8-K/A - FLWS - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

Amendment No. 2

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 3 , 2020

1-800-FLOWERS.COM, INC.

(Exact name of registrant as specified in its charter)

Delaware	0-26841	11-3117311
(State of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

One Old Country Road, Suite 500

Carle Place, New York 11514

(Address of principal executive offices) (Zip Code)

(516) 237-6000

(Registrant's telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrants under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)

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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

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. ☐

Explanatory Note

On August 4, 2020, 1-800-Flowers.com, Inc. (the “Company”) filed a Current Report on Form 8-K (the “Original Filing”) reporting the purchase (the “Acquisition”) of all of the issued and outstanding membership interests of PersonalizationaMall.Com, LLC (“PersonalizationMall”), as of August 3, 2020. On October 19, 2020, the Company amended the Original Filing by filing a current Report on Form 8-K/A (the “Amended Filing”) with the following financial statements and pro forma financial information: (i) unaudited Special Purpose Statement of Assets Acquired and Liabilities Assumed, as of August 3, 2020, of PersonalizationMall, (ii) unaudited Special Purpose Statement of Revenues and Direct Expenses for the year ended February 29, 2020, of PersonalizationMall, (iii) unaudited Special Purpose Statement of Revenues and Direct Expenses for the three months ended May 30, 2020, of PersonalizationMall and (iv) unaudited Pro Forma Condensed Combined Financial Statements of the Company at, and for the year ended, June 28, 2020.

The Company is hereby amending the Original Filing and the Amended Filing by filing this Current Report on Form 8-K/A with the following financial statements and pro forma financial information: (i) audited Special Purpose Statement of Assets Acquired and Liabilities Assumed, as of August 3, 2020, of PersonalizationMall, (ii) audited Special Purpose Statement of Revenues and Direct Expenses for the year ended February 29, 2020, of PersonalizationMall, (iii) unaudited Special Purpose Statement of Revenues and Direct Expenses for the three months ended May 30, 2020, of PersonalizationMall and (iv) unaudited Pro Forma Condensed Combined Financial Statements of the Company at, and for the year ended, June 28, 2020.

There have been no material changes or differences between the financial statements filed herewith and the unaudited financial statements filed with the Amended Filing.

Except as described above, no other changes have been made to the Original Filing or the Amended Filing. The Original Filing continues to speak as of the date of the Original Filing and the Amended Filing continues to speak as of the date of the Amended Filing. Accordingly, this amendment should be read in conjunction with the Company’s Original Filing and the Amended Filing.

Item 9.01. **** Financial Statements and Exhibits.

(a) Financial statements of businesses acquired.

The audited Special Purpose Statement of Assets Acquired and Liabilities Assumed as of August 3, 2020, of PersonalizationMall is filed as Exhibit 99.1.

The audited Special Purpose Statement of Revenues and Direct Expenses for the year ended February 29, 2020, of PersonalizationMall is filed as Exhibit 99.2.

The unaudited Special Purpose Statement of Revenues and Direct Expenses for the three months ended May 30, 2020, of PersonalizationMall is filed as Exhibit 99.3.

(b) Pro Forma Financial Information.

The unaudited Pro Forma Condensed Combined Financial Statements of the Company at, and for the year ended, June 28, 2020, is filed as Exhibit 99.4.

(d) Exhibits

Exhibit No.	Description
23.1	Consent of Independent Registered Public Accounting Firm
99.1	Audited Special Purpose Statement of Assets Acquired and Liabilities Assumed as of August 3, 2020, of PersonalizationMall
99.2	Audited Special Purpose Statement of Revenues and Direct Expenses for the year ended February 29, 2020, of PersonalizationMall
99.3	Unaudited Special Purpose Statement of Revenues and Direct Expenses for the three months ended May 30, 2020, of PersonalizationMall
99.4	Unaudited Pro Forma Condensed Combined Financial Statements of the Company at, and for the year ended, June 28, 2020

Special Note Regarding Forward-Looking Statements:

This current report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent the Company’s current expectations or beliefs concerning future events and can generally be identified using statements that include words such as “estimate,” “expects,” “project,” “believe,” “anticipate,” “intend,” “plan,” “foresee,” “forecast,” “likely,” “will,” “target” or similar words or phrases. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of the Company’s control which could cause actual results to differ materially from the results expressed or implied in the forward-looking statements, including, but not limited to, statements regarding the Company’s ability to achieve the expected results of PersonalizationMall; its ability to successfully integrate the acquired businesses and assets; its ability to cost effectively acquire and retain customers; the outcome of contingencies, including legal proceedings in the normal course of business; its ability to compete against existing and new competitors; its ability to manage expenses associated with sales and marketing and necessary general and administrative and technology investments; and the impact of the Covid-19 pandemic on the Company and PersonalizationMall. The Company undertakes no obligation to publicly update any of the forward-looking statements, whether because of new information, future events or otherwise, made in this report or in any of its SEC filings. Consequently, you should not consider any such list to be a complete set of all potential risks and uncertainties. For a more detailed description of these and other risk factors, please refer to the Company’s SEC filings, including the Company’s Annual Reports on Form 10-K and its Quarterly Reports on Form 10-Q.

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 hereunto duly authorized.

Dated: October 29, 2020

1-800-FLOWERS.COM, Inc.

By: /s/ William E. Shea

William E. Shea

Senior Vice President, Treasurer and

Chief Financial Officer

ex_209115.htm

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of

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

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No.333-54590, 333-119999, 333-164727 and 333-192304) of 1-800-FLOWERS.COM, Inc. and Subsidiaries of our report dated October 29, 2020, relating to the financial statements of PersonalizationMall.com, LLC, which appear in this Form 8K/A.

/s/ BDO USA, LLP

Carle Place, NY

October 29, 2020

ex_207317.htm

Exhibit 99.1

Table of Contents

PersonalizationMall.com, LLC

Special Purpose Statement of Assets Acquired and Liabilities Assumed

as of August 3, 2020

	Pages
Independent Auditor’s Report	2
Financial Statement
Special Purpose Statement of Assets Acquired and Liabilities Assumed	3
Notes to Special Purpose Statement of Assets Acquired and Liabilities Assumed	4

Independent Auditor’s Report

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

Carle Place, NY

Report on the Special Purpose Financial Statement

We have audited the accompanying special purpose statement of Assets Acquired and Liabilities Assumed of PersonalizationMall.com, LLC, a business of Bed Bath & Beyond, Inc., as of August 3, 2020 and the related notes to the special purpose financial statement.

Management’s Responsibility for the Special Purpose Financial Statement

Management is responsible for the preparation and fair presentation of the special purpose financial statement in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of special purpose financial statement that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on the special purpose financial statement based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the special purpose financial statement is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the special purpose financial statement. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the special purpose financial statement, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company’s preparation and fair presentation of the special purpose financial statement in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the special purpose financial statement. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Emphasis of Matter – Special Purpose Financial Statement

As discussed in Note 1 to the financial statement, the accompanying financial statement have been prepared for the purposes of presenting the assets acquired and liabilities assumed of PersonalizationMall.com, LLC, a business of Bed Bath & Beyond, Inc., and are not intended to be a complete presentation of the financial position, results of operations or cash flows of PersonalizationMall.com, LLC a business of Bed Bath & Beyond, Inc. Our opinion is not modified with respect to this matter.

Opinion

In our opinion, the special purpose financial statement referred to above present fairly, in all material respects, the assets acquired and liabilities assumed of PersonalizationMall.com, LLC, a business of Bed Bath & Beyond, Inc., as of August, 3, 2020, in accordance with accounting principles generally accepted in the United States of America.

/s/ BDO USA, LLP

Melville, NY

October 29, 2020

PersonalizationMall.com, LLC

Special Purpose Statement of Assets Acquired and Liabilities Assumed

as of August 3, 2020

	August 3, 2020
	(in thousands)
Assets Acquired:
Inventories	$	16,998
Other assets		5,216
Property, plant and equipment		30,792
Operating lease right-of-use assets		21,438
Goodwill		133,337
Other intangibles		76,000
Total assets acquired	$	283,781
Liabilities assumed:
Accounts payable and accrued expenses	$	11,400
Operating lease liabilities		21,438
Total liabilities assumed		32,838
Net assets acquired	$	250,943

The accompanying notes are an integral part of this financial statement.

Notes to Special Purpose Statement of Assets Acquired and Liabilities Assumed

Note 1 – Description of Business and Basis of Presentation

Description of Business

PersonalizationMall.com, LLC (“The Company” or “PersonalizationMall”) is a leading ecommerce provider of personalized products. The Company’s product offerings include a wide variety of personalization processes such as sublimation, embroidery, digital printing, engraving and sandblasting, while providing an industry-leading customer experience based on a fully integrated business platform that includes a highly automated personalization process and rapid order fulfillment.

On February 14, 2020, 1-800-Flowers.com, Inc., 800-Flowers, Inc., a wholly-owned subsidiary of 1-800-Flowers.com, Inc. (the “Purchaser”), PersonalizationMall, and Bed Bath & Beyond Inc. (“Seller”), entered into an Equity Purchase Agreement (the “Purchase Agreement”) pursuant to which Seller agreed to sell to the Purchaser, and the Purchaser agreed to purchase from Seller, all of the issued and outstanding membership interests of PersonalizationMall for $252.0 million in cash (subject to certain working capital and other adjustments). On July 20, 2020, Buyer, PersonalizationMall, and Seller entered into an amendment (the “Amendment”) to the Purchase Agreement to, among other things, amend the purchase price to $245.0 million (subject to certain working capital and other adjustments). The transaction closed on August 3, 2020 (the “Acquisition Date”).

The Purchase Agreement and Amendment contain customary representations, warranties and covenants by the Purchaser, PersonalizationMall, and Seller, and an indemnity by Seller for certain specified matters and pre-closing taxes. The closing of the transaction was subject to customary closing conditions, including applicable regulatory approvals. The Purchase Agreement includes covenants relating to the negotiation of a commercial selling agreement with respect to the ongoing provision of certain PersonalizationMall products and services to Seller, and, a transition services agreement whereby Seller would provide certain post-closing services to PersonalizationMall for a limited time period.

Basis of Presentation

This special purpose statement of assets acquired and liabilities assumed (“financial statement”), has been prepared as of August 3, 2020, and is provided in lieu of certain historical financial information of PersonalizationMall required by Rule 3-05 of Regulation S-X, in accordance with a request for relief granted by the Securities and Exchange Commission.

This financial statement has been derived from the Purchaser’s preliminary purchase price allocation, which represents the fair value of assets acquired and liabilities assumed at the Acquisition Date. The financial statement does not represent the assets sold or liabilities assumed as if PersonalizationMall had operated as a separate, stand-alone entity. In addition, the financial statement is not meant to be indicative of the financial condition of PersonalizationMall going forward as a result of future changes to its operations. The statement of assets acquired and liabilities assumed includes only the specific assets and liabilities related to PersonalizationMall that was acquired by Purchaser in accordance with the Purchase Agreement and Amendment.

Note 2 - Summary of Significant Accounting Policies

Use of Estimates

The preparation of the financial statement in accordance with GAAP requires management to make estimates and assumptions that may affect the reported amounts of the assets acquired, liabilities assumed, and related disclosures as of the period being presented. Management bases its estimates on historical experience and various other assumptions it believes to be reasonable. Components of this financial statement particularly subject to estimation include the fair value of assets acquired and liabilities assumed. Actual results may differ from management’s estimates.

Concentration of Credit Risk

Concentration of credit risk, with respect to accounts receivable is limited due to the Company’s large number of customers and their dispersion throughout the United States, and the fact that a substantial portion of receivables are related to balances owed by major credit card companies.

Fair Value Measurements

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

Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.

Level 2 - Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.

Level 3 - Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The fair value of acquired receivables, inventories, other assets, property plant and equipment and the fair value of assumed accounts payable and accrued expenses approximated their carrying value at the acquisition date. Operating lease right-of-use assets and lease liabilities were measured using Level 2 inputs, and intangible assets were measured using Level 3 inputs.

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.

Total deferred revenue as of August 3, 2020 was $1.5 million (included in “ Accounts payable and accrued expenses” in the financial statement).

Recently Issued Accounting Pronouncements - Adopted

Leases - In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASC 842”). Under this guidance, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. This guidance offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. The new standard provides a number of optional practical expedients in transition. The Company elected the ‘package of practical expedients’, that did not require it to reassess, under the new standard, its prior conclusions about lease identification, lease classification and initial direct costs. Further, the Company elected a short-term lease exception policy, permitting it to not apply the recognition requirements of this standard to short-term leases (i.e. leases with terms of 12 months or less) and an accounting policy to account for lease and non-lease components as a single component for certain classes of assets. The adoption of the new standard had a material impact to the Company’s statement of assets acquired and liabilities assumed. As such, the Company recorded operating lease liabilities of $21.4 million, based on the present value of the remaining minimum rental payments using discount rates as of the effective date, and a corresponding right-of-use assets of $21.4 million based on the operating lease liabilities adjusted for deferred rent and lease incentives received. See Note 8 - Leases for further information about the Company’s transition to ASC 842 and the newly required disclosures.

Recently Issued Accounting Pronouncements – Not Yet Adopted

Financial Instruments – Measurement of Credit Losses. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 introduces a new forward-looking “expected loss” approach, to estimate credit losses on most financial assets and certain other instruments, including trade receivables. The estimate of expected credit losses will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. This ASU also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. The Company does not expect the adoption of this guidance to have a material effect on its financial statement.

Goodwill – Impairment Test. In January 2017, the FASB issued ASU No. 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment," which eliminates Step 2 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. The Company does not expect the standard to have a material impact on its financial statement.

Note 3 - Preliminary Purchase Price Allocation

This financial statement is presented on the basis of the Purchaser’s preliminary purchase price allocation. The Purchaser accounts for business combinations in accordance with Accounting Standards Codification Topic 805 which requires, among other things, the acquiring entity in a business combination to recognize the fair value of all the assets acquired and liabilities assumed and contingent purchase consideration to be recognized at their fair values on the acquisition date with subsequent adjustments recognized in the results of operations. The fair values assigned to identifiable intangible assets acquired are determined primarily by using an income approach which is based on assumptions and estimates made by management. Significant assumptions utilized in the income approach are based on company specific information and projections which are not observable in the market and are therefore considered Level 3 measurements. The excess of the purchase price over the fair value of the identified assets and liabilities is recorded as goodwill.

On August 3, 2020, Purchaser completed its acquisition of the Company. The purchase price of $245.0 million, subject to certain working capital and other adjustments which resulted in total consideration paid of approximately $250.9 million, included its newly renovated, leased 360,000 square foot state-of-the-art production and distribution facility, as well as customer database, tradenames and website. The total purchase price was allocated to the identifiable assets acquired and liabilities assumed based on preliminary estimates of their fair values on the acquisition date. The Purchaser is in the process of finalizing its allocation and this may result in potential adjustments to the carrying value of the respective recorded assets and liabilities, establishment of certain additional intangible assets, revisions of useful lives of intangible assets, establishment of potential acquisition contingencies, and the determination of any residual amount that will be allocated to goodwill. As additional information becomes available, the preliminary purchase price allocation may be revised during the remainder of the measurement period, which will not exceed 12 months from the acquisition date. Any such revisions or changes may be material.

The determination of the fair values of the acquired assets and assumed liabilities (and the related determination of estimated lives of depreciable tangible and identifiable intangible assets) requires significant judgment. The estimates and assumptions include the projected timing and amount of future cash flows and discount rates reflecting risk inherent in the future cash flows. Based on the valuation as of August 3, 2020, of the acquired intangible assets, $11.0 million was assigned to customer lists (4 years life), $65.0 million was assigned to tradenames (indefinite life), and the residual amount of $133.3 million was allocated to Goodwill (indefinite life and deductible for tax purposes). The goodwill recognized in conjunction with the Purchaser’s acquisition of the Company 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. It also includes certain other intangible assets that do not qualify for separate recognition, such as an assembled workforce.

The estimated fair value of the acquired trade names 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 association 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.

Note 4 – Other Assets

Other assets are stated at fair value and were valued based on the cost method, due to the short-term nature of the assets, consisting primarily of accounts receivable owed by major credit card companies, short-term vendor deposits, and prepaid expenses.

Note 5 – Inventories

The Company’s inventory consists primarily of raw materials and supplies and is stated at fair value, which approximated carrying value at the Acquisition Date. Inventory is classified as follows:

	August 3, 2020
	(in thousands)
Raw materials	$	14,029
Supplies		2,969
Total inventory	$	16,998

Note 6 - Property, Plant and Equipment

Property, plant and equipment are stated at fair value, and were valued at book value (cost less accumulated depreciation and amortization), due to the nature of the assets: recently acquired production equipment and leasehold improvements for the Company’s state of the art production facility. Property, plant and equipment are reviewed for impairment whenever changes in circumstances or events may indicate that the carrying amounts are not recoverable.

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

	Estimated useful lives		August 3, 2020
	(in years)		(in thousands)
Leasehold improvements		3-11	$	12,274
Production equipment		1-19		15,500
Furniture and fixtures		5-6		266
Computer and telecommunication equipment		3		878
Software		2		1,874
Property, plant and equipment	****	****	$	30,792

Note 7 – Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of the following:

	August 3, 2020
	(in thousands)
Accounts payable	$	3,718
Payroll and employee benefits		1,677
Deferred revenue		1,545
Sales Taxes Payable		953
Other		3,507
Accounts payable and accrued expenses	$	11,400

Note 8 – Leases

The Company currently leases two facilities which are used for production, warehouse and administrative purposes, with terms through fiscal 2031. These lease agreements 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, the Company determines 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.

The Company determined that both of its leases were operating leases as of the August 3, 2020 and recognized a corresponding lease liability and right-of-use asset on its statement of net assets acquired. The lease liability was measured at the present value of the remaining fixed minimum rental payments (including base rent and fixed common area maintenance) using discount rates as of the Acquisition Date. Variable payments (including most utilities, real estate taxes, insurance and variable common area maintenance) are expensed as incurred. The right-of-use asset was measured at the carrying amount of the lease liability adjusted to reflect any potential favorable or unfavorable terms of the lease when compared with market terms (none present). 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 the Company’s estimated collateralized incremental borrowing rate, based on the yield curve for the respective lease terms, as the Company generally cannot determine the interest rate implicit in the lease.

The Company recognizes expense for its 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 the Company determines: (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:

	August 3, 2020
Weighted-average remaining lease term - operating leases (in years)		10.0
Weighted-discount rate - operating leases		3.8	%

Maturities of lease liabilities in accordance with ASC 842 as of August 2020 are as follows (in thousands):

2021	$	1,936
2022		2,507
2023		2,565
2024		2,624
2025		2,685
Thereafter		13,669
Total Future Minimum Lease Payments		25,986
Less Imputed Remaining Interest		4,548
Total	$	21,438

Note 9 - Employee Retirement Plans

The Company’s employees participate in the 401(k) Profit Sharing Plan of a subsidiary of 1-800-Flowers.com, Inc. All employees who have attained the age of 21 are eligible to participate upon completion of one month of service. Participants may elect to make voluntary contributions to the 401(k) plan in amounts not exceeding federal guidelines. Employees are vested in the Company's contributions based upon years of service. Prior to the Date of Acquisition, the Company participated in a 401(k) plan sponsored by Seller, and approximately $0.2 million of Seller contribution payable is included within accrued expenses as of August 3, 2020.

Note 10 - Commitments and Contingencies

Litigation

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

Other Commitments

The Company’s purchase commitments consist primarily of inventory, equipment and technology (hardware and software) purchase orders made in the ordinary course of business, most of which have terms less than one year. As of August 3, 2020, the Company had fixed and determinable off-balance sheet purchase commitments with remaining terms in excess of one year of approximately $7.4 million, primarily related to inventory commitments.

Note 11 – Subsequent Events

Management has evaluated subsequent events through October 29, 2020, the date the financial statement was available to be issued. No events were identified requiring additional recognition of disclosure in the notes to the financial statement.

COVID-19

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was signed into law. The CARES Act provides a substantial stimulus and assistance package intended to address the impact of the pandemic of the novel strain of coronavirus (“COVID-19”), including tax relief and government loans, grants and investments. The CARES Act did not have a material impact on the Company’s financial statement as of August 3, 2020.

In response to the global pandemic, the Company has taken actions to ensure employee safety and business continuity, informed by the guidelines set forth by local, state and federal government and health officials. As of the Acquisition Date, PersonalizationMall has followed 1-800-Flowers.com, Inc.’s “Pandemic Preparedness and Response Plan,” which established an internal “nerve center” to allow for communication and coordination, including workstream teams to promote workforce protection and supply chain management, and dedicating resources to support our customers and vendors.

The COVID-19 pandemic has affected, and will continue to affect, the Company’s operations and financial results for the foreseeable future. As a result of governmental and regulatory requirements, the Company closed its facilities and temporarily ceased production and fulfillment operations between March 21, 2020 and May 4, 2020. Facilities were re-opened on a limited basis on May 5, 2020, operating at approximately 25% of capacity, as the Company implemented required social distancing and related employee protection measures. Operations were able to return to full capacity, in compliance with applicable safety protocols, by June 8, 2020. Sales were negatively impacted during the closure period and continuing through June 20, 2020, by which time the Company was able to fulfill its order backlog and resume marketing activities. Subsequent to June 20, 2020 the Company has been seeing strong e-commerce demand as customers increasingly turn to the brand’s product offerings to help them remain connected and express themselves during a very difficult time.

The Company is closely monitoring the impact of COVID-19 on its business, including how it will affect its customers, workforce, suppliers, vendors, 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 August 3, 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 financial statement as of August 3, 2020, the Company’s future assessment of these factors and the evolving factors described above, could result in material impacts to the Company’s financial statements in future reporting periods.

ex_207318.htm

Exhibit 99.2

Table of Contents ****

PersonalizationMall.com, LLC

Special Purpose Statement of Revenues and Direct Expenses

for the year ended February 29, 2020

	Pages
Independent Auditor’s Report	2
Financial Statement
Special Purpose Statement of Revenues and Direct Expenses		3
Notes to Special Purpose Statement of Revenues and Direct Expenses		4

Independent Auditor’s Report

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

Carle Place, NY

Report on the Special Purpose Financial Statement

We have audited the accompanying special purpose statement of revenues and direct expenses of PersonalizationMall.com, LLC, a business of Bed Bath & Beyond, Inc., for the year ended February 29, 2020, and the related notes to the special purpose financial statement.

Management’s Responsibility for the Special Purpose Financial Statement

Auditor’s Responsibility

Emphasis of Matter – Special Purpose Financial Statement

As discussed in Note 1 to the financial statement, the accompanying financial statement have been prepared for the purposes of presenting the revenues and direct expenses of PersonalizationMall.com, LLC, a business of Bed Bath & Beyond, Inc., and are not intended to be a complete presentation of the financial position, results of operations or cash flows of PersonalizationMall.com, LLC , a business of Bed Bath & Beyond, Inc. Our opinion is not modified with respect to this matter.

Opinion

In our opinion, the special purpose financial statement referred to above present fairly, in all material respects, the revenues and direct expenses of PersonalizationMall.com, LLC, a business of Bed Bath & Beyond, Inc., for the year ended February 29, 2020, in accordance with accounting principles generally accepted in the United States of America.

/s/ BDO USA, LLP

Melville, NY

October 29, 2020

PersonalizationMall.com, LLC

Special Purpose Statement of Revenues and Direct Expenses

for the year ended February 29, 2020

	Year Ended
	February 29, 2020
	(in thousands)
Net revenues	$	171,208
Cost of revenues		81,623
Gross profit		89,585
Direct expenses:
Marketing and sales		53,611
Technology and development		1,213
General and administrative		9,258
Depreciation and amortization		3,346
Total direct expenses		67,428
Revenues less direct expenses	$	22,157

The accompanying notes are an integral part of this financial statements.

Notes to Special Purpose Statement of Revenues and Direct Expenses

Note 1 – Description of Business and Basis of Presentation

Description of Business

On February 14, 2020, 1-800-Flowers.com, Inc., 800-Flowers, Inc., a wholly-owned subsidiary of 1-800-Flowers.com, Inc. (the “Purchaser”), PersonalizationMall, and Bed Bath & Beyond Inc. (“Seller”), entered into an Equity Purchase Agreement (the “Purchase Agreement”) pursuant to which Seller agreed to sell to the Purchaser, and the Purchaser agreed to purchase from Seller, all of the issued and outstanding membership interests of PersonalizationMall for $252.0 million in cash (subject to certain working capital and other adjustments). On July 20, 2020, Buyer, PersonalizationMall, and Seller entered into an amendment (the “Amendment”) to the Purchase Agreement to, among other things, amend the purchase price to $245 million (subject to certain working capital and other adjustments). The transaction closed on August 3, 2020 (the “Acquisition Date”).

Basis of Presentation

This special purpose financial statement of revenues and direct expenses has been prepared for the year ended February 29, 2020 (“financial statement”), and is provided in lieu of certain historical financial information of PersonalizationMall required by Rule 3-05 of Regulation S-X, in accordance with a request for relief granted by the Securities and Exchange Commission.

This financial statement has been derived from the historical accounting records of the Company. The financial statement does not represent revenues and direct expenses as if the Company had operated as a separate, stand-alone entity during the period presented. In addition, the financial statement is not meant to be indicative of results of operations of the Company going forward as a result of future changes in its operations and the omission of various operating expenses.

All significant intracompany balances and transactions have been eliminated.

The revenues included in the accompanying financial statement represent revenues directly attributable to the Company. The costs and expenses included in the accompanying financial statement were incurred by the Company and include direct and allocated costs and expenses related to PersonalizationMall. The allocated costs and expenses (including, among other items, outbound shipping expenses, employee benefits, utilities and insurance costs) were allocated to PersonalizationMall by Seller based on direct usage or benefit where identifiable, with the remainder allocated on a pro rata basis of relevant measures. The Company considers the expense allocation methodology and results to be reasonable for the period presented.

The financial statement does not include expenses not directly associated with the Company’s business, such as corporate overhead expenses (legal, treasury and certain other back-office functions), interest expense and income taxes

Note 2 - Summary of Significant Accounting Policies

Use of Estimates

The preparation of the financial statement in accordance with GAAP requires management to make estimates and assumptions that may affect the **** reported amounts of revenues, direct expenses and related disclosures during the period being presented. Management bases its estimates on historical experience and various other assumptions it believes to be reasonable. Components of this financial statement particularly subject to estimation include the allocation of certain direct expenses. Actual results may differ from management’s estimates.

Revenue Recognition

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

Our revenue generating activities consist primarily of E-commerce revenues derived from 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.

Concentration of Credit Risk

Cost of Revenues

Cost of revenues consists primarily of the cost of merchandise sold from inventory or through third parties, and associated costs, including inbound and outbound shipping charges. Additionally, cost of revenues includes labor and facility costs related to manufacturing and production operations.

Marketing and Sales

Marketing and sales expense consists primarily of advertising expenses, online portal and search expenses, and customer service center expenses, as well as the operating expenses of the Company’s departments engaged in marketing, selling and merchandising activities.

The Company expenses all advertising costs at the time the advertisement is first shown.

Technology and Development

Technology and development expense consists primarily of payroll and operating expenses of the Company’s information technology group, costs associated with its websites, including hosting, content development and maintenance and support costs related to the Company’s order entry, customer service, fulfillment and database systems. Costs associated with the acquisition or development of software for internal use are capitalized if the software is expected to have a useful life beyond one year and amortized over the software’s useful life, typically three to seven years. Costs associated with repair maintenance or the development of website content are expensed as incurred, as the useful lives of such software modifications are less than one year.

Lease expense

During the twelve months ending February 29, 2020, the Company leased two primary facility locations which were used for production, warehouse and administrative purposes, with terms through fiscal 2031. These lease agreements 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, the Company determines 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.

The Company recognizes expense for its operating leases on a straight-line basis over the lease term.

Depreciation expense

Depreciation expense is computed using the straight-line method over the assets’ estimated useful lives. Amortization of leasehold improvements is computed using the straight-line method over the shorter of the estimated useful lives and the initial lease terms. The Company capitalizes certain internal and external costs incurred to acquire or develop internal-use software. Capitalized software costs are amortized on a straight-line basis over the estimated useful life of the software. Estimated useful lives are periodically reviewed, and where appropriate, changes are made prospectively.

The Company’s property, plant and equipment are depreciated using the following estimated lives:

	Estimated useful lives
	(in years)
Leasehold improvements		8-12
Production equipment		3-20
Furniture and fixtures		7
Computer and telecommunication equipment		5
Software		5

Property, plant and equipment are reviewed for impairment whenever changes in circumstances or events may indicate that the carrying amounts are not recoverable. There were no impairments recorded during the period.

Amortization of intangible assets

Definite-lived intangible assets were fully amortized prior to the beginning of the fiscal year, and as such, there was no amortization during the year ended February 29, 2020. There were no goodwill and intangible asset impairments recorded during the period.

Recently Issued Accounting Pronouncements – Not Yet Adopted

Note 3 - Employee Retirement Plans

Subsequent to the Acquisition Date, the Company’s employees were eligible to participate in the 401(k) Profit Sharing Plan of a subsidiary of 1-800-Flowers.com, Inc. All employees who have attained the age of 21 are eligible to participate upon completion of one month of service. Participants may elect to make voluntary contributions to the 401(k) plan in amounts not exceeding federal guidelines. Prior to the Date of Acquisition, employees of the Company participated in a 401(k) plan sponsored by the Seller. The Company contributed approximately $0.2 million during the year ended February 29, 2020.

Note 4 - Commitments and Contingencies

Litigation

Note 5 - Subsequent Events

Management has evaluated subsequent events through October 29, 2020, the date the financial statement was available to be issued. No events, other than the ones described in this financial statement, were identified requiring additional disclosure.

COVID-19

ex_207319.htm

Exhibit 99.3

Table of Contents ****

PersonalizationMall.com, LLC

Special Purpose Statement of Revenues and Direct Expenses

for the three months ending May 30, 2020

Financial Statement	Pages
Special Purpose Statement of Revenues and Direct Expenses		2
Notes to Special Purpose Statement of Revenues and Direct Expenses		3

PersonalizationMall.com, LLC

Special Purpose Statement of Revenues and Direct Expenses

for the three months ending May 30, 2020

	Three Months Ended
	May 30, 2020
	(in thousands)
Net revenues	$	7,608
Cost of revenues		4,965
Gross profit		2,643
Direct expenses:
Marketing and sales		7,167
Technology and development		285
General and administrative		1,748
Depreciation and amortization		1,115
Total direct expenses		10,315
Revenues less direct expenses	$	(7,672	)

The accompanying notes are an integral part of this financial statement.

Notes to Special Purpose Statement of Revenues and Direct Expenses

Note 1 – Description of Business and Basis of Presentation

Description of Business

On February 14, 2020, 1-800-Flowers.com, Inc., 800-Flowers, Inc., a wholly-owned subsidiary of 1-800-Flowers.com, Inc. (the “Purchaser”), Personalization Mall, and Bed Bath & Beyond Inc. (“Seller”), entered into an Equity Purchase Agreement (the “Purchase Agreement”) pursuant to which Seller agreed to sell to the Purchaser, and the Purchaser agreed to purchase from Seller, all of the issued and outstanding membership interests of Personalization Mall for $252.0 million in cash (subject to certain working capital and other adjustments). On July 20, 2020, Buyer, Personalization Mall, and Seller entered into an amendment (the “Amendment”) to the Purchase Agreement to, among other things, amend the purchase price to $245 million (subject to certain working capital and other adjustments). The transaction closed on August 3, 2020 (the “Acquisition Date”).

The Purchase Agreement and Amendment contain customary representations, warranties and covenants by the Purchaser, Personalization Mall, and Seller, and an indemnity by Seller for certain specified matters and pre-closing taxes. The closing of the transaction was subject to customary closing conditions, including applicable regulatory approvals. The Purchase Agreement includes covenants relating to the negotiation of a commercial selling agreement with respect to the ongoing provision of certain Personalization Mall products and services to Seller, and, a transition services agreement whereby Seller would provide certain post-closing services to Personalization Mall for a limited time period.

Basis of Presentation

This special purpose financial statement of revenues and direct expenses has been prepared for the three months ended May 30, 2020 (“financial statement”), and is provided in lieu of certain historical financial information of PersonalizationMall required by Rule 3-05 of Regulation S-X, in accordance with a request for relief granted by the Securities and Exchange Commission. This financial statement has been derived from the historical accounting records of the Company. The financial statement does not represent revenues and direct expenses as if the Company had operated as a separate, stand-alone entity during the period presented. In addition, the financial statement is not meant to be indicative of results of operations of the Company going forward as a result of future changes in its operations and the omission of various operating expenses.

All significant intracompany balances and transactions have been eliminated.

Note 2 - Summary of Significant Accounting Policies

Use of Estimates

Revenue Recognition

Concentration of Credit Risk

Cost of Revenues

Marketing and Sales

The Company expenses all advertising costs at the time the advertisement is first shown.

Technology and Development

Lease expense

During the three months ending May 30, 2020, the Company leased two primary facility locations which were used for production, warehouse and administrative purposes, with terms through fiscal 2031. These lease agreements 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, the Company determines 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.

The Company recognizes expense for its operating leases on a straight-line basis over the lease term.

Depreciation expense

The Company’s property, plant and equipment are depreciated using the following estimated lives:

	Estimated useful lives
	(in years)
Leasehold improvements		8-12
Production equipment		3-20
Furniture and fixtures		7
Computer and telecommunication equipment		5
Software		5

Amortization of intangible assets

Definite-lived intangible assets were fully amortized prior to the beginning of the period, and as such, there was no amortization during the three months ended May 30, 2020. There were no goodwill and intangible asset impairments recorded during the period.

Recently Issued Accounting Pronouncements – Not Yet Adopted

Note 3 - Employee Retirement Plans

Subsequent to the Acquisition Date, the Company’s employees were eligible to participate in the 401(k) Profit Sharing Plan of a subsidiary of 1-800-Flowers.com, Inc. All employees who have attained the age of 21 are eligible to participate upon completion of one month of service. Participants may elect to make voluntary contributions to the 401(k) plan in amounts not exceeding federal guidelines. Prior to the Date of Acquisition, employees of the Company participated in a 401(k) plan sponsored by the Seller. The Company contributed less than $0.1 million during the three months ended May 30, 2020.

Note 4 - COVID-19

Note 5 - Commitments and Contingencies

Litigation

Note 6 - Subsequent Events

ex_207320.htm

Exhibit 99.4

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

Unaudited Pro Forma Condensed Combined Financial Statements

On February 14, 2020, 1-800-Flowers.com, Inc. (the “Company”), 800-Flowers, Inc., a wholly-owned subsidiary of 1-800-Flowers.com, Inc. (the “Purchaser”), PersonalizationMall.com, LLC (PersonalizationMall), and Bed Bath & Beyond Inc. (“Seller”), entered into an Equity Purchase Agreement (the “Purchase Agreement”) pursuant to which Seller agreed to sell to the Purchaser, and the Purchaser agreed to purchase from Seller, all of the issued and outstanding membership interests of PersonalizationMall for $252.0 million in cash (subject to certain working capital and other adjustments). On July 20, 2020, Buyer, PersonalizationMall, and Seller entered into an amendment (the “Amendment”) to the Purchase Agreement to, among other things, amend the purchase price to $245.0 million (subject to certain working capital and other adjustments). On August 3, 2020, Purchaser completed its acquisition of the PersonalizationMall, which included its newly renovated, leased 360,000 square foot state-of-the-art production and distribution facility, as well as customer database, tradenames and website. Including specified working capital and other adjustments, total consideration paid amounted to $250.9 million, which has been allocated to the identifiable assets acquired and liabilities assumed based on preliminary estimates of their fair values on the acquisition date. The Purchaser is in the process of finalizing its allocation and this may result in potential adjustments to the carrying value of the respective recorded assets and liabilities, establishment of certain additional intangible assets, revisions of useful lives of intangible assets, establishment of potential acquisition contingencies, and the determination of any residual amount that will be allocated to goodwill. As additional information becomes available, the preliminary purchase price allocation may be revised during the remainder of the measurement period, which will not exceed 12 months from the acquisition date. Any such revisions or changes may be material.

The Company used a combination of cash on its balance sheet and borrowed $95.0 million under its existing credit facility to finance the acquisition. Subsequent to, but in contemplation of the acquisition, on August 20, 2020, the Company, the Subsidiary Guarantors, JPMorgan Chase Bank, N.A. as administrative agent, and a group of lenders entered into a First Amendment (the “First Amendment”) to the 2019 Credit Agreement. The First Amendment amends the 2019 Credit Agreement to, among other modifications, (i) increase the aggregate principal amount of the existing Revolver commitments from $200.0 million to $250.0 million, (ii) establish a new tranche of term A-1 loans in an aggregate principal amount of $100.0 million (the “New Term Loan”), (iii) increase the working capital sublimit with respect to the Revolver from $175.0 million to $200.0 million, and (iv) increase the seasonally-reduced Revolver commitments from $100.0 million to $125.0 million for the period from January 1 through August 1 for each fiscal year of the Company. The New Term Loan will mature on May 31, 2024. The New Term Loan is payable in 15 quarterly installments of principal and interest beginning on September 27, 2020, with escalating principal payments, at the rate of 5.0% per annum for the first four payments, and 10.0% per annum for the remaining 11 payments, with the remaining balance of $67.5 million due upon maturity. The $100.0 million proceeds of the New Term Loan were used to repay the $95.0 million borrowing which had been drawn on its existing Revolver to finance the acquisition, as well as financing fees of approximately $2.0 million.

The acquisition is being accounted for in accordance with ASC Topic 805 Business Combinations (“ASC 805”). Accordingly, the total purchase price has been allocated on a preliminary basis to assets acquired and liabilities assumed in connection with the acquisition based on their estimated fair values as of the assumed acquisition date. These allocations reflect various preliminary estimates that were available at the time of the preparation of this Current Report on Form 8-K/A, and are subject to change during the measurement period (not to exceed one year from the acquisition date) as valuations are finalized.

The following unaudited pro forma condensed combined financial information incorporates PersonalizationMall’s abbreviated financial statements that are provided in lieu of certain historical financial information of PersonalizationMall required by Rule 3-05 of Regulation S-X, in accordance with a request for relief granted by the Securities and Exchange Commission.

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

Unaudited Pro Forma Condensed Combined Balance Sheet at June 28, 2020

(in thousands, except share data)

	Company, as reported			PersonalizationMall, at fair value		Pro Forma				Pro Forma
	June 28, 2020			August 3, 2020		Adjustments				Combined
Assets	****	****	****	****	****	****	****	****		****	****	****
Current assets:
Cash and cash equivalents	$	240,506		$	-	$	(153,133	)	(a)	$	87,373
Trade receivables, net		15,178			1,382		-				16,560
Inventories		97,760			16,998		-				114,758
Prepaid and other		25,186			3,834		-				29,020
Total current assets		378,630			22,214		(153,133	)			247,711
Property, plant and equipment, net		169,075			30,792		-				199,867
Operating lease right-of-use assets		66,760			21,438		-				88,198
Goodwill		74,711			133,337		-				208,048
Other intangibles, net		66,273			76,000		-				142,273
Other assets		18,986			-		-				18,986
Total assets	$	774,435		$	283,781	$	(153,133	)		$	905,083
Liabilities and Stockholders' Equity	****	****	****	****	****	****	****	****		****	****	****
Current liabilities:
Accounts payable		25,306			3,677		-				28,983
Accrued expenses		141,741			7,723		4,939		(b)		154,403
Current maturities of long-term debt		5,000			-		5,000		(a)		10,000
Current portion of long-term operating lease liabilities		8,285			1,358		-				9,643
Total current liabilities		180,332			12,758		9,939				203,029
Long-term debt		87,559			-		92,810		(a)		180,369
Long-term operating lease liabilities		61,964			20,080		-				82,044
Deferred tax liabilities		28,632			-		-				28,632
Other liabilities		16,174			-		-				16,174
Total liabilities	****	374,661		****	32,838	****	102,749			****	510,248
Stockholders' equity:
Class A Common stock		537			-		-				537
Class B common stock		338			-		-				338
Additional paid-in capital		358,031			-		-				358,031
Retained earnings		167,523			-		(4,939	)	(b)		162,584
Accumulated other comprehensive loss		(243	)		-		-				(243	)
Treasury stock		(126,412	)		-		-				(126,412	)
Total stockholders’ equity		399,774			-		(4,939	)			394,835
Total liabilities and stockholders’ equity	$	774,435		$	32,838	$	97,810			$	905,083

See the accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Statements.

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

Unaudited Pro Forma Condensed Combined Statement of Income ****

for the year ended June 28, 2020

(in thousands, except per share data)

	Company, as reported			PersonalizationMall, Historical		****	****	****		****	****	****
	for the year ended			for the year ended		Pro Forma				Pro Forma
	June 28, 2020			May 30, 2020		Adjustments				Combined
Net revenues	$	1,489,637		$	142,848	$	-			$	1,632,485
Cost of revenues		867,441			70,469		-				937,910
Gross profit		622,196			72,379		-				694,575
Operating expenses:
Marketing and sales		363,227			49,619		-				412,846
Technology and development		48,698			1,157		-				49,855
General and administrative		97,394			8,962		(2,706	)	(d)		103,650
Depreciation and amortization		32,513			3,832		2,750		(c)		39,095
Total operating expenses		541,832			63,570		44				605,446
Operating income (loss)		80,364			8,809		(44	)			89,129
Interest expense, net		2,438			-		4,073		(a)		6,511
Other income (loss)		(84	)		-		-				(84	)
Income (loss) before income taxes		77,842			8,809		(4,117	)			82,534
Income tax expense (benefit)		18,844			-		(865	)	(e)		17,979
Net i ncome (loss)	$	58,998		$	8,809	$	(3,252	)		$	64,555
Basic net income per common share	$	0.92								$	1.00
Diluted net income per common share	$	0.89								$	0.97
Weighted average shares used in the calculation of net income per common share:
Basic		64,463									64,463
Diluted		66,408									66,408

See the accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Statements.

Notes to the Unaudited Pro Forma Condensed Combined Financial Statements

(amounts in thousands)

Note 1 - **** Basis of Pro Forma Presentation

The unaudited pro forma condensed combined balance sheet is presented as if the acquisition of PersonalizationMall had occurred on June 28, 2020, and combines the Company’s historical audited consolidated balance sheet as of June 28, 2020 with PersonalizationMall’s audited statement of assets acquired and liabilities assumed prepared on the basis of the Company’s acquisition accounting as of August 3, 2020. The following unaudited pro forma condensed combined statement of income for the fiscal year ended June 28, 2020 is presented as if the acquisition of PersonalizationMall had occurred on July 1, 2019, and combines the Company’s historical audited consolidated statement of income for the year ended June 28, 2020 with PersonalizationMall’s unaudited statement of revenues and direct expenses for the twelve month period ending May 30, 2020.

The financial statements of 1-800-FLOWERS.COM and PersonalizationMall have been adjusted in the unaudited pro forma condensed combined financial statements to give effect to pro forma events that are: (i) directly attributable to the acquisition, including the related financing of the acquisition, (ii) factually supportable, and (iii) with respect to the unaudited condensed combined statement of income, expected to have a continuing impact on the combined entity. The adjustments summarized above are described in detail in the accompanying notes.

These unaudited pro forma condensed combined financial statements are prepared by management for informational purposes only in accordance with the rules and regulations of the U.S. Securities and Exchange Commission and are not necessarily indicative of or intended to represent the results that would have been achieved had the acquisition been consummated as of the dates presented, and should not be taken as representative of future consolidated results of operations. The unaudited pro forma condensed combined financial statements do not reflect any operating efficiencies and/or cost savings that the Company may achieve, or any additional expenses or costs of integration that may be incurred, with respect to the combined companies.

The Company accounts for business combinations pursuant to ASC Topic 805. In accordance with ASC 805, the Company uses its best estimates and assumptions to allocate the total purchase price to the fair value of identifiable assets acquired and liabilities assumed at the acquisition date. Goodwill is measured as the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired. The fair values assigned to PersonalizationMall’s tangible and intangible assets and liabilities assumed are considered preliminary and are based on the information that was available as of the date of the acquisition. The Company is in the process of finalizing its allocation and this may result in potential adjustments to the carrying value of the respective recorded assets and liabilities, establishment of certain additional intangible assets, revisions of useful lives of intangible assets, and the determination of any residual amount that will be allocated to goodwill. The Company will finalize the valuation of the net tangible and intangible assets as soon as practicable, but not later than one year from the acquisition date.

Under ASC Topic 805, acquisition-related transaction costs (i.e., advisory, legal, valuation, and other professional fees) are not included as a component of consideration transferred, but are accounted for as expenses in the periods in which the costs are incurred. These costs are not presented in the unaudited pro forma condensed combined statements of income because, although they are directly attributable to the acquisition, they will not have a continuing impact on the consolidated results of the combined company.

The unaudited pro forma condensed combined financial statements have been developed from and should be read in conjunction with 1-800-FLOWERS.COM’s historical audited consolidated financial statements and accompanying notes contained in the Company’s Annual Report on Form 10-K for its fiscal year ended June 28, 2020, and PersonalizationMall’s Special Purpose Statement of Assets Acquired and Liabilities Assumed as of August 3, 2020, PersonalizationMall’s Special Purpose Statement of Revenues and Direct Expenses for the year ending February 29, 2020, and PersonalizationMall’s Special Purpose Statement of Revenues and Direct Expenses for the three months ending May 30, 2020, contained in this Form 8-K/A.

Note 2 - Accounting Policies

1-800-FLOWERS.COM has begun performing a comparative review of the accounting policies of the two companies. Upon completion of this review, the Company may identify differences between the accounting policies of the two companies that, when conformed, could have a material impact on the combined financial statements.

Note 3 - Purchase C onsideration and E stimated A llocation

On August 3, 2020, the Company completed its acquisition of PersonalizationMall. The purchase price of $245.0 million, subject to certain working capital and other adjustments which resulted in total consideration paid of approximately $250.9 million, included its newly renovated, leased 360,000 square foot state-of-the-art production and distribution facility, as well as customer database, tradenames and website.

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 fair values assigned to PersonalizationMall’s tangible and intangible assets and liabilities assumed are considered preliminary and are based on the information that was available as of the date of the acquisition. The Company is in the process of finalizing its allocation and this may result in potential adjustments to the carrying value of the respective recorded assets and liabilities, establishment of certain additional intangible assets, revisions of useful lives of intangible assets, and the determination of any residual amount that will be allocated to goodwill. As additional information becomes available, the preliminary purchase price allocation may be revised during the remainder of the measurement period, which will not exceed 12 months from the acquisition date. Any such revisions or changes may be material.

The following table summarizes the preliminary allocation of the purchase price to the estimated fair values of assets acquired and liabilities assumed at the assumed acquisition date of August 3, 2020:

	PersonalizationMall’s Preliminary Purchase Price Allocation
	(in thousands)
Assets Acquired:
Inventories	$	16,998
Other assets		5,216
Property, plant and equipment		30,792
Operating lease right-of-use assets		21,438
Goodwill		133,337
Other intangibles		76,000
Total assets acquired	$	283,781
Liabilities assumed:
Accounts payable and accrued expenses	$	11,400
Operating lease liabilities		21,438
Total liabilities assumed		32,838
Net assets acquired	$	250,943

Note 4 - Pro Forma A djustments ****

The following unaudited pro forma adjustments (in thousands) have been reflected in the unaudited pro forma condensed combined financial statements:

(a)	To record the following adjustments related to the financing of the acquisition of PersonalizationMall using a combination of cash on hand and proceeds from the New Term Loan:
-	Adjustment to cash represents the portion of total consideration ($250.9 million) financed utilizing cash on hand ($153.1 million). The balance of the consideration paid was financed through the net proceeds attributable to the New Term Loan ($97.8 million).
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-	Adjustment to current maturities of long-term debt and long-term debt represents the proceeds from the New Term Loan ($100.0 million), net of deferred financing costs ($2.2 million), which were deducted from the proceeds of the New Term Loan. The net proceeds from the New Term Loan, which closed on August 20, 2020, were used to repay borrowings ($95.0 million) previously drawn on its existing Revolver to finance the acquisition. We believe these adjustments meet the definition of pro forma adjustments and are: (1) directly attributable to the transaction, (2) factually supportable and (3) expected to have a continuing impact on the registrant. Based upon the repayment terms of the term loan, $5.0 million of the New Term Loan was classified as current maturities of long-term debt.
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-	Adjustment to Interest Expense, net of $4.1 million which is comprised of incremental interest and amortization of deferred financing costs associated with the New Term Loan. The interest rate used for the purposes of these pro forma statements, of 3.5%, was the rate in effect at loan inception. A 50 basis points increase in the interest rate would result in an additional interest expense of $0.5 million.
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(b) To record an adjustment to retained earnings and accrued expenses for PersonalizationMall acquisition and related costs incurred by the Company after June 28, 2020.

(d) To record an adjustment to general and administrative expenses, to remove PersonalizationMall acquisition and related costs incurred by the Company during the fiscal year ended June 28, 2020.

(e) Reflects the recognition of an income tax benefit on the pro forma adjustments, using a statutory income tax rate of 21.0%. PersonalizationMall’s historical financial information is derived from its special purpose statement of revenues and direct expenses, and as such does not include a provision for income tax expense. The actual effective tax rate of the combined company could differ.