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 29, 2019

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 incorporation)	(I.R.S. Employer Identification No.)

One Old Country Road, Carle Place, New York, 11514	(516) 237-6000
(Address of principal executive offices) (Zip code)	(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Class A common stock	FLWS	The Nasdaq Stock Market

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 ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period that the registrant was required to submit such files). Yes ☑   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

☐ Large accelerated filer	☑ Accelerated filer
☐ Non-accelerated filer	☐ Smaller reporting company
	☐ Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐  No ☑

The number of shares outstanding of each of the Registrant’s classes of common stock as of November 1, 2019:

Class A common stock:	36,047,572
Class B common stock:	28,542,823

1-800-FLOWERS.COM, Inc.

FORM 10-Q

For the quarterly period ended September 29, 2019

TABLE OF CONTENTS

		Page
Part I.	Financial Information
Item 1.	Condensed Consolidated Financial Statements		1
	Condensed Consolidated Balance Sheets – September 29, 2019 (Unaudited) and June 30, 2019		1
	Condensed Consolidated Statements of Operations (Unaudited) – Three Months Ended September 29, 2019 and September 30, 2018		2
	Condensed Consolidated Statements of Comprehensive Loss (Unaudited) – Three Months Ended September 29, 2019 and September 30, 2018		3
	Condensed Consolidated Statements of Stockholder’s Equity (Unaudited) – Three Months Ended September 29, 2019 and September 30, 2018		4
	Condensed Consolidated Statements of Cash Flows (Unaudited) – Three Months Ended September 29, 2019 and September 30, 2018		5
	Notes to Condensed Consolidated Financial Statements (Unaudited)		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		20
Item 4.	Controls and Procedures		20
Part II.	Other Information
Item 1.	Legal Proceedings		20
Item 1A.	Risk Factors		20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		21
Item 3.	Defaults upon Senior Securities		21
Item 4.	Mine Safety Disclosures		21
Item 5.	Other Information		21
Item 6.	Exhibits		21
Signatures			22

PART I. – FINANCIAL INFORMATION

ITEM 1. – CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1-800-FLOWERS.COM, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except for share data)

	September 29, 2019			June 30, 2019
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	34,174		$	172,923
Trade receivables, net		36,062			12,374
Inventories		172,513			92,361
Prepaid and other		25,649			25,580
Total current assets		268,398			303,238
Property, plant and equipment, net		163,422			166,681
Operating lease right-of-use assets		75,876			-
Goodwill		74,711			62,590
Other intangibles, net		66,954			59,615
Other assets		15,594			14,316
Total assets	$	664,955		$	606,440
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	37,128		$	25,704
Accrued expenses		82,913			96,793
Current maturities of long-term debt		5,000			5,000
Current portion of long-term operating lease liabilities		10,381			-
Total current liabilities		135,422			127,497
Long-term debt		90,782			91,973
Long-term operating lease liabilities		67,643			-
Deferred tax liabilities		28,195			28,898
Other liabilities		13,517			15,361
Total liabilities		335,559			263,729
Commitments and contingencies (See Note 13 and Note 14)
Stockholders’ equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued		-			-
Class A common stock, $0.01 par value, 200,000,000 shares authorized, 53,216,294 and 53,084,127 shares issued at September 29, 2019 and June 30, 2019, respectively		532			530
Class B common stock, $0.01 par value, 200,000,000 shares authorized, 33,822,823 shares issued at September 29, 2019 and June 30, 2019		338			338
Additional paid-in-capital		351,304			349,319
Retained earnings		93,254			108,525
Accumulated other comprehensive loss		(269	)		(269	)
Treasury stock, at cost, 17,211,206 and 17,209,093 Class A shares at September 29, 2019 and June 30, 2019, respectively, and 5,280,000 Class B shares at September 29, 2019 and June 30, 2019		(115,763	)		(115,732	)
Total stockholders’ equity		329,396			342,711
Total liabilities and stockholders’ equity	$	664,955		$	606,440

1

1-800-FLOWERS.COM, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(in thousands, except for per share data)

(unaudited)

	Three Months Ended
	September 29, 2019			September 30, 2018
Net revenues	$	187,263		$	169,496
Cost of revenues		111,117			100,956
Gross profit		76,146			68,540
Operating expenses:
Marketing and sales		56,839			52,954
Technology and development		10,803			10,279
General and administrative		21,522			20,430
Depreciation and amortization		7,635			7,843
Total operating expenses		96,799			91,506
Operating loss		(20,653	)		(22,966	)
Interest expense, net		595			990
Other income (expense), net		(84	)		274
Loss before income taxes		(21,332	)		(23,682	)
Income tax benefit		(6,061	)		(6,416	)
Net loss	$	(15,271	)	$	(17,266	)
Basic and diluted net loss per common share	$	(0.24	)	$	(0.27	)
Basic and diluted weighted average shares used in the calculation of net loss per common share		64,503			64,620

2

1-800-FLOWERS.COM, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(unaudited)

	Three Months Ended
	September 29, 2019			September 30, 2018
Net loss	$	(15,271	)	$	(17,266	)
Other comprehensive income (currency translation & other)		-			10
Comprehensive loss	$	(15,271	)	$	(17,256	)

3

1-800-FLOWERS.COM, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders' Equity

(in thousands, except share data)

(unaudited)

	Three Months Ended September 29, 2019 and September 30, 2018
	Common Stock								Additional		Retained			Accumulated								Total
	Class A				Class B				Paid-in		Earnings			Other			Treasury Stock					Stockholders’
	Shares		Amount		Shares		Amount		Capital					Comprehensive Loss			Shares		Amount			Equity
Balance at June 30, 2019		53,084,127	$	530		33,822,823	$	338	$	349,319	$	108,525		$	(269	)		22,489,093	$	(115,732	)	$	342,711
Net loss		-		-		-		-		-		(15,271	)		-			-		-			(15,271	)
Stock-based compensation		7,167		-		-		-		1,765		-			-			-		-			1,765
Exercise of stock options		125,000		2		-		-		220		-			-			-		-			222
Acquisition of Class A treasury stock		-		-		-		-		-		-			-			2,113		(31	)		(31	)
Balance at September 29, 2019		53,216,294	$	532		33,822,823	$	338	$	351,304	$	93,254		$	(269	)		22,491,206	$	(115,763	)	$	329,396
Balance at July 1, 2018		52,071,293	$	520		33,822,823	$	338	$	341,783	$	73,429		$	(200	)		21,258,790	$	(100,966	)	$	314,904
Net loss		-		-		-		-		-		(17,266	)		-			-		-			(17,266	)
Translation adjustment		-		-		-		-		-					10			-		-			10
Stock-based compensation		1,667		-		-		-		955		-			-			-		-			955
Exercise of stock options		90,000		1		-		-		300		-			-			-		-			301
Other		-		-		-		-		-		1,120			-			-		-			1,120
Acquisition of Class A treasury stock		-		-		-		-		-		-			-			345,622		(4,040	)		(4,040	)
Balance at September 30, 2018		52,162,960	$	521		33,822,823	$	338	$	343,038	$	57,283		$	(190	)		21,604,412	$	(105,006	)	$	295,984

4

1-800-FLOWERS.COM, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	Three months ended
	September 29, 2019			September 30, 2018
Operating activities:
Net loss	$	(15,271	)	$	(17,266	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		7,635			7,843
Amortization of deferred financing costs		112			224
Deferred income taxes		(703	)		(259	)
Bad debt expense		503			224
Stock-based compensation		1,765			955
Other non-cash items		184			286
Changes in operating items:
Trade receivables		(24,191	)		(18,024	)
Inventories		(79,124	)		(71,855	)
Prepaid and other		(1,190	)		(2,731	)
Accounts payable and accrued expenses		(2,646	)		(8,766	)
Other assets and liabilities		148			(54	)
Net cash used in operating activities		(112,778	)		(109,423	)
Investing activities:
Acquisitions, net of cash acquired		(20,500	)		-
Capital expenditures, net of non-cash expenditures		(4,359	)		(4,907	)
Net cash used in investing activities		(24,859	)		(4,907	)
Financing activities:
Acquisition of treasury stock		(31	)		(4,040	)
Proceeds from exercise of employee stock options		222			302
Repayment of notes payable and bank borrowings		(1,250			(2,156	)
Debt issuance cost		(53	)		-
Net cash used in financing activities		(1,112	)		(5,894	)
Net change in cash and cash equivalents		(138,749	)		(120,224	)
Cash and cash equivalents:
Beginning of period		172,923			147,240
End of period	$	34,174		$	27,016

5

1-800-FLOWERS.COM, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(unaudited)

Note 1 – Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by 1-800-FLOWERS.COM, Inc. and Subsidiaries (the “Company”) in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three month period ended September 29, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending June 28, 2020. These financial statements should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended June 30, 2019, which provides a more complete understanding of our accounting policies, financial position, operating results and other matters.

The Company’s quarterly results may experience seasonal fluctuations. Due to the seasonal nature of the Company’s business, and its continued expansion into non-floral products, the Thanksgiving through Christmas holiday season, which falls within the Company’s second fiscal quarter, generates nearly 50% of the Company’s annual revenues, and all of its earnings. Additionally, due to the number of major floral gifting occasions, including Mother's Day, Valentine’s Day, Easter and Administrative Professionals Week, revenues also rise during the Company’s fiscal third and fourth quarters compared to its fiscal first quarter.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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.

Revenue Recognition

Net revenue is measured based on the amount of consideration that we expect to receive, reduced by discounts and estimates for credits and returns (calculated based upon previous experience and management’s evaluation). Service and outbound shipping charged to customers are recognized at the time the related merchandise revenues are recognized and are included in net revenues. Inbound and outbound shipping and delivery costs are included in cost of revenues. Net revenues exclude sales and other similar taxes collected from customers.

A description of our principal revenue generating activities is as follows:

● E-commerce revenues - consumer products sold through our online and telephonic channels. Revenue is recognized when control of the merchandise is transferred to the customer, which generally occurs upon shipment. Payment is typically due prior to the date of shipment.

● Retail revenues - consumer products sold through our retail stores. Revenue is recognized when control of the goods is transferred to the customer, at the point of sale, at which time payment is received.

● Wholesale revenues - products sold to our wholesale customers for subsequent resale. Revenue is recognized when control of the goods is transferred to the customer, in accordance with the terms of the applicable agreement. Payment terms are typically 30 days from the date control over the product is transferred to the customer.

● BloomNet Services - membership fees as well as other service offerings to florists. Membership and other subscription-based fees are recognized monthly as earned. Services revenues related to orders sent through the floral network are variable, based on either the number of orders or the value of orders, and are recognized in the period in which the orders are delivered. The contracts within BloomNet Services are typically month-to-month and as a result no consideration allocation is necessary across multiple reporting periods. Payment is typically due less than 30 days from the date the services were performed. 

Deferred Revenues

Deferred revenues are recorded when the Company has received consideration (i.e. advance payment) before satisfying its performance obligations. As such, customer orders are recorded as deferred revenue prior to shipment or rendering of product or services. Deferred revenues primarily relate to e-commerce orders placed, but not shipped, prior to the end of the fiscal period, as well as for monthly subscription programs, including our Fruit of the Month Club and Celebrations Passport program.

Our total deferred revenue as of June 30, 2019 was $17.3 million (included in “Accrued expenses” on our consolidated balance sheets), of which, $10.0 million was recognized as revenue during the three months ended September 29, 2019. The deferred revenue balance as of September 29, 2019 was $16.5 million.

Recently Issued Accounting Pronouncements - Adopted

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASC 842”). Under this guidance, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. This guidance offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. We adopted the new standard effective July 1, 2019 and elected the optional transition method and therefore, we will not apply the standard to the comparative periods presented in our financial statements. The new standard provides a number of optional practical expedients in transition. We elected the ‘package of practical expedients’, that did not require us to reassess, under the new standard, our prior conclusions about lease identification, lease classification and initial direct costs. Further, we elected a short-term lease exception policy, permitting us to not apply the recognition requirements of this standard to short-term leases (i.e. leases with terms of 12 months or less) and an accounting policy to account for lease and non-lease components as a single component for certain classes of assets. The adoption of the new standard had a material impact to the Company’s Consolidated Balance Sheets, but no impact to the Consolidated Statements of Income (Operations) or Consolidated Statements of Cash Flows. As such, we recorded operating lease liabilities of $80.7 million, based on the present value of the remaining minimum rental payments using discount rates as of the effective date, and a corresponding right-of-use assets of $78.7 million based on the operating lease liabilities adjusted for deferred rent and lease incentives received. See Note 13 - Leases for further information about our transition to ASC 842 and the newly required disclosures.

Recently Issued Accounting Pronouncements – Not Yet Adopted

Financial Instruments – Measurement of Credit Losses. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 introduces a new forward-looking “expected loss” approach, to estimate credit losses on most financial assets and certain other instruments, including trade receivables. The estimate of expected credit losses will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. This ASU also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. ASU 2016-13 is effective for the Company’s fiscal 2021, and the guidance is to be applied using the modified-retrospective approach. The Company is currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

6

Goodwill – Impairment Test. In January 2017, the FASB issued ASU No. 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment," which eliminates step two from the goodwill impairment test. Under ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit. This guidance is effective for the Company’s fiscal 2021, with early adoption permitted, and should be applied prospectively. We do not expect the standard to have a material impact on our consolidated financial statements.

Note 2 – Net Income (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 dilutive potential common shares (consisting of employee stock options and unvested restricted stock awards), as their inclusion would be antidilutive. As a result of the net loss for the three months ended September 29, 2019 and September 30, 2018, there is no dilutive impact to the net loss per share calculation for the respective periods.

Note 3 – Stock-Based Compensation

The Company has a Long Term Incentive and Share Award Plan, which is more fully described in Note 12 and Note 13 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2019, that provides for the grant to eligible employees, consultants and directors of stock options, restricted shares, and other stock-based awards.

The amounts of stock-based compensation expense recognized in the periods presented are as follows:

	Three Months Ended
	September 29, 2019		September 30, 2018
	(in thousands)
Stock options	$	65	$	105
Restricted stock		1,700		850
Total		1,765		955
Deferred income tax benefit		329		259
Stock-based compensation expense, net	$	1,436	$	696

 Stock-based compensation is recorded within the following line items of operating expenses:

	Three Months Ended
	September 29, 2019		September 30, 2018
	(in thousands)
Marketing and sales	$	816	$	255
Technology and development		119		51
General and administrative		830		649
Total	$	1,765	$	955

Stock based compensation expense has not been allocated between business segments, but is reflected as part of Corporate overhead (see Note 12 - Business Segments).

Stock Options

The following table summarizes stock option activity during the three months ended September 29, 2019:

	Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
							(in years)		(in thousands)
Outstanding at June 30, 2019		1,365,000		$	2.48
Granted		-		$	-
Exercised		(125,000	)	$	1.79
Forfeited		-		$	-
Outstanding at September 29, 2019		1,240,000		$	2.55		1.9	$	14,994
Exercisable at September 29, 2019		1,110,000		$	2.50		1.9	$	13,470

As of September 29, 2019, the total future compensation cost related to non-vested options, not yet recognized in the statement of income, was $0.1 million and the weighted average period over which these awards are expected to be recognized was 0.1 years.

7

Restricted Stock

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 and performance conditions and, in certain cases, holding periods (Restricted Stock). The following table summarizes the activity of non-vested restricted stock awards during the three months ended September 29, 2019:

	Shares			Weighted Average Grant Date Fair Value
Non-vested at June 30, 2019		1,438,592		$	10.81
Granted		1,500		$	14.73
Vested		(7,167	)	$	9.23
Forfeited		(33,849	)	$	12.67
Non-vested at September 29, 2019		1,399,076		$	10.78

The fair value of non-vested shares is determined based on the closing stock price on the grant date. As of September 29, 2019, there was $7.6 million of total unrecognized compensation cost related to non-vested restricted stock-based compensation to be recognized over the weighted-average remaining period of 1.3 years.  

Note 4 – Acquisition

 Acquisition of Shari’s Berries

On August 14, 2019, the Company completed its acquisition of the Shari’s Berries business ("Shari's Berries"), a leading provider of dipped berries and other specialty treats, through a bankruptcy proceeding of certain assets of the gourmet food business of the FTD Companies, Inc. The transaction, for a purchase price of $20.5 million, included the Shari’s Berries domain names, copyrights, trademarks, customer data, phone numbers and other intellectual property, as well as certain raw material inventory and the assumption of specified liabilities.

The total purchase price was allocated to the identifiable assets acquired and liabilities assumed based on our preliminary estimates of their fair values on the acquisition date. The Company is in the process of finalizing its allocation and this may result in potential adjustments to the carrying value of the respective recorded assets and liabilities, establishment of certain additional intangible assets, revisions of useful lives of intangible assets, and the determination of any residual amount that will be allocated to goodwill. Of the acquired intangible assets, $0.6 million was assigned to customer lists, which is being amortized over the estimated remaining life of 2 years, $6.9 million was assigned to tradenames, and $12.1 million was assigned to goodwill, which is expected to be deductible for tax purposes. The goodwill recognized in conjunction with our acquisition of Shari’s Berries is primarily related to synergistic value created in terms of both operating costs and revenue growth opportunities, enhanced financial and operational scale, and other strategic benefits.

The following table summarizes the preliminary allocation of the purchase price to the estimated fair values of assets acquired and liabilities assumed at the date of the acquisition:

	Shari’s Berries Preliminary Purchase Price Allocation
	(in thousands)
Current assets	$	1,029
Intangible assets		7,540
Goodwill		12,121
Total assets acquired		20,690
Current liabilities		190
Net assets acquired	$	20,500

Raw materials inventory was valued at book value, as there have not been any significant price fluctuations or other events that would materially change the cost to replace the raw materials.

The estimated fair value of the acquired tradenames was determined using the relief from royalty method, which is a risk-adjusted discounted cash flow approach. The relief from royalty method values an intangible asset by estimating the royalties saved through ownership of the asset. The relief from royalty method requires identifying the future revenue that would be generated by the trademark, multiplying it by a royalty rate deemed to be avoided through ownership of the asset and discounting the projected royalty savings amounts back to the acquisition date. The royalty rate used in the valuation was based on a consideration of market rates for similar categories of assets. The discount rate used in the valuation was based on the Company’s weighted average cost of capital, the riskiness of the earnings stream associated with the trademarks and the overall composition of the acquired assets.

The estimated fair value of the acquired customer lists was determined using the excess earnings method under the income approach. This method requires identifying the future revenue that would be generated by existing customers at the time of the acquisition, considering an appropriate attrition rate based on the historical experience of the Company. Appropriate expenses are then deducted from the revenues and economic rents are charged for the return on contributory assets. The after-tax cash flows attributable to the asset are discounted back to their net present value at an appropriate intangible asset rate of return and summed to calculate the value of the customer lists.

Operating results of the Shari’s Berries brand are reflected in the Company’s consolidated financial statements from the date of acquisition, within the Gourmet Food & Gift Baskets segment. Pro forma results of operations have not been presented, as the impact on the Company’s consolidated financial results would not have been material.

Note 5 – Inventory

The Company’s inventory, stated at cost, which is not in excess of market, includes purchased and manufactured finished goods for sale, packaging supplies, crops, raw material ingredients for manufactured products and associated manufacturing labor and is classified as follows:

	September 29, 2019		June 30, 2019
	(in thousands)
Finished goods	$	105,102	$	36,820
Work-in-process		16,227		17,535
Raw materials		51,184		38,006
Total inventory	$	172,513	$	92,361

8

Note 6 – Goodwill and Intangible Assets

The following table presents goodwill by segment and the related change in the net carrying amount:

	1-800-Flowers.com Consumer Floral		BloomNet Wire Service		Gourmet Food & Gift Baskets		Total
	(in thousands)
Balance at June 30, 2019	$	17,441	$	-	$	45,149	$	62,590
Acquisition of Shari’s Berries		-		-		12,121		12,121
Balance at September 29, 2019	$	17,441	$	-	$	57,270	$	74,711

The Company’s other intangible assets consist of the following:

			September 29, 2019						June 30, 2019
	Amortization Period		Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
	(in years)		(in thousands)
Intangible assets with determinable lives
Investment in licenses		14-16	$	7,420	$	6,174	$	1,246	$	7,420	$	6,148	$	1,272
Customer lists		2-10		12,825		9,948		2,877		12,184		9,798		2,386
Other		5-14		2,946		2,306		640		2,946		2,280		666
Total intangible assets with determinable lives				23,191		18,428		4,763		22,550		18,226		4,324
Trademarks with indefinite lives				62,191		-		62,191		55,291		-		55,291
Total identifiable intangible assets			$	85,382	$	18,428	$	66,954	$	77,841	$	18,226	$	59,615

Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Future estimated amortization expense is as follows: remainder of fiscal 2020 - $0.7 million, fiscal 2021 - $0.8 million, fiscal 2022 - $0.7 million, fiscal 2023 - $0.6 million, fiscal 2024 - $0.5 million and thereafter - $1.5 million.

Note 7 – Investments

Equity investments accounted for under the equity method 

The Company has certain investments in non-marketable equity instruments of private companies. The Company accounts for these investments using the equity method if they provide the Company the ability to exercise significant influence, but not control, over the investee. Significant influence is generally deemed to exist if the Company has an ownership interest in the voting stock of the investee between 20% and 50%, although other factors, such as representation on the investee’s board of directors, are considered in determining whether the equity method is appropriate. The Company records equity method investments initially at cost and adjusts the carrying amount to reflect the Company’s share of the earnings or losses of the investee.

The Company’s equity method investment is comprised of an interest in Flores Online Ltda. ("Flores Online"), a Sao Paulo, Brazil-based internet floral and gift retailer, that the Company originally acquired on May 31, 2012. The Company currently holds 24.9% of the outstanding shares of Flores Online. The book value of this investment was $0.5 million as of September 29, 2019 and June 30, 2019, and is included in the “Other assets” line item within the Company’s consolidated balance sheets. The Company’s equity in the net loss of Flores Online for the three months ended September 29, 2019 and September 30, 2018, respectively, was less than $0.1 million.

Equity investments without a readily determinable fair value

Investments in non-marketable equity instruments of private companies, where the Company does not possess the ability to exercise significant influence, are accounted for at cost, less impairment (assessed qualitatively at each reporting period), adjusted for observable price changes from orderly transactions for identical or similar investments of the same issuer. These investments are included within “Other assets” in the Company’s consolidated balance sheets. The aggregate carrying amount of the Company’s cost method investments was $1.7 million as of September 29, 2019 and June 30, 2019. 

Equity investments with a readily determinable fair value

The Company also holds certain trading securities associated with its Non-Qualified Deferred Compensation Plan (“NQDC Plan”). These investments are measured using quoted market prices at the reporting date and are included within the “Other assets” line item in the consolidated balance sheets (see Note 10 - Fair Value Measurements).

9

Note 8 –Debt

The Company’s current and long-term debt consists of the following:

	September 29, 2019			June 30, 2019
	(in thousands)
Revolver (1)	$	-		$	-
Term Loan (1)		98,750			100,000
Deferred financing costs		(2,968	)		(3,027	)
Total debt		95,782			96,973
Less: current debt		5,000			5,000
Long-term debt	$	90,782		$	91,973

(1) On May 31, 2019, the Company entered into a Second Amended and Restated Credit Agreement (the “2019 Credit Agreement”) with JPMorgan Chase Bank, N.A. as administrative agent, and a group of lenders. The 2019 Credit Agreement amended and restated the Company’s existing amended and restated credit agreement dated as of December 23, 2016 (the “2016 Credit Agreement”) to, among other modifications: (i) increase the amount of the outstanding term loan (“Term Loan”) from approximately $97 million to $100 million, (ii) extend the maturity date of the outstanding Term Loan and the revolving credit facility (“Revolver”) by approximately 29 months to May 31, 2024, and (iii) decrease the applicable interest rate margins for LIBOR and base rate loans by 25 basis points. The Term Loan is payable in 19 quarterly installments of principal and interest beginning on September 29, 2019, with escalating principal payments, at the rate of 5.0% per annum for the first eight payments, and 10.0% per annum for the remaining 11 payments, with the remaining balance of $62.5 million due upon maturity. The Revolver, in the aggregate amount of $200 million, subject to seasonal reduction to an aggregate amount of $100 million for the period from January 1 through August 1, may be used for working capital and general corporate purposes, subject to certain restrictions.

For each borrowing under the 2019 Credit Agreement, the Company may elect that such borrowing bear interest at an annual rate equal to either: (1) a base rate plus an applicable margin varying based on the Company’s consolidated leverage ratio, where the base rate is the highest of (a) the prime rate, (b) the New York fed bank rate plus 0.5% and (c) a LIBOR rate plus 1% or (2) an adjusted LIBOR rate plus an applicable margin varying based on the Company’s consolidated leverage ratio. The 2019 Credit Agreement requires that while any borrowings or commitments are outstanding the Company comply with certain financial covenants and affirmative covenants as well as certain negative covenants that, subject to certain exceptions, limit the Company’s ability to, among other things, incur additional indebtedness, make certain investments and make certain restricted payments. The Company was in compliance with these covenants as of September 29, 2019. The 2019 Credit Agreement is secured by substantially all of the assets of the Company.

Future principal payments under the Term Loan are as follows: $3.8 million – remainder of fiscal 2020, $5.0 million – fiscal 2021, $10.0 million - fiscal 2022, $10.0 million – fiscal 2023 and $70.0 million – fiscal 2024. 

Note 9 - Property, Plant and Equipment

The Company’s property, plant and equipment consists of the following:

	September 29, 2019			June 30, 2019
	(in thousands)
Land	$	30,789		$	30,789
Orchards in production and land improvements		11,629			11,339
Building and building improvements		59,800			59,236
Leasehold improvements		14,075			13,861
Production equipment and furniture and fixtures		62,251			61,415
Computer and telecommunication equipment		53,591			53,694
Software		135,453			132,078
Capital projects in progress - orchards		8,968			9,902
Property, plant and equipment, gross		376,556			372,314
Accumulated depreciation and amortization		(213,134	)		(205,633	)
Property, plant and equipment, net	$	163,422		$	166,681

10

Note 10 - Fair Value Measurements

Cash and cash equivalents, trade and other receivables, prepaids, accounts payable and accrued expenses are reflected in the consolidated balance sheets at carrying value, which approximates fair value due to the short-term nature of these instruments. Although no trading market exists, the Company believes that the carrying amount of its debt approximates fair value due to its variable nature. The Company’s investments in non-marketable equity instruments of private companies are carried at cost and are periodically assessed for other-than-temporary impairment, when an event or circumstances indicate that an other-than-temporary decline in value may have occurred. The Company’s remaining financial assets and liabilities are measured and recorded at fair value (see table below). The Company’s non-financial assets, such as definite lived intangible assets and property, plant and equipment, are recorded at cost and are assessed for impairment when an event or circumstance indicates that an other-than-temporary decline in value may have occurred. Goodwill and indefinite lived intangibles are tested for impairment annually, or more frequently, if events occur or circumstances change such that it is more likely than not that an impairment may exist, as required under the accounting standards.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability, in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants at the measurement date. The authoritative guidance for fair value measurements establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under the guidance are described below:

Level 1	Valuations based on quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.
Level 2	Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.
Level 3	Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following table presents by level, within the fair value hierarchy, financial assets and liabilities measured at fair value on a recurring basis:

	Carrying Value		Fair Value Measurements Assets (Liabilities)
			Level 1		Level 2		Level 3
	(in thousands)
As of September 29, 2019:
Trading securities held in a “rabbi trust” (1)	$	13,065	$	13,065	$	-	$	-
Total assets (liabilities) at fair value	$	13,065	$	13,065	$	-	$	-
As of June 30, 2019:
Trading securities held in a “rabbi trust” (1)	$	11,816	$	11,816	$	-	$	-
Total assets (liabilities) at fair value	$	11,816	$	11,816	$	-	$	-

(1) The Company has established an NQDC Plan for certain members of senior management. Deferred compensation plan assets are invested in mutual funds held in a “rabbi trust,” which is restricted for payment to participants of the NQDC Plan. Trading securities held in a rabbi trust are measured using quoted market prices at the reporting date and are included in the “Other assets” line item, with the corresponding liability included in the “Other liabilities” line item in the consolidated balance sheets. 

Note 11 – 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 29, 2019 was 28.4% compared to 27.1% in the same period of the prior year. The effective rate for fiscal 2020 differed from the U.S. federal statutory rate of 21% due to state income taxes and nondeductible expenses for executive compensation, which were partially offset by various permanent differences and tax credits, including excess tax benefits from stock-based compensation. The effective rate for the three months ended September 30, 2018 differed from the U.S. federal statutory rate of 21%, primarily due to state income taxes and nondeductible expenses for executive compensation, which were partially offset by various tax credits, including excess tax benefits from stock-based compensation, and other permanent differences.

The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions, and various foreign countries. The Company is currently undergoing its U.S. federal examination for fiscal 2017, however, fiscal year 2018 remains subject to U.S. federal examination. Due to ongoing state examinations and nonconformity with the U.S. federal statute of limitations for assessment, certain states remain open from fiscal 2015. The Company's foreign income tax filings from fiscal 2014 are open for examination by its respective foreign tax authorities, mainly Canada, Brazil, and the United Kingdom.

The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. At September 29, 2019, the Company has an unrecognized tax benefit, including interest and penalties, of approximately $0.9 million. The Company believes that $0.2 million of unrecognized tax positions will be resolved over the next twelve months. 

11

Note 12 – Business Segments

The Company’s management reviews the results of its operations by the following three business segments:

•     1-800-Flowers.com Consumer Floral,

•     BloomNet Wire Service, and

•     Gourmet Food & Gift Baskets

Segment performance is measured based on contribution margin, which includes only the direct controllable revenue and operating expenses of the segments. As such, management’s measure of profitability for these segments does not include the effect of corporate overhead (see (a) below), nor does it include depreciation and amortization, other (income) expense, net and income taxes, or stock-based compensation, both of which are included within corporate overhead. Assets and liabilities are reviewed at the consolidated level by management and not accounted for by segment.

	Three Months Ended
Net Revenues:	September 29, 2019			September 30, 2018
Segment Net Revenues:	(in thousands)
1-800-Flowers.com Consumer Floral	$	90,768		$	85,076
BloomNet Wire Service		25,440			23,993
Gourmet Food & Gift Baskets		71,215			60,518
Corporate		195			267
Intercompany eliminations		(355	)		(358	)
Total net revenues	$	187,263		$	169,496

	Three Months Ended
Operating Income (Loss):	September 29, 2019			September 30, 2018
	(in thousands)
Segment Contribution Margin:
1-800-Flowers.com Consumer Floral	$	8,524		$	7,495
BloomNet Wire Service		8,357			7,638
Gourmet Food & Gift Baskets		(6,600	)		(9,121	)
Segment Contribution Margin Subtotal		10,281			6,012
Corporate (a)		(23,299	)		(21,135	)
Depreciation and amortization		(7,635	)		(7,843	)
Operating loss	$	(20,653	)	$	(22,966	)

(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.

The following tables represent a disaggregation of revenue from contracts with customers, by channel:

	Three Months Ended									Three Months Ended
	September 29, 2019									September 30, 2018
	1-800-Flowers.comConsumer Floral		BloomNet Wire Service		Gourmet Food & Gift Baskets		Consolidated			1-800-Flowers.com  Consumer Floral		BloomNet Wire Service		Gourmet Food & Gift Baskets		Consolidated
	(in thousands)
Net revenues
E-commerce	$	89,088	$	-	$	39,962	$	129,050		$	83,450	$	-	$	34,250	$	117,700
Retail		939		-		7,490		8,429			861		-		7,779		8,640
Wholesale		-		8,748		23,763		32,511			-		8,133		18,489		26,622
BloomNet services		-		16,692		-		16,692			-		15,860		-		15,860
Other		741		-		-		741			765		-		-		765
Corporate		-		-		-		195			-		-		-		267
Eliminations		-		-		-		(355	)		-		-		-		(358	)
Net revenues	$	90,768	$	25,440	$	71,215	$	187,263		$	85,076	$	23,993	$	60,518	$	169,496

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Note 13 – Leases

The Company currently leases plants, warehouses, offices, store facilities, and equipment under various leases through fiscal 2034. Most lease agreements are of a long-term nature (over a year), although the Company does also enter into short-term leases, primarily for seasonal needs. Lease agreements may contain renewal options and rent escalation clauses and require the Company to pay real estate taxes, insurance, common area maintenance and operating expenses applicable to the leased properties. The Company accounts for its leases in accordance with ASC 842. At contract inception, we determine whether a contract is, or contains, a lease by determining whether it conveys the right to control the use of the identified asset for a period of time, by assessing whether we have the right to obtain substantially all of the economic benefits from use of the identified asset and the right to direct the use of the identified asset.

At the lease commencement date, we determine if a lease should be classified as an operating or a finance lease (we currently have no finance leases) and recognize a corresponding lease liability and a right-of-use asset on our Balance Sheet. The lease liability is initially and subsequently measured as the present value of the remaining fixed minimum rental payments (including base rent and fixed common area maintenance) using discount rates as of the commencement date. Variable payments (including most utilities, real estate taxes, insurance and variable common area maintenance) are expensed as incurred. The right-of-use asset is initially and subsequently measured at the carrying amount of the lease liability adjusted for any prepaid or accrued lease payments, remaining balance of lease incentives received, unamortized initial direct costs, or impairment charges relating to the right-of-use asset. Right-of-use assets are assessed for impairment using the long-lived assets impairment guidance. The discount rate used to determine the present value of lease payments is our estimated collateralized incremental borrowing rate, based on the yield curve for the respective lease terms, as we generally cannot determine the interest rate implicit in the lease.

We recognize expense for our operating leases on a straight-line basis over the lease term. As these leases expire, it can be expected that in the normal course of business they will be renewed or replaced. Renewal option periods are included in the measurement of lease liability, where the exercise is reasonably certain to occur. Key estimates and judgments in accounting for leases include how we determine: (1) lease payments, (2) lease term and (3) the discount rate used in calculating the lease liability.

Information related to our leases as of and for the period ending September 29, 2019 is as follows:

	Three Months Ended
	September 29, 2019
	(in thousands)
Lease costs:
Operating lease costs	$	3,640
Variable lease costs		3,540
Short-term lease cost		1,065
Sublease income		(270	)
Total lease costs	$	7,975
Cash paid for amounts included in measurement of operating lease liabilities	$	3,305
Right-of-use assets obtained in exchange for new operating lease liabilities	$	178
Weighted-average remaining lease term - operating leases	9.8 years
Weighted-discount rate - operating leases		3.8	%

Maturities of lease liabilities in accordance with ASC 842 as of September 29, 2019 are as follows (in thousands):

Remainder of 2020	$	8,899
2021		11,679
2022		10,310
2023		9,901
2024		9,452
Thereafter		44,888
Total Future Minimum Lease Payments	$	95,129
Less Imputed Remaining Interest		17,105
Total	$	78,024

 At June 30, 2019, in accordance with ASC 840, future minimum rental payments under non-cancelable operating leases with initial terms of one year or more consisted of the following (in thousands):

2020	$	16,588
2021		13,490
2022		12,081
2023		9,957
2024		9,498
Thereafter		44,953
Total Future Minimum Lease Payments	$	106,567

Note 14 – Commitments and Contingencies

Litigation

There are various claims, lawsuits, and pending actions against the Company and its subsidiaries incident to the operations of its businesses. It is the opinion of management, after consultation with counsel, that the ultimate resolution of such claims, lawsuits and pending actions will not have a material adverse effect on the Company's consolidated financial position, results of operations or liquidity.

13

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (MD&A) is intended to provide an understanding of our financial condition, change in financial condition, cash flow, liquidity and results of operations. The following MD&A discussion should be read in conjunction with the consolidated financial statements and notes to those statements that appear elsewhere in this Form 10-Q and in the Company’s Annual Report on Form 10-K, for the year ended June 30, 2019. The following discussion contains forward-looking statements that reflect the Company’s plans, estimates and beliefs. The Company’s actual results could differ materially from those discussed or referred to in the forward-looking statements. Factors that could cause or contribute to any differences include, but are not limited to, those discussed under the caption “Forward-Looking Information and Factors That May Affect Future Results” and under Part I, Item 1A, of the Company’s Annual Report on Form 10-K, for the year ended June 30, 2019 under the heading “Risk Factors.”

Overview

1-800-FLOWERS.COM, Inc. and its subsidiaries (collectively, the “Company”) is a leading provider of gifts designed to help customers express, connect and celebrate. For more than 40 years, 1-800-Flowers.com® has been delivering smiles to customers with gifts for every occasion, including fresh flowers and the best selection of plants, gift baskets, gourmet foods, confections, jewelry, candles, balloons and plush stuffed animals. As always, our 100% Smile Guarantee® backs every gift.

The Company’s Celebrations Ecosystem includes the following brands: 1-800-Flowers.com®, 1-800-Baskets.com®, Cheryl’s Cookies®, Harry & David®, Shari's Berries®, FruitBouquets.com^SM, Moose Munch®, The Popcorn Factory®, Wolferman’s Bakery ®, Personalization Universe®, Simply Chocolate®, Goodsey®, DesignPac® and Stock Yards®. Through the Celebrations Passport® loyalty program, which provides members with free standard shipping and no service charge across our portfolio of brands, 1-800-FLOWERS.COM, Inc. strives to deepen its relationships with its customers. The Company also operates BloomNet®, an international floral wire service providing a broad range of products and services designed to help professional florists grow their businesses profitably; as well as Napco^SM, a resource for floral gifts and seasonal décor.

1-800-FLOWERS.COM, Inc. was recognized as the 2019 Mid-Market Company of the Year by CEO Connection.

Shares in 1-800-FLOWERS.COM, Inc. are traded on the NASDAQ Global Select Market, ticker symbol: FLWS.

For additional information, see Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Overview” of our Annual Report on Form 10-K for the year ended June 30, 2019. 

Definitions of non-GAAP Financial Measures:

We sometimes use financial measures derived from consolidated financial information, but not presented in our financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Certain of these are considered "non-GAAP financial measures" under the U.S. Securities and Exchange Commission rules. See below for definitions and the reasons why we use these non-GAAP financial measures. Where applicable, see the Segment Information and Results of Operations sections below for reconciliations of these non-GAAP measures to their most directly comparable GAAP financial measures. These non-GAAP financial measures are referred to as “adjusted" or “on a comparable basis” below.

EBITDA and adjusted EBITDA

We define EBITDA as net income (loss) before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for the impact of stock-based compensation, NQDC Plan investment appreciation/depreciation, and for certain items affecting period to period comparability. See Segment Information for details on how EBITDA and adjusted EBITDA were calculated for each period presented.

The Company presents EBITDA and adjusted EBITDA 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 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 and adjusted EBITDA 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 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 should only be used on a supplemental basis combined with GAAP results when evaluating the Company's performance.

Segment contribution margin

We define segment contribution margin as earnings before interest, taxes, depreciation and amortization, before the allocation of corporate overhead expenses. See Segment Information for details on how segment contribution margin was calculated for each period presented.

When viewed together with our GAAP results, we believe segment contribution margin provides management and users of the financial statements meaningful information about the performance of our business segments.

Segment contribution margin is used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. The material limitation associated with the use of the segment contribution margin is that it is an incomplete measure of profitability as it does not include all operating expenses or non-operating income and expenses. Management compensates for these limitations when using this measure by looking at other GAAP measures, such as operating income and net income.

14

Segment Information

The following table presents the net revenues, gross profit and segment contribution margin from each of the Company’s business segments, as well as consolidated EBITDA, and adjusted EBITDA.

	Three Months Ended
	September 29, 2019			September 30, 2018			% Change
	(dollars in thousands)
Net revenues:
1-800-Flowers.com Consumer Floral	$	90,768		$	85,076			6.7	%
BloomNet Wire Service		25,440			23,993			6.0	%
Gourmet Food & Gift Baskets		71,215			60,518			17.7	%
Corporate		195			267			(27.0	%)
Intercompany eliminations		(355	)		(358	)		0.8	%
Total net revenues	$	187,263		$	169,496			10.5	%
Gross profit:
1-800-Flowers.com Consumer Floral	$	36,050		$	33,288			8.3	%
		39.7	%		39.1	%
BloomNet Wire Service		12,958			11,907			8.8	%
		50.9	%		49.6	%
Gourmet Food & Gift Baskets		27,042			23,036			17.4	%
		38.0	%		38.1	%
Corporate		96			309			(68.9	%)
		49.2	%		115.7	%
Total gross profit	$	76,146		$	68,540			11.1	%
		40.7	%		40.4	%
EBITDA (non-GAAP)
Segment Contribution Margin (non-GAAP) (a):
1-800-Flowers.com Consumer Floral	$	8,524		$	7,495			13.7	%
BloomNet Wire Service		8,357			7,638			9.4	%
Gourmet Food & Gift Baskets		(6,600	)		(9,121	)		27.6	%
Segment Contribution Margin Subtotal		10,281			6,012			71.0	%
Corporate (b)		(23,299	)		(21,135	)		(10.2	%)
EBITDA (non-GAAP)		(13,018	)		(15,123	)		13.9	%
Add: Stock-based compensation		1,765			955			84.8	%
Add: Compensation charge related to NQDC Plan investment appreciation (depreciation)		(44	)		282			(115.6	%)
Adjusted EBITDA (non-GAAP)	$	(11,297	)	$	(13,886	)		18.6	%

Reconciliation of net loss to Adjusted EBITDA (non-GAAP):

	Three Months Ended
	September 29, 2019			September 30, 2018
	(in thousands)
Net loss	$	(15,271	)	$	(17,266	)
Add:
Interest expense, net		679			716
Depreciation and amortization		7,635			7,843
Less:
Income tax benefit		6,061			6,416
EBITDA		(13,018	)		(15,123	)
Add: Stock-based compensation		1,765			955
Add: Compensation charge related to NQDC Plan investment appreciation/(depreciation)		(44	)		282
Adjusted EBITDA	$	(11,297	)	$	(13,886	)

a) Segment performance is measured based on segment contribution margin or segment Adjusted EBITDA, reflecting only the direct controllable revenue and operating expenses of the segments, both of which are non-GAAP measurements. 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), and other items that we do not consider indicative of our core operating performance.

b) 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.

15

Results of Operations

Net revenues

	Three Months Ended
	September 29, 2019		September 30, 2018		% Change
	(dollars in thousands)
Net revenues:
E-Commerce	$	129,050	$	117,700		9.6	%
Other		58,213		51,796		12.4	%
Total net revenues	$	187,263	$	169,496		10.5	%

Net revenues consist primarily of the selling price of the merchandise, service or outbound shipping charges, less discounts, returns and credits.

Net revenues increased 10.5% during the three months ended September 29, 2019, compared to the same period of the prior year, due to growth across all three of the Company’s business segments, including the Gourmet Food & Gift Baskets segment, which benefited from strong everyday gifting at Harry & David and 1-800-Baskets.com, combined with a shift into the quarter of some gift basket shipments for certain wholesale customers and revenues from Shari’s Berries, which was acquired through bankruptcy auction in August 2019.

Disaggregated revenue by channel follows:

	Three Months Ended									Three Months Ended
	September 29, 2019									September 30, 2018
	1-800-Flowers.com Consumer Floral		BloomNet Wire Service		Gourmet Food & Gift Baskets		Consolidated			1-800-Flowers.com Consumer Floral		BloomNet Wire Service		Gourmet Food & Gift Baskets		Consolidated
	(in thousands)
Net revenues
E-commerce	$	89,088	$	-	$	39,962	$	129,050		$	83,450	$	-	$	34,250	$	117,700
Retail		939		-		7,490		8,429			861		-		7,779		8,650
Wholesale		-		8,748		23,763		32,511			-		8,133		18,489		26,622
BloomNet services		-		16,692		-		16,692			-		15,860		-		15,860
Other		741		-		-		741			765		-		-		765
Corporate		-		-		-		195			-		-		-		267
Eliminations		-		-		-		(355	)		-		-		-		(358	)
Net revenues	$	90,768	$	25,440	$	71,215	$	187,263		$	85,076	$	23,993	$	60,518	$	169,496

Revenue by sales channel:

E-commerce revenues (combined online and telephonic) increased by 9.6% during the three months ended September 29, 2019, compared to the same period of the prior year, as a result of growth within the Gourmet Food & Gift Baskets segment of 16.7% as well as growth within the 1-800-Flowers.com Consumer Floral segment of 6.8%. During the three months ended September 29, 2019, the Company fulfilled approximately 1,845,000 orders through its e-commerce sales channels (online and telephonic sales), an increase of 8.2% compared to the same period of the prior year, while average order value increased 1.3%, to $69.95, during the three months ended September 29, 2019, compared to the same period of the prior year.

Other revenues are comprised of the Company’s BloomNet Wire Service segment, as well as the wholesale and retail channels of its 1-800-Flowers.com Consumer Floral and Gourmet Food & Gift Baskets segments. Other revenues increased by 12.4% during the three months ended September 29, 2019, compared to the same period of the prior year, due to growth within the Gourmet Food & Gift Baskets segment of 19.0%, BloomNet Wire Service segment of 6.0%, and 1-800-Flowers.com Consumer Floral of 3.3%.

Revenue by segment:

1-800-Flowers.com Consumer Floral – this segment, which consists primarily of the operations of the 1-800-Flowers.com brand, derives revenue from the sale of consumer floral products through its e-commerce sales channels (telephonic and online sales), retail stores, and royalties from its franchise operations. Net revenues increased 6.7% during the three months ended September 29, 2019, compared to the same period of the prior year, reflecting the strategic marketing and merchandising investments that we have been making in the Company’s flagship brands.

BloomNet Wire Service -revenues in this segment are derived from membership fees, as well as other product and service offerings to florists. Net revenues increased 6.0% during the three months ended September 29, 2019, compared to the same period of the prior year, primarily due to higher services revenue, including digital directory and transaction fees (driven primarily by increased 1-800-Flowers order volume sent through the network), as well as increasing demand for our expanded line of wholesale products.

Gourmet Food & Gift Baskets – this segment includes the operations of Harry & David, Wolferman’s, Stock Yards, Cheryl’s Cookies, The Popcorn Factory, 1-800-Baskets/DesignPac, and Shari’s Berries (acquired on August 14, 2019). Revenue is derived from the sale of gourmet fruits, cookies, baked gifts, premium chocolates and confections, gourmet popcorn, gift baskets, dipped berries, and prime steaks and chops through the Company’s e-commerce sales channels (telephonic and online sales) and company-owned and operated retail stores under the Harry & David and Cheryl’s brand names, as well as wholesale operations. Net revenues increased 17.7% during the three months ended September 29, 2019, compared to the same period of the prior year primarily due to : (i) strong growth at Harry & David and 1-800-Baskets, driven by everyday gifting, particularly for such occasions as Birthday, Sympathy and Thank You, along with the new “Get-Well” Collection, as well as Harry & David’s Gourmet line, which includes prepared meals and wines for both gifting and entertaining, (ii) strong growth in the DesignPac wholesale business due to a combination of increased demand, and a timing shift of some wholesale gift basket shipments into the quarter, and (iii) the acquisition of Shari’s Berries on August 14, 2019, which contributed approximately $2.0 million of revenue during the quarter. On a comparable basis, excluding Shari’s Berries incremental revenue and the earlier wholesale shipments, adjusted Gourmet Food & Gift Baskets revenues would have increased approximately 9.4% in comparison to the prior year period.

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Gross profit

	Three Months Ended
	September 29, 2019			September 30, 2018			% Change
	(dollars in thousands)
Gross profit	$	76,146		$	68,540			11.1	%
Gross profit %		40.7	%		40.4	%

Gross profit consists of net revenues less cost of revenues, which is comprised primarily of florist fulfillment costs (fees paid directly to florists), the cost of floral and non-floral merchandise sold from inventory or through third parties, and associated costs, including inbound and outbound shipping charges. Additionally, cost of revenues includes labor and facility costs related to direct-to-consumer and wholesale production operations, as well as payments made to sending florists related to order volume sent through the Company’s BloomNet network. 

Gross profit increased 11.1% during the three months ended September 29, 2019, compared to the same period of the prior year, primarily as a result of the increase in revenues noted above. Gross profit percentage increased 30 basis points, reflecting a combination of strategic pricing initiatives and more efficient use of promotional marketing programs, which offset higher costs associated with seasonal labor and tariffs. 

1-800-Flowers.com Consumer Floral segment - Gross profit increased by 8.3% during the three months ended September 29, 2019, compared to the same period of the prior year, as a result of the revenue increases noted above, as well as an increase in gross profit percentage of 60 basis points to 39.7%. The higher gross profit percentage was due to product mix combined with efficient use of promotional pricing programs.

BloomNet Wire Service segment - Gross profit increased by 8.8% during the three months ended September 29, 2019, compared to the same period of the prior year, due to the increase in revenues noted above, as well as an increase in gross profit percentage of 130 basis points to 50.9%. The higher gross profit percentage was due to the impact of sales mix, resulting from increases in higher margin directory and transaction fee revenues.

Gourmet Food & Gift Baskets segment - Gross profit increased by 17.4% during the three months ended September 29, 2019, compared to the same period of the prior year, due to the revenue increase noted above. Gross profit percentage decreased 10 basis points, to 38.0%, primarily due to product mix as a result of the increase in wholesale gift basket shipments.

Marketing and sales expense

	Three Months Ended
	September 29, 2019			September 30, 2018			% Change
	(dollars in thousands)
Marketing and sales	$	56,839		$	52,954			7.3	%
Percentage of net revenues		30.4	%		31.2	%

Marketing and sales expense consists primarily of advertising and promotional expenditures, catalog costs, online portal and search costs, retail store and fulfillment operations (other than costs included in cost of revenues) and customer service center expenses, as well as the operating expenses of the Company’s departments engaged in marketing, selling and merchandising activities. 

Marketing and sales expense increased 7.3% during the three months ended September 29, 2019, compared to the same period of the prior year, primarily due to increased advertising spend within the 1-800-Flowers.com Consumer Floral and Gourmet Food & Gift Baskets segments, as a result of the Company’s incremental marketing efforts designed to accelerate revenue growth and capture market share. Marketing and sales as a percentage of net revenues of 30.4%, decreased from 31.2% in the same period of the prior year, primarily as a result of the timing shift of some wholesale gift basket shipments into the quarter.

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Technology and development expense

	Three Months Ended
	September 29, 2019			September 30, 2018			% Change
	(dollars in thousands)
Technology and development	$	10,803		$	10,279			5.1	%
Percentage of net revenues		5.8	%		6.1	%

Technology and development expense consists primarily of payroll and operating expenses of the Company’s information technology group, costs associated with its websites, including hosting, design, content development and maintenance and support costs related to the Company’s order entry, customer service, fulfillment and database systems.

Technology and development expenses increased 5.1% during the three months ended September 29, 2019, compared to the same period of the prior year, primarily due to increased license and maintenance costs required to support the Company’s technology platform.

General and administrative expense

	Three Months Ended
	September 29, 2019			September 30, 2018			% Change
	(dollars in thousands)
General and administrative	$	21,522		$	20,430			5.3	%
Percentage of net revenues		11.5	%		12.1	%

General and administrative expense consists of payroll and other expenses in support of the Company’s executive, finance and accounting, legal, human resources and other administrative functions, as well as professional fees and other general corporate expenses.

General and administrative expense increased 5.3% during the three months ended September 29, 2019, compared to the same period of the prior year, primarily due to higher labor costs, bad debt expense, and professional fees related to due diligence acquisition related costs.

Depreciation and amortization expense

	Three Months Ended
	September 29, 2019			September 30, 2018			% Change
	(dollars in thousands)
Depreciation and amortization	$	7,635		$	7,843			-2.7	%
Percentage of net revenues		4.1	%		4.6	%

Depreciation and amortization expense during the three months ended September 29, 2019 was slightly favorable in comparison to the prior year.

Interest (income) expense, net

	Three Months Ended
	September 29, 2019		September 30, 2018		% Change
	(dollars in thousands)
Interest expense, net	$	595	$	990		-39.9	%

Interest expense, net consists primarily of interest expense and amortization of deferred financing costs attributable to the Company’s credit facility (See Note 8 - Debt, in Item 1. for details), net of income earned on the Company’s available cash balances.

Interest expense, net decreased 39.9% during the three months ended September 29, 2019, compared to the same period of the prior year, due to higher invested cash balances and associated rates earned on these balances, combined with lower borrowings outstanding on the 2019 Credit Agreement.

Other income (expense), net

	Three Months Ended
	September 29, 2019			September 30, 2018		% Change
	(dollars in thousands)
Other income (expense), net	$	(84	)	$	274		-130.7	%

Other income, net for the three months ended September 29, 2019 consists primarily of investment losses on the Company’s Non-Qualified Deferred Compensation Plan assets, whereas in the prior year, there was a gain $0.3 million. 

Income Taxes

The Company recorded an income tax benefit of $6.1 million during the three months ended September 29, 2019. The Company’s effective tax rate for the three months ended September 29, 2019 was 28.4% compared to 27.1% in the same period of the prior year. The effective rate for fiscal 2020 differed from the U.S. federal statutory rate of 21% due to state income taxes and nondeductible expenses for executive compensation, which were partially offset by various permanent differences and tax credits, including excess tax benefits from stock-based compensation. The effective rate for the three months ended September 30, 2018 differed from the U.S. federal statutory rate of 21%, primarily due to state income taxes and nondeductible expenses for executive compensation, which were partially offset by various tax credits, including excess tax benefits from stock-based compensation, and other permanent differences. At September 29, 2019, the Company has an unrecognized tax benefit, including interest and penalties, of approximately $0.9 million. The Company believes that $0.2 million of unrecognized tax positions will be resolved over the next twelve months.

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Liquidity and Capital Resources

Liquidity and borrowings

The Company's principal sources of liquidity are cash on hand, cash flows generated from operations and borrowings available under the 2019 Credit Agreement (see Note 8 - Debt in Item 1 for details). At September 29, 2019, the Company had working capital of $133.0 million, including cash and cash equivalents of $34.2 million, compared to working capital of $175.7 million, including cash and cash equivalents of $172.9 million, at June 30, 2019. As of September 29, 2019, there were no borrowings outstanding under the Company’s working capital Revolver.

Due to the seasonal nature of the Company’s business, the Thanksgiving through Christmas holiday season, which falls within its second fiscal quarter, generates nearly 50% of the Company’s annual revenues, and all of its earnings. As a result, the Company expects to generate significant cash from operations during its second quarter. In order to fund pre-holiday manufacturing and inventory procurement requirements, the Company will borrow from its Revolver at the beginning of its second quarter. Cash generated during the Holiday selling season will enable the Company to repay all such borrowings before the end of the quarter, with sufficient cash on hand to fund its operations through the second quarter of fiscal 2021.

While we believe that our sources of funding will be sufficient to meet our anticipated operating cash needs for at least the next twelve months, any projections of future cash needs and cash flows are subject to substantial uncertainty. We continually evaluate opportunities to repurchase common stock and we will, from time to time, consider the acquisition of, or investment in, complementary businesses, products, services, capital infrastructure, and technologies, which might affect our liquidity requirements or cause us to require additional financing. 

Cash Flows

Net cash used in operating activities of $112.8 million, for the three months ended September 29, 2019, was primarily attributable to the Company’s net loss during the period, combined with seasonal changes in working capital, including increases in inventory and trade receivables, partially offset by non-cash charges for depreciation and amortization and stock-based compensation.

Net cash used in investing activities of $24.9 million, for the three months ended September 29, 2019, was primarily attributable to the acquisition of Shari’s Berries for $20.5 million and capital expenditures of $4.4 million related to the Company's technology initiatives and Gourmet Food & Gift Baskets segment manufacturing production and warehousing equipment.

Net cash used in financing activities of $1.1 million, for the three months ended September 29, 2019, was primarily due to net bank repayments of $1.3 million, partially offset by $0.2 million in proceeds from exercise of employee stock options.

Stock Repurchase Program

See Item 2 in Part II below for details.

Contractual Obligations

At September 29, 2019, the Company’s contractual obligations consist of:

● Long-term debt obligations - payments due under the Company's 2019 Credit Agreement (see Note 8 - Debt in Item 1 for details).

● Operating lease obligations – payments due under the Company’s long-term operating leases (see Note 13 - Leases in Item 1 for details).

● Purchase commitments - consisting primarily of inventory and IT related equipment purchase orders and license agreements made in the ordinary course of business – see below for the contractual payments due by period.

	Payments due by period
	(in thousands)
	Remaining Fiscal 2020		Fiscal 2021		Fiscal 2022		Fiscal 2023		Fiscal 2024		Thereafter		Total
Purchase commitments	$	62,828	$	4,447	$	2,855	$	1,376	$	-	$	-	$	71,506

Critical Accounting Policies and Estimates

As disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2019, the discussion and analysis of the Company’s financial condition and results of operations are based upon the consolidated financial statements of 1-800-FLOWERS.COM, Inc., which have been prepared in conformity with U.S. generally accepted accounting principles. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Management bases its estimates and assumptions on historical experience and on various other factors that are believed to be reasonable under the circumstances, and management evaluates its estimates and assumptions on an ongoing basis. Actual results may differ from these estimates under different assumptions or conditions. The Company’s most critical accounting policies relate to goodwill, other intangible assets and income taxes. There have been no significant changes to the assumptions and estimates related to the Company’s critical accounting policies, since June 30, 2019, except for the adoption of ASC 842 (see Note 1 - Accounting Policies in Item 1 above for details). 

Recently Issued Accounting Pronouncements 

See Note 1 - Accounting Policies in Item 1 for details regarding the impact of accounting standards that were recently issued on our consolidated financial statements.

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Forward Looking Information and Factors that May Affect Future Results

Our disclosure and analysis in this report contain 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,” “project,” “believe,” “anticipate,” “intend,” “plan,” “foresee,” “likely,” “will,” “goal,” “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 that could cause actual results to differ materially from the results expressed or implied in the forward-looking statements, including:

● the Company’s ability:

o to achieve revenue and profitability;

o to leverage its operating platform and reduce operating expenses;

o to manage the increased seasonality of its business;

o to cost effectively acquire and retain customers;

o to effectively integrate and grow acquired companies;

o to reduce working capital requirements and capital expenditures;

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; and

o to cost effectively manage inventories;

● the outcome of contingencies, including legal proceedings in the normal course of business; and

● general consumer sentiment and economic conditions that may affect levels of discretionary customer purchases of the Company’s products.

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 June 30, 2019 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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk from the effect of interest rate changes.

Interest Rate Risk

The Company’s exposure to market risk for changes in interest rates relates primarily to the Company’s investment of available cash balances and its long-term debt. The Company generally invests its cash and cash equivalents in investment grade corporate and U.S. government securities. Due to the currently low rates of return the Company is receiving on its cash equivalents, the potential for a significant decrease in short-term interest rates is low and, therefore, a further decrease would not have a material impact on the Company’s interest income. Borrowings under the Company’s 2019 Credit Agreement bear interest at a variable rate, plus an applicable margin, and therefore expose the Company to market risk for changes in interest rates. The effect of a 50 basis point increase in current interest rates on the Company’s interest expense would be approximately $0.1 million during the three months ended September 29, 2019.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as of September 29, 2019. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of September 29, 2019.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the Company’s evaluation required by Rules 13a-15(d) or 15d-15(d) of the Securities Exchange Act of 1934 during the quarter ended September 29, 2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Litigation

There are various claims, lawsuits, and pending actions against the Company and its subsidiaries incident to the operations of its businesses. It is the opinion of management, after consultation with counsel, that the ultimate resolution of such claims, lawsuits and pending actions will not have a material adverse effect on the Company's consolidated financial position, results of operations or liquidity.

ITEM 1A. RISK FACTORS.

There were no material changes to the Company’s risk factors as discussed in Part 1, Item 1A-Risk Factors in the Company’s Annual Report on Form 10-K for the year ended June 30, 2019.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The Company has a stock repurchase plan through which purchases can be made from time to time in the open market and through privately negotiated transactions, subject to general market conditions. The repurchase program is financed utilizing available cash. On June 27, 2019, the Company’s Board of Directors authorized an increase to its stock repurchase plan of up to $30.0 million. As of September 29, 2019, $30.0 million remained authorized under the plan.

The following table sets forth, for the months indicated, the Company’s purchase of common stock during the first three months of fiscal 2020, which includes the period July 1, 2019 through September 29, 2019:

Period	Total Number of Shares Purchased		Average Price Paid Per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
	(in thousands, except average price paid per share)
07/01/19 - 07/28/19		-	$	-		-	$	30,000
07/29/19 - 08/25/19		-	$	-		-	$	30,000
08/26/19 – 09/29/19		2,113	$	14.85		2,113	$	29,969
Total		2,113	$	14.85		2,113

(1) Average price per share excludes commissions and other transaction fees.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable. 

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

31.1	Certification of the principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
31.2	Certification of the principal financial officer 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. *
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Document
101.PRE	XBRL Taxonomy Definition Presentation Document

* Filed herewith.

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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, 2019	/s/ Christopher G. McCann       Christopher G. McCann Chief Executive Officer,  Director and President (Principal Executive Officer)
Date:      November 8, 2019	/s/ William E. Shea       William E. Shea Senior Vice President, Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer)

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