UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2007
or
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___
Commission File No. 0-26841
1-800-FLOWERS.COM, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE 11-3117311
-------- ----------
(State of (I.R.S. Employer
incorporation) Identification No.)
One Old Country Road, Carle Place, New York 11514
-------------------------------------------------
(Address of principal executive offices)(Zip code)
(516) 237-6000
--------------
(Registrant's telephone number, including area code)
|
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No ( )
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ( ) Accelerated filer(X) Non-accelerated filer ( )
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ( ) No (X)
The number of shares outstanding of each of the Registrant's classes of common stock:
1-800-FLOWERS.COM, Inc.
TABLE OF CONTENTS
INDEX
Page
----
Part I. Financial Information
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheets - September 30, 2007 (Unaudited)
(Unaudited) and July 1, 2007 1
Consolidated Statements of Income (Unaudited) - Three
Months Ended September 30, 2007 and October 1, 2006 2
Consolidated Statements of Cash Flows (Unaudited) -
Three Months Ended September 30, 2007 and October 1, 2006 3
Notes to Consolidated Financial Statements (Unaudited) 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures About Market Risk 21
Item 4. Controls and Procedures 21
Part II. Other Information
Item 1. Legal Proceedings 22
Item 1A. Risk Factors 22
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 22
Item 3. Defaults upon Senior Securities 22
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 5. Other Information 22
Item 6. Exhibits 22
Signatures 24
|
PART I. - FINANCIAL INFORMATION
ITEM 1. - CONSOLIDATED FINANCIAL STATEMENTS
1-800-FLOWERS.COM, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share data)
September 30, July 1,
2007 2007
-------------- -----------
(unaudited)
Assets
Current assets:
Cash and equivalents $3,821 $16,087
Receivables, net 20,915 17,010
Inventories 83,163 62,051
Deferred income taxes 23,040 19,260
Prepaid and other 18,342 9,576
-------------- -----------
Total current assets 149,281 123,984
Property, plant and equipment, net 62,666 62,561
Goodwill 112,131 112,131
Other intangibles, net 52,082 52,750
Other assets 677 1,081
-------------- -----------
Total assets $376,837 $352,507
============== ===========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses $52,795 $62,433
Current maturities of long-term debt and obligations under capital leases 50,829 10,132
-------------- -----------
Total current liabilities 103,624 72,565
Long-term debt and obligations under capital leases 64,813 68,000
Deferred income taxes 8,230 8,230
Other liabilities 2,614 2,681
-------------- -----------
Total liabilities 179,281 151,476
Commitments and contingencies
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 30,446,524
and 30,298,019 shares issued at September 30, 2007 and July 1, 2007,
respectively 304 303
Class B common stock, $.01 par value, 200,000,000 shares authorized 42,138,465
shares issued at September 30, 2007 and July 1, 2007 421 421
Additional paid-in capital 271,584 269,270
Retained deficit (44,683) (38,893)
Treasury stock, at cost - 4,594,326 and 4,590,717 Class A Shares at September
30, 2007 and July 1, 2007, respectively and 5,280,000 Class B shares (30,070) (30,070)
-------------- -----------
Total stockholders' equity $197,556 $201,031
-------------- -----------
Total liabilities and stockholders' equity $376,837 $352,507
============== ===========
|
See accompanying Notes to Consolidated Financial Statements.
1-800-FLOWERS.COM, Inc. and Subsidiaries Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)
Three Months Ended
---------------------------------
September 30, October 1,
2007 2006
---------------- ----------------
Net revenues $145,810 $137,132
Cost of revenues 85,929 82,318
---------------- ----------------
Gross profit 59,881 54,814
Operating expenses:
Marketing and sales 42,779 42,370
Technology and development 5,235 5,161
General and administrative 15,218 13,343
Depreciation and amortization 4,870 4,744
---------------- ----------------
Total operating expenses 68,102 65,618
---------------- ----------------
Operating loss (8,221) (10,804)
Other income (expense):
Interest income 178 337
Interest expense (1,545) (1,828)
Other 18 11
---------------- ----------------
Total other income (expense), net (1,349) (1,480)
---------------- ----------------
Loss before income taxes (9,570) (12,284)
Income tax benefit 3,780 4,865
---------------- ----------------
Net loss ($5,790) ($7,419)
================ ================
Basic and diluted net loss per common share ($0.09) ($0.11)
================ ================
Weighted average shares used in the calculation
of basic and diluted net loss per common share 62,638 65,195
================ ================
|
See accompanying Notes to Consolidated Financial Statements.
1-800-FLOWERS.COM, Inc. and Subsidiaries Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended
---------------------------------
September 30, October 1,
2007 2006
---------------- ----------------
Operating activities:
Net loss ($5,790) ($7,419)
Reconciliation of net loss to net cash used in operations:
Depreciation and amortization 4,870 4,744
Deferred income taxes (3,780) (4,865)
Stock-based compensation 1,469 1,020
Bad debt expense 584 238
Other non-cash items 97 56
Changes in operating items:
Receivables (4,489) (7,078)
Inventories (21,179) (21,581)
Prepaid and other (8,766) (16,776)
Accounts payable and accrued expenses (5,272) 6,391
Other assets 351 (387)
Other liabilities (67) 562
---------------- ----------------
Net cash used in operating activities (41,972) (45,095)
Investing activities:
Acquisitions, net of cash acquired (4,366) -
Capital expenditures (4,332) (6,146)
Other 48 (262)
---------------- ----------------
Net cash used in investing activities (8,650) (6,408)
Financing activities:
Proceeds from employee stock options 846 138
Proceeds from bank borrowings 50,000 37,000
Repayment of notes payable and bank borrowings (12,481) (363)
Repayment of capital lease obligations (9) (173)
---------------- ----------------
Net cash provided by financing activities 38,356 36,602
---------------- ----------------
Net change in cash and equivalents (12,266) (14,901)
Cash and equivalents:
Beginning of period 16,087 24,599
---------------- ----------------
End of period $3,821 $9,698
================ ================
|
See accompanying Notes to Consolidated Financial Statements.
1-800-FLOWERS.COM, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1 - Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared by 1-800-FLOWERS.COM, Inc. and subsidiaries (the "Company") in accordance with accounting principles generally accepted in the United States for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended September 30, 2007 are not necessarily indicative of the results that may be expected for the fiscal year ending June 29, 2008.
The balance sheet information at July 1, 2007 has been derived from the audited financial statements at that date.
The information in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended July 1, 2007.
Use of Estimates
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Comprehensive Income
For the three months ended September 30, 2007 and October 1, 2006, the Company's comprehensive net losses were equal to the respective net losses for each of the periods presented.
Recent Accounting Pronouncements
On July 2, 2007, the Company adopted Financial Accounting Standards Board Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109" (FIN 48). FIN 48 prescribes a "more-likely-than-not" threshold for the recognition and derecognition of tax positions, providing guidance on the accounting for interest and penalties relating to tax positions and requires that the cumulative effect of applying the provisions of FIN 48 shall be reported as an adjustment to the opening balance sheet of retained earnings or other appropriate components of equity or net assets in the statement of financial position. The Company did not have any significant unrecognized tax benefits and there was no material effect on our financial condition or results of operations as a result of implementing FIN 48. See Note 8, "Income Taxes," for additional information relating to the Company's implementation of FIN 48.
In September 2006, the FASB issued Statement No. 157, "Fair Value Measurements" ("Statement No. 157") which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. Statement No. 157 applies to other accounting pronouncements that require or permit fair value measurements and, accordingly, does not require any new fair value measurements. Statement No. 157 is effective for fiscal years beginning after November 15, 2007. The transition adjustment of the difference between the carrying amounts and the fair values of those financial instruments should be recognized as a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. The company is currently evaluating the impact of adopting the provisions of Statement No. 157.
Reclassifications
Certain balances in the prior fiscal periods have been reclassified to conform with the presentation in the current fiscal year.
1-800-FLOWERS.COM, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Note 2 - Net Loss Per Common Share
Basic net loss per common share is computed using the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed using the weighted average number of common shares outstanding during the period, and excludes the effect of dilutive potential common shares (consisting of employee stock options and unvested restricted stock awards) for the three months ended September 30, 2007 and October 1, 2006, respectively, as their inclusion would be antidilutive.
Note 3 - Stock-Based Compensation
The Company has a Long Term Incentive and Share Award Plan, which is more fully described in Note 11 of the Company's 2007 Annual Report on Form 10-K, that 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 stock-based awards.
The amounts of stock-based compensation expense recognized in the periods presented are as follows:
Three Months Ended
-----------------------------
September 30, October 1,
2007 2006
-------------- --------------
(in thousands, except
per share data)
Stock options $502 $856
Restricted stock awards 967 164
-------------- --------------
Total 1,469 1,020
Deferred income tax benefit 487 281
-------------- --------------
Stock-based compensation expense, net $982 $739
============== ==============
Impact on basic and diluted net loss per
common share $0.02 $0.01
============== ==============
|
Stock-based compensation is recorded within the following line items of operating expenses:
Three Months Ended
-----------------------------
September 30, October 1,
2007 2006
-------------- --------------
(in thousands, except
per share data)
Marketing and sales $514 $358
Technology and development 220 153
General and administrative 735 509
-------------- --------------
Total $1,469 $1,020
============== ==============
|
1-800-FLOWERS.COM, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
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 granted during the respective periods were as follows:
Three Months Ended
-------------------------------
September 30, October 1,
2007 2006(*)
--------------- ---------------
Weighted average fair value of
options granted $4.74 -
Expected volatility 46.5% -
Expected life 5.3 yrs -
Risk-free interest rate 4.43% -
Expected dividend yield 0.0% -
|
(*) The Company did not grant stock options during the three months ended October 1, 2006.
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 to be the average of the Company's historical expected term from vest date and the midpoint between the average vesting term and the contractual term. 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 three months ended September 30, 2007:
Weighted
Weighted Average
Average Remaining Aggregate
Exercise Contractual Intrinsic
Options Price Term Value (000s)
-----------------------------------------------------------
Outstanding at July 1, 2007 9,152,665 $8.10
Granted 127,500 $9.95
Exercised (135,622) $5.22
Forfeited (83,781) $10.78
--------------
Outstanding at September 30, 2007 9,060,762 $8.14 4.7 years $37,796
==============
Options vested or expected to vest at September
30,2007 8,794,680 $8.17 4.6 years $36,654
Exercisable at September 30, 2007 7,248,508 $8.35 3.9 years $30,008
|
As of September 30, 2007, the total future compensation cost related to nonvested options, not yet recognized in the statement of income, was $4.8 million and the weighted average period over which these awards are expected to be recognized was 2.9 years.
1-800-FLOWERS.COM, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
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 (Restricted Stock Awards). The following table summarizes the activity of non-vested restricted stock awards during the three months ended September 30, 2007:
Weighted
Average Grant
Date Fair
Shares Value
------------- ---------------
Non-vested at July 1, 2007 1,101,982 $5.70
Granted 510,044 $12.87
Vested (11,177) $5.89
Forfeited (17,476) $9.70
-------------
Non-vested at September 30, 2007 1,583,373 $8.01
=============
|
The fair value of nonvested shares is determined based on the closing stock price on the grant date. As of September 30, 2007, there was $9.0 million of total unrecognized compensation cost related to non-vested restricted stock-based compensation to be recognized over the weighted-average remaining period of 2.4 years.
Note 4 - Acquisitions
The Company accounts for its business combinations in accordance with SFAS No. 141, "Business Combinations," which addresses financial accounting and reporting for business combinations and requires that all such transactions be accounted for using the purchase method. Under the purchase method of accounting for business combinations, the aggregate purchase price for the acquired business is allocated to the assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. Operating results of the acquired entities are reflected in the Company's consolidated financial statements from date of acquisition.
Acquisition of Fannie May Confections Brands, Inc.
On May 1, 2006, the Company acquired all of the outstanding common stock of Fannie May Confections Brands, Inc. ("Fannie May Confections"), a manufacturer and multi-channel retailer and wholesaler of premium chocolate and other confections under the Fannie May, Harry London and Fanny Farmer brands. The acquisition, for a purchase price of approximately $96.6 million in cash, including estimated working capital adjustments and transaction costs, includes a 200,000-square foot manufacturing facility in North Canton, Ohio and 52 Fannie May retail stores in the Chicago area, where the chocolate brand has been a tradition since 1920. The purchase price is subject to "earn-out" incentives which amount to a maximum of $4.5 million during the year ended July 1, 2007 (of which $4.4 million was achieved) and $1.5 million during the year ending June 29, 2008, upon achievement of specified earnings targets. Fannie May Confections generated revenues of approximately $75.0 million in its fiscal year ended April 30, 2006.
As described further under "Long-Term Debt," in order to finance the acquisition, on May 1, 2006, the Company entered into a secured credit facility with JPMorgan Chase Bank, N.A., as administrative agent, and a group of lenders (the "2006 Credit Facility"). The 2006 Credit Facility includes an $85.0 million term loan and a $50.0 million revolving facility (which was subsequently increased to $75.0 million effective October 23, 2007), which bear interest at LIBOR plus 0.625% to 1.125%, with pricing based upon the Company's leverage ratio. At closing, the Company borrowed $85.0 million of the term facility to acquire all of the outstanding capital stock of Fannie May Confections.
1-800-FLOWERS.COM, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Note 5 - Inventory
The Company's inventory, stated at cost, which is not in excess of market, includes purchased and manufactured finished goods for resale, packaging supplies, raw material ingredients for manufactured products and associated manufacturing labor, and is classified as follows:
September 30, July 1,
2007 2007
---------------- -----------
(in thousands)
Finished goods $59,528 $43,113
Work-in-Process 5,016 3,911
Raw materials 18,619 15,027
----------- -----------
$83,163 $62,051
=========== ===========
|
Note 6 - Goodwill and Intangible Assets
There were no changes in the carrying amount of the Company's goodwill during
the three month period ended September 30, 2007. Goodwill by segment is as
follows:
1-800- Gourmet
Flowers.com BloomNet Food and Home and
Consumer Wire Gift Children's
Floral Service Baskets Gifts Total
----------------------------------------------------------------------------------
Balance at July 1, 2007 $6,352 $- $87,279 $18,500 $ 112,131
Change - - - - -
-------------- ------------- --------------- -------------- ----------------
Balance at September 30, 2007 $6,352 $- $87,279 $18,500 $ 112,131
============== ============= =============== ============== ================
|
The Company's other intangible assets consist of the following:
September 30, 2007 July 1, 2007
---------------------------------------- ----------------------------------------
Gross Gross
Amortization Carrying Accumulated Carrying Accumulated
Period Amount Amortization Net Amount Amortization Net
------------- ------------- --------------- ----------- ----------- --------------- ------------
(in thousands)
Intangible assets with
determinable lives
Investment in licenses 14 - 16 years $4,927 $4,166 $761 $4,927 $4,085 $842
Customer lists 3 - 10 years 14,260 4,403 9,857 14,260 3,919 10,341
Other 5 - 8 years 2,639 851 1,788 2,639 748 1,891
------------ --------------- ----------- ----------- --------------- ------------
21,826 9,420 12,406 21,826 8,752 13,074
Trademarks with
indefinite lives - 39,676 - 39,676 39,676 - 39,676
------------ --------------- ----------- ----------- --------------- ------------
Total identifiable
intangible assets $61,502 $9,420 $52,082 $61,502 $8,752 $52,750
============ =============== =========== =========== =============== ============
|
Estimated future amortization expense is as follows: remainder of fiscal 2008 - $2.0 million, fiscal 2009 - $2.6 million, fiscal 2010 - $2.5 million, fiscal 2011 - $2.0 million, fiscal 2012 - $0.9 and thereafter - $2.4 million.
1-800-FLOWERS.COM, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Note 7 - Long-Term Debt
The Company's long-term debt and obligations under capital leases consist of the
following:
September 30, July 1,
2007 2007
---------------- -----------
(in thousands)
Term loan $74,375 $76,500
Revolving line of credit 40,000 -
Commercial note 1,193 1,553
Obligations under capital leases 74 79
---------------- -----------
115,642 78,132
Less current maturities of long-term debt and obligations under
capital leases 50,829 10,132
---------------- -----------
$64,813 $68,000
================ ===========
|
In order to finance the acquisition of Fannie May Confections, on May 1, 2006, the Company entered into a secured credit facility with JPMorgan Chase Bank, N.A., as administrative agent, and a group of lenders (the "2006 Credit Facility"). The 2006 Credit Facility includes an $85.0 million term loan and a $50.0 million revolving facility, (which was subsequently increased to $75.0 million effective October 23, 2007), which bear interest at LIBOR plus 0.625% to 1.125%, with pricing based upon the Company's leverage ratio. At closing, the Company borrowed $85.0 million of the term facility to acquire all of the outstanding capital stock of Fannie May Confections. The Company is required to pay the outstanding term loan in escalating quarterly installments, with the final installment payment due on May 1, 2012. As of September 30, 2007, the Company had $40.0 million outstanding under its revolving credit facility, bearing interest at a rate of 5.5%.
Note 8 - Income Taxes
At the end of each interim reporting period, the Company estimates its effective income tax rate expected to be applicable for the full year. This estimate is used in providing for income taxes on a year-to-date basis and may change in subsequent interim periods. The Company's effective tax rate for the three months ended September 30, 2007 was 39.5%, compared to 39.6% during the comparative three months ended October 1, 2006. The Company's effective tax rate for the three months ended September 30, 2007 and October 1, 2006 differed from the U.S. federal statutory rate of 35% primarily due to state income taxes, partially offset by various tax credits.
The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109, or FIN 48, on July 2, 2007. The Company did not have any significant unrecognized tax benefits and there was no material effect on its financial condition or results of operations as a result of implementing FIN 48.
The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The tax years that remain subject to examination are fiscal 2003 through fiscal 2006. The Company does not believe there will be any material changes in its unrecognized tax positions over the next twelve months.
The Company's policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. As of the date of adoption of FIN 48, the Company did not have any accrued interest or penalties associated with any unrecognized tax benefits, nor was any interest expense recognized during the quarter.
1-800-FLOWERS.COM, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Note 9 - Business Segments
The Company's management reviews the results of the Company's operations by the following four business categories:
o 1-800-Flowers.com Consumer Floral;
o BloomNet Wire Service;
o Gourmet Food and Gift Baskets; and
o Home and Children's Gifts.
Category performance is measured based on contribution margin, which includes only the direct controllable revenue and operating expenses of the categories. As such, management's measure of profitability for these categories does not include the effect of corporate overhead (see (*) below), which are operated under a centralized management platform, providing services throughout the organization, nor does it include stock-based compensation, depreciation and amortization, other income (net), and income taxes. Assets and liabilities are reviewed at the consolidated level by management and not accounted for by category.
Three Months Ended
------------------------------
September 30, October 1,
Net revenues 2007 2006
--------------- --------------
In thousands
Net revenues:
1-800-Flowers.com Consumer Floral $87,599 $82,668
BloomNet Wire Service 9,891 7,166
Gourmet Food & Gift Baskets 23,162 22,224
Home & Children's Gifts 24,735 24,867
Corporate (*) 1,125 915
Intercompany eliminations (702) (708)
--------------- --------------
Total net revenues $145,810 $137,132
=============== ==============
Three Months Ended
------------------------------
September 30, October 1,
Operating Loss 2007 2006
--------------- --------------
In thousands
Category Contribution Margin:
1-800-Flowers.com Consumer Floral $11,945 $7,870
BloomNet Wire Service 2,564 1,702
Gourmet Food & Gift Baskets (1,855) (1,574)
Home & Children's Gifts (2,296) (1,878)
--------------- --------------
Category Contribution Margin Subtotal 10,358 6,120
Corporate (*) (13,709) (12,180)
Depreciation and amortization (4,870) (4,744)
--------------- --------------
Operating loss (8,221) (10,804)
=============== ==============
|
(*) Corporate expenses consist of the Company's enterprise shared service cost centers, and include, among others, 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 category.
Note 10 - Commitments and Contingencies
Legal Proceedings
From time to time, the Company is subject to legal proceedings and claims arising in the ordinary course of business. The Company is not aware of any such legal proceedings or claims that it believes will have, individually or in the aggregate, a material adverse effect on its consolidated financial position, results of operations or liquidity.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Forward Looking Statements
The section entitled "Forward Looking Information and Factors that May Affect Future Results," provides a description of the risks and uncertainties that could cause actual results to differ materially from those discussed in forward-looking statements set forth in this report relating to the financial results, operations and business prospects of the Company. Such forward-looking statements are based on management's current expectations about future events, which are inherently susceptible to uncertainty and changes in circumstances.
Overview
For more than 30 years, 1-800-FLOWERS.COM Inc. - "Your Florist of Choice(R)" - has been providing customers around the world with the freshest flowers and finest selection of plants, gift baskets, gourmet foods, confections and plush stuffed animals perfect for every occasion. 1-800-FLOWERS.COM(R) offers the best of both worlds: exquisite, florist-designed arrangements individually created by some of the nation's top floral artists and hand-delivered the same day, and spectacular flowers shipped overnight "Fresh From Our Growers(sm)."
Customers can "call, click or come in" to shop 1-800-FLOWERS.COM 24/7 at
1-800-356-9377 or www.1800flowers.com. As always, 100 percent satisfaction and
freshness are guaranteed. The 1-800-FLOWERS.COM collection of brands also
includes home decor and children's gifts from Plow & Hearth(R) (1-800-627-1712
or www.plowandhearth.com), Wind & Weather(R) (www.windandweather.com),
HearthSong(R) (www.hearthsong.com) and Magic Cabin(R) (www.magiccabin.com);
gourmet gifts including popcorn and specialty treats from The Popcorn Factory(R)
(1-800-541-2676 or www.thepopcornfactory.com); exceptional cookies and baked
gifts from Cheryl&Co.(R) (1-800-443-8124 or www.cherylandco.com); premium
chocolates and confections from Fannie May Confections Brands(R)
(www.fanniemay.com and www.harrylondon.com); gourmet foods from GreatFood.com(R)
(www.greatfood.com); wine gifts from Ambrosia(R) (www.ambrosia.com); gift
baskets from 1-800-BASKETS.COM(R) (www.1800baskets.com) and the BloomNet(R)
international floral wire service, which provides quality products and diverse
services to a select network of florists.
1-800-FLOWERS.COM, Inc. stock is traded on the NASDAQ Global Select Market under ticker symbol FLWS.
Category Information
During the first quarter of fiscal 2007, the Company segmented its organization to improve execution and customer focus and to align its resources to meet the demands of the markets it serves. The following table presents the contribution of net revenues, gross profit and category contribution margin or category "EBITDA" (earnings before interest, taxes, depreciation and amortization) from each of the Company's business categories.
Three Months Ended
------------------------------------------------
Net Revenues September 30, October 1,
2007 2006 % Change
---------------- ---------------- --------------
(in thousands)
Net revenues:
1-800-Flowers.com Consumer Floral $87,599 $82,668 6.0%
BloomNet Wire Service 9,891 7,166 38.0%
Gourmet Food & Gift Baskets 23,162 22,224 4.2%
Home & Children's Gifts 24,735 24,867 (0.5%)
Corporate (*) 1,125 915 23.0%
Intercompany eliminations (702) (708) 0.8%
---------------- ----------------
Total net revenues $145,810 $137,132 6.3%
================ ================
Three Months Ended
------------------------------------------------
Gross Profit September 30, October 1,
2007 2006 % Change
---------------- ---------------- --------------
(in thousands)
Gross Profit:
1-800-Flowers.com Consumer Floral $34,096 $31,451 8.4%
38.9% 38.0%
BloomNet Wire Service 5,609 4,100 36.8%
56.7% 57.2%
Gourmet Food & Gift Baskets 9,483 8,519 11.3%
40.9% 38.3%
Home & Children's Gifts 10,206 10,342 (1.3%)
41.3% 41.6%
Corporate (*) 507 446 13.7%
45.1% 48.7%
Intercompany eliminations (20) (44) 54.5%
---------------- ----------------
Total gross profit $59,881 $54,814 9.2%
================ ================
41.1% 40.0%
================ ================
Three Months Ended
------------------------------------------------
EBITDA** September 30, October 1,
2007 2006 % Change
---------------- ---------------- --------------
(in thousands)
Category Contribution Margin:
1-800-Flowers.com Consumer Floral $11,945 $7,870 51.8%
BloomNet Wire Service 2,564 1,702 50.6%
Gourmet Food & Gift Baskets (1,855) (1,574) (17.9%)
Home & Children's Gifts (2,296) (1,878) (22.3%)
---------------- ----------------
Category Contribution Margin Subtotal 10,358 6,120 69.2%
Corporate (*) (13,709) (12,180) (12.6%)
---------------- ----------------
EBITDA ($3,351) ($6,060) 44.7%
================ ================
|
(*) 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 category.
(**) Performance is measured based on category contribution margin or category EBITDA, reflecting only the direct controllable revenue and operating expenses of the categories. As such, management's measure of profitability for these categories does not include the effect of corporate overhead, described above, nor does it include depreciation and amortization, other income (net), and income taxes. Management utilizes EBITDA 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 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 (with additional adjustments) to measure compliance with covenants such as interest coverage and debt incurrence. EBITDA is also used by the Company to evaluate and price potential acquisition candidates. EBITDA has 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.
Reconciliation of Net Loss to EBITDA:
Three Months Ended
------------------------------
September 30, October 1,
2007 2006
-------------- ---------------
Net loss ($5,790) ($7,419)
Add:
Interest expense 1,545 1,828
Depreciation and amortization 4,870 4,744
Less:
Interest income 178 337
Other income 18 11
Income tax benefit 3,780 4,865
-------------- ---------------
EBITDA ($3,351) ($6,060)
============== ===============
|
Results of Operations
Net Revenues
Three Months Ended
-------------------------------------------
September 30, October 1,
2007 2006 % Change
-------------- -------------- -------------
(in thousands)
Net revenues:
E-commerce $114,503 $109,259 4.8%
Other 31,307 27,873 12.3%
-------------- --------------
Total net revenues $145,810 $137,132 6.3%
============== ==============
|
The Company's revenue growth of 6.3% during the three months ended September 30, 2007 resulted primarily from growth within the Company's 1-800-Flowers.com Consumer Floral and BloomNet Wire Service businesses, which increased 6.0% and
38.0%, respectively. Excluding the Home and Children's Gift category, total revenue growth during the three months ended September 30, 2007 was 8.0%, reflecting: (i) the Company's strong brand name recognition, (ii) continued leveraging of its existing customer base, and (iii) cost effective spending on its marketing and selling programs.
The Company fulfilled approximately 1,654,200 orders through its E-commerce sales channels (online and telephonic sales) during the three months ended September 30, 2007, an increase of 1.1% over the prior year period. The Company's E-commerce average order value of $67.84 during the three months ended September 30, 2007, increased 2.8% over the prior year period, primarily from a combination of product mix and pricing initiatives. Other revenues, for the three months ended September 30, 2007, increased in comparison to the same period of the prior year, primarily as a result of the continued membership growth and expanded product and service offerings from the Company's BloomNet Wire Service category as well as increased retail/wholesale revenues from Fannie May Confections Brands, Inc.
The 1-800-Flowers.com Consumer Floral category includes the 1-800-Flowers brand operations which derives revenue from the sale of consumer floral products through its E-Commerce sales channels (telephonic and online sales) and company-owned and operated retail floral stores, as well as royalties from its franchise operations. Net revenues during the three months ended September 30, 2007 increased by 6.0% over the prior year period, primarily from a combination of increased average order value and order volumes from its E-commerce sales channel (which grew at a rate of 7.2%), offset in part by lower retail sales from its company-owned floral stores due to the continued transition of Company stores to franchise ownership.
The BloomNet Wire Service category includes revenues from membership fees as well as other product and service offerings to florists. Net revenues during the three months ended September 30, 2007 increased by 38.0% over the prior year period, primarily as a result of increased florist membership, expanded product and service offerings, pricing initiatives and a growing volume of orders sent between florists.
The Gourmet Food & Gift Basket category includes the operations of the Cheryl & Co., Fannie May Confections, The Popcorn Factory and The Winetasting Network brands. Revenue is derived from the sale of cookies, baked gifts, premium chocolates and confections, gourmet popcorn and wine gifts through its E-commerce sales channels (telephonic and online sales) and company-owned and operated retail stores under the Cheryl & Co. and Fannie May brands, as well as wholesale operations. Net revenue during the three months ended September 30, 2007 increased by 4.2% over the prior year period, reflecting the Company's seasonally slower summer months.
The Home & Children's Gifts category includes revenues from Plow & Hearth, Wind & Weather, HearthSong and Magic Cabin brands. Revenue is derived from the sale of home decor and children's gifts through its E-commerce sales channels (telephonic and online sales) or company-owned and operated retail stores under the Plow & Hearth brand. Net revenue during the three months ended September 30, 2007 was consistent with the prior year period, and is expected to remain flat for the balance of the fiscal year. As a result of the poor results during the second quarter of fiscal 2007, the Company announced a planned reduction in investment spending in this category, and as a result, beginning with the third quarter of fiscal 2007, management implemented several changes to improve the performance within this category: (i) discontinued such as Madison Place and Problem Solvers, (ii) strengthened the management team, (iii) improved the creative look and feel of the catalogs and (iv) reduced the circulation plans for all titles to place more focus on the category's existing customer base.
Over the past several years, through a combination of organic efforts and strategic acquisitions, the Company has rapidly grown its revenues, achieving a solid base of business which is approaching $1 billion. The Company anticipates that its revenue growth for fiscal 2008 will be in the range of 7-9 percent, as strong revenue growth in the Company's key business categories of 1-800-Flowers Consumer Floral, BloomNet Wire Service and Gourmet Food & Gift Baskets offsets the lower revenue contribution expected from its Home and Children's Gifts category.
Gross Profit
Three Months Ended
---------------------------------------------
September 30, October 1,
2007 2006 % Change
-------------- --------------- -------------
(In thousands)
Gross profit $59,881 $54,814 9.2%
Gross margin % 41.1% 40.0%
|
Gross profit increased during the three months ended September 30, 2007, in
comparison to the same period of the prior year, primarily as a result of the
revenue growth described above, as well as an increase in gross margin
percentage. Gross margin percentage increased 110 basis points to 41.1% during
the three months ended September 30, 2007, as a result of product mix and
pricing initiatives, as well as continued improvements in customer service,
fulfillment, including improved outbound shipping rates, and merchandising
programs.
The 1-800-Flowers.com Consumer Floral category gross profit for the three months ended September 30, 2007 increased by 8.4% over the prior year period as a result of the aforementioned increase in net revenues, as well as improvements in sourcing, fulfillment logistics, including reduced outbound shipping rates, and pricing initiatives, which resulted in an increase in gross margin percentage of 90 basis points to 38.9%, during the three months ended September 30, 2007.
The BloomNet Wire Service category gross profit for the three months ended September 30, 2007 increased by 36.8% over the prior year period as a result of increases in florist membership, product and service offerings and pricing initiatives. Gross margin percentage decreased 50 basis points to 56.7% during the three months ended September 30, 2007, primarily as a result of sales mix, impacted by increased revenue related to a growing volume of orders sent between florists which bear lower margins, but support membership growth.
The Gourmet Food & Gift Basket category gross profit for the three months ended September 30, 2007 increased by 11.3% over the prior year period as a result of the aforementioned increased revenue as well as an improved gross margin percentage. The gross margin percentage increased by 260 basis points to 40.9% during the three months ended September 30, 2007, driven primarily by reduced manufacturing costs and improved product sourcing, as well as sales mix.
The Home & Children's Gift category gross profit for the three months ended September 30, 2007 decreased by 1.3% over the prior year period as a result of the lower gross margin percentage, which declined 30 basis points to 41.3%, due to sales mix.
During the remainder of fiscal 2008, the Company expects that its gross margin
percentage will improve, although varying by quarter due to seasonal changes in
product mix, primarily through: (i) growth of its higher margin business
categories including Gourmet Food and Gift Baskets and BloomNet Wire Service,
(ii) improved product sourcing, new product development and process improvement
initiatives implemented during the second half of fiscal 2007, and (iii) the
continued improved performance of the Consumer Floral category.
Marketing and Sales Expense
Three Months Ended
---------------------------------------------
September 30, October 1,
2007 2006 % Change
------------------ --------------- ----------
(In thousands)
Marketing and sales $42,779 $42,370 1.0%
Percentage of net revenues 29.3% 30.9%
|
During the three months ended September 30, 2007, marketing and sales expenses decreased from 30.9% of net revenues to 29.3% of net revenues, reflecting improved operating leverage from a number of cost-saving initiatives, such as catalog printing and e-mail pricing improvements, as well as the impact of the growth of the Company's BloomNet category. Marketing and sales expense increased slightly over the prior year period, by 1.0%, as a result of incremental variable costs to accommodate higher sales volumes. During the three months ended September 30, 2007, the Company added approximately 506,000 new e-commerce customers. As a result of the Company's effective customer retention efforts, approximately 822,000 existing customers placed e-commerce orders during the three months ended September 30, 2007, representing an increase of 3.1% over the same period of the prior year. Of the 1,328,000 total customers who placed e-commerce orders during the three months ended September 30, 2007, approximately 61.9% were repeat customers, compared to 59.3% during the prior year, reflecting the Company's ongoing focus on deepening the relationship with its existing customers as their trusted source for gifts and services for all of their celebratory occasions.
During fiscal 2008, the Company is focused on continuing to improve its operating expense ratio through a number of cost saving initiatives, including catalog printing and e-mail pricing improvements, as well as a review of the type, quantity and effectiveness of its marketing programs. In addition to the improved operating results expected now that the Company has completed the investment phase of its BloomNet florist business, the Company expects that marketing and sales expense, as a percentage of revenue, will continue to decrease in comparison to the prior year.
Technology and Development Expense
Three Months Ended
---------------------------------------------
September 30, October 1,
2007 2006 % Change
-------------- --------------- --------------
(In thousands)
Technology and development $5,235 $5,161 1.4%
Percentage of net revenues 3.6% 3.8%
|
During the three months ended September 30, 2007, technology and development expense decreased to 3.6% of net revenue, reflecting improved operating leverage, but increased over the prior year period by 1.4% as a result of increased cost of hosting, maintenance and license agreements required to support the Company's technology platform. During the three months ended September 30, 2007, the Company expended $8.4 million on technology and development, of which $3.2 million has been capitalized.
While the Company believes that continued investment in technology and development is critical to attaining its strategic objectives, the Company expects that its spending for the remainder of fiscal 2008 will remain consistent as a percentage of net revenues in comparison to the prior year.
General and Administrative Expense
Three Months Ended
---------------------------------------------
September 30, October 1,
2007 2006 % Change
-------------- --------------- --------------
(In thousands)
General and administrative $15,218 $13,343 14.1%
Percentage of net revenues 10.4% 9.7%
|
General and administrative expense increased 14.1% during the three months ended September 30, 2007, and by 70 basis points of net revenues in comparison to the prior year period, primarily as a result of increased professional fees and corporate initiatives. The benefit of these increased costs are reflected in the improvements in the Company's gross profit margin and marketing and selling expense ratios, in comparison to the same period of the prior year.
The Company believes that its current general and administrative infrastructure is sufficient to support existing requirements and drive operating leverage, and as a result the Company expects that its general and administrative expenses as a percentage of net revenue during the remainder of fiscal 2008 will be consistent with the prior year period.
Depreciation and Amortization Expense
Three Months Ended
------------------------------------------
September 30, October 1,
2007 2006 % Change
-------------- --------------- -----------
(In thousands)
Depreciation and amortization $4,870 $4,744 2.7%
Percentage of net revenues 3.3% 3.5%
|
Depreciation and amortization expense, as a percentage of net revenue, decreased by 20 basis points in comparison to the prior year period, as a result of the Company's ability to leverage its existing technology infrastructure. Depreciation and amortization expense increased 2.7% during the three months ended September 30, 2007, as a result of the completion of technology projects designed to provide improved order/warehouse management functionality across the enterprise.
The Company believes that continued investment in its infrastructure, primarily in the areas of technology and development, including the improvement of its technology platforms are critical to attaining its strategic objectives. As a result of these improvements, the Company expects that depreciation and amortization for the remainder of fiscal 2008 will remain consistent as a percentage of net revenues in comparison to the prior year.
Other Income (Expense)
Three Months Ended
------------------------------------------
September 30, October 1,
2007 2006 % Change
-------------- -------------- ------------
(In thousands)
Interest income $178 $337 (47.2%)
Interest expense (1,545) (1,828) 15.5%
Other 18 11 63.6%
-------------- --------------
($1,349) ($1,480) 8.9%
============== ==============
|
Other income (expense) consists primarily of interest income earned on the Company's investments and available cash balances, offset by interest expense, primarily attributable to the Company's long-term debt, and revolving line of credit. In order to finance the acquisition of Fannie May Confections Brands, on May 1, 2006, the Company entered into a $135.0 million secured credit facility with JPMorgan Chase Bank, N.A., as administrative agent, and a group of lenders (the "2006 Credit Facility"). The 2006 Credit Facility, as amended on October 23, 2007, includes an $85.0 million term loan and a $75.0 million revolving facility, which bear interest at LIBOR plus 0.625% to 1.125%, with pricing based upon the Company's leverage ratio. At closing, the Company borrowed $85.0 million of the term facility to acquire all of the outstanding capital stock of Fannie May Confections Brands, Inc. As of September 30, 2007, the outstanding balances on the term loan and revolving credit line under the Company's 2006 Credit Facility was $74.4 million and $40.0 million, respectively. The outstanding balance on the Company's credit line was used to fund working capital needs in preparation for the upcoming holiday season.
The increase in other income (expense) during the three months ended September 30, 2007, in comparison to the prior year period was primarily the result of lower interest expense on the Company's 2006 Credit Facility due to a reduced outstanding balance on the Company's term loan as a result of the scheduled repayments, and a reduction in rates, offset in part by lower interest income, resulting from a decrease in average cash balances and rates.
Income Taxes
On July 2, 2007, the Company adopted Financial Accounting Standards Board Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109" (FIN 48). FIN 48 prescribes a "more-likely-than-not" threshold for the recognition and derecognition of tax positions, providing guidance on the accounting for interest and penalties relating to tax positions and requires that the cumulative effect of applying the provisions of FIN 48 shall be reported as an adjustment to the opening balance sheet of retained earnings or other appropriate components of equity or net assets in the statement of financial position. The Company did not have any significant unrecognized tax benefits and there was no material effect on our financial condition or results of operations as a result of implementing FIN 48. See Note 7, "Income Taxes," for additional information relating to the Company's implementation of FIN 48.
During the three months ended September 30, 2007 and October 1, 2006, the Company recorded an income tax benefit of $3.8 million and $4.9 million, respectively. The Company's effective tax rate for the three months ended September 30, 2007 and October 1, 2006 was 39.5% and 39.6%, respectively. The Company's effective tax rate for the three months ended September 30, 2007 and October 1, 2006 differed from the U.S. federal statutory rate of 35% primarily due to state income taxes, partially offset by various tax credits.
Liquidity and Capital Resources
At September 30, 2007, the Company had working capital of $45.7 million, including cash and equivalents of $3.8 million, compared to working capital of $51.4 million, including cash and equivalents of $16.1 million, at July 1, 2007.
Net cash used in operating activities of $42.0 million for the three months ended October 1, 2006 was primarily attributable to the Company's net loss and seasonal changes in working capital, including increases in inventory, receivables and prepaids, consisting primarily of prepaid catalog production costs, as well as lower accounts payable and accrued expenses due to payments related to the Company's fiscal 2007 performance-based bonuses.
Net cash used in investing activities of $8.7 million for the three months ended September 30, 2007 was primarily attributable to capital expenditures related to the Company's technology and distribution infrastructure and to the payment of a $4.4 million "earn-out" incentive, for financial targets achieved during fiscal 2007, related to the acquisition of Fannie May Confections Brands, Inc.
Net cash provided by financing activities of $38.4 million for the three months ended September 30, 2007 was primarily from bank borrowings used to fund
seasonal operating losses and working capital requirements, net of the repayment of bank borrowings on outstanding debt and long-term capital lease obligations.
On May 1, 2006, the Company entered into a $135.0 million secured credit facility with JPMorgan Chase Bank, N.A., as administrative agent, and a group of lenders (the "2006 Credit Facility"). The 2006 Credit Facility, as amended on October 23, 2007, includes an $85.0 million term loan and a $75.0 million revolving credit facility, which bear interest at LIBOR plus 0.625% to 1.125%, with pricing based upon the Company's leverage ratio. At closing, the Company borrowed $85.0 million of the term facility to acquire all of the outstanding capital stock of Fannie May Confections Brands, Inc. The Company is required to pay the outstanding term loan in quarterly installments, with the final installment payment due on May 1, 2012. The 2006 Credit Facility contains various conditions to borrowing, and affirmative and negative financial covenants.
The Company has historically utilized cash generated from operations to meet its cash requirements, including all operating, investing and debt repayment activities. However, due to the Company's continued expansion into non-floral products, including the acquisition of Fannie May Confections Brands, as of September 30, 2007, the Company had borrowed $40.0 million against its line of credit to fund working capital requirements, which have increased during this time period as a result of increased inventory and pre-holiday manufacturing requirements. The Company expects to increase its level of borrowing during its fiscal second quarter, but also expects that all such amounts will be repaid prior to the end of the quarter.
On May 12, 2005, the Company's Board of Directors increased the Company's authorization to repurchase the Company's Class A common stock up to $20 million, from the previous authorized limit of $10 million. Any such purchases could be made from time to time in the open market and through privately negotiated transactions, subject to general market conditions. The repurchase program will be financed utilizing available cash. As of September 30, 2007, the Company had repurchased 1,538,286 shares of common stock for $11.3 million, excluding the December 28, 2006 repurchase of 3,010,740 shares of common stock from an affiliate. The purchase price was $15,689,000, or $5.21 per share. The repurchase was approved by the disinterested members of the Company's Board of Directors and is in addition to the Company's existing stock repurchase authorization of $20.0 million, of which $8.7 million remains authorized but unused.
At September 30, 2007, the Company's contractual obligations consist of:
Payments due by period
-----------------------------------------------------------------------------------
(in thousands)
Less than 1 1 - 3 3 - 5 More than 5
Total year years years years
----------- --------------- ------------ ------------- ----------------
Long-term debt, including interest 128,934 55,390 32,861 40,683 -
Capital lease obligations 89 35 25 25 4
Operating lease obligations 65 947 8,182 16,436 13,182 28,147
Sublease obligations 5,656 1,755 2,720 927 254
Purchase commitments (*) 34,305 34,305 - - -
----------- --------------- ------------ ------------- ----------------
Total 234,931 99,667 52,042 54,817 28,405
=========== =============== ============ ============= ================
|
(*) Purchase commitments consist primarily of inventory, equipment purchase orders and online marketing agreements made in the ordinary course of business.
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 assumptions that affect the reported amount of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, 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 judgments and estimates used in preparation of its consolidated financial statements.
Revenue Recognition
Net revenues are generated by E-commerce operations from the Company's online and telephonic sales channels as well as other operations (retail/fulfillment) and primarily consist of the selling price of merchandise, service or outbound shipping charges, less discounts, returns and credits. Net revenues are recognized upon product shipment. Shipping terms are FOB shipping point. Net revenues generated by the Company's BloomNet Wire Service operations include membership fees as well as other product and service offerings to florists. Membership fees are recognized monthly in the period earned, and product sales are recognized upon shipment with shipping terms of FOB shipping point.
Accounts Receivable
The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers or franchisees to make required payments. If the financial condition of the Company's customers or franchisees were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.
Inventory
The Company states inventory at the lower of cost or market. In assessing the realization of inventories, we are required to make judgments as to future demand requirements and compare that with inventory levels. It is possible that changes in consumer demand could cause a reduction in the net realizable value of inventory.
Goodwill and Other Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of the net assets acquired and is evaluated annually for impairment. The cost of intangible assets with determinable lives is amortized to reflect the pattern of economic benefits consumed, on a straight-line basis, over the estimated periods benefited, ranging from 3 to 16 years.
The Company performs an annual impairment test as of the first day of its fiscal fourth quarter, or earlier if indicators of potential impairment exist, to evaluate goodwill. Goodwill is considered impaired if the carrying amount of the reporting unit exceeds its estimated fair value. In assessing the recoverability of goodwill, the Company reviews both quantitative as well as qualitative factors to support its assumptions with regard to fair value. Judgment regarding the existence of impairment indicators is based on market conditions and operational performance of the Company. Future events could cause the Company to conclude that impairment indicators exist and that goodwill and other intangible assets associated with our acquired businesses is impaired.
Capitalized Software
The carrying value of capitalized software, both purchased and internally developed, is periodically reviewed for potential impairment indicators. Future events could cause the Company to conclude that impairment indicators exist and that capitalized software is impaired.
Stock-based Compensation
SFAS No. 123R requires the measurement of stock-based compensation expense based on the fair value of the award on the date of grant. The Company determines the fair value of stock options issued by using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model considers a range of assumptions related to volatility, dividend yield, risk-free interest rate and employee exercise behavior. Expected volatilities are based on historical volatility of the Company's stock price. The dividend yield is based on historical experience and future expectations. The risk-free interest rate is derived from the US Treasury yield curve in effect at the time of grant. The Black-Scholes model also incorporates expected forfeiture rates, based on historical behavior. Determining these assumptions are subjective and complex, and therefore, a change in the assumptions utilized could impact the calculation of the fair value of the Company's stock options.
Income Taxes
The Company has established deferred income tax assets and liabilities for temporary differences between the financial reporting bases and the income tax bases of its assets and liabilities at enacted tax rates expected to be in effect when such assets or liabilities are realized or settled. The Company has recognized as a deferred tax asset the tax benefits associated with losses related to operations, which are expected to result in a future tax benefit. Realization of this deferred tax asset assumes that we will be able to generate sufficient future taxable income so that these assets will be realized. The factors that we consider in assessing the likelihood of realization include the forecast of future taxable income and available tax planning strategies that could be implemented to realize the deferred tax assets.
Recent Accounting Pronouncements
On July 2, 2007, the Company adopted Financial Accounting Standards Board Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109" (FIN 48). FIN 48 prescribes a "more-likely-than-not" threshold for the recognition and derecognition of tax positions, providing guidance on the accounting for interest and penalties relating to tax positions and requires that the cumulative effect of applying the provisions of FIN 48 shall be reported as an adjustment to the opening balance sheet of retained earnings or other appropriate components of equity or net assets in the statement of financial position. The Company did not have any significant unrecognized tax benefits and there was no material effect on our financial condition or results of operations as a result of implementing FIN 48.
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements". This Statement defines fair value, establishes a framework for measuring fair value and expands disclosure about fair value measurements, and is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company is currently evaluating the effect that the adoption of this Statement will have on its consolidated results of operations and financial condition.
Forward Looking Information and Factors that May Affect Future Results
Our disclosure and analysis in this report contain forward-looking information about the Company's financial results and estimates, business prospects that involve substantial risks and uncertainties. From time to time, we also may provide oral or written forward-looking statements in other materials we release to the public. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historic or current facts. They use words such as "will," "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "target," "forecast" and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, future performance, new products and product categories, the outcome of contingencies, such as legal proceedings, and financial results. Among the factors that could cause actual results to differ materially are the following:
o the Company's ability:
o to achieve revenue and profitability;
o to reduce costs and enhance its profit margins;
o to manage the increased seasonality of its business;
o to effectively integrate and grow acquired companies;
o to cost effectively acquire and retain customers;
o to compete against existing and new competitors;
o to manage expenses associated with sales and marketing and necessary
general and administrative and technology investments;
o to cost efficiently manage inventories;
o to leverage its operating infrastructure;
o general consumer sentiment and economic conditions that may affect
levels of discretionary customer purchases of the Company's products;
and
o competition from existing and potential new competitors.
We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans and assumptions. Achievement of future results is subject to risks, uncertainties and inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from past results and those anticipated, estimated or projected. Investors should bear this in mind as they consider forward-looking statements.
We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our Forms 10-Q, 8-K and 10-K reports to the Securities and Exchange Commission. Our Annual Report on Form 10-K filing for the fiscal year ended July 1, 2007 listed various important factors that could cause actual results to differ materially from expected and historic results. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. Readers can find them in Part I, Item 1A, of that filing under the heading "Cautionary Statements Under the Private Securities Litigation Reform Act of 1995". We incorporate that section of that Form 10-K in this filing and investors should refer to it. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's earnings and cash flows are subject to fluctuations due to changes in interest rates primarily from its investment of available cash balances in money market funds. While the Company currently does not use interest rate derivative instruments to manage exposure to interest rate changes, in order to finance the acquisition of Fannie May Confections, on May 1, 2006, the Company entered into a secured credit facility. The credit facility, as amended on October 23, 2007, includes an $85.0 million term loan and a $75.0 million revolving facility, which bear interest at LIBOR plus 0.625% to 1.125%, with pricing based upon the Company's leverage ratio.
ITEM 4. CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, these disclosure controls and procedures are effective in alerting them in a timely manner to material information required to be disclosed in the Company's periodic reports filed with the SEC.
There were no changes in our internal control over financial reporting (as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the three months ended September 30, 2007 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
PART II. - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company is subject to legal proceedings and claims arising in the ordinary course of business. The Company is not aware of any such legal proceedings or claims that it believes will have, individually or in the aggregate, a material adverse effect on its business, consolidated financial position, results of operations or liquidity.
ITEM 1A. RISK FACTORS.
There have been no material changes from the risk factors disclosed in Part 1, Item 1, of the Company's Annual Report on Form 10-K for the fiscal year ended July 1, 2007.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table sets forth, for the months indicated, the Company's purchase of common stock during the three months of fiscal 2008 which includes the period July 2, 2007 through September 30, 2007.
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 Programs Programs
--------------------------------------------------------------------------------------------------------------------
(in thousands, except average price paid per share)
7/2/07-7/29/07 - $- - $8,711
7/30/07-8/26/07 - $- - $8,711
8/27/07-9/30/07 3.6 $11.55 3.6 $8,669
--------------- ---------------- ----------------
Total 3.6 $11.55 3.6
=============== ================ ================
|
On May 12, 2005, the Company's Board of Directors increased the Company's authorization to repurchase the Company's Class A common stock up to $20 million, from the previous authorized limit of $10 million. Any such purchases could be made from time to time in the open market and through privately negotiated transactions, subject to general market conditions. The repurchase program will be financed utilizing available cash.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
10.1 Revolving Credit Commitment Increase Dated October 23, 2007.
10.2 Offer letter dated November 25, 2003 between Monica L. Woo and the Company.
10.3 Offer letter dated February 9, 2005 between the Company and Timothy J. Hopkins.
10.4 Offer letter dated February 21, 2007 between the Company and Stephen Bozzo.
31.1 Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
1-800-FLOWERS.COM, Inc.
(Registrant)
Date: November 8, 2007 /s/ James F. McCann
--------------------------- -----------------------------------
James F. McCann
Chief Executive Officer
Chairman of the Board of Directors
(Principal Executive Officer)
Date: November 8, 2007 /s/ William E. Shea
--------------------------- -----------------------------------
William E. Shea
Senior Vice President Finance and
Administration (Principal Financial
and Accounting Officer)
|
Exhibit 10.3
February 9, 2005
Mr. Timothy J. Hopkins
15409 NE 153rd Street
Woodinville, WA 98072
Dear Tim:
It is my pleasure to extend an offer of employment to you for the position of President of our Specialty Brands Division, reporting to the President of 1-800-Flowers.Com, Inc. (the "Company"). I believe and expect you will make a significant contribution to the Company and its ongoing success.
Please note that in view of the position you will be holding with the Company, your employment and the terms thereof are subject to the prior approval of the Compensation Committee of the Board of Directors.
Our offer is as follows:
Title: President of Specialty Brands
Duties: You will perform faithfully and diligently the duties
customarily performed by persons in the position for which you
are employed and such other duties as from time to time may be
prescribed by the Company's Chief Executive Officer, its
President, or the Board of Directors.
You shall devote your full business time and efforts to the
rendition of services and performance of all duties
contemplated hereunder. You shall at all times be in
compliance with, and ensure that the Company is in compliance
with, any and all laws, rules and regulations applicable to
the Company or its business.
Salary: $13,461.00 biweekly. ($350,000.00 annualized).
Once eligible, your base salary will be reviewed on an annual
basis to ascertain what merit increase, if any, will be given
based upon your performance and that of the Company for the
prior fiscal year. As you are starting with us more than
halfway through the current fiscal year (FY'05) then your
first review will be following the end of fiscal year 2006,
which year ends on or about June 30, 2006.
Benefits: You will be eligible to participate in all Company benefit
programs subject to the terms of each plan. You may
participate in Company medical, dental, life insurance, and
short term and long term disability commencing on the first
day of employment. You will be eligible to participate in the
|
Company 401(k) plan after twelve (12) months of service. You will be eligible for three (3) weeks vacation accruing pursuant to the Company's policy.
Bonus: You will be eligible to participate in our Company's Sharing
Success Program with an annual target bonus of 50% of your
base compensation, of which 40% will be the cash component and
the remaining 10% paid through restricted stock. The plan is
performance based and requires satisfactory attainment of
established corporate and your Division performance goals.
These goals will be set by the President of the Company and
your bonus will be tied 75% to your Division goals and the
remaining 25% tied to the Company's performance. Our plan year
coincides with our fiscal year; therefore, it begins on about
July 1 and ends on about June 30. Any earned bonus is
generally paid out in approximately mid-September.
|
Your first year of eligibility for participation in the
Company's Sharing Success Program will be for fiscal year '06.
The vesting on any restricted stock will be subject to the
direction of the Compensation Committee. Currently, the
Sharing Success Program provides that any restricted stock
paid as part of the bonus compensation shall vest on the first
anniversary of the grant date with an additional one year
"holding period" ("restriction") before any of such restricted
stock can be sold. Of course, to be eligible for any bonus
compensation you must be employed by the Company at the time
the compensation is paid.
For the balance of this current fiscal year '05, you will be
guaranteed a bonus equal to 40% of your base compensation,
prorated from the first day of your employment with the
Company until the end of the fiscal year.
Stock Options: You will be recommended to the Compensation Committee of the
Board of Directors for inclusion in the Company's 2003 Long
Term Incentive and Share Award Plan (the "Plan"). Subject to
the Committee's approval, your initial option award will be an
option to purchase 200,000 (Two hundred thousand)shares of the
Company's Class A Common Stock, subject to the terms of the
Plan and the Stock Option Agreement. These stock options will
vest commencing with 40% on the second anniversary of the
grant, then 20% for each subsequent year you remain employed
by the Company up to the fifth anniversary of the grant, when
they will be 100% vested. The grant date shall be your first
date of employment with the Company. The exercise price of
your initial award shall be the closing price of the Company's
Class A Common Stock on the day your employment commences.
Future stock options awards are at the discretion of the
Compensation Committee.
Restricted
Stock: In addition, you will be eligible to receive a one-time grant
of 12,500 shares of restricted stock. These shares will vest
on a four (4) year cliff-vesting schedule meaning that none
will vest until the 4th anniversary of your employment start
date when all will vest assuming you are still employed by the
Company at that time.
Relocation: See the attached Relocation Agreement for specifics.
|
We are committed to maintaining a competitive position in the employment marketplace. However, it is agreed that neither this offer of employment, its acceptance, nor the maintenance of personnel policies, procedures and benefits creates a contract of employment or a guarantee of any length of employment or specific benefits. Your employment with the Company is "at-will", meaning that you retain the option, as does the Company, to end your employment at any time, for any reason or for no reason. In addition, this offer of employment is contingent upon the completion of satisfactory reference and background checks.
If, however, you are terminated during your employment for death, disability (unable to perform your duties on a full time basis for two or more consecutive months or an aggregate of four months in any six month period), resignation, or Cause, then you will be entitled to base salary through the date of termination and any other amounts earned, accrued, due and owing, but not yet paid as of the date of your death or termination of employment. In the event that you resign your position with the Company within the first 12 months of employment then you shall reimburse the Company for all expenses paid for your relocation as further set forth on the attachment hereto regarding relocation.
In the event that you are terminated without Cause (other than resignation, death, or disability), or terminated at your own initiative due to a Constructive Termination Without Cause, or terminated without Cause after the occurrence of a Change of Control, then you shall be entitled to:
(a) an amount equal to your base salary through the date of termination,
(b) any amounts, earned, accrued, due and owing, but not yet paid as of
the date of termination ,
(c) a severance package equal to:
(i) your then base compensation for a period of12 months following termination of your employment with the Company or until you find new employment, whichever event first occurs. This compensation shall be paid out on a bi-weekly basis. You agree to actively seek new employment in the event of termination from the Company; and
(ii) the ability to exercise any options for the allowable period of time set forth in the Plan that fully vested prior to your termination of employment, except that in no event can the vested options be exercised past the life of the option grant (for example, the options granted under this letter have a life of 10 years from date of the grant and that date cannot be extended). The ability to sell any restricted shares that were vested prior to your termination of employment and provided any additional restriction period has expired.
(d) such other benefits, if any, as are payable to, or for your benefit, as of the date of your termination in accordance with the applicable plans and programs of the Company.
For the purposes of the letter, "Cause" is defined as: (a) you fail to substantially perform the duties and responsibilities of your position as President of Specialty Brands or to comply in all material respects with the material policies or directives of the Company, which failure continues unremedied for a period of fourteen (14) days after your receipt of written notice from the Company, specifying the nature of the failure; (b) you engage in any conduct which is unethical, illegal, involves misappropriation of trade secrets, fraud, embezzlement, dishonesty, disloyalty, breach of a fiduciary duty or which otherwise brings notoriety to the Company or which has an adverse affect on the name or public image or reputation of the Company; (c) you engage in conduct that is in bad faith and/or injurious to the Company as determined in good faith by the Company; (d) you willfully fail to implement or follow a reasonable and lawful policy or directive of the Company ; (e) you (i) are declared of unsound mind by an order of court, (ii) are convicted of or plead guilty or nolo contendere to a crime, or (iii) fraudulently or intentionally commit an act which is detrimental to the Company; or (f) your breach of any material provisions of this letter or any other agreement you may have with the Company, including, without limitation, any agreement referred to herein.
For purposes of this letter, "Constructive Termination Without Cause" shall mean a termination of your employment at your own initiative following the occurrence, without your prior written consent, of any of the following events:
(i) any action by the Company which results in a material change and diminution in your authority and duties as the President of Specialty Brands of the Company and which is not cured by the Company within 30 days following its receipt of written notice from you specifying in detail the reasons why you believe there has been a material diminution in your authority and duties as the President of Specialty Brands of the Company.
(ii) failure by the Company to make any undisputed payments due you, provided they have not timely paid any such payments due you within 7 business days after receipt from you of a written notice specifying the payment then allegedly due and owing; or
(iii) change in the location of the Company's headquarters to a new venue outside of the greater New York metropolitan area and which would require a complete geographical relocation on your part.
For purposes of this letter, a "Change of Control" means (i) a merger, consolidation or reorganization approved by the Company's shareholders, unless securities representing 50% or more of the total combined voting power of the voting securities of the successor corporation are thereafter owned, directly or indirectly, by the McCann Family (Jim McCann, Chris McCann, and their respective families and affiliates) or (ii) an acquisition by an unaffiliated third party of more that 50% of the votes attributable to all the voting securities of the Company's voting securities (currently Class A and Class B common stock); provided any such event results in a material change and diminution in your authority and duties as the President of Specialty Brands of the Company and which change and diminution are not cured within thirty (30) days after the Company's receipt of a written notice from you detailing the alleged change and diminution. To exercise your rights to terminate under "Constructive Termination Without Cause" or "Change of Control", you must exercise your right to terminate your employment within thirty (30) days after the event complained of occurred or you have waived your right to do so.
For purposes of this letter, "affiliates" means any person or entity who or which is, directly or indirectly, in control of, controlled by, or under common control with one of the McCann Family.
In order to be in compliance with the Immigration and Reform Control Act of 1986, we require that you provide proof of employment eligibility and identity on your first day. Please bring with you two forms of current identification, one of which must contain a photograph. As a condition of your employment, you will also be required to sign a Confidentiality and Non-Compete Agreement and Critical Days Notice on or before your first day of employment. Your execution and abidance by the terms of the Confidentiality and Non-Compete Agreement and the Critical Days Notice are a material condition of your employment.
The terms of this letter and all the rights and obligations of the parties hereto shall be governed by the laws of the State of New York. Any suit, action, or proceeding relating to this letter or your employment with the Company, including the termination of same, shall be exclusively brought, and you hereby irrevocably submit to the jurisdiction of, the Supreme Court of the State of New York, County of Nassau and the United District Court, in and for the Eastern District of New York.
You hereby represent to the Company that you have no agreements or understandings, whether in writing or oral, which would, in any way, be violated by, or prevent you from taking, employment with the Company and performing the services contemplated hereunder. You further represent that you are not a party to any Confidentiality Agreement, Non-Compete Agreement, Non-Solicitation Agreement, or similar agreement. You have been represented by legal counsel, or have been afforded the opportunity to do so, with reference to the negotiation and execution of this letter and also the Confidentiality and Non-Compete Agreement referred to above.
Tim, we are very excited about having someone with your background and experience joining our team. Please report to Human Resources on the 4th floor at 9:00am on your first day of employment with the Company. Your anticipated start date will be on or before March 15, 2005.
Please acknowledge your agreement to these terms of employment by signing below and returning the original to me along with the signed Confidentiality Agreement and Non-Compete and Critical Day's Notice. This offer, if not so accepted within this period will expire five (5) days from the date of the letter.
This letter can be executed in counterparts, including facsimile counterparts.
If you have any questions or need additional information feel free to contact me at (516) 237-6112.
Sincerely,
/s/ Christopher G. McCann ------------------------- Christopher G. McCann |
I hereby agree to the terms of this letter Confirmed Start Date: /s/ Timothy J. Hopkins 3/15/2005 ---------------------- --------------------- Timothy J. Hopkins |
* In NY office, earlier date if planned for visit to Chicago is confirmed
ATTACHMENT TO OFFER LETTER - RELOCATION AGREEMENT
February 9, 2005
Timothy Hopkins
15409 NE 153rd Street
Woodinville, WA 98072
This is to specify the relocation provisions being offered to you as part of your offer of employment with 1-800-flowers.com as President of Specialty Brands. Please read the important notes below.
Customary Closing Costs - This provision will cover reasonable and actual customary closing costs related to the sale of your current out-of-state residence and purchase of a new home in New York. For purposes of this Agreement "closing costs" shall mean reasonable legal fees, customary title company charges, and a real estate commission on the sale of your current residence, not to exceed five percent of the purchase price. However, we will not cover any other costs including, without limitation, taxes, fees related to a mortgage or homeowner insurance premiums.
Physical Move - The Company will provide you with the services of a professional moving company. They will handle the reasonable and customary packing, ground transportation, and unpacking of your personal belongings.
Storage - The Company will assume the expense of storing your personal belongings for up to ninety (90) days.
Movement of Personal Auto(s) - The Company will make arrangements through a professional relocation company to have up to three (3) of your personal vehicles shipped via ground transportation from your home state to a location of your choice in New York.
Relocation Allowance - You shall submit relocation-related expenses for up to $1,000 in reimbursement for items such as car registration, utility hook-ups, etc. In addition, the Company will pay up to $15,000 towards any Mansion Tax that may be due as a result of a new home in New York, provided said closing occurs within one (1) year of your employment start date and you, of course, are still employed by the Company at the time of such closing.
Airline Travel - The Company will pay the cost of reasonable and actual airline travel expense to commence your employment with 1-800-flowers.com and return to Washington for your home closing. In addition, the Company will pay for up to 3 round trips for your wife and children for house hunting in New York. You agree to give the Company as much prior notice as possible so as to lessen the cost of the plane tickets.
Temporary Living Allowance - The Company will pay for reasonable temporary living quarter's expense for up to six (6) months. This payment pertains to housing only.
Travel Home - The Company will pay all reasonable travel expenses related to any
approved trips to visit your immediate family in Washington for a period of six
(6) months or until your family moves to New York; whichever event first occurs.
The Company shall pay the relocation expenses directly to the provider of the services and you shall direct the service providers to forward their bills directly to the Company. Any expenses for which you receive a 1099 from the Company shall be grossed up for income tax purposes.
IMPORTANT NOTE: In the event you decide to resign your employment with the Company during the first twelve (12) months of your tenure, then you shall be obligated to reimburse the Company for all of the above expenses, on or before your last day of employment.
Relocation Company: our contact is Jodi O'Donnell of Relocation Solutions at 631-261-1137.
Accepted By: Confirmed Start Date: /s/ Timothy J. Hopkins 3/15/2005 ---------------------- ---------------------- Timothy Hopkins |
* In NY office, earlier date if planned for visit to Chicago is confirmed
Exhibit 10.4
February 20, 2007
Stephen Bozzo
25 Robert Crescent
Stony Brook, NY 11790
Dear Stephen:
It is my pleasure to extend an offer of employment to you for the position of Chief Information Officer reporting to the President of the Company (the "Supervisor"). We trust you will make a significant contribution to 1-800-Flowers.com, Inc. (the "Company") and its ongoing success.
Our offer is as follows:
Title: Chief Information Officer
-----
Duties: You will perform faithfully and diligently the duties customarily
------ performed by persons in the position for which you are employed
and such other duties as from time to time may be prescribed by your
supervisor. You shall devote your full business time and efforts to
the rendition of services and performance of all duties contemplated
hereunder. You shall at all times be in compliance with, and ensure
that the Company is in compliance with, any and all laws, rules and
regulations applicable to the Company or its business. Your employment
is subject to the terms and conditions contained in the then-current
Employee Handbook of the Company.
Salary: $ 11,538.46 biweekly ($300,000.00 annualized)
------
Bonus: You will be eligible to participate in our Company's Sharing Success
----- Program, as amended from time to time, with a target bonus of
50% of your base compensation. The plan is performance based and
requires satisfactory attainment of both corporate financial
performance and your individual performance measures, which goals and
measures shall be set by your Supervisor. Our plan year coincides with
our fiscal year. Fiscal year 2007 began July 3, 2006 and ends on July
1, 2007. To be eligible for a prorated bonus your first day of
employment with the Company must be no later than April lst of the
then current year.
As your first date of employment will be April 30, 2007, your first
year of eligibility for participating in our Company's Sharing Success
Program will be fiscal year 2008. For the first full year of your
employment (FY'08), which begins July 2, 2007 and ends on June 29,
2008 you will be guaranteed a minimum bonus of $50,000 under the
Sharing Success Program.
Of course, to be eligible for any bonus compensation you must be
employed by the Company at the time the compensation is actually paid.
Long Term Incentive Plan: You will be eligible to participate in
1800flowers.com Long Term Incentive Program ("LTIP"). The LTIP
currently consists of awards of Restricted Stock ("performance
shares") which are earned based on the Company's actual three (3) year
financial performance results vs. pre-established financial goals.
Your first year of eligibility to participate in the LTIP is FY'08 and
you are eligible for a long-term incentive opportunity of up to 90% of
your base salary. All shares once earned are fully vested. The actual
LTIP is subject to the approval of the Compensation Committee of the
Board of Directors on a yearly basis.
|
Benefits: You will be eligible to participate in all Company benefit programs -------- subject to the terms of each plan. You may participate in Company medical, dental, life insurance, and short term and long term disability beginning on the first day of employment. You will be eligible to participate in the Company 401k plan after one (1) month of service. You will be eligible to accrue three (3) weeks vacation.
Cash: You are eligible to obtain a one-time bonus of $50,000 to be paid $25,000 in June, 2007 and $25,000 in September, 2007. In the event you voluntarily resign your employment with the Company, or are terminated for Cause as defined in this letter, during the first 24 months of your tenure, you are obligated to reimburse the Company the $50,000, amortized monthly, on or before your last day of employment. For example, if you resigned in your eighteenth (18th) month of employment then you will be obligated to reimburse the Company $12,500.
Gold Rush Days: While considering employment with the Company, it is important
to be aware of our Company culture regarding our Gold Rush Days that surround
our busiest holidays. The holidays that are subject to Gold Rush Days are:
Christmas, Valentine's Day and Mother's Day. Our Gold Rush Days are a period of
time whereby you will be required to work additional daily hours, which can also
include being scheduled to work on a holiday and/or on a day that you are
normally off.
At-Will Employment: We are committed to maintaining a competitive position in the employment marketplace. However, it is agreed that neither this offer of employment, its acceptance, nor the maintenance of personnel policies, procedures and benefits creates a contract of employment or a guarantee of any length of employment or specific benefits. Your employment with the Company is "at-will", meaning that you retain the option, as does the Company, to end your employment at any time, for any reason or for no reason.
If, however, you are terminated during your employment for death, disability (unable to perform your duties on a full time basis for two or more consecutive months or an aggregate of four months in any six month period), resignation, or Cause, then you will be entitled to base salary through the date of termination and any other amounts earned, accrued, due and owing, but not yet paid as of the date of your death or termination of employment.
In the event that you are terminated without Cause (other than resignation, death, or disability), within your first twelve (12) months of employment, then you shall be entitled to, subject to execution of the Company's then current Separation Agreement and General Release,:
(a) an amount equal to your base salary through the date of termination,
(b) any amounts, earned, accrued, due and owing, but not yet paid as of
the date of termination,
(c) a severance package equal to:
(i) your then base compensation for a period of 6 months following termination of your employment with the Company or until you find new employment, whichever event first occurs. This compensation shall be paid out on a bi-weekly basis. You agree to actively seek new employment in the event of termination from the Company; and
(ii) the ability to exercise any options for the allowable period of time set forth in the Plan that fully vested prior to your termination of employment, except that in no event can the vested options be exercised past the life of the option grant (for example, the options granted under this letter have a life of 10 years from date of the grant and that date cannot be extended). You have the ability to sell any restricted shares that were vested prior to your termination of employment provided any additional restriction period has expired; and
(d) such other benefits, if any, as are payable to, or for your benefit, as of the date of your termination in accordance with the applicable plans and programs of the Company.
For the purposes of the letter, "Cause" is defined as: (a) you fail to substantially perform the duties and responsibilities of your position as Chief Information Officer or to comply in all respects with the material policies or directives of the Company, which failure continues unremedied for a period of fourteen (14) days after your receipt of written notice from the Company, specifying the nature of the failure; (b) you engage in any conduct which is unethical, illegal, involves misappropriation of trade secrets, fraud, embezzlement, dishonesty, disloyalty, breach of a fiduciary duty or which otherwise brings notoriety to the Company or which has an adverse affect on the name or public image or reputation of the Company; (c) you engage in conduct that is in bad faith and/or injurious to the Company as determined in good faith by the Company; (d) you willfully fail to implement or follow a reasonable and lawful policy or directive of the Company ; (e) you (i) are declared of unsound mind by an order of court, (ii) are convicted of or plead guilty or nolo contendere to a crime, or (iii) fraudulently or intentionally commit an act which is detrimental to the Company; or (f) you breach of any material provisions of this letter or any other agreement you may have with the Company, including, without limitation, any agreement referred to herein.
Your employment and the terms of this letter and all the rights and obligations of the parties hereto shall be governed by the laws of the State of New York. Any suit, action, or proceeding relating to this letter or your employment with the Company, including the termination of same, shall be exclusively brought, and you hereby irrevocably submit to the exclusive jurisdiction of, the Supreme Court of the State of New York, County of Nassau and the United District Court, in and for the Eastern District of New York. ANY SUCH DISPUTE BROUGHT IN SUCH COURTS SHALL BE RESOLVED BY A JUDGE SITTING WITHOUT A JURY TO ENSURE RAPID ADJUDICATION OF ANY SUCH DISPUTE. THE PARTIES HERETO EXPRESSLY WAIVE THEIR RIGHT TO A JURY TRIAL.
Prior Agreements: You hereby represent to the Company that you have no agreements or understandings, whether in writing or oral, which would, in any way, be violated by, or prevent you from taking, employment with the Company and performing the services contemplated hereunder, including without limitation any Confidentiality Agreement, Non-Compete Agreement, Non-Solicitation Agreement, or other similar agreement.
Miscellaneous: In order to be in compliance with the Immigration and Reform Control Act of 1986, we require that you provide proof of employment eligibility and identity on your first day. Please bring with you one document from List A or one document from List B and one from List C, as listed on the attached Lists of Acceptable Documents Form. As a condition of your employment, you will also be required to sign and return to the Company prior to your first date of employment (i) our "Confidentiality and Non-compete Agreement" and "Insider Trading Notification" as requested by the Company.
Stephen, we are very excited about having someone with your background and experience joining our team. Please report to Human Resources on the 5th floor at 9:00AM on your first day of employment with the Company. The anticipated start date for this position is April 30, 2007.
Please acknowledge your agreement to these terms of employment by signing below and returning the original to us along with the signed "Confidentiality and Non-Compete Agreement" and "Insider Trading Notification" within ten (10) days from the date of this letter. This offer, if not so accepted within this period will expire ten (10) days from the date of the letter. This offer is contingent upon the following: 1) a favorable review of two (2) professional references from your prior employers and 2) pre-hire screening, which will require that you execute documents required by the Company for a background investigation.
If you have questions or need additional information, feel free to contact me at
(516) 237-7843.
Sincerely,
/s/ Maureen Paradine -------------------- Maureen Paradine Vice President, Human Resources |
Enclosures Accepted: Confirmed Start Date: /s/ Stephen Bozzo 4/30/2007 ----------------- --------- Stephen Bozzo |
Exhibit 10.2
November 25, 2003
Monica L. Woo
67 Oenoke Lane
New Canaan, CT 06840
Dear Monica:
It is my pleasure to extend an offer of employment to you for the position of Chief Marketing Officer reporting to the President. I believe and expect you will make a significant contribution to 1-800-FLOWERS.COM, Inc., and its ongoing success. As you will be designated a Section 16 Officer of the Company by the Board of Directors, the terms of this letter are subject to the approval of the Compensation Committee of the Board of Directors.
Our offer is as follows:
Title: Chief Marketing Officer.
Duties: You have such duties consistent with the above office as from
time to time may be prescribed by the Company's Chief
Executive Officer, its President, or the Board of Directors.
You shall faithfully and diligently perform such duties.
Salary: $13,461.00 biweekly. ($350,000.00 annualized). Once eligible,
your salary will be reviewed on an annual basis to ascertain
what merit increase, if any, will be given based upon your
performance and that of the Company for the prior fiscal year.
As you are starting with us more than halfway through the
current fiscal year (FY'04) then your first review will be
following the end of fiscal year 2005 which year ends on or
about June 30,2005.
Benefits: You will be eligible to participate in all company benefit
programs subject to the terms of each plan. You may
participate in Company medical, dental, life insurance, and
short term and long term disability on the first day of
employment. You will be eligible to participate in the Company
401k plan after twelve (12) months of service.
Bonus: You will be eligible to participate in our Company Sharing
Success Program with a target bonus of 45% of your base
compensation. The plan is performance based and requires
satisfactory attainment of corporate performance goals. Our
plan year begins on July 1, 2003 and ends on June 30, 2004.
Although you will only be joining us midway through our fiscal
year 2004, we agree you will be eligible for 50% of prorated
bonus ($39,375.00) for the remainder of fiscal year 2004
provided the corporate performance goals are met. Starting
with fiscal year 2005 you will also be entitled to participate
in the Company Supplemental Sharing Success Program.
|
You will be recommended to the Compensation Committee of the Board of Directors for inclusion in the Company's 2003 Long Term Incentive and Share Award Plan ("Plan"). Subject to the Committee's approval, your initial option award will be an option to purchase 35,000 (Thirty-Five Thousand) shares of the Company's Class A Common Stock. The term of your option grant is ten years from the date of the grant and they vest at 40% commencing with the second anniversary of the grant, and 20% for each year up to the fifth anniversary of the grant. In addition, you will be awarded an incremental option award to purchase 50,000 (Fifty Thousand) shares of the Company's Class A Common Stock. The terms of this special one time grant will be for ten years from the date of the grant and will vest 100% on the 5th anniversary of the grant. The exercise price of your option awards shall be the closing price of the Company's Class A Common Stock on the day your employment commences. The grant date shall be your first date of employment with the Company and all options granted are subject to the Plan and any Stock Award Agreement. Future awards are at the discretion of the Compensation Committee.
We are committed to maintaining a competitive position in the employment marketplace. However, it is agreed that neither this offer of employment, its acceptance, nor the maintenance of personnel policies, procedures and benefits creates a contract of employment or a guarantee of any length of employment or specific benefits. Your employment with the Company is "at-will", meaning that you retain the option, as does the Company, to end your employment at any time, for any reason or for no reason. In addition, this offer of employment is contingent upon the completion of satisfactory reference and background checks.
If, however, you are terminated during your employment for death, disability (unable to perform your duties on a full time basis for two or more consecutive months or an aggregate of four months in any six month period), resignation, or cause, then you will be entitled to base salary through the date of termination and any other amounts earned, accrued and owing, but not yet paid as of the date of your death or termination of employment.
In the event you are terminated without Cause (other than resignation, death, or disability), or terminated at your own initiative due to a Constructive Termination Without Cause, or terminated without Cause after the occurrence of a Change of Control, then you shall be entitled to:
(a) an amount equal to your base salary through the date of termination,
(b) any amounts, earned, accrued or owing, but not yet paid as of the
date of termination ,
(c) a severance package equal to:
(i) base pay compensation for the period of time to which you would be entitled to same under the Company's then existing severance policy, except that if your employment is terminated for any of the reasons set forth in this paragraph during the first 12 months of your employment then you will be entitled to base pay compensation equal to 6 months. Current Company policy provides severance equal to 2 weeks of base pay compensation for every year of service at the Company.
(ii) an amount equal to any bonus due to you under the Sharing Success Program and the Supplemental Sharing Success Program prorated to the date of termination,
(iii) the ability to exercise any options (or restricted stock, if applicable) that fully vested prior to termination of employment for a period of up to one (1) year from the date of your termination, except that in no event can the vested options be exercised past the life of the option grant (for example, the options granted under this letter have a life of 10 years from date of the grant and that date cannot be extended)
(d) such other benefits, if any, as are payable to or for your benefit as of the date of your termination in accordance with applicable plans and programs of the Company.
For the purposes of the Agreement, "Cause" is defined as: (a) you fail to perform faithfully your duties as Chief Marketing Officer, which failure continues unremedied for a period of seven (7) days after your receipt of written notice from the Company, specifying the nature of the failure; (b) you engage in any conduct which is unethical, illegal or which otherwise brings notoriety to the Company or which has an adverse affect on the name or public image or reputation of the Company; (c) you (i) are declared of unsound mind by an order of court, (ii) are convicted of or plead guilty or nolo contendere to a crime, or (iii) fraudulently or intentionally commit an act which is detrimental to the Company; or (d) your breach of any material provisions of this letter or any other agreement you may have with the Company, including, without limitation, any agreement referred to herein.
For purposes of this Agreement, "Constructive Termination Without Cause" shall mean a termination of your employment at your own initiative following the occurrence, without your prior written consent, of any of the following events:
(i) any action by the Company which results in a material change and diminution in your authority and duties as the Chief Marketing Officer of the Company and which is not cured by the Company within 30 days following its receipt of written notice from you specifying in detail the reasons why you believe there has been a material diminution in your authority and duties as the Chief Marketing Officer of the Company.
(ii) failure by the Company to make any undisputed payments due you, provided they have not paid any such payments due you within 7 business days after receipt from you of a written notice specifying the payment then allegedly due and owing; or
(iii) change in the location of the Company's headquarters to a new venue outside of the greater New York metropolitan area and which would require a complete geographical relocation on your part.
For purposes of this Agreement, a "Change of Control" means a material change in the management structure of the Company due to acquisition by, or merger with, an unaffiliated third party or the purchase by an unaffiliated third party of more that 50% of the votes attributable to all the shares of the Company's capital stock (currently Class A and Class B common stock) from the McCann family (James F. McCann, Christopher G. McCann and their respective families and affiliates); provided any such event results in a material change and diminution in your authority and duties as the Chief Marketing Officer of the Company and which change and diminution are not cured within thirty (30) days after the Company's receipt of a written notice from you detailing the alleged change and diminution.
To exercise your rights to terminate under "Constructive Termination Without Cause" or "Change of Control", you must exercise your right to terminate your employment within thirty (30) days after the event complained of occurred.
For purposes of this letter, "affiliates" means any person or entity who or which is, directly or indirectly, in control of, controlled by, or under common control with one of the McCann Family.
In order to be in compliance with the Immigration and Reform Control Act of 1986, we require that you provide proof of employment eligibility and identity on your first day. Please bring with you two forms of current identification, one of which must contain a photograph. As a condition of your employment, you will also be required to sign a Confidentiality and Non-Compete Agreement and Critical Day's Notice on or before your first day of employment.
The terms of this letter and all the rights and obligations of the parties hereto shall be governed by the laws of the State of New York. Any suit, action, or proceeding relating to this letter or your employment with the Company, including the termination of same, shall be exclusively brought, and you hereby irrevocably submit to the jurisdiction of, the Supreme Court of the State of New York, County of Nassau and the United District Court, in and for the Eastern District of New York.
Your start date will be on or about the second week of January 2004 immediately following the fulfillment by you of the exit clause in your current consulting agreement with BrainReserve. You hereby represent to the Company that you have no agreements or understandings, whether in writing or oral, which would, in any way, be violated by, or prevent you from taking, employment with the Company and performing the services contemplated hereunder. You have been represented by legal counsel with reference to the negotiation and execution of this letter and also the Confidentiality and Non-Compete Agreement referred to above.
Monica, we are very excited about having someone with your background and experience joining our team. Please report to Human Resources on the 4th floor at 9:00am on your first day of employment with the Company. Please acknowledge your agreement to these terms of employment by signing below and returning the original to me along with the signed Confidentiality Agreement and Non-Compete. and Critical Day's Notice. This offer, if not so accepted within this period will expire five (5) days from the date of the letter.
This letter can be executed in counterparts, including facsimile counterparts.
If you have any questions or need additional information feel free to contact me at (516) 237-7843.
Sincerely,
/s/ Christopher G. McCann -------------------------- Christopher G. McCann |
I hereby agree to the terms of this letter
/s/ Monica L. Woo 11/25/2003 -------------------------------- Monica L. Woo |
Exhibit 31.1
CERTIFICATIONS PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, James F. McCann, certify that:
(1) I have reviewed this quarterly report on Form 10-Q of 1-800-FLOWERS.COM, Inc.;
(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
(4) The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
(c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
(5) The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: November 8, 2007 /s/ James F. McCann
James F. McCann
Chief Executive Officer and
Chairman of the Board of Directors
|
I, William E. Shea, certify that:
(1) I have reviewed this quarterly report on Form 10-Q of 1-800-FLOWERS.COM, Inc.;
(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
(4) The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
(c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
(5) The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or operation of internal control over the financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: November 8, 2007 /s/ William E. Shea
William E. Shea
Senior Vice President of Finance and
Administration and Chief Financial
Officer
|
Exhibit 32.1
CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of 1-800-FLOWERS.COM, Inc. (the "Company") hereby certifies, to the best of such officer's knowledge, that:
(1) the Quarterly Report on Form 10-Q of the Company for the quarter
ended September 30, 2007, as filed with the Securities and Exchange Commission
on the date hereof (the "Report"), fully complies with the requirements of
Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of
1934; as amended; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: November 8, 2007
/s/ James F. McCann
James F. McCann
Chief Executive Officer and
Chairman of the Board
|
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of 1-800-FLOWERS.COM, Inc. (the "Company") hereby certifies, to the best of such officer's knowledge, that:
(1) the Quarterly Report on Form 10-Q of the Company for the quarter
ended September 30, 2007, as filed with the Securities and Exchange Commission
on the date hereof (the "Report"), fully complies with the requirements of
Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of
1934; as amended; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: November 8, 2007
/s/William E. Shea
William E. Shea
Senior Vice President of Finance
and Administration and Chief
Financial Officer
|
These certifications are furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such certifications will not be deemed to be incorporated by reference in to any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates them by reference.
Exhibit 10.1
October 23, 2007
JPMorgan Chase Bank, N.A.,
as Administrative Agent
JPMorgan Loan Services
10 South Dearborn, 19th Floor
Chicago, IL 60603-0010
Attention: Stephen Zajac
Ladies and Gentlemen:
Reference is made to the Credit Agreement dated as of May 1, 2006 (as amended and in effect from time to time, the "Credit Agreement"), among 1-800-FLOWERS.COM, Inc. (the "Company"), the Subsidiary Borrowers party thereto (together with the Company, the "Borrowers"), the Guarantors party thereto, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent. Terms defined in the Credit Agreement are used herein with the same meanings.
The Company hereby notifies the Administrative Agent pursuant to Section 2.08(c)(i) of the Credit Agreement with respect to a Revolving Credit Commitment Increase of $15,000,000 (the "Revolving Credit Commitment Increase"), which shall be effective on October 22, 2007 (the "Revolving Credit Commitment Increase Date").
Each Lender whose name appears under the caption "Increasing Revolving Credit Lenders" on the signature pages hereof agrees, by its execution and delivery of this letter, with the Borrowers and the Administrative Agent that, effective as of the Revolving Credit Commitment Increase Date, (a) the Revolving Credit Commitment of such Lender shall be increased by an amount equal to the amount set forth opposite its name on Schedule I hereto under the caption "Revolving Credit Commitment Increase Amount" and, after giving effect to such increase, such Lender shall have a total Revolving Credit Commitment equal to the amount set forth opposite its name on Schedule I hereto under the caption "Revolving Credit Commitment (as increased)" and (b) such Lender shall be an Increasing Revolving Credit Lender and shall have all of the rights and obligations of a Lender under the Credit Agreement in respect of its Revolving Credit Commitment as so increased. In addition, each such Lender hereby (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 6.01 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this letter; (ii) agrees that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents; and (iii) appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Loan Documents as are delegated to the Administrative Agent by the terms thereof, together with such powers and discretion as are reasonably incidental thereto.
The Company hereby (a) certifies for purposes of Section 2.08(c)(ii) of the Credit Agreement that the conditions with respect to the Revolving Credit Commitment Increase have been satisfied (including, without limitation, the penultimate sentence of said Section 2.08(c)(ii)) and (b) represents and warrants that: (i) the Revolving Credit Commitment Increase has been duly authorized by each Loan Party; (ii) this letter has been duly executed and delivered by the Company; and (iii) each of this letter and the Credit Agreement as modified hereby constitutes a legal, valid and binding obligation of each Loan Party party hereto or thereto, enforceable against such Loan Party in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
The effectiveness of the Revolving Credit Commitment Increase and the
obligation of each Increasing Revolving Credit Lender to provide its respective
portion of the Revolving Credit Commitment Increase are subject to the receipt
by the Administrative Agent of (a) one or more counterparts duly executed and
delivered by the Company and each Increasing Revolving Credit Lender, and
consented to (on the signature lines provided below) by the Administrative
Agent, each Issuing Lender and the Swingline Lender; and (b) such other
documents as the Administrative Agent may reasonably request pursuant to clause
(C) of the first sentence of Section 2.08(c)(ii) of the Credit Agreement.
Except as herein provided, the Credit Agreement shall remain unchanged and in full force and effect. This letter may be executed in any number of counterparts, all of which taken together shall constitute one and the same agreement and any of the parties hereto may execute this letter by signing any such counterpart. Delivery of an executed counterpart of this letter by facsimile shall be effective as delivery of a manually executed counterpart of this letter. This letter shall be governed by, and construed in accordance with, the law of the State of New York.
[remainder of page intentionally left blank]
Very truly yours,
1-800-FLOWERS.COM, INC.
By /s/ William E. Shea ------------------- Name: William E. Shea Title: Chief Financial Officer |
INCREASING REVOLVING CREDIT LENDERS
By /s/ Alicia T. Schreibstein ---------------------------- Name: Alicia T. Schreibstein Title: Vice President By /s/ Steven Melicharek ----------------------- Name: Steven Melicharek Title: Senior Vice President By /s/ Richard Hazlegrove ----------------------- Name: Richard Hazlegrove Title: Senior Vice President By /s/ Jed Pomerantz ----------------------- Name: Jed Pomerantz Title: Vice President By /s/ Christopher Mendelsohn ---------------------------- Name: Christopher Mendelsohn Title: Vice President By /s/ Brendan Lawlor ------------------------- Name: Brendan Lawlor Title: Senior Vice President By /s/ George B. Davis ------------------------- Name: George B. Davis Title: Vice President |
Accepted and Agreed this 22nd day of October, 2006:
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
By /s/ Alicia T. Schreibstein ---------------------------- Name: Alicia T. Schreibstein Title: Vice President |
JPMORGAN CHASE BANK, N.A.,
as Issuing Lender and Swingline Lender
By /s/ Alicia T. Schreibstein ---------------------------- Name: Alicia T. Schreibstein Title: Vice President |
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Issuing Lender
By /s/ Richard Hazlegrove ---------------------------- Name: Richard Hazlegrove Title: Senior Vice President |
Schedule I
Increasing Revolving Credit Lenders:
------------------------------------- ----------------------------------- -----------------------------------
Name of Lender Revolving Credit Commitment Revolving Credit Commitment (as
-------------- ---------------------------- -------------------------------
Increase Amount so increased)
--------------------------------------------------------------------------------------------------------------
JP Morgan Chase Bank, N.A $5,938,888.89 $19,550,000.00
Bank of America, N.A. $12,037.03 $9,169,444.44
Wachovia Bank, National Association $2,842,592.59 $12,000,000.00
North Fork Bank $2,842,592.59 $12,000,000.00
LaSalle Bank National Association $0 $5,555,555.56
HSBC Bank USA National Association $1,046,296.30 $6,000,000.00
KeyBank National Association $1,296,296.30 $6,000,000.00
Fifth Third Bank $1,021,296.30 $4,725,000.00
---------------------------------- -------------- --------------
TOTAL $15,000,000.00 $75,000,000.00
|