EX-99 2 c35141exv99.htm EXHIBIT 99 exv99
Exhibit 99
For Immediate Release
ShopNBC Announces Second Quarter Fiscal 2008 Financial Results
Minneapolis, MN, August 22, 2008 — ShopNBC (Nasdaq: VVTV), a 24-hour TV shopping network, today announced financial results for its second fiscal quarter ended August 2, 2008.
Second Quarter Results
Second quarter revenues were $142 million, a 26% decrease from the same period last year. EBITDA, as adjusted, was ($10.7) million compared with $1.8 million in the year-ago period. Net Loss for the second quarter was ($15.7) million compared with a net loss of ($5.4) million for the same quarter last year.
“Revenues in the second quarter were very disappointing,” said John Buck, ShopNBC’s CEO. “The Board fully recognizes these performance issues, and we are taking decisive action to address these trends.”
Leadership Changes
As announced in a separate press release the Company issued earlier today, ShopNBC’s Board of Directors concluded it was necessary to make organizational leadership changes that are effective immediately. The Board appointed John D. Buck to serve as Chief Executive Officer replacing Rene Aiu, who joined the Company as President and CEO in March 2008 and is leaving ShopNBC and its Board. Mr. Buck is currently Executive Chairman and was previously ShopNBC’s Interim CEO from November 2007 to March 2008. The Company also announced the departures of Glenn Leidahl, COO, Terry Curtis, SVP of Customer Analytics and Sales Planning, and John Gunder, SVP of Media & On-air Sales, who were named to their positions in April 2008.
The Board also appointed Keith R. Stewart, with 20 years of executive retail experience, as President and Chief Operating Officer of the Company. Buck commented, “Keith has excellent leadership skills, a deep understanding of retail operations domestically and internationally and, importantly, nearly 15 years of experience in home shopping as an executive at QVC. He possesses a strong understanding of multi-channel retailing and has a proven history of delivering growth and profitability spanning markets in the United States and Germany.”
Second Quarter Highlights
The Company noted that in the second quarter:
•   ShopNBC.com launched several live Webcasts to aggressively reach new customers and drive incremental sales by capitalizing on its strong niche categories, such as watches and coins.
 
•   It appointed Kris Kulesza, a retail executive with 23 years of experience and nearly a decade in home shopping, as Senior Vice President and Chief Merchant; and Jeff Lewis, a customer service executive with 25 years of leadership experience in retail and direct marketing, as Vice President of Customer Experience.
 
•   It continued disciplined control of operating expenses, which were down year-over-year by 11% in the quarter, driven by headcount and other fixed overhead reductions.
 
•   It maintained a strong balance sheet with over $80 million in cash and securities.
 
•   It recently signed an extended carriage agreement with one of the top five cable providers and continues to work on preserving its cable distribution base while lowering distribution costs.
Business Outlook

 

 

“ShopNBC has undergone significant changes this past year,” said Buck. “We greatly appreciate the support and patience of our shareholders. Despite these challenging times, ShopNBC made progress in the second quarter in its cable negotiations, diversifying its merchandise mix with newness, and continued success of our e-commerce business. ShopNBC is a great company with strong underlying assets supported by a talented and dedicated employee base and excellent growth potential.
“We are encouraged by these signs of progress. I look forward to working with Keith and the rest of our talented management team to improve performance that will enable us to deliver long-term shareholder value. Given the changes being implemented at the Company, we have decided not to provide guidance at this time.”
Conference Call Information
The Company has re-scheduled its conference call for 11 a.m. EDT / 10 a.m. CDT on Monday, August 25, 2008, to discuss the results for the fiscal second quarter. To participate, please dial 1-800-857-9866 (pass code SHOPNBC) five to ten minutes prior to the start time. A replay of the call will be available for 30 days. To access the replay, please dial 1-866-455-0459 (pass code SHOPNBC). You may also participate via live audio stream by logging on to https://e-meetings.verizonbusiness.com. To access the audio stream, please use conference number 6203440 (pass code SHOPNBC.) A rebroadcast of the audio stream will be available using the same access information for 30 days after the initial broadcast.
EBITDA and EBITDA, as adjusted
The Company defines EBITDA as net income (loss) from continuing operations for the respective periods excluding depreciation and amortization expense, interest income (expense) and income taxes. The Company defines EBITDA, as adjusted, as EBITDA excluding non-recurring non-operating gains (losses) and equity in income of Ralph Lauren Media, LLC; non-recurring restructuring and CEO transition costs; and non-cash share-based payment expense. Management has included the term EBITDA, as adjusted, in order to adequately assess the operating performance of the Company’s “core” television and Internet businesses and in order to maintain comparability to its analyst’s coverage and financial guidance. Management believes that EBITDA, as adjusted, allows investors to make a more meaningful comparison between our core business operating results over different periods of time with those of other similar small cap, higher growth companies. In addition, management uses EBITDA, as adjusted, as a metric measure to evaluate operating performance under its management and executive incentive compensation programs. EBITDA, as adjusted, should not be construed as an alternative to operating income (loss) or to cash flows from operating activities as determined in accordance with GAAP and should not be construed as a measure of liquidity. EBITDA, as adjusted, may not be comparable to similarly entitled measures reported by other companies.
About ShopNBC
ShopNBC is a direct-to-consumer, multi-media shopping destination for little luxuries and fashion must-haves. The shopping network reaches 70 million homes in the United States via cable affiliates and satellite: DISH Network channel 228 and DIRECTV channel 316. ShopNBC.com is recognized as a top e-commerce site. ShopNBC is owned and operated by ValueVision Media (Nasdaq:VVTV). For more information, please visit www.ShopNBC.com.
Forward-Looking Information
This release contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and are accordingly subject to uncertainty and changes in circumstances. Actual results may vary materially from the expectations contained herein due to various important factors, including (but not limited to): consumer spending and debt levels; interest rates; competitive pressures on sales, pricing and gross profit margins; the level of cable distribution for the Company’s programming and the fees associated therewith; the success of the Company’s e-commerce and rebranding initiatives; the performance of its equity investments; the success of its strategic alliances and relationships; the ability of the Company to manage its operating expenses successfully; risks associated with acquisitions; changes in governmental or regulatory requirements; litigation or

 

 

governmental proceedings affecting the Company’s operations; and the ability of the Company to obtain and retain key executives and employees. More detailed information about those factors is set forth in the Company’s filings with the Securities and Exchange Commission, including the Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. The Company is under no obligation (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.
###
CONTACT:
Frank Elsenbast, Chief Financial Officer, 952-943-6262

 

 

VALUE VISION MEDIA, INC.
Key Performance Metrics*
(Unaudited)
                                                 
    Q2     YTD  
    For the three months ending     For the six months ending  
    8/2/2008     8/4/2007     %     8/2/2008     8/4/2007     %  
Program Distribution
                                                
Cable FTEs
     42,988       41,446       4 %     42,673       40,901       4 %
Satellite FTEs
     28,676       27,486       4 %     28,528       27,292       5 %
 
                                    
Total FTEs (Average 000s)
     71,664       68,932       4 %     71,201       68,193       4 %
 
                                                
Net Sales per FTE (Annualized)
   $ 7.92     $ 10.85       -27 %   $ 8.32     $ 10.92       -24 %
 
                                                
Product Mix
                                                
Jewelry
     39 %     40 %             41 %     40 %        
Apparel, Fashion Accessories, Health & Beauty
     9 %     8 %             10 %     8 %        
Computers & Electronics
     18 %     23 %             17 %     23 %        
Watches, Coins & Collectibles
     26 %     17 %             23 %     16 %        
Home & All Other
     8 %     12 %             9 %     13 %        
 
                                                
Shipped Units (000s)
     870       1,132       -23 %     1,874       2,281       -18 %
 
                                                
Average Price Point — shipped units
   $ 224     $ 233       -4 %   $ 226     $ 229       -1 %
 
* Includes ShopNBC TV and ShopNBC.com only.

 

 

VALUEVISION MEDIA, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
                                     
    For the Three Month Periods Ended     For the Six Month Periods Ended  
    August 2,     August 4,     August 2,     August 4,  
    2008     2007     2008     2007  
Net sales
   $ 141,927     $ 190,613     $ 298,215     $ 378,722  
Cost of sales
     94,046       123,291       200,378       245,287  
(exclusive of depreciation and amortization shown below)
                                
 
                                
Operating expense:
                                
Distribution and selling
     53,827       60,033       110,910       120,493  
General and administrative
     5,682       6,210       12,017       13,705  
Depreciation and amortization
     4,246       5,261       8,565       10,847  
Restructuring costs
     —       2,043       330       2,043  
CEO transition costs
     553       —       830       —  
 
                        
 
                                
Total operating expense
     64,308       73,547       132,652       147,088  
 
                        
 
Operating loss
     (16,427 )     (6,225 )     (34,815 )     (13,653 )
 
                        
 
                                
Other income (loss):
                                
Other loss
     —       (119 )     —       (119 )
Interest income
     761       1,575       1,586       2,815  
 
                        
 
Total other income
     761       1,456       1,586       2,696  
 
                        
Loss before income taxes and equity in net income of affiliates
     (15,666 )     (4,769 )     (33,229 )     (10,957 )
 
                                
Gain on sale of RLM investment
     —       —       —       40,240  
Equity in income of affiliates
     —       —       —       609  
Income tax provision
     (18 )     (640 )     (33 )     (921 )
 
                        
 
                                
Net income (loss)
     (15,684 )     (5,409 )     (33,262 )     28,971  
Accretion of redeemable preferred stock
     (73 )     (73 )     (146 )     (145 )
 
                        
 
                                
Net income (loss) available to common shareholders
   $ (15,757 )   $ (5,482 )   $ (33,408 )   $ 28,826  
 
                        
 
                                
Net income (loss) per common share
   $ (0.47 )   $ (0.15 )   $ (0.99 )   $ 0.67  
 
                        
 
Net income (loss) per common share —assuming dilution
   $ (0.47 )   $ (0.15 )   $ (0.99 )   $ 0.68  
 
                        
 
                                
Weighted average number of common shares outstanding:
                                
 
                                
Basic
     33,574,131       37,366,541       33,576,015       42,822,333  
 
                        
Diluted
     33,574,131       37,366,541       33,576,015       42,846,686  
 
                        

 

 

VALUEVISION MEDIA, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)
                 
    August 2,     February 2,  
    2008     2008  
    (Unaudited)          
ASSETS
                
Current assets:
                
Cash and cash equivalents
   $ 48,829     $ 25,605  
Short-term investments
     10,892       33,473  
Accounts receivable, net
     55,730       109,489  
Inventories
     55,634       79,444  
Prepaid expenses and other
     5,646       4,172  
 
            
Total current assets
     176,731       252,183  
 
Long term investments
     20,487       26,306  
Property and equipment, net
     34,694       36,627  
FCC broadcasting license
     31,943       31,943  
NBC Trademark License Agreement, net
     8,994       10,608  
Cable distribution and marketing agreement, net
     502       872  
Other assets
     615       541  
 
            
 
   $ 273,966     $ 359,080  
 
            
 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
 
                
Current liabilities:
                
Accounts payable
   $ 36,543     $ 73,093  
Accrued liabilities
     34,598       44,609  
Deferred revenue
     692       648  
 
            
Total current liabilities
     71,833       118,350  
 
                
Deferred revenue
     2,132       2,322  
 
                
Series A Redeemable Convertible Preferred Stock, $.01 par value, 5,339,500 shares authorized; 5,339,500 shares issued and outstanding
     44,045       43,898  
 
                
Shareholders’ equity:
                
Common stock, $.01 par value, 100,000,000 shares authorized; 33,590,834 and 34,070,422 shares issued and outstanding
     336       341  
Warrants to purchase 2,036,858 shares of common stock
     12,041       12,041  
Additional paid-in capital
     272,745       274,172  
Accumulated other comprehensive losses
     (6,314 )     (2,454 )
Accumulated deficit
     (122,852 )     (89,590 )
 
            
Total shareholders’ equity
     155,956       194,510  
 
            
 
   $ 273,966     $ 359,080  
 
            

 

 

VALUEVISION MEDIA, INC.
AND SUBSIDIARIES
Reconciliation of EBITDA, as adjusted, to Net Income (Loss):
                                     
                    Six-Month   Six-Month
    Second Quarter   Second Quarter   Period Ended   Period Ended
    2-Aug-08   4-Aug-07   2-Aug-08   4-Aug-07
EBITDA, as adjusted (000’s)
   $ (10,666 )   $ 1,764     $ (23,059 )   $ 515  
Less:
                                
Non-operating gains (losses) and equity in income of RLM
     —       (119 )     —       40,730  
Restructuring costs
     —       (2,043 )     (330 )     (2,043 )
CEO transition costs
     (553 )     —       (830 )     —  
Non-cash share-based compensation
     (962 )     (685 )     (2,031 )     (1,278 )
     
EBITDA (as defined) (a)
     (12,181 )     (1,083 )     (26,250 )     37,924  
     
 
                                
A reconciliation of EBITDA to net income (loss) is as follows:
                                
 
                                
EBITDA, as defined
     (12,181 )     (1,083 )     (26,250 )     37,924  
Adjustments:
                                
Depreciation and amortization
     (4,246 )     (5,261 )     (8,565 )     (10,847 )
Interest income
     761       1,575       1,586       2,815  
Income taxes
     (18 )     (640 )     (33 )     (921 )
         
Net income (loss)
   $ (15,684 )   $ (5,409 )   $ (33,262 )   $ 28,971  
         
 
(a)   EBITDA as defined for this statistical presentation represents net income (loss) from continuing operations for the respective periods excluding depreciation and amortization expense, interest income (expense) and income taxes. The Company defines EBITDA, as adjusted, as EBITDA excluding non-recurring non-operating gains (losses) and equity in income of Ralph Lauren Media, LLC; non-recurring restructuring and CEO transition costs; and non-cash share-based compensation expense.
     Management has included the term EBITDA, as adjusted, in its EBITDA reconciliation in order to adequately assess the operating performance of the Company’s “core” television and Internet businesses and in order to maintain comparability to its analyst’s coverage and financial guidance. Management believes that EBITDA, as adjusted, allows investors to make a more meaningful comparison between our core business operating results over different periods of time with those of other similar small cap, higher growth companies. In addition, management uses EBITDA, as adjusted, as a metric measure to evaluate operating performance under its management and executive incentive compensation programs. EBITDA, as adjusted, should not be construed as an alternative to operating income (loss) or to cash flows from operating activities as determined in accordance with GAAP and should not be construed as a measure of liquidity. EBITDA, as adjusted, may not be comparable to similarly entitled measures reported by other companies.