1-800-FLOWERS.COM, Inc. (NASDAQ: FLWS), the world’s leading
florist and gift shop, today reported results for its fiscal 2012
fourth quarter and full year. Total revenue from continuing
operations for the year increased 7.6 percent to $716.3 million in
fiscal 2012 and 4.0 percent to $179.6 million in the fiscal fourth
quarter ended July 1, 2012 on a comparable, non-GAAP basis
reflecting results for fiscal 2012 full year which include 52 weeks
compared with 53 weeks in fiscal 2011 and fiscal 2012 fourth
quarter results which include 13 weeks compared with 14 weeks and
the shift of the Easter holiday. On a reported basis, fiscal 2012
revenues grew 6.6 percent and fourth quarter revenues declined 1.4
percent.
Gross profit margin from continuing operations for the year was
41.0 percent, down 20 basis points compared with 41.2 percent in
the prior year. For the fourth quarter, gross margin increased 100
basis points to 41.2 percent, compared with 40.2 percent in the
prior year period. Operating expenses increased $11.2 million
during the year, while operating expense ratio improved 90 basis
points to 38.3 percent of total net sales, compared with 39.2
percent in the prior year. For the quarter, operating expenses
decreased $1.6 million to $71.6 million, compared with $73.3
million in the prior year period, while operating expense ratio
improved by 30 basis points to 39.9 percent, compared with 40.2
percent in the prior year period.
EBITDA* for the year (excluding stock-based compensation expense
of $4.9 million) increased $10.3 million, or 27.6 percent, to $47.6
million, compared with $37.3 million in the prior year. EBITDA for
the fourth quarter (excluding stock-based compensation expense of
$1.1 million) increased $2.3 million, or 38.0 percent, to $8.4
million, compared with $6.1 million in the prior year period. For
the year, net income from continuing operations increased 131.0
percent to $12.7 million, or $0.19* per share compared with $5.5
million or $0.08 per share in the prior year. For the fourth
quarter, net income from continuing operations increased to $1.3
million, or $0.02 per share, compared with a loss of $360,000, or
($0.01) per share in the prior year period. Free Cash Flow* for the
full fiscal year increased $9.0 million, or 65.9 percent, to $22.9
million compared with the prior year. (*EBITDA, Free Cash Flow and
EPS for fiscal 2012 include a pre-tax gain of $3.8 million from the
sale of 17 Fannie May Fine Chocolate company-owned stores to a new
franchisee.)
Jim McCann, CEO of 1-800-FLOWERS.COM, said, “The strong top and
bottom-line results achieved in Fiscal 2012, coming on top of
similarly strong results last year, reflect continued positive
trends in all three of our business segments. We are particularly
pleased with the growth in revenues, gross margin and contribution
margin in our core Consumer Floral business where we see customers
reacting positively to our enhanced marketing efforts – including
our industry leading initiatives in the fast evolving Social and
Mobile channels – as they embrace our truly original product
designs to help them deliver smiles.”
McCann said the Company’s BloomNet wire service continued to
grow its market position during fiscal 2012, achieving double-digit
revenue growth for a second consecutive year as well as more than
10 percent growth in contribution margin. “BloomNet has established
itself as the growth leader in the wire service category with
unsurpassed innovation in the expanded suite of products and
services it offers to help professional florists grow their
businesses.
“In our Gourmet Food and Gift Baskets, we achieved revenue
growth for the year reflecting strong ecommerce growth in our
Cheryl’s, 1-800-Baskets.com and The Popcorn Factory brands,
combined with wholesale channel growth in our Fannie May Fine
Chocolates business, which more than offset the loss of revenues
associated with the sale of 17 Fannie May Fine Chocolate retail
stores, which we completed during the second quarter of the year.
The strategic store sale was part of a 62-store franchise deal that
includes an additional 45 new stores to be opened over the next
three years, significantly accelerating our franchising program for
Fannie May. We believe these franchise stores, in addition to other
franchise agreements already signed or in development, will provide
significant growth opportunities in the future across ecommerce,
retail and wholesale channels for the iconic Fannie May brand,”
said McCann.
McCann also noted that sales and profit margins in the Company’s
Gourmet Food and Gift Basket category were impacted during the
fiscal year by reduced order volumes in wholesale gift baskets.
“Fortunately, based on the improved demand we are now seeing from
the key mass market accounts, we expect to achieve renewed growth
in both revenues and contribution margin in this area in fiscal
2013,” he said.
Category Results:
The Company provides selected financial results for its business
categories in the tables attached to this release and as follows.
Results for the fiscal 2012 full year include 52 weeks compared
with 53 weeks in the prior year; results for the fiscal 2012 fourth
quarter include 13 weeks compared with 14 weeks in the prior year
period as well as the aforementioned impact of the shift of the
Easter holiday.
- Consumer
Floral: full year revenues grew $29.0 million, or 7.9
percent to $398.2 million and fourth quarter revenues grew
approximately $300,000, or 0.3 percent to 124.0 million, compared
with $369.2 million and $123.7 million in the respective prior year
periods. Gross profit margin increased 90 basis points to 38.9
percent for the year and 90 basis points to 39.2 percent for the
fourth quarter, compared with 38.0 percent and 38.3 percent in the
respective prior year periods. The significant improvement in gross
profit margin reflects enhanced product mix, logistics and reduced
promotional marketing programs. Reflecting the higher revenues and
gross margin, category contribution margin increased 19.8 percent
to $39.1 million for the year and 9.8 percent to $12.2 million for
the fourth quarter, compared with $32.7 million and $11.2 million
in the respective prior year periods.
- BloomNet Wire
Service: full year revenues increased $9.3 million, or 12.7
percent to $82.6 million and fourth quarter revenues increased
approximately $400,000, or 1.9 percent to $21.7 million, compared
with $73.3 million and $21.3 million in the respective prior year
periods. Gross profit margin was 46.9 percent for the year and 48.2
percent for the fourth quarter, compared with 50.3 percent and 44.6
percent in the respective prior year periods. The higher gross
margin in the fourth quarter reflects the normalization of gross
margin percentage as the Company leverages its increasing order
volumes. Category contribution margin increased 10.6 percent to
$22.3 million for the year and 23.6 percent to $6.4 million for the
fourth quarter, compared with $20.2 million and $5.2 million in the
respective prior year periods.
- Gourmet Food and
Gift Baskets: full year revenues increased 3.2 percent to
$236.7 million while fourth quarter revenues declined 8.8 percent
to $33.9 million reflecting the shift of the Easter holiday,
compared with $229.4 million and $37.2 million in the respective
prior year periods. Gross profit margin was 42.1 percent for the
year and 43.6 percent for the fourth quarter, compared with 43.1
percent and 43.7 percent in the respective prior year periods.
Gross profit margins for the year and fourth quarter were impacted
by increased commodity costs and shipping fuel surcharges as well
as product mix. Category contribution margin for the year was $26.0
million, excluding the gain on the sale of the 17 retail stores,
and $600,000 for the fourth quarter, compared with $27.8 million
and $1.5 million in the respective prior year periods. Category
contribution margin for the year was impacted by the sale of 17
company-owned Fannie May retail stores as well as weaker
performance in wholesale gift baskets, while fourth quarter
contribution margin was impacted by the shift of the Easter
holiday.
Customer Metrics
In terms of its key customer metrics from continuing operations,
approximately 4.6 million e-commerce customers placed orders during
fiscal 2012, of which 55.8 percent were repeat customers. During
the year, the Company attracted approximately 2.0 million new
customers. For the fiscal fourth quarter, the Company said
approximately 1.6 million e-commerce customers placed orders, with
repeat customers representing 63.7 percent of the total. During the
quarter, the Company attracted approximately 577,000 new e-commerce
customers.
Company Guidance:
For fiscal 2013, the Company said it expects to grow revenues
across all three of its business segments with consolidated revenue
growth for the year anticipated to be in the mid-single-digit
range. Also, based on continued improvements in gross profit margin
and operating leverage, the Company anticipates achieving
double-digit year-over-year increases in EBITDA and EPS.
McCann said, “Our fiscal 2013 guidance is based on the positive
trends – both top and bottom-line – that we have seen in our
business over the past two years, balanced by the continued
uncertainty in the global economy. We plan to continue our focus on
managing those aspects of our business where we can drive growth
and enhanced results, including our:
- merchandising and marketing initiatives
featuring truly original products that have helped us drive
increased average order value and gross profit margins,
- efforts in manufacturing, sourcing and
shipping that have helped absorb rising commodity and fuel costs
and enhanced operating cost leverage, and
- investments in innovation for the
future, including our industry leading efforts in Social and Mobile
arenas, BloomNet and franchising programs in consumer floral and
Fannie May.
We believe these efforts, and others underway, will help us
continue the positive trends we have seen in our business as we
deepen our relationship with our customers, helping them deliver
smiles, and build shareholder value.”
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 The Company presents EBITDA, Adjusted EBITDA from
continuing operations 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 the world’s leading florist and gift
shop. For more than 30 years, 1-800-FLOWERS® (1-800-356-9377 or
www.1800flowers.com) has been helping deliver smiles for our
customers with gifts for every occasion, including fresh flowers
and the finest selection of plants, gift baskets, gourmet foods,
confections, candles, balloons and plush stuffed animals. As
always, our 100% Smile Guarantee backs every gift.
1-800-FLOWERS.COM’s Mobile Flower & Gift Center was named
winner of the Mobile Shopping Summit’s “Best Mobile Site of 2011.”
1-800-FLOWERS.COM was also rated number one vs. competitors for
customer satisfaction by STELLAService and named by the E-Tailing
Group as one of only nine online retailers out of 100 benchmarked
to meet the criteria for Excellence in Online Customer Service.
1-800-FLOWERS.COM has been honored in Internet Retailer’s “Hot 100:
America’s Best Retail Web Sites” for 2011. The Company’s BloomNet®
international floral wire service (www.mybloomnet.net) provides a
broad range of quality products and value-added services designed
to help professional florists grow their businesses profitably. The
1-800-FLOWERS.COM “Gift Shop” also includes gourmet gifts such as
popcorn and specialty treats from The Popcorn Factory®
(1-800-541-2676 or www.thepopcornfactory.com); cookies and baked
gifts from Cheryl’s® (1-800-443-8124 or www.cheryls.com); premium
chocolates and confections from Fannie May® confections brands
(www.fanniemay.com and www.harrylondon.com); gift baskets and
towers from 1-800-Baskets.com® (www.1800baskets.com); delicious
cut-fruit arrangements from FruitBouquets.com
(www.fruitbuquets.com); wine gifts from Winetasting.com®
(www.winetasting.com); ultra- premium meats from Stockyards.com
(www.stockyards.com); as well as exquisite, customizable
invitations and personal stationery from FineStationery.com
(www.finestationery.com). The Company’s Celebrations® brand
(www.celebrations.com) is a new premier online destination for
fabulous party ideas and planning tips. 1-800-FLOWERS.COM, Inc. is
involved in a broad range of corporate social responsibility
initiatives including continuous expansion and enhancement of its
environmentally-friendly “green” programs as well as various
philanthropic and charitable efforts. Shares in 1-800-FLOWERS.COM,
Inc. are traded on the NASDAQ Global Select Market, ticker symbol:
FLWS.
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. Forward-looking statements include, but are not
limited to, statements regarding the Company’s expectations for:
continued market penetration in its BloomNet wire service business,
its ability to build on positive trends including increases in
revenue, gross margin and contribution margin in its Consumer
Floral business; its ability to achieve continued top and bottom
line growth in its BloomNet and Gourmet Food and Gift Baskets
categories; its ability to achieve its guidance for consolidated
revenue growth for the full year in mid-single digit range along
with further improvement in gross profit margin and double-digit
year-over-year increases in EBITDA and EPS. 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,
among others: the Company’s ability to leverage its operating
platform and reduce operating expenses; its ability to grow its
1-800-Baskets.com business; its ability to manage the seasonality
of its businesses; its ability to cost effectively acquire and
retain customers; the outcome of contingencies, including legal
proceedings in the normal course of business; its ability to
compete against existing and new competitors; its ability to manage
expenses associated with sales and marketing and necessary general
and administrative and technology investments; its ability to
reduce promotional activities and achieve more efficient marketing
programs; and general consumer sentiment and economic conditions
that may affect levels of discretionary customer purchases of the
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, Thursday, August 23,
2012 at 11:00 a.m. (EDT). 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 for 48
hours beginning at 2:00 p.m. EDT on the day of the call at:
1-855-859-2056 or 1-404-537-3406; Conference ID: 18445174.
Note: Attached tables are an integral part of this press
release without which the information presented in this press
release should be considered incomplete.
Correction of an Immaterial Error in
the Financial Statements
During the first quarter of fiscal 2013, prior to announcing the
Company's financial results for its fiscal 2012 fourth quarter and
year ended July 1, 2012, certain errors primarily related to the
accounting for deferred tax liabilities on non-amortizable
intangibles arising from historical acquisitions prior to fiscal
2007 were identified. These errors in purchase price allocation
subsequently impacted the goodwill impairment charge recorded by
the Company in fiscal 2009. In connection with this review, the
Company also identified an issue related to the treatment of
deferred tax liabilities on basis differences related to fixed
assets which were recorded in error during fiscal years 2009 and
prior.
The Company is in the final stages of its review of this matter,
and expects that it will result in a prior period adjustment to
increase net income, and thus, decrease the retained deficit by
approximately $1.2 million on the June 28, 2009 Consolidated
Statements of Stockholders' Equity, with a corresponding adjustment
to goodwill by approximately $7.6 million and deferred tax
liabilities by approximately $6.4 million. The Company believes
this prior period adjustment is qualitatively and quantitatively
immaterial to the respective balances adjusted and will have no
impact on the 2012, 2011 or 2010 statements of operations or cash
flows. Correcting prior year financial statements for these
immaterial errors will not require previously filed reports to be
amended and as such the Company will correct the error by making
adjustments to prior comparative period financial information
beginning with its Annual Report on Form 10-K for the year ended
July 1, 2012.
1-800-FLOWERS.COM, Inc. and
Subsidiaries
Condensed Consolidated Balance
Sheets
(In thousands)
July 1,
2012
July 3,
2011
Assets Current assets: Cash and equivalents $ 28,854
$ 21,442 Receivables, net 14,968 11,916 Inventories 55,744 51,185
Deferred tax assets 5,698 5,416 Prepaid and other 11,082 8,871
Current assets of discontinued operations 100 3,506
Total current assets $ 116,446 102,336 Property, plant and
equipment, net 48,669 49,908 Goodwill 41,277 39,348 Other
intangibles, net 41,838 41,748 Deferred tax assets 7,516 16,943
Other assets 7,875 5,204 Non-current assets of discontinued
operations - 2,738 Total assets $ 263,621 $ 258,225
Liabilities and stockholders’ equity Current
liabilities: Accounts payable and accrued expenses $ 70,154 $
66,878
Current maturities of long-term debt and
obligations under
capital leases
15,756 16,488 Current liabilities of discontinued operations
110 956 Total current liabilities $ 86,020 84,322
Long-term debt and obligations under capital leases 13,500 29,250
Other liabilities 3,580 2,884 Non-current liabilities of
discontinued operations - 109 Total liabilities
103,100 116,565 Total stockholders’ equity
160,521 141,660 Total liabilities and stockholders’ equity $
263,621 $ 258,225
1-800-FLOWERS.COM, Inc. and
Subsidiaries
Selected Financial Information
Consolidated Statements of
Operations
(In thousands, except for per share
data)
Three Months Ended
Year Ended July 1,
2012
July 3,
2011
July 1,
2012
July 3,
2011
Net revenues: E-commerce (combined online and telephonic) $
139,095 $ 142,060 $ 515,205 $ 485,378 Other 40,461
40,093 201,052 186,227
Total net revenues 179,556 182,153 716,257 671,605
Cost of revenues 105,524 108,920
422,298 395,161 Gross profit 74,032
73,233 293,959 276,444 Operating expenses: Marketing and
sales 48,612 49,915 182,512 173,531 Technology and development
5,227 5,529 20,479 20,168 General and administrative 12,915 12,807
51,972 49,360 Depreciation and amortization 4,871
4,999 19,576 20,271
Total operating expenses 71,625 73,250 274,539 263,330
Gain on sale of stores - -
3,789 - Operating income (loss)
2,407 (17 ) 23,209 13,114 Interest expense, net (322
) (756 ) (2,312 ) (4,077 )
Income (loss) from continuing operations
before income tax
2,085 (773 ) 20,897 9,037 Income tax expense (benefit) from
continuing operations 830 (413 ) 8,148
3,517 Income (loss) from continuing operations
1,255 (360 ) 12,749 5,520 Income (loss) from discontinued
operations, net of tax - 352 (22 ) 202 Gain on sale of discontinued
operations, net of tax 200 200 -
4,542 - Income from discontinued operations
200 352 4,520 202
Net income (loss) $ 1,455 ($8 ) $
17,269 $ 5,722
Basic net income (loss) per common
share
From continuing operations $ 0.02 ($0.01 ) $ 0.20 $ 0.09 From
discontinued operations 0.00 0.01
0.07 0.00 Net income (loss) per common
share $ 0.02 $ 0.00 $ 0.27 $ 0.09
Diluted net income (loss) per common
share
From continuing operations $ 0.02 ($0.01 ) $ 0.19 $ 0.08 From
discontinued operations 0.00 0.01
0.07 0.00 Net income (loss) per common
share $ 0.02 $ 0.00 $ 0.26 $ 0.09
Weighted average shares used in the
calculation of net
income (loss) per common share
Basic 64,741 64,135 64,697
64,001 Diluted 66,381
64,135 66,239 65,153
1-800-FLOWERS.COM, Inc. and
Subsidiaries
Selected Financial Information
Consolidated Statements of Cash
Flows
(In thousands)
Year Ended July 1,
2012
July 3,
2011
Operating activities Net income $ 17,269 $ 5,722
Reconciliation of net income to net cash provided by operations:
Operating activities of discontinued operations 1,931 (814 ) Gain
on sale of discontinued operations (8,733 ) - Depreciation and
amortization 19,576 20,271 Amortization of deferred financing costs
457 474 Deferred income taxes 8,167 2,262 Bad debt expense 930
1,537 Stock based compensation 4,850 3,961 Excess tax
(benefit)/expense from stock based compensation 123 419 Other
non-cash items 42 27 Receivables (3,438 ) (1,174 ) Inventories
(4,041 ) (5,443 ) Prepaid and other (2,190 ) (1,868 ) Accounts
payable and accrued expenses 2,656 6,334 Other assets 1,629 (748 )
Other liabilities 947 (235 )
Net
cash provided by operating activities $ 40,175 $ 30,725
Investing activities Acquisitions, net of cash acquired
(4,336 ) (4,310 ) Proceeds from sale of business 12,823 - Capital
expenditures (17,304 ) (16,890 ) Purchase of investment (3,945 )
(268 ) Other, net (119 ) 100 Investing activities of discontinued
operations - (127 )
Net cash used in investing
activities
(12,881 ) (21,495 )
Financing activities Acquisition of
treasury stock (3,277 ) (454 ) Excess tax benefit/(expense) from
stock based compensation (123 ) (419 ) Proceeds from excise of
employee stock options - 49 Proceeds from bank borrowings 56,000
40,000 Repayment of notes payable and bank borrowings (71,000 )
(52,750 ) Debt issuance cost - (17 ) Repayment of capital lease
obligations (1,482 ) (2,040 )
Net cash used
in financing activities (19,882 ) (15,631 )
Net change in cash and equivalents 7,412 (6,401 ) Cash and
equivalents: Beginning of period 21,442 27,843
End of period $ 28,854 $ 21,442
1-800-FLOWERS.COM, Inc. and
Subsidiaries
Selected Financial Information
Category Information
(in thousands)
Three Months Ended
Year Ended July 1,
2012
July 3,
2011
% Change
July 1,
2012
July 3,
2011
% Change
Net revenues from continuing operations: Consumer
Floral $ 124,017 $ 123,681 0.3 % $ 398,184 $ 369,199 7.9 % BloomNet
Wire Service 21,745 21,339 1.9 % 82,582 73,282 12.7 % Gourmet Food
& Gift Baskets 33,913 37,187 -8.8 % 236,742 229,390 3.2 %
Corporate (*) 198 295 -32.9 773 1,150 -32.8 % Intercompany
eliminations (317 ) (349 ) 9.2 % (2,024 )
(1,416 ) -42.9 %
Total net revenues from continuing
operations $ 179,556 $ 182,153 -1.4 % $ 716,257
$ 671,605 6.6 %
Three Months Ended Year Ended July 1,
2012
July 3,
2011
% Change
July 1,
2012
July 3,
2011
% Change
Gross profit from continuing operations: Consumer
Floral $ 48,634 $ 47,310 2.8 % $ 154,892 $ 140,163 10.5 % 39.2 %
38.3 % 38.9 % 38.0 % BloomNet Wire Service 10,483 9,515 10.2
% 38,737 36,877 5.0 % 48.2 % 44.6 % 46.9 % 50.3 % Gourmet
Food & Gift Baskets 14,783 16,259 -9.1 % 99,764 98,831 0.9 %
43.6 % 43.7 % 42.1 % 43.1 % Corporate (*) 132 66.7 % 149
50.5 % -11.4 % 566 73.2 % 573 49.8 % -1.3 %
Total gross profit from continuing operations $
74,032 $ 73,233 1.1 % $ 293,959 $ 276,444
6.3 % (41.2 %) (40.2 %) (41.0 %)
(41.2 %) Three
Months Ended Year Ended
July 1,
2012
July 3,
2011
% Change
July 1,
2012
July 3,
2011
% Change
Adjusted EBITDA from
continuing operations,
excluding stock-based
compensation:
Category Contribution
Margin (**)
Consumer Floral $ 12,248 $ 11,156 9.8 % $ 39,147 $ 32,669 19.8 %
BloomNet Wire Service 6,414 5,188 23.6 % 22,339 20,195 10.6 %
Gourmet Food & Gift Baskets (***) 601
1,454 -58.7 % 29,789 27,776 7.2
%
Category Contribution
Margin Subtotal
19,263 17,798 8.2 % 91,275 80,640 13.2 % Corporate (*)
(11,985 ) (12,816 ) 6.5 % (48,490 ) (47,255 )
-2.6 %
EBITDA, from
continuing operations
7,278 4,982 46.1 % $ 42,785 $ 33,385 28.2 % Add: Stock-based
compensation 1,114 1,101 1.2 %
4,850 3,961 22.4 %
EBITDA, excluding
stock-based compensation
8,392 6,083 38.0 % $ 47,635 $ 37,346 27.6 % Less: Gain on sale of
stores (***) - - - 3,789
- -
Adjusted EBITDA from
continuing operations,
excluding stock-based
compensation
$
8,392
$
6,083
38.0
%
$
43,846
$
37,346
17.4
%
1-800-FLOWERS.COM, Inc. and
Subsidiaries
Selected Financial Information
Category Information
(in thousands)
Three Months Ended
Years Ended
July 1,
2012
July 3,
2011
July 1,
2012
July 3,
2011
Reconciliation of net income
from
continuing operations to EBITDA
and
adjusted EBITDA from continuing
operations, less stock-based
compensation:
Net income from continuing operations $ 1,255 ($360 ) $ 12,749 $
5,520 Add: Interest expense, net 322 756 2,312 4,077 Depreciation
and amortization 4,871 4,999 19,576 20,271 Income tax expense 830 -
8,148 3,517 Less: Income tax benefit - 413
- -
EBITDA from continuing operations $ 7,278
$ 4,982 42,785 33,385 Add: Stock-based
compensation 1,114 1,101 4,850
3,961
EBITDA, excluding stock-based compensation 8,392 6,083
47,635 37,346 Less: Gain on sale of stores (***) - -
3,789 -
Adjusted EBITDA from continuing
operation, excluding stock
based
compensation
$
8,392
$
6,083
$
43,846
$
37,346
(*) Corporate expenses consist of the Company’s
enterprise shared service cost centers, and include, among other
items, Information Technology, Human Resources, Accounting and
Finance, Legal, Executive and Customer Service Center functions, as
well as Stock-Based Compensation. In order to leverage the
Company’s infrastructure, these functions are operated under a
centralized management platform, providing support services
throughout the organization. The costs of these functions, other
than those of the Customer Service Center, which are allocated
directly to the above categories based upon usage, are included
within corporate expenses as they are not directly allocable to a
specific category. (**)
Performance is measured based on category
contribution margin or category Adjusted EBITDA, reflecting only
the direct controllable revenue and operating expenses of the
categories. As such, management’s measure of profitability for
these categories does not include the effect of corporate overhead,
described above, depreciation and amortization, other income (net),
nor does it include one-time charges. 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 have to be replaced
in the future, and EBITDA does not reflect any cash requirements
for such capital expenditures. Because of these limitations, EBITDA
should only be used on a supplemental basis combined with GAAP
results when evaluating the Company's performance.
(***) GFGB category contribution margin during the year
ended July 1, 2012, includes a $3.8 million gain on the sale of 17
Fannie May retail stores, which are currently being operated as
franchised locations.
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