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 ~~December 31, 2017~~March 29, 2020

~~___~~__ 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~~ (Zip code)	(~~Registrant~~’sRegistrant’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 ~~and posted on its corporate Website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period that the registrant was required to submit ~~and post~~ 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~~		☑ Accelerated filer
☐ Non-accelerated filer		☐ ~~Non-accelerated filer (Do not check if a smaller reporting company)~~	☐ 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~~’sRegistrant’s classes of common stock as of ~~February 2, 2018:~~May 1, 2020:

Class A common stock:	~~35,969,913~~ 35,739,913
Class B common stock:	~~28,567,063~~ 28,542,823

Table of Contents

1-800-FLOWERS.COM, Inc.

FORM 10-Q

For the quarterly period ended March 29, 2020

TABLE OF CONTENTS

		Page
Part I.	Financial Information
Item 1.	Condensed Consolidated Financial Statements		1
	Condensed Consolidated Balance Sheets – ~~December 31, 2017~~March 29, 2020 (Unaudited) and ~~July 2, 2017~~June 30, 2019		1
	Condensed Consolidated Statements of Income (Loss) (Unaudited) – Three ~~and Six~~ ~~Months Ended~~ ~~December 31, 2017~~and ~~January 1, 2017~~Nine Months Ended March 29, 2020 and March 31, 2019		2
	Condensed Consolidated Statements of Comprehensive Income(Loss) (Unaudited) – Three and ~~Six Months~~Nine Months Ended ~~December 31, 2017~~March 29, 2020 and ~~January 1, 2017~~March 31, 2019		3
	Condensed Consolidated Statements of ~~Cash Flows~~Stockholder’s Equity (Unaudited) – ~~Six Months Ended~~ ~~December 31, 2017~~Three and ~~January 1, 2017~~Nine Months Ended March 29, 2020 and March 31, 2019		4
	Condensed Consolidated Statements of Cash Flows (Unaudited) – Nine Months Ended March 29, 2020 and March 31, 2019		5
	Notes to Condensed Consolidated Financial Statements (Unaudited)		56
Item 2.	~~Management~~’sManagement’s Discussion and Analysis of Financial Condition and Results of Operations		1615
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		3124
Item 4.	Controls and Procedures		3125

Part II.	Other Information
Item 1.	Legal Proceedings		3225
Item 1A.	Risk Factors		3225
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		3326
Item 3.	Defaults upon Senior Securities		3326
Item 4.	Mine Safety Disclosures		3326
Item 5.	Other Information		3326
Item 6.	Exhibits		3427

Signatures			3528

Table of Contents

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)

December 31, 2017

July 2, 2017

(unaudited)

Assets

Current assets:

Cash and cash equivalents
$ 232,589 $ 149,732
Trade receivables, net
44,424 14,073
Inventories
60,567 75,862
Prepaid and other
22,007 17,735
Total current assets
359,587 257,402

Property, plant and equipment, net
154,606 161,381
Goodwill
62,590 62,590
Other intangibles, net
60,460 61,090
Other assets
11,520 10,007
Total assets
$ 648,763 $ 552,470

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable
$ 55,252 $ 27,781
Accrued expenses
123,504 90,206
Current maturities of long-term debt
8,625 7,188
Total current liabilities
187,381 125,175

Long-term debt
97,545 101,377
Deferred tax liabilities
21,530 33,868
Other liabilities
11,565 9,811
Total liabilities
318,021 270,231

Commitments and contingencies (Note 13)

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, 51,879,967 and 51,227,779 shares issued at December 31, 2017 and July 2, 2017, respectively
519 513
Class B common stock, $0.01 par value, 200,000,000 shares authorized, 33,847,063 and 33,901,603 shares issued at December 31, 2017 and July 2, 2017, respectively
338 339
Additional paid-in-capital
339,805 337,726
Retained earnings
90,115 32,638
Accumulated other comprehensive loss
(160
)
(187
)
Treasury stock, at cost, 15,877,054 and 14,709,731 Class A shares at December 31, 2017 and July 2, 2017, respectively, and 5,280,000 Class B shares at December 31, 2017 and July 2, 2017
(99,875
)
(88,790
)
Total stockholders’ equity
330,742 282,239
Total liabilities and stockholders’ equity
$ 648,763 $ 552,470

March 29, 2020

June 30, 2019

(unaudited)
Assets

Current assets:

Cash and cash equivalents
$ 232,115 $ 172,923
Trade receivables, net
26,217 12,374
Inventories
74,037 92,361
Prepaid and other
21,312 25,580
Total current assets
353,681 303,238

Property, plant and equipment, net
166,399 166,681
Operating lease right-of-use assets
70,284 -
Goodwill
74,711 62,590
Other intangibles, net
66,500 59,615
Other assets
17,054 14,316
Total assets
$ 748,629 $ 606,440

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable
$ 37,314 $ 25,704
Accrued expenses
116,815 96,793
Current maturities of long-term debt
5,000 5,000
Current portion of long-term operating lease liabilities
9,524 -
Total current liabilities
168,653 127,497

Long-term debt
88,648 91,973
Long-term operating lease liabilities
64,251 -
Deferred tax liabilities
27,300 28,898
Other liabilities
11,766 15,361
Total liabilities
360,618 263,729

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, 53,702,810 and 53,084,127 shares issued at March 29, 2020 and June 30, 2019, respectively
537 530
Class B common stock, $0.01 par value, 200,000,000 shares authorized, 33,822,823 shares issued at March 29, 2020 and June 30, 2019
338 338
Additional paid-in-capital
356,038 349,319
Retained earnings
157,749 108,525
Accumulated other comprehensive loss
(252
)
(269
)
Treasury stock, at cost, 17,962,897 and 17,209,093 Class A shares at March 29, 2020 and June 30, 2019, respectively, and 5,280,000 Class B shares at March 29, 2020 and June 30, 2019
(126,399

)
(115,732

)
Total stockholders’ equity
388,011 342,711
Total liabilities and stockholders’ equity
$ 748,629 $ 606,440

See accompanying Notes to Condensed Consolidated Financial ~~Statements~~Statements..

Table of Contents

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

Condensed Consolidated Statements of Income (Loss)

(in thousands, except for per share data)

(unaudited)

												Three Months Ended						Nine Months Ended
	Three Months Ended					Six Months Ended						March 29, 2020			March 31, 2019			March 29, 2020		March 31, 2019
	December 31, 2017			January 1, 2017		December 31, 2017			January 1, 2017
Net revenues	$	526,093		$	554,553	$	683,442		$	720,382		$	278,776		$	248,413		$	1,071,681	$	989,225
Cost of revenues		290,834			297,559		380,905			392,001			171,324			150,893			618,911		568,338
Gross profit		235,259			256,994		302,537			328,381			107,452			97,520			452,770		420,887
Operating expenses:
Marketing and sales		113,771			119,876		163,493			174,954			78,606			71,163			262,849		243,781
Technology and development		9,175			9,849		18,845			19,337			11,900			11,511			34,436		32,696
General and administrative		19,170			21,551		38,575			43,484			20,031			22,447			64,187		64,480
Depreciation and amortization		8,677			9,167		16,761			17,164			7,803			7,028			23,268		22,840
Total operating expenses		150,793			160,443		237,674			254,939			118,340			112,149			384,740		363,797
Operating income		84,466			96,551		64,863			73,442
Interest expense, net		1,226			2,154		2,257			3,605
Operating income (loss)													(10,888	)		(14,629	)		68,030		57,090
Interest (income) expense, net													147			(30	)		1,727		2,390
Other (income) expense, net		(86	)		1		(346	)		(149	)		2,605			(1,285	)		1,714		(293	)
Income before income taxes		83,326			94,396		62,952			69,986
Income tax expense		12,627			31,467		5,475			22,828
Net income	$	70,699		$	62,929	$	57,477		$	47,158
Income (loss) before income taxes													(13,640	)		(13,314	)		64,589		54,993
Income tax expense (benefit)													(3,983	)		(5,073	)		15,365		11,922
Net income (loss)												$	(9,657	)	$	(8,241	)	$	49,224	$	43,071

Basic net income per common share	$	1.09		$	0.97	$	0.89		$	0.72
Basic net income (loss) per common share												$	(0.15	)	$	(0.13	)	$	0.76	$	0.67

Diluted net income per common share	$	1.06		$	0.93	$	0.86		$	0.70
Diluted net income (loss) per common share												$	(0.15	)	$	(0.13	)	$	0.74	$	0.65

Weighted average shares used in the calculation of net income per common share:
Weighted average shares used in the calculation of net income (loss) per common share:
Basic		64,601			65,172		64,778			65,112			64,348			64,194			64,517		64,383
Diluted		66,782			67,754		67,037			67,778			64,348			64,194			66,378		66,456

See accompanying Notes to Condensed Consolidated Financial ~~Statements~~Statements..

Table of Contents

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

Condensed Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

(unaudited)

Three Months Ended

Six Months Ended

December 31, 2017

January 1, 2017

December 31, 2017

January 1, 2017

Net income
$ 70,699 $ 62,929 $ 57,477 $ 47,158
Other comprehensive income/(loss) (currency translation & other miscellaneous items)
26 (14 ) 27 81
Comprehensive income
$ 70,725 $ 62,915 $ 57,504 $ 47,239

Three Months Ended

Nine Months Ended

March 29, 2020

March 31, 2019

March 29, 2020

March 31, 2019

Net income (loss)
$ (9,657
)
$ (8,241
)
$ 49,224 $ 43,071
Other comprehensive income (loss) (currency translation & other miscellaneous items)
1 3 17 (58
)
Comprehensive income (loss)
$ (9,656
)
$ (8,238
)
$ 49,241 $ 43,013

See accompanying Notes to Condensed Consolidated Financial ~~Statements~~Statements.

Table of Contents

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

Condensed Consolidated Statements of Stockholders' Equity

(in thousands, except share data)

(unaudited)

Three Months Ended March 29, 2020 and March 31, 2019

Common Stock

Additional

Retained

Accumulated

Total

Class A
Class B

Paid-in

Earnings

Other
Treasury Stock
Stockholders’

Shares
Amount

Shares

Amount

Capital

(Deficit)

Comprehensive Loss

Shares

Amount

Equity

Balance at December 29, 2019
53,678,919 $ 536 33,822,823 $ 338 $ 353,643 $ 167,406 $ (253
)
22,859,956 $ (120,762
)
$ 400,908
Net loss
- - - - - (9,657
)
- - - (9,657
)
Translation adjustment
- - - - - - 1 - - 1
Stock-based compensation
23,891 1 - - 2,395 - - - - 2,396
Acquisition of Class A treasury stock
- - - - - - - 382,941 (5,637
)
(5,637
)
Balance at March 29, 2020
53,702,810 $ 537 33,822,823 $ 338 $ 356,038 $ 157,749 $ (252
)
23,242,897 $ (126,399
)
$ 388,011

Balance at December 30, 2018
52,749,203 $ 527 33,822,823 $ 338 $ 344,769 $ 125,071 $ (261
)
22,383,738 $ (114,371
)
$ 356,073
Net loss
- - - - - (8,241
)
- - - (8,241
)
Translation adjustment
- - - - - - 3 - - 3
Stock-based compensation
1,924 - - - 1,903 - - - - 1,903
Exercise of stock options
180,000 1 - - 563 - - - - 564
Acquisition of Class A treasury stock
- - - - - - - 105,355 (1,360
)
(1,360
)
Balance at March 31, 2019
52,931,127 $ 528 33,822,823 $ 338 $ 347,235 $ 116,830 $ (258
)
22,489,093 $ (115,731
)
$ 348,942

Nine Months Ended March 29, 2020 and March 31, 2019
Common Stock
Additional

Retained

Accumulated

Total

Class A
Class B

Paid-in

Earnings

Other

Treasury Stock

Stockholders’

Shares
Amount

Shares

Amount

Capital

(Deficit)

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 income
- - - - - 49,224 - - - 49,224
Translation adjustment
- - - - - - 17 - - 17
Stock-based compensation
468,683 5 - - 6,436 - - - - 6,441
Exercise of stock options
150,000 2 - - 283 - - - - 285
Acquisition of Class A treasury stock
- - - - - - - 753,804 (10,667
)
(10,667
)
Balance at March 29, 2020
53,702,810 $ 537 33,822,823 $ 338 $ 356,038 $ 157,749 $ (252
)
23,242,897 $ (126,399
)
$ 388,011

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 income
- - - - - 43,071 - - - 43,071
Translation adjustment
- - - - - - (58
)
- - (58
)
Stock-based compensation
411,600 4 - - 4,527 - - - - 4,531
Exercise of stock options
448,234 4 - - 925 - - - - 929
Other
- - - - - 330 - - - 330
Acquisition of Class A treasury stock
- - - - - - - 1,230,303 (14,765
)
(14,765
)
Balance at March 31, 2019
52,931,127 $ 528 33,822,823 $ 338 $ 347,235 $ 116,830 $ (258
)
22,489,093 $ (115,731
)
$ 348,942
See accompanying Notes to Condensed Consolidated Financial Statements.

4
3
Table of Contents

1-800-FLOWERS.COM, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

Six months ended

Nine months ended

December 31, 2017

January 1, 2017

March 29, 2020

March 31, 2019

Operating activities:

Net income
$ 57,477 $ 47,158 $ 49,224 $ 43,071
Reconciliation of net income to net cash provided by operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization
16,761 17,164 23,268 22,840
Amortization of deferred financing costs
480 1,050 486 671
Deferred income taxes
(12,338
)
(1,380
)
(1,597 ) 811
Bad debt expense
418 656 1,201 1,018
Stock-based compensation
2,069 3,498 6,441 4,531
Other non-cash items
(103
)
(400
)
(23 ) (301 )
Changes in operating items:

Trade receivables
(30,769
)
(39,399
)
(15,044 ) (7,249 )
Inventories
15,295 9,916 19,353 14,448
Prepaid and other
(4,272
)
(3,215
)
3,148 2,675
Accounts payable and accrued expenses
69,269 75,304 31,442 14,741
Other assets
(97
)
(35
)
Other liabilities
(24
)
(324
)
Other assets and liabilities
(557 ) (251 )
Net cash provided by operating activities
114,166 109,993 117,342 97,005

Investing activities:

Working capital adjustment related to sale of business
(8,500
)
-
Acquisitions, net of cash acquired
(20,500 ) -
Capital expenditures, net of non-cash expenditures
(8,864
)
(13,253
)
(22,282 ) (16,845 )
Purchase of equity investments
(1,176 ) -
Net cash used in investing activities
(17,364
)
(13,253
)
(43,958 ) (16,845 )

Financing activities:

Acquisition of treasury stock
(11,085
)
(6,822
)
(10,667 ) (14,765 )
Proceeds from exercise of employee stock options
15 267 285 929
Proceeds from bank borrowings
30,000 181,000 20,000 30,000
Repayment of bank borrowings
(32,875
)
(183,563
)
Debt issuance costs
- (1,456
)
Repayment of notes payable and bank borrowings
(23,750 ) (37,187 )
Debt issuance cost
(60 ) -
Net cash used in financing activities
(13,945
)
(10,574
)
(14,192 ) (21,023 )

Net change in cash and cash equivalents
82,857 86,166 59,192 59,137
Cash and cash equivalents:

Beginning of period
149,732 27,826 172,923 147,240
End of period
$ 232,589 $ 113,992 $ 232,115 $ 206,377

See accompanying Notes to Condensed Consolidated Financial ~~Statements~~Statements..

5
4
Table of Contents

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,~~1-800-FLOWERS.COM, Inc. and ~~subsidiaries~~Subsidiaries (the “Company”) in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q10-Q and Article 10 of Regulation S-X. ~~They~~S-X. Accordingly, they do not include all of the information and notes required by ~~generally accepted accounting principles~~GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring ~~accruals)~~adjustments) considered necessary for a fair presentation have been included. Operating results for the three and ~~six~~nine month periods ended ~~December 31, 2017~~ March 29, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending ~~July 1, 2018.~~ ~~For further information, refer to the consolidated~~June 28, 2020. These financial statements ~~and footnotes thereto included~~should be read in ~~the Company’s annual report~~conjunction with our Annual Report on Form 10-K10-K for the fiscal year ended ~~July 2, 2017.~~June 30, 2019, which provides a more complete understanding of our accounting policies, financial position, operating results and other matters.

The ~~Company~~’sCompany’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, ~~is expected to generate~~generates nearly 50% of the Company’s annual revenues, and all of its earnings. ~~Additionally, due to~~As a result of 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 ~~in comparison~~compared to its fiscal first quarter. ~~In fiscal~~ ~~2017,~~ ~~Easter was on~~ ~~April~~ ~~16th,~~ ~~which resulted in the shift of some revenue and EBITDA from the Company’s~~ ~~third~~ ~~quarter of fiscal~~ ~~2016.~~ ~~In fiscal~~ ~~2018,~~ ~~Easter falls on~~ ~~April~~ ~~1st,~~ ~~which will result in the shift of all Easter-related revenue and EBITDA into the Company’s~~ ~~third~~ ~~quarter of fiscal~~ ~~2018.~~

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.

~~Recent Accounting Pronouncements~~COVID-19

In ~~May 2014,~~ On March 27, 2020, the ~~FASB issued ASU~~ ~~No.~~~~2014~~-~~09,~~ ~~“Revenue from Contracts with Customers.” This amended guidance will enhance the comparability of revenue recognition practices~~Coronavirus Aid, Relief, and ~~will be applied~~Economic Security (“CARES”) Act was signed into law. The CARES Act provides a substantial stimulus and assistance package intended to all contracts with customers. Expanded disclosures related to the nature, amount, timing, and uncertainty of revenue that is recognized are requirements under the amended guidance. As we continue to evaluateaddress the impact of ~~this ASU, we have determined that~~ the ~~new standard will impact the following areas: the costs of producing~~COVID-19 pandemic, including tax relief and ~~distributing the Company’s catalogs will be expensed upon mailing, instead of being capitalized~~government loans, grants and amortized in direct proportion to the actual sales; gift card breakage will be estimated based on the historical pattern of gift card redemption, rather than when redemption is considered remote; the Company will defer revenue at the time the Celebrations Reward loyalty points are earned using a relative fair value approach, rather than accruing a liability equal to the incremental cost of fulfilling its obligations. We have further identified the timing of revenue recognition for e-commerce orders (shipping point versus destination) as a potential issue in our analysis, which is ~~not~~ ~~expected to change the total amount of revenue recognized, but could accelerate the timing of when revenue is recognized. We plan to adopt this guidance beginning with the~~ ~~first~~ ~~quarter in the fiscal year ending~~ ~~June 30, 2019,~~ on a retrospective basis, with a cumulative adjustment to retained earnings. We are continuing to evaluate the impact that this ASU, and related amendments and interpretive guidance, will have on our consolidated financial statements, including the related disclosures.
In ~~July 2015,~~ ~~the FASB issued ASU~~ ~~No.~~~~2015~~-~~11,~~ ~~“Inventory (Topic~~ ~~330~~~~).”~~investments. The pronouncement was issued to simplify the measurement of inventory and changes the measurement from lower of cost or market to lower of cost and net realizable value. The Company adopted this standard effective ~~July 3, 2017.~~ ~~The adoption of ASU~~ ~~2015~~-11CARES Act did not have a ~~significant impact on the Company’s consolidated financial position or results of operations.~~
5
~~Table of Contents~~
In ~~January 2016,~~ ~~the FASB issued ASU~~ ~~No.~~~~2016~~-~~01,~~ ~~"Financial Instruments~~ – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities." The pronouncement requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset, and eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. This guidance will become effective for the Company's fiscal year ending ~~June 30, 2019.~~ ~~The adoption is~~ ~~not~~ ~~expected to have a significant~~material impact on the Company’s consolidated financial statements during the three months and nine months ended March 29, 2020.
The Company is closely monitoring the impact of the pandemic of the novel strain of coronavirus ("COVID-19") on its business, including how it will affect its customers, workforce, suppliers, vendors, franchisees, florists, and production and distribution channels, as well as its financial statements. The extent to which COVID-19 impacts the Company’s business and financial results will depend on numerous evolving factors including, but not limited to: the magnitude and duration of COVID-19, the extent to which it will impact macroeconomic conditions including interest rates, employment rates and consumer confidence, the speed of the anticipated recovery, and governmental, business and individual consumer reactions to the pandemic. The Company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company and the unknown future impacts of COVID-19 as of March 29, 2020 and through the date of this report. The accounting matters assessed included, but were not limited to, the Company’s allowance for doubtful accounts and credit losses, inventory and related reserves and the carrying value of goodwill and other long-lived assets. While there was not a material impact to the Company’s consolidated financial statements as of and for the quarter ended March 29, 2020, the Company’s future assessment of these factors and the evolving factors described above, could result in material impacts to the Company’s consolidated financial statements in future reporting periods.
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, $0.5 million and $16.4 million was recognized as revenue during the three and nine months ended March 29, 2020. The deferred revenue balance as of March 29, 2020 was $28.6 million.
6
Table of Contents
Recently Issued Accounting Pronouncements - Adopted

In February 2016, the FASB issued ASU No.~~2016~~-~~02,~~ 2016-02, “Leases (Topic ~~842~~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. ~~This guidance is~~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 ~~Company’s fiscal year ending~~ ~~June 28, 2020.~~ ~~We are currently evaluating the impact and expect the ASU will have~~new standard had a material impact ~~on our consolidated financial statements, primarily~~ to the ~~consolidated balance sheets and related disclosures.~~
In ~~March 2016,~~ ~~the FASB issued ASU~~ ~~No.~~~~2016~~-~~09,~~ ~~“Improvements~~Company’s Consolidated Balance Sheets, but no impact to ~~Employee Share-Based Payment Accounting.” ASU~~ ~~No.~~~~2016~~-09 ~~affects all entities that issue share-based payment awards to their employees. ASU~~ ~~No.~~~~2016~~-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The Company elected to early adopt the amendments in ASU ~~2016~~-~~09,~~ ~~in fiscal~~ ~~2017.~~ ~~As a result, stock-based compensation excess tax benefits are reflected in~~ the Consolidated Statements of Income as a component of the provision for income taxes, whereas they were previously recognized in equity. This change resulted in the recognition of excess tax benefits against income tax expenses, rather than additional paid-in capital, of ~~$1.0~~ ~~million for the year ended~~ ~~July 2, 2017.~~ ~~There was~~ no ~~impact on earnings per share since approximately~~ ~~700,000~~ ~~tax benefit shares for the year ended~~ ~~July 2, 2017,~~ ~~previously associated with the APIC pool calculation, are~~ no ~~longer considered in the diluted share computation. Additionally, our~~(Operations) or Consolidated Statements of Cash ~~Flows now~~Flows. As such, we recorded operating lease liabilities of $80.7 million, based on the present ~~excess tax benefits as an operating activity. This change has been applied prospectively in accordance with the ASU and prior periods have~~ ~~not~~ been adjusted. Further, the Company has elected to account for forfeitures as they occur, rather than estimate expected forfeitures. The cumulative effect of this change, which was recorded as compensation expense in fiscal ~~2017,~~ ~~was~~ ~~not~~ ~~material to the financial statements. In addition, this ASU allows entities to withhold an amount up to an employees’ maximum individual statutory tax rate in the relevant jurisdiction, up from the minimum statutory requirement, without resulting in liability classification~~value of the ~~award. We adopted this change on~~remaining minimum rental payments using discount rates as of the effective date, and a ~~modified retrospective basis, with~~ no impact to our consolidated financial statements. Finally, this ASU clarified that the cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a financing activity. This change does ~~not~~ ~~have an impact~~corresponding right-of-use assets of $78.7 million based on the ~~Company’s consolidated financials as it conforms with its current practice.~~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,~~ 2016-13, “Financial Instruments-Credit Losses (Topic ~~326~~)326): Measurement of Credit Losses on Financial Instruments.” ASU ~~2016~~-132016-13 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~~’sentity’s assumptions, models and methods for estimating expected credit losses. ASU ~~2016~~-132016-13 is effective for the Company’s fiscal ~~year ending~~ ~~July 4,~~ 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.

Goodwill – Impairment Test. In ~~June 2016,~~ January 2017, the FASB issued ASU ~~2016~~-~~15,~~ ~~“Statement of Cash Flows (Topic~~ ~~230~~~~), a consensus of the FASB’s Emerging Issues Task Force.” ASU~~ ~~2016~~-15 ~~is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The ASU is effective for the Company’s fiscal year ending~~ ~~June 30, 2019,~~ and interim periods within those fiscal years. Early adoption is permitted, including interim periods within those fiscal years. An entity that elects early adoption must adopt all of the amendments in the same period. The guidance requires application using a retrospective transition method. The adoption is ~~not~~ ~~expected to have a significant impact on the Company’s consolidated financial statements.~~
In ~~January 2017,~~ ~~the FASB issued ASU~~ No.~~2017~~-~~01,~~ ~~"Business Combinations (Topic~~ ~~805~~~~): Clarifying the Definition of a Business (ASU~~ ~~2017~~-01~~)," which revises the definition of a business and provides new guidance in evaluating when a set of transferred assets and activities is a business. ASU~~ ~~2017~~-01 ~~is effective for the Company's fiscal year ending~~ ~~June 30, 2019,~~ ~~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.~~
6
~~Table of Contents~~
In ~~January 2017,~~ ~~the FASB issued ASU~~ ~~No.~~~~2017~~-~~04,~~ 2017-04, "Intangibles - Goodwill and Other (Topic ~~350~~)350): Simplifying the Test for Goodwill Impairment," which eliminates step two from the goodwill impairment test. Under ASU ~~2017~~-~~04,~~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~~’sCompany’s fiscal ~~year ending~~ ~~July 4,~~ 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.

In ~~February 2017,~~ ~~the FASB issued~~ ~~ASU~~ ~~No.~~~~2017~~-~~05,~~ “Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets.” This update clarifies the scope of accounting for the derecognition or partial sale of nonfinancial assets to exclude all businesses and nonprofit activities. ASU ~~2017~~-05 ~~also provides a definition for in-substance nonfinancial assets and additional guidance on partial sales of nonfinancial assets. This guidance will be effective for the Company’s fiscal year ending~~ ~~June 30, 2019~~ ~~and~~ ~~may~~ ~~be applied retrospectively. The Company is currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.~~
In ~~May 2017,~~ ~~the FASB issued ASU~~ No~~2017~~-~~09,~~ ~~“Compensation - Stock Compensation (Topic~~ ~~718~~): Scope of Modification Accounting.” This ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. An entity would ~~not~~ ~~apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. ASU~~ ~~2017~~-09 ~~is effective for the Company's fiscal year ending~~ ~~June 30, 2019,~~ with early adoption permitted, and should be applied prospectively to an award modified on or after the adoption date. The Company is currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.
~~U.S. Tax Reform~~
On ~~December 22, 2017,~~ ~~the U.S. government~~ enacted significant changes to the U.S. tax law following the passage and signing of the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act revises the future ongoing U.S. corporate income tax by, among other things, lowering U. S. corporate income tax rates ~~from~~ ~~35%~~ to ~~21%.~~ ~~As the Company’s fiscal year ends on~~ ~~July 1, 2018,~~ ~~the lower corporate income tax rate will be phased in, resulting in a U.S. statutory federal rate of approximately~~ ~~28%~~ ~~for the current fiscal year and~~ ~~21%~~ ~~for subsequent fiscal years. The Tax Act also eliminates the domestic production activities deduction and introduces limitations on certain business expenses and executive compensation deductions. See~~ ~~Note~~ 11 ~~– Income taxes~~ ~~for the impact of the Tax Act on the Company’s financial statements.~~
On ~~December 22, 2017,~~ ~~the SEC issued guidance under Staff Accounting Bulletin~~ ~~No.~~~~118,~~ ~~Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB~~ ~~118”~~~~) directing taxpayers to consider the impact of the Tax Act as “provisional” when it does~~ ~~not~~ ~~have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the change in tax law.~~ ~~The changes in the Tax Act are broad and complex. The final impacts of the Tax Act~~ ~~may~~ differ from the Company’s estimates due to, among other things, changes in interpretations of the Tax Act, further legislation related to the Tax Act, changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates to estimates the Company has utilized to calculate the impacts of the Tax Act. The Securities Exchange Commission has issued rules that would allow for a measurement period of up to ~~one~~ ~~year after the enactment date of the Tax Act to finalize the related tax impacts.~~
7
~~Table of Contents~~

Note 2– Net Income(Loss) Per Common Share

The following table sets forth the computation of basic and diluted net income (loss) per common share:

Three Months Ended

Six Months Ended

Three Months Ended

Nine Months Ended

December 31, 2017

January 1, 2017

December 31, 2017

January 1, 2017

March 29, 2020

March 31, 2019

March 29, 2020

March 31, 2019

(in thousands, except per share data)

(in thousands, except per share data)

Numerator:

Net income
$ 70,699 $ 62,929 $ 57,477 $ 47,158
Net income (loss)
$ (9,657 ) $ (8,241
)
$ 49,224 $ 43,071

Denominator:

Weighted average shares outstanding
64,601 65,172 64,778 65,112 64,348 64,194 64,517 64,383
Effect of dilutive securities:

Employee stock options
1,549 1,526 1,528 1,503 - - 1,035 1,444
Employee restricted stock awards
632 1,056 731 1,163 - - 826 629
2,181 2,582 2,259 2,666 - - 1,861 2,073

Adjusted weighted-average shares and assumed conversions
66,782 67,754 67,037 67,778 64,348 64,194 66,378 66,456

Net income per common share

Net income (loss) per common share

Basic
$ 1.09 $ 0.97 $ 0.89 $ 0.72 $ (0.15
)
$ (0.13
)
$ 0.76 $ 0.67
Diluted
$ 1.06 $ 0.93 $ 0.86 $ 0.70 $ (0.15
)
$ (0.13
)
$ 0.74 $ 0.65


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-K10-K for the fiscal year ended ~~July 2, 2017,~~ 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

Six Months Ended

Three Months Ended

Nine Months Ended

December 31, 2017

January 1, 2017

December 31, 2017

January 1, 2017

March 29, 2020

March 31, 2019

March 29, 2020

March 31, 2019

(in thousands)

(in thousands)

Stock options
$ 107 $ 113 $ 215 $ 227 $ 6 $ 67 $ 99 $ 250
Restricted stock
861 1,611 1,854 3.271 2,390 1,836 6,342 4,281
Total
968 1,724 2,069 3,498 2,396 1,903 6,441 4,531
Deferred income tax (expense) benefit
206 438 592 1,141
Deferred income tax benefit
594 328 1,597 982
Stock-based compensation expense, net
$ 762 $ 1,286 $ 1,477 $ 2,357 $ 1,802 $ 1,575 $ 4,844 $ 3,549

7
Table of Contents
Stock-based compensation is recorded within the following line items of operating expenses:

Three Months Ended

Six Months Ended

Three Months Ended

Nine Months Ended

December 31, 2017

January 1, 2017

December 31, 2017

January 1, 2017

March 29, 2020

March 31, 2019

March 29, 2020

March 31, 2019

(in thousands)

(in thousands)

Marketing and sales
$ 258 $ 495 $ 556 $ 1,042 $ 1,097 $ 830 $ 2,960 $ 1,816
Technology and development
51 96 111 196 181 118 473 274
General and administrative
659 1,133 1,402 2,260 1,118 955 3,008 2,441
Total
$ 968 $ 1,724 $ 2,069 $ 3,498 $ 2,396 $ 1,903 $ 6,441 $ 4,531
8
~~Table of Contents~~

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

Stock Options

The following table summarizes stock option activity during the~~six~~ nine months ended ~~December 31, 2017:~~March 29, 2020:

Options

Weighted Average
Exercise Price

Weighted Average Remaining Contractual Term (years)

Aggregate Intrinsic Value (000s)

Outstanding at July 2, 2017
2,127,734 $ 2.42
Granted
- $ -
Exercised
(4,000 ) $ 3.71
Forfeited
(17,500
)
$ 9.83
Outstanding at December 31, 2017
2,106,234 $ 2.36 3.4 $ 17,573

Options vested or expected to vest at December 31, 2017
2,106,234 $ 2.36 3.4 $ 17,573
Exercisable at December 31, 2017
1,707,234 $ 2.27 3.3 $ 14,389

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
(150,000
)
$ 1.90
Forfeited
- $ -
Outstanding at March 29, 2020
1,215,000 $ 2.55 1.5 $ 12,550

Exercisable at March 29, 2020
1,215,000 $ 2.55 1.5 $ 12,550

As of ~~December 31, 2017,~~ March 29, 2020, the total future compensation cost related to non-vested options, not yet recognized in the statement of income, was ~~$0.6~~$0.0 million and the weighted average period over which these awards are expected to be recognized was ~~1.5~~0.0 years.

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 ~~six~~nine months ended ~~December 31, 2017:~~March 29, 2020:

Shares

Weighted Average Grant Date Fair Value

Shares

Weighted Average Grant Date Fair Value

Non-vested at July 2, 2017
1,352,873 $ 7.44
Non-vested at June 30, 2019
1,438,592 $ 10.81
Granted
881,473 $ 9.47 736,555 $ 13.09
Vested
(593,648
)
$ 7.76 (468,683
)
$ 10.37
Forfeited
(628,946
)
$ 9.50 (59,816
)
$ 12.54
Non-vested at December 31, 2017
1,011,752 $ 7.74
Non-vested at March 29, 2020
1,646,648 $ 11.89

The fair value of non-vested shares is determined based on the closing stock price on the grant date. As of ~~December 31, 2017~~,March 29, 2020, there was ~~$5.8~~$12.2 million of total unrecognized compensation cost related to non-vested restricted stock-based compensation to be recognized over the weighted-average remaining period of ~~2.2~~1.9 years.

8
9
Table of Contents

Note 4– ~~Disposition~~Acquisition
Acquisition of Shari’s Berries

On ~~March 15, 2017,~~ August 14, 2019, the Company ~~and Ferrero International S.A.~~completed its acquisition of the Shari’s Berries business ("Shari's Berries"), a ~~Luxembourg corporation (“Ferrero”), entered into~~leading provider of dipped berries and other specialty treats, through a ~~Stock Purchase Agreement (the “Purchase Agreement”) pursuant to which Ferrero~~ ~~agreed to purchase from the Company all~~bankruptcy proceeding of certain assets of the ~~outstanding equity~~gourmet food business of ~~Fannie~~ ~~May~~ ~~Confections Brands,~~the FTD Companies, Inc.~~, including its subsidiaries, Fannie~~ ~~May~~ ~~Confections, Inc. and Harry London Candies, Inc. (“Fannie~~ ~~May”)~~ The transaction, for a ~~total consideration~~purchase price of ~~$115.0~~$20.5 million, ~~in cash, subject to adjustment for seasonal working capital. The working capital adjustment was finalized in~~ ~~August 2017,~~ ~~resulting in an~~ ~~$11.4~~ ~~million reduction to~~included the ~~purchase price. The resulting gain on sale~~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 ~~$14.6~~ ~~million, is included within “Other (income) expense, net” in the Company’s consolidated statements of income in the~~ ~~fourth~~ ~~quarter of fiscal year~~ ~~2017.~~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 ~~Ferrero also entered into a transition services agreement whereby~~this may result in potential adjustments to the ~~Company~~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 ~~provide certain post-closing services~~be allocated to ~~Ferrero~~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 ~~Fannie~~ ~~May~~ $12.1 million was assigned to goodwill, which is expected to be deductible for ~~a period~~tax purposes. The goodwill recognized in conjunction with our acquisition of ~~approximately~~ 18 ~~months,~~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 ~~business~~preliminary allocation of ~~Fannie~~ ~~May,~~ ~~and a commercial agreement with respect~~the purchase price to the ~~distribution~~estimated fair values of ~~certain Ferrero~~assets acquired and ~~Fannie~~ ~~May~~ ~~products.~~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 ~~Fannie~~ ~~May~~ the Shari’s Berries brand are reflected in the ~~Company~~’sCompany’s consolidated financial statements ~~through~~ ~~May 30, 2017,~~ from the date of ~~its disposition,~~acquisition, within ~~its~~the Gourmet ~~Food~~Foods & Gift Baskets segment. ~~During fiscal~~ ~~2017,~~ ~~Fannie~~ ~~May~~ ~~contributed net revenues~~Pro forma results of ~~$85.6~~ ~~million. Operating and pre-tax income during such period were~~ 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~~’sCompany’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:

December 31, 2017

July 2, 2017

March 29, 2020

June 30, 2019

(in thousands)

(in thousands)

Finished goods
$ 26,853 $ 34,476 $ 32,361 $ 36,820
Work-in-process
4,559 11,933 10,332 17,535
Raw materials
29,155 29,453 31,344 38,006
Total inventory
$ 60,567 $ 75,862 $ 74,037 $ 92,361
9
Table of Contents

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 December 31, 2017 and July 2, 2017
$ 17,441 $ - $ 45,149 $ 62,590

1-800-Flowers.com Consumer Floral

BloomNet
Wire Service

Gourmet Foods &
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 March 29, 2020
$ 17,441 $ - $ 57,270 $ 74,711
10
~~Table of Contents~~

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

December 31, 2017

July 2, 2017

March 29, 2020

June 30, 2019

Amortization Period

Gross Carrying Amount

Accumulated Amortization

Net

Gross Carrying Amount

Accumulated Amortization

Net

Amortization Period

Gross Carrying Amount

Accumulated Amortization

Net

Gross Carrying Amount

Accumulated Amortization

Net

(in years)

(in thousands)

(in years)

(in thousands)

Intangible assets with determinable lives:

Intangible assets with determinable lives

Investment in licenses
14-16 $ 7,420 $ 5,990 $ 1,430 $ 7,420 $ 5,937 $ 1,483 14-16 $ 7,420 $ 6,227 $ 1,193 $ 7,420 $ 6,148 $ 1,272
Customer lists
3-10 12,184 8,840 3,344 12,184 8,227 3,957 2-10 12,825 10,299 2,526 12,184 9,798 2,386
Other
5-14 2,946 2,102 844 2,946 2,045 901 5-14 2,946 2,356 590 2,946 2,280 666
Total intangible assets with determinable lives
22,550 16,932 5,618 22,550 16,209 6,341 23,191 18,882 4,309 22,550 18,226 4,324

Trademarks with indefinite lives
54,842 - 54,842 54,749 - 54,749 62,191 - 62,191 55,291 - 55,291

Total identifiable intangible assets
$ 77,392 $ 16,932 $ 60,460 $ 77,299 $ 16,209 $ 61,090 $ 85,382 $ 18,882 $ 66,500 $ 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: ~~remainde~~rremainder of fiscal ~~2018~~2020 - ~~$0.6~~$0.3 million, fiscal ~~2019~~2021 - ~~$0.7~~$0.9 million, fiscal ~~2020~~2022 - ~~$0.6~~$0.6 million, fiscal ~~2021~~2023 - ~~$0.6~~$0.5 million, fiscal ~~2022~~2024 - ~~$0.5~~$0.5 million and thereafter - ~~$2.6million.~~$1.5 million.

Note 7– Investments

~~The Company has certain~~Equity 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,~~without 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~~ ~~$0.6~~ ~~million as of~~ ~~December 31, 2017~~ ~~and~~ ~~$1.0~~ ~~million as of~~ ~~July 2, 2017,~~ ~~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~~ ~~and~~ ~~six~~ ~~months ended~~ ~~December 31, 2017~~ ~~and~~ ~~January 1, 2017~~ ~~was less than~~ ~~$0.1~~ ~~million. During the quarter ended~~ ~~December 31, 2017,~~ ~~Flores Online entered into a share exchange agreement with Isabella Flores, whereby among other changes, the Company exchanged~~ 5% ~~of its interest in Flores Online for a~~ 5% ~~interest in Isabella Flores. This new investment of approximately~~ ~~$0.1~~ ~~million is currently being accounted as a cost method investment and is immaterial to the financial statements. In conjunction with this share exchange, the Company determined that the~~readily determinable fair value ~~of its investment in Flores Online was below its carrying value and that this decline was other-than-temporary. As a result, the Company recorded an impairment charge of~~ ~~$0.2~~ ~~million, which is included within the “Other (income) expense, net” line item in the Company’s consolidated statement of income during the quarter ended~~ ~~December 31, 2017.~~
Investments in non-marketable equity instruments of private companies, where the Company does not possess the ability to exercise significant influence, are accounted for ~~under the cost method. Cost method investments are originally recorded~~ at cost, ~~and~~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~~’sCompany’s consolidated balance sheets. The aggregate carrying amount of the Company’s cost method investments was ~~$1.8~~$2.8 million as of ~~December 31, 2017~~ March 29, 2020 and ~~$1.7~~$1.6 million as of ~~July 2, 2017.~~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).

11
~~Table of Contents~~

Note 8 –Debt

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

December 31, 2017

July 2, 2017

(in thousands)

March 29, 2020

June 30, 2019

(in thousands)

Revolver (1)
$ - $ - $ - $ -
Term Loan (1)
109,250 112,125 96,250 100,000
Deferred financing costs
(3,080
)
(3,560
)
(2,602
)
(3,027
)
Total debt
106,170 108,565 93,648 96,973
Less: current debt
8,625 7,188 5,000 5,000
Long-term debt
$ 97,545 $ 101,377 $ 88,648 $ 91,973

(1) On ~~December 23, 2016,~~ ~~the Company entered into an Amended and Restated Credit Agreement (the~~ ~~“2016~~ ~~Amended Credit Agreement”) with JPMorgan Chase Bank as administrative agent, and a group of lenders. The~~ ~~2016~~ ~~Amended Credit Agreement amended and restated the Company’s credit agreement dated as of~~ ~~September 30, 2014 (~~~~the~~ ~~“2014~~ ~~Agreement”) to, among other things, extend the maturity date of its~~ ~~$115.0~~ ~~million outstanding term loan ("Term Loan") and revolving credit facility (the "Revolver") to~~ ~~December 23, 2021.~~ ~~The Term Loan is payable in~~ 19 ~~quarterly installments of principal and interest beginning on~~ ~~April 2, 2017,~~ ~~with escalating principal payments, at the rate of~~ 5% ~~in year one,~~ ~~7.5%~~ ~~in year two,~~ ~~10%~~ ~~in year three,~~ ~~12.5%~~ ~~in year four, and~~ ~~15%~~ ~~in year five, with the remaining balance of~~ ~~$61.8~~ ~~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.~~
(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 ~~2016~~ ~~Amended~~2019 Credit Agreement, the Company may elect that such borrowing bear interest at an annual rate equal to ~~either (~~1)either: (1) a base rate plus an applicable margin varying ~~from~~~~0.75%~~ to ~~1.5%,~~ based on the Company’s consolidated leverage ratio, where the base rate is the highest of (a) the prime rate, (b) the ~~highest of the federal funds rate and the overnight bank funding rate as published by the~~ New York ~~Fed,~~fed bank rate plus 0.5% and (c) a LIBOR rate plus 1% or (2) an adjusted ~~LIBO rate, plus~~ 1% ~~or (~~2~~) an adjusted LIBO~~LIBOR rate plus an applicable margin varying ~~from~~ ~~1.75%~~ to ~~2.5%,~~ based on the Company’s consolidated leverage ratio. The ~~2016~~ ~~Amended~~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~~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 ~~December 31, 2017.~~ March 29, 2020. The ~~2016~~ ~~Amended~~2019 Credit Agreement is secured by substantially all of the assets of the ~~Company and the Subsidiary Guarantors.~~Company.

Future principal payments under th~~e term loan~~the Term Loan are as follows: ~~$4.4~~$1.25 million – remainder of fiscal ~~2018,~~~~$10.1~~2020, $5.0 million – fiscal ~~2019,~~~~$12.9~~2021, $10.0 million - fiscal 2022, $10.0 million – fiscal ~~2020,~~~~$15.8~~2023 and $70.0 million ~~- fiscal~~ ~~2021,~~ ~~and~~ ~~$66.1~~ – fiscal ~~2022.~~
2024.
10
12
Table of Contents

Note 9 - Property, Plant and Equipment

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

December 31, 2017

July 2, 2017

(in thousands)

March 29, 2020

June 30, 2019

(in thousands)

Land
$ 30,789 $ 30,789 $ 30,789 $ 30,789
Orchards in production and land improvements
10,773 9,703 11,701 11,339
Building and building improvements
57,803 56,791 60,512 59,236
Leasehold improvements
12,305 11,950 14,182 13,861
Production equipment and furniture and fixtures
48,889 47,293 64,461 61,415
Computer and telecommunication equipment
46,890 45,026 54,664 53,694
Software
123,001 119,177 144,746 132,078
Capital projects in progress - orchards
9,114 9,971 12,489 9,902
Property, plant and equipment, gross
339,564 330,700 393,544 372,314
Accumulated depreciation and amortization
(184,958
)
(169,319
)
(227,145
)
(205,633
)
Property, plant and equipment, net
$ 154,606 $ 161,381 $ 166,399 $ 166,681


~~Not~~e 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:

Level1

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.
13
~~Table of Contents~~

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)

Carrying Value

Fair Value Measurements
Assets (Liabilities)

Level 1

Level 2

Level 3

Level 1

Level 2

Level 3

(in thousands)

(in thousands)

Assets (liabilities) as of December 31, 2017:

As of March 29, 2020:

Trading securities held in a “rabbi trust” (1)
$ 8,693 $ 8,693 $ - $ - $ 11,360 $ 11,360 $ - $ -
Total assets (liabilities) at fair value
$ 11,360 $ 11,360 $ - $ -
$ 8,693 $ 8,693 $ - $ -

Assets (liabilities) as of July 2, 2017:

As of June 30, 2019:

Trading securities held in a “rabbi trust” (1)
$ 6,916 $ 6,916 $ - $ - $ 11,816 $ 11,816 $ - $ -
$ 6,916 $ 6,916 $ - $ -
Total assets (liabilities) at fair value
$ 11,816 $ 11,816 $ - $ -

(1)(1)
The Company has established ~~a Non-qualified Deferred Compensation~~an NQDC Plan for certain members of senior management. Deferred compensation plan assets are invested in mutual funds held in a “rabbi ~~trust”~~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~~’sCompany’s effective tax rate from operations for the three and ~~six~~nine months ended ~~December 31, 2017~~ March 29, 2020 was ~~15.2%~~29.2% and ~~8.7%~~23.8% respectively, compared to ~~33.3%~~38.1% and ~~32.6%~~21.7% in the same periods of the prior year. The effective tax rates for fiscal ~~2018~~ ~~were impacted by changes associated with the Tax Act (see~~ ~~Note~~ 1 -~~Accounting Policies~~ ~~above). During the quarter ended~~ ~~December 31, 2017,~~ ~~the Company recognized a benefit of~~ ~~$15.9~~ ~~million, or~~ ~~$0.24~~ ~~per diluted share related to the impact of the Tax Act, consisting of a discrete tax benefit of~~ ~~$12.2~~ ~~million, or~~ ~~$0.18~~ ~~per diluted share, reflecting a revaluation of deferred tax liabilities at the lower U.S. federal statutory rate of~~ ~~21%,~~2020 and ~~a benefit of~~ ~~$3.7~~ ~~million, or~~ ~~$0.06~~ ~~per diluted share, reflecting the Company’s lower transitional federal tax rate in~~ fiscal ~~2018~~ of ~~28.0~~ ~~percent. In addition, fiscal~~ ~~2018~~ ~~effective rates were impacted by state income taxes, which were partially offset by various permanent differences and tax credits. The effective rates for fiscal~~ ~~2017~~2019 differed from the U.S. federal statutory rate of 21% due to state income taxes ~~which were more than~~and nondeductible expenses for executive compensation, partially offset by various permanent differences and tax credits, including excess tax benefits ~~on stock based compensation as a result of the Company’s adoption of ASU~~ ~~2016~~-~~09.~~from stock-based compensation.

The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions, and various foreign countries. The Company ~~completed~~is currently undergoing its ~~audit by the Internal Revenue Service~~U.S. federal examination for fiscal ~~year~~ ~~2014,~~2017, however, fiscal ~~years~~ ~~2015~~ ~~and~~ ~~2016~~ ~~remain~~year 2018 remains subject to U.S. federal examination. Due to ongoing state examinations and ~~non-conformity~~nonconformity with the U.S. federal statute of limitations for assessment, certain states remain open from fiscal ~~2012.~~ ~~The Company commenced operations in foreign jurisdictions in~~ ~~2012.~~2015. The Company's foreign income tax filings from fiscal 2014 are open for examination by its respective foreign tax ~~authorities.~~authorities, mainly Canada, Brazil, and the United Kingdom.

The ~~Company��s~~Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. At ~~December 31, 2017,~~ March 29, 2020, the Company has an unrecognized tax benefit, including ~~an immaterial amount of~~ accrued interest and penalties, of approximately ~~$0.4~~$0.9 million. The Company believes that no ~~significant~~$0.2 million of unrecognized tax positions will be resolved over the next twelve months.

11
14
Table of Contents


Note12 – Business Segments

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

•1-~~800~~~~-Flowers.com~~     1-800-Flowers.com Consumer Floral,
•     BloomNet Wire Service, and
•     Gourmet ~~Food and~~Foods & 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~~’smanagement’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.~~compensation. Assets and liabilities are reviewed at the consolidated level by management and not accounted for by segment.

Three Months Ended

Nine Months Ended

March 29, 2020

March 31, 2019

March 29, 2020

March 31, 2019

Net Revenues:

(in thousands)

Segment Net Revenues:

1-800-Flowers.com Consumer Floral
$ 152,620 $ 144,821 $ 359,104 $ 338,003
BloomNet Wire Service
30,414 28,185 81,576 75,613
Gourmet Foods & Gift Baskets
95,906 75,445 631,705 575,966
Corporate
112 263 472 845
Intercompany eliminations
(276
)
(301
)
(1,176
)
(1,202
)
Total net revenues
$ 278,776 $ 248,413 $ 1,071,681 $ 989,225

Operating Income (Loss):

Segment Contribution Margin:

1-800-Flowers.com Consumer Floral
$ 15,439 $ 15,364 $ 34,853 $ 32,667
BloomNet Wire Service
10,025 9,480 27,516 25,375
Gourmet Foods & Gift Baskets
(6,275
)
(7,202
)
100,512 89,191
Segment Contribution Margin Subtotal
19,189 17,642 162,881 147,233
Corporate (a)
(22,274
)
(25,243
)
(71,583
)
(67,303
)
Depreciation and amortization
(7,803
)
(7,028
)
(23,268
)
(22,840
)
Operating income (loss)
$ (10,888
)
$ (14,629
)
$ 68,030 $ 57,090
(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

Six Months Ended

Net Revenues:

December 31, 2017

January 1, 2017

December 31, 2017

January 1, 2017

(in thousands)

Segment Net Revenues:

1-800-Flowers.com Consumer Floral
$ 100,064 $ 97,808 $ 176,674 $ 173,023
BloomNet Wire Service
20,375 20,502 40,139 41,466
Gourmet Food & Gift Baskets
405,964 436,870 466,950 506,684
Corporate
317 316 587 579
Intercompany eliminations
(627
)
(943
)
(908
)
(1,370
)
Total net revenues
$ 526,093 $ 554,553 $ 683,442 $ 720,382

Three Months Ended

Three Months Ended

March 29, 2020

March 31, 2019

Consumer Floral

BloomNet Wire Service

Gourmet Foods & Gift Baskets

Consolidated

Consumer Floral

BloomNet Wire Service
Gourmet Foods & Gift Baskets
Consolidated

(in thousands)
Net revenues

E-commerce
$ 150,491 $ - $ 81,360 $ 231,851 $ 142,552 $ - $ 61,810 $ 204,362
Retail
1,166 - 5,030 6,196 1,189 - 5,727 6,916
Wholesale
- 10,801 9,516 20,317 - 9,321 7,908 17,229
BloomNet services
- 19,613 - 19,613 - 18,864 - 18,864
Other
963 - - 963 1,080 - - 1,080
Corporate
- - - 112 - - - 263
Eliminations
- - - (276
)
- - - (301
)
Net revenues
$ 152,620 $ 30,414 $ 95,906 $ 278,776 $ 144,821 $ 28,185 $ 75,445 $ 248,413

Nine months ended

Nine months ended

March 29, 2020

March 31, 2019

Consumer Floral

BloomNet Wire Service

Gourmet Foods & Gift Baskets

Consolidated

Consumer Floral

BloomNet Wire Service

Gourmet Foods & Gift Baskets

Consolidated

(in thousands)
Net revenues

E-commerce

$
353,436

$
-

$
494,549

$
847,985

$
332,302

$
-

$
448,581

$
780,883

Retail

3,187

-

35,640

38,827

3,113

-

38,477

41,590

Wholesale

-

26,819

101,516

128,335

-

23,247

88,908

112,155

BloomNet services

-

54,757

-

54,757

-

52,366

-

52,366

Other

2,481

-

-

2,481

2,588

-

-

2,588

Corporate

-

-

-

472

-

-

-

845

Eliminations

-

-

-

(1,176
)

-

-

-

(1,202
)
Net revenues

$
359,104

$
81,576

$
631,705

$
1,071,681

$
338,003

$
75,613

$
575,966

$
989,225

12

Three Months Ended

Six Months Ended

Operating Income:

December 31, 2017

January 1, 2017

December 31, 2017

January 1, 2017

(in thousands)

Segment Contribution Margin:

1-800-Flowers.com Consumer Floral
$ 10,791 $ 13,128 $ 17,762 $ 21,309
BloomNet Wire Service
7,692 8,189 14,393 15,468
Gourmet Food & Gift Baskets
93,496 104,624 88,509 95,320
Segment Contribution Margin Subtotal
111,979 125,941 120,664 132,097
Corporate (a)
(18,836
)
(20,223
)
(39,040
)
(41,491
)
Depreciation and amortization
(8,677
)
(9,167
)
(16,761
)
(17,164
)
Operating income
$ 84,466 $ 96,551 $ 64,863 $ 73,442
Table of Contents
~~(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.~~

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.
Additional information related to our leases is as follows:

Three Months Ended

Nine Months Ended

March 29, 2020

March 29, 2020

(in thousands)

Lease costs:

Operating lease costs
$ 3,384 $ 10,690
Variable lease costs
3,679 11,565
Short-term lease cost
1,013 5,983
Sublease income
(243
)
(721
)
Total lease costs
$ 7,833 $ 27,517

Nine Months Ended

March 29, 2020

(in thousands)

Cash paid for amounts included in measurement of operating lease liabilities
$ 9,014
Right-of-use assets obtained in exchange for new operating lease liabilities
$ 178
March 29, 2020
(in thousands)
Weighted-average remaining lease term - operating leases
9.5 years
Weighted-discount rate - operating leases
3.8
%
Maturities of lease liabilities in accordance with ASC 842 as of March 29, 2020 are as follows (in thousands):
Remainder of 2020
$ 3,195
2021
11,683
2022
10,313
2023
9,905
2024
9,455
Thereafter
44,897
Total Future Minimum Lease Payments
89,448
Less Imputed Remaining Interest
15,673
Total
$ 73,775
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
13
Table of Contents
Note 14 – Commitments and Contingencies

Litigation

~~There~~Bed Bath & Beyond:
On April 1, 2020, Bed Bath & Beyond Inc. (“Bed Bath”) commenced an action against the Company in the Court of Chancery for the State of Delaware, which is captioned Bed Bath & Beyond Inc. v. 1-800-Flowers.com, et ano., C.A. (the “Complaint”), alleging a breach of the Equity Purchase Agreement (the “Agreement”), dated February 14, 2020, between Bed Bath, PersonalizationMall.com, LLC (“Personalization Mall”), the Company and a subsidiary of the Company (the “Purchaser”) pursuant to which Bed Bath agreed to sell to Purchaser, and the Purchaser agreed to purchase from Bed Bath, all of the issued and outstanding membership interests of Personalization Mall. The action was initiated after the Company requested a reasonable delay in the closing under the Agreement due to the unprecedented circumstances created by the COVID-19 pandemic. The Complaint requests an order of specific performance to consummate the transaction under the Agreement plus attorney’s fees and costs in connection with the action. The Company filed its answer to the Complaint on April 17, 2020 and an order governing expedited proceedings was approved on April 9, 2020 that sets a trial date for late September. The Company intends to vigorously defend itself against this lawsuit and no assurance can be given as to the ultimate outcome of this matter. At this time the proceedings are in the very early stages, and we are unable to determine or estimate the amount of possible loss or range of loss.
In addition, 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~~final 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~~liquidity.

Note 15 –Subsequent Event-Closure of Harry & David Retail Stores
On April 14, 2020, the Company made the strategic decision to permanently close 38 of its 39 Harry & David branded stores, which had previously been closed on a temporary basis due to COVID-19, in accordance with state and local regulations. This will result in a charge within the range of $4.0 - $5.0 million in our fourth quarter for lease obligations, employee costs and other store closure costs.
14
15
Table of Contents

ITEM 2~~. MANAGEMENT~~’S2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
~~Forward Looking Statements~~

This ~~“Management~~’s“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.~~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~~Results,” under Part I, Item 1A, of the Company’s Annual Report on Form 10-K, for the year ended June 30, 2019under the heading “Risk ~~Factors.~~Factors” and Part II-Other Information, Item 1A in this Form 10-Q.
Overview

1-800-FLOWERS.COM, Inc. and its ~~subsidiarie~~ssubsidiaries (collectively, the “Company”) is a leading provider of gifts ~~for all celebratory occasions.~~designed to help customers express, connect and celebrate. For ~~the past~~more than 40 years, 1-800-Flowers.com® has been ~~helping deliver~~delivering smiles to customers with agifts 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® ~~backing~~backs every gift.~~In addition~~
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, the Company strives to ~~the 1-800-Flowers.com brand, which offers fresh flowers, plants, fruit and gift baskets, as well as balloons, plush and keepsake gifts, the Company’s~~deepen its relationships with its customers. The Company also operates BloomNet®, an international floral wire service ~~(www.mybloomnet.net) and Napco brands provide~~providing a broad range of ~~quality~~ products and ~~value-added~~ services designed to help professional florists grow their businesses ~~profitably. The 1-800-FLOWERS.COM, Inc. family of brands also offers everyday gifting~~profitably; as well as Napco^SM, a resource for floral gifts and entertaining products such as premium, gift-quality fruits and other gourmet items from Harry & David® (1-877-322-1200 or www.harryanddavid.com), popcorn and specialty treats from The Popcorn Factory® (1-800-541-2676 or www.thepopcornfactory.com); cookies and baked gifts from Cheryl’s® (1-800-443-8124 or www.cheryls.com); gift baskets and towers from 1-800-Baskets.com® (www.1800baskets.com) and DesignPac; premium English muffins and other breakfast treats from Wolferman’s (1-800-999-1910 or www.wolfermans.com); artisanal and specialty chocolates from Simply Chocolate^SM~~(www.simplychocolate.com),~~ carved fresh fruit arrangements from FruitBouquets.com (www.fruitbouquets.com); top quality steaks and chops from Stock Yards® (www.stockyards.com), and personalized gifts from Personalization Universe�� ~~(www.personalizationuniverse.com).~~seasonal décor.

~~Service offerings such as~~ ~~Celebrations Passport®, Celebrations Rewards® and Celebrations Reminders® are designed to deepen relationships with customers across all brands.~~ 1-800-FLOWERS.COM, Inc. was ~~named to~~recognized as the ~~Stores® 2017 Hot 100 Retailers List~~2019 Mid-Market Company of the Year by the National Retail Federation and received the Gold award in the “Best Artificial Intelligence” category at the Data & Marketing Association’s 2017 International ECHO Awards for the Company’s groundbreaking implementation of an artificial intelligence-powered online gift concierge, GWYN.CEO Connection.

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

~~On May~~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, ~~2017,~~2019.
COVID-19 Impact
In response to the global pandemic, the Company ~~completed~~has taken actions to ensure employee safety and business continuity, informed by the ~~sale~~guidelines set forth by local, state and federal government and health officials. These initiatives include developing a “Pandemic Preparedness and Response Plan,” establishing an internal “nerve center” to allow for communication and coordination throughout the business, designing workstream teams to promote workforce protection and supply chain management, and dedicating resources to support customers, vendors, franchisees, and our BloomNet member florists.
The COVID-19 pandemic has affected, and will continue to affect, our operations and financial results for the foreseeable future. While there is significant uncertainty in the overall consumer environment due to the COVID-19 crisis, we are seeing strong e-commerce demand for gourmet foods and gift baskets and our floral products for holidays and every-day gifting occasions, as well as for self-consumption. As we entered the Company’s fiscal fourth quarter, we saw an acceleration of demand during the Easter Holiday period, and this continued throughout the month of April. As we look ahead, our expectation is that demand trends will remain strong through the balance of the ~~outstanding equity~~fourth quarter. With that said, there are headwinds (and resulting increased costs) that have been, and will continue to impact our operations during the foreseeable future, including the following:
●
Retail store closures – on March 20, 2020, in response to government actions, and for the safety of its employees, the Company temporarily closed its Cheryl’s and Harry & David retail stores. Affected employees were provided with Company paid special COVID leave pay through April 3^rd, as the nation and the Company worked to understand the extent and potential length of the crisis. On April 14^th, the difficult decision was made to permanently close 38 of our 39 Harry & David retail stores. Plans to wind-down store operations in an orderly manner are currently in development. As a result, the Company expects to incur a charge within the range of $4.0 - $5.0 million in our fourth quarter for lease obligations, employee costs and other store closure costs. Annual revenues attributable to the closed locations was approximately $33.0 million.
●
Wholesale volume reductions - we have seen a reduction in our wholesale business as a result of COVID-19, which will impact our fourth quarter results within our BloomNet and Gourmet Foods and Gift Baskets segments. Additionally, we anticipate reduced wholesale orders through the fiscal second quarter of fiscal 2021, as our large wholesale customers are taking a cautious approach due to the uncertainty surrounding the impact of COVID-19 on the overall consumer economy.
●
Bloomnet membership fee reductions - we have waived certain fees to our BloomNet members for the month of April to help them weather the COVID-19 crisis.
●
Increased operating costs - we are seeing some increased costs associated with the changes we have made, and continue to make, to our manufacturing, warehouse and distribution facilities to provide for the safety and wellbeing of our associates, including: required social distancing, enhanced facility cleaning and sanitizing schedules, and staggered production shifts.
●
PersonalizationMall.com - Due to the unprecedented circumstances created by the COVID-19 pandemic, the Company requested a reasonable delay in the closing of the previously announced acquisition of PersonalizationMall.com, LLC until April 30, 2020. Bed Bath & Beyond Inc., the parent company of PersonalizationMall.com, responded to this request by filing a lawsuit in the Court of Chancery in the state of Delaware on April 1, 2020. The Company intends to vigorously defend itself against this lawsuit.
The scale and overall economic impact of ~~Fannie May Confections Brands, Inc., including~~the COVID-19 crisis is still very difficult to assess. However, the strong e-commerce demand that we are seeing across our brands, is expected to offset both the reductions in revenues and increases in costs noted above. The Company believes that the operating platform it has built over the years, combined with its ~~subsidiaries, Fannie May Confections, Inc.~~diversified product line, and ~~Harry London Candies, Inc. (“Fannie May”)~~ability to ~~Ferrero International S.A., a Luxembourg corporation (“Ferrero”), for a total consideration~~engage with its customers will allow it to successfully navigate this challenging environment. We remain focused on three key elements of $115.0 million in cash, subject to adjustment for seasonal working capital. The working capital adjustment was finalized in August 2017, resulting in an $11.4 million reduction to the purchase price. The resulting gain on sale of $14.6 million, is included within “Other (income) expense, net” in the Company~~’s consolidated statements of income in the fourth quarter of fiscal year 2017.~~our business strategy:
●
Taking care of the health and safety of our associates, our BloomNet florists, our vendors and our customers,
●
Maintaining our financial strength and flexibility, and
●
Continuing to invest in areas of our business that can help drive future growth.

The Company believes that it is in a strong financial position and ~~Ferrero also entered into a transition services agreement whereby~~has already begun to plan and take the ~~Company will provide certain post-closing services~~necessary steps to ~~Ferrero and Fannie May~~ensure its continued financial health. See Part II, Item 1A. Risk Factors for ~~a period~~further discussion of ~~approximately 18 months, related to~~ the ~~business~~possible impact of ~~Fannie May, and a commercial agreement with respect to~~ the ~~distribution of certain Ferrero and Fannie May products.~~COVID-19 pandemic on our business.

~~Operating results of Fannie May are reflected in the Company’s consolidated financial statements through May 30, 2017, the date of its disposition, within its Gourmet Food & Gift Baskets segment. See~~ ~~Segment Information~~ ~~and~~ ~~Results of Operations~~ ~~below for a comparison of fiscal 2018 results to fiscal 2017, adjusted to exclude the operations of Fannie May.~~
15
16
Table of Contents

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 Operationssections 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, as these terms are used interchangeably.~~
~~Adjusted~~ ~~revenues~~
~~Adjusted~~ ~~revenues measure GAAP revenues adjusted for the effects of acquisitions, dispositions, and other items affecting period to period comparability. See~~ ~~Segment~~ ~~Information~~ f~~or details on how adjusted revenues were calculated for each period presented.~~
We believe that this measure provides management and investors with a more complete understanding of underlying revenue trends of established, ongoing operations by excluding the effect of activities which are subject to volatility and can obscure underlying trends.
~~Management recognizes that the term "~~adjusted revenues" may be interpreted differently by other companies and under different circumstances. Although this may influence comparability of absolute percentage growth from company to company, we believe that these measures are useful in assessing trends of the Company and its segments, and may therefore be a useful tool in assessing period-to-period performance trends.
~~Adjusted gross profit and adjusted gross profit percentage~~
~~Adjusted gross profit measures~~ GAAP revenues less cost of revenues, adjusted for the effects of acquisitions, dispositions, and other items affecting period to period comparability. Adjusted gross profit percentage measures adjusted gross profit divided by adjusted revenues. See ~~Segment~~ ~~Information~~ ~~for details on how adjusted gross profit and adjusted gross profit percentage were calculated for each period presented.~~
~~We believe that this measure provides management and investors with a more complete understanding of underlying~~ ~~gross profit trends of established, ongoing operations by excluding the effect of activities which are subject to volatility and can obscure underlying trends.~~
~~Management recognizes that the term "~~adjusted gross profit" or “adjusted gross profit percentage” may be interpreted differently by other companies and under different circumstances. Although this interpretation may vary from company to company, we believe that these consistently applied measures are useful in assessing trends of the Company and its segments, and may therefore be a useful tool in assessing period-to-period performance trends.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~~stock-based compensation, ~~Non-Qualified~~NQDC Plan ~~Investment appreciation/~~investment appreciation/depreciation, and for certain items affecting period to period comparability. SeeSegment Information ~~Information~~ or 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.

17
~~Table of Contents~~
Segment ~~contribution~~ ~~margin and adjusted segment~~contribution margin
We define segment contribution margin as earnings before interest, taxes, depreciation and amortization, before the allocation of corporate overhead expenses. ~~Adjusted segment contribution margin is defined as segment contribution margin adjusted for certain items affecting period to period comparability.~~ See Segment Information for details on how segment contribution margin ~~and comparable segment contribution margin were~~was calculated for each period presented.

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

Segment contribution margin ~~and comparable segment contribution margin are~~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 and adjusted~~ 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.

Adjusted net income (loss) and adjusted net income (loss) per common share
We define adjusted net income (loss) and adjusted net income (loss) per common share as net income (loss) and net income (loss) per common share adjusted for certain items affecting period to period comparability. See Segment Information b~~elow~~ below for details on how adjusted net income (loss) and adjusted net income (loss) per common share were calculated for each period presented.

We believe that adjusted net income (loss) and adjusted net income (loss) per common share are meaningful measures because they increase the comparability of period to period results.

Since these are not measures of performance calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, GAAP net income (loss) and net income (loss) per common share, as indicators of operating performance and they may not be comparable to similarly titled measures employed by other companies.

16
18
Table of Contents

Segment Information

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

Three Months Ended

Three Months Ended

December 31, 2017

January 1, 2017

Exclude Operating Results of
Fannie May

Severance
Costs

Adjusted
(non-GAAP)
December 31, 2017

Adjusted
(non-GAAP)
% Change

March 29, 2020

Transaction Costs

As Adjusted (non-GAAP) March 29, 2020

March 31, 2019

% Change

(dollars in thousands) (dollars in thousands)
Net revenues:

1-800-Flowers.com Consumer Floral
$ 100,064 $ 97,808 $ - $ - $ 97,808 2.3 % $ 152,620 $ - $ 152,620 $ 144,821 5.4 %
BloomNet Wire Service
20,375 20,502 20,502 -0.6 % 30,414 - 30,414 28,185 7.9 %
Gourmet Food & Gift Baskets
405,964 436,870 (41,199 ) - 395,671 2.6 %
Gourmet Foods & Gift Baskets
95,906 - 95,906 75,445 27.1 %
Corporate
317 316 316 0.3 % 112 - 112 263 -57.4 %
Intercompany eliminations
(627 ) (943 ) 344 - (599 ) -4.7 % (276 ) - (276 ) (301 ) 8.3 %
Total net revenues
$ 526,093 $ 554,553 $ (40,855 ) $ - $ 513,698 2.4 % $ 278,776 $ - $ 278,776 $ 248,413 12.2 %

Gross profit:

1-800-Flowers.com Consumer Floral
$ 38,844 $ 40,300 - - $ 40,300 -3.6 % $ 59,943 $ - $ 59,943 $ 56,334 6.4 %
38.8 % 41.2 % 41.2 % 39.3 % 39.3 % 38.9 %
- -
BloomNet Wire Service
11,693 12,310 12,310 -5.0 % 14,401 - 14,401 14,071 2.3 %
57.4 % 60.0 % - - 60.0 % 47.3 % 47.3 % 49.9 %

Gourmet Food & Gift Baskets
184,468 204,185 (15,939 ) - 188,246 -2.0 %
Gourmet Foods & Gift Baskets
32,956 - 32,956 26,848 22.8 %
45.4 % 46.7 % 47.6 % 34.4 % 34.4 % 35.6 %

Corporate (a)
254 199 - - 199 27.6 %
Corporate
152 - 152 267 -43.1 %
80.1 % 63.0 % 63.0 % 135.7 % 135.5 % 101.5 %

Total gross profit
$ 235,259 $ 256,994 $ (15,939 ) $ - $ 241,055 -2.4 % $ 107,452 $ - $ 107,452 $ 97,520 10.2 %
44.7 % 46.3 % 46.9 % 38.5 % - 38.5 % 39.3 %

EBITDA (non-GAAP):

Segment Contribution Margin (non-GAAP):

Segment Contribution Margin (non-GAAP) (a):

1-800-Flowers.com Consumer Floral
$ 10,791 $ 13,128 $ - $ - $ 13,128 -17.8 % $ 15,439 $ - $ 15,439 $ 15,364 0.5 %
BloomNet Wire Service
7,692 8,189 - - 8,189 -6.1 % 10,025 - 10,025 9,480 5.7 %
Gourmet Food & Gift Baskets
93,496 104,624 (6,219 ) 79 98,484 -5.1 %
Gourmet Foods & Gift Baskets
(6,275 ) - (6,275 ) (7,202 ) 12.9 %
Segment Contribution Margin Subtotal
111,979 125,941 (6,219 ) 79 119,801 -6.5 % 19,189 - 19,189 17,642 8.8 %
Corporate (a)
(18,836 ) (20,223 ) 356 - (19,867 ) 5.2 %
Corporate (b)
(22,274 ) 911 (21,363 ) (25,243 ) 15.4 %
EBITDA (non-GAAP)
93,143 105,718 (5,863 ) 79 99,934 -6.8 % (3,085 ) 911 (2,174 ) (7,601 ) 71.4 %
Add: Stock-based compensation
968 1,724 - - 1,724 -43.9 % 2,396 2,396 1,903 25.9 %
Add: Comp charge related to NQ Plan Investment Appreciation
364 20 - - 20 1720.0 %
Add: Comp charge related to NQ Plan
Investment Appreciation/(Depreciation)
(2,611 ) - (2,611 ) 1,294 -301.8 %
Adjusted EBITDA (non-GAAP)
$ 94,475 $ 107,462 $ (5,863 ) $ 79 $ 101,678 -7.1 % $ (3,300 ) $ 911 $ (2,389 ) $ (4,404 ) -45.8 %

17
19
Table of Contents

Nine Months Ended

March 29, 2020

Transaction Costs

As Adjusted (non-GAAP) March 29, 2020

March 31, 2019

% Change

(dollars in thousands)
Net revenues:

1-800-Flowers.com Consumer Floral
$ 359,104 $ - $ 359,104 $ 338,003 6.2 %
BloomNet Wire Service
81,576 - 81,576 75,613 7.9 %
Gourmet Foods & Gift Baskets
631,705 - 631,705 575,966 9.7 %
Corporate
472 - 472 845 -44.1 %
Intercompany eliminations
(1,176 ) - (1,176 ) (1,202 ) 2.2 %
Total net revenues
$ 1,071,681 $ - $ 1,071,681 $ 989,225 8.3 %

Gross profit:

1-800-Flowers.com Consumer Floral
$ 140,537 $ - $ 140,537 $ 131,254 7.1 %
39.1 % 39.1 % 38.8 %

BloomNet Wire Service
40,520 - 40,520 38,306 5.8 %
49.7 % 49.7 % 50.7 %

Gourmet Foods & Gift Baskets
271,360 - 271,360 250,550 8.3 %
43.0 % 43.0 % 43.5 %

Corporate
353 - 353 777 -54.6 %
74.8 % 74.8 % 92.0 %

Total gross profit
$ 452,770 $ - $ 452,770 $ 420,887 7.6 %
42.2 % - 42.2 % 42.5 %

EBITDA (non-GAAP):

Segment Contribution Margin (non-GAAP) (a):

1-800-Flowers.com Consumer Floral
$ 34,853 $ - $ 34,853 $ 32,667 6.7 %
BloomNet Wire Service
27,516 - 27,516 25,375 8.4 %
Gourmet Foods & Gift Baskets
100,512 - 100,512 89,191 12.7 %
Segment Contribution Margin Subtotal
162,881 - 162,881 147,233 10.6 %
Corporate (b)
(71,583 ) 911 (70,672 ) (67,303 ) -5.0 %
EBITDA (non-GAAP)
91,298 911 92,209 79,930 15.4 %
Add: Stock-based compensation
6,441 6,441 4,531 42.2 %
Add: Comp charge related to NQ Plan
Investment Appreciation/(Depreciation)
(1,653 ) - (1,653 ) 327 -605.5 %
Adjusted EBITDA (non-GAAP)
$ 96,086 $ 911 $ 96,997 $ 84,788 14.4 %
18
Table of Contents
Reconciliation of net income (loss) to adjusted net income (loss) (non-GAAP):

Three Months Ended

Nine Months Ended

March 29, 2020

March 31, 2019

March 29, 2020

March 31, 2019

(in thousands, except per share data)

Net income (loss)
$ (9,657 ) $ (8,241 ) $ 49,224 $ 43,071
Adjustments to reconcile net income (loss) to adjusted net income (loss) (non-GAAP)

Add: Personalization Mall transaction costs
911 - 911 -
Deduct: Income tax (benefit) on transaction costs
(217 ) - (217 ) -
Adjusted net income (loss) (non-GAAP)
$ (8,963 ) $ (8,241 ) $ 49,918 $ 43,071

Basic and diluted net income (loss) per common share

Basic
$ (0.15 ) $ (0.13 ) $ 0.76 $ 0.67
Diluted
$ (0.15 ) $ (0.13 ) $ 0.74 $ 0.65

Basic and diluted adjusted net income (loss) per common share (non-GAAP)

Basic
$ (0.14 ) $ (0.13 ) $ 0.77 $ 0.67
Diluted
$ (0.14 ) $ (0.13 ) $ 0.75 $ 0.65

Weighted average shares used in the calculation of net income (loss) and adjusted net income (loss) per common share

Basic
64,348 64,194 64,517 64,383
Diluted
64,348 64,194 66,378 66,456

Six Months Ended

December 31, 2017

January 1, 2017

Exclude Operating
Results of
Fannie May

Severance Costs

Adjusted
(non-GAAP)
December 31, 2017

Adjusted
(non-GAAP)
% Change

(dollars in thousands)
Net revenues:

1-800-Flowers.com Consumer Floral
$ 176,674 $ 173,023 $ - $ - $ 173,023 2.1 %
BloomNet Wire Service
40,139 41,466 - - 41,466 -3.2 %
Gourmet Food & Gift Baskets
466,950 506,684 (52,573 ) - 454,111 2.8 %
Corporate
587 579 - - 579 1.4 %
Intercompany eliminations
(908 ) (1,370 ) 514 - (856 ) -6.0 %
Total net revenues
$ 683,442 $ 720,382 $ (52,059 ) $ - $ 668,323 2.3 %

Gross profit:

1-800-Flowers.com Consumer Floral
$ 69,578 $ 70,799 $ - $ - $ 70,799 -1.7 %
39.4 % 40.9 % 40.9 %

BloomNet Wire Service
22,751 24,104 - - 24,104 -5.6 %
56.7 % 58.1 % 58.1 %

Gourmet Food & Gift Baskets
209,620 232,936 (20,425 ) - 212,511 -1.4 %
44.9 % 46.0 % 46.8 %

Corporate (a)
588 542 - - 542 8.5 %
100.2 % 93.6 % 93.6 %

Total gross profit
$ 302,537 $ 328,381 $ (20,425 ) $ - $ 307,956 -1.8 %
44.3 % 45.6 % 46.1 %

EBITDA (non-GAAP):

Segment Contribution Margin (non-GAAP):

1-800-Flowers.com Consumer Floral
$ 17,762 $ 21,309 $ - $ - $ 21,309 -16.6 %
BloomNet Wire Service
14,393 15,468 - - 15,468 -6.9 %
Gourmet Food & Gift Baskets
88,509 95,320 (3,018 ) 103 92,405 -4.2 %
Segment Contribution Margin Subtotal
120,664 132,097 (3,018 ) 103 129,182 -6.6 %
Corporate (a)
(39,040 ) (41,491 ) 763 - (40,728 ) 4.1 %
EBITDA (non-GAAP)
81,624 90,606 (2,255 ) 103 88,454 -7.7 %
Add: Stock-based compensation
2,069 3,498 - - 3,498 -40.9 %
Add: Comp charge related to NQ Plan Investment Appreciation
639 282 - - 282 -126.6 %
Adjusted EBITDA (non-GAAP)
$ 84,332 $ 94,386 $ (2,255 ) $ 103 $ 92,234 -8.6 %
20
~~Table of Contents~~
~~Reconciliation of net income to adjusted net i~~~~ncome (non-GAAP):~~

Three Months Ended

Years Ended

December 31, 2017

January 1, 2017

December 31, 2017

January 1, 2017

(in thousands, except per share data)

Net income
$ 70,699 $ 62,929 $ 57,477 $ 47,158
Adjustments to reconcile net income to adjusted net income (non-GAAP)

Deduct: Fannie May operating results
- 5,047 - 629
Deduct: U.S. tax reform impact on deferred taxes (b)
12,158 - 12,158 -
Add back: Severance costs
- 79 - 103
Add back: Income tax expense impact on Fannie May operating results and severance adjustments
- 1,656 - 171
Adjusted net income (non-GAAP)
$ 58,541 $ 59,617 $ 45,319 $ 46,803

Basic and diluted net income per common share

Basic
$ 1.09 $ 0.97 $ 0.89 $ 0.72
Diluted
$ 1.06 $ 0.93 $ 0.86 $ 0.70

Basic and diluted adjusted net income per common share (non-GAAP)

Basic
$ 0.91 $ 0.91 $ 0.70 $ 0.72
Diluted
$ 0.88 $ 0.88 $ 0.68 $ 0.69

Weighted average shares used in the calculation of net income and adjusted net income (non-GAAP) per common share

Basic
64,601 65,172 64,778 65,112
Diluted
66,782 67,754 67,037 67,778
~~Rec~~~~onciliation of net income to a~~~~djusted EBITDA (non-GAAP) (c~~):

Three Months Ended

Years Ended

December 31, 2017
January 1, 2017
December 31, 2017
January 1, 2017
(in thousands)

Net income
$ 70,699 $ 62,929 $ 57,477 $ 47,158
Add:

Interest expense, net
1,140 2,155 1,911 3,456
Depreciation and amortization
8,677 9,167 16,761 17,164
Income tax expense
12,627 31,467 5,475 22,828
EBITDA (non-GAAP)
93,143 105,718 81,624 90,606
Add:

Severance costs
- 79 - 103
Compensation charge related to NQ plan investment appreciation
364 20 639 282
Stock-based compensation
968 1,724 2,069 3,498
Less:

Fannie May EBITDA
- 5,863 - 2,255
Adjusted EBITDA (non-GAAP)
$ 94,475 $ 101,678 $ 84,332 $ 92,234
a)
~~Corporate expenses consist of the Company~~’s enterprise shared service cost centers, and include, among other items, Information Technology, Human Resources, Accounting and Finance, Legal, Executive and Customer Service Center functions, as well as Stock-Based Compensation. In order to leverage the Company’s infrastructure, these functions are operated under a centralized management platform, providing support services throughout the organization. The costs of these functions, other than those of the Customer Service Center, which are allocated directly to the above categories based upon usage, are included within corporate expenses as they are not directly allocable to a specific segment.
b)
~~The adjustment to deduct~~ the impact of U.S. tax reform from Net Income includes the impact of the re-valuation of the Company’s deferred tax liability of $12.2 million, or $0.18 per diluted share, and does not include the ongoing impact of the lower federal corporate tax rate of $3.7 million, or $0.06 per diluted share.
c)
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.
21
~~Table of Contents~~
Reconciliation of net income (loss) to adjusted EBITDA (non-GAAP):

Three Months Ended

Nine Months Ended

March 29, 2020

March 31, 2019

March 29, 2020

March 31, 2019

(in thousands, except per share data)

Net income (loss)
$ (9,657 ) $ (8,241 ) $ 49,224 $ 43,071
Add:

Interest expense, net
2,752 (1,315 ) 3,441 2,097
Depreciation and amortization
7,803 7,028 23,268 22,840
Income tax expense
- - 15,365 11,922
Less:

Income tax benefit
3,983 5,073 - -
EBITDA
(3,085 ) (7,601 ) 91,298 79,930
Add: Transaction costs
911 - 911 -
Add: Stock-based compensation
2,396 1,903 6,441 4,531
Add: Compensation charge related to NQ plan investment appreciation/(depreciation)
(2,611 ) 1,294 (1,653 ) 327
Adjusted EBITDA
$ (2,389 ) $ (4,404 ) $ 96,997 $ 84,788

(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.

Results of ~~Operatio~~nsOperations

Net ~~Revenues~~revenues

Three Months Ended

Six Months Ended

Three Months Ended

Nine Months Ended

December 31, 2017

January 1, 2017

% Change

December 31, 2017

January 1, 2017

% Change

March 29, 2020

March 31, 2019

% Change

March 29, 2020

March 31, 2019

% Change

(dollars in thousands)

(dollars in thousands)

Net revenues:

E-Commerce
$ 424,132 $ 420,594 0.8
%
$ 532,903 $ 527,678 1.0
%
$ 231,851 $ 204,362 13.5
%
$ 847,985 $ 780,883 8.6
%
Other
101,961 133,959 -23.9
%
150,539 192,704 -21.9
%
46,925 44,051 6.5
%
223,696 208,342 7.4
%
Total net revenues
$ 526,093 $ 554,553 -5.1
%
$ 683,442 $ 720,382 -5.1
%
$ 278,776 $ 248,413 12.2
%
$ 1,071,681 $ 989,225 8.3
%

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

Net revenues ~~decreased 5.1%~~increased 12.2% and 8.3% during~~both~~ the three and ~~six~~nine months ended ~~December 31, 2017,~~March 29, 2020, respectively, compared to the same periods of the prior year, due to growth across all three of the ~~disposition~~Company’s business segments, reflecting the strategic marketing and merchandising investments across the Company’s brands, the continuing positive trends in everyday gifting occasions, and increased self-consumption within the Gourmet Foods and Gift Baskets segment, as well as incremental revenues from Shari’s Berries, which was acquired on August 14, 2019, and contributed approximately 4.1% of ~~Fannie May on May 30, 2017. On a comparable basis, adjusting fiscal 2017 net~~consolidated revenue growth.
19
Table of Contents
Disaggregated revenue by channel follows:

Three Months Ended

Three Months Ended

March 29, 2020

March 31, 2019

Consumer Floral

BloomNet Wire Service
Gourmet Foods & Gift Baskets
Consolidated

Consumer Floral

BloomNet Wire Service
Gourmet Foods & Gift Baskets
Consolidated

(in thousands)
Net revenues

E-commerce
$ 150,491 $ - $ 81,360 $ 231,851 $ 142,552 $ - $ 61,810 $ 204,362
Retail
1,166 - 5,030 6,196 1,189 - 5,727 6,916
Wholesale
- 10,801 9,516 20,317 - 9,321 7,908 17,229
BloomNet services
- 19,613 - 19,613 - 18,864 - 18,864
Other
963 - - 963 1,080 - - 1,080
Corporate
- - - 112 - - - 263
Eliminations
- - - (276
)
- - - (301
)
Net revenues
$ 152,620 $ 30,414 $ 95,906 $ 278,776 $ 144,821 $ 28,185 $ 75,445 $ 248,413

Nine months ended

Nine months ended

March 29, 2020

March 31, 2019

Consumer Floral

BloomNet Wire Service
Gourmet Foods & Gift Baskets
Consolidated

Consumer Floral

BloomNet Wire Service
Gourmet Foods & Gift Baskets
Consolidated

(in thousands)
Net revenues

E-commerce
$ 353,436 $ - $ 494,549 $ 847,985 $ 332,302 $ - $ 448,581 $ 780,883
Retail
3,187 - 35,640 38,827 3,113 - 38,477 41,590
Wholesale
- 26,819 101,516 128,335 - 23,247 88,908 112,155
BloomNet services
- 54,757 - 54,757 - 52,366 - 52,366
Other
2,481 - - 2,481 2,588 - - 2,588
Corporate
- - - 472 - - - 845
Eliminations
- - - (1,176
)
- - - (1,202
)
Net revenues
$ 359,104 $ 81,576 $ 631,705 $ 1,071,681 $ 338,003 $ 75,613 $ 575,966 $ 989,225
Revenue by sales channel:
E-commerce revenues ~~to exclude the revenues of Fannie May, net revenues~~(combined online and telephonic) increased ~~2.4% and 2.3%~~by 13.5% during the three ~~and six~~ months ended ~~December 31, 2017, respectively,~~March 29, 2020, compared to the same ~~periods~~period of the prior ~~year. This increase was due to~~year, primarily as a result of growth within the ~~Consumer Floral and~~ Gourmet Foods & Gift Baskets segment ~~attributable~~of 31.6%, complemented by growth within the 1-800-Flowers.comConsumer Floral segment of 5.6%. During the three months ended March 29, 2020, the Company fulfilled approximately 3.5 million orders through its e-commerce sales channels (online and telephonic sales), an increase of 13.6% compared to the ~~Harry & David and 1-800-Baskets/DesignPac brands, partially offset by slightly lower revenues in~~same period of the ~~Company’s BloomNet segment. Comparable revenue growth was negatively impacted by a temporary disruption in operations at our Cheryl’s brand, related~~prior year, while average order value decreased 0.1% to the recent implementation of a new production and warehouse management system, which, in turn, led to the brand’s decision to stop taking orders eight days prior to the Christmas holiday. As a result, the Company estimates that it had to forego approximately $4.0 million in holiday revenues during the three and six months ended December 31, 2017. In addition, revenues during the six months ended December 31, 2017 were negatively impacted, by approximately $1.1 million, due to hurricanes Harvey and Irma.$66.98.

E-commerce revenues (combined online and telephonic) increased by ~~0.8% and 1.0%~~8.6% during the ~~three and six~~nine months ended ~~December 31, 2017,~~ ~~respectively,~~March 29, 2020, compared to the same ~~periods~~period of the prior year, as a result of growth within the ~~Consumer Floral and~~ Gourmet Foods & Gift Baskets ~~segments. On a comparable basis, adjusting fiscal 2017 e-commerce revenues to exclude~~and 1-800-Flowers.com Consumer Floral segments of 10.2% and 6.4%, respectively. During the ~~revenues of Fannie May, e-commerce revenues increased 3.1% and 2.9% during the three and six~~nine months ended ~~December 31, 2017, respectively, compared to the same periods of the prior year. During the three months ended December 31, 2017,~~March 29, 2020, the Company fulfilled approximately ~~5.205,000~~10.9 million orders through its e-commerce sales channels (online and telephonic sales), an increase of 7.8% compared to ~~approximately 5,263,000 (5,020,000 adjusted to exclude Fannie May orders in fiscal 2017) during~~ the same period of the prior year, while average order value increased 0.7%, to ~~$81.44~~$77.62, during the ~~three~~nine months ended ~~December 31, 2017, from $79.92 ($81.92 adjusted~~March 29, 2020, compared to ~~exclude Fannie May average order value in fiscal 2017) during~~ the same period of the prior year. During the six months ended December 31, 2017, the Company fulfilled approximately 6,725,000 orders through its e-commerce sales channels (online and telephonic sales), compared to approximately 6,780,000 (6,526,000 adjusted to exclude Fannie May orders in fiscal 2017) during the same period of the prior year, while average order value increased to $79.20 during the six months ended December 31, 2017, from $77.83 ($79.36 adjusted to exclude Fannie May average order value in fiscal 2017) during the same period of the prior year.

Other revenues are comprised of the ~~Company~~’sCompany’s BloomNet Wire Service segment, as well as the wholesale and retail channels of its 1-800-Flowers.comConsumer Floral and Gourmet ~~Food and~~Foods & Gift Baskets segments. Other revenues ~~decreased~~increased by 23.9% and 21.9% during the three and six months ended December 31, 2017, respectively, compared to the same periods of the prior year, primarily as a result of the Fannie May disposition during May 2017. On a comparable basis, adjusting fiscal 2017 other revenues to exclude the revenues of Fannie May, other revenues decreased 0.5%6.5% during the three months ended ~~December 31, 2017, and increased 0.1% during the six months ended December 31, 2017,~~March 29, 2020, compared to the ~~respective~~same period of the prior year, ~~periods.~~due to growth within the Gourmet Foods & Gift Baskets segment of 6.7% and BloomNet Wire Service segment of 7.9%.

~~The~~ Other revenues increased by 7.4% during the nine months ended March 29, 2020, compared to the same period of the prior year, driven primarily by growth within the Gourmet Foods & Gift Baskets segment of 7.7% and BloomNet Wire Service segment of 7.9%.
20
Table of Contents
Revenue by segment:
1-800-Flowers.com Consumer Floral – this segment, ~~includes~~which consists primarily of the operations of the 1-800-Flowers.com brand, ~~which~~ 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 ~~2.3%~~5.4% and ~~2.1%,~~6.2% during the three and ~~six~~nine months ended ~~December 31, 2017, in comparison~~March 29, 2020, compared to the same periods of the prior year, reflecting the strategic marketing and merchandising investments that we have been making in the Company’s flagship brand, resulting in strong growth during the Valentine’s Day holiday period, partially offset by softer demand in the last few weeks of the quarter due to ~~increased demand driven by merchandising and marketing efforts, as well as an increase in promotional activity in order to expand market share. Revenues during~~ the ~~six months ended December 31, 2017 were negatively impacted, by approximately $0.8 million, due to hurricanes Harvey and Irma.~~impact of the COVID-19 crisis.

~~The~~ BloomNet Wire Service - revenues in this segment ~~includes revenues~~are derived from membership fees, as well as other product and service offerings to florists. Net revenues ~~decreased 0.6% and 3.2%~~increased 7.9% during both the three and ~~six~~nine months ended ~~December 31, 2017, respectively,~~March 29, 2020, compared to thethe same periods of the prior year, primarily due to ~~lower membership,~~increasing demand for our expanded line of wholesale products, as well as higher services revenue, including digital directory and transaction fees (driven primarily by increased 1-800-Flowers and ~~ancillary revenues resulting from a decline in network shop count,~~Shari’s Berries order volume sent through the network), partially offset by ~~higher wholesale product revenues. During~~softer demand in the ~~six months ended December 31, 2017, these decreases were exacerbated by~~last few weeks of the quarter due to the impact of ~~hurricanes Harvey and Irma, as BloomNet provided financial aid to florists in~~ the ~~affected areas, and waived approximately $0.2 million of membership fees.~~COVID-19 crisis.

~~The~~ Gourmet ~~Food~~Foods & Gift Baskets – this segment includes the operations of Harry & David, ~~Wolferman’s, Stockyards,~~Wolferman’s, Stock Yards, Cheryl’s ~~Fannie May (through the date of its disposition on May 30, 2017),~~Cookies, The Popcorn Factory, 1-800-Baskets/DesignPac, and ~~1-800-Baskets/DesignPac.~~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 ~~Cheryl’s~~ and ~~Fannie May (through the date of its disposition)~~Cheryl’s brand names, as well as wholesale operations. Net revenues ~~decreased 7.1%~~increased 27.1% and ~~7.8%~~9.7% during the three and ~~six~~nine months ended ~~December 31, 2017, respectively,~~March 29, 2020, compared to the same periods of the prior year primarily due to the disposition of Fannie May on May 30, 2017. On a comparable basis, adjusting fiscal year 2017 revenues to exclude Fannie May, net revenues increased 2.6% and 2.8% during the three and six months ended December 31, 2017, respectively, compared to the same periods of the prior year due to growth by theto: (i) Harry & David growth which continues to benefit from the digital transformation of its marketing programs as well as its expanded product offerings of unique, shareable gifts for both holiday (seasonal fruits and ~~1-800-Baskets.com consumer~~bakery) and everyday occasions, as well as Harry & David’s Gourmet line, which includes prepared meals and wines for both gifting and entertaining, which is enabling the brand to attract new customers while also deepening engagement with existing customers, (ii) strong growth in the DesignPac wholesale ~~channel brands. Comparable segment growth was attributable~~business due to ~~several initiatives implemented during~~increased demand fueled by new product designs and an expanded customer list, and (iii) the acquisition of Shari’s Berries on August 14, 2019. Revenues for the three months ended March 29, 2020 also benefitted slightly from favorable e-commerce buying patterns late in the quarter due to COVID-19, although the impact will primarily be reflected in Q4 when product is shipped. Results for the nine months ended March 29, 2020 were negatively impacted by the shortened holiday shopping season caused by the late Thanksgiving/Cyber Monday, which resulted in 6 fewer shopping days between Thanksgiving and Christmas in the second ~~half~~quarter of fiscal 2017, including: (i) the Company’s successful efforts to grow the “everyday” volume of its Gourmet Foods & Gift Baskets brands through expanded birthday and sympathy merchandise, (ii) the modernization of the Harry & David brand, which focused on developing merchandising assortments and digital marketing programs that helped to broaden the demographic reach of the brand, and, (ii) the launch of the Simply Chocolates product line, which is managed by 1-800-Baskets. As noted above, Cheryl’s revenue decrease,2020 in comparison to the prior year, was due to the Company’s decision to suspend order taking as a result of operational issues experienced during the weeks leading up to the Christmas holiday. As a result, the Company estimates that it had to forego approximately $4.0 million in holiday revenues during the three and six months ended December 31, 2017. In addition, revenues during the six months ended December 31, 2017 were negatively impacted, by approximately $0.2 million, due to hurricanes Harvey and Irma. The operational issues at Cheryl’s have been addressed, and business has returned to its normal pace.
22
~~Table of Contents~~
year.

Gross ~~Profit~~profit

Three Months Ended

Six Months Ended

Three Months Ended

Nine Months Ended

December 31, 2017

January 1, 2017

% Change

December 31, 2017

January 1, 2017

% Change

March 29, 2020

March 31, 2019

% Change

March 29, 2020

March 31, 2019

% Change

(dollars in thousands)

(dollars in thousands)

Gross profit
$ 235,259 $ 256,994 -8.5
%
$ 302,537 $ 328,381 -7.9
%
$ 107,452 $ 97,520 10.2
%
$ 452,770 $ 420,887 7.6
%
Gross profit %
44.7
%
46.3
%
44.3
%
45.6
%
38.5
%
39.3
%
42.2
%
42.5
%

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 ~~include~~includes labor and facility costs related to direct-to-consumer and wholesale production ~~operations.~~operations, as well as payments made to sending florists related to order volume sent through the Company’s BloomNet network.

Gross profit ~~decreased 8.5%~~increased 10.2% and ~~7.9%~~7.6% during the three and ~~six~~nine months ended ~~December 31, 2017, respectively, in comparison~~March 29, 2020, compared to the same periods of the prior year, ~~while~~as a result of the increase in revenues noted above, partially offset by a decrease in gross profit percentage. Gross profit percentage ~~decreased 160~~declined 80 and ~~130~~30 basis points, to 38.5% and 42.2%, during the respective three and ~~six~~nine months ended December 31, 2017, respectively, in comparison to the same periods of the prior year. On a comparable basis, adjusting prior year gross profit to exclude Fannie May, which was disposed of on May 30, 2017, gross profit decreased 2.4% and 1.8% during the three and six months ended December 31, 2017, respectively, in comparisonMarch 29, 2020, compared to the same periods of the prior year, ~~while gross profit percentage decreased 220~~as a result of product mix, combined with macro-economic headwinds including: (i) rising labor and ~~180 basis points, during~~transportation costs, (ii) tariffs, and (iii) increased costs associated with the ~~same periods. The lower comparable gross profit,~~changes we have made, and ~~gross profit percentage, primarily reflects~~continue to make, to our manufacturing, warehouse and distribution facilities to provide for the ~~impact~~safety and wellbeing of ~~the operational issue at~~our associates in light of COVID-19, including: required social distancing, enhanced facility cleaning and sanitizing schedules, and staggered production shifts. These headwinds have been partially offset by the Company’s ~~Cheryl’s Cookies brand, as well as increased transportation costs in the Gourmet Food~~strategic pricing initiatives and ~~Gift Baskets segment, and increased promotional activity within the Consumer Floral segment in order to increase market share.~~operational productivity improvements.

~~The~~ 1-800-Flowers.com Consumer Floral segment ~~gross~~ - Gross profit ~~decreased~~increased by ~~3.6%~~6.4% and ~~1.7%~~7.1% during the three and ~~six~~nine months ended ~~December 31, 2017,~~ respectively, in comparison to the same period of the prior year, due to a decrease in gross profit percentage of 240 and 150 basis points to 38.8% and 39.4%, respectively, partially offset by the aforementioned revenue growth. The lower gross profit percentages reflect an increase in promotional activity initiated to extend the market share of the 1-800-Flowers brand, as well as an increase in Passport free shipping participation, which has improved customer loyalty and purchase frequency.
~~BloomNet Wire Service segment~~’s gross profit decreased by 5.0% and 5.6% during the three and six months ended December 31, 2017, respectively, in comparison to the same period of the prior year, due to the decrease in revenues noted above, as well as decreases in gross profit percentage of 260 and 140 basis points, to 57.4% and 56.7%, respectively, The lower gross profit percentages are due to sales mix, with a decline in higher margin membership and related services, offset by an increase in lower margin wholesale product sales.
~~The Gourmet Food & Gift Baskets segment~~ ~~gross profit decreased by 9.7% and 10.0% during the three and six months ended December 31, 2017, respectively, in comparison~~March 29, 2020, compared to the same periods of the prior year, ~~while gross~~as a result of the revenue increases noted above. Gross profit percentage ~~decreased 130~~increased 40 basis points and ~~110~~30 basis points, to ~~45.4%~~39.3% and ~~44.9%~~39.1%, ~~over the same respective periods. On a comparable basis, adjusting prior year gross profit to exclude Fannie May, which was disposed of on May 30, 2017, gross profit decreased 2.0% and 1.4%~~ during the respective three and ~~six~~nine months ended ~~December 31, 2017, respectively, in comparison~~March 29, 2020, compared to the same periods of the prior year, ~~while~~primarily due to efficient use of promotional pricing programs, partially offset by increased product and transportation costs.
BloomNet Wire Service segment - Gross profit increased by 2.3% and 5.8% during the three and nine months ended March 29, 2020, compared to the same periods of the prior year, due to the increase in revenues noted above, partially offset by a decline in gross margin percentage of 260 and 100 basis points, to 47.3% and 49.7%, respectively, due to product sales mix associated with the impact of COVID-19 on membership and transaction fees, combined with the significant increase in wholesale product revenues and the impact of tariffs on product cost.
Gourmet Foods & Gift Baskets segment - Gross profit increased by 22.8% and 8.3% during the three and nine months ended March 29, 2020, compared to the same periods of the prior year, due to the revenue increase noted above, partially offset by gross profit percentage which decreased ~~220 and 190~~120 basis points to ~~45.4%~~34.4%, and ~~44.9%, over~~50 basis points to 43.0% during the three months ended and nine months ended March 29, 2020 compared to the same ~~respective periods. The lower comparable gross profit and gross profit percentage primarily reflects the impact~~periods of the ~~operational issue at the Company’s Cheryl’s Cookies brand, which negatively impacted gross profit by approximately $4.0 million~~prior year, primarily as a result of ~~increased labor, expedited shipping, expiring~~ product mix and higher customer credits. In addition, although revenue growth provided for improved gross profit at Harry & David, higher transportation costs at Harry & David and our wholesale baskets brands negatively impacted gross profit percentage.the input cost increases described above.
21
23
Table of Contents

Marketing and ~~Sales Expense~~sales expense

Three Months Ended

Six Months Ended

Three Months Ended

Nine months Ended

December 31, 2017

January 1, 2017

% Change

December 31, 2017

January 1, 2017

% Change

March 29, 2020

March 31, 2019

% Change

March 29, 2020

March 31, 2019

% Change

(dollars in thousands)

(dollars in thousands)

Marketing and sales
$ 113,771 $ 119,876 -5.1
%
$ 163,493 $ 174,954 -6.6
%
$ 78,606 $ 71,163 10.5
%
$ 262,849 $ 243,781 7.8
%
Percentage of net revenues
21.6
%
21.6
%
23.9
%
24.3
%
28.2
%
28.6
%
24.5
%
24.6
%

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~~’sCompany’s departments engaged in marketing, selling and merchandising activities.

Marketing and sales expense ~~decreased 5.1%~~increased 10.5% and ~~6.6%~~7.8% during the three and ~~six~~nine months ended ~~December 31, 2017,~~March 29, 2020, compared to the same periods of the prior year,, primarily due to increased advertising spend within the Gourmet Foods & Gift Baskets and 1-800-Flowers.comConsumer Floral segments, due to the ~~disposition of Fannie May on May 30, 2017. On~~Company’s incremental marketing efforts designed to accelerate revenue growth and capture market share, partially offset by operational efficiencies and platform leverage attributable to the revenue growth. As a ~~comparable basis, adjusting prior year~~result, marketing and sales ~~expense~~as a percentage of net revenues decreased 40 basis points, to ~~exclude Fannie May’s expenditures, marketing and sales expense increased 1.8% during both~~28.2% for the three ~~and six~~ months ended ~~December 31, 2017,~~March 29, 2020, and decreased 10 basis points, to 24.5%, for the nine months ended March 29, 2020, in comparison to the same periods of the prior year, due to increased marketing spend within the Consumer Floral and Gourmet Foods & Gift Baskets segments, commensurate with revenue growth, including the Company’s efforts to test digital marketing strategies during the holiday season for applications throughout the remainder of the fiscal year. ~~These increases were partially offset by a reduction in performance based bonuses.~~
Technology and ~~Development Expense~~development expense

Three Months Ended

Six Months Ended

Three Months Ended

Nine months Ended

December 31, 2017

January 1, 2017

% Change

January 1, 2017

January 1, 2017

% Change

March 29, 2020

March 31, 2019

% Change

March 29, 2020

March 31, 2019

% Change

(dollars in thousands)

(dollars in thousands)

Technology and development
$ 9,175 $ 9,849 -6.8
%
$ 18,845 $ 19,337 -2.5
%
$ 11,900 $ 11,511 3.4
%
$ 34,436 $ 32,696 5.3
%
Percentage of net revenues
1.7
%
1.8
%
2.8
%
2.7
%
4.3
%
4.6
%
3.2
%
3.3
%

Technology and development expense consists primarily of payroll and operating expenses of the ~~Company~~’sCompany’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 ~~decreased 6.8%~~increased 3.4% and ~~2.5%~~5.3% during the three and ~~six~~nine months ended ~~December 31, 2017,~~March 29, 2020, compared to the same ~~period~~periods of the prior year, primarily due to ~~favorable hosting costs and labor expenses resulting from a reduction in performance based bonuses, partially offset by~~ increased license and maintenance costs ~~related~~required to ~~security and order processing platforms.~~support the Company’s technology platform as well as increased hosting costs due to higher usage of cloud storage applications.
24
~~Table of Contents~~
General and ~~Administrative Expense~~administrative expense

Three Months Ended

Six Months Ended

Three Months Ended

Nine months Ended

December 31, 2017

January 1, 2017

% Change

December 31, 2017

January 1, 2017

% Change

March 29, 2020

March 31, 2019

% Change

March 29, 2020

March 31, 2019

% Change

(dollars in thousands)

(dollars in thousands)

General and administrative
$ 19,170 $ 21,551 -11.0
%
$ 38,575 $ 43,484 -11.3
%
$ 20,031 $ 22,447 (10.8
%)
$ 64,187 $ 64,480 (0.5
%)
Percentage of net revenues
3.6 % 3.9
%
5.6
%
6.0
%
7.2
%
9.0
%
6.0
%
6.5
%

General and administrative expense consists of payroll and other expenses in support of the ~~Company~~’sCompany’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 decreased ~~11.0%~~10.8% and ~~11.3%~~0.5% during the three and ~~six~~nine months ended ~~December 31, 2017,~~March 29, 2020, compared ~~to the same period of the prior year, primarily due to the disposition of Fannie May on May 30, 2017~~. On a comparable basis, adjusting prior year general and administrative expense to exclude Fannie May’s expenditures, general and administrative expense decreased 3.9% and 3.7% during the respective three and six months ended December 31, 2017, in comparison to the same periods of the prior year, primarily due to ~~reductions in travel, and~~lower labor ~~resulting from~~costs, attributable to a ~~reduction in performance based bonuses, partially offset by an increase~~decrease in the value of Non-Qualified Deferred Compensation Plan (NQ Plan) investments ~~(increase offset~~(offset by an equal decrease in ~~Other (income) expense net~~ ~~line item~~other income on the financials statement – see below), and lower insurance costs due to favorable claims experience, partially offset by higher ~~health insurance costs.~~transaction costs associated with the planned acquisition of PersonalizationMall.com. Adjusted to exclude the impact of the decrease in the value of the NQ Plan investments and the PersonalizationMall.com transaction costs, general and administrative expenses would have been $21.7 million and $64.9 million during the three and nine months ended March 29, 2020, representing increases of 2.7% and 1.2% over the respective prior year periods.

Depreciation and amortization expense ~~and Amortization Expense~~

Three Months Ended

Six Months Ended

Three Months Ended

Nine months Ended

December 31, 2017

January 1, 2017

% Change

December 31, 2017

January 1, 2017

% Change

March 29, 2020

March 31, 2019

% Change

March 29, 2020

March 31, 2019

% Change

(dollars in thousands)

(dollars in thousands)

Depreciation and amortization
$ 8,677 $ 9,167 -5.3
%
$ 16,761 $ 17,164 -2.3
%
$ 7,803 $ 7,028 11.0
%
$ 23,268 $ 22,840 1.9
%
Percentage of net revenues
1.6
%
1.7
%
2.5
%
2.4
%
2.8
%
2.8
%
2.2
%
2.3
%

Depreciation and amortization expense ~~for~~during the three and nine months ended ~~December 31, 2017 decreased 5.3%~~ March 29, 2020 increased 11.0% and ~~2.3%~~1.9%, in comparison to the same period of the prior year, due to the disposition of Fannie May. On a comparable basis, adjusting prior year depreciation and amortization expense to exclude Fannie May, depreciation and amortization expense increased 3.9% and 7.9% during the respective three and six months ended December 31, 2017, in comparisonrespectively, compared to the same periods of the prior year, primarily as result of short-lived capital expenditures to support the Company’s IT infrastructure, but was consistent as a ~~result~~percentage of ~~recent shorter-lived IT capital expenditures.~~revenues.

22
Table of Contents

Interest ~~Expense,~~(income) expense, net

Three Months Ended

Six Months Ended

December 31, 2017

January 1, 2017

% Change

December 31, 2017

January 1, 2017

% Change

(dollars in thousands)

Interest expense, net
$ 1,226 $ 2,154 -43.1
%
$ 2,257 $ 3,605 -37.4
%

Three Months Ended

Nine months Ended

March 29, 2020

March 31, 2019

% Change

March 29, 2020

March 31, 2019

% Change

(dollars in thousands)

Interest (income) expense, net
$ 147 $ (30
)
590.0
%
$ 1,727 $ 2,390 (27.7
%)

Interest (income) expense, net consists primarily of interest expense and amortization of deferred financing costs attributable to the ~~Company~~’sCompany’s credit facility (See Note 8 - Debt,, in Item 1.1. for ~~details regarding the 2016 Amended Credit Facility)~~details), net of income earned on the Company’s available cash balances.

Interest (income) expense, net ~~decreased 43.1% and 37.4%~~increased during the three ~~and six~~ months ended ~~December 31, 2017 in comparison~~March 29, 2020, compared to the same ~~periods~~period of the prior year, due to lower interest income on available cash balance, as a result of ~~scheduled repayment~~the Federal Reserve’s March 2020 rate reduction to counteract the impact of ~~term loan~~COVID-19. Interest (income) expense, net decreased 27.7% during the nine months ended March 29, 2020, compared to the same period of the prior year, due to lower borrowings outstanding, and ~~funding fiscal 2018 working capital requirements primarily through the use of cash on hand~~a lower interest rate resulting from the ~~sale of Fannie May, in comparison to fiscal 2017, when the Company funded working capital requirements through its revolving credit facility.~~
25
~~Table of Contents~~
2019 Credit Agreement amendment, partially offset by lower rates earned on outstanding cash balances.

Other (income) expense, net

Three Months Ended

Six Months Ended

December 31, 2017

January 1, 2017

% Change

December 31, 2017

January 1, 2017

% Change

(dollars in thousands)

Other (income) expense, net
$ (86
)
$ 1 8,700
%
$ (346
)
$ (149
)
132.2
%

Three Months Ended

Nine months Ended

March 29, 2020

March 31, 2019

% Change

March 29, 2020

March 31, 2019

% Change

(dollars in thousands)

Other (income) expense, net
$ 2,605 $ (1,285
)
302.7
%
$ 1,714 $ (293
)
685.0
%

Other ~~income,~~expense, net for the three and ~~six~~nine months ended ~~December 31, 2017~~March 29, 2020 consists primarily of investment ~~earnings of~~loss on the Company’s Non-Qualified Deferred Compensation Plan assets ~~partially offset by a $0.2~~of approximately $2.6 million ~~impairment related to the Company’s equity method investment in Flores Online (see~~ ~~Note 7 - Investmentsabove).~~
~~Other (income) expense, net for the three~~ and ~~six months ended January 1, 2017 primarily consists of~~ ~~investment earnings of the Company’s Non-Qualified Deferred Compensation Plan assets for both the three and six months ended January 1, 2017, partially offset by a decrease~~$1.7 million, respectively, whereas in the ~~Company’s equity interest in Flores Online~~prior year there was investment income of ~~$0.1~~$1.3 million ~~for both the three~~ and ~~six months ended January 1, 2017.~~$0.3 million, respectively.

Income Taxes

The Company recorded an income tax benefit of $4.0 million and expense of ~~$12.6~~$15.4 million, ~~and $5.5 million, respectively,~~ during the three and ~~six~~nine months ended ~~December 31, 2017~~March 29, 2020, respectively, and income tax benefit of $5.1 million and income tax expense of ~~$31.5~~$11.9 million, ~~and $22.8 million, respectively,~~ during the three and ~~six~~nine months ended ~~January 1, 2017.~~March 31, 2019, respectively. The Company’s effective tax rate from operations for the three and ~~six~~nine months ended ~~December 31, 2017~~March 29, 2020 was ~~15.2%~~29.2% and ~~8.7%~~23.8% respectively, compared to ~~33.3%~~38.1% and ~~32.6%~~21.7% in the same periods of the prior year. The effective tax rates for fiscal ~~2018 were impacted by changes associated with the Tax Act (see~~ ~~Note 1 -Accounting Policies~~ in Item 1. above). During the quarter ended December 31, 2017, the Company recognized a benefit of $15.9 million, or $0.24 per diluted share related to the impact of the Tax Act, consisting of a discrete tax benefit of $12.2 million, or $0.18 per diluted share, reflecting a revaluation of deferred tax liabilities at the lower U.S. federal statutory rate of 21%,2020 and ~~a benefit of $3.7 million, or $0.06 per diluted share, reflecting the Company’s lower transitional federal tax rate in~~ fiscal 2018 of 28.0 percent. In addition, fiscal 2018 effective rates were impacted by state income taxes, which were partially offset by various permanent differences and tax credits. The effective rates for fiscal 20172019 differed from the U.S. federal statutory rate of 21% due to state income taxes ~~which were more than~~and nondeductible expenses for executive compensation, partially offset by various permanent differences and tax credits, including excess tax benefits ~~on stock based compensation as a result of the Company’s adoption of ASU 2016-09.~~from stock-based compensation. At ~~December 31, 2017,~~March 29, 2020, the Company has an unrecognized tax benefit, including ~~an immaterial amount of~~ accrued interest and penalties, of approximately ~~$0.4~~$0.9 million. The Company believes that ~~no significant~~$0.2 million of unrecognized tax positions will be resolved over the next twelve months.

Liquidity and Capital Resources
Liquidity and borrowings

The Company's principal sources of liquidity are cash on hand, cash flows generated from operations and ~~the~~ borrowings available under the ~~2016~~2019 Credit ~~Facility~~Agreement (see Note 8 - Debt in Item 1 for details). At ~~December 31, 2017,~~March 29, 2020, the Company had working capital of ~~$172.2~~$185.0 million, including cash and cash equivalents of ~~$232.6~~$232.1 million, compared to working capital of ~~$132.2~~$175.7 million, including cash and cash equivalents of ~~$149.7~~$172.9 million, at ~~July 2, 2017.~~ ~~Borrowings under~~June 30, 2019. The March 29, 2020 working capital was negatively impacted by $9.5 million due the ~~Revolver (working capital needs), which were significantly lower than prior year~~establishment of an operating lease liability (current portion) on the balance sheet in the first quarter of fiscal 2020 as a result of the adoption of ASC 842.
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. The Company utilized cash ~~generated from~~on hand to fund operations through September 2019. In October 2019, the ~~sale of Fannie May, peaked~~Company borrowed under its Revolver to fund short-term working capital needs, with borrowings peaking at $20.0 million in November ~~when cash~~2019. Cash generated from operations during the Christmas holiday shopping season enabled the Company to repay the Revolver prior to the end of December 2017. 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, is expected to generate nearly 50% of the Company’s annual revenues, and all of its earnings. As a result,2019. Based on current projected cashflows, the Company ~~generated significant~~believes that available cash ~~from operations during its second quarter, which, after re-paying all borrowings outstanding under its Revolver, is~~balances are expected to be sufficient to provide for the Company’s operating needs ~~until the second quarter of~~through fiscal ~~2019, when the Company expects to borrow against its Revolver to fund pre-holiday manufacturing and inventory purchases.~~2021.

WeWhile we believe that our sources of funding will be sufficient to meet our anticipated operating cash needs for at ~~lea~~stleast the next ~~12 months. However,~~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.

26
~~Table~~
Our sources and uses of ~~Contents~~cash were not materially impacted by COVID-19 for the quarter ended March 29, 2020 and, to date, we have not identified any material liquidity deficiencies as a result of the COVID-19 pandemic. Based on the information currently available to us, we do not expect the impact of COVID-19 to have a material impact on our liquidity. We will continue to monitor and assess the impact COVID-19 may have on our business and financial results. See Part II. Item 1A. “Risk Factors”
and Part I. Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further information.

Cash Flows

Net cash provided by operating activities of ~~$114.2~~$117.3 million, for the ~~six~~nine months ended ~~December 31, 2017,~~March 29, 2020, was primarily attributable to the Company’s net income during the period, adjusted by non-cash charges for depreciation/amortization ~~deferred income taxes (including the impact of the Tax Act – see~~ ~~Note 1 -Accounting Policies~~ ~~and~~ ~~Note 11 – Income taxes~~ ~~in Item 1 above)~~ and stock based compensation, ~~as well as~~combined with seasonal changes in working capital, including ~~holiday related~~ increases in accounts payable and accrued expenses, and reductions in inventory, partially offset by increases in ~~receivables related to holiday season sales.~~receivables.

Net cash used in investing activities of ~~$17.4~~$44.0 million, for the ~~six~~nine months ended ~~December 31, 2017,~~March 29, 2020, was primarily attributable to the ~~working~~acquisition of Shari’s Berries for $20.5 million, capital ~~adjustment related to the sale~~expenditures of ~~Fannie May, of which $8.5~~$22.3 million ~~was still due to Ferrero at July 2, 2017 and to capital expenditures~~ related to the Company's technology initiatives and Gourmet Foods & Gift ~~Basket~~Baskets segment manufacturing production and ~~orchard planting equipment.~~warehousing equipment, and the purchase of equity investments of $1.2 million.

Net cash used in financing activities of ~~$13.9~~$14.2 million, for the ~~six~~nine months ended ~~December 31, 2017~~March 29, 2020, was primarily due to ~~Term Loan~~net bank repayments of ~~$2.9~~$3.8 million and the acquisition of ~~$11.1~~$10.7 million of treasury stock. ~~All borrowings under the Company's revolving credit facility were repaid by the end~~
23
Table of ~~the fiscal second quarter.~~ Contents

Stock Repurchase Program

~~The Company has a stock repurchase plan through which purchases can be made from time to time~~See Item 2 in ~~the open market and through privately negotiated transactions, subject to general market conditions. The repurchase program is financed utilizing available cash. On August 30, 2017, the Company’s Board of Directors authorized an increase to its stock repurchase plan of up to $30.0 million. As of December 31, 2017, $21.1 million remained authorized under the plan.~~Part II below for details.
Contractual Obligations

~~There have been no material changes outside~~At March 29, 2020, the ~~ordinary course of business related to the Company~~’sCompany’s contractual obligations ~~as discussed in the Annual Report on Form 10-K for the year ended July 2, 2017.~~consist of:

27
~~Table of Contents~~
●
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
$ 37,722 $ 24,163 $ 6,845 $ 4,725 $ 1,170 $ - $ 74,625

Critical Accounting Policies and Estimates

As disclosed in the ~~Company~~’s Company’s Annual Report on Form 10-K for the fiscal year ended ~~July 2, 2017,~~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 ~~revenue recognition, accounts receivable, inventory,~~ goodwill, other intangible ~~assets and long-lived~~ assets and income taxes. There have been no significant changes to the assumptions and estimates related to the Company’s critical accounting policies, since ~~July 2, 2017,~~June 30, 2019, except for the ~~enactment~~adoption of ~~the Tax Act~~ASC 842 (see Note 1 -Accounting Policies ~~and~~ ~~Note 11 – Income taxes~~ in Item 1 above for details).

~~Recent~~Recently Issued Accounting Pronouncements
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” This amended guidance will enhance the comparability of revenue recognition practices and will be applied to all contracts with customers. Expanded disclosures related to the nature, amount, timing, and uncertainty of revenue that is recognized are requirements under the amended guidance. As we continue to evaluateSee Note 1 - Accounting Policies in Item 1 for details regarding the impact of ~~this ASU, we have determined~~accounting standards that ~~the new standard will impact the following areas: the costs of producing and distributing the Company~~’s catalogs will be expensed upon shipment, instead of being capitalized and amortized in direct proportion to the actual sales; gift card breakage will be estimated based on the historical pattern of gift card redemption, rather than when redemption is considered remote; the Company will defer revenue at the time the Celebrations Reward loyalty points are earned using a relative fair value approach, rather than accruing a liability equal to the incremental cost of fulfilling its obligations. We have further identified the timing of revenue recognition for e-commerce orders (shipping point versus destination) as a potential issue in our analysis, which is not expected to change the total amount of revenue recognized, but could accelerate the timing of when revenue is recognized. We plan to adopt this guidance beginning with the first quarter in the fiscal year ending June 30, 2019 on a retrospective basis with a cumulative adjustment to retained earnings. We are continuing to evaluate the impact that this ASU, and related amendments and interpretive guidance, will have on our consolidated financial statements, including the related disclosures.
~~In July 2015, the FASB~~were recently issued ASU No. 2015-11, “Inventory (Topic 330).” The pronouncement was issued to simplify the measurement of inventory and changes the measurement from lower of cost or market to lower of cost and net realizable value. The Company adopted this standard effective July 3, 2017. The adoption of ASU 2015-11 did not have a significant impact on the Company~~’s consolidated financial position or results of operations.~~
~~In January 2016, the FASB issued ASU No. 2016-01, "Financial Instruments~~ – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities." The pronouncement requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset, and eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. This guidance will become effective for the Company's fiscal year ending June 30, 2019. The adoption is not expected to have a significant impact on the Company’s consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 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. This guidance is effective for the Company’s fiscal year ending June 28, 2020. We are currently evaluating the impact and expect the ASU will have a material impact on our consolidated financial statements, primarily to the consolidated balance sheets and related disclosures.
28
~~Table of Contents~~
In March 2016, the FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting.” ASU No. 2016-09 affects all entities that issue share-based payment awards to their employees. ASU No. 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The Company elected to early adopt the amendments in ASU 2016-09, in fiscal 2017. As a result, stock-based compensation excess tax benefits are reflected in the Consolidated Statements of Income as a component of the provision for income taxes, whereas they were previously recognized in equity. This change resulted in the recognition of excess tax benefits against income tax expenses, rather than additional paid-in capital, of $1.0 million for the year ended July 2, 2017. There was no impact on earnings per share since approximately 700,000 tax benefit shares for the year ended July 2, 2017, previously associated with the APIC pool calculation, are no longer considered in the diluted share computation. Additionally, our Consolidated Statements of Cash Flows now present excess tax benefits as an operating activity. This change has been applied prospectively in accordance with the ASU and prior periods have not been adjusted. Further, the Company has elected to account for forfeitures as they occur, rather than estimate expected forfeitures. The cumulative effect of this change, which was recorded as compensation expense in fiscal 2017, was not material to the financial statements. In addition, this ASU allows entities to withhold an amount up to an employees’ maximum individual statutory tax rate in the relevant jurisdiction, up from the minimum statutory requirement, without resulting in liability classification of the award. We adopted this change on a modified retrospective basis, with no impact to our consolidated financial statements. Finally, this ASU clarified that the cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a financing activity. This change does not have an impact on the Company’s consolidated financials as it conforms with its current practice.
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 year ending July 4, 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.
~~In June 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230), a consensus of the FASB~~’s Emerging Issues Task Force.” ASU 2016-15 is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The ASU is effective for the Company’s fiscal year ending June 30, 2019, and interim periods within those fiscal years. Early adoption is permitted, including interim periods within those fiscal years. An entity that elects early adoption must adopt all of the amendments in the same period. The guidance requires application using a retrospective transition method. The adoption is not expected to have a significant impact on the Company’s consolidated financial statements.
In January 2017, the FASB issued ASU No. 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business (ASU 2017-01)," which revises the definition of a business and provides new guidance in evaluating when a set of transferred assets and activities is a business. ASU 2017-01 is effective for the Company's fiscal year ending June 30, 2019, 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.
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 year ending July 4, 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.
~~In February 2017, the FASB issued~~ ASU No. 2017-05, “Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets.” This update clarifies the scope of accounting for the derecognition or partial sale of nonfinancial assets to exclude all businesses and nonprofit activities. ASU 2017-05 also provides a definition for in-substance nonfinancial assets and additional guidance on partial sales of nonfinancial assets. This guidance will be effective for the Company’s fiscal year ending June 30, 2019 and may be applied retrospectively. The Company is currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.
29
~~Table of Contents~~
In May 2017, the FASB issued ASU No 2017-09, “Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting.” This ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. An entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. ASU 2017-09 is effective for the Company's fiscal year ending June 30, 2019, with early adoption permitted, and should be applied prospectively to an award modified on or after the adoption date. The Company is currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

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~~’sCompany’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~~’sCompany’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 ~~efficiently~~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.~~Company’s products; and
●
the impact of COVID-19 on our business and financial statements.

We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans and assumptions. Achievement of future results is subject to risks, uncertainties and inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from past results and those anticipated, estimated or projected. Investors should bear this in mind as they consider forward-looking statements.

We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our Forms 10-Q, 8-K and 10-K reports to the Securities and Exchange Commission. Our Annual Report on Form 10-K filing for the fiscal year ended ~~July 2, 2017~~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. In addition, please refer to additional risk factors in Part II, Item 1A in this Form 10-Q.
30
~~Table of Contents~~

ITEM 3.3. 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~~’sCompany’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 ~~credit facility~~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 ~~$0.2~~$0.1 million and ~~$0.3~~$0.4 million during the three and ~~six~~nine months ended ~~December 31, 2017, respectively.~~March 29, 2020.
24
Table of Contents

ITEM 4.4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The ~~Company~~’sCompany’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 ~~December 31, 2017.~~March 29, 2020. 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 ~~December 31, 2017.~~March 29, 2020.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the ~~Company~~’sCompany’s evaluation required by Rules 13a-15(d) or 15d-15(d) of the Securities Exchange Act of 1934 during the quarter ended ~~December 31, 2017,~~March 29, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
31
~~Table~~ To the extent our normal procedures and controls related to our financial close or other reporting processes were adversely impacted by the COVID-19 outbreak, we took appropriate actions and safeguards to reasonably ensure the fair presentation of ~~Contents~~
the financial statements in accordance with GAAP.

PART II. II. – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Litigation

~~There~~Bed Bath & Beyond:
On April 1, 2020, Bed Bath & Beyond Inc. (“Bed Bath”) commenced an action against the Company in the Court of Chancery for the State of Delaware, which is captioned Bed Bath & Beyond Inc. v. 1-800-Flowers.com, et ano., C.A. (the “Complaint”), alleging a breach of the Equity Purchase Agreement (the “Agreement”), dated February 14, 2020, between Bed Bath, PersonalizationMall.com, LLC (“Personalization Mall”), the Company and a subsidiary of the Company (the “Purchaser”) pursuant to which Bed Bath agreed to sell to Purchaser, and the Purchaser agreed to purchase from Bed Bath, all of the issued and outstanding membership interests of Personalization Mall. The action was initiated after the Company requested a reasonable delay in the closing under the Agreement due to the unprecedented circumstances created by the COVID-19 pandemic. The Complaint requests an order of specific performance to consummate the transaction under the Agreement plus attorney’s fees and costs in connection with the action. The Company filed its answer to the Complaint on April 17, 2020 and an order governing expedited proceedings was approved on April 9, 2020 that sets a trial date for late September. The Company intends to vigorously defend itself against this lawsuit and no assurance can be given as to the ultimate outcome of this matter. At this time the proceedings are in the very early stages, and we are unable to determine or estimate the amount of possible loss or range of loss.
In addition, 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~~final 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.1A. RISK FACTORS.

~~There were no material changes~~The following additional risk factor related to COVID-19 should be read in conjunction with the ~~Company~~’sCompany’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 ~~July 2, 2017.~~June 30, 2019. The developments described in this additional risk factor have heightened, or in some cases manifested, certain of the risks disclosed in the risk factor section of our previously filed Form 10-K, and such risk factors are further qualified by the information relating to COVID-19 that is described in this Form 10-Q, including in the additional risk factor below. Except as described herein, there have been no material changes with respect to the risk factors disclosed in our Annual Report on Form 10-K for the year ended June 30, 2019.

The impact of the spread of COVID-19 is creating significant uncertainty for our business, financial condition and results of operations and for the prices of our publicly traded securities.
The extent of the impact of the COVID-19 pandemic on our business and financial results will depend on numerous evolving factors that we are not able to accurately predict and which will vary by market, including the duration and scope of the pandemic, global economic conditions during and after the pandemic, governmental actions that have been taken, or may be taken in the future, in response to the pandemic, and changes in consumer behavior in response to the pandemic, some of which may be more than just temporary.
Our operations expose us to risks associated with the COVID-19 pandemic, which has resulted in challenging operating environments. COVID-19 has spread across the globe to the countries and states in which we do business. Authorities in many of these markets have implemented numerous measures to stall the spread of COVID-19, including travel bans and restrictions, quarantines, curfews, shelter in place orders, and business shutdowns. These measures have impacted and will further impact us and our business partners (such as customers, employees, suppliers, franchisees, florists and other third parties with whom we do business). There is considerable uncertainty regarding how these measures and future measures in response to the pandemic will impact our business, including whether they will result in further changes in demand for our products, further increases in operating costs (whether as a result of changes to our supply chain or increases in employee costs or otherwise), how they will further impact our supply chain and whether they will result in further reduced availability of air or other commercial transport, port closures or border restrictions, each or all of which can impact our ability to make, manufacture, distribute and sell our products. In addition, measures that impact our ability to access our offices, plants, warehouses, distribution centers or other facilities, or that impact the ability of our business partners to do the same, may impact the availability of our and their employees, many of whom are not able to perform their job functions remotely. If a significant percentage of our or our business partners’ workforce is unable to work, our operations will be negatively impacted. Any sustained interruption in our or our business partners’ operations, distribution network or supply chain or any significant continuous shortage of raw materials or other supplies as a result of these measures, restrictions or disruptions can impair our ability to make, manufacture, distribute or sell our products.
Compliance with governmental measures imposed in response to COVID-19 has caused and may continue to cause us to incur additional costs, and any inability to comply with such measures can subject us to restrictions on our business activities, fines, and other penalties, any of which can adversely affect our business. The continuation of the COVID-19 pandemic and various governmental responses may continue to restrict our ability to carry on business development activities and business-related travel, and our sales activity may be adversely affected. In addition, the increase in certain of our employees working remotely has amplified certain risks to our business, including increased demand on our information technology resources and systems, increased phishing and other cybersecurity attacks as cybercriminals try to exploit the uncertainty surrounding the COVID-19 pandemic, and an increase in the number of points of potential attack, such as laptops and mobile devices (both of which are now being used in increased numbers), to be secured, and any failure to effectively manage these risks, including to timely identify and appropriately respond to any cyberattacks, may adversely affect our business.
25
32
Table of Contents
Public concern regarding the risk of contracting COVID-19 impacts demand from customers, including due to customers not leaving their homes or otherwise shopping in a different manner than they historically have or because some of our customers have lower discretionary income due to unemployment or reduced or limited work as a result of measures taken in response to the pandemic. As we sell a wide variety of products, the profile of the products we sell and the amount of revenue attributable to such products varies by jurisdiction and changes in demand as a result of COVID-19 will vary in scope and timing across these markets. In addition, changes in consumer purchasing and consumption patterns may result in changes in demand for our products, thereby impacting our earnings. Any reduced demand for our products or change in customers purchasing and consumption patterns, as well as continued economic uncertainty, can adversely affect our customers’ and business partners’ financial condition, resulting in an inability to pay for our products, reduced or canceled orders of our products, closing of florist or franchise locations, stores, or our business partners’ inability to supply us with ingredients or other items necessary for us to make, manufacture, distribute or sell our products. Such adverse changes in our customers’ or business partners’ financial condition may also result in our recording impairment charges for our inability to recover or collect any accounts receivable, owned or leased assets, or prepaid expenses. In addition, economic uncertainty associated with the COVID-19 pandemic has resulted in volatility in the global capital and credit markets, and in foreign currency exchange rates, commodity prices, and interest rates, which can impair our ability to access these markets on terms commercially acceptable to us, or at all. Even after the COVID-19 global pandemic has subsided, we may experience adverse impacts to our business as a result of any economic recession or depression that has occurred or may occur in the future.
While we have developed and implemented and continue to develop and implement health and safety protocols, business continuity plans and crisis management protocols in an effort to try to mitigate the negative impact of COVID-19 on our employees and our business, there can be no assurance that we will be successful in our efforts, and as a result, our business, financial condition and results of operations and the prices of our publicly traded securities may be adversely affected.

ITEM 2.2. 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 ~~August 30, 2017,~~June 27, 2019, the ~~Company~~’sCompany’s Board of Directors authorized an increase to its stock repurchase plan of up to $30.0 million. As of ~~December 31, 2017, $21.1~~March 29, 2020, $19.3 million remained authorized under the plan.

The following table sets forth, for the months indicated, the ~~Company~~’sCompany’s purchase of common stock during the ~~first six~~nine months of fiscal ~~2018,~~2020, which includes the period July ~~3, 2017~~1, 2019 through ~~December 31, 2017:~~March 29, 2020:

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)

07/03/17 - 07/30/17
89.3 $ 9.66 89.3 $ 16,363
07/31/16 - 08/27/17
99.6 $ 9.08 99.6 $ 15,456
08/28/17 - 10/01/17
268.7 $ 9.43 268.7 $ 27,859
10/02/17 - 10/29/17
233.5 $ 9.62 233.5 $ 25,606
10/30/17 - 12/03/17
414.3 $ 9.36 414.3 $ 21,719
12/04/17 - 12/31/17
61.9 $ 10.16 61.9 $ 21,089

Total
1,167.3 $ 9.47 1,167.3
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
09/30/19 - 10/27/19
- $ - - $ 29,969
10/28/19 - 11/24/19
158,750 $ 13.24 158,750 $ 27,867
11/25/19 - 12/29/19
210,000 $ 13.76 210,000 $ 24,970
12/30/19 - 01/26/20
270,000 $ 14.43 270,000 $ 21,065
01/27/20 - 02/23/20
112,941 $ 15.30 112,941 $ 19,333
02/24/20 - 03/29/20
- $ - - $ 19,333
Total
753,804 $ 14.13 753,804
(1) Average price per share excludes commissions and other transaction fees.

ITEM 3.3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.5. OTHER INFORMATION

None.

26
33
Table of Contents

ITEM 6. EXHIBITS

2.1 Equity Purchase Agreement dated as of February 14, 2020, by an among 1-800-Flowers.com, Inc., 800-Flowers, Inc. PersonalizationMall.com, LLC, and Bed Bath & Beyond Inc. (Current Report on Form 8-K filed on February 18, 2020, Exhibit 2.1).
31.1
~~31.1~~
Certification of the principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
31.2
~~31.2~~
Certification of the principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. * *
32.1
~~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
~~101.INS~~
XBRL Instance Document
101.SCH
~~101.SCH~~
XBRL Taxonomy Extension Schema Document
101.CAL
~~101.CAL~~
XBRL Taxonomy Calculation Linkbase Document
101.DEF
~~101.DEF~~
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
~~101.LAB~~
XBRL Taxonomy Extension Label Document
101.PRE
~~101.PRE~~
XBRL Taxonomy Definition Presentation Document
* Filed herewith.

27
34
Table of Contents

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:      ~~February 9, 2017~~       May 8, 2020
/s/ Christopher G. McCann
Christopher G. McCann
Chief Executive Officer,
Director and President
(Principal Executive Officer)

Date:           ~~February 9, 2017~~ May 8, 2020
/s/ William E. Shea
William E. Shea
Senior Vice President, Treasurer and
Chief Financial Officer (Principal
Financial and Accounting Officer)

28
35

	December 31, 2017			July 2, 2017
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	232,589		$	149,732
Trade receivables, net		44,424			14,073
Inventories		60,567			75,862
Prepaid and other		22,007			17,735
Total current assets		359,587			257,402

Property, plant and equipment, net		154,606			161,381
Goodwill		62,590			62,590
Other intangibles, net		60,460			61,090
Other assets		11,520			10,007
Total assets	$	648,763		$	552,470

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	55,252		$	27,781
Accrued expenses		123,504			90,206
Current maturities of long-term debt		8,625			7,188
Total current liabilities		187,381			125,175

Long-term debt		97,545			101,377
Deferred tax liabilities		21,530			33,868
Other liabilities		11,565			9,811
Total liabilities		318,021			270,231

Commitments and contingencies (Note 13)

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, 51,879,967 and 51,227,779 shares issued at December 31, 2017 and July 2, 2017, respectively		519			513
Class B common stock, $0.01 par value, 200,000,000 shares authorized, 33,847,063 and 33,901,603 shares issued at December 31, 2017 and July 2, 2017, respectively		338			339
Additional paid-in-capital		339,805			337,726
Retained earnings		90,115			32,638
Accumulated other comprehensive loss		(160	)		(187	)
Treasury stock, at cost, 15,877,054 and 14,709,731 Class A shares at December 31, 2017 and July 2, 2017, respectively, and 5,280,000 Class B shares at December 31, 2017 and July 2, 2017		(99,875	)		(88,790	)
Total stockholders’ equity		330,742			282,239
Total liabilities and stockholders’ equity	$	648,763		$	552,470

	March 29, 2020			June 30, 2019
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	232,115		$	172,923
Trade receivables, net		26,217			12,374
Inventories		74,037			92,361
Prepaid and other		21,312			25,580
Total current assets		353,681			303,238

Property, plant and equipment, net		166,399			166,681
Operating lease right-of-use assets		70,284			-
Goodwill		74,711			62,590
Other intangibles, net		66,500			59,615
Other assets		17,054			14,316
Total assets	$	748,629		$	606,440

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	37,314		$	25,704
Accrued expenses		116,815			96,793
Current maturities of long-term debt		5,000			5,000
Current portion of long-term operating lease liabilities		9,524			-
Total current liabilities		168,653			127,497

Long-term debt		88,648			91,973
Long-term operating lease liabilities		64,251			-
Deferred tax liabilities		27,300			28,898
Other liabilities		11,766			15,361
Total liabilities		360,618			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, 53,702,810 and 53,084,127 shares issued at March 29, 2020 and June 30, 2019, respectively		537			530
Class B common stock, $0.01 par value, 200,000,000 shares authorized, 33,822,823 shares issued at March 29, 2020 and June 30, 2019		338			338
Additional paid-in-capital		356,038			349,319
Retained earnings		157,749			108,525
Accumulated other comprehensive loss		(252	)		(269	)
Treasury stock, at cost, 17,962,897 and 17,209,093 Class A shares at March 29, 2020 and June 30, 2019, respectively, and 5,280,000 Class B shares at March 29, 2020 and June 30, 2019		(126,399	)		(115,732	)
Total stockholders’ equity		388,011			342,711
Total liabilities and stockholders’ equity	$	748,629		$	606,440

	Three Months Ended						Nine Months Ended
	March 29, 2020			March 31, 2019			March 29, 2020		March 31, 2019
Net income (loss)	$	(9,657	)	$	(8,241	)	$	49,224	$	43,071
Other comprehensive income (loss) (currency translation & other miscellaneous items)		1			3			17		(58	)
Comprehensive income (loss)	$	(9,656	)	$	(8,238	)	$	49,241	$	43,013

	Three Months Ended March 29, 2020 and March 31, 2019
	Common Stock								Additional		Retained			Accumulated								Total
	Class A				Class B				Paid-in		Earnings			Other			Treasury Stock					Stockholders’
	Shares		Amount		Shares		Amount		Capital		(Deficit)			Comprehensive Loss			Shares		Amount			Equity

Balance at December 29, 2019		53,678,919	$	536		33,822,823	$	338	$	353,643	$	167,406		$	(253	)		22,859,956	$	(120,762	)	$	400,908
Net loss		-		-		-		-		-		(9,657	)		-			-		-			(9,657	)
Translation adjustment		-		-		-		-		-		-			1			-		-			1
Stock-based compensation		23,891		1		-		-		2,395		-			-			-		-			2,396
Acquisition of Class A treasury stock		-		-		-		-		-		-			-			382,941		(5,637	)		(5,637	)
Balance at March 29, 2020		53,702,810	$	537		33,822,823	$	338	$	356,038	$	157,749		$	(252	)		23,242,897	$	(126,399	)	$	388,011

Balance at December 30, 2018		52,749,203	$	527		33,822,823	$	338	$	344,769	$	125,071		$	(261	)		22,383,738	$	(114,371	)	$	356,073
Net loss		-		-		-		-		-		(8,241	)		-			-		-			(8,241	)
Translation adjustment		-		-		-		-		-		-			3			-		-			3
Stock-based compensation		1,924		-		-		-		1,903		-			-			-		-			1,903
Exercise of stock options		180,000		1		-		-		563		-			-			-		-			564
Acquisition of Class A treasury stock		-		-		-		-		-		-			-			105,355		(1,360	)		(1,360	)
Balance at March 31, 2019		52,931,127	$	528		33,822,823	$	338	$	347,235	$	116,830		$	(258	)		22,489,093	$	(115,731	)	$	348,942

	Nine Months Ended March 29, 2020 and March 31, 2019
	Common Stock								Additional		Retained			Accumulated								Total
	Class A				Class B				Paid-in		Earnings			Other			Treasury Stock					Stockholders’
	Shares		Amount		Shares		Amount		Capital		(Deficit)			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 income		-		-		-		-		-		49,224			-			-		-			49,224
Translation adjustment		-		-		-		-		-		-			17			-		-			17
Stock-based compensation		468,683		5		-		-		6,436		-			-			-		-			6,441
Exercise of stock options		150,000		2		-		-		283		-			-			-		-			285
Acquisition of Class A treasury stock		-		-		-		-		-		-			-			753,804		(10,667	)		(10,667	)
Balance at March 29, 2020		53,702,810	$	537		33,822,823	$	338	$	356,038	$	157,749		$	(252	)		23,242,897	$	(126,399	)	$	388,011

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 income		-		-		-		-		-		43,071			-			-		-			43,071
Translation adjustment		-		-		-		-		-		-			(58	)		-		-			(58	)
Stock-based compensation		411,600		4		-		-		4,527		-			-			-		-			4,531
Exercise of stock options		448,234		4		-		-		925		-			-			-		-			929
Other		-		-		-		-		-		330			-			-		-			330
Acquisition of Class A treasury stock		-		-		-		-		-		-			-			1,230,303		(14,765	)		(14,765	)
Balance at March 31, 2019		52,931,127	$	528		33,822,823	$	338	$	347,235	$	116,830		$	(258	)		22,489,093	$	(115,731	)	$	348,942

●	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.

	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		(150,000	)	$	1.90
Forfeited		-		$	-
Outstanding at March 29, 2020		1,215,000		$	2.55		1.5	$	12,550

Exercisable at March 29, 2020		1,215,000		$	2.55		1.5	$	12,550

	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value

Non-vested at July 2, 2017		1,352,873		$	7.44
Non-vested at June 30, 2019							1,438,592		$	10.81
Granted		881,473		$	9.47		736,555		$	13.09
Vested		(593,648	)	$	7.76		(468,683	)	$	10.37
Forfeited		(628,946	)	$	9.50		(59,816	)	$	12.54
Non-vested at December 31, 2017		1,011,752		$	7.74
Non-vested at March 29, 2020							1,646,648		$	11.89

	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

	December 31, 2017		July 2, 2017		March 29, 2020		June 30, 2019
	(in thousands)				(in thousands)
Finished goods	$	26,853	$	34,476	$	32,361	$	36,820
Work-in-process		4,559		11,933		10,332		17,535
Raw materials		29,155		29,453		31,344		38,006
Total inventory	$	60,567	$	75,862	$	74,037	$	92,361

	1-800-Flowers.com Consumer Floral		BloomNet Wire Service		Gourmet Foods & 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 March 29, 2020	$	17,441	$	-	$	57,270	$	74,711

	December 31, 2017			July 2, 2017
	(in thousands)						March 29, 2020			June 30, 2019
							(in thousands)
Revolver (1)	$	-		$	-		$	-		$	-
Term Loan (1)		109,250			112,125			96,250			100,000
Deferred financing costs		(3,080	)		(3,560	)		(2,602	)		(3,027	)
Total debt		106,170			108,565			93,648			96,973
Less: current debt		8,625			7,188			5,000			5,000
Long-term debt	$	97,545		$	101,377		$	88,648		$	91,973

Level1		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.

	Carrying Value		Fair Value Measurements Assets (Liabilities)						Carrying Value		Fair Value Measurements Assets (Liabilities)
			Level 1		Level 2		Level 3				Level 1		Level 2		Level 3
	(in thousands)								(in thousands)
Assets (liabilities) as of December 31, 2017:
As of March 29, 2020:
Trading securities held in a “rabbi trust” (1)	$	8,693	$	8,693	$	-	$	-	$	11,360	$	11,360	$	-	$	-
Total assets (liabilities) at fair value									$	11,360	$	11,360	$	-	$	-
	$	8,693	$	8,693	$	-	$	-

Assets (liabilities) as of July 2, 2017:
As of June 30, 2019:
Trading securities held in a “rabbi trust” (1)	$	6,916	$	6,916	$	-	$	-	$	11,816	$	11,816	$	-	$	-
	$	6,916	$	6,916	$	-	$	-
Total assets (liabilities) at fair value									$	11,816	$	11,816	$	-	$	-

	Nine months ended									Nine months ended
	March 29, 2020									March 31, 2019
	Consumer Floral		BloomNet Wire Service		Gourmet Foods & Gift Baskets		Consolidated			Consumer Floral		BloomNet Wire Service		Gourmet Foods & Gift Baskets		Consolidated
	(in thousands)
Net revenues
E-commerce	$	353,436	$	-	$	494,549	$	847,985		$	332,302	$	-	$	448,581	$	780,883
Retail		3,187		-		35,640		38,827			3,113		-		38,477		41,590
Wholesale		-		26,819		101,516		128,335			-		23,247		88,908		112,155
BloomNet services		-		54,757		-		54,757			-		52,366		-		52,366
Other		2,481		-		-		2,481			2,588		-		-		2,588
Corporate		-		-		-		472			-		-		-		845
Eliminations		-		-		-		(1,176	)		-		-		-		(1,202	)
Net revenues	$	359,104	$	81,576	$	631,705	$	1,071,681		$	338,003	$	75,613	$	575,966	$	989,225

	March 29, 2020
	(in thousands)
Weighted-average remaining lease term - operating leases	9.5 years
Weighted-discount rate - operating leases		3.8	%

Remainder of 2020	$	3,195
2021		11,683
2022		10,313
2023		9,905
2024		9,455
Thereafter		44,897
Total Future Minimum Lease Payments		89,448
Less Imputed Remaining Interest		15,673
Total	$	73,775

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

●	Retail store closures – on March 20, 2020, in response to government actions, and for the safety of its employees, the Company temporarily closed its Cheryl’s and Harry & David retail stores. Affected employees were provided with Company paid special COVID leave pay through April 3^rd, as the nation and the Company worked to understand the extent and potential length of the crisis. On April 14^th, the difficult decision was made to permanently close 38 of our 39 Harry & David retail stores. Plans to wind-down store operations in an orderly manner are currently in development. As a result, the Company expects to incur a charge within the range of $4.0 - $5.0 million in our fourth quarter for lease obligations, employee costs and other store closure costs. Annual revenues attributable to the closed locations was approximately $33.0 million.
●	Wholesale volume reductions - we have seen a reduction in our wholesale business as a result of COVID-19, which will impact our fourth quarter results within our BloomNet and Gourmet Foods and Gift Baskets segments. Additionally, we anticipate reduced wholesale orders through the fiscal second quarter of fiscal 2021, as our large wholesale customers are taking a cautious approach due to the uncertainty surrounding the impact of COVID-19 on the overall consumer economy.
●	Bloomnet membership fee reductions - we have waived certain fees to our BloomNet members for the month of April to help them weather the COVID-19 crisis.
●	Increased operating costs - we are seeing some increased costs associated with the changes we have made, and continue to make, to our manufacturing, warehouse and distribution facilities to provide for the safety and wellbeing of our associates, including: required social distancing, enhanced facility cleaning and sanitizing schedules, and staggered production shifts.
●	PersonalizationMall.com - Due to the unprecedented circumstances created by the COVID-19 pandemic, the Company requested a reasonable delay in the closing of the previously announced acquisition of PersonalizationMall.com, LLC until April 30, 2020. Bed Bath & Beyond Inc., the parent company of PersonalizationMall.com, responded to this request by filing a lawsuit in the Court of Chancery in the state of Delaware on April 1, 2020. The Company intends to vigorously defend itself against this lawsuit.

●	Taking care of the health and safety of our associates, our BloomNet florists, our vendors and our customers,
●	Maintaining our financial strength and flexibility, and
●	Continuing to invest in areas of our business that can help drive future growth.

	Three Months Ended																	Three Months Ended
	December 31, 2017			January 1, 2017			Exclude Operating Results of Fannie May			Severance Costs		Adjusted (non-GAAP) December 31, 2017			Adjusted (non-GAAP) % Change			March 29, 2020			Transaction Costs		As Adjusted (non-GAAP) March 29, 2020			March 31, 2019			% Change
	(dollars in thousands)																		(dollars in thousands)
Net revenues:
1-800-Flowers.com Consumer Floral	$	100,064		$	97,808		$	-		$	-	$	97,808			2.3	%	$	152,620		$	-	$	152,620		$	144,821			5.4	%
BloomNet Wire Service		20,375			20,502								20,502			-0.6	%		30,414			-		30,414			28,185			7.9	%
Gourmet Food & Gift Baskets		405,964			436,870			(41,199	)		-		395,671			2.6	%
Gourmet Foods & Gift Baskets																			95,906			-		95,906			75,445			27.1	%
Corporate		317			316								316			0.3	%		112			-		112			263			-57.4	%
Intercompany eliminations		(627	)		(943	)		344			-		(599	)		-4.7	%		(276	)		-		(276	)		(301	)		8.3	%
Total net revenues	$	526,093		$	554,553		$	(40,855	)	$	-	$	513,698			2.4	%	$	278,776		$	-	$	278,776		$	248,413			12.2	%

Gross profit:
1-800-Flowers.com Consumer Floral	$	38,844		$	40,300			-			-	$	40,300			-3.6	%	$	59,943		$	-	$	59,943		$	56,334			6.4	%
		38.8	%		41.2	%							41.2	%					39.3	%				39.3	%		38.9	%
								-			-
BloomNet Wire Service		11,693			12,310								12,310			-5.0	%		14,401			-		14,401			14,071			2.3	%
		57.4	%		60.0	%		-			-		60.0	%					47.3	%				47.3	%		49.9	%

Gourmet Food & Gift Baskets		184,468			204,185			(15,939	)		-		188,246			-2.0	%
Gourmet Foods & Gift Baskets																			32,956			-		32,956			26,848			22.8	%
		45.4	%		46.7	%							47.6	%					34.4	%				34.4	%		35.6	%

Corporate (a)		254			199			-			-		199			27.6	%
Corporate																			152			-		152			267			-43.1	%
		80.1	%		63.0	%							63.0	%					135.7	%				135.5	%		101.5	%

Total gross profit	$	235,259		$	256,994		$	(15,939	)	$	-	$	241,055			-2.4	%	$	107,452		$	-	$	107,452		$	97,520			10.2	%
		44.7	%		46.3	%							46.9	%					38.5	%		-		38.5	%		39.3	%

EBITDA (non-GAAP):

Segment Contribution Margin (non-GAAP):
Segment Contribution Margin (non-GAAP) (a):
1-800-Flowers.com Consumer Floral	$	10,791		$	13,128		$	-		$	-	$	13,128			-17.8	%	$	15,439		$	-	$	15,439		$	15,364			0.5	%
BloomNet Wire Service		7,692			8,189			-			-		8,189			-6.1	%		10,025			-		10,025			9,480			5.7	%
Gourmet Food & Gift Baskets		93,496			104,624			(6,219	)		79		98,484			-5.1	%
Gourmet Foods & Gift Baskets																			(6,275	)		-		(6,275	)		(7,202	)		12.9	%
Segment Contribution Margin Subtotal		111,979			125,941			(6,219	)		79		119,801			-6.5	%		19,189			-		19,189			17,642			8.8	%
Corporate (a)		(18,836	)		(20,223	)		356			-		(19,867	)		5.2	%
Corporate (b)																			(22,274	)		911		(21,363	)		(25,243	)		15.4	%
EBITDA (non-GAAP)		93,143			105,718			(5,863	)		79		99,934			-6.8	%		(3,085	)		911		(2,174	)		(7,601	)		71.4	%
Add: Stock-based compensation		968			1,724			-			-		1,724			-43.9	%		2,396					2,396			1,903			25.9	%
Add: Comp charge related to NQ Plan Investment Appreciation		364			20			-			-		20			1720.0	%
Add: Comp charge related to NQ Plan Investment Appreciation/(Depreciation)																			(2,611	)		-		(2,611	)		1,294			-301.8	%
Adjusted EBITDA (non-GAAP)	$	94,475		$	107,462		$	(5,863	)	$	79	$	101,678			-7.1	%	$	(3,300	)	$	911	$	(2,389	)	$	(4,404	)		-45.8	%

Reconciliation of net income (loss) to adjusted net income (loss) (non-GAAP):	Three Months Ended						Nine Months Ended
	March 29, 2020			March 31, 2019			March 29, 2020			March 31, 2019
	(in thousands, except per share data)

Net income (loss)	$	(9,657	)	$	(8,241	)	$	49,224		$	43,071
Adjustments to reconcile net income (loss) to adjusted net income (loss) (non-GAAP)
Add: Personalization Mall transaction costs		911			-			911			-
Deduct: Income tax (benefit) on transaction costs		(217	)		-			(217	)		-
Adjusted net income (loss) (non-GAAP)	$	(8,963	)	$	(8,241	)	$	49,918		$	43,071

Basic and diluted net income (loss) per common share
Basic	$	(0.15	)	$	(0.13	)	$	0.76		$	0.67
Diluted	$	(0.15	)	$	(0.13	)	$	0.74		$	0.65


Basic and diluted adjusted net income (loss) per common share (non-GAAP)
Basic	$	(0.14	)	$	(0.13	)	$	0.77		$	0.67
Diluted	$	(0.14	)	$	(0.13	)	$	0.75		$	0.65


Weighted average shares used in the calculation of net income (loss) and adjusted net income (loss) per common share
Basic		64,348			64,194			64,517			64,383
Diluted		64,348			64,194			66,378			66,456

	Three Months Ended				Years Ended
	December 31, 2017		January 1, 2017		December 31, 2017		January 1, 2017
	(in thousands, except per share data)

Net income	$	70,699	$	62,929	$	57,477	$	47,158
Adjustments to reconcile net income to adjusted net income (non-GAAP)
Deduct: Fannie May operating results		-		5,047		-		629
Deduct: U.S. tax reform impact on deferred taxes (b)		12,158		-		12,158		-
Add back: Severance costs		-		79		-		103
Add back: Income tax expense impact on Fannie May operating results and severance adjustments		-		1,656		-		171
Adjusted net income (non-GAAP)	$	58,541	$	59,617	$	45,319	$	46,803

Basic and diluted net income per common share
Basic	$	1.09	$	0.97	$	0.89	$	0.72
Diluted	$	1.06	$	0.93	$	0.86	$	0.70

Basic and diluted adjusted net income per common share (non-GAAP)
Basic	$	0.91	$	0.91	$	0.70	$	0.72
Diluted	$	0.88	$	0.88	$	0.68	$	0.69

Weighted average shares used in the calculation of net income and adjusted net income (non-GAAP) per common share
Basic		64,601		65,172		64,778		65,112
Diluted		66,782		67,754		67,037		67,778

●	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	$	37,722	$	24,163	$	6,845	$	4,725	$	1,170	$	-	$	74,625

	●	general consumer sentiment and economic conditions that may affect levels of discretionary customer purchases of the ~~Company’s products.~~Company’s products; and
●	the impact of COVID-19 on our business and financial statements.

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)

07/03/17 - 07/30/17		89.3	$	9.66		89.3	$	16,363
07/31/16 - 08/27/17		99.6	$	9.08		99.6	$	15,456
08/28/17 - 10/01/17		268.7	$	9.43		268.7	$	27,859
10/02/17 - 10/29/17		233.5	$	9.62		233.5	$	25,606
10/30/17 - 12/03/17		414.3	$	9.36		414.3	$	21,719
12/04/17 - 12/31/17		61.9	$	10.16		61.9	$	21,089

Total		1,167.3	$	9.47		1,167.3

2.1		Equity Purchase Agreement dated as of February 14, 2020, by an among 1-800-Flowers.com, Inc., 800-Flowers, Inc. PersonalizationMall.com, LLC, and Bed Bath & Beyond Inc. (Current Report on Form 8-K filed on February 18, 2020, Exhibit 2.1).
31.1	~~31.1~~	Certification of the principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
31.2	~~31.2~~	Certification of the principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. * *
32.1	~~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	~~101.INS~~	XBRL Instance Document
101.SCH	~~101.SCH~~	XBRL Taxonomy Extension Schema Document
101.CAL	~~101.CAL~~	XBRL Taxonomy Calculation Linkbase Document
101.DEF	~~101.DEF~~	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	~~101.LAB~~	XBRL Taxonomy Extension Label Document
101.PRE	~~101.PRE~~	XBRL Taxonomy Definition Presentation Document

	1-800-FLOWERS.COM, Inc. (Registrant)
Date: ~~February 9, 2017~~ May 8, 2020	/s/ Christopher G. McCann Christopher G. McCann Chief Executive Officer, Director and President (Principal Executive Officer)

Date: ~~February 9, 2017~~ May 8, 2020	/s/ William E. Shea William E. Shea Senior Vice President, Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer)