fiscal years
ended June 30, 2013, July 1, 2012, and July 3, 2011,
respectively, under this program. As of June 30, 2013,
$18.9 million remains authorized under the plan.
Contractual Obligations
At June 30, 2013, the Company’s contractual obliga-
tions from continuing operations consist of:
Payments due by period
Less than More than
Total 1 year 1 - 2 years 3 - 5 years 5 years
(dollars in thousands)
Long-term debt,
including interest
Operating lease obligations
Sublease obligations
Purchase commitments(*)
$
––
54,072
2,582
54,352
$
––
12,818
1,249
54,352
Total
$111,006
$ 68,419
$
––
17,175
1,097
––
$ 18,272
$
––
12,684
236
––
$
12,920
$
––
11,395
––
––
$ 11,395
(*) Purchase commitments consist primarily of inventory and equipment purchase orders made in the ordinary course of business.
11
Management’s Discussion and Analysis (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
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 U.S. generally accepted accounting
principles. The preparation of these financial statements
requires management to make estimates and assump-
tions 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, inventory and long-lived
assets, including goodwill and other intangible assets
related to acquisitions. Management bases its estimates
and judgments on historical experience 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 assumptions or conditions.
Management believes the following critical accounting
policies, among others, affect its more significant judg-
ments and estimates used in preparation of its consoli-
dated financial statements.
Revenue Recognition
Net revenues are generated by E-commerce opera-
tions from the Company’s online and telephonic sales
channels as well as other operations (retail/wholesale)
and primarily consist of the selling price of merchandise,
service or outbound shipping charges, net of discounts,
returns and credits. Net revenues are recognized
primarily upon product shipment and do not include
sales tax. Shipping terms are primarily FOB shipping
point. Net revenues generated by the Company’s
BloomNet Wire Service operations include membership
fees as well as other products and service offerings to
florists. Membership fees are recognized monthly in the
period earned, and products sales are recognized upon
product shipment with shipping terms primarily FOB
shipping point.
Initial franchise fees are recognized in income when
the Company has substantially performed or satisfied all
material services or conditions relating to the sale of the
franchise and the fees are nonrefundable. Area develop-
ment fees are nonrefundable and are recognized in
income on a pro-rata basis when the conditions for
revenue recognition under the individual area develop-
ment agreements are met. Both initial franchise fees and
area development fees are generally recognized upon
the opening of a franchise store or upon termination of
the agreement between the Company and the franchisee.
Accounts Receivable
The Company maintains allowances for doubtful
accounts for estimated losses resulting from the inability
of its customers or franchisees to make required pay-
ments. In establishing the appropriate provisions for
customer receivable balances, the Company makes
assumptions with respect to their future collectability.
The Company’s assumptions are based on an assess-
ment of a customer’s credit quality as well as subjective
factors and trends, including the aging of receivable
balances. Once the Company considers the factors
above, an appropriate provision is made, which takes into
account the severity of the likely loss on the outstanding
receivable balance based on the Company’s experience
in collecting these amounts. If the financial condition of
the Company’s customers or franchisees were to deterio-
rate, resulting in an impairment of their ability to make
payments, additional allowances may be required.
Inventory
Inventories are valued at the lower of cost or market
using the first-in, first-out method of accounting. The
Company also records an inventory obsolescence
reserve, which represents the difference between the
cost of the inventory and its estimated realizable value,
based on various product sales projections. This reserve
is determined by analyzing inventory skus based on age,
expiration, historical trends and requirements to support
forecasted sales. In addition, and as necessary, the
Company may establish specific reserves for future
known or anticipated events.
Goodwill
Goodwill represents the excess of the purchase price
over the fair value of the net tangible and identifiable
intangible assets acquired in each business combination,
with the carrying value of the Company’s goodwill allo-
cated to its reporting units. Goodwill is not amortized, but it
is subject to an annual assessment for impairment, which
the Company performs during the fourth quarter, or more
frequently if events occur or circumstances change such
that it is more likely than not that an impairment may exist.
The Company tests goodwill for impairment at the
reporting unit level. The Company identifies its reporting
units by assessing whether the components of its
operating segments constitute businesses for which
discrete financial information is available and manage-
ment of each reporting unit regularly reviews the operat-
ing results of those components. Goodwill impairment
testing involves a two-step process. The first step requires
comparison of the fair value of each of the reporting units
to the respective carrying value. If the carrying value of
the reporting unit is less than the fair value, no impair-
ment exists and the second step is not performed. If the
12
Management’s Discussion and Analysis (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
carrying value of the reporting unit is higher than the fair
value, the second step must be performed to compute the
amount of the goodwill impairment, if any. In the second
step, the impairment is computed by comparing the
implied fair value of the reporting unit goodwill with the
carrying amount of that goodwill. If the carrying amount
of the reporting unit goodwill exceeds the implied fair
value of that goodwill, an impairment loss is recognized
for the excess.
The Company generally estimates the fair value of a
reporting unit using an equal weighting of the income
and market approaches. The Company uses industry
accepted valuation models and set criteria that are
reviewed and approved by various levels of management
and, in certain instances, the Company engages third-
party valuation specialists for advice. Under the income
approach, the Company uses a discounted cash flow
methodology which requires management to make
significant estimates and assumptions related to fore-
casted revenues, gross profit margins, operating income
margins, working capital cash flow, perpetual growth
rates, and long-term discount rates, among others.
For the market approach, the Company uses the guide-
line public company method. Under this method the
Company utilizes information from comparable publicly
traded companies with similar operating and investment
characteristics as the reporting units, to create valuation
multiples that are applied to the operating performance of
the reporting unit being tested, in order to obtain their
respective fair values. The Company also reconciles the
aggregate fair values of its reporting units determined in
the first step (as described above) to its current market
capitalization, allowing for a reasonable control premium.
Based on the goodwill impairment test performed
during the fourth quarter of fiscal 2013, the estimated fair
value of the Company’s reporting units significantly
exceeded their respective carrying value (including
goodwill allocated to each respective reporting unit).
Future changes in the estimates and assumptions
above could materially affect the results of our reviews
for impairment of goodwill. However, as a measure of
sensitivity, a 40% decrease in the fair value of the
Company’s reporting units as of June 30, 2013, would
have had no impact on the carrying value of the
Company’s goodwill. In addition, a decrease of 100
basis points in our terminal (perpetual) growth rate or an
increase of 100 basis points in our weighted-average
cost of capital would still result in a fair value calculation
exceeding our book value for each of our reporting units.
Other Intangibles and Long-Lived Assets
Other intangibles consist of definite-lived intangible
assets (such as investment in licenses, customer lists,
and others) and indefinite-lived intangible assets (such
as acquired trade names and trademarks). The cost of
definite-lived intangible assets 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, while indefinite-lived intangible assets
are not amortized.
Long-lived assets, such as definite-lived intangibles
and property, plant and equipment are reviewed for
impairment whenever changes in circumstances or
events may indicate that the carrying amounts are not
recoverable. When such events or changes in circum-
stances occur, a recoverability test is performed compar-
ing projected undiscounted cash flows from the use and
eventual disposition of an asset or asset group to its
carrying value. If the projected undiscounted cash flows
are less than the carrying value, then an impairment
charge would be recorded for the excess of the carrying
value over the fair value, which is determined by dis-
counting future cash flows.
The Company tests indefinite-lived intangible assets
for impairment at least annually, during the fourth quarter,
or whenever changes in circumstances or events may
indicate that the carrying amounts are not recoverable.
The impairment test for indefinite-lived intangible assets
encompasses calculating a fair value of an indefinite-
lived intangible asset and comparing the fair value to its
carrying value. If the carrying value exceeds the fair
value, impairment is recognized for the difference. To
determine fair value of other indefinite-lived intangible
assets, the Company uses an income approach, the
relief-from-royalty method. This method assumes that, in
lieu of ownership, a third party would be willing to pay a
royalty in order to obtain the rights to use the comparable
asset. Other indefinite-lived intangible assets’ fair values
require significant judgments in determining both the
assets’ estimated cash flows as well as the appropriate
discount and royalty rates applied to those cash flows to
determine fair value.
Based on the indefinite-lived intangible assets
impairment test performed during the fourth quarter of
fiscal 2013, the estimated fair value of the Company’s
intangibles significantly exceeded their respective
carrying value. Future changes in the estimates and
assumptions above could materially affect the results
of our reviews for impairment of intangibles.
13
Management’s Discussion and Analysis (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
Income Taxes
The Company uses the asset and liability method to
account for income taxes. The Company has established
deferred tax assets and liabilities for temporary differ-
ences 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 recog-
nizes as a deferred tax asset, the tax benefits associated
with losses related to operations. Realization of these
deferred tax assets 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 implemented to
realize the deferred tax assets.
The Company recognizes the tax benefit from an
uncertain tax position only if it is more likely than not that
the tax position will be sustained on examination by the
taxing authorities based on the technical merits of the
position. The tax benefits recognized in the financial
statements on a particular tax position are measured
based on the largest benefit that has a greater than a
50% likelihood of being realized upon settlement. The
amount of unrecognized tax benefits (“UTBs”) is adjusted
as appropriate for changes in facts and circumstances,
such as significant amendments to existing tax law, new
regulations or interpretations by the taxing authorities,
new information obtained during a tax examination, or
resolution of an examination. We recognize both accrued
interest and penalties, where appropriate, related to
UTBs in income tax expense. Assumptions, judgment
and the use of estimates are required in determining if
the “more likely than not” standard has been met when
developing the provision for income taxes.
Newly Adopted Accounting Pronouncements
In September 2011, the FASB issued Accounting
Standards Update No. 2011-08 “Testing Goodwill for
Impairment” (ASU No. 2011-08) which is intended to
reduce the complexity and costs to test goodwill for
impairment. The amendment allows an entity the option
to make a qualitative evaluation about the likelihood of
goodwill impairment to determine whether it is neces-
sary to perform the two-step quantitative goodwill
impairment test. An entity will no longer be required to
calculate the fair value of a reporting unit unless the
entity determines, based on its qualitative assessment,
that it is more likely than not that the fair value of
the reporting unit is less than its carrying amount.
The ASU also expands upon the examples of events
and circumstances that an entity should consider
between annual impairment tests in determining
whether it is more likely than not that the fair value of a
reporting unit is less than its carrying amount. This ASU
became effective for annual and interim goodwill
impairment tests performed for the Company’s fiscal
year ending June 30, 2013. The adoption of this
standard did not have a material impact on the
Company’s consolidated financial statements.
In June 2011, the FASB issued Accounting Stan-
dards Update No. 2011-05, “Comprehensive Income
(Topic 220) - Presentation of Comprehensive Income”
(ASU 2011-05), which requires an entity to present the
total of comprehensive income, the components of net
income, and the components of other comprehensive
income either in a single continuous statement of
comprehensive income or in two separate but consecu-
tive statements. ASU 2011-05 eliminated the option
to present the components of other comprehensive
income as part of the statement of equity. The Company
adopted ASU 2011-05 in its first quarter of fiscal year
2013 by including the required disclosures in two
separate but consecutive statements.
Recent Accounting Pronouncements
In July 2012, the Financial Accounting Standards
Board (“FASB”) issued Accounting Standards Update
No. 2012-02, “Testing Indefinite-Lived Intangible Assets
for Impairment” (“ASU No. 2012-02”), which allows
entities to use a qualitative approach to test indefinite-
lived intangible assets for impairment. ASU No. 2012-02
permits an entity to first assess qualitative factors to
determine whether it is more likely than not that the fair
value of the indefinite-lived intangible asset is less than
its carrying value. If it is concluded that this is the case, it
is necessary to perform the currently prescribed quantita-
tive impairment test. Otherwise, the quantitative impair-
ment test is not required. ASU No. 2012-02 is effective for
annual and interim impairment tests performed for fiscal
years beginning after September 15, 2012. The adoption
of the provisions of ASU No. 2012-02 is not expected to
have a material impact on the Company’s financial
position or results of operations.
14
Management’s Discussion and Analysis (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
Quantitative and Qualitative Disclosures
About Market Risk
Special Note Regarding Forward-Looking
Statements
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, as well as from outstanding
debt. As of June 30, 2013, the Company had no debt
outstanding under its credit agreement, as all amounts
previously outstanding were paid off during the fourth
quarter of fiscal 2013.
The Company does not enter into derivative
transactions for trading purposes, but rather, on
occasion, to manage its exposure to interest rate
fluctuations. The Company has managed its floating
rate debt using interest rate swaps in order to reduce
its exposure to the impact of changing interest rates on
its consolidated results of operations and future cash
outflows for interest.
In July 2009, the Company entered into a $45.0
million notional amount swap agreement that ex-
changes a variable interest rate (LIBOR) for a 1.92%
fixed rate of interest over the term of the agreement.
This swap matured on July 25, 2012. The Company
had designated this swap as a cash flow hedge of the
interest rate risk attributable to forecasted variable
interest (LIBOR) payments. The effective portion of the
after tax fair value gains or losses on this swap was
included as a component of accumulated other
comprehensive income.
This annual report contains forward-looking state-
ments within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking
statements represent the Company’s expectations or
beliefs at the time of this report’s publishing concerning
future events and can generally be identified by the use
of statements that include words such as “estimate,”
“expects,” “project,” “believe,” “anticipate,” “intend,” “plan,”
“foresee,” “likely,” “will,” “target” or similar words or
phrases. These forward-looking statements are subject to
risks, uncertainties and other factors, many of which are
outside of the Company’s control, which could cause
actual results to differ materially from the results ex-
pressed or implied in the forward- looking statements,
including, but are not limited to, statements regarding the
Company’s expectations for: continued market penetra-
tion in its BloomNet wire service business; its ability to
build on positive trends including increases in revenue,
gross margin and contribution margin in its Consumer
Floral business; its ability to achieve top and bottom line
growth in its BloomNet and Gourmet Food and Gift
Baskets categories; its ability to achieve its guidance for
consolidated revenue growth for the full year in mid-
single digit range along with higher year-over-year
increases in EBITDA and EPS; its ability to leverage its
operating platform and reduce operating expense ratio;
its ability to remediate operational issues and improve
performance in its Fannie May business; its ability to
divest its Winetasting.com business on a timely and cost
effective basis; its ability to manage the seasonality of its
businesses; its ability to cost effectively acquire and retain
customers; the outcome of contingencies, including legal
proceedings in the normal course of business; its ability to
compete against existing and new competitors; its ability
to manage expenses associated with sales and market-
ing and necessary general and administrative and
technology investments; its ability to reduce promotional
activities and achieve more efficient marketing programs;
and general consumer sentiment and economic condi-
tions that may affect levels of discretionary customer
purchases of the Company’s products. The Company
undertakes no obligation to publicly update any of the
forward-looking statements, whether as a result of new
information, future events or otherwise, made in this
release or in any of its SEC filings except as may be
otherwise stated by the Company. For a more detailed
description of these and other risk factors, please refer to
the Company’s SEC filings including the Company’s
Annual Reports on Form 10-K and its Quarterly Reports
on Form 10-Q. Consequently, you should not consider
any such list to be a complete set of all potential risks
and uncertainties.
15
Management’s Discussion and Analysis (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
Quarterly Results of Operations
The following table provides unaudited quarterly consolidated results of operations for each quarter of fiscal
years 2013 and 2012. 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
Jun. 30, Mar. 31, Dec. 30, Sep. 30, Jul. 1, Apr. 1, Jan. 1, Oct. 2,
2013 2013 2012 2012 2012 2012 2012 2011
(in thousands, except per share data)
Net revenues:
E-commerce
Other
(telephonic/online) $139,109 $144,555 $171,774
79,587
251,360
146,879
104,481
33,854
172,963
102,134
70,829
47,027
191,582
111,125
80,457
Total net revenues
Cost of revenues
Gross Profit
Operating expenses:
48,075
5,328
12,016
4,992
70,411
51,439
5,613
13,757
4,838
75,647
54,483
5,363
13,354
4,521
77,721
$ 81,112
38,480
119,592
70,167
49,425
32,723
5,396
13,061
4,447
55,627
46,416
$138,487 $131,598 $163,794 $ 78,368
36,939
38,853
115,307
177,340
68,957
103,652
46,350
73,688
73,062
178,014 236,856
137,131
105,199
99,725
72,815
48,249
5,215
12,776
4,861
71,101
48,282
5,627
13,667
4,865
72,440
52,604
4,842
12,807
4,920
75,173
32,064
4,742
12,224
4,894
53,924
––
418
32
––
––
26,760
4,810
(199) (538)
––
(6,202)
(286)
––
––
2,587 375
(410)
(410)
3,789
––
28,341 (7,574)
(821)
(996)
450
(88)
4,611
1,491
26,222
9,715
(6,488)
(2,045)
2,177
453
(35)
(215)
27,345
10,955
(8,395)
(3,422)
538
3,120
16,507
(4,443)
1,724
180
16,390
(4,973)
(749)
(481)
(496)
(163)
(92)
(265)
249
(109)
Marketing and sales
Technology and development
General and administrative
Depreciation and amortization
Total operating expenses
Gain on sale of stores
Operating income (loss)
Interest income (expense), net
Income (loss) from continuing
operations before income taxes
Income tax expense (benefit)
Income (loss) from continuing
operations
Income (loss) from discontinued
operations, net of tax
Gain (loss) on sale of discontinued
operations, net of tax
(1,512)
––
––
––
200
––
––
4,342
Income (Ioss) from discontinued
operations
(496)
Net income (loss) $ (1,723) $ 2,639 $ 16,011
Basic net income (loss) per
(2,261)
(481)
(163)
$ (4,606)
108
4,233
$ 1,832 $ (85) $ 16,639 $ (740)
(265)
249
common share:
From continuing operations $ 0.01 $ 0.05 $ 0.25 $ (0.07)
0.00
(0.04)
From discontinued operations
(0.01) (0.01)
$ 0.03 $ 0.00 $ 0.25 $ (0.08)
0.00 0.00 0.00 0.07
Net income (loss) per
common share $ (0.03) $ 0.04 $ 0.25 $ (0.07)
$ 0.03 $ 0.00 $ 0.26 $ (0.01)
Diluted net income (loss) per
common share:
From continuing operations $ 0.01 $ 0.05 $ 0.25 $ (0.07)
0.00
(0.03)
From discontinued operations
(0.01) (0.01)
$ 0.03 $ 0.00 $ 0.25 $ (0.08)
0.00 0.00 0.00 0.07
Net income (loss) per
common share $ (0.03) $ 0.04 $ 0.24 $ (0.07)
$ 0.03 $ 0.00 $ 0.25 $ (0.01)
Weighted average shares used in
the calculation of net income (loss)
per common share:
Basic
Diluted
63,891
66,620
64,256
66,111
64,824
66,557
64,505
64,505
64,741
66,381
64,988
66,299
64,841
66,050
64,218
64,218
The Company’s quarterly results may experience seasonal fluctuations. Due to the Company’s expansion into
non-floral 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 and Administrative Professionals Week, revenues also
rise during the Company’s fiscal fourth quarter. The Easter Holiday was in the Company’s third quarter of fiscal 2013,
but it was in the fourth quarter during fiscal 2012 and 2011, and will fall in the fourth quarter of fiscal 2014.
16
Consolidated Balance Sheets
1-800-FLOWERS.COM, Inc. and Subsidiaries
(in thousands, except share data)
June 30, July 1,
2013 2012
Assets
Current assets:
Cash and cash equivalents
Receivables, net
Inventories
Deferred tax assets
Prepaid and other
Current assets of discontinued operations
Total current assets
Property, plant and equipment, net
Goodwill
Other intangibles, net
Deferred tax assets
Other assets
Non-current assets of discontinued operations
Total assets
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
Accrued expenses
Current maturities of long-term debt and obligations under capital leases
Current liabilities of discontinued operations
Total current liabilities
Long-term debt and obligations under capital leases
Other liabilities
Total liabilities
Stockholders’ equity:
Preferred stock, $.01 par value, 10,000,000 shares authorized, none issued
Class A common stock, $.01 par value, 200,000,000 shares authorized,
36,280,425 and 34,465,207 shares issued in 2013 and 2012, respectively
Class B common stock, $.01 par value, 200,000,000 shares authorized,
42,125,465 and 42,138,465 shares issued in 2013 and 2012, respectively
Accumulated other comprehensive loss
Additional paid-in capital
Retained deficit
Treasury stock, at cost, 9,257,231 and 6,767,166 Class A shares in 2013 and
2012, respectively, and 5,280,000 Class B shares in 2013 and 2012
Total stockholders’ equity
Total liabilities and stockholders’ equity
See accompanying Notes to Consolidated Financial Statements.
17
$
154
14,957
55,756
5,746
9,941
6,095
92,649
52,943
47,943
43,276
2,127
10,086
1,049
$250,073
$ 26,235
45,044
––
4,484
75,763
––
5,039
80,802
––
362
$ 28,854
11,887
53,933
4,993
8,286
5,153
113,106
48,550
47,485
41,576
2,824
7,875
797
$262,213
$ 17,619
48,811
15,756
1,199
83,385
13,500
3,580
100,465
––
344
421
421
–– (17)
298,580
293,814
(83,937) (96,258)
(46,155) (36,556)
161,748
169,271
$250,073
$262,213
Consolidated Statements of Income
1-800-FLOWERS.COM, Inc. and Subsidiaries
(in thousands, except per share data)
Years Ended
June 30, July 1, July 3,
2013 2012 2011
Net revenues
Cost of revenues
Gross profit
Operating expenses:
$707,517
414,940
292,577
$735,497
430,305
305,192
$661,389
386,296
275,093
Marketing and sales
Technology and development
General and administrative
Depreciation and amortization
Total operating expenses
Gain on sale of stores
Operating income
Interest expense, net
Income from continuing operations
before income taxes
Income tax expense from continuing operations
Income from continuing operations
Loss from discontinued operations,
net of tax
Gain (loss) on sale of discontinued operations,
net of tax
Income (loss) from discontinued operations
Net income
Basic net income (loss) per common share:
From continuing operations
From discontinued operations
Basic net income per common share
Diluted net income (loss) per common share:
From continuing operations
From discontinued operations
Diluted net income per common share
Weighted average shares used in the calculation of
net income (loss) per common share:
Basic
Diluted
See accompanying Notes to Consolidated Financial Statements.
186,720
21,700
52,188
18,798
279,406
––
25,786
(991)
24,795
9,073
15,722
(1,889)
(1,512)
(3,401)
$ 12,321
$
0.24
(0.05)
0.19
$
$
0.24
(0.05)
0.19
$
64,369
66,792
181,199
20,426
51,474
19,540
272,639
3,789
23,727
171,960
20,109
48,701
20,237
261,007
––
14,086
(2,635) (3,993)
21,092
7,771
13,321
(217)
4,542
4,325
$ 17,646
$ 0.21
0.07
$ 0.27
$ 0.20
0.07
$ 0.27
64,697
66,239
10,093
3,903
6,190
(468)
––
(468)
$ 5,722
$ 0.10
(0.01)
$ 0.09
$ 0.10
(0.01)
$ 0.09
64,001
65,153
Consolidated Statements of Comprehensive Income
1-800-FLOWERS.COM, Inc. and Subsidiaries
(in thousands)
Years Ended
June 30, July 1, July 3,
2013 2012 2011
$5,722
Net income
176
5,898
$17,646
141
17,787
$12,321
17
12,338
Other comprehensive income
Comprehensive income
See accompanying Notes to Consolidated Financial Statements.
18
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Consolidated Statements of Cash Flows
1-800-FLOWERS.COM, Inc. and Subsidiaries
(in thousands)
Years Ended
June 30, July 1, July 3,
2013 2012 2011
Operating activities:
Net income
Reconciliation of net income to net cash
$ 12,321
$ 17,646
$ 5,722
provided by operating activities, net of acquisitions:
Operating activities of discontinued operations
Loss/(gain) on sale of discontinued operations
Depreciation and amortization
Amortization of deferred financing costs
Deferred income taxes
Bad debt expense
Stock-based compensation
Excess tax benefit from stock-based compensation
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
Proceeds from sale of business
Capital expenditures
Purchase of investments
Other, net
Investing activities of discontinued operations
Net cash used in investing activities
Financing activities:
Acquisition of treasury stock
Excess tax benefit from stock based compensation
Proceeds from exercise of employee stock options
Proceeds from bank borrowings
Repayment of notes payable and bank borrowings
Debt issuance cost
Repayment of capital lease obligations
Net cash used in financing activities
Net change in cash and cash equivalents
Cash and cash equivalents:
Beginning of year
End of year
(179)
2,348
18,798
420
(811)
1,085
4,283
(739)
483
(4,108)
(1,823)
(1,655)
4,368
(609)
463
34,645
(3,700)
––
(20,044)
(903)
117
––
(24,530)
(9,599)
739
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(91,250)
(1,234)
(6)
(38,815)
(28,700)
28,854
154
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(8,683)
19,539
457
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869
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(273)
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(2,135)
(3,919)
(2,126)
1,694
1,646
947
39,779
(4,336)
12,823
(17,180)
(3,945)
(119)
(124)
(12,881)
(3,277)
273
––
56,000
(71,000)
––
(1,482)
(19,486)
7,412
21,442
$ 28,854
310
––
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474
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1,537
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(18)
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(6,898)
(1,822)
6,357
(748)
(235)
30,288
(4,310)
––
(16,890)
(268)
100
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(21,495)
(454)
18
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40,000
(52,750)
(17)
(2,040)
(15,194)
(6,401)
27,843
$ 21,442
Supplemental Cash Flow Information:
- Interest paid amounted to $1.1 million, $2.2 million, and $3.7 million, for the years ended June 30, 2013, July 1, 2012,
and July 3, 2011, respectively.
- The Company paid income taxes of approximately $8.3 million, $5.0 million and $1.4 million, net of tax refunds received,
for the years ended June 30, 2013, July 1, 2012, and July 3, 2011, respectively.
See accompanying Notes to Consolidated Financial Statements.
20
Notes to Consolidated Financial Statements
1-800-FLOWERS.COM, Inc. and Subsidiaries
Note 1. Description of Business
For more than 35 years, 1-800-FLOWERS.COM, Inc.
has been providing customers with gifts for every
occasion, including fresh flowers and the finest selection
of plants, gift baskets, gourmet foods, confections,
candles, balloons and plush stuffed animals. As always,
100 percent satisfaction is guaranteed. The Company’s
BloomNet® international floral wire service provides a
broad range of quality products and value-added
services designed to help professional florists grow their
businesses profitably. The 1-800-FLOWERS.COM, Inc.
“Gift Shop” also includes gourmet gifts such as popcorn
and specialty treats from The Popcorn Factory®; cookies
and baked gifts from Cheryl’s®; and premium chocolates
and confections from Fannie May® Confections Brands;
gift baskets and towers from 1-800-BASKETS.COM®,
carved fresh fruit arrangements from FruitBouquets.com,
top quality steaks and chops from Stock Yards®, as well as
premium branded customizable invitations and personal
stationery from FineStationery.com®. The Company’s
Celebrations ® brand is a new premier online destination
for fabulous party ideas and planning tips.
Note 2. Significant Accounting Policies
Basis of Presentation
The consolidated financial statements include the
accounts of 1-800-FLOWERS.COM, Inc. and its
wholly-owned subsidiaries (collectively, the “Company”).
All significant intercompany accounts and transactions
have been eliminated in consolidation.
On September 6, 2011, the Company completed the
sale of certain assets of its wine fulfillment services
business operated by its Winetasting Network subsidiary.
During the fourth quarter of fiscal 2013, the Company
made the strategic decision to divest the e-commerce and
procurement businesses of The Winetasting Network in
order to focus on growth opportunities in its Gourmet
Foods and Gift Baskets business segment. The Company
anticipates completing the sale of the Winetasting
Network business in fiscal 2014. Consequently, the
Company has classified the results of its wine fulfillment
services business as a discontinued operation for fiscal
2012 and 2011, and the e-commerce and procurement
business of Winetasting Network as a discontinued
operation for all periods presented. Refer to Note 16.
Discontinued Operations, for further discussion.
Fiscal Year
The Company’s fiscal year is a 52- or 53-week period
ending on the Sunday nearest to June 30. Fiscal years
2013 and 2012 consisted of 52 weeks which ended on
June 30, 2013 and July 1, 2012, respectively, whereas
fiscal year 2011 consisted of 53 weeks, which ended on
July 3, 2011.
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 Cash Equivalents
Cash and cash equivalents consist of demand
deposits with banks, highly liquid money market funds,
United States government securities, overnight repur-
chase 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 are stated at cost less
accumulated depreciation and amortization. Depreciation
expense is computed using the straight-line method over
the assets’ estimated useful lives. Amortization of lease-
hold improvements and capital leases is computed using
the straight-line method over the shorter of the estimated
useful lives and the initial lease terms. The Company
capitalizes certain internal and external costs incurred to
acquire or develop internal-use software. Capitalized
software costs are amortized on a straight-line basis over
the estimated useful life of the software. Estimated useful
lives are periodically reviewed, and where appropriate,
changes are made prospectively. The Company’s
property plant and equipment is depreciated using
the following estimated lives:
Buildings
Leasehold Improvements
Furniture, Fixtures and Equipment
Software
40 years
3 - 10 years
3 - 10 years
3 - 7 years
Property, plant and equipment and other long-lived
assets are reviewed for impairment whenever changes
in circumstances or events may indicate that the carrying
amounts are not recoverable.
Goodwill
Goodwill represents the excess of the purchase price
over the fair value of the net tangible and identifiable
intangible assets acquired in each business combination,
with the carrying value of the Company’s goodwill allo-
cated to its reporting units. Goodwill is not amortized, but it
is subject to an annual assessment for impairment, which
the Company performs during the fourth quarter, or more
frequently if events occur or circumstances change such
that it is more likely than not that an impairment may exist.
The Company tests goodwill for impairment at the
reporting unit level. The Company identifies its reporting
units by assessing whether the components of its operat-
ing segments constitute businesses for which discrete
21
Notes to Consolidated Financial Statements (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
financial information is available and management of each
reporting unit regularly reviews the operating results of
those components. Goodwill impairment testing involves a
two-step process. The first step requires comparison of the
fair value of each of the reporting units to the respective
carrying value. If the carrying value of the reporting unit is
less than the fair value, no impairment exists and the
second step is not performed. If the carrying value of the
reporting unit is higher than the fair value, the second step
must be performed to compute the amount of the goodwill
impairment, if any. In the second step, the impairment is
computed by comparing the implied fair value of the
reporting unit goodwill with the carrying amount of that
goodwill. If the carrying amount of the reporting unit
goodwill exceeds the implied fair value of that goodwill,
an impairment loss is recognized for the excess.
The Company generally estimates the fair value of a
reporting unit using an equal weighting of the income and
market approaches. The Company uses industry ac-
cepted valuation models and set criteria that are re-
viewed and approved by various levels of management
and, in certain instances, the Company engages third-
party valuation specialists for advice. Under the income
approach, the Company uses a discounted cash flow
methodology which requires management to make
significant estimates and assumptions related to fore-
casted revenues, gross profit margins, operating income
margins, working capital cash flow, perpetual growth
rates, and long-term discount rates, among others. For the
market approach, the Company uses the guideline public
company method. Under this method the Company
utilizes information from comparable publicly traded
companies with similar operating and investment
characteristics as the reporting units, to create valuation
multiples that are applied to the operating performance of
the reporting unit being tested, in order to obtain their
respective fair values. The Company also reconciles the
aggregate fair values of its reporting units determined in
the first step (as described above) to its current market
capitalization, allowing for a reasonable control premium.
Other Intangibles, net
Other intangibles consist of definite-lived intangible
assets (such as investment in licenses, customer lists,
and others) and indefinite-lived intangible assets (such
as acquired trade names and trademarks). The cost of
definite-lived intangible assets 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, while indefinite-lived intangible assets are
not amortized.
Long-lived assets, such as definite-lived intangibles
and property, plant and equipment are reviewed for
impairment whenever changes in circumstances or
events may indicate that the carrying amounts are not
recoverable. When such events or changes in circum-
stances occur, a recoverability test is performed compar-
ing projected undiscounted cash flows from the use and
eventual disposition of an asset or asset group to its
carrying value. If the projected undiscounted cash flows
are less than the carrying value, then an impairment
charge would be recorded for the excess of the carrying
value over the fair value, which is determined by dis-
counting future cash flows.
The Company tests indefinite-lived intangible assets
for impairment at least annually, during the fourth quarter,
or whenever changes in circumstances or events may
indicate that the carrying amounts are not recoverable.
The impairment test for indefinite-lived intangible assets
encompasses calculating a fair value of an indefinite-
lived intangible asset and comparing the fair value to its
carrying value. If the carrying value exceeds the fair
value, impairment is recognized for the difference. To
determine fair value of other indefinite-lived intangible
assets, the Company uses an income approach, the
relief-from-royalty method. This method assumes that, in
lieu of ownership, a third party would be willing to pay a
royalty in order to obtain the rights to use the comparable
asset. Other indefinite-lived intangible assets’ fair values
require significant judgments in determining both the
assets’ estimated cash flows as well as the appropriate
discount and royalty rates applied to those cash flows to
determine fair value.
Business Combinations
The Company accounts for business combinations in
accordance with ASC Topic 805 which requires, among
other things, the acquiring entity in a business combina-
tion to recognize the fair value of all the assets acquired
and liabilities assumed; the recognition of acquisition-
related costs in the consolidated results of operations;
the recognition of restructuring costs in the consolidated
results of operations for which the acquirer becomes
obligated after the acquisition date; and contingent
purchase consideration to be recognized at their fair
values on the acquisition date with subsequent adjust-
ments recognized in the consolidated results of opera-
tions. The fair values assigned to identifiable intangible
assets acquired are determined primarily by using an
income approach which is based on assumptions and
estimates made by management. Significant assumptions
utilized in the income approach are based on company
specific information and projections which are not
observable in the market and are therefore considered
Level 3 measurements. The excess of the purchase price
over the fair value of the identified assets and liabilities is
recorded as goodwill. Operating results of the acquired
entity are reflected in the Company’s consolidated
financial statements from date of acquisition.
22
Notes to Consolidated Financial Statements (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
Deferred Catalog Costs
The Company capitalizes the costs of producing and
distributing its catalogs. These costs are amortized in
direct proportion to actual sales from the corresponding
catalog over a period not to exceed 26-weeks. Included
within prepaid and other current assets was $0.5 and
$0.3 million at June 30, 2013 and July 1, 2012 respec-
tively, relating to prepaid catalog expenses.
Investments
The Company has certain investments in non-
marketable equity instruments of private companies. The
Company accounts for these investments using the equity
method if they provide the Company the ability to
exercise significant influence, but not control, over the
investee. Significant influence is generally deemed to
exist if the Company has an ownership interest in the
voting stock of the investee between 20% and 50%,
although other factors, such as representation on the
investee’s Board of Directors, are considered in determin-
ing whether the equity method is appropriate. The
Company records equity method investments initially at
cost, and adjusts the carrying amount to reflect the
Company’s share of the earnings or losses of the investee,
including all adjustments similar to those made in prepar-
ing consolidated financial statements. The Company’s
equity method investments are comprised of a 32%
interest in Flores Online, a Sao Paulo, Brazil based
internet floral and gift retailer, that the Company made on
May 31, 2012. The book value of this investment was $3.8
million as of June 30, 2013 and $3.6 million as of July 1,
2012, and is included in Other assets within the consoli-
dated balance sheets. The Company’s equity in the net
income of Flores Online for each of the years ended June
30, 2013 and July 1, 2012 was less than $0.2 million.
Investments in non-marketable equity instruments of
private companies, where the Company does not
possess the ability to exercise significant influence, are
accounted for under the cost method. Cost method
investments are originally recorded at cost, and are
included within Other assets in the Company’s consoli-
dated balance sheets. The aggregate carrying amount of
the Company’s cost method investments was $2.4 million
as of June 30, 2013 and $1.7 million as of July 1, 2012. In
addition, the Company had notes receivable from a
company it maintains an investment in of $2.3 million as
of June 30, 2013 and $0.9 million as of July 1, 2012.
The Company also holds certain trading securities
associated with its Non-Qualified Deferred Compensation
Plan (“NQDC Plan”). These investments are measured
using quoted market prices at the reporting date and are
included in Other assets in the consolidated balance
sheets (see Note 10).
Each reporting period, the Company uses available
qualitative and quantitative information to evaluate its
investments for impairment. When a decline in fair value,
if any, is determined to be other-than-temporary, an
impairment charge is recorded in the consolidated
statement of operations.
Concentration of Credit Risk
Financial instruments that potentially subject the
Company to significant concentrations of credit risk
consist principally of cash and cash equivalents and
accounts receivable. The Company maintains cash and
cash equivalents with high quality financial institutions.
Concentration of credit risk with respect to accounts
receivable is 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 receiv-
ables are related to balances owed by major credit card
companies. Allowances relating to consumer, corporate
and franchise accounts receivable ($2.5 million and $2.4
million at June 30, 2013 and July 1, 2012, respectively)
have been recorded based upon previous experience
and management’s evaluation.
Revenue Recognition
Net revenues are generated by E-commerce opera-
tions from the Company’s online and telephonic sales
channels as well as other operations (retail/wholesale)
and primarily consist of the selling price of merchandise,
service or outbound shipping charges, net of discounts,
returns and credits. Net revenues are recognized
primarily upon product shipment and do not include sales
tax. Shipping terms are primarily FOB shipping point. Net
revenues generated by the Company’s BloomNet Wire
Service operations include membership fees as well as
other products and service offerings to florists. Member-
ship fees are recognized monthly in the period earned,
and products sales are recognized upon product ship-
ment with shipping terms primarily FOB shipping point.
Initial franchise fees are recognized in income when
the Company has substantially performed or satisfied all
material services or conditions relating to the sale of the
franchise and the fees are nonrefundable. Area develop-
ment fees are nonrefundable and are recognized in
income on a pro-rata basis when the conditions for
revenue recognition under the individual area develop-
ment agreements are met. Both initial franchise fees and
area development fees are generally recognized upon
the opening of a franchise store or upon termination of
the agreement between the Company and the franchisee.
Cost of Revenues
Cost of revenues consists primarily of florist fulfillment
costs (fees paid directly to florists), 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 manufacturing
and production operations.
Marketing and Sales
Marketing and sales expense consists primarily of
advertising and promotional expenditures, catalog costs,
online portal and search expenses, 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
merchandising activities.
23
Notes to Consolidated Financial Statements (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
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 $77.9 million, $75.1 million and
$67.2 million for the years ended June 30, 2013, July 1,
2012 and July 3, 2011, respectively.
Technology and Development
Technology and development expense consists
primarily of payroll and operating expenses of the
Company’s information technology group, costs associ-
ated with its web sites, including hosting, content devel-
opment 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 capital-
ized if the software is expected to have a useful life
beyond one year and amortized over the software’s
useful life, typically three to seven years. Costs associ-
ated with repair maintenance or the development of web
site content are expensed as incurred as the useful lives
of such software modifications are less than one year.
Stock-Based Compensation
The Company records compensation expense
associated with restricted stock awards and other forms
of equity compensation based upon the fair value of
stock-based awards as measured at the grant date. The
expense is recorded by amortizing the fair values on a
straight-line basis over the vesting period, adjusted for
estimated forfeitures.
Derivatives and hedging
The Company does not enter into derivative transac-
tions for trading purposes, but rather, on occasion to
manage its exposure to interest rate fluctuations. The
Company has managed its floating rate debt using
interest rate swaps in order to reduce its exposure to the
impact of changing interest rates on its consolidated
results of operations and future cash outflows for interest.
Income Taxes
The Company uses the asset and liability method to
account for income taxes. The Company has established
deferred tax assets and liabilities for temporary differ-
ences 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 recog-
nizes as a deferred tax asset, the tax benefits associated
with losses related to operations. Realization of these
deferred tax assets 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 implemented to realize
the deferred tax assets.
The Company recognizes the tax benefit from an
uncertain tax position only if it is more likely than not that
the tax position will be sustained on examination by the
taxing authorities based on the technical merits of the
position. The tax benefits recognized in the financial
statements on a particular tax position are measured
based on the largest benefit that has a greater than a
50% likelihood of being realized upon settlement. The
amount of unrecognized tax benefits (“UTBs”) is adjusted
as appropriate for changes in facts and circumstances,
such as significant amendments to existing tax law, new
regulations or interpretations by the taxing authorities,
new information obtained during a tax examination, or
resolution of an examination. We recognize both accrued
interest and penalties, where appropriate, related to
UTBs in income tax expense. Assumptions, judgment and
the use of estimates are required in determining if the
“more likely than not” standard has been met when
developing the provision for income taxes.
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
(loss) per share is computed using the weighted-average
number of common and dilutive common equivalent
shares (consisting primarily of employee stock options
and unvested restricted stock awards) outstanding during
the period. Diluted net loss per share excludes the effect
of potential common shares (consisting primarily of
employee stock options and unvested restricted stock
awards) that would be antidilutive.
Newly Adopted Accounting Pronouncements
In September 2011, the FASB issued Accounting
Standards Update No. 2011-08 “Testing Goodwill for
Impairment” (ASU No. 2011-08) which is intended to
reduce the complexity and costs to test goodwill for
impairment. The amendment allows an entity the option
to make a qualitative evaluation about the likelihood of
goodwill impairment to determine whether it is necessary
24
Notes to Consolidated Financial Statements (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
Note 3 – Net Income Per Common Share
from Continuing Operations
The following table sets forth the computation of basic
and diluted net income per common share from continu-
ing operations:
Years Ended
June 30, July 1, July 3,
2013 2012 2011
(in thousands, except per share data)
Numerator:
Net income
from continuing
operations
Denominator:
Weighted average
$ 15,722
$ 13,321
$ 6,190
shares outstanding
64,369
64,697
64,001
Effect of dilutive securities:
Employee stock
options(1)
Employee restricted
stock awards
Adjusted weighted-average
shares and assumed
786
40
16
1,637
2,423
1,502
1,542
1,136
1,152
conversions
Net income per
common share from
continuing operations:
$
Basic
$
Diluted
66,792
66,239
65,153
0.24
0.24
$ 0.21
$ 0.20
$ 0.10
$ 0.10
Note (1): The effect of options to purchase 2.0 million, 5.5 million and 7.0
million shares for the years ended June 30, 2013, July 1, 2012, and July 3,
2011, respectively, were excluded from the calculation of net income per
share on a diluted basis as their effect is anti-dilutive.
to perform the two-step quantitative goodwill impairment
test. An entity will no longer be required to calculate the
fair value of a reporting unit unless the entity determines,
based on its qualitative assessment, that it is more likely
than not that the fair value of the reporting unit is less than
its carrying amount. The ASU also expands upon the
examples of events and circumstances that an entity
should consider between annual impairment tests in
determining whether it is more likely than not that the fair
value of a reporting unit is less than its carrying amount.
This ASU became effective for annual and interim
goodwill impairment tests performed for the Company’s
fiscal year ending June 30, 2013. The adoption of this
standard did not have a material impact on the
Company’s consolidated financial statements.
In June 2011, the FASB issued Accounting Standards
Update No. 2011-05, “Comprehensive Income (Topic
220) - Presentation of Comprehensive Income” (ASU
2011-05), which requires an entity to present the total of
comprehensive income, the components of net income,
and the components of other comprehensive income
either in a single continuous statement of comprehensive
income or in two separate but consecutive statements.
ASU 2011-05 eliminated the option to present the
components of other comprehensive income as part of
the statement of equity. The Company adopted ASU
2011-05 in its first quarter of fiscal year 2013 by including
the required disclosures in two separate but consecutive
statements.
Recent Accounting Pronouncements
In July 2012, the Financial Accounting Standards
Board (“FASB”) issued Accounting Standards Update No.
2012-02, “Testing Indefinite-Lived Intangible Assets for
Impairment” (“ASU No. 2012-02”), which allows entities to
use a qualitative approach to test indefinite-lived intan-
gible assets for impairment. ASU No. 2012-02 permits an
entity to first assess qualitative factors to determine
whether it is more likely than not that the fair value of the
indefinite-lived intangible asset is less than its carrying
value. If it is concluded that this is the case, it is necessary
to perform the currently prescribed quantitative impair-
ment test. Otherwise, the quantitative impairment test is
not required. ASU No. 2012-02 is effective for annual and
interim impairment tests performed for fiscal years
beginning after September 15, 2012. The adoption of the
provisions of ASU No. 2012-02 is not expected to have a
material impact on the Company’s financial position or
results of operations.
Reclassifications
Certain balances in the prior fiscal years have been
reclassified to conform to the presentation in the current
fiscal year.
25
Notes to Consolidated Financial Statements (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
and area development fees are generally recognized
upon the opening of a franchise store, or upon termina-
tion of the agreement between the Company and the
franchisee. The Company recognized approximately $0.2
million, of the $1.2 million promissory note in the second
quarter of fiscal 2012, based upon its assessment of the
likelihood that the performance criteria under the agree-
ment will be achieved. The fair value of the promissory
note is impacted by estimates relating to the probability
that GB Chocolates will open 45 stores, discounted for
present value, and the risk associated with counterparty
payment. Changes in these assumptions could result in
an increase or decrease in fair value which would impact
the income statement. There were no significant changes
in these estimates during fiscal year 2013.
Acquisition of Flowerama
On August 1, 2011, the Company completed the
acquisition of Flowerama of America, Inc. (Flowerama), a
franchisor and operator of retail flower shops under the
Flowerama trademark, with annual revenue of approxi-
mately $6.1 million and annual operating income of $0.1
million in its most recent year end prior to acquisition.
The purchase price, which included the acquisition of
receivables, inventory, eight retail store locations and
certain other assets and related liabilities, was approxi-
mately $4.3 million. Of the acquired assets, $2.1 million
was assigned to amortizable investment in licenses
(intangibles), which is being amortized over the estimated
useful life of 20 years, based upon the estimated remain-
ing life of the franchise agreements. Approximately $2.4
million of purchase price was assigned to goodwill which
is not deductible for tax purposes. The acquisition was
financed utilizing available cash balances.
Note 5. Inventory
The Company’s inventory, stated at cost, which is not in
excess of market, includes purchased and manufactured
finish goods for resale, packaging supplies, raw material
ingredients for manufactured products and associated
manufacturing labor, and is classified as follows:
Years Ended
June 30, July 1,
2013 2012
(in thousands)
Finished goods
Work-in-process
Raw materials
$30,906
6,465
18,385
$55,756
$24,746
10,466
18,721
$53,933
Note 4. Acquisitions and Dispositions
Acquisition of Pingg
On May 31, 2013, the Company completed the
acquisition of Pingg Corp., an online invitation and event
planner. The purchase price, which included the acquisi-
tion of software, receivables and certain other assets and
related liabilities, was approximately $1.7 million.
Approximately $0.5 million of purchase price was
assigned to goodwill. The acquisition was financed
utilizing available cash balances. Operating results of the
acquired entity, which are not significant, are reflected in
the Company’s consolidated financial statements from the
date of acquisition, in the Consumer Floral segment.
Acquisition of 1-800-Flowers’ European trademarks
On March 11, 2013, the Company acquired the
European rights to various derivations of the 1-800-
Flowers’ tradename, trademark, URL’s and telephone
numbers from Flowerscorp Pty Ltd. for a purchase price of
$4.0 million, which is included within Other Intangibles,
net. The purchase agreement requires payment of $2.0
million on March 11, 2013, and $1.0 million on each of
the first and second anniversary dates of the acquisition.
Sale and franchise of Fannie May retail stores
On November 21, 2011, the Company and GB
Chocolates LLC (GB Chocolates) entered into an
agreement whereby the Company sold 17 existing
Fannie May stores, to be operated as franchised locations
by GB Chocolates, for $5.6 million, recognizing a gain on
the sale of $3.8 million. Upon completion of the sale, the
Company also recognized initial franchise fees associ-
ated with these 17 stores in the amount of $0.5 million. In
conjunction with the sale of stores, the Company and GB
Chocolates entered into an area development agreement
whereby GB Chocolates will open a minimum of 45 new
Fannie May franchise stores. The agreement provides
exclusive development rights for several Midwestern
states, as well as specific cities in Florida and Ohio. The
terms of the agreement include a non-refundable area
development fee of $0.9 million, store opening fees of
$0.5 million, assuming successful opening of 45 stores,
and a non-performance promissory note in the amount of
$1.2 million, which becomes due and payable only if GB
Chocolates does not open all 45 stores as set forth in the
development agreement. The Company has deferred
recognition of $0.7 million, of the original $0.9 million
area development fee associated with the 45 store area
development agreement, based upon the number of
stores opened by GB Chocolates as of June 30, 2013.
The Company will recognize the remaining deferred
revenue of $0.7 million on a pro-rata basis, when the
conditions for revenue recognition under the area
development agreement are met. Both store opening fees
26
Notes to Consolidated Financial Statements (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
Note 6. Goodwill and Intangible Assets
The following table presents goodwill by segment and the related change in the net carrying amount:
BloomNet Gourmet
Consumer Wire Food and
Floral Service Gift Baskets(1) Total
(in thousands)
Balance at July 3, 2011
$
Acquisition of Flowerama
Acquisition related adjustments
Sale of Fannie May stores
Balance at July 1, 2012
Adjustments
Acquisition of Pingg
Balance at June 30, 2013
$ 6,779
2,440
490
––
$ 9,709
––
542
$ 10,251
––
––
––
––
––
––
––
––
$
$
$
38,777
––
––
(1,001)
$
37,776
(84)
––
37,692
$
$ 45,556
2,440
490
(1,001)
$ 47,485
(84)
542
$ 47,943
(1) The total carrying amount of goodwill for all periods in the table above is reflected net of $71.1 million of accumulated impairment charges, which were
recorded in the GFGB segment during fiscal 2009.
The Company’s other intangible assets consist of the following:
June 30, July 1,
2013 2012
Gross Gross
Amortization Carrying Accumulated Carrying Accumulated
Period Amount Amortization Net Amount Amortization Net
(in thousands)
Intangible assets with determinable lives:
Investment in
licenses
Customer lists
Other
Trademarks with
indefinite lives
Total intangible assets
14-16 years
3-10 years
5-8 years
$ 7,420 $ 5,516
11,334
2,513
19,363
15,989
2,538
25,947
––
36,692
$ 62,639
––
$19,363
$ 1,904
4,655
25
6,584
36,692
$43,276
$ 7,420
16,019
2,538
25,977
33,134
$59,111
$ 5,401
9,961
2,173
17,535
––
$17,535
$ 2,019
6,058
365
8,442
33,134
$41,576
Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset or asset group may not be recoverable. During the year ended June 30, 2013,
the Company wrote-down the value of its Fine Stationery tradename from $1.1 million to $0.7 million.
The amortization of intangible assets for the years ended June 30, 2013, July 1, 2012 and July 3, 2011 was $1.8
million, $1.8 million and $2.3 million, respectively. Future estimated amortization expense is as follows: 2014 - $1.4
million, 2015 - $1.3 million, 2016 - $1.2 million, 2017 - $0.7 million, and thereafter - $2.0 million.
27
Notes to Consolidated Financial Statements (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
Note 7. Property, Plant and Equipment
June 30, July 1,
2013 2012
(in thousands)
Land
Building and building improvements 9,807
17,566
Leasehold improvements
4,903
Furniture and fixtures
31,798
Production equipment
57,879
Computer equipment
8,204
Telecommunication equipment
122,459
Software
255,523
$ 2,907 $ 2,907
9,807
16,631
4,778
28,582
56,901
8,188
106,635
234,429
Accumulated depreciation and
amortization
202,580
185,879
$ 52,943 $ 48,550
Note 8. Accrued Expenses
Accrued expenses consisted of the following:
June 30, July 1,
2013 2012
(in thousands)
Payroll and employee benefits
Advertising and marketing
Other
$ 19,859 $ 20,137
12,813
15,861
$ 45,044 $ 48,811
9,107
16,078
Note 9. Long-Term Debt
June 30, July 1,
2013 2012
(in thousands)
Term loan(1) $ –– $ 29,250
Revolving line
of credit(1)
–– ––
Obligations under capital
leases
Less current maturities of
–– 6
–– 29,256
long-term debt obligations
under capital leases
–– 15,756
$ –– $ 13,500
(1) On April 16, 2010, the Company entered into a Second Amended
and Restated Credit Agreement (the “2010 Credit Facility”) with JPMorgan
Chase Bank N.A., as administrative agent, and a group of lenders. The
2010 Credit Facility consisted of a $60.0 million term loan with a maturity
date of March 30, 2014, and a revolving credit line which extended through
April 16, 2014, and included a seasonally adjusted limit which ranged from
$40.0 to $75.0 million. The term loan was payable in sixteen quarterly
installments of principal and interest beginning in June 2010, with
escalating principal payments at the rate of 20% in year one, 25% in years
two and three and 30% in year four. Interest on outstanding amounts under
the 2010 Credit Facility was calculated under: (i) LIBOR plus a defined
margin, or (ii) the agent bank’s prime rate plus a margin. The applicable
margins for the Company’s term loans and revolving credit facility ranged
from 3.00% to 3.75% for LIBOR loans and 2.00% to 2.75% for ABR loans
with pricing based upon the Company’s leverage ratio.
On April 10, 2013, the Company entered into a Third Amended and
Restated Credit Agreement (the “2013 Credit Facility”). The 2013 Credit
Facility consists of a revolving line of credit with a seasonally adjusted limit
ranging from $150.0 to $200.0 million and a working capital sublimit ranging
from $25.0 to $75.0 million. The 2013 Credit Facility also revises certain
financial and non-financial covenants, including the maintenance of certain
financial ratios. The Company was in compliance with these covenants as
of June 30, 2013. Outstanding amounts under the 2013 Credit Facility,
which matures on April 10, 2018, will bear interest at the Company’s option
at either: (i) LIBOR, plus a spread of between 150 and 225 basis points, as
determined by the Company’s leverage ratio, or (ii) the agent bank’s prime
rate plus a margin. The obligations of the Company and its subsidiaries
under the 2013 Credit Facility were secured by liens on all personal
property of the Company and its domestic subsidiaries. There were no
amounts outstanding under the 2013 Credit Facility as of June 30, 2013.
Note 10. Fair Value Measurements
Cash and cash equivalents, receivables, accounts
payable and accrued expenses are reflected in the
consolidated balance sheets at carrying value, which
approximates fair value due to the short-term nature of
these instruments. Although no trading market exists, the
Company believes that the carrying amount of its debt
approximates fair value due to its variable nature. The
Company’s investments in non-marketable equity
instruments of private companies are carried at cost and
are periodically assessed for other-than-temporary
impairment, when an event or circumstances indicate that
an other-than-temporary decline in value may have
occurred. The Company’s remaining financial assets and
liabilities are measured and recorded at fair value (see
table below). The Company’s non-financial assets, such
as goodwill, intangible assets, and property, plant and
equipment, are recorded at cost and are assessed for
impairment when an event or circumstance indicates
that an other-than-temporary decline in value may have
occurred. Goodwill and indefinite lived intangibles are
also tested for impairment annually, as required under
the accounting standards.
Fair value is defined as the price that would be
received to sell an asset or paid to transfer a liability, in
the principal or most advantageous market for the asset
or liability, in an orderly transaction between market
participants at the measurement date. The authoritative
guidance for fair value measurements establishes a fair
value hierarchy that prioritizes the inputs to valuation
techniques used to measure fair value. The hierarchy
28
Notes to Consolidated Financial Statements (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
gives the highest priority to unadjusted quoted prices in
active markets for identical assets or liabilities (level 1
measurements) and the lowest priority to unobservable
inputs (level 3 measurements). The three levels of the fair
value hierarchy under the guidance are described below:
Level 1 Valuations based on quoted prices in active
markets for identical assets or liabilities that the
entity has the ability to access.
Level 2 Valuations based on quoted prices for similar
assets or liabilities, quoted prices in markets
that are not active, or other inputs that are
observable or can be corroborated by
observable data for substantially the full term
of the assets or liabilities.
Level 3 Valuations based on inputs that are supported
by little or no market activity and that are
significant to the fair value of the assets
or liabilities.
The following table presents by level, within the fair
value hierarchy, financial assets and liabilities measured
at fair value on a recurring basis as of June 30, 2013:
Fair Value Measurements
Assets (Liabilities)
Carrying Value Level 1 Level 2 Level 3
The following table presents, by level, within the fair
value hierarchy, financial assets and liabilities measured
at fair value on a recurring basis as of July 1, 2012:
Fair Value Measurements
Assets (Liabilities)
Carrying Value Level 1 Level 2 Level 3
(in thousands)
Assets (liabilities):
Trading securities
held in a
“rabbi trust”(1)
Fair value of
non-performance
promissory note(2)
$1,143
$1,143 $ –– $ ––
Interest rate swap (7)
205
–– ––
–– (7)
205
––
$1,341
$1,143 $ (7)
$205
(1) Trading securities held in a rabbi trust are measured using quoted
market prices at the reporting date and are included in Other assets in
the consolidated balance sheets. (Note 14 – Employee Retirement Plans).
(2) Refer to Note 4. Acquisitions and dispositions – Sale and franchise of
Fannie May retail stores. Included in other assets on the consolidated
balance sheets.
(in thousands)
Note 11. Income Taxes
Assets (liabilities):
Trading securities
held in a
“rabbi trust”(1)
$1,708
$1,708 $ –– $ ––
Non-performance
promissory note(2) 205 –– –– 205
$1,913
$1,708 $ –– $ 205
(1) Trading securities held in a rabbi trust are measured using quoted
market prices at the reporting date and are included in Other assets in the
consolidated balance sheets. The Company established a Non-qualified
Deferred Compensation Plan (Note 14 – Employee Retirement Plans) for
certain members of senior management in fiscal 2009. Deferred compensa-
tion is invested in mutual funds held in a “rabbi trust” which is restricted for
payment to participants of the NQDC Plan.
(2) Refer to Note 4. Acquisitions and dispositions – Sale and franchise of
Fannie May retail stores. Included in Other assets on the consolidated
balance sheets.
The Company files income tax returns in the U.S.
federal jurisdiction and various state jurisdictions. The
Company is currently under examination by the Internal
Revenue Service for fiscal year 2011, while fiscal years
2010 and 2012 remain subject to federal examination.
Due to non-conformity with the federal statute of limita-
tions for assessment, certain states remain open from
fiscal 2008.
The Company’s policy is to recognize interest and
penalties accrued on any unrecognized tax benefits as a
component of income tax expense. At June 30, 2013, the
Company has an unrecognized tax position of approxi-
mately $0.8 million, including accrued interest and
penalties of $0.1 million. The Company believes that an
29
Notes to Consolidated Financial Statements (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
additional $0.4 million of its unrecognized tax positions
will be resolved over the next twelve months.
Significant components of the income tax provision
from continuing operations are as follows:
Years Ended
June 30, July 1, July 3,
2013 2012 2011
(in thousands)
Current provision (benefit):
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 signifi-
cant components of the Company’s deferred income tax
assets (liabilities) are as follows:
Years Ended
June 30, July 1,
2013 2012
(in thousands)
Federal
State
$ 7,983
1,845
9,828
$ (1,643)
1,155
(488)
$ 927
840
1,767
Deferred income tax assets:
Net operating loss and
credit carryforwards
Deferred provision (benefit):
Federal
State
(730)
(25)
(755)
8,479
(220)
8,259
2,038
98
2,136
Income tax expense
$ 9,073
$ 7,771
$ 3,903
A reconciliation of the U.S. federal statutory tax rate to
the Company’s effective tax rate is as follows:
Years Ended
June 30, July 1, July 3,
2013 2012 2011
35.0%
Tax at U.S. statutory rates
State income taxes, net
of federal tax benefit
35.0%
35.0%
6.2
3.3
4.0
Non-deductible stock-based
compensation ––
0.6
1.7
Non-deductible goodwill
amortization –– 1.7 ––
(0.3) (1.1) 0.1
Rate change
(2.7)
Tax credits (1.2) (1.2)
Tax settlements 1.1 –– (1.4)
(0.2)
Other, net
38.7%
(2.2)
36.8%
(1.3)
36.6%
Accrued expenses
and reserves
Stock-based
compensation
Book in excess of
tax depreciation
Gross deferred
$3,230
$ 3,569
5,848
3,266
1,055
5,680
3,494
––
income tax assets
12,743
Less: Valuation allowance (1,477) (1,578)
11,165
11,922
13,399
Deferred income tax liabilities:
Other intangibles (4,049) (3,036)
Tax in excess of
book depreciation –– (312)
(4,049) (3,348)
Net deferred income tax assets
$7,873
$ 7,817
A valuation allowance is provided when it is more
likely than not that some portion, or all, of the deferred tax
assets will not be realized. The Company has estab-
lished valuation allowances primarily for net operating
loss carryforwards in certain states. At June 30, 2013,
the Company’s federal and state net operating loss
carryforwards were approximately $3.1 million, and $3.3
million, respectively, which if not utilized, will begin to
expire in fiscal year 2025 and 2015, respectively. The
federal net operating loss of $3.1 million is subject to
Section 382 limitations of $0.3 million per year.
30
Notes to Consolidated Financial Statements (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
Note 12. 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 presented 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 common stock at any time on a one-for-one
share basis. Each share of Class B common stock will
automatically convert into one share of Class A common
stock upon its transfer, with limited exceptions.
The Company has a stock repurchase plan through
which purchases can be made from time to time in the
open market and through privately negotiated transac-
tions, subject to general market conditions. The repur-
chase program is financed utilizing available cash. In
March 2013, the Company’s Board of Directors autho-
rized an increase of $20 million to its stock repurchase
plan. The Company repurchased a total of $9.6 million
(2,490,065 shares), $3.3 million (1,133,913 shares) and
$0.5 million (168,207 shares) during the fiscal years
ended June 30, 2013, July 1, 2012, and July 3, 2011,
respectively, under this program. As of June 30, 2013,
$18.9 million remains authorized under the plan.
The Company has stock options and restricted stock
awards outstanding to participants under the 1-800-
FLOWERS.COM 2003 Long Term Incentive and Share
Award Plan (the “Plan”). Options are also outstanding
under the Company’s 1999 Stock Incentive Plan, but no
further options may be granted under this 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
stockholder 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”).
Note 13. Stock Based Compensation
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 “Commit-
tee”). Unless otherwise determined by the Board, the
Committee will consist of two or more members of the
Board who are non-employee 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
31
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 30, 2013, the Company has reserved approxi-
mately 13.0 million shares of common stock for issuance,
including options previously authorized for issuance
under the 1999 Stock Incentive Plan.
The amounts of stock-based compensation expense
recognized in the periods presented are as follows:
Years Ended
June 30, July 1, July 3,
2013 2012 2011
(in thousands, except per share data)
Stock options
Restricted stock awards
Total
Deferred income tax benefit
Stock-based compensation
$ 477
3,806
4,283
1,555
$1,073
3,777
4,850
1,796
$1,181
2,780
3,961
1,381
expense, net
$2,728 $3,054
$2,580
Stock based compensation expense is recorded
within the following line items of operating expenses:
Years Ended
June 30, July 1, July 3,
2013 2012 2011
(in thousands)
Marketing and sales
Technology and
development
General and administrative
Total
$1,499
$1,755
$1,587
428
2,356
600
2,495
$4,283 $4,850
791
1,583
$3,961
Stock-based compensation expense has not been
allocated between business segments, but is reflected as
part of Corporate overhead. (Refer to Note 15. Business
Segments.)
Stock Option Plans
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 30, July 1, July 3,
2013 2012 2011
Weighted average fair
value of options granted
Expected volatility
Expected life (in years)
Risk-free interest rate
Expected dividend yield
$2.95
72%
6.4
0.7%
0.0%
$1.84
72%
8.0
0.9%
0.0%
$1.23
68%
7.5
1.3%
0.0%
Notes to Consolidated Financial Statements (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
The expected volatility of the option is determined using historical volatilities based on historical stock prices. The
Company estimated the expected life of options granted based upon the historical weighted average. The risk-free
interest rate is determined using the yield available for zero-coupon U.S. government issues with a remaining term equal
to the expected life of the option. The Company has never paid a dividend, and as such the dividend yield is 0.0%.
The following table summarizes stock option activity during the year ended June 30, 2013:
Weighted
Weighted Average
Average Remaining Aggregate
Exercise Contractual Intrinsic
Options Price Term Value (000s)
Outstanding beginning of period 6,711,280
$ 4.48
Granted 35,000 $ 4.55
Exercised (191,947) $ 2.36
Forfeited/Expired (1,831,093) $ 6.23
Outstanding end of period 4,723,240 $ 3.89
Options vested or expected to
5.1 years $12,536
vest at end of period 4,572,098 $ 3.94
$11,950
Exercisable at June 30, 2013 2,917,540 $ 4.88 3.4 years $ 5,508
4.9 years
The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference
between the Company’s closing stock price on the last trading day of fiscal 2013 and the exercise price, multiplied by
the number of in-the-money options) that would have been received by the option holders had all option holders
exercised their options on June 30, 2013. This amount changes based on the fair market value of the Company’s stock.
The total intrinsic value of options exercised for the years ended June 30, 2013, July 1, 2012 and July 3, 2011 was
$0.6 million, $0.0 million, and $0.0 million, respectively.
The following table summarizes information about stock options outstanding at June 30, 2013:
Options Outstanding Options Exercisable
Weighted- Weighted- Weighted-
Average Average Average
Options Remaining Exercise Options Exercise
Exercise Price Outstanding Contractual Life Price Exercisable Price
1.69 - 1.79
$
$
2.01 - 2.63
$ 2.77 - 3.11
$
3.26 - 6.52
$ 6.90 - 11.81
1,080,500
1,078,400
1,193,753
645,234
725,353
4,723,240
7.3 years
8.2 years
3.1 years
3.1 years
2.1 years
5.1 years
$ 1.79
$ 2.62
$ 3.09
$ 6.09
$ 8.28
$ 3.89
257,000
177,300
1,156,153
601,734
725,353
2,917,540
$ 1.79
$ 2.62
$ 3.09
$ 6.09
$ 8.28
$ 4.88
As of June 30, 2013, the total future compensation
cost related to non-vested options not yet recognized in
the statement of operations was $2.3 million and the
weighted average period over which these awards are
expected to be recognized was 5.5 years.
The Company grants shares of Common Stock to its
employees that are subject to restrictions on transfer and
risk of forfeiture until fulfillment of applicable service
conditions and, in certain cases, holding periods (Re-
stricted Stock).
The following table summarizes the activity of
non-vested restricted stock during the year ended
June 30, 2013:
Weighted
Average
Grant Date
Shares Fair Value
Non-vested – beginning of period 3,855,320 $ 2.37
Granted 1,668,490 $ 3.55
Vested (1,610,271) $ 2.48
Forfeited (480,184) $ 3.06
Non-vested – end of period 3,433,355 $ 2.80
The fair value of non-vested shares is determined
based on the closing stock price on the grant date. As of
32
Notes to Consolidated Financial Statements (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
June 30, 2013, there was $6.3 million of total unrecog-
nized compensation cost related to non-vested restricted
stock-based compensation to be recognized over a
weighted-average period of 2.3 years.
Note 14. Employee Retirement Plans
The Company has a 401(k) Profit Sharing Plan
covering substantially all of its eligible employees. All
employees who have attained the age of 21 are eligible
to participate upon completion of one month of service.
Participants may elect to make voluntary contributions to
the 401(k) plan in amounts not exceeding federal
guidelines. On an annual basis the Company, as deter-
mined 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 suspended all contributions during fiscal
years 2013, 2012 and 2011.
The Company also has a nonqualified supplemental
deferred compensation plan for certain executives
pursuant to Section 409A of the Internal Revenue Code.
Participants can defer from 1% up to a maximum of 100%
of salary and performance and non-performance based
bonus. The Company will match 50% of the deferrals
made by each participant during the applicable period,
up to a maximum of $2,500. Employees are vested in the
Company’s contributions based upon years of participation
in the plan. Distributions will be made to participants upon
termination of employment or death in a lump sum, unless
installments are selected. As of June 30, 2013 and July 1,
2012, these plan liabilities, which are included in Other
liabilities within the Company’s Consolidated Balance
Sheet, totaled $1.7 million and $1.1 million, respectively.
The associated plan assets, which are subject to the
claims of the creditors, are primarily invested in mutual
funds and are included in Other assets-long term. Com-
pany contributions during the years ended June 30, 2013,
July 1, 2012 and July 3, 2011 were less than $0.1 million.
Gains and losses on these investments, which were
immaterial during fiscal years 2013, 2012 and 2011, are
included in Interest expense, net, within the Company’s
Consolidated Statements of Income.
Note 15. Business Segments
The Company’s management reviews the results of
the Company’s continuing operations by the following
three business segments:
• Consumer Floral;
• BloomNet Wire Service; and
• Gourmet Food and Gift Baskets; and
Segment performance is measured based on contribu-
tion margin, which includes only the direct controllable
revenue and operating expenses of the segments. As such,
management’s measure of profitability for these segments
does not include the effect of corporate overhead (see (1)
below), nor does it include depreciation and amortization,
other income, and income taxes, or stock-based compensa-
tion, which is included within corporate overhead. Assets
and liabilities are reviewed at the consolidated level by
management and not accounted for by segment.
Net Revenues
Years Ended
June 30, July 1, July 3,
2013 2012 2011
(in thousands)
Net revenues:
Consumer Floral
$411,526
$398,184
$369,199
BloomNet Wire
Service
Gourmet Food &
Gift Baskets
Corporate(1)
Intercompany
81,822
82,582
73,282
243,225
228,002
219,174
789
773
1,150
eliminations (1,865) (2,024) (1,416)
Total net revenues
$735,497
$707,517
$661,389
Operating Income
Years Ended
June 30, July 1, July 3,
2013 2012 2011
(in thousands)
Segment Contribution Margin:
Consumer Floral $ 47,193 $ 39,147 $ 32,669
BloomNet Wire
Service
Gourmet Food &
Gift Baskets(2)
Segment Contribution
Margin Subtotal
25,611
22,339
20,195
20,345
30,193
28,544
93,149
91,679
81,408
Corporate(1) (48,565) (48,412) (47,085)
Depreciation and
amortization (18,798) (19,540) (20,237)
Operating income $ 25,786 $ 23,727
$ 14,086
(1) Corporate expenses consist of the Company’s enterprise shared service
cost centers, and include, among other items, Information Technology,
Human Resources, Accounting and Finance, Legal, Executive and Customer
Service Center functions, as well as Stock-Based Compensation. In order to
leverage the Company’s infrastructure, these functions are operated under a
centralized management platform, providing support services throughout the
organization. The costs of these functions, other than those of the Customer
Service Center, which are allocated directly to the above segments based
upon usage, are included within corporate expenses, as they are not directly
allocable to a specific segment.
(2) GFGB segment contribution margin during the year ended July 1, 2012
includes a $3.8 million ($2.4mm, net of tax) gain on the sale of 17 Fannie
May stores, which are being operated as franchised locations post-sale.
33
Notes to Consolidated Financial Statements (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
Note 16. Discontinued Operations
On September 6, 2011, the Company completed the
sale of certain assets of its wine fulfillment services
business operated by its Winetasting Network subsidiary.
The sales price consisted of $12.0 million of cash
proceeds at closing, resulting in a gain on sale of $8.7
million ($4.5 million, net of tax). During the fourth quarter
of fiscal 2013, the Company made the strategic decision
to divest the e-commerce and procurement businesses of
The Winetasting Network in order to focus on growth
opportunities in its Gourmet Foods and Gift Baskets
business segment. The Company anticipates completing
the sale of the Winetasting Network business in fiscal
2014, at an anticipated loss of $2.3 million ($1.5 million,
net of tax). Consequently, the Company has classified
the results of its wine fulfillment services business as a
discontinued operation for fiscal 2012 and 2011, and the
e-commerce and procurement business of Winetasting
Network as a discontinued operation for all periods
presented.
Results for discontinued operations are as follows:
Years Ended
June 30, July 1, July 3,
2013 2012 2011
(in thousands, except per share data)
Net revenues from
discontinued
operations $ 5,154 $10,743 $ 28,399
Loss from
discontinued
operations,
net of tax $ (1,889) $ (217) $ (468)
Income (loss) on
sale of discontinued
operations,
net of tax $ (1,512) $ 4,542 $ ––
area maintenance and operating expenses applicable to
the leased properties. The Company has also entered
into leases that are on a month-to-month basis. These
leases are classified as either capital leases, operating
leases or subleases, as appropriate.
As of June 30, 2013 future minimum payments under
non-cancelable operating leases with initial terms of one
year or more consist of the following:
Operating
Leases
(in thousands)
2014
2015
2016
2017
2018
Thereafter
Total minimum lease payments
$12,818
8,781
8,393
7,490
5,194
11,396
$54,072
At June 30, 2013, 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)
2013
2014
2015
2016
Thereafter
$1,249
654
443
236
$1,249
654
443
236
–– ––
$2,582 $2,582
Income (loss) from
discontinued
operations $ (3,401) $ 4,325 $ (468)
Rent expense was approximately $17.7 million, $17.4
million, and $17.7 million for the years ended June 30,
2013, July 1, 2012 and July 3, 2011, respectively.
Note 17. Commitments and Contingencies
Leases
The Company currently leases office, store facilities,
and equipment under various leases through fiscal 2026.
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, insurance, common
Litigation
From time to time, the Company is subject to legal
proceedings and claims arising in the ordinary course
of business.
On November 10, 2010, a purported class action
complaint was filed in the United States District Court for
the Eastern District of New York naming the Company
(along with Trilegiant Corporation, Inc., Affinion, Inc. and
Chase Bank USA, N.A.) as defendants in an action
purporting to assert claims against the Company alleging
34
Notes to Consolidated Financial Statements (continued)
1-800-FLOWERS.COM, Inc. and Subsidiaries
violations arising under the Connecticut Unfair Trade
Practices Act among other statutes, and for breach of
contract and unjust enrichment in connection with certain
post-transaction marketing practices in which certain of the
Company’s subsidiaries previously engaged in with certain
third-party vendors. On December 23, 2011, plaintiff filed a
notice of voluntary dismissal seeking to dismiss the entire
action without prejudice. The court entered an Order on
November 28, 2012, dismissing the case in its entirety. This
case was subsequently refiled in the United States District
Court for the District of Connecticut.
On March 6, 2012 and March 15, 2012, two additional
purported class action complaints were filed in the United
States District Court for the District of Connecticut naming
the Company and numerous other parties as defendants
in actions purporting to assert claims substantially similar
to those asserted in the lawsuit filed on November 10,
2010. In each case, plaintiffs seek to have the respective
case certified as a class action and seek restitution and
other damages, each in an amount in excess of $5.0
million. On April 26, 2012, the two Connecticut cases
were consolidated with a third case previously pending in
the United States District Court for the District of Connecti-
cut in which the Company is not a party (the “Consoli-
dated Action”). A consolidated amended complaint was
filed by plaintiffs on September 7, 2012, purporting to
assert claims substantially similar to those originally
asserted. The Company moved to dismiss the consoli-
dated amended complaint on December 7, 2012, which
was subsequently refiled at the direction of the Court on
January 16, 2013.
On December 5, 2012, the same plaintiff from the
action voluntarily dismissed in the United States District
Court for the Eastern District of New York filed a purported
class action complaint in the United States District Court
for the District of Connecticut naming the Company and
numerous other parties as defendants, purporting to
assert claims substantially similar to those asserted in
the consolidated amended complaint (the “Frank Ac-
tion”). On January 23, 2013, plaintiffs in the Consolidated
Action filed a motion to transfer and consolidate the
action filed on December 5, 2012 with the Consolidated
Action. The Company intends to defend each of these
actions vigorously.
On January 31, 2013, the court issued an order to
show cause directing plaintiffs’ counsel in the Frank
Action,, also counsel for plaintiffs in the Consolidated
Action, to show cause why the Frank Action is distinguish-
able from the Consolidated Action such that it may be
maintained despite the prior-pending action doctrine.
On June 13, 2013 the court issued an order in the Frank
Action suspending deadlines to answer or to otherwise
respond to the complaint until 21 days after the court
decides whether the Frank Action should be consolidated
with the Consolidated Action. On July 24, 2013 the Frank
Action was reassigned to Judge Vanessa Bryant, before
whom the Consolidated Action is currently pending, for all
further proceedings. On August 14, 2013, other defendants
filed a motion for clarification in the Frank Action requesting
that Judge Bryant clarify the order suspending deadlines.
There has been no ruling on (1) Plaintiff’s Motion
to Consolidate, (2) the Order to Show Cause, (3) the
Motion for Clarification, or (4) the Company’s Motion
Seeking to dismiss the plaintiffs’ Amended
Consolidated Complaint. Oral argument thereon
is scheduled for September 25, 2013.
There are no assurances that additional legal actions
will not be instituted in connection with the Company’s
former post-transaction marketing practices involving
third party vendors nor can we predict the outcome of any
such legal action. At this time, we are unable to estimate
a possible loss or range of possible loss for the afore-
mentioned actions for various reasons, including, among
others: (i) the damages sought are indeterminate, (ii) the
proceedings are in the very early stages and the court
has not yet ruled as to whether the classes will be
certified, and (iii) there is uncertainty as to the outcome of
pending motions. As a result of the foregoing, we have
determined that the amount of possible loss or range of
loss is not reasonably estimable. However, legal matters
are inherently unpredictable and subject to significant
uncertainties, some of which may be beyond our control.
35
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 30, 2013 and
July 1, 2012, and the related consolidated statements of
income, comprehensive income, stockholders’ equity,
and cash flows for each of the three years in the period
ended June 30, 2013. 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 assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures 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 30, 2013 and July 1, 2012, and
the consolidated results of their operations and their cash
flows for each of the three years in the period ended June
30, 2013, in conformity with U.S. generally accepted
accounting principles.
We also have audited, in accordance with the
standards of the Public Company Accounting Oversight
Board (United States), 1-800-FLOWERS.COM, Inc. and
Subsidiaries’ internal control over financial reporting as of
June 30, 2013, based on criteria established in Internal
Control-Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission
(1992 framework) and our report dated September 13,
2013 expressed an unqualified opinion thereon.
Jericho, New York
September 13, 2013
Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and
maintaining adequate internal control over financial
reporting. Internal control over financial reporting is
defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act as a process designed by, or under the
supervision of, the Company’s principal executive and
principal financial officers and effectuated by the
Company’s board of directors, management and other
personnel to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance
with U.S. generally accepted accounting principles (“U.S.
GAAP”), and includes those policies and procedures that:
• pertain to the maintenance of records that, in reason-
able detail, accurately and fairly reflect the transactions
and dispositions of the assets of the Company;
• provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial
statements in accordance with U.S. GAAP, and that
receipts and expenditures of the Company are being
made in accordance with authorization of management
and directors of the Company; and
• provide reasonable assurance regarding prevention
or timely detection of unauthorized acquisition, use or
disposition of the Company’s assets that could have a
material effect on the financial statements.
36
Because of its inherent limitations, internal control
over financial reporting may not prevent or detect
misstatements. Projections of any evaluation of effec-
tiveness to future periods are subject to the risk that
controls may become inadequate because of changes
in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Management, including the Company’s Chief
Executive Officer and Chief Financial Officer, assessed
the effectiveness of the Company’s internal control over
financial reporting based on the framework established
in “Internal Control-Integrated Framework,” issued by
the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). Based on this assess-
ment, management concluded that the Company’s
internal control over financial reporting was effective as
of June 30, 2013.
The Company’s independent registered public
accounting firm, Ernst & Young LLP, audited the effec-
tiveness of the Company’s internal control over financial
reporting as of June 30, 2013. Ernst & Young LLP’s
report on the effectiveness of the Company’s internal
control over financial reporting as of June 30, 2013 is
set forth below.
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders of
1-800-FLOWERS.COM, Inc. and Subsidiaries
We have audited 1-800-FLOWERS.COM, Inc. and
Subsidiaries’, (the Company) internal control over
financial reporting as of June 30, 2013, based on criteria
established in Internal Control—Integrated Framework
issued by the Committee of Sponsoring Organizations of
the Treadway Commission (1992 framework) (the COSO
criteria). The Company’s management is responsible for
maintaining effective internal control over financial
reporting, and for its assessment of the effectiveness of
internal control over financial reporting included in the
accompanying Management’s Report on Internal Control
over Financial Reporting. Our responsibility is to express
an opinion on the company’s internal control over
financial reporting based on our audit.
We conducted our audit 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 effective internal control over
financial reporting was maintained in all material re-
spects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating
the design and operating effectiveness of internal control
based on the assessed risk, and performing such other
procedures as we considered necessary in the circum-
stances. We believe that our audit provides a reasonable
basis for our opinion.
A company’s internal control over financial reporting is
a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of financial statements for external purposes
in accordance with generally accepted accounting
principles. A company’s internal control over financial
reporting includes those policies and procedures that (1)
pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in
accordance with generally accepted accounting prin-
ciples, and that receipts and expenditures of the company
are being made only in accordance with authorizations of
management and directors of the company; and (3)
provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a
material effect on the financial statements.
Because of its inherent limitations, internal control
over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in
conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
In our opinion, 1-800-FLOWERS.COM, Inc. and
Subsidiaries maintained, in all material respects, effective
internal control over financial reporting as of June 30,
2013, based on the COSO criteria.
We also have audited, in accordance with the
standards of the Public Company Accounting Oversight
Board (United States), the consolidated balance sheets of
1-800-FLOWERS.COM, Inc. and Subsidiaries as of June
30, 2013 and July 1, 2012, and the related consolidated
statements of income, comprehensive income, stockhold-
ers’ equity, and cash flows for each of the three years in
the period ended June 30, 2013 of the Company and our
report dated September 13, 2013 expressed an unquali-
fied opinion thereon.
Jericho, NY
September 13, 2013
37
Market for Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
Market Information
1-800-FLOWERS.COM’s Class A common stock
trades on The NASDAQ Global Select 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
common stock for each of the fiscal quarters during the
fiscal years ended June 30, 2013 and July 1, 2012.
High Low
Year ended June 30, 2013
July 2, 2012 – September 30, 2012
October 1, 2012 – December 30, 2012
December 31, 2012 – March 31, 2013
April 1, 2013 – June 30, 2013
Year ended July 1, 2012
July 4, 2011 – October 2, 2011
October 3, 2011 – January 1, 2012
January 2, 2012 – April 1, 2012
April 2, 2012 – July 1, 2012
$ 4.12
$ 3.93
$ 5.12
$ 6.60
$ 3.42
$ 2.95
$ 3.13
$ 3.63
$ 3.13
$ 2.77
$ 3.45
$ 4.75
$ 2.10
$ 2.08
$ 2.20
$ 2.76
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 presented
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 common stock at
any time on a one-for-one share basis. Each share of
Class B common stock will automatically convert into
one share of Class A common stock upon its transfer,
with limited exceptions.
Holders
As of September 6, 2013, there were approximately
306 stockholders 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 6, 2013, there were approxi-
mately 15 stockholders of record of the Company’s
Class B common stock.
Dividend Policy
The Company has never declared or paid any cash
dividends on its Class A or Class B common stock.
Although the Company has no current intent to do so,
the Company may choose, at some future date, to
use some portion of its cash for the purpose of cash
dividends.
Resales of Securities
36,825,802 shares of Class A and Class B common
stock are “restricted securities” as that term is defined in
Rule 144 under the Securities Act. Restricted 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 1, 2013, 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 common stock by increasing the
number of shares available on the public market.
Purchases of Equity Securities by the Issuer
The Company has a stock repurchase plan through
which purchases can be made from time to time in the
open market and through privately negotiated transac-
tions, subject to general market conditions. The repur-
chase program is financed utilizing available cash. In
March 2013, the Company’s Board of Directors autho-
rized an increase of $20 million to its stock repurchase
plan. The Company repurchased a total of $9.6 million
(2,490,065 shares), $3.3 million (1,133,913 shares) and
$0.5 million (168,207 shares) during the fiscal years
38
Market for Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities (continued)
ended June 30, 2013, July 1, 2012, and July 3, 2011, respectively, under this program. As of June 30, 2013, $18.9
million remains authorized under the plan.
The following table sets forth, for the months indicated, the Company’s purchase of common stock during the fiscal
year ended June 30, 2013, which includes the period July 2, 2012 through June 30, 2013:
Total Number of Dollar Value of
Shares Purchased as Shares that May Yet
Part of Publicly Be Purchased Under
Total Number of Average Price Announced Plans or the Plans or
Period Shares Purchased Paid Per Share (1) Programs Programs
(in thousands, except average price paid per share)
7/2/12 - 7/29/12
7/30/12 - 8/26/12
8/27/12 - 9/30/12
10/01/12 - 10/28/12
10/29/12 - 11/25/12
11/26/12 - 12/30/12
12/31/12 - 1/27/13
1/28/13 - 2/24/13
2/25/13 - 3/31/13
4/1/13 - 4/28/13
4/29/13 - 5/26/13
5/27/13 - 6/30/13
––
5.3
241.7
289.4
565.9
371.7
193.7
414.1
293.5
––
25.4
89.4
$ ––
$3.74
$3.86
$3.55
$3.39
$3.36
$3.70
$4.13
$4.49
$ ––
$5.84
$5.88
––
5.3
241.7
289.4
565.9
371.7
193.7
414.1
293.5
––
25.4
89.4
Total
2,490.1
$3.83 2,490.1
(1) Average price per share excludes commissions and other transaction fees.
$ 8,548
$ 8,528
$ 7,595
$ 6,567
$ 4,647
$ 3,399
$ 2,677
$ 954
$19,626
$19,626
$19,477
$18,949
Comparison of 5 Year Cumulative Total Return*
Among 1-800-FLOWERS.COM, Inc., the Russell 2000 Index
and the NASDAQ Non-Financial Index
■
1-800-FLOWERS.COM, INC.
▼
Russell 2000
●
Nasdaq Non-Financial
*$100 invested on 6/30/08 in stock or index, including reinvestment of dividends. Fiscal year ending June 30.
39
One Old Country Road, Suite 500
Carle Place, NY 11514
(516) 237-6000
Special Note Regarding
Forward-Looking Statements
This annual report contains forward-looking statements
within the meaning of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements
represent the Company’s expectations or beliefs at the time
of this report’s publishing concerning future events and
can generally be identified by the use of statements that
include words such as “estimate,” “expects,” “project,” “believe,”
“anticipate,” “intend,” “plan,” “foresee,” “likely,” “will,” “target”
or similar words or phrases. These forward-looking state-
ments are subject to risks, uncertainties and other factors,
many of which are outside of the Company’s control, which
could cause actual results to differ materially from the results
expressed or implied in the forward-looking statements,
including, but are not limited to, statements regarding the
Company’s expectations for: continued market penetration
in its BloomNet wire service business; its ability to build on
positive trends including increases in revenue, gross margin
and contribution margin in its Consumer Floral business;
its ability to achieve top and bottom line growth in its
BloomNet and Gourmet Food and Gift Baskets categories;
its ability to achieve its guidance for consolidated revenue
growth for the full year in mid-single digit range along with
higher year-over-year increases in EBITDA and EPS; its ability
to leverage its operating platform and reduce operating
expense ratio; its ability to remediate operational issues and
improve performance in its Fannie May business; its ability
to divest its Winetasting.com business on a timely and cost
effective basis; its ability to manage the seasonality of its
businesses; its ability to cost effectively acquire and retain
customers; the outcome of contingencies, including legal
proceedings in the normal course of business; its ability to
compete against existing and new competitors; its ability
to manage expenses associated with sales and marketing
and necessary general and administrative and technology
investments; its ability to reduce promotional activities and
achieve more efficient marketing programs; and general
consumer sentiment and economic conditions that may
affect levels of discretionary customer purchases of the Com-
pany’s products. The Company undertakes no obligation
to publicly update any of the forward-looking statements,
whether as a result of new information, future events or oth-
erwise, made in this release or in any of its SEC filings except
as may be otherwise stated by the Company. For a more de-
tailed description of these and other risk factors, please refer
to the Company’s SEC filings including the Company’s Annual
Reports on Form 10-K and its Quarterly Reports on Form
10-Q. Consequently, you should not consider any such list
to be a complete set of all potential risks and uncertainties.
Stock Exchange Listing
NASDAQ Global Select Market
Ticker Symbol: FLWS
Transfer Agent and Registrar
American Stock Transfer & Trust Company
6201 15th Avenue
Brooklyn, New York 11219
(718) 921-8200
Independent Auditors
Ernst & Young LLP
One Jericho Plaza
Suite 105
Jericho, New York 11753
(516) 336-0100
SEC Counsel
Cahill Gordon and Reindel LLP
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, Inc.
may be obtained by visiting the Investor
Relations section at www.1800flowersinc.com,
by calling 516-237-6113, or by writing to:
Investor Relations
1-800-FLOWERS.COM, Inc.
One Old Country Road, Suite 500
Carle Place, NY 11514
One Old Country Road, Suite 500, Carle Place, NY 11514
(516) 237-6000 • www.1800flowers.com