[LOGO]
FOR IMMEDIATE RELEASE
Contact:
-------
Albert J. Detz
Chief Financial Officer
Gerald Stevens, Inc.
954-713-5000
[email protected]
Gerald Stevens, Inc. Announces Third Quarter Results,
Reorganizes Management and Expands Board
John G. Hall named President and Chief Executive Officer
FORT LAUDERDALE, FL - July 17, 2000 - Gerald Stevens, Inc. (Nasdaq:
GIFT), the nation's largest specialty retailer and marketer of floral products,
today announced financial results for the third quarter ended May 31, 2000.
Revenue for the third fiscal quarter increased to $83.7 million from
$36.3 million in the same period last year. The Company reported a net loss for
the third quarter of $3.0 million or $0.06 per share compared to a net loss of
$1.2 million or $0.03 per share a year ago. Revenue for the nine-month period
ended May 31, 2000 increased to $214.5 million from $76.3 million in the same
period last year. The net loss for the nine-month period ended May 31, 2000 was
$4.0 million or $0.09 per share compared to a net loss of $7.7 million or $0.23
per share a year ago. All operating results are on a combined basis,
retroactively reflecting the merger of Gerald Stevens, Inc. and Florafax
International, Inc. on April 30, 1999.
The Company also announced that it has realigned its businesses into
two separate units, retail and order generation. Gerald R. Geddis has stepped
down from the board of directors and as president and chief executive officer
but will continue to serve as president of the Company's Retail Division. John
G. Hall, 36, was named to replace Mr. Geddis as the Company's president and
chief executive officer and was appointed to the board of directors. The Company
also announced that it has appointed Jerry St. Dennis, 58, to its board of
directors.
Mr. Hall is a partner with New River Capital Partners, the Company's
largest shareholder. Mr. Hall was a principal of Allen & Company Incorporated
from 1993 to 1999 where he provided growth capital and investment banking
services to public and private companies, including Gerald Stevens. Prior to
joining Allen & Company, Mr. Hall was a Vice President of Chemical Bank, where
he specialized in restructurings and workouts from 1991 through 1993.
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Mr. St. Dennis is currently a member of the board of directors of
StairMaster Health & Fitness Products, Inc. He previously served as chairman of
the board of AdobeAire, Inc., a manufacturer of heaters and evaporative coolers,
Fluidrive, Inc., a manufacturer of hydraulic drives and specialty suspension
systems, and CalFed, Inc., a large financial services holding company
headquartered in Los Angeles California, where he led a major restructuring of
the company. He is a founding partner of Rutledge Investors II, the general
partner of a middle-market leveraged buyout fund where he remains on the
investment committee.
The Company also announced that Andrew W. Williams, a member of the
Company's Board and the former chairman of the Company's predecessor, Florafax
International, Inc., was named president and chief operating officer of the
Company's newly-formed Order Generation Division, which includes its Florafax
wire service, National Flora and Calyx & Corolla.
Steven R. Berrard, the company's executive chairman, said, "We are
tremendously disappointed with our performance in our retail business and our
Calyx & Corolla consumer direct operations in the third quarter. The timing of
the key Spring holidays (particularly, the lateness of Easter and its proximity
to Mother's Day), softening retail conditions, and bad weather in a number of
markets during periods of the quarter all contributed to our weak results.
Marketing efforts intended to establish Gerald Stevens as a national brand
proved to be less effective than we had anticipated and the cost of these
programs were higher than we expected. And our labor expenses ran higher than we
anticipated, particularly in light of the lower revenue levels we experienced
during much of the quarter."
Mr. Berrard added, "In light of our performance during the third
quarter, we've realigned our businesses, reorganized our management, suspended
our growth plans, significantly reduced our corporate overhead in line with our
slower growth rate, and instituted other cost cutting measures we believe are
necessary to improve our cash flow. We've reduced corporate overhead and our
field labor expenses by approximately $12.0 million on an annual basis.
Notwithstanding these expense reductions, we expect our losses to continue for
the next two quarters. Summer and Fall are the slowest periods of the year in
the floral industry and our results are likely to be negatively impacted by the
changes we're making in our businesses. However, we will enter calendar 2001
with a leaner, more focused company that should be positioned to generate
significantly higher profitability."
Mr. Berrard concluded, "John Hall has the right skills and experience
to manage the company and maximize the value of the terrific assets we've
acquired over the past two years. Jerry St. Dennis brings invaluable experience
to our board as we guide the management team through this restructuring period.
Gerry Geddis will now focus all of his efforts on improving our retail
operations, his strength, and Andy Williams will assume a broader role in our
order generation operations, having guided our Florafax wire service and our
Flower Club marketing division to outstanding results this year. I'm confident
that this team positions the company to achieve its strategic and financial
objectives."
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Gerald Stevens, Inc. (Nasdaq: GIFT) (www.geraldstevens.com) is the largest
specialty retailer and marketer of floral products in the country. The Company
currently operates the largest network of floral specialty retail stores in the
United States with over 300 locations across the country and in Toronto, Canada.
It also operates Florafax, a national wire service with over 5,000 member
florists covering all 50 states, three regional call centers and Internet
businesses that take orders 24 hours a day, 7 days a week. Additionally, Gerald
Stevens owns National Flora, a leading national floral marketing company with
premium-placed advertisements in over 1,000 Yellow Page directories; the Flower
Club, a leading corporate affinity marketer with over 50 corporate partners; and
upscale floral direct marketer, Calyx & Corolla, Inc. Gerald Stevens also owns
its own import and sourcing operation in Miami, Florida.
This announcement contains "forward-looking" information. Future results may
differ from those discussed in this announcement. Some of the factors that could
cause such differences can be found under the headings "Forward-Looking
Statements" and "Risk Factors" in our Annual Report on Form 10-K filed with the
Securities and Exchange Commission on November 24, 1999, and in our most recent
Form 10-Q filed with the Securities and Exchange Commission on July 17, 2000.
##
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<PAGE>
GERALD STEVENS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
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<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
May 31, May 31, May 31, May 31,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUE:
Product sales, net $ 64,989 $ 25,224 $ 165,632 $ 53,597
Service and other revenue 18,746 11,063 48,886 22,685
--------- --------- --------- ---------
83,735 36,287 214,518 76,282
--------- --------- --------- ---------
OPERATING COSTS AND EXPENSES:
Cost of product sales 23,792 10,315 60,344 23,059
Operating expenses 32,290 12,054 79,645 25,410
Selling, general and administrative expenses 29,743 14,119 76,557 28,379
Merger expenses -- 591 -- 4,642
--------- --------- --------- ---------
85,825 37,079 216,546 81,490
--------- --------- --------- ---------
Operating loss (2,090) (792) (2,028) (5,208)
--------- --------- --------- ---------
OTHER INCOME (EXPENSE):
Interest expense (774) (319) (1,699) (502)
Interest income 26 44 55 217
Other income 157 38 317 134
--------- --------- --------- ---------
(591) (237) (1,327) (151)
--------- --------- --------- ---------
Loss before provision for income taxes (2,681) (1,029) (3,355) (5,359)
PROVISION FOR INCOME TAXES 314 200 659 2,327
--------- --------- --------- ---------
Net loss $ (2,995) $ (1,229) $ (4,014) $ (7,686)
========= ========= ========= =========
BASIC LOSS PER SHARE $ (0.06) $ (0.03) $ (0.09) $ (0.23)
========= ========= ========= =========
DILUTED LOSS PER SHARE $ (0.06) $ (0.03) $ (0.09) $ (0.23)
========= ========= ========= =========
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING:
Basic 48,398 36,478 45,691 33,305
========= ========= ========= =========
Diluted 48,398 36,478 45,691 33,305
========= ========= ========= =========
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