PART I
ITEM 1.
BUSINESS
General
Lillian Vernon Corporation (the "Company") is a direct mail specialty catalog and online
company concentrating on the marketing of gift, houseware, gardening, Christmas and
children's products. The Company, a predecessor of which was founded in 1951, seeks to
provide customers with reasonably priced products that can be differentiated from competitive
products either by design, price or personalization. In fiscal 2002, the Company published 37
catalog editions, and mailed approximately 162,100,000 catalogs to past and prospective
customers.
The Company has developed a proprietary customer data base containing information about its
customers, including such data as order frequency, size and date of last order, and type of
products purchased. These and other factors are analyzed by computer to rank and segment
customers to determine those most likely to purchase products offered in the Company's
catalogs. The data base contains information with respect to over 26 million customers, gift
recipients and people who have requested the Company's catalogs.
The Company derives a small portion of its revenue from the rental of its customer list to direct
mail marketers and other organizations and from a magazine subscription sales program. The
Company has a Business to Business operation which sells premium and incentive items, and
other products to numerous businesses, including Fortune 500 companies. Business to Business
also sells to the wholesale market. The Company also operates a chain of outlet stores which sell
Lillian Vernon merchandise. In addition to offering its products through its catalogs, the
Corporation offers its products over the Internet from its websites, www.lillianvernon.com and
www.ruedefrance.com.
The following table reflects the Company's history in the areas of circulation of its catalogs,
number of orders received and average revenue per order received, over the last five fiscal
years.
Fiscal Years Ended
February 23,
2002(4)
February 24,
2001(4)
February 26,
2000
February 27,
1999
February 22,
1998(3)
Number of catalogs mailed (000's) (1) . . .
162,100
172,948
165,855
188,678
178,917
Number of catalog editions. . . . . . . . . . . .
37
39
33
34
34
Number of orders received (000's) . . . . . .
4,062
4,467
4,627
4,812
4,936
Average revenue per order received (2) . .
$56.85
$57.82
$55.56
$55.23
$54.13
(1) "Number of catalogs mailed" includes catalog circulation to the extent that resulting orders are received in that fiscal year.
(2) "Average revenue per order received" is not reduced for refunds, nor does it include shipping and handling or applicable state
sales tax.
(3) Fiscal 1998 contained 53 weeks.
(4) Fiscal 2002 and Fiscal 2001 include Rue de France statistics. Rue de France, Inc. was acquired by the Company in April 2000.
1
L I L L I A N V E R N O N
