UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(AMENDMENT NO. 1)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
-----
SECURITIES EXCHANGE ACT OF 1934
or
----- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-26841
1-800-FLOWERS.COM, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 11-3117311
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1600 Stewart Avenue, Westbury, New York 11590
---------------------------------------------
(Address of principal executive offices)(Zip code)
Registrant's telephone number, including area code: (516) 237-6000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Class A common stock, $0.01 par value
(Title of class)
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 (X)
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ( )
The aggregate market value of voting common stock held by non-affiliates of
the Registrant, based on the closing price of the Class A common stock on
October 20, 1999 as reported on the Nasdaq National Market, was approximately
$150,020,000. Shares of common stock held by each officer and director and by
each person who owns 5% or more of the outstanding common stock have been
excluded from this computation in that such persons may be deemed to be
affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes. The Registrant does not have any
non-voting common equity outstanding.
23,208,572
(Number of shares of class A common stock outstanding as of October 20, 1999)
38,413,105
(Number of shares of class B common stock outstanding as of October 20, 1999)
DOCUMENTS INCORPORATED BY REFERENCE:
None.
1-800-FLOWERS.COM, Inc., a Delaware corporation (the "Company" or
"1-800-FLOWERS.COM") hereby amends Items 10, 11, 12 and 13 of its Form 10-K for
the fiscal year ended June 27, 1999, as filed with the Securities and Exchange
Commission on September 20, 1999, to add the additional information contained
herein.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS AND EXECUTIVE OFFICERS
The following individuals were serving as directors and executive officers
of the Company on October 20, 1999:
NAME AGE POSITION WITH THE COMPANY
- ---- --- -------------------------
James F. McCann........................ 47 Chairman and Chief Executive Officer
Christopher G. McCann.................. 38 Director and Senior Vice President
T. Guy Minetti......................... 48 Director and Senior Vice President - Corporate Development
John W. Smolak......................... 50 Senior Vice President - Finance and Administration
Gerard M. Gallagher.................... 46 Senior Vice President and General Counsel, Corporate Secretary
Jerry Noonan........................... 40 Senior Vice President - Chief Marketing Officer
Peter G. Rice.......................... 53 President, Plow & Hearth
Kerry W. Coin.......................... 51 Vice President-Retail and Fulfillment
Kenneth J. Mesnik...................... 49 Vice President-Merchandising
Jeffrey C. Walker(1)................... 43 Director
Kevin J. O'Connor(2)................... 38 Director
Lawrence V. Calcano(2)................. 36 Director
David Beirne(1)........................ 35 Director
Charles R. Lax(1)(2)................... 40 Director
- ----------------------
(1) Member of Compensation Committee
(2) Member of Audit Committee
JAMES F. MCCANN has been the Company's Chairman and Chief
Executive Officer since inception. Prior to that, Mr. McCann founded Flora
Plenty, a chain of 14 flower shops in the New York metropolitan area. Mr. McCann
is a member of the boards of directors of Gateway 2000, OfficeMax, Inc., PETCO
Animal Supplies, Inc., the National Retail Federation and Very Special Arts, as
well as the boards of Hofstra University and Winthrop-University Hospital. James
F. McCann is the brother of Christopher G. McCann.
CHRISTOPHER G. MCCANN has been the Company's Senior Vice
President and a director since inception. Prior to joining the Company, Mr.
McCann was President of Flora Plenty. Mr. McCann serves on the board of
directors of Neoware, Inc. and is a member of the Advisory Board of the Marist
College School of Management, the National Retail Federation Marketing Committee
and the Society of American Florists Marketing Committee. Christopher G. McCann
is the brother of James F. McCann.
T. GUY MINETTI has been a Director of the Company since
December 1993 and became the Company's Senior Vice President - Corporate
Development in August 1999. Mr. Minetti serves as President of Bayberry
Advisors, an investment banking firm which he founded in March 1989. In
September 1993, Mr. Minetti co-founded American Sports Products Group Inc., a
holding company which has acquired nine niche sporting goods manufacturers.
Prior to forming Bayberry, Mr. Minetti was a Managing Director at Kidder,
Peabody & Company.
JOHN W. SMOLAK has been the Company's Senior Vice President -
Finance and Administration since January 1999. From February 1995 until joining
the Company, Mr. Smolak was senior vice president and chief financial officer of
Lechters, Inc., a national housewares specialty retailer. Prior to that, Mr.
Smolak was senior vice president of finance and administration of Jungle Jim's
Playlands, Inc.
GERARD M. GALLAGHER has been the Company's Senior Vice
President and General Counsel and Corporate Secretary since August 1999 and has
been providing legal services to the Company since inception. Mr. Gallagher was
a founder and partner of the law firm Gallagher, Walker, Bianco and Plastaras,
specializing in corporate and intellectual property matters, since 1993.
JERRY NOONAN has been the Company's Senior Vice President -
Chief Marketing Officer since August 1999. Prior to joining the Company, Mr.
Noonan was Senior Vice President, Worldwide Marketing for Polaroid Corporation
since 1996. Prior to that, he was Senior Vice President of Marketing for Nabisco
Biscuit Company from 1992 and from 1981 through 1992, he was Vice President of
Brand Marketing for Frito-Lay, Inc. Mr. Noonan is a member of the Board of
Managers of Olin Graduate School of Management at Babson College.
PETER G. RICE, President - Plow & Hearth, was co-founder of
The Plow & Hearth, Inc. and served as its President and Chairman of the Board
since its inception in November 1980. Mr. Rice was also involved in the
formation of Blue Ridge Mountain Sports, a retail chain of backpacking/outdoor
stores, and Phoenix Products, a manufacturer of kayaks. He is a director of
the New England Mail Order Association and a member of the U.S. Senate
Productivity and Quality Award Board for Virginia.
KERRY W. COIN has been the Company's Vice President - Retail
and Fulfillment since January 1999. From February 1998 until joining the
Company, Mr. Coin was an independent consultant. From August 1996 until February
1998, Mr. Coin was the president and chief operating officer of Diedrich Coffee,
a California-based purveyor of gourmet coffee. Prior to that, Mr. Coin founded
and served as president and chief executive officer of Boston West, the largest
area developer of Boston Chicken, from January 1993.
KENNETH J. MESNIK has been the Company's Vice President -
Merchandising since January 1999. From May 1993 until joining the Company, Mr.
Mesnik was the Senior Vice President of Federated Merchandising. Prior to that,
Mr. Mesnik served as Vice President of May Company in charge of home furnishings
from January 1990.
JEFFREY C. WALKER has been a director of the Company since
February 1995. Mr. Walker has been General Managing Partner of Chase Capital
Partners, the private equity division of The Chase Manhattan Corporation, since
1988, and a General Partner thereof since 1984. Mr. Walker is also a director of
the Monet Group, Guitar Center, House of Blues and Domain.
KEVIN J. O'CONNOR has been a director of the Company since
July 1999. Mr. O'Connor co-founded DoubleClick, Inc., an Internet advertising
network, and has served as its Chief Executive Officer and Chairman of the Board
of Directors since its inception in January 1996. From December 1995 until
January 1996, Mr. O'Connor served as Chief Executive Officer of Internet
Advertising Network, an Internet advertising company which he founded. From
September 1994 to December 1995, Mr. O'Connor served as Director of Research for
Digital Communications Associates, a data communications company (now Attachmate
Corporation), and from April 1992 to September 1994, as its Chief Technical
Officer and Vice President, Research.
LAWRENCE V. CALCANO has been a director of the Company since
August 1999. Mr. Calcano is a Managing Director and Co-Chief Operating Officer
of the High Technology Department at Goldman, Sachs & Co., a worldwide
investment banking firm. Prior to this appointment in July 1999, Mr. Calcano
managed the East Coast High Technology Group at Goldman from April 1993. Mr.
Calcano also serves on the Investment Banking Division's Technology Committee at
Goldman and is a director of Pivotpoint Software International, a private
company.
DAVID BEIRNE has been a director of the Company since July
1999. Mr. Beirne has been a Managing Member of Benchmark Capital Management Co.
II, L.L.C., a venture capital firm, since June 1997. Prior to joining Benchmark,
Mr. Beirne founded Ramsey/Beirne Associates, an executive search firm, and
served as its Chief Executive Officer from October 1987 to June 1997. Mr. Beirne
serves as a director to several private companies, including ePhysician, Kana
Communications, Inc., living.com, Inc., PlanetRx, Inc., Scient Corporation,
TriStrata, Inc. and Webvan Group, Inc.
CHARLES R. LAX has been a director of the Company since July
1999. Mr. Lax has been a general partner of SOFTBANK Technology Ventures IV,
L.P. since November 1997. From March 1996 to November 1997, Mr. Lax was a Vice
President of SOFTBANK Holdings Inc. Mr. Lax was previously a venture partner at
Vimac Partners LLC, a venture capital firm specializing in investments in the
information technology and Internet-related industries, from June 1993 to March
1996. Mr. Lax is a director of a number of private companies, including ThirdAge
Media, Inc. LIMITrader Securities, Inc., Gamesville.com, Reciprocal, Inc. and
several public companies, including Interliant, Inc., Art Technology Group, Inc.
and Global Sports Interactive.
COMMITTEES OF THE BOARD
The audit committee of the Board of Directors reports to the
Board regarding the appointment of the Company's independent public accountants,
the scope and results of its annual audits, compliance with accounting and
financial
3
policies and management's procedures and policies relative to the adequacy of
internal accounting controls. The current members of the audit committee are
Messrs. Lax, Calcano and O'Connor.
The compensation committee of the Board of Directors reviews
and makes recommendations regarding the Company's compensation policies and all
forms of compensation to be provided to the Company's executive officers and
directors. In addition, the compensation committee reviews bonus and stock
compensation arrangements for all of the Company's other employees. The
compensation committee administers the Company's 1999 Stock Incentive Plan. The
current members of the compensation committee are Messrs. Walker, Beirne and
Lax. Prior to its current composition, the compensation committee consisted of
Messrs. James F. McCann and Minetti until the fourth quarter of the fiscal
year ended June 27, 1999 ("Fiscal 1999").
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No interlocking relationships exist between the Board of
Directors or compensation committee and the board of directors or compensation
committee of any other company, nor has any such interlocking relationship
existed in the past. None of the members of the current compensation committee
was an officer or employee of the Company at any time during Fiscal 1999. Mr.
James F. McCann, our Chief Executive Officer, was a member of the preceding
compensation committee.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
During Fiscal 1999, the Board of Directors held three meetings
and acted by unanimous written consent on three occasions. During Fiscal 1999,
each Director attended all meetings of the Board of Directors. The audit
committee was formed in the fourth quarter of Fiscal 1999 and did not meet in
Fiscal 1999. The predecessor compensation committee met three times in Fiscal
1999 and did not act by written consent. All of the members of the preceding
compensation committee were present at such meetings. The current compensation
committee did not meet in Fiscal 1999.
COMPLIANCE WITH REPORTING REQUIREMENTS
Under the securities laws of the United States, the
Company's Directors, executive officers, and any persons holding more than
ten percent of the Company's Common Stock are required to report their
ownership of the Company's Common Stock and any changes in that ownership to
the Securities and Exchange Commission and the Nasdaq National Market
Surveillance Department. Specific due dates for these reports have been
established and the Company is required to report any failure to file by
these dates. As the Company became publicly traded and subject to these
requirements in August 1999, no such reports were required to be filed during
Fiscal 1999. The Company believes that all Directors, executives officers and
beneficial owners of more than ten percent of its Common Stock were in
compliance with all such filing requirements subsequent to the time at which
the Company became publicly traded.
COMPENSATION OF DIRECTORS
Directors currently do not receive a stated salary from the
Company for their service as members of the Board of Directors, although by
resolution of the Board they may receive a fixed sum and reimbursement for
expenses in connection with the attendance at Board and committee meetings. The
Company currently does not provide additional compensation for committee
participation or special assignments of the Board of Directors.
The Company has entered into a letter agreement with Bayberry
Advisors, Inc. ("Bayberry"), pursuant to which Bayberry provides the Company
with consulting and advisory services. T. Guy Minetti, one of the Company's
Directors, serves as Bayberry's President and owns 70% of its outstanding stock,
and James F. McCann, the Company's Chairman and Chief Executive Officer, owns
30% of its outstanding stock. The original term of the letter agreement expired
in 1995, but the term has been extended for additional one-year periods since
its initial expiration. The agreement with Bayberry was modified in August 1999
to provide for a two-year term and payment of $250,000 per year for these
services. The prior agreement with Bayberry provided that the Company would pay
Bayberry a retainer fee of $100,000 per year and a mutually agreed upon fee upon
the closing of any transaction outside the ordinary course of business which
results from the services provided by Bayberry. With respect to the Company's
April 1998 acquisition of Plow & Hearth, the Company paid Bayberry advisory fees
in the amount of $210,000, against which the $100,000 retainer for that year was
credited.
In July 1998, the Company granted Mr. Minetti options to
purchase 20,000 shares of Class B Common Stock with an exercise price of $2.00
per share for his services on the Board of Directors. In August 1999, the
Company granted to each of Messrs. Calcano and O'Connor options to purchase
10,000 shares and Mr. Minetti 50,000 shares of Class A Common Stock with an
exercise price equal to $21 per share.
4
Each individual who first becomes a non-employee member of the
Board of Directors after the Company's initial public offering will
automatically receive an option grant for 10,000 shares of Class A Common Stock
on the date such individual joins the Board. In addition, on the date of each
annual meeting of stockholders, each non-employee Board member who is to
continue to serve as a non-employee Board member will automatically be granted
an option to purchase 5,000 shares of Class A Common Stock, if such individual
has served on the Board for at least six months.
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the annual and long-term compensation paid
by the Company during Fiscal 1999 and the fiscal year ended June 28, 1998
("Fiscal 1998") to the Company's Chief Executive Officer and the four most
highly compensated executive officers of the Company whose total compensation
during Fiscal 1999 exceeded $100,000 (collectively, the "Named Executive
Officers"):
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------- ------------ ------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION FISCAL YEAR ($) ($) ($)(1) (#)(2) ($)
- --------------------------- ----------- -------- ------------
James F. McCann...................... 1999 $1,229,930 -- -- -- --
Chief Executive Officer 1998 1,229,930 -- -- -- --
Christopher G. McCann................ 1999 216,667 36,000 -- 353,000 --
Senior Vice President 1998 191,667 42,600 -- -- --
John W. Smolak....................... 1999 125,000(3) 39,000 -- 150,000 --
Senior Vice President - Finance and 1998 -- -- -- -- --
Administration
Peter G. Rice........................ 1999 200,000 26,368 -- -- --
President - Plow & Hearth 1998 51,236(4) -- -- -- --
Kenneth J. Mesnik.................... 1999 108,173(5) -- -- -- --
Vice President - Merchandising 1998 -- -- -- -- --
- ------------------------
(1) Other compensation in the form of perquisites and other personal
benefits has been omitted as the aggregate amount of such perquisites
and other personal benefits constituted the lesser of $50,000 or 10% of
the total annual salary and bonus for the executive officer for such
year.
(2) The Company did not grant any stock appreciation rights or make any
long-term incentive plan payments to any Named Executive Officers in
Fiscal 1999 or Fiscal 1998.
(3) Mr. Smolak's employment with the Company began in January 1999.
Pursuant to the terms of Mr. Smolak's employment agreement, Mr. Smolak
is entitled to an annual salary of $260,000 per year.
(4) Mr. Rice's employment with the Company began in April 1998. Pursuant to
the terms of Mr. Rice's employment agreement, Mr. Rice is entitled to
an annual salary of $200,000 per year.
(5) Mr. Mesnik's employment with the Company began in January 1999. Mr.
Mesnik receives an annual salary from the Company of $225,000.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information with respect to the stock option
grants made during Fiscal 1999 to the Named Executive Officers. No stock
appreciation rights were granted during Fiscal 1999.
NUMBER OF % OF TOTAL
SECURITIES OPTIONS POTENTIAL REALIZABLE VALUE
UNDERLYING GRANTED TO EXERCISE AT ASSUMED RATES OF STOCK PRICE
OPTIONS EMPLOYEES IN PRICE EXPIRATION APPRECIATION FOR OPTION TERM (1)
NAME GRANTED FISCAL YEAR ($/SHARE) DATE 0% 5% 10%
- ---- ------- ----------- --------- ---- -- -- ---
James F. McCann............... - -% $ - - - - -
Christopher G. McCann......... 353,000 50 2.00 7/1/08 - 444,000 1,125,182
John W. Smolak................ 150,000 21 2.00 1/4/09 1,264,500 2,248,406 3,757,910
Peter G. Rice................. - - - - - - -
Kenneth J. Mesnik............. - - - - - - -
5
- ------------------------
(1) Amounts calculated by subtracting the exercise price of the options
from the fair market value per share of the underlying Common Stock on
the date of grant. The fair market value per share of Common Stock on
the date of grant for Mr. McCann was $2.00 and the fair market value
per share of Common Stock on the date of grant for Mr. Smolak was
$10.43.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth certain information with respect to the
Named Executive Officers regarding stock option holdings as of June 27, 1999.
No stock options were exercised by any Named Executive Officer during Fiscal
1999. No stock appreciation rights were exercised by any Named Executive
Officer during Fiscal 1999 and no stock appreciation rights were outstanding
as of June 27, 1999.
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
UNDERLYING UNEXERCISED MONEY OPTIONS AT FISCAL YEAR
OPTIONS AT FISCAL YEAR-END (#) END(1)
------------------------------ ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
James F. McCann.............................. - - - -
Christopher G. McCann........................ 522,200 453,800 3,333,240 4,999,860
John W. Smolak............................... - 150,000 - 2,850,000
Peter G. Rice................................ - - - -
Kenneth J. Mesnik............................ - - - -
- ---------------------------
(1) Amounts calculated by subtracting the exercise price of the options
from the market value of the underlying Class A Common Stock on June
27, 1999 of $21 per share, using the initial public offering price as
an estimate of fair market value at such date.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with each
of James F. McCann, Christopher G. McCann, John W. Smolak, Peter G. Rice and
Kerry W. Coin.
Mr. James F. McCann's employment agreement became effective
as of July 1, 1999. The agreement is for a five year term, and on each
anniversary of the agreement, the term is extended for one additional year.
The annual salary for Mr. McCann is $1,000,000, with the eligibility to
participate in the Company's management bonus plan, up to a maximum of
$200,000, based on the Company attaining certain levels of revenue and
earnings before interest, taxes, depreciation and amortization ("EBITDA").
Upon termination without good cause or resignation for good reason, Mr.
McCann is entitled to severance pay in the amount of $2,500,000, plus the
base salary otherwise payable to him for the balance of the then current
employment term and any base salary, bonuses, vacation and unreimbursed
expenses accrued but unpaid as of the termination date. Mr. McCann will also
be entitled to health insurance coverage for himself and his dependents and
life insurance coverage. Upon termination due to death, or for good cause or
a voluntary resignation, Mr. McCann is not entitled to any compensation from
the Company, except for the payment of any base salary, bonuses, benefits or
unreimbursed expenses accrued but unpaid as of the date of termination.
Mr. Christopher G. McCann's employment agreement became
effective as of July 1, 1999. The agreement is for a five year term, and on
each anniversary of the agreement, the term is extended for one additional
year. The annual salary for Mr. McCann is $250,000, with the possibility of a
bonus of up to 35% of his salary upon the Company attaining certain levels of
revenue and EBITDA and Mr. McCann attaining individual performance
objectives. In addition, pursuant to the agreement, Mr. McCann has received
options to purchase 200,000 shares of our Class A Common Stock, which options
vest 25% each year over a four-year period from the date of grant, with an
exercise price equal to $21 per share. Upon termination without good cause or
resignation for good reason, Mr. McCann is entitled to severance pay in the
amount of $500,000, plus the base salary otherwise payable to him for the
balance of the then current employment term and any base salary, bonuses,
vacation and unreimbursed expenses accrued but unpaid as of the termination
date. Mr. McCann will also be entitled to health insurance coverage for
himself and his dependents and life insurance coverage. Upon termination due
to death or for good cause, or a voluntary resignation, Mr. McCann is not
entitled to any compensation from the Company, except for the payment of any
base salary, bonuses, benefits or unreimbursed expenses accrued but unpaid as
of the date of such termination.
6
Mr. Smolak's employment agreement became effective on
January 4, 1999 and can be terminated at any time. The annual salary for Mr.
Smolak is $260,000, with the possibility of a bonus of up to 35% of his
salary upon the Company attaining certain levels of revenues and EBITDA and
Mr. Smolak attaining individual performance objectives. In addition, pursuant
to the agreement Mr. Smolak has received options to purchase 150,000 shares
of our Class B Common Stock with an exercise price of $2.00 per share, which
options vest at the rate of 25% per year beginning on the first anniversary
of the date of grant. Mr. Smolak is not entitled to any compensation from the
Company after his employment is terminated, except that if Mr. Smolak's
employment is terminated without cause within the first 12 months following
his commencement of employment, then the Company will continue to pay his
salary, health insurance coverage and any earned bonus compensation for the
time Mr. Smolak was employed during the period.
Mr. Rice has entered into an employment agreement with Plow
& Hearth, which became effective April 3, 1998. The agreement terminates on
April 3, 2001, with automatic one-year renewals unless prior notice is given.
Mr. Rice's annual salary is $200,000, with the possibility of a bonus of up
to 30% of his salary upon the Company attaining certain levels of revenues
and EBITDA, and Mr. Rice attaining individual performance objectives. Upon
termination without cause, Mr. Rice is entitled to an amount equal to his
salary through the end of the agreement, any amounts earned, accrued or owing
but not yet paid as of the date of the termination and other benefits, if
any, as are payable to or for the benefit of Mr. Rice as of the date of his
termination until the end of the agreement.
Mr. Coin's agreement became effective on January 18, 1999
and can be terminated at any time. Mr. Coin's annual salary is $170,000, with
the possibility of a bonus of up to 30% of his salary upon the Company
attaining certain levels of revenues and EBITDA and Mr. Coin attaining
individual performance objectives. In addition, pursuant to the agreement,
Mr. Coin received options to purchase 50,000 shares of our Class B Common
Stock with an exercise price of $2.00 per share, which options vest at the
rate of 25% per year beginning on the first anniversary of the date of grant.
Mr. Coin is not entitled to any compensation from the Company after his
employment is terminated, except that if Mr. Coin's employment is terminated
without cause within the first 12 months following his commencement of
employment, then the Company will continue to pay his salary for a period of
six months following the date of termination.
Under their employment agreements, Messrs. McCann are each
restricted from participating in a competitive floral products business for a
period of one year after a voluntary resignation or termination for good cause.
In addition, Messrs. Smolak and Coin have each agreed not to compete with the
Company during their respective terms of employment and for one year immediately
following their termination and to not solicit the Company's clients or
employees during their respective terms of employment and for two years
immediately following their termination. Mr. Rice has agreed not to compete with
the Company or solicit its clients or employees during his term of employment
and for two years immediately following his termination. Each of these
executives is also bound by confidentiality provisions, which prohibit the
executive from, among other things, disseminating or using confidential
information about the Company's clients in any way that would be adverse to the
Company.
7
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth information with respect to
beneficial ownership of the Company's Class A Common Stock and Class B Common
Stock, as of October 20, 1999, for (i) each person known by the Company to
beneficially own more than 5% of each class; (ii) each Director; (iii) each
Named Executive Officer; and (iv) all of the Company's executive officers and
Directors as a group.
Except as indicated by footnote, and applicable community
property laws, the persons named in the table have sole voting and investment
power with respect to all shares of common stock shown as beneficially owned by
them.
NAME OF BENEFICIAL OWNER A SHARES B SHARES A SHARES B SHARES
- ------------------------ -------- -------- -------- --------
PERCENTAGE OF
SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY
------------------------- OWNED
-----
James F. McCann(1)......................... - 36,605,105 -% 95.3%
Christopher G. McCann(2)................... - 3,519,940 - 9.1
T. Guy Minetti(3).......................... 9,600 20,000 * *
John W. Smolak............................. - - - -
Peter G. Rice(4)........................... 21,400 - * -
Kenneth J. Mesnik.......................... 4,600 - * -
Jeffrey C. Walker(5)....................... 4,065,022 15.9 -
David Beirne(6)............................ 7,399,080 - 31.9 -
Charles R. Lax(7).......................... 3,836,560 - 16.5 -
Kevin J. O'Connor(8)....................... - - -
Lawrence V. Calcano(9)..................... 5,000 - *
Chase Venture Capital
Associates, L.P.(10)....................... 4,065,022 - 15.9 -
Benchmark Capital Partners(11)............. 7,399,080 31.9 -
SOFTBANK America Inc.(12).................. 3,836,560 16.5 -
Waelinvest S.A.(13)........................ 2,397,850 - 10.3 -
All directors and executive officers as a
group (14 persons)(14).................. 15,341,262 38,145,045 59.6% 97.8%
- ---------------------------
* Indicates less than 1%.
(1) Includes (a) 2,000,000 shares of Class B Common Stock held by a limited
partnership, of which Mr. McCann is a general partner and exercises
control, (b) an aggregate of 775,000 shares of Class B Common Stock
held by two trusts, over which Mr. McCann exercises control, and (c)
3,875,000 shares of Class B Common Stock for which Mr. McCann disclaims
beneficial ownership that is held by a limited partnership over which
he does not exercise control.
(2) Includes (a) 2,000,000 shares of Class B Common Stock held by a limited
partnership, of which Mr. McCann is a general partner and exercises
control and (b) 606,800 shares of Class B Common Stock issuable upon
the exercise of currently exercisable stock options.
(3) Includes 20,000 shares of Class B Common Stock issuable upon the
exercise of currently exercisable stock options and options which vest
within 60 days.
(4) Includes 9,500 shares of Class A Common Stock held by Mr. Rice's wife.
Mr. Rice's address is c/o Plow & Hearth Inc., State Road 230 West,
Madison, VA 22727.
(5) Includes 2,371,040 shares of Class A Common Stock issuable upon the
exercise of a currently exercisable warrant. All shares indicated as
owned by Mr. Walker are included because of Mr. Walker's affiliation
with Chase Venture Capital Associates. The general partner of Chase
Venture Capital Associates is Chase Capital Partners, of which Mr.
Walker is a general partner. The remaining general partners of Chase
Capital Partners who are natural persons are John R. Baron,
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Christopher C. Behrens, Mitchell J. Blutt, Arnold L. Chavkin, Michael
R. Hannon, Donald J. Hofmann, Stephen P. Murray, John M. B. O'Connor,
Brian J. Richmand, Shahan D. Soghikian, Jonas Steinman and Damion E.
Wicker. Mr. Walker disclaims beneficial ownership of all shares owned
by Chase. Mr. Walker's address is c/o Chase Venture Capital
Associates, 380 Madison Avenue, 12th Floor, New York, New York 10017.
(6) All shares indicated as owned by Mr. Beirne are included because of Mr.
Beirne's affiliation with the Benchmark entities. Mr. Beirne disclaims
beneficial ownership of all shares owned by the Benchmark entities. Mr.
Beirne's address is c/o Benchmark Capital Partners, 2480 Sand Hill
Road, Suite 200, Menlo Park, California 94025.
(7) All shares indicated as owned by Mr. Lax are included because of Mr.
Lax's affiliation with Softbank. Mr. Lax disclaims beneficial ownership
of all shares owned by Softbank. Mr. Lax's address is c/o Softbank
America Inc., 10 Langley Road, Suite 202, Newton Center, Massachusetts
02459.
(8) Mr. O'Connor's address is c/o DoubleClick, Inc., 41 Madison Ave.,
32nd Floor, New York, New York, 10010.
(9) Mr. Calcano's address is c/o Goldman Sachs & Co., 85 Broad Street,
New York, New York 10004.
(10) Includes 2,371,040 shares of Class A Common Stock issuable upon the
exercise of a currently exercisable warrant. The address of Chase is
380 Madison Avenue, 12th Floor, New York, New York 10017.
(11) Consists of (a) 951,870 shares of Class A Common Stock owned by
Benchmark Capital Partners II, L.P., (b) 2,543,170 shares of Class A
Common Stock owned by Benchmark Capital Partners III, L.P., and (c)
3,904,040 shares of Class A Common Stock owned by Benchmark Investors
III, L.P. Benchmark Capital Management Co. II, L.L.C. is the general
partner of Benchmark Capital Partners II, L.P. and directs its
investment decisions, and Benchmark Capital Management Co. III, L.L.C.
is the general partner of Benchmark Capital Partners III, L.P. and
Benchmark Investors III, L.P. and controls their investment decision.
Both Benchmark Capital Management Co. II and Benchmark Capital
Management Co. III are controlled by David Beirne, Bruce Dunlevie, J.
William Gurley, Kevin Harvey, Robert Kagel and Andrew Rachleff. The
address of the Benchmark entities is 2480 Sand Hill Road, Suite 200,
Menlo Park, California 94025.
(12) SOFTBANK America Inc. is an indirect wholly-owned subsidiary of
SOFTBANK Corp. Approximately 43.3% of the outstanding common stock of
SOFTBANK Corp. is owned by Masayoshi Son. SOFTBANK's address is 10
Langley Road, Suite 202, Newton Center, Massachusetts 02459.
(13) Waelinvest is indirectly controlled by Mr. Bernard Arnault, who also
controls, indirectly, LVMH Moet Hennessy Louis Vuitton S.A. The address
of Waelinvest is rue Waelhem, 102, 1030 Brussels, Belgium.
(14) Includes 2,371,040 shares of Class A Common Stock issuable upon
exercise of a currently exercisable warrant and 626,800 shares of Class
B Common Stock issuable upon the exercise of currently exercisable
stock options and options which vest within 60 days.
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ITEM 14. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
TRANSACTIONS WITH CHASE
In January 1995, the Company entered into an investment
agreement with the predecessor of Chase Venture Capital Associates ("Chase")
under which Chase purchased shares of the Company's Class C Common Stock and a
warrant to purchase 2,371,040 shares of Class A Common Stock with a nominal
exercise price for an aggregate of $10.0 million. Chase currently holds over 5%
of the Class A Common Stock, assuming exercise of their warrant, and Jeffrey C.
Walker, one of the Company's directors, is a managing partner of Chase. With
respect to the Company's private placement completed in May 1999, the Company
entered into an amendment to the investment agreement, under which Chase agreed
to allow the Company to redeem the Class C Common Stock owned by them in
exchange for 263,452 shares of Class A Common Stock and approximately $14.9
million. The Company sold shares of preferred stock to Chase in the May 1999
private placement for a purchase price equal to the $14.9 million proceeds from
the redemption of their Class C Common Stock.
In March 1999, the Company entered into a credit agreement
with The Chase Manhattan Bank ("Chase Bank"), an affiliate of Chase Venture
Capital Associates and Jeffrey C. Walker, under which Chase Bank agreed to
provide the Company with a term loan of $18.0 million and a revolving loan
commitment of $12.0 million. At June 27, 1999, the amount of indebtedness to
Chase Bank outstanding was $21.0 million. The terms of the credit agreement were
amended to provide, among other things, that the indebtedness outstanding under
the credit agreement matured on the consummation of the Company's initial public
offering. A portion of the proceeds from the Company's initial public offering
were used to repay all of its outstanding indebtedness under the credit
facility.
TRANSACTIONS REGARDING PLOW & HEARTH
With respect to the Company's acquisition of 88% of the
outstanding common stock of Plow & Hearth, it entered into a stockholders
agreement, under which the remaining stockholders of Plow & Hearth had the
right to either convert their shares of Plow & Hearth and Plow & Hearth
options granted under one of its option plans into cash or shares of Class A
Common Stock. The Plow & Hearth stockholders agreement was amended to provide
that each of these minority holders were to have their interests redeemed
upon effectiveness of the initial public offering for an aggregate of $8.4
million. In addition, Plow & Hearth's other option plan was amended so that
upon effectiveness of the initial public offering, 40% of these options were
accelerated and redeemed for an aggregate of $354,000 and the remaining 60%
terminated. Peter G. Rice, an executive officer, received an aggregate of
$4.0 million under these amendments. The aggregate exercise price for these
options was $852,000.
TRANSACTIONS INVOLVING MAY 1999 PRIVATE PLACEMENT
With respect to the Company's May 1999 private placement of
preferred stock to Waelinvest, SOFTBANK, Benchmark and other investors and the
amendment to the Chase investment agreement, the Company entered into an
investors' rights agreement with these investors and James F. McCann and
Christopher G. McCann. Under the investors' rights agreement, the Company will
be required to register the stock held by these investors and Messrs. McCann
upon their request.
TRANSACTIONS WITH DIRECTORS AND OFFICERS
Concurrent with the closing of the May 1999 private placement,
we redeemed the existing Class C Common Stock owned by Mr. James McCann in
exchange for $4.4 million and 84,768 shares of Class B Common Stock.
The Company has entered into an agreement with Bayberry
Advisors, Inc., under which Bayberry provides consulting and advisory
services. These consulting and advisory services include advice on capital
raising, business expansion and acquisitions, product line expansion, and on
our business plan in general. T. Guy Minetti, one of the Company's Directors,
serves as Bayberry's President and owns 70% of its outstanding stock, and
James F. McCann, the Company's Chairman and Chief Executive Officer, owns 30%
of its outstanding stock. Under the original Bayberry agreement, Bayberry was
paid a retainer fee of $100,000 per year for these services. In connection
with the April 1998 acquisition of Plow & Hearth, Bayberry was paid advisory
fees in the amount of $210,000, against which the $100,000 retainer for that
year was credited. Under the Company's new arrangement with Bayberry,
effective August 1999, Bayberry will be paid $250,000 per year for a term of
two years for these services.
In July 1998, the Company loaned Christopher G. McCann, its
Senior Vice President and a Director, an amount of $67,631 at an interest rate
of 7% per annum. This loan was repaid in July 1999.
The law firm of Gallagher, Walker, Bianco and Plastaras, of
which Mr. Gerald M. Gallagher, our Senior Vice President and General Counsel,
is a partner, received fees in the amount of $443,839, $284,638 and $179,879
for legal services provided to the Company in Fiscal 1999, 1998 and 1997,
respectively.
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The Company maintains life insurance for each of our executive
officers in the amount of $50,000 and also maintain a directors and officers
insurance policy.
GENERAL
The Company has adopted a policy providing that all future
material transactions between it and its officers, directors and other
affiliates must be on fair terms and be approved by either a majority of the
disinterested members of the Board or the stockholders.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act
of 1934, the registrant has duly caused this Amendment No. 1 to its Annual
Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: October 25, 1999 1-800-FLOWERS.COM, Inc.
By: /s/ James F. McCann
------------------------------------
James F. McCann
Chief Executive Officer
Chairman of the Board of Directors
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Annual Report has been signed by the following persons in the capacities
indicated below:
Date: October 25, 1999 By: /s/ James F. McCann
------------------------------------
James F. McCann
Chief Executive Officer
Chairman of the Board of
Directors
(Principal Executive Officer)
Date: October 25, 1999 By: /s/ John W. Smolak
------------------------------------
John W. Smolak
Senior Vice President Finance
and Administration (Principal
Financial and Accounting
Officer)
Date: October 25, 1999 By: *
------------------------------------
Christopher G. McCann
Director, Senior Vice President
Date: October 25, 1999 By: *
------------------------------------
David Beirne
Director
Date: October 25, 1999 By: *
------------------------------------
Lawrence V. Calcano
Director
Date: October 25, 1999 By: *
------------------------------------
Charles R. Lax
Director
Date: October 25, 1999 By: *
------------------------------------
T. Guy Minetti
Director, Senior Vice President - Corporate
Development
Date: October 25, 1999 By: *
------------------------------------
Kevin J. O'Connor
Director
Date: October 25, 1999 By: *
------------------------------------
Jeffrey C. Walker
Director
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* By: /s/ John W. Smolak
-------------------
Attorney-in-fact
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