UNITED
STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
November
2, 2016
1-800-FLOWERS.COM,
INC.
(Exact
name of registrant as specified in its charter)
Delaware |
0-26841 |
11-3117311 |
(State of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
One Old Country Road, Suite 500 Carle Place, New York 11514 |
(Address of principal executive offices) (Zip Code) |
(516) 237-6000
(Registrant’s
telephone number, including area code)
N/A
(Former
name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrants under any of the following provisions:
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition
On November 2, 2016, 1-800-FLOWERS.COM, Inc. issued a press release announcing its financial results for its Fiscal 2017 First Quarter ended October 2, 2016. A copy of the press release is included as Exhibit 99.1 and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits
The following exhibits are furnished with this Form 8-K:
99.1 Press Release dated November 2, 2016.
SIGNATURE
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 hereunto duly authorized.
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1-800-FLOWERS.COM, Inc. |
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|
By: |
/s/ William E. Shea |
|
William E. Shea |
|||
Chief Financial Officer, Senior Vice-President |
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Finance and Administration |
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Date: |
November 2, 2016 |
Exhibit 99.1
1-800-FLOWERS.COM, Inc. Reports Results for Its Fiscal 2017 First Quarter
*Excludes a one-time net benefit primarily associated with the final settlement of the Company’s insurance claims related to the Fannie May warehouse fire that occurred on Thanksgiving Day, 2014.
CARLE PLACE, N.Y.--(BUSINESS WIRE)--November 2, 2016--1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS), the leading gourmet food and floral gift provider for all occasions, today reported results for its Fiscal 2017 first quarter.
Chris McCann, CEO of 1-800-FLOWERS.COM, Inc., said, “Our first quarter results reflect a continuation of the positive trends we have been seeing across our business for some time. In Gourmet Food and Gift Baskets, revenue growth accelerated, driven primarily by double digit growth in our wholesale baskets business as well as in our Cheryl’s and The Popcorn Factory brands. In addition, our Fannie May business recorded positive same store sales as well as solid ecommerce growth, reflecting the success of the initiatives we have implemented to enhance its performance.”
McCann noted that the Company’s floral business segments also continued to see positive trends during the quarter: “Our 1-800-Flowers brand continued its strong top and bottom-line growth trends, with revenues, gross margin and contribution margin all rising in what is a seasonally slow quarter. Our BloomNet wire service business also continued to drive very strong bottom line results, increasing its contribution margin to nearly 35 percent despite slightly lower revenues, which primarily reflected timing of some wholesale orders that moved from the first quarter into the second quarter.
“As we head into the important holiday season, the positive trends we are seeing across all three of our business segments, combined with the many innovative merchandising and marketing plans we have in place, position us to drive strong results for the fiscal second quarter. As such, we are poised to deliver another year of revenue and earnings growth to drive shareholder value.”
First Quarter 2017 Financial Results
For the first quarter of 2017, revenues grew 6.3 percent to $165.8 million as compared with total revenues of $156.0 million in the prior year period. Revenue growth for the quarter was driven primarily by the Company’s Gourmet Food and Gift Baskets segment, which grew 13.3 percent compared with the prior year period. The strong growth in the Gourmet Food and Gift Baskets segment, combined with 3.1 percent revenue growth in the Company’s 1-800-Flowers.com Consumer Floral segment, more than offset slightly lower revenues in the Company’s BloomNet segment.
Gross profit margin for the quarter was 43.0 percent, a decrease of 30 basis points compared with 43.3 percent in the prior year period. This primarily reflects product mix in the Company’s Gourmet Food and Gift Baskets segment. Operating expenses as a percent of total revenues was 57.0 percent, unchanged compared with the prior year period* (*adjusted to exclude integration costs). This primarily reflected the increased revenue in the period which more than offset higher labor and insurance costs as well as increased marketing spending in preparation for the upcoming holiday season.
The combination of these factors resulted in an EBITDA loss (excluding stock-based compensation expense) of $13.3 million compared with an Adjusted EBITDA loss of $12.0 million in the prior year period. The increased loss primarily reflects higher operating expenses and marketing investments in preparation for the key, holiday period.
Net loss was $15.8 million, or $0.24 per share, compared with a net loss of $4.5 million, or $0.07 per share, in the prior year period. It is important to note that the net loss attributable to 1-800-FLOWERS.COM, Inc. and EPS for the prior year period include an after-tax benefit of $9.8 million reflecting the final settlement of the Company’s insurance claims related to the Fannie May warehouse and distribution center fire that occurred on Thanksgiving Day, 2014, partially offset by costs associated with the write down of certain foreign business assets and integration costs during the quarter. On a comparable basis, net loss attributable to 1-800-FLOWERS.COM, Inc. in the prior year period was $14.3 million, or $0.22 per share.
Segment Results From Continuing Operations:
The Company provides selected financial results for its Consumer Floral, BloomNet and Gourmet Foods and Gift Baskets segments in the tables attached to this release and as follows:
Company Guidance:
The Company is reiterating its guidance for fiscal 2017 as follows:
Definitions:
EBITDA: Net income (loss) before interest, taxes, depreciation, amortization. Free Cash Flow: net cash provided by operating activities less capital expenditures. Category contribution margin: earnings before interest, taxes, depreciation and amortization, before the allocation of corporate overhead expenses. *Adjusted EBITDA excludes one-time acquisition and integration related costs incurred in the prior year period. Comparable EPS excludes the after-tax benefit of $9.8 million reflecting the final settlement of the Company’s insurance claims related to the Fannie May warehouse and distribution center fire that occurred on Thanksgiving Day 2014 partially offset by costs associated with the write down of certain foreign business assets and integration costs during the quarter. The Company presents EBITDA, Comparable EPS and Free Cash Flow because it considers such information meaningful supplemental measures of its performance and believes such information is frequently used by the investment community in the evaluation of similarly situated companies. The Company also uses EBITDA and Adjusted EBITDA as factors used to determine the total amount of incentive compensation available to be awarded to executive officers and other employees. The Company's credit agreement uses EBITDA and Adjusted EBITDA to measure compliance with covenants such as interest coverage and debt incurrence. EBITDA and Adjusted EBITDA are also used by the Company to evaluate and price potential acquisition candidates. EBITDA, Adjusted EBITDA and Free Cash Flow have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP. Some of the limitations of EBITDA and Adjusted EBITDA are: (a) EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, the Company's working capital needs; (b) EBITDA and Adjusted EBITDA do 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. EBITDA and Free Cash Flow should only be used on a supplemental basis combined with GAAP results when evaluating the Company's performance.
About 1-800-FLOWERS.COM, Inc.
1-800-FLOWERS.COM, Inc. is a leading provider of gourmet food and floral gifts for all occasions. For the past 40 years, 1-800-FLOWERS® (1-800-356-9377 or www.1800flowers.com) has been helping deliver smiles for our customers with gifts for every occasion, including fresh flowers and the finest selection of plants, gift baskets, gourmet foods, confections, candles, balloons and plush stuffed animals. As always, our 100% Smile Guarantee® backs every gift. The company’s Celebrations suite of services including Celebrations Passport Free Shipping Program, Celebrations Rewards and Celebrations Reminders, are all designed to engage with customers and deepen relationships as a one-stop destination for all celebratory and gifting occasions. In 2016, 1-800-Flowers.com was awarded Silver Stevie “e-Commerce Customer Service” Award, recognizing the company’s innovative use of online technologies and social media to service the needs of customers. In addition, 1-800-FLOWERS.COM, Inc. was recognized as one of Internet Retailer’s Top 300 B2B e-commerce companies and was also recently named in Internet Retailer’s 2016 Top Mobile 500 as one of the world’s leading mobile commerce sites. The company was included in Internet Retailer’s 2015 Top 500 for fast growing e-commerce companies. In 2015, 1-800-Flowers.com was named a winner of the “Best Companies to Work for in New York State” Award by The New York Society for Human Resource Management (NYS-SHRM). The Company’s BloomNet® international floral wire service (www.mybloomnet.net) provides a broad range of quality products and value-added services designed to help professional florists grow their businesses profitably.
The 1-800-FLOWERS.COM, Inc. “Gift Shop” also includes gourmet gifts such as premium, gift-quality fruits and other gourmet items from Harry & David® (1-877-322-1200) or www.harryanddavid.com), popcorn and specialty treats from The Popcorn Factory® (1-800-541-2676 or www.thepopcornfactory.com); cookies and baked gifts from Cheryl’s® (1-800-443-8124 or www.cheryls.com); premium chocolates and confections from Fannie May® (www.fanniemay.com and www.harrylondon.com); gift baskets and towers from 1-800- Baskets.com® (www.1800baskets.com); premium English muffins and other breakfast treats from Wolferman’s (1-800-999-1910 or www.wolfermans.com); carved fresh fruit arrangements from FruitBouquets.com (www.fruitbouquets.com); and top quality steaks and chops from Stock Yards® (www.stockyards.com). Shares in 1-800-FLOWERS.COM, Inc. are traded on the NASDAQ Global Select Market, ticker symbol: FLWS.
Special Note Regarding Forward-Looking Statements:
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent the Company’s current expectations or beliefs concerning future events and can generally be identified by the use of statements that include words such as “estimate,” “expects,” “project,” “believe,” “anticipate,” “intend,” “plan,” “foresee,” “likely,” “will,” “target” or similar words or phrases. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of the Company’s control which could cause actual results to differ materially from the results expressed or implied in the forward- looking statements, including, but are not limited to, statements regarding the Company’s expectations for: enhanced performance in its Fannie May business; its ability to continue to generate solid top and bottom-line growth in its 1-800-Flowers.com Consumer Floral business; its ability to generate strong revenue growth in its Cheryl’s, Harry & David, The Popcorn Factory and 1800Baskets businesses; its ability to continue to grow bottom-line contribution in its 1-800-Flowers and BloomNet businesses; its ability to leverage its consolidated customer database and new multi-brand website to attract and retain customers and help grow revenues; its ability to achieve its guidance for consolidated revenue growth for the full year in a range of 4-to-5 percent; its ability to achieve EBITDA growth in a range of 8-to-10 percent and EPS in a range of 5-to-10 percent; its ability to generate Free Cash Flow for the year of approximately $40 million; its ability to leverage its operating platform and reduce operating expense ratio; its ability to cost effectively acquire and retain customers; the outcome of contingencies, including legal proceedings in the normal course of business; its ability to compete against existing and new competitors; its ability to manage expenses associated with sales and marketing and necessary general and administrative and technology investments; its ability to reduce promotional activities and achieve more efficient marketing programs; and general consumer sentiment and economic conditions that may affect levels of discretionary customer purchases of the Company’s products. The Company undertakes no obligation to publicly update any of the forward-looking statements, whether as a result of new information, future events or otherwise, made in this release or in any of its SEC filings except as may be otherwise stated by the Company. For a more detailed description of these and other risk factors, please refer to the Company’s SEC filings including the Company’s Annual Reports on Form 10-K and its Quarterly Reports on Form 10-Q. Consequently, you should not consider any such list to be a complete set of all potential risks and uncertainties.
Conference Call
The Company will conduct a conference call to discuss the above details and attached financial results today, Wednesday, November 2, 2016, at 11:00 a.m. (ET). The call will be “web cast” live via the Internet and can be accessed from the Investor Relations section of the 1-800-FLOWERS.COM web site at www.1800flowersinc.com A recording of the call will be posted on the Investor Relations section of the Company’s web site within two hours of the call’s completion. A telephonic replay of the call can be accessed beginning at 2:00 p.m. ET on the day of the call through November 9, 2016 at: 1-877-344-7529 or 1-412-317-0088 (international) or 1-855-669-9658 (Canada); Conference ID: 10095323.
Note: Attached tables are an integral part of this press release without which the information presented in this press release should be considered incomplete.
1-800-FLOWERS.COM, Inc. and Subsidiaries | ||||||
Condensed Consolidated Balance Sheets | ||||||
(In thousands) |
||||||
October 2, 2016 |
July 3, 2016 | |||||
|
||||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 6,755 | $ | 27,826 | ||
Trade receivables, net | 42,821 | 19,123 | ||||
Inventories | 191,382 | 103,328 | ||||
Prepaid and other | 27,852 | 16,382 | ||||
Total current assets | 268,810 | 166,659 | ||||
Property, plant and equipment, net | 168,186 | 171,362 | ||||
Goodwill | 77,667 | 77,667 | ||||
Other intangibles, net | 78,709 | 79,000 | ||||
Other assets | 9,291 | 8,253 | ||||
Total assets | $ | 602,663 | $ | 502,941 | ||
Liabilities and Stockholders' Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 32,448 | $ | 35,201 | ||
Accrued expenses | 63,301 | 66,066 | ||||
Current maturities of long-term debt | 146,375 | 19,594 | ||||
Total current liabilities | 242,124 | 120,861 | ||||
Long-term debt | 89,425 | 94,396 | ||||
Deferred tax liabilities | 34,814 | 35,517 | ||||
Other liabilities | 10,578 | 9,581 | ||||
Total liabilities | 376,941 | 260,355 | ||||
Total equity | 225,722 | 242,586 | ||||
Total liabilities and equity | $ | 602,663 | $ | 502,941 | ||
1-800-FLOWERS.COM, Inc. and Subsidiaries | ||||||
Selected Financial Information | ||||||
Condensed Consolidated Statements of Operations | ||||||
(In thousands, except for per share data) |
||||||
(unaudited) |
||||||
Three Months Ended | ||||||
October 2, 2016 | September 27, 2015 | |||||
Net revenues: | ||||||
E-commerce (combined online and telephonic) | $ | 107,084 | $ | 104,697 | ||
Other | 58,745 | 51,344 | ||||
Total net revenues | 165,829 | 156,041 | ||||
Cost of revenues | 94,442 | 88,532 | ||||
Gross profit | 71,387 | 67,509 | ||||
Operating expenses: | ||||||
Marketing and sales | 55,078 | 52,526 | ||||
Technology and development | 9,488 | 9,311 | ||||
General and administrative | 21,933 | 19,971 | ||||
Depreciation and amortization | 7,997 | 7,972 | ||||
Total operating expenses | 94,496 | 89,780 | ||||
Operating loss | (23,109) | (22,271) | ||||
Interest expense, net | 1,451 | 1,891 | ||||
Other income, net | (150) | (15,538) | ||||
Loss before income taxes | (24,410) | (8,624) | ||||
Income tax benefit | (8,639) | (3,188) | ||||
Net loss | (15,771) | (5,436) | ||||
Less: Net loss attributable to noncontrolling interest | - | (952) | ||||
Net loss attributable to 1-800-FLOWERS.COM, Inc. | $ | (15,771) | $ | (4,484) | ||
Basic and diluted net loss per common share attributable to 1-800-FLOWERS.COM, Inc. |
$ |
(0.24) |
$ |
(0.07) |
||
Basic and diluted weighted average shares used in the calculation of net loss per common share |
65,081 |
64,825 |
||||
1-800-FLOWERS.COM, Inc. and Subsidiaries |
||||||
Selected Financial Information | ||||||
Consolidated Statements of Cash Flows | ||||||
(In thousands) |
||||||
(unaudited) |
||||||
Years ended | ||||||
October 2, 2016 | September 27, 2015 | |||||
Operating activities: | ||||||
Net loss | ($15,771) | ($5,436) | ||||
Reconciliation of net loss to net cash used in operating activities, net of acquisitions/dispositions: | ||||||
Depreciation and amortization | 7,997 | 7,972 | ||||
Amortization of deferred financing costs | 374 | 414 | ||||
Deferred income taxes | (703) | (740) | ||||
Foreign equity method investment impairment | - | 1,728 | ||||
Impairment of iFlorist | - | 1,879 | ||||
Fire related gain | - | (19,611) | ||||
Bad debt expense | 188 | 454 | ||||
Stock-based compensation | 1,774 | 1,518 | ||||
Other non-cash items | 264 | 181 | ||||
Changes in operating items: | ||||||
Trade receivables | (23,886) | (13,152) | ||||
Insurance receivable | - | (449) | ||||
Inventories | (88,054) | (94,756) | ||||
Prepaid and other | (11,470) | (4,861) | ||||
Accounts payable and accrued expenses | (5,518) | (15,342) | ||||
Other assets | - | (75) | ||||
Other liabilities | (37) | 45 | ||||
Net cash used in operating activities | (134,842) | (140,231) | ||||
Investing activities: | ||||||
Capital expenditures, net of non-cash expenditures | (4,703) | (6,224) | ||||
Net cash used in investing activities | (4,703) | (6,224) | ||||
Financing activities: | ||||||
Acquisition of treasury stock | (2,964) | (4,717) | ||||
Proceeds from exercise of employee stock options | 1 | 1 | ||||
Proceeds from bank borrowings | 125,000 | 141,903 | ||||
Repayment of bank borrowings | (3,563) | (16,685) | ||||
Net cash (used in) provided by financing activities | 118,474 | 120,502 | ||||
Net change in cash and cash equivalents | (21,071) | (25,953) | ||||
Cash and cash equivalents: | ||||||
Beginning of year | 27,826 | 27,940 | ||||
End of year | $ | 6,755 | $ | 1,987 | ||
1-800-FLOWERS.COM, Inc. and Subsidiaries |
||||||||||||||
Selected Financial Information – Category Information | ||||||||||||||
(in thousands) |
||||||||||||||
(unaudited) |
||||||||||||||
Three Months Ended | ||||||||||||||
October 2, 2016 | September 27, 2015 | % Change | ||||||||||||
Net revenues: | ||||||||||||||
1-800-Flowers.com Consumer Floral | $ | 75,215 | $ | 72,948 | 3.1% | |||||||||
BloomNet Wire Service | 20,964 | 21,549 | -2.7% | |||||||||||
Gourmet Food & Gift Baskets | 69,814 | 61,592 | 13.3% | |||||||||||
Corporate | 263 | 257 | 2.3% | |||||||||||
Intercompany eliminations | (427) | (305) | 40.0% | |||||||||||
Total net revenues | $ | 165,829 | $ | 156,041 | 6.3% | |||||||||
Gross profit: | ||||||||||||||
1-800-Flowers.com Consumer Floral | $ | 30,499 | $ | 28,769 | 6.0% | |||||||||
40.5% | 39.4% | |||||||||||||
BloomNet Wire Service | 11,794 | 11,766 | 0.2% | |||||||||||
56.3% | 54.6% | |||||||||||||
Gourmet Food & Gift Baskets | 28,751 | 26,632 | 8.0% | |||||||||||
41.2% | 43.2% | |||||||||||||
Corporate (a) | 343 | 342 | 0.3% | |||||||||||
130.4% | 133.1% | |||||||||||||
Total gross profit | $ | 71,387 | $ | 67,509 | 5.7% | |||||||||
43.0% | 43.3% | |||||||||||||
Three Months Ended | ||||||||||||||
EBITDA, excluding stock- based compensation | October 2, 2016 |
Reported |
Integration Costs |
Adjusted |
As Adjusted |
|||||||||
Category Contribution Margin: | ||||||||||||||
1-800-Flowers.com Consumer Floral | $ | 8,181 | $ | 7,549 | $ | - | $ | 7,549 | 8.4% | |||||
BloomNet Wire Service | 7,279 | 6,915 | - | 6,915 | 5.3% | |||||||||
Gourmet Food & Gift Baskets | (9,304) | (8,494) | - | (8,494) | -9.5% | |||||||||
Category Contribution Margin Subtotal | 6,156 | 5,970 | - | 5,970 | 3.1% | |||||||||
Corporate (a) | (21,268) | (20,269) | 828 | (19,441) | -9.4% | |||||||||
EBITDA | $ | (15,112) | $ | (14,299) | $ | 828 | $ | (13,471) | -12.2% | |||||
Add: Stock-based compensation | 1,774 | 1,518 | - | 1,518 | -16.9% | |||||||||
EBITDA, excluding stock-based compensation | $ | (13,338) | $ | (12,781) | $ | 828 | $ | (11,953) | -11.6% | |||||
1-800-FLOWERS.COM, Inc. and Subsidiaries | ||||||
Selected Financial Information | ||||||
(in thousands) |
||||||
(unaudited) |
||||||
Reconciliation of GAAP net loss to Adjusted loss attributable to 1-800-FLOWERS.COM, Inc.: | ||||||
Three Months Ended | ||||||
October 2, 2016 | September 27, 2015 | |||||
GAAP net loss | $ | (15,771) | $ | (5,436) | ||
Less: Net loss attributable to noncontrolling interest | - | (952) | ||||
Loss attributable to 1-800-FLOWERS.COM, Inc. | (15,771) | (4,484) | ||||
Adjustments to reconcile loss attributable to 1-800-FLOWERS.COM, Inc. to Adjusted loss attributable to 1-800-FLOWERS.COM, Inc. | ||||||
Add back: Loss on sale/impairment of iFlorist | - | 1,879 | ||||
Add back: Impairment of foreign equity method investment | - | 1,728 | ||||
Add back: Harry & David integration costs | - | 828 | ||||
Deduct: Gain from insurance recovery on warehouse fire | - | (19,611) | ||||
Deduct income tax effect of adjustments | - | 5,352 | ||||
Adjusted loss attributable to 1-800-FLOWERS.COM, Inc. | $ | (15,771) | $ | (14,308) | ||
GAAP loss per common share attributable to 1-800-FLOWERS.COM, Inc. | ||||||
Basic and diluted | $ | (0.24) | $ | (0.07) | ||
Adjusted loss per common share attributable to 1-800-FLOWERS.COM, Inc. | ||||||
Basic and diluted | $ | (0.24) | $ | (0.22) | ||
Weighted average shares used in the calculation of GAAP loss and Adjusted loss per common share attributable to 1-800-FLOWERS.COM, Inc. |
||||||
Basic and diluted | 65,081 | 64,825 | ||||
Reconciliation of GAAP net loss attributable to 1-800-Flowers.com, Inc. to Adjusted EBITDA, excluding stock-based compensation(b): | ||||||
Three Months Ended | ||||||
October 2, 2016 | September 27, 2015 | |||||
Loss attributable to 1-800-FLOWERS.COM, Inc. | $ | (15,771) | $ | (4,484) | ||
Add: | ||||||
Interest expense, net | 1,301 | 2,357 | ||||
Depreciation and amortization | 7,997 | 7,972 | ||||
Loss on sale/impairment of iFlorist | - | 1,879 | ||||
Impairment of foreign equity method investment | - | 1,728 | ||||
Less: | ||||||
Net loss attributable to noncontrolling interest | - | 952 | ||||
Income tax benefit | 8,639 | 3,188 | ||||
Gain from insurance recovery on warehouse fire | - | 19,611 | ||||
EBITDA | (15,112) | (14,299) | ||||
Add: Integration costs | - | 828 | ||||
Adjusted EBITDA | (15,112) | (13,471) | ||||
Add: Stock-based compensation | 1,774 | 1,518 | ||||
Adjusted EBITDA, excluding stock-based compensation | $ | (13,338) | $ | (11,953) | ||
(a) | Corporate expenses consist of the Company’s enterprise shared service cost centers, and include, among other items, Information Technology, Human Resources, Accounting and Finance, Legal, Executive and Customer Service Center functions, as well as Stock-Based Compensation. In order to leverage the Company’s infrastructure, these functions are operated under a centralized management platform, providing support services throughout the organization. The costs of these functions, other than those of the Customer Service Center, which are allocated directly to the above categories based upon usage, are included within corporate expenses as they are not directly allocable to a specific segment. | |
(b) | Performance is measured based on segment contribution margin or segment Adjusted EBITDA, reflecting only the direct controllable revenue and operating expenses of the segments. As such, management’s measure of profitability for these segments does not include the effect of corporate overhead, described above, depreciation and amortization, other income (net), nor does it include one-time charges or gains. Management utilizes EBITDA, and adjusted financial information, as a performance measurement tool because it considers such information a meaningful supplemental measure of its performance and believes it is frequently used by the investment community in the evaluation of companies with comparable market capitalization. The Company also uses EBITDA and adjusted financial information as one of the factors used to determine the total amount of bonuses available to be awarded to executive officers and other employees. The Company’s credit agreement uses EBITDA and adjusted financial information to measure compliance with covenants such as interest coverage and debt incurrence. EBITDA and adjusted financial information is also used by the Company to evaluate and price potential acquisition candidates. EBITDA and adjusted financial information have limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP. Some of these limitations are: (a) EBITDA does not reflect changes in, or cash requirements for, the Company's working capital needs; (b) EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on the Company's debts; and (c) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may ave 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. | |
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CONTACT:
For 1-800-FLOWERS.COM, Inc.
Investors
Joseph
D. Pititto, 516-237-6131
invest@1800flowers.com
or
Media:
Yanique
Woodall, 516-237-6028
ywoodall@1800flowers.com