R | Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 |
for the quarterly period ended July 30, 2011 |
Minnesota | 41-1673770 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer o | Accelerated filer R | Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
Page | |
EX-31.1 | |
EX-31.2 | |
EX-32 | |
EX-101.INS | |
EX-101.SCH | |
EX-101.CAL | |
EX-101.DEF | |
EX-101.LAB | |
EX-101.PRE |
July 30, 2011 | January 29, 2011 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 37,503 | $ | 46,471 | ||||
Restricted cash and investments | 4,961 | 4,961 | ||||||
Accounts receivable, net | 82,930 | 90,183 | ||||||
Inventories | 52,720 | 39,800 | ||||||
Prepaid expenses and other | 5,240 | 3,942 | ||||||
Total current assets | 183,354 | 185,357 | ||||||
Property & equipment, net | 28,181 | 25,775 | ||||||
FCC broadcasting license | 23,111 | 23,111 | ||||||
NBC trademark license agreement, net | 3,298 | 928 | ||||||
Other assets | 2,895 | 3,188 | ||||||
$ | 240,839 | $ | 238,359 | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 59,817 | $ | 58,310 | ||||
Accrued liabilities | 41,934 | 43,405 | ||||||
Current portion of accrued dividends | — | 1,355 | ||||||
Deferred revenue | 728 | 728 | ||||||
Total current liabilities | 102,479 | 103,798 | ||||||
Deferred revenue | 61 | 425 | ||||||
Long-term payable | — | 4,894 | ||||||
Term loan | 25,000 | 25,000 | ||||||
Accrued dividends — Series B Preferred Stock | — | 6,491 | ||||||
Series B Mandatory Redeemable Preferred Stock, $.01 per share par value, 4,929,266 shares authorized; -0- and 4,929,266 shares issued and outstanding | — | 14,599 | ||||||
Total liabilities | 127,540 | 155,207 | ||||||
Commitments and Contingencies | ||||||||
Shareholders’ equity: | ||||||||
Common stock, $.01 per share par value, 100,000,000 shares authorized; 48,472,205 and 37,781,688 shares issued and outstanding | 485 | 378 | ||||||
Warrants to purchase 6,014,744 shares of common stock | 602 | 602 | ||||||
Additional paid-in capital | 400,847 | 337,421 | ||||||
Accumulated deficit | (288,635 | ) | (255,249 | ) | ||||
Total shareholders’ equity | 113,299 | 83,152 | ||||||
$ | 240,839 | $ | 238,359 |
For the Three Month | For the Six Month | |||||||||||||||
Periods Ended | Periods Ended | |||||||||||||||
July 30, 2011 | July 31, 2010 | July 30, 2011 | July 31, 2010 | |||||||||||||
Net sales | $ | 132,137 | $ | 126,177 | $ | 275,670 | $ | 251,154 | ||||||||
Cost of sales | 80,869 | 79,021 | 171,010 | 158,261 | ||||||||||||
Gross profit | 51,268 | 47,156 | 104,660 | 92,893 | ||||||||||||
Operating expense: | ||||||||||||||||
Distribution and selling | 46,313 | 45,021 | 92,789 | 91,063 | ||||||||||||
General and administrative | 5,408 | 4,795 | 9,972 | 9,562 | ||||||||||||
Depreciation and amortization | 3,086 | 3,527 | 6,068 | 7,218 | ||||||||||||
Restructuring costs | — | 50 | — | 426 | ||||||||||||
Total operating expense | 54,807 | 53,393 | 108,829 | 108,269 | ||||||||||||
Operating loss | (3,539 | ) | (6,237 | ) | (4,169 | ) | (15,376 | ) | ||||||||
Other income (expense): | ||||||||||||||||
Interest income | 44 | 9 | 44 | 51 | ||||||||||||
Interest expense | (944 | ) | (2,095 | ) | (3,546 | ) | (3,945 | ) | ||||||||
Debt extinguishment | — | — | (25,679 | ) | — | |||||||||||
Total other expense | (900 | ) | (2,086 | ) | (29,181 | ) | (3,894 | ) | ||||||||
Loss before income taxes | (4,439 | ) | (8,323 | ) | (33,350 | ) | (19,270 | ) | ||||||||
Income tax (provision) benefit | (17 | ) | 630 | (36 | ) | 606 | ||||||||||
Net loss | $ | (4,456 | ) | $ | (7,693 | ) | $ | (33,386 | ) | $ | (18,664 | ) | ||||
Net loss per common share | $ | (0.09 | ) | $ | (0.24 | ) | $ | (0.75 | ) | $ | (0.57 | ) | ||||
Net loss per common share — assuming dilution | $ | (0.09 | ) | $ | (0.24 | ) | $ | (0.75 | ) | $ | (0.57 | ) | ||||
Weighted average number of common shares outstanding: | ||||||||||||||||
Basic | 48,131,218 | 32,703,164 | 44,393,198 | 32,691,334 | ||||||||||||
Diluted | 48,131,218 | 32,703,164 | 44,393,198 | 32,691,334 |
Common Stock | Common Stock Purchase Warrants | Additional Paid-In Capital | Total Shareholders' Equity | ||||||||||||||||||||
Number of Shares | Par Value | Accumulated Deficit | |||||||||||||||||||||
BALANCE, January 29, 2011 | 37,781,688 | $ | 378 | $ | 602 | $ | 337,421 | $ | (255,249 | ) | $ | 83,152 | |||||||||||
Net loss | — | — | — | — | (33,386 | ) | (33,386 | ) | |||||||||||||||
Common stock issuances pursuant to equity compensation plans | 513,362 | 5 | — | 1,687 | — | 1,692 | |||||||||||||||||
Share-based compensation | — | — | — | 2,175 | — | 2,175 | |||||||||||||||||
Common stock issuances - equity offerings | 9,487,500 | 95 | — | 55,405 | — | 55,500 | |||||||||||||||||
Common stock issuances - NBCU | 689,655 | 7 | — | 4,159 | — | 4,166 | |||||||||||||||||
BALANCE, July 30, 2011 | 48,472,205 | $ | 485 | $ | 602 | $ | 400,847 | $ | (288,635 | ) | $ | 113,299 |
For the Six-Month | ||||||||
Periods Ended | ||||||||
July 30, 2011 | July 31, 2010 | |||||||
OPERATING ACTIVITIES: | ||||||||
Net loss | $ | (33,386 | ) | $ | (18,664 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used for) operating activities: | ||||||||
Depreciation and amortization | 6,208 | 7,218 | ||||||
Share-based payment compensation | 2,175 | 1,498 | ||||||
Amortization of deferred revenue | (364 | ) | (364 | ) | ||||
Amortization of debt discount | 575 | 711 | ||||||
Amortization of deferred financing costs | 303 | 121 | ||||||
Asset impairments and write-offs | — | 276 | ||||||
Debt extinguishment | 25,679 | — | ||||||
Gain from disposal of equipment | (405 | ) | — | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable, net | 7,253 | 16,509 | ||||||
Inventories, net | (12,920 | ) | (3,079 | ) | ||||
Prepaid expenses and other | (1,281 | ) | (306 | ) | ||||
Accounts payable and accrued liabilities | (5,162 | ) | (1,304 | ) | ||||
Accrued dividends payable — Series B Preferred Stock | 1,069 | 2,773 | ||||||
Net cash provided by (used for) operating activities | (10,256 | ) | 5,389 | |||||
INVESTING ACTIVITIES: | ||||||||
Property and equipment additions | (6,496 | ) | (4,332 | ) | ||||
Change in restricted cash and investments | — | 99 | ||||||
Proceeds from disposal of equipment | 405 | 55 | ||||||
Net cash used for investing activities | (6,091 | ) | (4,178 | ) | ||||
FINANCING ACTIVITIES: | ||||||||
Payments for Series B Preferred Stock and other issuance costs | — | (263 | ) | |||||
Payment for Series B Preferred stock redemption | (40,853 | ) | — | |||||
Payment for Series B Preferred stock dividends | (8,915 | ) | — | |||||
Payments for deferred issuance costs | (45 | ) | — | |||||
Proceeds from exercise of stock options | 1,692 | 4 | ||||||
Proceeds from issuance of common stock, net | 55,500 | — | ||||||
Net cash provided by (used for) financing activities | 7,379 | (259 | ) | |||||
Net increase (decrease) in cash and cash equivalents | (8,968 | ) | 952 | |||||
BEGINNING CASH AND CASH EQUIVALENTS | 46,471 | 17,000 | ||||||
ENDING CASH AND CASH EQUIVALENTS | $ | 37,503 | $ | 17,952 | ||||
SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
Interest paid | $ | 1,899 | $ | 133 | ||||
Income taxes paid | $ | 24 | $ | 48 | ||||
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
Property and equipment purchases included in accounts payable | $ | 322 | $ | 501 | ||||
Deferred financing costs included in accrued liabilities | $ | — | $ | 448 | ||||
Issuance of 689,655 shares of common stock | $ | 4,166 | $ | — |
Weighted Average Life (Years) | July 30, 2011 | January 29, 2011 | ||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | |||||||||||||||
Finite-lived intangible assets: | ||||||||||||||||||
NBC trademark license renewal | 1.0 | $ | 4,166,000 | $ | (868,000 | ) | $ | — | $ | — | ||||||||
NBC trademark license agreement | 10.5 | $ | 34,437,000 | $ | (34,437,000 | ) | $ | 34,437,000 | $ | (33,509,000 | ) | |||||||
Indefinite-lived intangible assets: | ||||||||||||||||||
FCC broadcast license | $ | 23,111,000 | $ | 23,111,000 |
July 30, 2011 | January 29, 2011 | |||||||
Series B Preferred Stock | $ | — | $ | 40,854,000 | ||||
Unamortized debt discount on Series B Preferred Stock | — | (26,255,000 | ) | |||||
Series B Preferred Stock, carrying value | $ | — | $ | 14,599,000 | ||||
Long-Term Payable | $ | — | $ | 4,894,000 |
Fiscal 2011 | Fiscal 2010 | ||
Expected volatility | 88% | 80% — 88% | |
Expected term (in years) | 6 years | 6 years | |
Risk-free interest rate | 2.3% — 2.7% | 1.9% — 3.3% |
2004 Incentive Stock Option Plan | Weighted Average Exercise Price | 2001 Incentive Stock Option Plan | Weighted Average Exercise Price | Other Non- Qualified Stock Options | Weighted Average Exercise Price | ||||||||||||||||
Balance outstanding, January 29, 2011 | 2,374,000 | $ | 5.72 | 1,746,000 | $ | 5.97 | 525,000 | $ | 3.58 | ||||||||||||
Granted | 280,000 | $ | 7.53 | — | $ | — | 150,000 | $ | 6.44 | ||||||||||||
Exercised | (268,000 | ) | $ | 4.31 | (195,000 | ) | $ | 2.67 | (8,000 | ) | $ | 2.02 | |||||||||
Forfeited or canceled | (27,000 | ) | $ | 10.43 | (217,000 | ) | $ | 9.09 | — | $ | — | ||||||||||
Balance outstanding, July 30, 2011 | 2,359,000 | $ | 6.04 | 1,334,000 | $ | 5.95 | 667,000 | $ | 4.24 | ||||||||||||
Options exercisable at July 30, 2011 | 1,706,000 | $ | 6.51 | 922,000 | $ | 6.87 | 127,000 | $ | 3.84 |
Option Type | Options Outstanding | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value | Vested or Expected to Vest | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value | ||||||||||||||||||
2004 Incentive: | 2,359,000 | $ | 6.04 | 7.2 | $ | 5,597,000 | 2,293,000 | $ | 6.08 | 7.1 | $ | 5,423,000 | ||||||||||||||
2001 Incentive: | 1,334,000 | $ | 5.95 | 6.9 | $ | 3,334,000 | 1,293,000 | $ | 6.02 | 6.7 | $ | 3,177,000 | ||||||||||||||
Non-Qualified: | 667,000 | $ | 4.24 | 9.0 | $ | 2,165,000 | 613,000 | $ | 4.23 | 9.0 | $ | 1,995,000 |
Shares | Weighted Average Grant Date Fair Value | ||||||
Non-vested outstanding, January 29, 2011 | 40,000 | $ | 1.90 | ||||
Granted | 572,000 | $ | 6.46 | ||||
Vested | (42,000 | ) | $ | 2.17 | |||
Forfeited | (21,000 | ) | $ | 6.36 | |||
Non-vested outstanding, July 30, 2011 | 549,000 | $ | 6.46 |
Three-Month Periods Ended | Six-Month Periods Ended | |||||||||||||||
July 30, 2011 | July 31, 2010 | July 30, 2011 | July 31, 2010 | |||||||||||||
Net loss (a) | $ | (4,456,000 | ) | $ | (7,693,000 | ) | $ | (33,386,000 | ) | $ | (18,664,000 | ) | ||||
Weighted average number of common shares outstanding — Basic | 48,131,000 | 32,703,000 | 44,393,000 | 32,691,000 | ||||||||||||
Dilutive effect of stock options, non-vested shares and warrants (b) | — | — | — | — | ||||||||||||
Weighted average number of common shares outstanding — Diluted | 48,131,000 | 32,703,000 | 44,393,000 | 32,691,000 | ||||||||||||
Net loss per common share | $ | (0.09 | ) | $ | (0.24 | ) | $ | (0.75 | ) | $ | (0.57 | ) | ||||
Net loss per common share-assuming dilution | $ | (0.09 | ) | $ | (0.24 | ) | $ | (0.75 | ) | $ | (0.57 | ) |
Three-Month Periods Ended | Six-Month Periods Ended | |||||||||||||||
July 30, 2011 | July 31, 2010 | July 30, 2011 | July 31, 2010 | |||||||||||||
Jewelry & Watches | $ | 68,474 | $ | 66,739 | $ | 136,031 | $ | 131,412 | ||||||||
Home & Electronics | 31,677 | 33,071 | 74,835 | 69,993 | ||||||||||||
Beauty, Health & Fitness | 14,749 | 9,592 | 29,627 | 18,527 | ||||||||||||
Fashion (apparel, outerwear & accessories) | 7,084 | 6,822 | 13,387 | 12,590 | ||||||||||||
All other | 10,153 | 9,953 | 21,790 | 18,632 | ||||||||||||
Total | $ | 132,137 | $ | 126,177 | $ | 275,670 | $ | 251,154 |
For the Three-Month | For the Six-Month | |||||||||||
Periods Ended | Periods Ended | |||||||||||
July 30, 2011 | July 31, 2010 | July 30, 2011 | July 31, 2010 | |||||||||
Merchandise Mix | ||||||||||||
Jewelry & Watches | 56 | % | 57 | % | 54 | % | 56 | % | ||||
Home & Electronics | 26 | % | 28 | % | 29 | % | 30 | % | ||||
Beauty, Health & Fitness | 12 | % | 9 | % | 12 | % | 9 | % | ||||
Fashion (apparel, outerwear, & accessories) | 6 | % | 6 | % | 5 | % | 5 | % |
Dollar Amount as a Percentage of Net Sales for the | Dollar Amount as a Percentage of Net Sales for the | |||||||||||
Three-Month Periods Ended | Six-Month Periods Ended | |||||||||||
July 30, 2011 | July 31, 2010 | July 30, 2011 | July 31, 2010 | |||||||||
Net sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||
Gross margin | 38.8 | % | 37.4 | % | 38.0 | % | 37.0 | % | ||||
Operating expenses: | ||||||||||||
Distribution and selling | 35.0 | % | 35.7 | % | 33.7 | % | 36.2 | % | ||||
General and administrative | 4.1 | % | 3.8 | % | 3.6 | % | 3.8 | % | ||||
Depreciation and amortization | 2.3 | % | 2.8 | % | 2.2 | % | 2.9 | % | ||||
Restructuring costs | — | % | — | % | — | % | 0.2 | % | ||||
41.5 | % | 42.3 | % | 39.5 | % | 43.1 | % | |||||
Operating loss | (2.7 | )% | (4.9 | )% | (1.5 | )% | (6.1 | )% |
For the Three-Month | For the Six-Month | |||||||||||||||||||||
Periods Ended | Periods Ended | |||||||||||||||||||||
July 30, 2011 | July 31, 2010 | % Change | July 30, 2011 | July 31, 2010 | % Change | |||||||||||||||||
Program Distribution | ||||||||||||||||||||||
Total Homes (Average 000’s) | 78,865 | 75,571 | 4.4 | % | 78,546 | 75,715 | 3.7 | % | ||||||||||||||
Customer Counts: | ||||||||||||||||||||||
New (12 month rolling) | 539,671 | 573,545 | (5.9 | )% | N/A | N/A | ||||||||||||||||
Active (12 month rolling) | 1,130,999 | 1,089,682 | 3.8 | % | N/A | N/A | ||||||||||||||||
Merchandise Metrics | ||||||||||||||||||||||
Gross Margin % | 38.8 | % | 37.4 | % | +140bps | 38.0 | % | 37.0 | % | +100 bps | ||||||||||||
Net Shipped Units (000’s) | 1,158 | 1,195 | (3.1 | )% | 2,292 | 2,273 | 0.8 | % | ||||||||||||||
Average Selling Price | $ | 105 | $ | 97 | 8.2 | % | $ | 111 | $ | 103 | 7.8 | % | ||||||||||
Return Rate | 22.7 | % | 20.6 | % | +210bps | 21.9 | % | 19.9 | % | +200 bps | ||||||||||||
Internet Net Sales % | 46.1 | % | 39.4 | % | +670bps | 45.5 | % | 39.5 | % | +600 bps |
For the Three-Month | For the Six-Month | |||||||||||||||
Periods Ended | Periods Ended | |||||||||||||||
July 30, 2011 | July 31, 2010 | July 30, 2011 | July 31, 2010 | |||||||||||||
Adjusted EBITDA (as defined) | $ | 1,096 | $ | (1,943 | ) | $ | 4,214 | $ | (6,234 | ) | ||||||
Less: | ||||||||||||||||
Debt extinguishment | — | — | (25,679 | ) | — | |||||||||||
Restructuring costs | — | (50 | ) | — | (426 | ) | ||||||||||
Non-cash share-based compensation expense | (1,479 | ) | (717 | ) | (2,175 | ) | (1,498 | ) | ||||||||
EBITDA (as defined) | (383 | ) | (2,710 | ) | (23,640 | ) | (8,158 | ) | ||||||||
A reconciliation of EBITDA to net loss is as follows: | ||||||||||||||||
EBITDA (as defined) | (383 | ) | (2,710 | ) | (23,640 | ) | (8,158 | ) | ||||||||
Adjustments: | ||||||||||||||||
Depreciation and amortization | (3,156 | ) | (3,527 | ) | (6,208 | ) | (7,218 | ) | ||||||||
Interest income | 44 | 9 | 44 | 51 | ||||||||||||
Interest expense | (944 | ) | (2,095 | ) | (3,546 | ) | (3,945 | ) | ||||||||
Income tax benefit (provision) | (17 | ) | 630 | (36 | ) | 606 | ||||||||||
Net loss | $ | (4,456 | ) | $ | (7,693 | ) | $ | (33,386 | ) | $ | (18,664 | ) |
VALUEVISION MEDIA, INC. | |
September 8, 2011 | /s/ KEITH R. STEWART |
Keith R. Stewart | |
Chief Executive Officer (Principal Executive Officer) | |
September 8, 2011 | /s/ WILLIAM MCGRATH |
William McGrath | |
Executive Vice President, Chief Financial Officer (Principal Financial Officer) |
Exhibit Number | Exhibit | Filed by | |||||
3.1 | Articles of Incorporation of the Registrant, as amended | Incorporated by reference (1) | |||||
3.2 | Amended and Restated By-Laws, as amended | Incorporated by reference (2) | |||||
31.1 | Certification | Filed Electronically | |||||
31.2 | Certification | Filed Electronically | |||||
32 | Section 1350 Certification of Chief Executive Officer and Chief Financial Officer | Filed Electronically | |||||
101.INS | XBRL Instance Document | Filed Electronically | |||||
101.SCH | XBRL Taxonomy Extension Schema | Filed Electronically | |||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | Filed Electronically | |||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase | Filed Electronically | |||||
101.LAB | XBRL Taxonomy Extension Label Linkbase | Filed Electronically | |||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase | Filed Electronically |
(1) | Incorporated herein by reference to the Registrant's Current Report on Form 10-Q dated April 30, 2011 filed on June 7, 2011, File No. 000-20243. |
(2) | Incorporated herein by reference to the Registrant's Current Report on Form 8-K dated September 27, 2010, filed on September 27, 2010, File No. 000-20243. |
1. | I have reviewed this report on Form 10-Q of ValueVision Media, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. |
/s/ Keith R. Stewart |
Keith R. Stewart |
Chief Executive Officer (Principal Executive Officer) |
1. | I have reviewed this report on Form 10-Q of ValueVision Media, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. |
/s/ William McGrath |
William McGrath |
Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
• | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
• | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | September 8, 2011 | /s/ Keith R. Stewart |
Keith R. Stewart | ||
Chief Executive Officer (Principal Executive Officer) | ||
Date: | September 8, 2011 | /s/ William McGrath |
William McGrath | ||
Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
Consolidated Balance Sheets (Parentheticals) (USD $)
|
Jul. 30, 2011
|
Jan. 29, 2011
|
---|---|---|
Liabilities: | Â | Â |
Series B Mandatory Redeemable Preferred Stock, Par Value | $ 0.01 | $ 0.01 |
Series B Mandatory Redeemable Preferred Stock, Shares Authorized | 4,929,266 | 4,929,266 |
Series B Mandatory Redeemable Preferred Stock, Shares, Issued | 0 | 4,929,266 |
Series B Mandatory Redeemable Preferred Stock, Shares, Outstanding | 0 | 4,929,266 |
Stockholders' Equity: | Â | Â |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 48,472,205 | 37,781,688 |
Common stock, shares outstanding | 48,472,205 | 37,781,688 |
Warrants, Outstanding | 6,014,744 | 6,014,744 |
Condensed Consolidated Statements of Operations (USD $)
In Thousands, except Share data |
3 Months Ended | 6 Months Ended | ||
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Jul. 30, 2011
|
Jul. 31, 2010
|
Jul. 30, 2011
|
Jul. 31, 2010
|
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Net sales | $ 132,137 | $ 126,177 | $ 275,670 | $ 251,154 |
Cost of sales | 80,869 | 79,021 | 171,010 | 158,261 |
Gross profit | 51,268 | 47,156 | 104,660 | 92,893 |
Operating expense: | Â | Â | Â | Â |
Distribution and selling | 46,313 | 45,021 | 92,789 | 91,063 |
General and administrative | 5,408 | 4,795 | 9,972 | 9,562 |
Depreciation and amortization | 3,086 | 3,527 | 6,068 | 7,218 |
Restructuring costs | 0 | 50 | 0 | 426 |
Total operating expense | 54,807 | 53,393 | 108,829 | 108,269 |
Operating loss | (3,539) | (6,237) | (4,169) | (15,376) |
Other income (expense): | Â | Â | Â | Â |
Interest income | 44 | 9 | 44 | 51 |
Interest expense | (944) | (2,095) | (3,546) | (3,945) |
Debt extinguishment | 0 | 0 | (25,679) | 0 |
Total other expense | (900) | (2,086) | (29,181) | (3,894) |
Loss before income taxes | (4,439) | (8,323) | (33,350) | (19,270) |
Income tax (provision) benefit | (17) | 630 | (36) | 606 |
Net loss | $ (4,456) | $ (7,693) | $ (33,386) | $ (18,664) |
Net loss per common share | $ (0.09) | $ (0.24) | $ (0.75) | $ (0.57) |
Net loss per common share — assuming dilution | $ (0.09) | $ (0.24) | $ (0.75) | $ (0.57) |
Weighted average number of common shares outstanding: | Â | Â | Â | Â |
Basic | 48,131,218 | 32,703,164 | 44,393,198 | 32,691,334 |
Diluted | 48,131,218 | 32,703,164 | 44,393,198 | 32,691,334 |
Document and Entity Information
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6 Months Ended | |
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Jul. 30, 2011
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Sep. 02, 2011
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Document Information [Line Items] | Â | Â |
Entity Registrant Name | VALUEVISION MEDIA INC | Â |
Entity Central Index Key | 0000870826 | Â |
Current Fiscal Year End Date | --01-28 | Â |
Entity Filer Category | Accelerated Filer | Â |
Document Type | 10-Q | Â |
Document Period End Date | Jul. 30, 2011 | |
Document Fiscal Year Focus | 2011 | Â |
Document Fiscal Period Focus | Q2 | Â |
Amendment Flag | false | Â |
Entity Common Stock, Shares Outstanding | Â | 48,464,205 |
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Preferred Stock and Deferred Payables
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Jul. 30, 2011
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Preferred Stock and Deferred Payables [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities Disclosure [Text Block] | Preferred Stock and Long-Term Payable
In February 2011, the Company made a $2.5 million payment to GE Capital Equity Investments, Inc. ("GE Equity"), in connection with obtaining a consent for the execution of a common stock equity offering in December 2010, reducing the outstanding accrued dividends payable on the Series B Preferred Stock and recorded a $1.2 million charge to income related to the early preferred stock debt extinguishment. In April 2011, the Company redeemed all of its outstanding Series B Preferred Stock for $40.9 million, paid accrued Series B Preferred dividends of $6.4 million and recorded a $24.5 million charge related to the early preferred stock debt extinguishment. In the third quarter of fiscal 2009, the Company entered into a long-term agreement with one of its larger service providers to defer a material portion of its monthly contractual cash payment obligation for services over the next three fiscal years. All services under this arrangement are being recognized as expense ratably over the term of the agreement. Amounts recognized as expense in excess of amounts paid, plus interest at 5% annually totaled $11,063,000 and is included in accrued liabilities in the accompanying July 30, 2011 balance sheet. As of January 29, 2011, the total deferred amount was $16,820,000, of which $11,926,000 was included in accrued liabilities and $4,894,000 was reported as a deferred long-term payable in the accompanying January 29, 2011 balance sheet. In February 2011, the Company made an $11,926,000 required payment under the agreement. Remaining estimated future cash commitments, inclusive of accrued interest, relating to this deferred cash payment agreement is approximately $12.4 million which will be paid in March 2012. In connection with this deferral agreement, the Company granted a security interest in its Eden Prairie, Minnesota headquarters facility and its Boston television station to the service provider. |
Net Loss Per Common Share
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Jul. 30, 2011
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Net Loss Per Common Share [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Text Block] | Net Loss Per Common Share Basic earnings per share is computed by dividing reported earnings by the weighted average number of common shares outstanding for the reported period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock of the Company during reported periods. A reconciliation of earnings per share calculations and the number of shares used in the calculation of basic earnings per share and diluted earnings per share is as follows:
(a) The net loss for the six-month period ended July 30, 2011 includes a $25.7 million one-time charge related to the early preferred stock debt extinguishment made during the first quarter of fiscal 2011. (b) For the three-month periods ended July 30, 2011 and July 31, 2010, approximately 6,704,000 and 3,801,000, respectively, incremental in-the-money potentially dilutive common share stock options and warrants have been excluded from the computation of diluted earnings per share, as the effect of their inclusion would be antidilutive. For the six-month periods ended July 30, 2011 and July 31, 2010, approximately 6,483,000 and 4,588,000 respectively, incremental in-the-money potentially dilutive common share stock options and warrants have been excluded from the computation of diluted earnings per share, as the effect of their inclusion would be antidilutive. |
General
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6 Months Ended |
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Jul. 30, 2011
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General [Abstract] | Â |
Nature of Operations [Text Block] | General ValueVision Media, Inc. and its subsidiaries (the “Company”) is a multichannel electronic retailer that markets, sells and distributes products to consumers through TV, telephone, online, mobile and social media. Our principal form of product exposure is our 24-hour television shopping network, ShopNBC, which markets brand name and private label products in the categories of Jewelry & Watches; Home & Electronics; Beauty, Health & Fitness; and Fashion. Orders are fulfilled via telephone, online and mobile channels. ShopNBC is distributed into approximately 80 million homes, primarily through cable and satellite affiliation agreements and the purchase of month-to-month full- and part-time lease agreements of cable and broadcast television time. ShopNBC programming is also streamed live on the Internet at www.ShopNBC.com and www.ShopNBC.tv. We also distribute our programming through a company-owned full power television station in Boston, Massachusetts and through leased carriage on full power television stations in Pittsburgh, Pennsylvania and Seattle, Washington. The Company also operates ShopNBC.com, a comprehensive e-commerce platform that sells products appearing on our television shopping channel as well as an extended assortment of online-only merchandise. Its programming and products are also marketed via mobile devices - including smartphones and tablets such as the iPad, and through the leading social networking sites Facebook, Twitter and YouTube. The Company has an exclusive trademark license from NBCUniversal Media, LLC, formerly known as NBC Universal, Inc. (“NBCU”), for the worldwide use of an NBC-branded name through May 2012. Additionally, the agreement allows for a one-year extension to May 2013 upon the mutual agreement of both parties. Pursuant to the license, we operate our television home shopping network and our Internet websites, ShopNBC.com and ShopNBC.tv. |
Stock Based Compensation
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Jul. 30, 2011
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Stock Based Compensation [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | Stock-Based Compensation Compensation is recognized for all stock-based compensation arrangements by the Company. Stock-based compensation expense for the second quarter of fiscal 2011 and 2010 related to stock option awards was $1,026,000 and $701,000, respectively. Stock-based compensation expense for the first half of fiscal 2011 and 2010 related to stock option awards was $1,568,000 and $1,460,000, respectively. The Company has not recorded any income tax benefit from the exercise of stock options due to the uncertainty of realizing income tax benefits in the future. As of July 30, 2011, the Company had two active omnibus stock plans for which stock awards can be currently granted: the 2011 Omnibus Incentive Plan that provides for the issuance of up to 3,000,000 shares of the Company's stock and the 2004 Omnibus Stock Plan (as amended and restated in fiscal 2006) that provides for the issuance of up to 4,000,000 shares of the Company's common stock. The 2001 Omnibus Stock Plan expired on June 21, 2011. As of July 30, 2011, there have been no stock awards granted out of the 2011 Omnibus Incentive Plan. These plans are administered by the human resources and compensation committee of the board of directors and provide for awards for employees, directors and consultants. All employees and directors of the Company and its affiliates are eligible to receive awards under the plans. The types of awards that may be granted under these plans include restricted and unrestricted stock, incentive and nonstatutory stock options, stock appreciation rights, performance units, and other stock-based awards. Incentive stock options may be granted to employees at such exercise prices as the human resources and compensation committee may determine but not less than 100% of the fair market value of the underlying stock as of the date of grant. No incentive stock option may be granted more than ten years after the effective date of the respective plan's inception or be exercisable more than ten years after the date of grant. Options granted to outside directors are nonstatutory stock options with an exercise price equal to 100% of the fair market value of the underlying stock as of the date of grant. Options granted generally vest over three years in the case of employee stock options and vest immediately on the date of grant in the case of director options, and generally have contractual terms of either five years from the date of vesting or ten years from the date of grant. The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model that uses assumptions noted in the following table. Expected volatilities are based on the historical volatility of the Company's stock. Expected term is calculated using the simplified method taking into consideration the option's contractual life and vesting terms. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Expected dividend yields were not used in the fair value computations as the Company has never declared or paid dividends on its common stock and currently intends to retain earnings for use in operations.
A summary of the status of the Company’s stock option activity as of July 30, 2011 and changes during the six-months then ended is as follows:
The following table summarizes information regarding stock options outstanding at July 30, 2011:
The weighted average grant-date fair value of options granted in the first six-months of fiscal 2011 and 2010 was $5.27 and $2.54, respectively. The total intrinsic value of options exercised during the first six-months of fiscal 2011 and 2010 was $1,806,000 and $38,000, respectively. As of July 30, 2011, total unrecognized compensation cost related to stock options was $2,904,000 and is expected to be recognized over a weighted average period of approximately 1.1 years. |
Restructuring Costs
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6 Months Ended |
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Jul. 30, 2011
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Restructuring Costs [Abstract] | Â |
Restructuring and Related Activities Disclosure [Text Block] | Restructuring Costs As a result of a number of restructuring initiatives taken by the Company in order to simplify and streamline the Company’s organizational and capital structure, reduce operating costs and pursue and evaluate strategic alternatives, the Company recorded restructuring charges in fiscal 2010. Restructuring costs in fiscal 2010 primarily include employee severance costs associated with streamlining the Company's organizational structure, incremental costs associated with the refinancing of our debt facilities, restructuring advisory service fees and costs associated with strategic alternative initiatives. All restructuring costs were paid as of January 29, 2011. |
Restricted Stock
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Jul. 30, 2011
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Restricted Stock [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block] | Restricted Stock Compensation expense recorded in the first six-months of fiscal 2011 and 2010 relating to restricted stock grants was $607,000 and $38,000, respectively. As of July 30, 2011, there was $2,985,000 of total unrecognized compensation cost related to non-vested restricted stock granted. That cost is expected to be recognized over a weighted average period of 1.2 years. The total fair value of restricted stock vested during the first half of fiscal 2011 and 2010 was $316,000 and $68,000, respectively. On March 31, 2011, the Company granted a total of 522,000 shares of restricted stock to employees in lieu of an annual cash bonus for fiscal 2010. The restricted stock vests in two equal annual installments beginning March 31, 2012 and ending March 31, 2013. The aggregate market value of the restricted stock at the date of the award was $3,323,000 and is being amortized as compensation expense over the two-year vesting period. On June 15, 2011, the Company granted a total of 50,000 shares of restricted stock to seven non-management board members as part of the Company's annual director compensation program. The restricted stock vests on the day immediately preceding the next annual meeting of shareholders following the date of grant. The aggregate market value of the restricted stock at the date of the award was $377,000 and is being amortized as director compensation expense over the twelve-month vesting period. A summary of the status of the Company’s non-vested restricted stock activity as of July 30, 2011 and changes during the six-month period then ended is as follows:
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Term Loan Credit Agreement
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6 Months Ended |
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Jul. 30, 2011
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Term Loan Credit Agreement [Abstract] | Â |
Debt Disclosure [Text Block] | Term Loan Credit Agreement On November 17, 2010, the Company entered into a credit agreement with Crystal Financial LLC, as agent for the lending group, which provides for a term loan of $25 million (the “Credit Agreement”). The Credit Agreement has a five-year maturity and bears interest on the outstanding principal amount based on fixed interest rates and floating interest rates based on LIBOR plus variable margins. The interest rate calculated for the first quarter and second quarters of fiscal 2011 was 11%. The term loan is subject to a minimum borrowing base of $25 million which is based on eligible accounts receivable, eligible inventory, certain real estate and certain eligible cash and is secured by substantially all of the Company's personal property, as well as the Company's real property located in Bowling Green, Kentucky. Under certain circumstances, the borrowing base may be adjusted if there were to be a significant deterioration in value of the Company's accounts receivable and inventory. The term loan is subject to mandatory prepayment in certain circumstances. In addition, any voluntary or mandatory prepayments made prior to November 18, 2013 would require an early termination fee of the greater of the first year's yield revenue or 3% of the amount prepaid if terminated in year one; 2% of the amount prepaid if terminated in year two; and 1% of the amount prepaid if terminated in year three. The $25 million term loan matures and is payable in November 2015. Interest paid for the three and six-month period ended July 30, 2011 was $695,000 and $1,367,000, respectively. The Credit Agreement contains customary covenants and conditions, including, among other things, a covenant requiring the Company to maintain a minimum of unrestricted cash of $5,000,000 at all times. In addition, the Credit Agreement places restrictions on the Company's ability to incur additional indebtedness or prepay existing indebtedness, to create liens or other encumbrances, to sell or otherwise dispose of assets, to merge or consolidate with other entities, and to make certain restricted payments, including payments of dividends to common and preferred shareholders. As of July 30, 2011, the Company was in compliance with the applicable covenants of the facility and was in compliance with its minimum borrowing base requirement and expects to be in compliance in the near and long term. Costs incurred to obtain the Credit Agreement totaling approximately $3,011,000 have been capitalized and are being expensed as additional interest over the five-year term of the Credit Agreement. |
Basis of Financial Statement Presentation
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6 Months Ended |
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Jul. 30, 2011
|
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Basis of Financial Statement Presentation [Abstract] | Â |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | Basis of Financial Statement Presentation Principles of Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America have been condensed or omitted in accordance with these rules and regulations. The information furnished in the interim condensed consolidated financial statements includes normal recurring accruals and reflects all adjustments which, in the opinion of management, are necessary for a fair presentation of these financial statements. Although management believes the disclosures and information presented are adequate, these interim condensed consolidated financial statements should be read in conjunction with the Company’s most recent audited financial statements and notes thereto included in its annual report on Form 10-K for the fiscal year ended January 29, 2011. Operating results for the three and six-month periods ended July 30, 2011 are not necessarily indicative of the results that may be expected for the fiscal year ending January 28, 2012. The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. Fiscal Year The Company’s most recently completed fiscal year ended on January 29, 2011 and is designated “fiscal 2010.” The Company’s fiscal year ending January 28, 2012 is designated “fiscal 2011.” The Company reports on a 52/53 week fiscal year which ends on the Saturday nearest to January 31. The 52/53 week fiscal year allows for the weekly and monthly comparability of sales results relating to the Company’s television home-shopping and internet businesses. Each of fiscal 2011 and fiscal 2010 contains 52 weeks. |
Fair Value Measurements
|
6 Months Ended |
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Jul. 30, 2011
|
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Fair Value Measurements [Abstract] | Â |
Fair Value Disclosures [Text Block] | Fair Value Measurements GAAP utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to observable quoted prices (unadjusted) in active markets for identical assets and liabilities and the lowest priority to unobservable inputs. As of July 30, 2011 and January 29, 2011 the Company had $4,961,000 in Level 2 investments in the form of bank Certificates of Deposit which are used as collateral for the issuance of commercial letters of credit. The Company has no Level 3 investments that use significant unobservable inputs. |
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