e424b5
The information in
this prospectus supplement and the accompanying prospectus is
not complete and may be changed. This prospectus supplement and
the accompanying prospectus are not an offer to sell these
securities and are not soliciting an offer to buy these
securities in any state where the offer or sale is not
permitted.
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Filed
Pursuant to Rule 424(b)(5)
Registration
No. 333-168312
Subject to completion, dated
March 29, 2011
PROSPECTUS SUPPLEMENT
(To Prospectus dated August 16, 2010)
Shares
ValueVision Media,
Inc.
Common Stock
$
per share
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ValueVision Media, Inc. is
offering shares
of our common stock.
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Trading symbol: Nasdaq Global Market VVTV
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The last reported sale price of our common stock on
March 28, 2011, was $6.60 per share.
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This investment involves a high degree of risk. See
Risk Factors on
page S-4
of this prospectus supplement and page 3 of the
accompanying prospectus.
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Per Share
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Total
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Public offering price
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$
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$
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Underwriting discount
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$
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$
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Proceeds, before expenses, to ValueVision Media, Inc.
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$
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$
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The underwriters have a
30-day
option to purchase up
to
additional shares from us on the same terms set forth above to
cover over-allotments, if any.
The underwriters are offering the common stock as set forth
under Underwriting.
Neither the Securities and Exchange Commission nor any state
securities commission has approved of anyones investment
in these securities, or determined if this prospectus supplement
or the accompanying prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
Piper Jaffray
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Dougherty & Co.
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Feltl and Company
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The date of this prospectus supplement is
March , 2011
TABLE OF
CONTENTS
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Page
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Prospectus Supplement
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S-1
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S-4
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S-8
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S-10
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S-10
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S-10
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S-12
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S-13
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S-14
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S-17
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S-17
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S-18
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S-18
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Prospectus
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About This Prospectus
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i
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Where You Can Find More Information; Incorporation of Certain
Documents By Reference
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ii
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Special Note Regarding Forward-Looking Statements
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iii
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Summary
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1
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Risk Factors
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3
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Use of Proceeds
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12
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Dividend Policy
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12
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Market Price History of Common Stock
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12
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Dilution
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13
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Liquidity and Capital Resources Update
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13
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Description of Capital Stock
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13
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Description of Stock Purchase Contracts
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19
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Description of Securities Warrants
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19
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Description of Rights
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22
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Description of Units
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23
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Plan of Distribution
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24
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Legal Matters
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26
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Experts
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26
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This prospectus incorporates by reference important information.
You may obtain the information incorporated by reference without
charge by following the instructions under Information
Incorporated by Reference appearing below before deciding
to invest in our shares.
This document is in two parts. The first part is this prospectus
supplement, which describes the specific terms of this offering
of common stock and related matters. The second part is the
accompanying prospectus dated August 16, 2010, which
provides more general information, some of which may not apply
to this offering of common stock. To the extent the information
contained in this prospectus supplement differs or varies from
the information contained in the accompanying prospectus or any
document incorporated by reference, the information in this
prospectus supplement shall control.
S-i
All references in this prospectus supplement and the
accompanying prospectus to ValueVision, the
Company, we, us,
our, or similar references refer to ValueVision
Media, Inc. and its subsidiaries, except where the context
otherwise requires or as otherwise indicated.
You should rely only on the information contained or
incorporated by reference in this prospectus supplement, the
accompanying prospectus and any free writing prospectus that we
authorize to be distributed to you. We have not, and the
underwriters have not, authorized any other person to provide
you with different information. Dealers are not authorized to
give any information other than contained in this prospectus
supplement, the accompanying prospectus, and any free writing
prospectus prepared by us or on our behalf. This prospectus
supplement and the accompanying prospectus are not an offer to
sell, nor are they seeking an offer to buy, these securities in
any state where the offer or sale is not permitted. The
information in this prospectus supplement and the accompanying
prospectus are complete and accurate as of the date the
information is presented, but the information may have changed
since that date.
S-ii
PROSPECTUS
SUPPLEMENT SUMMARY
The following summary highlights selected information
contained elsewhere in this prospectus supplement, the
accompanying prospectus and the documents incorporated by
reference in this prospectus supplement and the accompanying
prospectus. It does not contain all the information you will
need in making your investment decision. You should carefully
read this entire prospectus supplement, the accompanying
prospectus and the documents that they incorporate by reference.
You should pay special attention to the Risk Factors
section of this prospectus supplement beginning on
page S-4
and the Risk Factors section of the accompanying
prospectus beginning on page 3.
Overview
We are an interactive 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 &
Accessories. Orders are fulfilled via telephone, online and
mobile channels. ShopNBC is distributed into approximately
78.3 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.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.
We also operate 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. Our 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. We do not
incorporate by reference into this prospectus supplement or the
accompanying prospectus the information on, or accessible
through, our internet retailing websites, and you should not
consider it as part of this prospectus supplement or the
accompanying prospectus.
We have an exclusive trademark license from NBCUniversal Media,
LLC, formerly 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. We will
issue shares of our common stock valued at $4 million to
NBCU on May 15, 2011 as consideration for NBCU extending
the term of the license agreement. Pursuant to the license, we
operate our television home shopping network under the ShopNBC
brand name and operate our internet website under the
ShopNBC.com and ShopNBC.tv brand names.
In January 2011, General Electric Company (GE
Electric) consummated a transaction with Comcast
Corporation (Comcast) pursuant to which GE Electric
contributed all of its holdings in NBCU to NBCUniversal Media,
LLC, a newly formed entity beneficially owned 51% by Comcast and
49% by GE Electric. As a result of that transaction, NBCU is now
a wholly owned subsidiary of NBCUniversal Media, LLC. The
aggregate equity ownership of GE Capital Equity Investments,
Inc. (GE Equity) in us is 4,929,266 shares of
Series B Preferred Stock and warrants to purchase up to
6,000,000 shares of common stock and the direct ownership
of NBCU in us consists of 6,452,194 shares of common stock
and warrants to purchase 14,744 shares of common stock. We
are currently making arms length negotiated payments to
Comcast for cable distribution under a pre-existing contract.
S-1
Corporate
Information
We are incorporated under the laws of Minnesota. Our principal
and executive offices are located at 6740 Shady Oak Road, Eden
Prairie, Minnesota
55344-3433.
Our telephone number is
(952) 943-6000.
Our website address is www.vvtv.com. We do not incorporate by
reference into this prospectus supplement or the accompanying
prospectus the information on, or accessible through, our
website, and you should not consider it as part of this
prospectus supplement or the accompanying prospectus.
S-2
The
Offering
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Common stock offered by us |
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shares |
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Common stock to be outstanding after this offering |
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shares |
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Offering price to the public |
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$ per share |
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Over-allotment option |
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The underwriters have a
30-day
option to purchase up to additional shares of common stock from
ValueVision Media, Inc. to cover over-allotments, if any. |
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Use of proceeds |
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We intend to use the net proceeds from this offering to redeem
the outstanding Series B Preferred Stock held by GE Equity
and, to the extent there are net proceeds remaining, for working
capital and general corporate purposes, which may include
capital expenditures. See the section titled Use of
Proceeds beginning on
page S-10
of this prospectus supplement. |
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Risk factors |
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Investing in our common stock involves a high degree of risk.
See Risk Factors beginning on
page S-4
of this prospectus supplement and page 3 of the
accompanying prospectus and other information included or
incorporated by reference in this prospectus supplement and the
accompanying prospectus. |
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Nasdaq Global Market Symbol |
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VVTV |
The number of shares of common stock that will be outstanding
immediately after this offering is based on
37,831,688 shares of common stock outstanding as of the
close of business on March 22, 2011 and excludes, as of the
close of business on March 22, 2011:
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2,374,195 shares of common stock issuable upon the exercise
of outstanding options under our 2004 Omnibus Stock Plan, with a
weighted average exercise price of $5.72 per share;
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1,692,491 shares of common stock issuable upon the exercise
of outstanding options under our 2001 Omnibus Stock Plan, with a
weighted average exercise price of $6.01 per share;
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525,000 shares of common stock issuable upon the exercise
of outstanding stock options issued to certain employees outside
the Omnibus Stock Plans, with a weighted average exercise price
of $3.58 per share; and
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warrants to purchase up to 6,000,000 shares of common stock
and warrants to purchase up to 14,744 shares of common
stock issued to issued to GE Equity and NBCU, respectively, in
connection with our strategic alliance with GE Equity and
NBCU; and
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$4 million of our common stock to be issued to NBCU on
May 15, 2011.
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Except as otherwise indicated, information in this prospectus
supplement assumes no exercise of the underwriters
over-allotment option to purchase up
to
additional shares of our common stock from us.
S-3
RISK
FACTORS
Investing in our common stock involves a high degree of risk.
Before making an investment in our common stock, you should
carefully consider the risk factors set forth below and in the
accompanying prospectus, and the risk factors described under
Risk Factors contained in our Annual Report on
Form 10-K
for the year ended January 29, 2011, together with the
other information contained in this prospectus supplement, the
accompanying prospectus and the documents we have incorporated
by reference, including our financial statements and related
notes.
Risks
Relating to an Investment in Our Common Stock
The price
of our common stock is volatile and may continue to be
volatile.
The trading price of our common stock fluctuates substantially
and may continue to fluctuate substantially. These fluctuations
could cause you to lose part or all of your investment in our
shares of common stock. The factors that could cause
fluctuations include, but are not limited to, the following:
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price and volume fluctuations in the overall stock market from
time to time;
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significant volatility in the market price and trading volume of
television home shopping, internet and other retail companies;
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actual or anticipated changes in our sales and earnings,
fluctuations in our operating results or the failure to meet the
expectations of financial market analysts and investors;
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investor perceptions of the television home shopping industry,
the retail industry in general and our company in particular;
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the operating and stock performance of comparable companies;
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strategic actions by us or our competitors, such as acquisitions
or restructurings;
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loss of external funding sources or other adverse changes to our
liquidity;
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general economic conditions and trends;
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major catastrophic events;
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competitive factors;
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relatively few shares available for public trading;
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changes in accounting standards, policies, guidance,
interpretation or principles;
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regulatory changes;
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sales of debt or equity securities by our company;
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sales of large blocks of our stock or sales by insiders;
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departures of key personnel; or
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the matters discussed under Risk Factors in the
accompanying prospectus.
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S-4
If you
purchase the securities sold in this offering, you will
experience immediate dilution in your investment.
The public offering price per share of common stock in this
offering exceeds the net tangible book value per share of our
common stock outstanding prior to this offering. Assuming we
sell shares
in this offering at a public offering price of
$ per share, after deducting the
estimated underwriting discount and estimated offering expenses
payable by us, you will experience immediate dilution of
$ per share, representing the
difference between our as adjusted net tangible book value per
share as of January 29, 2011 after giving effect to this
offering, and the public offering price. You will experience
additional dilution if the underwriters exercise the
over-allotment option. See the section entitled
Dilution below for a more detailed illustration of
the dilution you would incur if you participate in this offering.
We may
not have sufficient funds to redeem the outstanding
Series B Preferred Stock.
As described under Use of Proceeds, we intend to use
the proceeds from this offering to redeem the outstanding
Series B Preferred Stock held by GE Equity. We cannot
assure you that we will have sufficient financial resources as a
result of this offering to redeem the outstanding Series B
Preferred Stock.
Future
sales of our capital stock by our company or our existing
shareholders could cause our stock price to decline.
Except as described under Description of Capital
Stock in the accompanying prospectus, we are not
restricted from issuing additional securities, including any
securities that are convertible into or exchangeable for, or
that represent the right to receive, common stock. On
November 17, 2010, we entered into an amendment to our
Trademark License Agreement with NBCU, which, in consideration
for the extension of the term of that agreement through
May 15, 2012, we agreed that we will issue to NBCU
$4 million of shares of our common stock on May 15,
2011. This anticipated issuance and the issuance of any
additional shares of common or preferred stock or convertible
securities could be substantially dilutive to shareholders of
our common stock. Moreover, to the extent that we issue
restricted stock units, stock appreciation rights, options, or
warrants to purchase our common stock in the future and those
stock appreciation rights, options, or warrants are exercised or
as the restricted stock units vest, our shareholders may
experience further dilution. Holders of our shares of common
stock have no preemptive rights that entitle holders to purchase
their pro rata share of any offering of shares of any class or
series and, therefore, such sales or offerings could result in
increased dilution to our shareholders. If we or our
shareholders sell substantial amounts of our capital stock in
the public market or announce the intention to do so, the market
price of our common stock could decrease significantly. The
perception in the public market that we or our shareholders
might sell shares of our common stock could also depress the
market price of our common stock. On June 9, 2010, we
registered 6,452,194 shares of our common stock for resale
by NBCU. The shares were registered to permit public secondary
trading of the shares. On June 24, 2010, NBCU decided not
to sell the shares registered in that registration statement due
to prevailing prices. This registration statement has not been
withdrawn, and NBCU may offer the shares for resale in the
future. NBCU acquired the shares pursuant to our strategic
alliance with GE Equity and NBCU. As part of this strategic
alliance, we entered into an amended and restated registration
rights agreement on February 25, 2009 with GE Equity and
NBCU that provides GE Equity, NBCU and their affiliates and any
transferees and assigns, an aggregate of four demand
registrations and unlimited piggy-back registration rights. In
addition, NBCU was subsequently granted one additional demand
registration right pursuant to the November 2010 amendment of
the Trademark License Agreement. We prepared the above-mentioned
prospectus
S-5
pursuant to a notice submitted to us by NBCU under the demand
registration provisions in the amended and restated registration
rights agreement. A decline in the price of shares of our common
stock might impede our ability to raise capital through the
issuance of additional shares of our common stock or other
equity securities.
We do not
intend to declare dividends on our stock after this
offering.
Pursuant to the shareholders agreement we have with GE Equity
and NBCU, we are prohibited from paying dividends on our common
stock without GE Equitys prior written consent. We
currently intend to retain all future earnings for the operation
and expansion of our business and, therefore, do not anticipate
declaring or paying cash dividends on our common stock in the
foreseeable future. Any payment of cash dividends on our common
stock will be subject to restrictions on payment of dividends
contained in the terms of our outstanding Series B
Preferred Stock held by GE Equity, and is otherwise at the
discretion of our board of directors and will depend upon our
results of operations, earnings, capital requirements, financial
condition, future prospects, contractual restrictions and other
factors deemed relevant by our board of directors. Therefore,
you should not expect to receive dividend income from shares of
our common stock.
Common
stock is equity and is subordinate to our existing and future
indebtedness and preferred stock.
Shares of common stock are equity interests in us and do not
constitute indebtedness. As such, shares of common stock will
rank junior to all indebtedness and other non-equity claims on
us with respect to assets available to satisfy claims against
us, including in our liquidation. Additionally, holders of our
common stock are subject to the prior dividend and liquidation
rights of any holders of our Series B Preferred Stock.
Dividends on common stock are payable only if declared by our
board of directors and are subject to the shareholders agreement
we have with GE Equity and NBCU and the restrictions on payments
of dividends out of lawfully available funds.
Management
will have broad discretion as to the use of the proceeds from
this offering, and we may not use the proceeds
effectively.
Our management will have broad discretion in the application of
the net proceeds from this offering and could spend the proceeds
in ways that do not improve our results of operations or enhance
the value of our common stock. Our failure to apply these funds
effectively could have a material adverse effect on our business
and cause the price of our common stock to decline.
If
securities or industry analysts do not publish research or
reports about our business, or if they adversely change their
recommendations regarding our common stock, the market price for
our common stock and trading volume could decline.
The trading market for our common stock will be influenced by
research or reports that industry or securities analysts publish
about us or our business. If one or more analysts who cover us
downgrade our common stock, the market price for our common
stock would likely decline. If one or more of these analysts
cease coverage of us or fail to regularly publish reports on us,
we could lose visibility in the financial markets, which, in
turn, could cause the market price or trading volume for our
common stock to decline.
S-6
Certain
provisions of Minnesota law may make a takeover of our company
more difficult, depriving shareholders of opportunities to sell
shares at above-market prices.
Certain provisions of Minnesota law may have the effect of
discouraging attempts to acquire us without the approval of our
board of directors. Section 302A.671 of the Minnesota
statutes, with certain exceptions, requires approval of any
acquisition of the beneficial ownership of 20% or more of our
voting stock then outstanding by a majority vote of our
shareholders prior to its consummation. In general, shares
acquired in the absence of such approval are denied voting
rights and are redeemable by us at their then-fair market value
within 30 days after the acquiring person failed to give a
timely information statement to us or the date the shareholders
voted not to grant voting rights to the acquiring persons
shares. Section 302A.673 of the Minnesota statutes
generally prohibits any business combination by us, or any of
our subsidiaries, with an interested shareholder, which includes
any shareholder that purchases 10% or more of our voting shares
within four years following such interested shareholders
share acquisition date, unless the business combination is
approved by a committee of all of the disinterested members of
our board of directors before the interested shareholders
share acquisition date. Consequently, our common shareholders
may lose opportunities to sell their stock for a price in excess
of the prevailing market price due to these protective measures.
We may
face future securities class action lawsuits that could require
us to pay damages or settlement costs and otherwise harm our
business.
Future volatility in the price of our common stock may result in
securities class action lawsuits against us, which may require
that we pay substantial damages or settlement costs in excess of
our insurance coverage and incur substantial legal costs, and
which may divert managements attention and resources from
our business.
Our
ability to use net operating loss carryforwards may be subject
to limitation.
Section 382 of the U.S. Internal Revenue Code of 1986,
as amended, imposes an annual limit on the amount of net
operating loss carryforwards that may be used to offset taxable
income when a corporation has undergone significant changes in
its stock ownership or equity structure. Our ability to use net
operating losses may be limited by the issuance of common stock
in connection with this offering, the expected redemption of the
outstanding Series B Preferred Stock held by GE Equity from
the proceeds of this offering, or by the consummation of other
transactions. As a result, as we earn net taxable income, our
ability to use net operating loss carryforwards to offset
U.S. federal taxable income and state taxable income may
become subject to limitations, which could potentially result in
increased future tax liabilities for us.
S-7
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus supplement, the accompanying prospectus, and the
documents we incorporate by reference may contain statements
that constitute forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933,
and Section 21E of the Securities Exchange Act of 1934. All
statements other than statements of historical fact, including
statements regarding guidance, industry prospects or future
results of operations or financial position made in this report
are forward-looking.
We often use words such as may, will,
could, estimates, continue,
anticipates, believes,
expects, intends and similar expressions
to identify forward-looking statements. These statements are
based on managements current expectations based on
information currently available to us and accordingly are
subject to uncertainty and changes in circumstances. Actual
results may vary materially from the expectations contained
herein. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed in
this prospectus supplement and the accompanying prospectus in
the sections captioned Risk Factors, in the
Risk Factors section of our annual report on
Form 10-K
for the year ended January 29, 2011 and in other filings we
have made with the SEC. These include, without limitation:
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the general economic and credit environment;
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risks relating to decreased consumer spending and increased
consumer debt levels;
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the impact of increasing interest rates;
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risks relating to seasonal variations in consumer purchasing
activities;
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risks relating to changes in the mix of products sold by us;
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competitive pressures on our sales, as well as pricing and sales
margins;
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the level of cable and satellite distribution for our
programming and the associated fees;
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our ability to continue to manage our cash, cash equivalents and
investments to meet our liquidity needs;
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our ability to manage our operating expenses successfully;
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our management and information systems infrastructure;
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changes in governmental or regulatory requirements;
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litigation or governmental proceedings affecting our operations;
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significant public events that are difficult to predict, such as
widespread weather catastrophes or other significant
television-covering events causing an interruption of television
coverage or that directly compete with the viewership of our
programming; and
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our ability to obtain and retain key executives and employees.
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S-8
Investors are cautioned that all forward-looking statements
involve risk and uncertainty. The facts and circumstances that
exist when any forward-looking statements are made and on which
those forward-looking statements are based may significantly
change in the future, thereby rendering the forward-looking
statements obsolete. We are under no obligation (and expressly
disclaim any obligation) to update or alter our forward-looking
statements whether as a result of new information, future events
or otherwise.
S-9
USE OF
PROCEEDS
Based upon an offering price of $
per share, we estimate that the net proceeds we will receive
from this offering will be approximately
$ million, after deducting
underwriting discounts and commissions and estimated expenses
payable by us. We intend to use the net proceeds from this
offering to redeem the outstanding Series B Preferred Stock
held by GE Equity and, to the extent there are net proceeds
remaining, for working capital and general corporate purposes.
The Series B Preferred Stock accrues cumulative dividends
at a base annual rate of 12%, subject to adjustment. 30% of the
Series B Preferred Stock (including accrued but unpaid
dividends) is required to be redeemed on February 25, 2013,
and the remainder on February 25, 2014. All early payments
on the Series B Preferred Stock will be applied first to
any accrued but unpaid dividends, and then to redeem shares of
the Series B Preferred Stock.
This offering and the expected use of proceeds from this
offering could result in our inability to use our accumulated
net operating loss carryforwards. Section 382 of the
U.S. Internal Revenue Code of 1986, as amended, imposes an
annual limit on the amount of net operating loss carryforwards
that may be used to offset taxable income when a corporation has
undergone significant changes in its stock ownership or equity
structure. We currently anticipate that following the issuance
of common stock in connection with this offering and the
expected redemption of the outstanding Series B Preferred
Stock held by GE Equity from the proceeds of this offering, our
ability to use net operating losses may be limited to offsetting
approximately $22-26 million of U.S. federal taxable
income and related state taxable income on an annual basis. See
Risk Factors.
CERTAIN
TRANSACTIONS
On February 18, 2011, we made a payment to GE Equity, the
sole holder of our outstanding Series B Preferred Stock, of
$2.5 million as a partial payment in accordance with our
obligations under the terms of our Series B Preferred
Stock. We intend to use the net proceeds of this offering to
redeem the Series B Preferred Stock, which is held by GE
Equity. GE Equity beneficially owns more than five percent of
our common stock as of the date hereof. One of our directors,
Patrick O. Kocsi, is the senior managing director of GE Equity.
DILUTION
If you invest in our common stock in this offering, your
ownership interest will be diluted to the extent of the
difference between the public offering price per share of our
common stock and the as adjusted net tangible book value per
share of our common stock upon completion of this offering.
Historical net tangible book value per share is determined by
dividing our total tangible assets (total assets less intangible
assets) less total liabilities, by the number of outstanding
shares of our common stock. The historical net tangible book
value of our common stock as of January 29, 2011 was
approximately $82.2 million, or approximately $2.18 per
share of common stock, based on the number of shares of common
stock outstanding as of January 29, 2011.
Investors participating in this offering will incur immediate
and substantial dilution. After giving effect to the sale of
common stock offered by us in this offering at the public
offering price of $ per share, and
after deducting the underwriting discounts and commissions and
estimated expenses payable by us, our as adjusted net tangible
book value as of January 29, 2011 would have been
approximately $ million, or
approximately $ per share of
common stock. This represents an immediate increase in as
adjusted net tangible book value of
$ per share to existing common
shareholders, and
S-10
an immediate dilution of $ per
share to investors participating in this offering. The following
table illustrates this per share dilution:
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Public offering price per share
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$
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Historical net tangible book value per share as of
January 29, 2011
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2.18
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Increase in historical net tangible book value per share
attributable to investors participating in this offering
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As adjusted historical net tangible book value per share after
this offering
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Dilution per share to investors participating in this offering
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$
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S-11
CAPITALIZATION
The following table sets forth our consolidated capitalization
as of January 29, 2011:
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on an actual basis; and
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on an as adjusted basis to give effect to our sale
of shares
of common stock at a public offering price of
$ per share, after deducting an
underwriting discount and estimated offering expenses payable by
us.
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The information set forth in the following table should be read
in conjunction with and is qualified in its entirety by
reference to the audited and unaudited financial statements and
notes thereto incorporated by reference in this prospectus
supplement and the accompanying prospectus.
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As of January 29, 2011
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Actual
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As Adjusted
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(in thousands)
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Cash and cash equivalents
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$
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46,471
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$
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Restricted cash and investments
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4,961
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Long-term payable
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$
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4,894
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$
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Term loan
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25,000
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Accrued dividends Series B Preferred Stock
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6,491
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Series B Mandatory Redeemable Preferred Stock, $.01 per
share par value, 4,929,266 shares authorized;
4,929,266 shares issued and outstanding
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14,599
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Shareholders Equity:
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Common Stock, $0.01 per share par value; 100,000,000 shares
authorized
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Actual 37,781,688 shares outstanding
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$
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378
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As
adjusted shares
outstanding
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Warrants to purchase 6,014,744 shares of common stock
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602
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Additional paid-in capital
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337,421
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Accumulated deficit
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(255,249
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)
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Total shareholders equity
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$
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83,152
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$
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Total capitalization
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$
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134,136
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$
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S-12
MARKET
PRICE HISTORY OF COMMON STOCK
Shares of our common stock are traded on the Nasdaq Global
Market under the symbol VVTV. The following table
shows the high and low sales prices of our common stock on the
Nasdaq Global Market for the periods indicated:
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Common Stock Price
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High
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Low
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Fiscal 2011:
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First Quarter (through March 28, 2011)
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$
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7.67
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$
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6.00
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Fiscal 2010:
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First Quarter
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$
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4.77
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$
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2.96
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Second Quarter
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$
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3.09
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$
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1.45
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Third Quarter
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$
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2.69
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$
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1.41
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Fourth Quarter
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$
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7.24
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$
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2.15
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Fiscal 2009:
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First Quarter
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$
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0.83
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$
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0.18
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Second Quarter
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$
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3.22
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$
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0.50
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Third Quarter
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$
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4.15
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$
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2.61
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Fourth Quarter
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$
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5.27
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$
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3.00
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On March 28, 2011, the last reported sale price for shares
of our common stock on the Nasdaq Global Market was $6.60 per
share. As of March 28, 2011, there were approximately 519
holders of record of our common stock. We believe the number of
beneficial owners of our common stock on that date was
substantially greater.
S-13
UNDERWRITING
We are offering the shares of common stock described in this
prospectus supplement through
Piper Jaffray & Co., as the sole
book-running manager, and Dougherty & Co. and Feltl
and Company as
co-managers.
We have entered into a firm commitment underwriting agreement
with Piper Jaffray & Co., as representative
of the several underwriters. Subject to the terms and conditions
of the underwriting agreement, we have agreed to sell to the
underwriters, and the underwriters have agreed to purchase from
us, shares
of common stock.
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Number of
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Underwriter
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Shares
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Piper Jaffray & Co.
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Dougherty & Co.
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Feltl and Company
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Total
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Each underwriter is committed to purchase all the shares of
common stock offered by us if it purchases any shares, other
than those shares covered by the over-allotment option described
below.
Each underwriter proposes to offer the common stock directly to
the public at the initial public offering price set forth on the
cover page of this prospectus supplement and to certain dealers
at that price less a concession not in excess of
$ per share. After the offering,
these figures may be changed by the underwriters.
We have granted to the underwriters an option to purchase up to
an
additional shares
of common stock from us at the same price to the public, and
with the same underwriting discount, as set forth on the cover
page of this prospectus supplement. The underwriters may
exercise this option any time during the
30-day
period after the date of this prospectus, but only to cover
over-allotments, if any.
The underwriting fee is equal to the public offering price per
share of common stock less the amount paid by the underwriters
to us per share of common stock. The following table shows the
per share and total underwriting discounts to be paid to the
underwriters in this offering.
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With no
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With
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Over-Allotment
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Over-Allotment
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Per share
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$
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$
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Total
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We have also agreed to reimburse the underwriters for certain
out-of-pocket
expenses incurred by it up to an aggregate of $125,000 with
respect to this offering.
In compliance with guidelines of the Financial Industry
Regulatory Authority, or FINRA, the maximum consideration or
discount to be received by any FINRA member or independent
broker dealer may not exceed 8.0% of the aggregate amount of the
securities offered pursuant to this prospectus supplement.
We estimate that the total fees and expenses payable by us,
excluding underwriting discounts and commissions, will be
approximately $ , which includes
$ that we have agreed to reimburse
the underwriters for the legal fees incurred by it in connection
with the offering.
S-14
We have agreed to indemnify each underwriter against certain
liabilities, including liabilities under the Securities Act, or
to contribute to payments that the underwriters may be required
to make in respect of those liabilities.
We and certain of our directors and executive officers are
subject to
lock-up
agreements that prohibit us and them from offering for sale,
pledging, announcing the intention to sell, selling, contracting
to sell, selling any option or contract to purchase, purchasing
any option or contract to sell, granting any option, right or
warrant to purchase, or otherwise transferring or disposing of,
directly or indirectly, any shares of our common stock or any
securities convertible into or exercisable or exchangeable for
shares of our common stock, or from entering into any swap or
other agreement that transfers, in whole or in part, any of the
economic consequences of ownership of the common stock, for a
period of at least 90 days following the date of the
underwriting agreement without the prior written consent of
Piper Jaffray. The
lock-up
agreements do not prohibit our directors and executive officers
from transferring shares of our common stock for bona fide
estate or tax planning purposes, subject to certain
requirements, including that the transferee be subject to the
same lock-up
terms, participating in any exchange of underwater
options with us, acquiring or exercising stock options issued
pursuant to our existing stock option plans, or entering into
plans that satisfy the requirements of
Rule 10b5-1(c)(1)(i)(B)
under the Exchange Act, provided that no sales are made under
such plans during the
lock-up
period. Further, Keith R. Stewart, Robert Ayd, Carol Steinberg
and Mark A. Ahmann, respectively, may sell up to 500,000, 25,000
15,000 and 32,000 shares of common stock upon the later to
occur of the following: (x) five days after the exercise in
full of the underwriters over-allotment option, provided
that no such sales may occur on or before April 10, 2011,
and (y) one day after the expiration of the
underwriters over-allotment option; provided, that in any
event these individuals may sell these shares on or between
April 10, 2011 and April 15, 2011.
The lock-up
agreements do not prohibit us from issuing shares upon the
exercise or conversion of securities outstanding on the date of
this prospectus supplement. The
lock-up
provisions do not prevent us from selling shares to the
underwriters pursuant to the underwriting agreement, or prevent
us from granting options to acquire securities under our
existing stock option plans or issuing shares upon the exercise
or conversion of securities outstanding on the date of this
prospectus supplement.
The 90-day
lock-up
period in the
lock-up
agreements is subject to extension if (i) during the last
17 days of the
lock-up
period we issue an earnings release or material news or a
material event relating to us occurs or (ii) prior to the
expiration of the
lock-up
period, we announce that we will release earnings results during
the 16-day
period beginning on the last day of the
lock-up
period, in which case the restrictions imposed in these
lock-up
agreements shall continue to apply until the expiration of the
18-day
period beginning on the issuance of the earnings release or the
occurrence of the material news or material event, unless the
underwriter waives the extension in writing.
Our shares are quoted on the NASDAQ Global Market under the
symbol VVTV.
To facilitate the offering, the underwriters may engage in
transactions that stabilize, maintain or otherwise affect the
price of our common stock during and after the offering.
Specifically, the underwriters may over-allot or otherwise
create a short position in the common stock for its own account
by selling more shares of common stock than we have sold to it.
Short sales involve the sale by the underwriters of a greater
number of shares than they are required to purchase in the
offering. The underwriters may close out any short position by
either exercising its option to purchase additional shares or
purchasing shares in the open market.
In addition, the underwriters may stabilize or maintain the
price of our common stock by bidding for or purchasing shares of
common stock in the open market and may impose penalty bids. If
penalty bids are imposed, selling concessions allowed to
syndicate members or other broker-dealers participating in
S-15
the offering are reclaimed if shares of common stock previously
distributed in the offering are repurchased, whether in
connection with stabilization transactions or otherwise. The
effect of these transactions may be to stabilize or maintain the
market price of our common stock at a level above that which
might otherwise prevail in the open market. The imposition of a
penalty bid may also affect the price of our common stock to the
extent that it discourages resales of our common stock. The
magnitude or effect of any stabilization or other transactions
is uncertain. These transactions may be effected on the NASDAQ
Global Market or otherwise and, if commenced, may be
discontinued at any time.
The underwriters may also engage in passive market making
transactions in our common stock. Passive market making consists
of displaying bids on the NASDAQ Global Market limited by the
prices of independent market makers and effecting purchases
limited by those prices in response to order flow. Rule 103
of Regulation M promulgated by the SEC limits the amount of
net purchases that each passive market maker may make and the
displayed size of each bid. Passive market making may stabilize
the market price of our common stock at a level above that which
might otherwise prevail in the open market and, if commenced,
may be discontinued at any time.
This prospectus supplement and the accompanying prospectus in
electronic format may be made available on web sites maintained
by the underwriters, and the underwriters may distribute
prospectus supplements electronically.
From time to time in the ordinary course of their respective
businesses, the underwriters and certain of its affiliates may
in the future engage in commercial banking or investment banking
transactions with us and our affiliates. We have granted to
Piper Jaffray a right of first refusal to act as
bookrunning manager for certain offerings that we may propose to
conduct during the six month period following the closing of
this offering.
S-16
INDEMNIFICATION
OF DIRECTORS AND OFFICERS
We are subject to Minnesota Section 302A.521, which
provides that a corporation shall indemnify any person made or
threatened to be made a party to a proceeding by reason of the
former or present official capacity (as defined in
Section 302A.521 of the Minnesota Statutes) of that person
against judgments, penalties, fines, including, without
limitation, excise taxes assessed against such person with
respect to an employee benefit plan, settlements and reasonable
expenses, including attorneys fees and disbursements,
incurred by such person in connection with the proceeding, if,
with respect to the acts or omissions of that person complained
of in the proceeding, that person:
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has not been indemnified therefor by another organization or
employee benefit plan;
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|
acted in good faith;
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|
|
|
received no improper personal benefit and Section 302A.255
(with respect to director conflicts of interest), if applicable,
has been satisfied;
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|
in the case of a criminal proceeding, had no reasonable cause to
believe the conduct was unlawful; and
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|
in the case of acts or omissions occurring in such persons
performance in an official capacity, such person must have acted
in a manner such person reasonably believed was in the best
interests of the corporation or, in certain limited
circumstances, not opposed to the best interests of the
corporation.
|
In addition, Section 302A.521, subd. 3 requires payment by
us, upon written request, of reasonable expenses in advance of
final disposition in certain instances. A decision as to
required indemnification is made by a majority of the
disinterested board of directors present at a meeting at which a
disinterested quorum is present, or by a designated committee of
disinterested directors, by special legal counsel, by the
disinterested shareholders, or by a court.
Our bylaws provide that we will indemnify any of our officers,
directors, employees, and agents to the fullest extent permitted
by Minnesota law.
We have a director and officer liability insurance policy to
cover us, our directors and our officers against certain
liabilities.
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION OF
SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted for directors, officers or
persons controlling us pursuant to applicable state law, we have
been informed that, in the opinion of the SEC, such
indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
S-17
LEGAL
MATTERS
Certain legal matters with respect to the common stock will be
passed upon for us by Faegre & Benson LLP,
Minneapolis, Minnesota. Goodwin Procter LLP, New York, New York
will pass upon certain legal matters for the underwriters in
connection with this offering.
INFORMATION
INCORPORATED BY REFERENCE
This prospectus supplement and the accompanying prospectus are
part of a registration statement on
Form S-3.
The SEC allows this filing to incorporate by
reference information that the Company previously filed
with the SEC. This means we can disclose important information
to you by referring you to other documents that we have filed
with the SEC. The information that is incorporated by reference
is considered part of this prospectus supplement, and
information that the Company files later will automatically
update and may supersede this information. For further
information about us and the securities being offered, you
should refer to the registration statement and the following
documents that are incorporated by reference:
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Our Annual Report on
Form 10-K
for the fiscal year ended January 29, 2011, filed on
March 22, 2011;
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All other reports filed by us pursuant to Section 13(a) or
15(d) of the Exchange Act since the end of the fiscal year
covered by the annual report referred to above; and
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|
The description of our common stock contained in the
Registration Statement on
Form 8-A
filed with the SEC on May 22, 1992, as the same may be
amended from time to time.
|
All documents filed, and not furnished, by the Company
subsequent to those listed above with the SEC pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act and,
prior to the termination of the offering, shall be deemed to be
incorporated by reference into this prospectus supplement and to
be a part hereof from the date of filing of such documents. Any
statement contained in a document incorporated by reference
herein shall be deemed to be modified or superseded for purposes
of this prospectus supplement to the extent that a statement
contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this prospectus
supplement.
You may request a copy of all documents that are incorporated by
reference in this prospectus supplement by writing or
telephoning us at the following address and number:
Corporate Secretary
ValueVision Media, Inc.
6740 Shady Oak Road
Eden Prairie, Minnesota 55344
(952) 943-6000
We will provide copies of all documents requested (not including
exhibits to those documents, unless the exhibits are
specifically incorporated by reference into those documents or
this prospectus) without charge.
We file annual, quarterly and special reports, proxy statements
and other information with the SEC. You may read and copy any
document we file at the SECs Public Reference Room at
100 F Street, N.E., Washington, D.C. 20549.
Please call the SEC at
1-800-SEC-0330
for more information about the operation of the Public Reference
Room. The SEC maintains an Internet site that contains reports,
proxy and information statements, and other information
regarding issuers that file electronically with the SEC,
including ValueVision Media, Inc. The SECs Internet site
can be found at www.sec.gov.
S-18
VALUEVISION MEDIA,
INC.
$75,000,000
Common Stock
Preferred Stock
Stock Purchase Contracts
Securities Warrants
Rights
Units
By this prospectus, we may from time to time offer common stock,
preferred stock, stock purchase contracts, securities warrants,
rights
and/or units
in one or more offerings and in amounts, at prices and on terms
that we will determine at the time of such offerings. We will
provide specific terms of the securities offered and the terms
and conditions of the transactions in supplements to this
prospectus. You should read this prospectus, each applicable
prospectus supplement, and the information incorporated by
reference in this prospectus and each applicable prospectus
supplement carefully before you invest.
Our common stock, par value $0.01 per share, trades on the
Nasdaq Global Market under the symbol VVTV. On
July 19, 2010, the closing price of our common stock was
$1.64 per share. The aggregate market value of our outstanding
voting and non-voting common stock held by non-affiliates on
July 19, 2010 was approximately $38,196,794. We have not
issued any securities pursuant to Instruction I.B.6 of
Form S-3
during the prior 12 calendar month period that ends on, and
includes, the date hereof.
You should rely only on the information contained or
incorporated by reference in this prospectus or any prospectus
supplement. We have not authorized anyone else to provide you
with different information or to make additional
representations. We are not making or soliciting an offer of any
securities other than the securities described in this
prospectus and any prospectus supplement. We are not making or
soliciting an offer of these securities in any state or
jurisdiction where the offer is not permitted or in any
circumstances in which such offer or solicitation is unlawful.
You should not assume that the information contained or
incorporated by reference in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the
front of those documents.
Investing in these securities involves a high degree of risk.
See Risk Factors on page 3 of this prospectus
and in the prospectus supplement we will deliver with this
prospectus.
The securities may be sold by us to or through underwriters or
dealers, directly to purchasers or through agents designated
from time to time, or through a combination of these methods.
For additional information on the methods of sale, you should
refer to the section entitled Plan of Distribution
in this prospectus. If any underwriters are involved in the sale
of any securities with respect to which this prospectus is being
delivered, the names of such underwriters and any applicable
discounts or commissions and over-allotment options will be set
forth in a prospectus supplement. The price to the public of
such securities and the net proceeds we expect to receive from
such sale will also be set forth in a prospectus supplement.
This prospectus may not be used to sell any securities unless
accompanied by a prospectus supplement.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities, or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal
offense.
This prospectus is dated August 16, 2010
TABLE OF
CONTENTS
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Page
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i
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ii
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iii
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1
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3
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12
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12
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12
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13
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13
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13
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19
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19
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22
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23
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24
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26
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26
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ABOUT
THIS PROSPECTUS
When we refer to we, us or the
company, we mean ValueVision Media, Inc. and its
subsidiaries unless the context indicates otherwise.
This prospectus is part of a registration statement on
Form S-3
that we filed with the Securities and Exchange Commission, or
the SEC, using the shelf registration process. Under
this shelf registration process, we may sell preferred stock,
common stock, stock purchase contracts, warrants, rights
and/or units
described in this prospectus in one or more offerings up to an
aggregate initial dollar amount of $75,000,000. This prospectus
provides you with a general description of the securities we may
offer. Each time we offer securities, we will provide a
prospectus supplement that will describe the specific amounts,
prices and terms of the offered securities. The prospectus
supplement may also add, update or change information contained
in this prospectus. We may also prepare free writing
prospectuses that describe particular securities. Any free
writing prospectus should also be read in connection with this
prospectus and with any prospectus supplement referred to
therein. For purposes of this prospectus, any reference to an
applicable prospectus supplement may also refer to a free
writing prospectus, unless the context otherwise requires. You
should carefully read both this prospectus and any prospectus
supplement together with additional information described below
under Where You Can Find More Information; Incorporation
of Certain Documents By Reference.
You should rely only on the information provided in this
prospectus, any prospectus supplement or any free-writing
prospectus, including the information incorporated herein or
therein by reference. We have not authorized anyone to provide
you with different information. You should not assume that the
information in this prospectus, any prospectus supplement and
any free-writing prospectus, is accurate at any date other than
the date indicated on the cover page of such documents.
This prospectus does not contain all the information provided in
the registration statement we filed with the SEC. We urge you to
read carefully both this prospectus, any prospectus supplement
accompanying this prospectus, and any free-writing prospectus
together with the information incorporated herein by reference
and as described under the heading Where You Can Find More
Information; Incorporation of Certain Documents By
Reference, before deciding whether to invest in any of the
securities being offered.
The distribution of this prospectus, any prospectus supplement
and any free-writing prospectus and the offering of the
securities in certain jurisdictions may be restricted by law.
Persons into whose possession this
i
prospectus, any prospectus supplement and any free-writing
prospectus come should inform themselves about and observe any
such restrictions. This prospectus, any prospectus supplement
and any free-writing prospectus does not constitute, and may not
be used in connection with, an offer or solicitation by anyone
in any jurisdiction in which such offer or solicitation is not
authorized or in which the person making such offer or
solicitation is not qualified to do so or to any person to whom
it is unlawful to make such offer or solicitation.
This prospectus, any prospectus supplement and any free-writing
prospectus may include trademarks, service marks and trade names
owned by us or other companies. All trademarks, service marks
and trade names included in this prospectus, any prospectus
supplement and any free-writing prospectus are the property of
their respective owners.
WHERE YOU
CAN FIND MORE INFORMATION;
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We file annual, quarterly and current reports, proxy statements
and other information with the SEC. Our SEC filings are
available over the Internet at the SECs web site at
www.sec.gov. You may also read and copy any document we file
with the SEC at their Public Reference Room located at
100 F Street, N.E., Washington, D.C. 20549. You
may obtain information on the operation of the Public Reference
Room by calling the SEC at
1-800-SEC-0330.
We maintain a web site at www.valuevisionmedia.com. The
information on our web site is not incorporated by reference in
this prospectus, any prospectus supplement and any free-writing
prospectus, and you should not consider it a part of this
prospectus, any prospectus supplement and any free-writing
prospectus.
The SEC allows us to incorporate by reference the
information we file with them, which means that we can disclose
important information to you by referring you to separate
documents. The information incorporated by reference is
considered to be part of this prospectus, any prospectus
supplement and any free-writing prospectus, and later
information filed with the SEC will update and supersede this
information. We incorporate by reference the documents listed
below that we have previously filed with the SEC as well as all
documents filed by us with the SEC pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934 or the Exchange Act, subsequent
to the date of this prospectus (together with all filings we
make under the Exchange Act following the date of the initial
filing of our initial registration statement but prior to the
effectiveness of such registration statement) and prior to the
termination date of this offering (other than information deemed
furnished and not filed in accordance with SEC rules):
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Annual Report on
Form 10-K
for the year ended January 30, 2010;
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Quarterly Report on
Form 10-Q
for the period ended May 1, 2010;
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Current Reports on
Form 8-K
filed on February 3, February 23, May 19, 2010
(but only with respect to Item 8.01), June 9, 2010,
June 14, 2010, June 24, 2010, June 25, 2010 and
August 6, 2010; and
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The description of our common stock contained in the
Registration Statement on
Form 8-A
filed with the SEC on May 22, 1992, as the same may be
amended from time to time.
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Copies of these filings are available at no cost on our website,
www.valuevisionmedia.com. You may request a copy of these
filings (other than an exhibit to a filing unless that exhibit
is specifically incorporated by reference into that filing) at
no cost, by writing to or telephoning us at the following
address:
Corporate Secretary
ValueVision Media, Inc.
6740 Shady Oak Road
Eden Prairie, Minnesota 55344
(952) 943-6000
ii
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, any prospectus supplement delivered with this
prospectus, and the documents we incorporate by reference may
contain statements that constitute forward-looking
statements within the meaning of Section 27A of the
Securities Act of 1933, and Section 21E of the Securities
Exchange Act of 1934. All statements other than statements of
historical fact, including statements regarding guidance,
industry prospects or future results of operations or financial
position made in this report are forward-looking.
We often use words such as may, will,
could, estimates, continue,
anticipates, believes,
expects, intends and similar expressions
to identify forward-looking statements. These statements are
based on managements current expectations based on
information currently available to us and accordingly are
subject to uncertainty and changes in circumstances. Actual
results may vary materially from the expectations contained
herein. Factors that could cause or contribute to such
differences include, but are not limited to, those described in
the Risk Factors section of our annual report on
Form 10-K
for the year ended January 30, 2010 , our quarterly report
on
Form 10-Q
for the period ended May 1, 2010 and other filings we have
made with the SEC. These include, without limitation:
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macroeconomic issues, including, but not limited to, the current
global financial crisis and the credit environment;
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risks relating to decreased consumer spending and increased
consumer debt levels;
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the impact of increasing interest rates;
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risks relating to seasonal variations in consumer purchasing
activities;
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risks relating to changes in the mix of products sold by us;
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competitive pressures on our sales, as well as pricing and sales
margins;
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the level of cable and satellite distribution for our
programming and the associated fees;
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our ability to continue to manage our cash, cash equivalents and
investments to meet our liquidity needs;
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our ability to manage our operating expenses successfully;
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our management and information systems infrastructure;
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changes in governmental or regulatory requirements;
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litigation or governmental proceedings affecting our operations;
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significant public events that are difficult to predict, such as
widespread weather catastrophes or other significant
television-covering events causing an interruption of television
coverage or that directly compete with the viewership of our
programming; and
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our ability to obtain and retain key executives and employees.
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Investors are cautioned that all forward-looking statements
involve risk and uncertainty. The facts and circumstances that
exist when any forward-looking statements are made and on which
those forward-looking statements are based may significantly
change in the future, thereby rendering the forward-looking
statements obsolete. We are under no obligation (and expressly
disclaim any obligation) to update or alter our forward-looking
statements whether as a result of new information, future events
or otherwise.
iii
SUMMARY
The following summary contains basic information about us and
this offering. It does not contain all of the information that
you should consider in making your investment decision. You
should read and consider carefully all of the information in
this prospectus, including the information set forth under
Risk Factors, any applicable prospectus supplement,
as well as the more detailed financial information, including
the consolidated financial statements and related notes thereto,
appearing elsewhere or incorporated by reference in this
prospectus, before making an investment decision. Unless the
context indicates otherwise, all references in this prospectus
to ValueVision, the Company,
our, us and we refer to
ValueVision Media, Inc. and its subsidiaries as a combined
entity.
The
Company
We are an integrated multi-channel retailer that markets, sells
and distributes our products directly to consumers through
various forms of electronic media. Our operating strategy
incorporates distribution from television, internet and mobile
devices. Our principal electronic media activity is our
television home shopping business, which uses on-air
spokespersons to market brand name and private label consumer
products at competitive prices. Our live
24-hour per
day television home shopping programming is distributed
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. In addition, we 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. We also market a broad array of merchandise through
our internet retailing websites, www.ShopNBC.com and
www.ShopNBC.TV. We are not including the information contained
on our internet retailing websites as a part of, or
incorporating it by reference into, this prospectus.
We have an exclusive license from NBC Universal, Inc.
(NBCU), for the worldwide use of an NBC-branded name
and the peacock image through May 2011. Pursuant to the license,
we operate our television home shopping network under the
ShopNBC brand name and operate our internet website under the
ShopNBC.com and ShopNBC.TV brand name. We are in the process of
selecting a new name and logo for our television, websites,
mobile and other media channels, and will implement a systematic
rebranding strategy during the remainder of the fiscal year.
ValueVision Media, Inc. is a Minnesota corporation with
principal and executive offices located at 6740 Shady Oak
Road, Eden Prairie, Minnesota
55344-3433.
Our telephone number is
(952) 943-6000.
The
Securities We May Offer
The descriptions of the securities contained in this prospectus,
together with any applicable prospectus supplement, summarize
all the material terms and provisions of the various types of
securities that we may offer. We will describe in the applicable
prospectus supplement relating to any securities the particular
terms of the securities offered by that prospectus supplement.
We may sell from time to time, in one or more offerings:
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common stock;
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preferred stock which may be convertible into shares of our
common stock;
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warrants to purchase any of the securities listed above;
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stock purchase contracts for any of the above-mentioned
securities on the terms to be determined at the time of sale;
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rights to purchase our common stock; or
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units consisting of common stock, preferred stock, rights,
warrants, or any combination thereof.
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1
In this prospectus, we refer to the common stock, preferred
stock, warrants, stock purchase contracts, rights and units
collectively as securities. The total dollar amount
of all securities that we may sell will not exceed $75,000,000.
This prospectus may not be used to consummate a sale of
securities unless it is accompanied by a prospectus supplement.
Ratio of
Earnings to Fixed Charges and Preferred Stock
Dividends
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Fiscal Year Ended
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Three Months Ended
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February 4,
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February 3,
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February 2,
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January 31,
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January 30,
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May 1,
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2006
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2007
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2008
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2009
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2010
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2010
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Ratio of Earnings to Fixed Charges and Preferred Stock Dividends
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(15.91
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(4.78
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(20.10
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(108.58
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(7.26
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(4.99
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For the fiscal years ended February 4, 2006 through
January 30, 2010, our earnings were insufficient to cover
fixed charges and preferred stock dividends by $15,602,000,
$5,077,000, $17,558,000, $97,760,000 and $46,779,000,
respectively. For the three months ended May 1, 2010, our
earnings were insufficient to cover fixed charges and preferred
stock dividends by $12,315,000. Fixed charges consist of
interest on all indebtedness and one-third of rental expense,
which we believe is a reasonable approximation of the interest
factor of our rental expense.
2
RISK
FACTORS
An investment in our securities involves a high degree of
risk. You should carefully consider the risks described below,
as well as risk factors set forth under the caption Risk
Factors in the applicable prospectus supplement and other
information included or incorporated by reference in this
prospectus before making an investment decision. Our business,
financial condition or results of operations could be materially
adversely affected by any of these risks. The market or trading
price of our common stock could decline due to any of these
risks, and you may lose all or part of your investment. In
addition, please read Forward-Looking Statements
where we describe additional uncertainties associated with our
business and the forward-looking statements included or
incorporated by reference in this prospectus. The risks below
should be considered along with the other information included
or incorporated by reference into this prospectus. Please note
that additional risks not presently known to us or that we
currently deem immaterial may also impair our business and
operations.
Risks
Relating to Our Business and Operations
We
launched a new business strategy after unsuccessful efforts to
sell our company in fiscal 2008.
Beginning in the fall of 2008, the board of directors, with the
assistance of financial and legal advisors, pursued a strategy
to find a purchaser of the company or a new strategic partner.
This effort ended in January 2009 without a transaction taking
place. At this time, Keith Stewart was promoted to chief
executive officer of our company, and under his leadership, we
are currently focused on executing a new strategy for ShopNBC
that is designed to grow EBITDA levels and increase revenues. In
support of this strategy, we are pursuing the following actions:
(i) growing new and active customers while improving
household penetration, (ii) reducing our operating expenses
to reverse our operating losses, (iii) continue
renegotiating cable and satellite carriage contracts where we
have cost savings opportunities, (iv) broadening and
optimizing our mix of product categories offered on television
and the internet in order to appeal to a broader population of
potential customers, (v) lowering the average selling price
of our products in order to increase the size and purchase
frequency of our customer base, (vi) growing our internet
business by providing broader and internet-only merchandise
offering, and (vii) improving the shopping experience and
our customer service in order to retain and attract more
customers. There can be no guarantee that we will be able to
successfully implement this new strategy on a timeline that
would lead to a successful turnaround of operating results
before we exhaust available cash and other liquidity resources.
We
have a history of losses and a high fixed cost operating base
and may not be able to achieve or maintain profitable operations
in the future.
We experienced operating losses of approximately
$41.2 million, $88.5 million and $23.1 million in
the years ended January 30, 2010 (fiscal 2009),
January 31, 2009 (fiscal 2008) and
February 2, 2008 (fiscal 2007), respectively.
We reported a net loss of $42.0 in fiscal 2009 and a net loss in
fiscal 2008 of $97.8 million. While we reported net income
of $22.5 million in fiscal 2007, this was due to the
$40.2 million pre-tax gain we recorded on the sale of our
equity interest in Ralph Lauren Media, LLC, operator of the
polo.com website. There is no assurance that we will be able to
achieve or maintain profitable operations in future fiscal years.
Our television home shopping business operates with a high fixed
cost base, primarily driven by fixed fees under distribution
agreements with cable and satellite system operators to carry
our programming. In order to operate on a profitable basis, we
must reach and maintain sufficient annual sales revenues to
cover our high fixed cost base
and/or
negotiate a reduction in this cost structure. If our sales
levels are not sufficient to cover our operating expenses, our
ability to reduce operating expenses in the near term will be
limited by the fixed cost base. In that case, our earnings, cash
balance and growth prospects could be materially and adversely
affected.
3
If we
do not reverse our current trend of operating losses, we could
reduce our operating cash resources to the point where we will
not have sufficient liquidity to meet the ongoing cash
commitments and obligations to continue operating our
business.
We have limited unrestricted cash to fund our business,
$20.9 million as of May 1, 2010 (with an additional
$4.9 million of cash that is restricted and used to secure
letters of credit and similar arrangements), and have a history
of operating losses. We expect to use our cash to fund any
further operating losses, to finance our working capital
requirements and to make necessary capital expenditures in order
to operate our business. We also have significant future
commitments for our cash, primarily payments for our cable and
satellite program distribution obligations and redemption of our
Series B Preferred Stock. If our vendors or service
providers were to demand a shift from our current payment terms
to upfront prepayments or require cash reserves, this will have
a significant adverse impact on our available cash balance and
our ability to meet the ongoing commitments and obligations of
our business. If we are not able to attain profitability and
generate positive cash flows from operations or obtain cash from
other sources in addition to our $20 million secured bank
line of credit facility, we may not have sufficient liquidity to
continue operating. In addition, our credit agreement with our
secured lender requires compliance with various operating and
financial covenants. If we are unable to comply with those
covenants, our access to our secured bank line of credit may be
limited. For example, in order to borrow more than
$8 million under the credit agreement, we must satisfy
certain EBITDA thresholds or fixed charge ratios on certain
dates. While we are currently in compliance, because borrowings
were not in excess of $8 million, we currently believe that
borrowings in excess of $8 million would result in a
covenant violation at the quarter ended January 29, 2011.
This effectively will limit our borrowing capacity to
$8 million at January 29, 2011 unless these covenants
are amended prior to or at that time. In addition, the lender
has the right to terminate the revolving credit facility in the
event a material adverse effect (as defined in the agreement) is
met. Based on our current projections for fiscal 2010, we
believe that our existing cash balances, our credit line, our
ability to raise additional financing and the ability to
structure transactions in a manner reflective of capital
availability will be sufficient to maintain liquidity to fund
our normal business operations through fiscal 2010. However,
there can be no assurance that we will meet our projections for
2010 or that, if required, the Company would be able to raise
additional capital or reduce spending sufficiently to maintain
the necessary liquidity. Our shareholders agreement with GE
Capital Equity Investments, Inc. (GE Equity) and
NBCU require the consent of GE Equity in order for the Company
to issue new equity securities and to incur indebtedness above
certain thresholds, and there can be no assurance that we would
receive such consent if we made a request. If we did issue
additional equity, it would be dilutive to our existing
shareholders. If we sought to and were successful in incurring
indebtedness from sources other than our existing line of credit
arrangement to raise additional capital, there would be
additional interest expense associated with such funding, which
expense could be substantial.
The
failure to secure suitable placement for our television
programming and the expansion of digital cable systems could
adversely affect our ability to attract and retain television
viewers and could result in a decrease in revenue.
We are dependent upon our ability to compete for television
viewers. Effectively competing for television viewers is
dependent on our ability to secure placement of our television
programming within a suitable programming tier at a desirable
channel position. The majority of cable operators now offer
cable programming on a digital basis. While the growth of
digital cable systems may over time make it possible for our
programming to be more widely distributed, there are several
risks as well. The primary risks associated with the growth of
digital cable are demonstrated by the following:
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we could experience a reduction in the growth rate or an
absolute decline in sales per digital tier subscriber because of
the increased number of channels offered on digital systems
competing for the same number of viewers and the higher channel
location we typically are assigned in digital tiers;
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more competitors may enter the marketplace as additional channel
capacity is added; and
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more programming options being available to the viewing public
in the form of new television networks and time-shifted viewing
(e.g., personal video recorders,
video-on-demand,
interactive television and streaming video over broadband
internet connections).
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Failure to adapt to these risks will result in lower revenue and
may harm our results of operations. In addition, failure to
anticipate and adapt to technological changes in a
cost-effective manner that meets customer demands and evolving
industry standards will also reduce our revenue, harm our
results of operations and financial condition and have a
negative impact on our business.
We may
not be able to continue to expand or could lose some of our
programming distribution if we cannot negotiate profitable
distribution agreements or because of the ongoing shift from
analog to digital programming.
We are seeking to continue to materially reduce the costs
associated with our cable and satellite distribution agreements.
However, while we were able to achieve significant reductions in
such costs during fiscal 2009 without a loss in households,
there can be no assurance that we will achieve comparable cost
reductions in the future or that we will be able to maintain or
grow our households on financial terms that are profitable to
us. It is possible that we would reduce our programming
distribution in certain systems if we are unable to obtain
appropriate financial terms.
Failure to successfully renew agreements covering a material
portion of our existing cable and satellite households on
acceptable financial and other terms could adversely affect our
future growth, sales revenues and earnings unless we are able to
arrange for alternative means of broadly distributing our
television programming.
NBCU
and GE Equity have the ability to exert significant influence
over us and have the right to disapprove of certain actions by
us.
As a result of their equity ownership in our company, NBCU and
GE Equity together are currently our largest shareholder and
have the ability to exert significant influence over actions
requiring shareholder approval, including the election of
directors, adoption of equity-based compensation plans and
approval of mergers or other significant corporate events.
Through the provisions in the shareholder agreement and
certificate of designation for the preferred stock, NBCU and GE
Equity also have the right to block us from taking certain
actions. On June 9, 2010 we registered for sale all of the
outstanding shares of common stock owned by NBCU, however, on
June 24, 2010, NBCU decided not to sell the shares
registered in that registration statement due to prevailing
prices. This registration statement has not been withdrawn and
NBCU may decide to sell its shares pursuant to that registration
statement in the future. The interests of NBCU and GE Equity may
differ from the interests of our other shareholders, and they
may block us from taking actions that might otherwise be in the
interests of our other shareholders.
Our
directors, executive officers and principal shareholders will
continue to have substantial control over us and could delay or
prevent a change in corporate control.
Our directors, executive officers and holders of more than 5% of
our common stock, together with their affiliates, beneficially
own, in the aggregate, over 40% of our outstanding common stock.
As a result, these shareholders, acting together, would have the
ability to control the outcome of matters submitted to our
shareholders for approval, including the election of directors
and any merger, consolidation or sale of all or substantially
all of our assets. In addition, these shareholders, acting
together, would have the ability to control the management and
affairs of our company. Accordingly, this concentration of
ownership might harm the market price of our common stock by:
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delaying, deferring or preventing a change in corporate control;
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impeding a merger, consolidation, takeover or other business
combination involving us; or
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discouraging a potential acquirer from making a tender offer or
otherwise attempting to obtain control of us.
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5
Expiration
of the NBCU branding license would require us to pursue a new
branding strategy that may not be successful.
We have branded our television home shopping network and
internet site as ShopNBC and ShopNBC.com, respectively, under an
exclusive, worldwide licensing agreement with NBCU for the use
of NBC trademarks, service marks and domain names that continues
until May 2011. We do not have the right to automatic renewal at
the end of the license term, and consequently may choose or be
required to pursue a new branding strategy in the next
10 months which may not be as successful as the NBC brand
with current or potential customers. NBCU also has the right to
terminate the license prior to the end of the license term in
certain circumstances, including without limitation in the event
of a breach by us of the terms of the license agreement or upon
certain changes of control.
Competition
in the general merchandise retailing industry and particularly
the live home shopping and
e-commerce
sectors could limit our growth and reduce our
profitability.
As a general merchandise retailer, we compete for consumer
expenditures with other forms of retail businesses, including
other television home shopping and
e-commerce
retailers, infomercial companies, other types of consumer retail
businesses, including traditional brick and mortar
department stores, discount stores, warehouse stores, specialty
stores, catalog and mail order retailers and other direct
sellers. In the competitive television home shopping sector, we
compete with QVC Network, Inc., HSN, Inc. and Jewelry
Television, as well as a number of smaller niche
home shopping competitors. QVC Network, Inc and HSN, Inc. both
are substantially larger than we are in terms of annual revenues
and customers, their programming is more broadly available to
U.S. households than is our programming and in many markets
they have more favorable channel locations than we have. The
internet retailing industry is also highly competitive, with
numerous
e-commerce
websites competing in every product category we carry, in
addition to the websites operated by the other television home
shopping companies. This competition in the internet retailing
sector makes it more challenging and expensive for us to attract
new customers, retain existing customers and maintain desired
gross margin levels.
We may
not be able to maintain our satellite services in certain
situations, beyond our control, which may cause our programming
to go off the air for a period of time and cause us to incur
substantial additional costs.
Our programming is presently distributed to cable systems, full
power television stations and satellite dish operators via a
leased communications satellite transponder. Satellite service
may be interrupted due to a variety of circumstances beyond our
control, such as satellite transponder failure, satellite fuel
depletion, governmental action, preemption by the satellite
service provider, solar activity and service failure. The
agreement provides us with preemptable
back-up
service if satellite transmission is interrupted. Our satellite
service provider recently advised us and its other customers
that our current satellite had experienced an anomaly and that
its customers would be transitioned to a backup satellite for
continued service. However, there can be no assurance that there
will be no interruption in service in connection with this
transition or that, if the transition is successful, we will be
able to arrange an additional preemptable
back-up
service. In the event of a serious transmission interruption
where
back-up
service is not available, we may need to enter into new
arrangements, resulting in substantial additional costs and the
inability to broadcast our signal for some period of time.
The
FCC could limit must-carry rights, which would impact
distribution of our television home shopping programming and
might impair the value of our Boston FCC license.
The Federal Communications Commission, known as the FCC, issued
a public notice on May 4, 2007 stating that it was updating
the public record for a petition for reconsideration filed in
1993 and still pending before the FCC. The petition challenges
the FCCs prior determination to grant the same mandatory
cable carriage (or must-carry) rights for TV
broadcast stations carrying home shopping programming that the
FCCs rules accord to other TV stations. The time period
for comments and reply comments regarding the reconsideration
closed in August 2007, and we submitted comments supporting the
continuation of must-carry
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rights for home shopping stations. If the FCC decides to change
its prior determination and withdraw must-carry rights for home
shopping stations as a result of this updating of the public
record, we could lose our current carriage distribution on cable
systems in three markets: Boston, Pittsburgh and Seattle, which
currently constitute approximately 3.2 million full-time
equivalent households, or FTEs, receiving our programming.
We own the Boston television station and have carriage contracts
with the Pittsburg and Seattle television stations. In addition,
if must-carry rights for home shopping stations are withdrawn,
it may not be possible to replace these FTEs on
commercially reasonable terms and the carrying value of our
Boston FCC license ($23.1 million) may become further
impaired.
We may
be subject to product liability claims for on-air
misrepresentations or if people or properties are harmed by
products sold by us.
Products sold by us and representations related to these
products may expose us to potential liability from claims by
purchasers of such products, subject to our rights, in certain
instances, to seek indemnification against this liability from
the suppliers or manufacturers of the products. In addition to
potential claims of personal injury, wrongful death or damage to
personal property, the live unscripted nature of our television
broadcasting may subject us to claims of misrepresentation by
our customers, the Federal Trade Commission and state attorneys
general. We maintain, and have generally required the
manufacturers and vendors of these products to carry, product
liability and errors and omissions insurance. There can be no
assurance that we will maintain this coverage or obtain
additional coverage on acceptable terms, or that this insurance
will provide adequate coverage against all potential claims or
even be available with respect to any particular claim. There
also can be no assurance that our suppliers will continue to
maintain this insurance or that this coverage will be adequate
or available with respect to any particular claims. Product
liability claims could result in a material adverse impact on
our financial performance.
Our
ValuePay installment payment program could lead to significant
unplanned credit losses if our credit loss rate was to
materially deteriorate.
We utilize an installment payment program called ValuePay that
entitles customers to purchase merchandise and generally pay for
the merchandise in two or more equal monthly installments. As of
January 30, 2010 we had approximately $62.5 million
due from customers under the ValuePay installment program. We
maintain allowances for doubtful accounts for estimated losses
resulting from the inability of our customers to make required
payments. There is no guarantee that we will continue to
experience the same credit loss rate that we have in the past or
that losses will not be within current provisions. A significant
increase in our credit losses above what we have been
experiencing could result in a material adverse impact on our
financial performance.
Failure
to comply with existing laws, rules and regulations, or to
obtain and maintain required licenses and rights, could subject
us to additional liabilities.
We market and provide a broad range of merchandise through
multiple channels. As a result, we are subject to a wide variety
of statutes, rules, regulations, policies and procedures in
various jurisdictions which are subject to change at any time,
including laws regarding consumer protection, privacy, the
regulation of retailers generally, the importation, sale and
promotion of merchandise and the operation of warehouse
facilities, as well as laws and regulations applicable to the
internet and businesses engaged in
e-commerce.
Our failure to comply with these laws and regulations could
result in fines and proceedings against us by governmental
agencies and consumers, which could adversely affect our
business, financial condition and results of operations.
Moreover, unfavorable changes in the laws, rules and regulations
applicable to us could decrease demand for merchandise offered
by us, increase costs and subject us to additional liabilities.
Finally, certain of these regulations impact our marketing
efforts.
7
We may
be subject to claims by consumers and state and federal
authorities for security breaches involving customer
information, which could materially harm our reputation and
business.
In order to operate our business we take orders for our products
from customers. This requires us to obtain personal information
from these customers including credit card numbers. Although we
take reasonable and appropriate security measures to protect
customer information, there is still the risk that external or
internal security breaches could occur. In addition, new tools
and discoveries by third parties in computer or communications
technology or software or other developments may facilitate or
result in a future compromise or breach of our computer systems.
Such compromises or breaches could result in significant
liability or costs to us from consumer lawsuits for monetary
redress, state and federal authorities for fines and penalties,
and could also lead to interruptions in our operations and
negative publicity causing damage to our reputation and limiting
customers willingness to purchase products from us.
Recently, a major discount retailer and a credit reporting
agency experienced theft of credit card numbers of millions of
consumers resulting in multi-million dollar fines and consumer
settlement costs, FTC audit requirements, and significant
internal administrative costs.
The
unanticipated loss of several of our larger vendors could impact
our sales on a temporary basis.
It is possible that one or more of our larger vendors could
experience financial difficulties, including bankruptcy, or
otherwise could determine to cease doing business with us. While
we have periodically experienced the loss of a major vendor, if
a number of our current larger vendors ceased doing business
with us, this could materially and adversely impact our sales
and profitability on a short term basis.
Many
of our key functions are concentrated in a single location, and
a natural disaster could seriously impact our ability to
operate.
Our television broadcast studios, internet operations, IT
systems, merchandising team, inventory control systems,
executive offices and finance/accounting functions, among
others, are centralized in our adjacent offices at 6740 and
6690, Shady Oak Road in Eden Prairie, Minnesota. In addition,
our only fulfillment and distribution facility is centralized at
a location in Bowling Green, Kentucky. A natural disaster, such
as a tornado, could seriously disrupt our ability to continue or
resume normal operations for some period of time. While we have
certain business continuity plans in place, no assurances can be
given as to how quickly we would be able to resume operations
and how long it may take to return to normal operations. We
could incur substantial financial losses above and beyond what
may be covered by applicable insurance policies, and may
experience a loss of customers, vendors and employees during the
recovery period.
We
could be subject to additional sales tax collection obligations
and claims for uncollected amounts.
A number of states have adopted new legislation that would
require the collection of state
and/or local
taxes on transactions originating on the internet or by other
out-of-state
retailers, such as home shopping, infomercial and catalog
companies. In some cases these new laws seek to establish
grounds for asserting nexus by the
out-of-state
retailer in the applicable state, and are being challenged by
internet and other retailers under federal constitutional
grounds. However, if this trend continues and the laws are
upheld after legal challenges, we could be required to collect
additional state and local taxes which could negatively impact
sales as well as creating an additional administrative burden
which could be costly to the business. In addition, the state of
North Carolina is seeking to assert claims for uncollected state
sales taxes going back a number of years against
out-of-state
retailers, including our company. The retailers subject to these
claims by North Carolina include major national internet-based
retailers and catalog companies. We intend to vigorously contest
these efforts by North Carolina.
We
place a significant reliance on technology and information
management tools to run our existing businesses, the failure of
which could adversely impact our operations.
Our businesses are dependent, in part, on the use of
sophisticated technology, some of which is provided to us by
third parties. These technologies include, but are not
necessarily limited to, satellite based
8
transmission of our programming, use of the internet in relation
to our on-line business, new digital technology used to manage
and supplement our television broadcast operations and a network
of complex computer hardware and software to manage an ever
increasing need for information and information management
tools. The failure of any of these technologies, or our
inability to have this technology supported, updated, expanded
or integrated into other technologies, could adversely impact
our operations. Although we have, when possible, developed
alternative sources of technology and built redundancy into our
computer networks and tools, there can be no assurance that
these efforts to date would protect us against all potential
issues or disaster occurrences related to the loss of any such
technologies or their use.
Risks
Relating to Our Common Stock and This Offering
The
price of our common stock is volatile and may continue to be
volatile.
The trading price of our common stock fluctuates substantially
and may continue to fluctuate substantially. These fluctuations
could cause you to lose part or all of your investment in our
shares of common stock. The factors that could cause
fluctuations include, but are not limited to, the following:
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price and volume fluctuations in the overall stock market from
time to time;
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significant volatility in the market price and trading volume of
television home shopping, internet and other retail companies;
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actual or anticipated changes in our sales and earnings,
fluctuations in our operating results or the failure to meet the
expectations of financial market analysts and investors;
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investor perceptions of the television home shopping industry,
the retail industry in general and our company in particular;
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the operating and stock performance of comparable companies;
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strategic actions by us or our competitors, such as acquisitions
or restructurings;
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loss of external funding sources or other adverse changes to our
liquidity;
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general economic conditions and trends;
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major catastrophic events;
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competitive factors;
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relatively few shares available for public trading;
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changes in accounting standards, policies, guidance,
interpretation or principles;
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regulatory changes;
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sales of debt or equity securities by our company;
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sales of large blocks of our stock or sales by insiders;
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departures of key personnel; or
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the matters discussed elsewhere under Risk Factors.
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Future
sales of our capital stock by our company or our existing
shareholders could cause our stock price to
decline.
Except as described under Description of Capital
Stock, we are not restricted from issuing additional
securities, including any securities that are convertible into
or exchangeable for, or that represent the right to receive,
common stock. The issuance of any additional shares of common or
preferred stock or convertible securities could be substantially
dilutive to shareholders of our common stock. Moreover, to the
extent that we issue restricted stock units, stock appreciation
rights, options, or warrants to purchase our common stock in the
future and those stock appreciation rights, options, or warrants
are exercised or as the restricted stock units
9
vest, our shareholders may experience further dilution. Holders
of our shares of common stock have no preemptive rights that
entitle holders to purchase their pro rata share of any offering
of shares of any class or series and, therefore, such sales or
offerings could result in increased dilution to our
shareholders. If we or our shareholders sell substantial amounts
of our capital stock in the public market or announce the
intention to do so, the market price of our common stock could
decrease significantly. The perception in the public market that
we or our shareholders might sell shares of our common stock
could also depress the market price of our common stock. On
June 9, 2010 we registered 6,452,194 shares of our
common stock for resale by NBCU. The shares were registered to
permit public secondary trading of the shares. On June 24,
2010 NBCU decided not to sell the shares registered in that
registration statement due to prevailing prices. This
registration statement has not been withdrawn and NBCU may offer
the shares for resale in the future. NBCU acquired the shares
pursuant to our strategic alliance with GE Equity and NBCU. As
part of this strategic alliance, we entered into an amended and
restated registration rights agreement on February 25, 2009
with GE Equity and NBCU that provides GE Equity, NBCU and their
affiliates and any transferees and assigns, an aggregate of four
demand registrations and unlimited piggy-back registration
rights. We prepared the above-mentioned prospectus pursuant to a
notice submitted to us by NBCU under the demand registration
provisions in the amended and restated registration rights
agreement. A decline in the price of shares of our common stock
might impede our ability to raise capital through the issuance
of additional shares of our common stock or other equity
securities.
We do
not intend to declare dividends on our stock after this
offering.
Pursuant to the shareholders agreement we have with GE Equity
and NBCU, we are prohibited from paying dividends on our common
stock without GE Equitys prior written consent. We
currently intend to retain all future earnings for the operation
and expansion of our business and, therefore, do not anticipate
declaring or paying cash dividends on our common stock in the
foreseeable future. Any payment of cash dividends on our common
stock will be subject to restrictions on payment of dividends
contained in the terms of our outstanding Series B
Preferred Stock held by GE Equity, and is otherwise at the
discretion of our board of directors and will depend upon our
results of operations, earnings, capital requirements, financial
condition, future prospects, contractual restrictions and other
factors deemed relevant by our board of directors. Therefore,
you should not expect to receive dividend income from shares of
our common stock.
If
securities or industry analysts do not publish research or
reports about our business, or if they adversely change their
recommendations regarding our common stock, the market price for
our common stock and trading volume could decline.
The trading market for our common stock will be influenced by
research or reports that industry or securities analysts publish
about us or our business. If one or more analysts who cover us
downgrade our common stock, the market price for our common
stock would likely decline. If one or more of these analysts
cease coverage of us or fail to regularly publish reports on us,
we could lose visibility in the financial markets, which, in
turn, could cause the market price or trading volume for our
common stock to decline.
Certain
provisions of Minnesota law may make a takeover of our company
more difficult, depriving shareholders of opportunities to sell
shares at above-market prices.
Certain provisions of Minnesota law may have the effect of
discouraging attempts to acquire us without the approval of our
board of directors. Section 302A.671 of the Minnesota
statutes, with certain exceptions, requires approval of any
acquisition of the beneficial ownership of 20% or more of our
voting stock then outstanding by a majority vote of our
shareholders prior to its consummation. In general, shares
acquired in the absence of such approval are denied voting
rights and are redeemable by us at their then-fair market value
within 30 days after the acquiring person failed to give a
timely information statement to us or the date the shareholders
voted not to grant voting rights to the acquiring persons
shares. Section 302A.673 of the Minnesota statutes
generally prohibits any business combination by us, or any of
our subsidiaries, with an interested shareholder, which includes
any shareholder that purchases 10% or more of our voting shares
within four years following such interested shareholders
share acquisition date, unless the business combination is
10
approved by a committee of all of the disinterested members of
our board of directors before the interested shareholders
share acquisition date. Consequently, our common shareholders
may lose opportunities to sell their stock for a price in excess
of the prevailing market price due to these protective measures.
Common
stock is equity and is subordinate to our existing and future
indebtedness and preferred stock.
Shares of common stock are equity interests in us and do not
constitute indebtedness. As such, shares of common stock will
rank junior to all indebtedness and other non-equity claims on
us with respect to assets available to satisfy claims against
us, including in our liquidation. Additionally, holders of our
common stock are subject to the prior dividend and liquidation
rights of any holders of our Series B Preferred Stock.
Dividends on common stock are payable only if declared by our
board of directors and are subject to the shareholders agreement
we have with GE Equity and NBCU and the restrictions on payments
of dividends out of lawfully available funds.
11
USE OF
PROCEEDS
Unless otherwise specified in a prospectus supplement
accompanying this prospectus, the net proceeds from the sale of
the securities to which this prospectus relates will be used for
general corporate purposes. General corporate purposes may
include repayment of debt, repurchase or redemption of preferred
stock, acquisitions, investments, additions to working capital,
capital expenditures and advances to or investments in our
subsidiaries. Net proceeds may be temporarily invested prior to
use. We will have significant discretion in the use of any net
proceeds.
DIVIDEND
POLICY
We have never declared or paid any cash dividends on our shares
of common stock. We currently intend to retain all future
earnings for the operation and expansion of our business and do
not anticipate paying cash dividends on our shares of common
stock in the foreseeable future. Pursuant to the shareholders
agreement we have with GE Equity and NBCU, we are prohibited
from paying dividends on our common stock without GE
Equitys prior written consent. Any payment of cash
dividends on our common stock will be subject to restrictions on
payment of dividends contained in the terms of our outstanding
Series B Preferred Stock held by GE Equity, and is
otherwise at the discretion of our board of directors and will
depend upon our results of operations, earnings, capital
requirements, financial condition, future prospects, contractual
restrictions and other factors deemed relevant by our board of
directors.
MARKET
PRICE OF COMMON STOCK
Shares of our common stock are traded on the Nasdaq Global
Market under the symbol VVTV. The following table
shows the high and low sales prices of our common stock on the
Nasdaq Global Market for the periods indicated:
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Common Stock Price
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High
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Low
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Fiscal 2010:
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First Quarter
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$
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4.77
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$
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2.96
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Second Quarter (through July 19, 2010)
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$
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3.09
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$
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1.45
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Fiscal 2009:
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First Quarter
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$
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0.83
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$
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0.18
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Second Quarter
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$
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3.22
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$
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0.50
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Third Quarter
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$
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4.15
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$
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2.61
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Fourth Quarter
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$
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5.27
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$
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3.00
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Fiscal 2008:
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First Quarter
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$
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7.20
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$
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4.38
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Second Quarter
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$
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5.55
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$
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2.90
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Third Quarter
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$
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3.19
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$
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0.51
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Fourth Quarter
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$
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0.91
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$
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0.23
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On July 19, 2010, the last reported sale price for shares
of our common stock on the Nasdaq Global Market was $1.64 per
share.
12
DILUTION
We will set forth in a prospectus supplement the following
information regarding any material dilution of the equity
interests of investors purchasing securities in an offering
under this prospectus:
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the net tangible book value per share of our equity securities
before and after the offering;
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the amount of the increase in such net tangible book value per
share attributable to the cash payments made by purchasers in
the offering; and
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the amount of the immediate dilution from the public offering
price which will be absorbed by such purchasers.
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LIQUIDITY
AND CAPITAL RESOURCES UPDATE
Our principal source of liquidity is our available cash and cash
equivalents of $20.9 million as of May 1, 2010 and
$20 million of additional borrowing capacity relating to
our revolving asset-backed bank line of credit with PNC Bank,
National Association, as amended on June 8, 2010. If we are
not able to attain profitability and generate positive cash
flows from operations or obtain cash from other sources in
addition to our $20 million secured bank line of credit
facility, we may not have sufficient liquidity to continue
operating. In addition, our credit agreement with our secured
lender requires compliance with various operating and financial
covenants. If we are unable to comply with those covenants, our
access to our secured bank line of credit may be limited. For
example, in order to borrow more than $8 million under the
credit agreement, we must satisfy certain EBITDA thresholds or
fixed charge ratios on certain dates. While we are currently in
compliance, because borrowings were not in excess of
$8 million, we currently believe that borrowings in excess
of $8 million would result in a covenant violation at the
quarter ended January 29, 2011. This effectively will limit
our borrowing capacity to $8 million at January 29,
2011 unless these covenants are amended prior to or at that
time. In addition, the lender has the right to terminate the
revolving credit facility in the event a material adverse effect
(as defined in the agreement) is met. We also have the ability
to increase our short-term liquidity and cash resources by
reducing the percentage of our sales offered to customers using
our ValuePay installment program and by decreasing the length of
time we extend credit to our customers using the ValuePay
program. Based on our current projections for fiscal 2010, we
believe that our existing cash balances, our credit line, our
ability to raise additional financing and the ability to
structure transactions in a manner reflective of capital
availability will be sufficient to maintain liquidity to fund
our normal business operations through fiscal 2010. However,
there can be no assurance that we will meet our projections for
2010 or that, if required, we would be able to raise additional
capital or reduce spending sufficiently to maintain the
necessary liquidity.
DESCRIPTION
OF CAPITAL STOCK
The terms and provisions of our capital stock that may be
offered by this prospectus will be described in the applicable
prospectus supplement. We have filed our articles of
incorporation (including the certificate of designation for our
Series B Preferred Stock) and bylaws as exhibits to the
registration statement of which this prospectus is a part. You
should read our articles of incorporation (including the
certificate of designation for our Series B Preferred
Stock) and bylaws for additional information before you buy any
capital stock.
Our articles of incorporation provide that we may issue up to
100,000,000 shares of capital stock, par value $0.01 per
share in the case of common stock, and having a par value as
determined by the board of directors in the case of preferred
stock. A description of the material terms and provisions of our
capital stock is set forth below. The description is intended as
a summary and is qualified in its entirety by reference to our
articles of incorporation (including the certificate of
designation for our Series B Preferred Stock) and bylaws
incorporated herein by reference.
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The following is a summary of the material features of our
capital stock:
Provisions
Regarding Aliens
Except as otherwise provided by law, not more than 20% of the
aggregate voting power of all shares outstanding entitled to
vote on any matter shall be at any time voted by or for the
account of aliens as defined in the Communications Act of 1934,
or their representatives, or by or for the account of a foreign
government or representative thereof, or by or for the account
of any corporation organized under the laws of foreign country.
Except as otherwise provided by law, aliens, foreign
governments, or corporations organized under the laws of a
foreign country, or the representatives of such aliens, foreign
governments, or corporations organized under the laws of a
foreign country, shall not own, directly or through a third
party who holds the stock for the account of such alien, foreign
government, or corporation organized under the laws of a foreign
country: (1) more than 20% of the number of shares of our
outstanding stock, or (2) shares representing more than 20%
of the aggregate voting power of all of our outstanding shares
of voting stock.
Shares of stock shall not be transferable on our books to
aliens, foreign governments, or corporations organized under the
laws of foreign countries, or to the representatives of, or
persons holding for the account of, such aliens, foreign
governments, or corporations organized under the laws of foreign
countries, unless, after giving effect to such transfer, the
aggregate number of shares of stock owned by or for the account
of aliens, foreign governments, and corporations organized under
the laws of foreign countries, and any representatives thereof,
will not exceed 20% of the number of shares of outstanding
stock, and the aggregate voting power of such shares will not
exceed twenty percent 20% of the aggregate voting power of all
outstanding shares of our voting stock.
If, notwithstanding these restrictions on transfer, the
aggregate number of shares of stock owned by or for the account
of aliens, foreign governments, and corporations organized under
the laws of foreign countries, exceed 20% of our shares of
outstanding stock, or if the aggregate voting power of such
shares exceed 20% of the aggregate voting power of all
outstanding shares of our voting stock, we have the right to
redeem shares of all classes of capital stock, at their then
fair market value, on a pro rata basis, owned by or for the
account of all aliens, foreign governments, and corporations
organized under the laws of foreign countries, in order to
reduce the number of shares
and/or
percentage of voting power held by or for the account of aliens,
foreign governments, and corporations organized under the laws
of foreign countries, and their representatives to the maximum
number or percentage allowed under our articles of incorporation
or as otherwise required by applicable federal law.
The board of directors shall make such rules and regulations as
it deems necessary or appropriate to enforce the provisions of
this section.
Strategic
Alliance with GE Equity and NBC Universal
In March 1999, we entered into a strategic alliance with GE
Equity and NBCU pursuant to which we issued Series A
Redeemable Convertible Preferred Stock and common stock
warrants, and entered into a shareholder agreement, a
registration rights agreement, a distribution and marketing
agreement and, the following year, a trademark license
agreement. On February 25, 2009, we entered into an
exchange agreement with the same parties, pursuant to which GE
Equity exchanged all outstanding shares of our Series A
Redeemable Convertible Preferred Stock for
(i) 4,929,266 shares of our Series B Preferred
Stock, (ii) warrants to purchase up to
6,000,000 shares of our common stock at an exercise price
of $0.75 per share and (iii) a cash payment in the amount
of $3.4 million. Immediately after the exchange, the
aggregate equity ownership of GE Equity and NBCU in our company
was as follows: (i) 6,452,194 shares of common stock,
(ii) warrants to purchase up to 6,029,487 shares of
common stock and (iii) 4,929,266 shares of
Series B Preferred Stock. In connection with the exchange,
the parties also amended and restated both the shareholder
agreement and the registration rights agreement. The outstanding
agreements with GE Equity and NBCU are described in more detail
below.
14
Common
Stock
Holders of our common stock are entitled to one vote per share
in the election of directors and on all other matters on which
shareholders are entitled or permitted to vote. Holders of
common stock are not entitled to cumulative voting rights.
Subject to the terms of any outstanding series of preferred
stock, the holders of common stock are entitled to dividends in
amounts and at times as may be declared by the board of
directors out of funds legally available therefor. Upon our
liquidation or dissolution, holders of common stock are entitled
to share ratably in all net assets available for distribution to
shareholders after payment of any liquidation preferences to
holders of preferred stock. Holders of common stock have no
redemption, conversion or preemptive rights.
Preferred
Stock
Series B
Preferred Stock
On February 25, 2009, we issued 4,929,266 shares of
Series B Preferred Stock to GE Equity. The shares of
Series B Preferred Stock are redeemable at any time by us
for the initial redemption amount of $40.9 million, plus
accrued dividends. The Series B Preferred Stock accrues
cumulative dividends at a base annual rate of 12%, subject to
adjustment. All payments on the Series B Preferred Stock
will be applied first to any accrued but unpaid dividends, and
then to redeem shares.
30% of the Series B Preferred Stock (including accrued
but unpaid dividends) is required to be redeemed on
February 25, 2013, and the remainder on February 25,
2014. In addition, the Series B Preferred Stock includes a
cash sweep mechanism that may require accelerated redemptions if
we generate excess cash above agreed upon thresholds.
Specifically, our excess cash balance at the end of each fiscal
year, and at the end of any fiscal quarter during which we sell
our auction rate securities or dispose of assets or incur
indebtedness above agreed upon thresholds, must be used to
redeem the Series B Preferred Stock and pay accrued and
unpaid dividends thereon. Excess cash balance is defined as our
companys cash and cash equivalents and marketable
securities, adjusted to (i) exclude auction rate
securities, (ii) exclude cash pledged to vendors to secure
purchase price of inventory, (iii) account for variations
that are due to our management of payables, and
(iv) provide us a cash cushion of at least
$20 million. Any redemptions as a result of this cash sweep
mechanism will reduce the amounts required to be redeemed on
February 25, 2013 and February 25, 2014. The
Series B Preferred Stock (including accrued but unpaid
dividends) is also required to be redeemed, at the option of the
holders, upon a change in control.
The Series B Preferred Stock is not convertible into common
stock or any other security, but initially will vote with the
common stock on a
one-for-one
basis on general corporate matters other than the election of
directors. In addition, the holders of the Series B
Preferred Stock have certain class voting rights, including the
right to elect the GE Equity director-designees described below.
Undesignated
Preferred Stock
Our articles of incorporation permits us to issue shares of
preferred stock, from time to time, in one or more series and
with such designation and preferences for each series as are
stated in the resolutions providing for the designation and
issue of each such series adopted by our board of directors. Our
articles of incorporation authorizes our board of directors to
determine the number of shares, voting, dividend, redemption and
liquidation preferences and limitations pertaining to such
series. The board of directors, without shareholder approval,
may issue preferred stock with voting rights and other rights
that could adversely affect the voting power of the holders of
our common stock and outstanding preferred stock could have
certain anti-takeover effects. We have no present plans to issue
any additional shares of preferred stock. The ability of the
board of directors to issue preferred stock without shareholder
approval could have the effect of delaying, deferring or
preventing a change in control of our company or the removal of
existing management.
15
Amended
and Restated Shareholder Agreement
On February 25, 2009, we entered into an amended and
restated shareholder agreement with GE Equity and NBCU, which
provides for certain corporate governance and standstill
matters. The amended and restated shareholder agreement provides
that GE Equity is entitled to designate nominees for three out
of nine members of our board of directors so long as the
aggregate beneficial ownership of GE Equity and NBCU (and their
affiliates) is at least equal to 50% of their beneficial
ownership as of February 25, 2009 (i.e. beneficial
ownership of approximately 8.75 million common shares), and
two out of nine members so long as their aggregate beneficial
ownership is at least 10% of the adjusted outstanding
shares of common stock, as defined in the amended and
restated shareholder agreement. In addition, the amended and
restated shareholder agreement provides that GE Equity may
designate any of its director-designees to be an observer of the
Audit, Human Resources and Compensation, and Corporate
Governance and Nominating Committees.
The amended and restated shareholder agreement requires the
consent of GE Equity prior to our entering into any material
agreements with any of CBS, Fox, Disney, Time Warner or Viacom,
provided that this restriction will no longer apply when either
(i) our trademark license agreement with NBCU (described
below) has terminated or (ii) GE Equity is no longer
entitled to designate at least two director nominees. In
addition, the amended and restated shareholder agreement
requires the consent of GE Equity prior to our exceeding certain
thresholds relating to the issuance of securities, the payment
of dividends, the repurchase of common stock, acquisitions
(including investments and joint ventures) or dispositions, and
the incurrence of debt; provided, that these restrictions will
no longer apply when both (i) GE Equity is no longer
entitled to designate three director nominees and (ii) GE
Equity and NBCU no longer hold any Series B Preferred
Stock. We are also prohibited from taking any action that would
cause any ownership interest by us in TV broadcast stations from
being attributable to GE Equity, NBCU or their affiliates.
The shareholder agreement provides that during the standstill
period (as defined in the shareholder agreement), subject to
certain limited exceptions, GE Equity and NBCU are prohibited
from: (i) any asset/business purchases from us in excess of
10% of the total fair market value of our assets;
(ii) increasing their beneficial ownership above 39.9% of
our shares; (iii) making or in any way participating in any
solicitation of proxies; (iv) depositing any securities of
our company in a voting trust; (v) forming, joining or in
any way becoming a member of a 13D Group with
respect to any voting securities of our company;
(vi) arranging any financing for, or providing any
financing commitment specifically for, the purchase of any
voting securities of our company; (vii) otherwise acting,
whether alone or in concert with others, to seek to propose to
us any tender or exchange offer, merger, business combination,
restructuring, liquidation, recapitalization or similar
transaction involving us, or nominating any person as a director
of our company who is not nominated by the then incumbent
directors, or proposing any matter to be voted upon by our
shareholders. If, during the standstill period, any inquiry has
been made regarding a takeover transaction or
change in control, each as defined in the
shareholder agreement, that has not been rejected by the board
of directors, or the board pursues such a transaction, or
engages in negotiations or provides information to a third party
and the board has not resolved to terminate such discussions,
then GE Equity or NBCU may propose to us a tender offer or
business combination proposal.
In addition, unless GE Equity and NBCU beneficially own less
than 5% or more than 90% of the adjusted outstanding shares of
common stock, GE Equity and NBCU shall not sell, transfer or
otherwise dispose of any securities of our company except for
transfers: (i) to certain affiliates who agree to be bound
by the provisions of the shareholder agreement, (ii) that
have been consented to by us, (iii) pursuant to a
third-party tender offer, (iv) pursuant to a merger,
consolidation or reorganization to which we are a party,
(v) in an underwritten public offering pursuant to an
effective registration statement, (vi) pursuant to
Rule 144 of the Securities Act of 1933, or (vii) in a
private sale or pursuant to Rule 144A of the Securities Act
of 1933; provided, that in the case of any transfer pursuant to
clause (v), (vi) or (vii), the transfer does not result in,
to the knowledge of the transferor after reasonable inquiry, any
other person acquiring, after giving effect to such transfer,
beneficial ownership, individually or in the aggregate with that
persons affiliates, of more than 10% (or 16.2%, adjusted
for repurchases of common stock by our company, in the case of a
transfer by NBCU) of the adjusted outstanding shares of the
common stock.
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The standstill period will terminate on the earliest to occur of
(i) the ten-year anniversary of the amended and restated
shareholder agreement, (ii) our entering into an agreement
that would result in a change in control (subject to
reinstatement), (iii) an actual change in
control (subject to reinstatement), (iv) a
third-party tender offer (subject to reinstatement), or
(v) six months after GE Equity and NBCU can no longer
designate any nominees to the board of directors. Following the
expiration of the standstill period pursuant to clause (i)
or (v) above (indefinitely in the case of clause (i)
and two years in the case of clause (v)), GE Equity and
NBCUs beneficial ownership position may not exceed 39.9%
of our diluted outstanding stock, except pursuant to issuance or
exercise of any warrants or pursuant to a 100% tender offer for
our company.
Registration
Rights Agreement
On February 25, 2009, we entered into an amended and
restated registration rights agreement providing GE Equity, NBCU
and their affiliates and any transferees and assigns, an
aggregate of four demand registrations and unlimited piggy-back
registration rights.
On May 14, 2010, NBCU delivered a demand registration
notice to us. On June 9, 2010, pursuant to the demand
notice, we registered 6,452,194 shares of our common stock
for resale by NBCU. The shares were registered to permit public
secondary trading of the shares. On June 24, 2010 NBCU
decided not to sell the shares registered in that registration
statement due to prevailing prices. This registration statement
has not been withdrawn and NBCU may offer the shares for resale
in the future.
NBCU
Trademark License Agreement
On November 16, 2000, we entered into a trademark license
agreement with NBCU, pursuant to which NBCU granted us an
exclusive, worldwide license for a term of ten years to use
certain NBC trademarks, service marks and domain names to
rebrand our business and corporate name and website. We
subsequently selected the names ShopNBC and ShopNBC.com.
Under the license agreement we have agreed, among other things,
to (i) certain restrictions on using trademarks, service
marks, domain names, logos or other source indicators owned or
controlled by NBCU, (ii) the loss of our rights under the
license with respect to specific territories outside of the
United States in the event we fail to achieve and maintain
certain performance targets in such territories, (iii) not
own, operate, acquire or expand our business to include certain
businesses without NBCUs prior consent, (iv) comply
with NBCUs privacy policies and standards and practices,
and (v) not own, operate, acquire or expand our business
such that one-third or more of our revenues or our aggregate
value is attributable to certain services (not including
retailing services similar to our existing
e-commerce
operations) provided over the internet. The license agreement
also grants to NBCU the right to terminate the license agreement
at any time upon certain changes of control of our company, in
certain situations upon the failure by NBCU to own a certain
minimum percentage of our outstanding capital stock on a fully
diluted basis, and certain other situations. On March 28,
2007, we and NBCU agreed to extend the term of the license by
six months, such that the license would continue through
May 15, 2011, and to provide that certain changes of
control involving a financial buyer would not provide the basis
for an early termination of the license by NBCU. We are in the
process of selecting a new name and logo for our television,
websites, mobile and other media channels, and will implement a
systematic rebranding strategy during the remainder of the
fiscal year.
Anti-Takeover
Provisions Contained in Our Articles of Incorporation and the
Minnesota Business Corporation Act
Certain provisions of our articles of incorporation and of
Minnesota law described below could have an anti-takeover
effect. These provisions are intended to provide management
flexibility, to enhance the likelihood of continuity and
stability in the composition of our board of directors and in
the policies formulated by our board of directors and to
discourage an unsolicited takeover of our company, if our board
of directors determines that such a takeover is not in our best
interests or the best interests of our shareholders. However,
these provisions could have the effect of discouraging certain
attempts to acquire us that could deprive our shareholders of
opportunities to sell their shares of our stock at higher values.
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Statutory
Provisions
Section 302A.671 of the Minnesota Business Corporation Act
applies, with certain exceptions, to any acquisitions of our
voting stock from a person other than us, and other than in
connection with certain mergers and exchanges to which we are a
party and certain tender offers or exchange offers approved in
advance by a disinterested board committee, resulting in the
beneficial ownership of 20% or more of the voting power of our
then outstanding stock. Section 302A.671 requires approval
of the granting of voting rights for the shares received
pursuant to any such acquisitions by a vote of our shareholders
holding a majority of the voting power of our outstanding shares
and a majority of the voting power of our outstanding shares
that are not held by the acquiring person, our officers or those
non-officer employees, if any, who are also our directors.
Similar voting requirements are imposed for acquisitions
resulting in beneficial ownership of
331/3%
or more or a majority of the voting power of our then
outstanding stock. In general, shares acquired without this
approval are denied voting rights in excess of the 20%,
331/3%
or 50% thresholds and, to that extent, can be called for
redemption at their then fair market value by us within
30 days after the acquiring person has failed to deliver a
timely information statement to us or the date our shareholders
voted not to grant voting rights to the acquiring persons
shares.
Section 302A.673 of the Minnesota Business Corporation Act
generally prohibits any business combination by us, or any
subsidiary of ours, with any shareholder that beneficially owns
10% or more of the voting power of our outstanding shares (an
interested shareholder) within four years
following the time the interested shareholder crosses the 10%
stock ownership threshold, unless the business combination is
approved by a committee of disinterested members of our board of
directors before the time the interested shareholder crosses the
10% stock ownership threshold.
Section 302A.675 of the Minnesota Business Corporation Act
generally prohibits an offeror from acquiring our shares within
two years following the offerors last purchase of our
shares pursuant to a takeover offer with respect to that class,
unless our shareholders are able to sell their shares to the
offeror upon substantially equivalent terms as those provided in
the earlier takeover offer. This statute will not apply if the
acquisition of shares is approved by a committee of
disinterested members of our board of directors before the
purchase of any shares by the offeror pursuant to the earlier
takeover offer.
Authorized
But Unissued Shares of Common Stock and Preferred
Stock
Our authorized but unissued shares of common stock and preferred
stock are available for our board of directors to issue without
shareholder approval. We may use these additional shares for a
variety of corporate purposes, including future public offerings
to raise additional capital, corporate acquisitions and employee
benefit plans. In addition, our articles of incorporation
permits us to issue shares of preferred stock, from time to
time, in one or more series and with such designation and
preferences for each series as are stated in the resolutions
providing for the designation and issue of each such series
adopted by our board of directors. Our articles of incorporation
authorizes our board of directors to determine the number of
shares, voting, dividend, redemption and liquidation preferences
and limitations pertaining to such series. The board of
directors, without shareholder approval, may issue common stock
or preferred stock with voting rights and other rights that
could adversely affect the voting power of the holders of our
common stock and outstanding preferred stock could have certain
anti-takeover effects. We have no present plans to issue any
additional shares of preferred stock. The ability of the board
of directors to issue common stock or preferred stock without
shareholder approval could have the effect of delaying,
deferring or preventing a change in control of our company or
the removal of existing management.
Transfer
Agent and Registrar
Wells Fargo Shareowner Services has been appointed as the
transfer agent and registrar for our common stock.
Listing
Our common stock is quoted on the Nasdaq Global Market under the
symbol VVTV.
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Limitation
of Liability and Indemnification Matters
We are subject to Minnesota Section 302A.521, which
provides that a corporation shall indemnify any person made or
threatened to be made a party to a proceeding by reason of the
former or present official capacity (as defined in
Section 302A.521 of the Minnesota Statutes) of that person
against judgments, penalties, fines, including, without
limitation, excise taxes assessed against such person with
respect to an employee benefit plan, settlements and reasonable
expenses, including attorneys fees and disbursements,
incurred by such person in connection with the proceeding, if,
with respect to the acts or omissions of that person complained
of in the proceeding, that person:
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has not been indemnified therefor by another organization or
employee benefit plan;
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acted in good faith;
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received no improper personal benefit and Section 302A.255
(with respect to director conflicts of interest), if applicable,
has been satisfied;
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in the case of a criminal proceeding, had no reasonable cause to
believe the conduct was unlawful; and
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in the case of acts or omissions occurring in such persons
performance in an official capacity, such person must have acted
in a manner such person reasonably believed was in the best
interests of the corporation or, in certain limited
circumstances, not opposed to the best interests of the
corporation.
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In addition, Section 302A.521, subd. 3 requires payment by
the registrant, upon written request, of reasonable expenses in
advance of final disposition in certain instances. A decision as
to required indemnification is made by a majority of the
disinterested board of directors present at a meeting at which a
disinterested quorum is present, or by a designated committee of
disinterested directors, by special legal counsel, by the
disinterested shareholders, or by a court.
Our bylaws provide that we will indemnify any of our officers,
directors, employees, and agents to the fullest extent permitted
by Minnesota law.
We have a director and officer liability insurance policy to
cover us, our directors and our officers against certain
liabilities.
DESCRIPTION
OF STOCK PURCHASE CONTRACTS
We may issue stock purchase contracts obligating holders to
purchase from us and obligating us to sell to the holders, a
specified number of shares of common stock or other securities
at a future date or dates. The price per share and number of
shares of the securities may be fixed at the time the stock
purchase contracts are issued or may be determined by reference
to a specific formula set forth in the stock purchase contracts.
The stock purchase contracts may require holders to secure their
obligations in a specified manner.
The applicable prospectus supplement and any documents
incorporated by reference will describe the terms of any stock
purchase contracts. The description in the prospectus supplement
will not necessarily be complete, and reference may be made to
the stock purchase contracts, and, if applicable, collateral
arrangements and depositary arrangements relating to the stock
purchase contracts. In the applicable prospectus supplement, we
will also discuss any material U.S. federal income tax
considerations applicable to the stock purchase contracts.
DESCRIPTION
OF SECURITIES WARRANTS
This section describes the general terms and provisions of the
securities warrants. The prospectus supplement will describe the
specific terms of the securities warrants offered through that
prospectus supplement and any general terms outlined in this
section that will not apply to those securities warrants.
We may issue warrants for the purchase of preferred stock or
common stock, which we refer to as the securities
warrants. Securities warrants may be issued alone or
together with preferred stock or common
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stock offered by any prospectus supplement and may be attached
to or separate from those securities. Each series of securities
warrants will be issued under a separate warrant agreement
between us and a bank or trust company, as warrant agent, which
will be described in the applicable prospectus supplement. The
securities warrant agent will act solely as our agent in
connection with the securities warrants and will not act as an
agent or trustee for any holders of securities warrants.
We have summarized the material terms and provisions of the
securities warrant agreements and securities warrants in this
section. You should read the applicable forms of securities
warrant agreement and securities warrant certificate for
additional information before you buy any securities warrants.
General
If securities warrants for the purchase of preferred stock or
common stock are offered, the applicable prospectus supplement
will describe the terms of those securities warrants, including
the following where applicable:
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the title of such warrants;
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the aggregate number of such warrants;
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the offering price;
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the total number of shares that can be purchased if a holder of
the securities warrants exercises them and, in the case of
securities warrants for preferred stock, the designation, total
number and terms of the series of preferred stock that can be
purchased upon exercise;
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the designation and terms of the series of preferred stock with
which the securities warrants are being offered and the number
of securities warrants being offered with each share of
preferred stock or share of common stock;
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the date on and after which the holder of the securities
warrants can transfer them separately from the related common
stock or preferred stock;
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the number of shares of preferred stock or common stock that can
be purchased if a holder exercises the securities warrant and
the price at which the preferred stock or common stock may be
purchased upon each exercise;
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the date on which the right to exercise the securities warrants
begins and the date on which the right expires;
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United States federal income tax consequences; and
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any other terms of the securities warrants.
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Securities warrants for the purchase of preferred stock or
common stock will be in registered form only.
A holder of securities warrant certificates may:
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exchange them for new certificates of different denominations;
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present them for registration of transfer; and
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exercise them at the corporate trust office of the securities
warrant agent or any other office indicated in the applicable
prospectus supplement.
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Until any securities warrants to purchase preferred stock or
common stock are exercised, holders of these securities warrants
will not have any rights of holders of the underlying common
stock or preferred stock, including any right to receive
dividends or to exercise any voting rights.
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Exercise
of Securities Warrants
Each holder of a securities warrant is entitled to purchase the
number of shares of preferred stock or shares of common stock,
as the case may be, at the exercise price described in the
applicable prospectus supplement. After the close of business on
the day when the right to exercise terminates (or a later date
if we extend the time for exercise), unexercised securities
warrants will become void.
A holder of securities warrants may exercise them by following
the general procedure outlined below:
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delivering to the securities warrant agent the payment required
by the applicable prospectus supplement to purchase the
underlying security;
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properly completing and signing the reverse side of the
securities warrant certificate representing the securities
warrants; and
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delivering the securities warrant certificate representing the
securities warrants to the securities warrant agent within five
business days of the securities warrant agent receiving payment
of the exercise price.
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If you comply with the procedures described above, your
securities warrants will be considered to have been exercised
when the securities warrant agent receives payment of the
exercise price. After you have completed those procedures, we
will, as soon as practicable, issue and deliver to you the
preferred stock or common stock that you purchased upon
exercise. If you exercise fewer than all of the securities
warrants represented by a securities warrant certificate, the
securities warrant agent will issue to you a new securities
warrant certificate for the unexercised amount of securities
warrants. Holders of securities warrants will be required to pay
any tax or governmental charge that may be imposed in connection
with transferring the underlying securities in connection with
the exercise of the securities warrants.
Amendments
and Supplements to Securities Warrant Agreements
We may amend or supplement a securities warrant agreement
without the consent of the holders of the applicable securities
warrants if the changes are not inconsistent with the provisions
of the securities warrants and do not materially adversely
affect the interests of the holders of the securities warrants.
We, along with the securities warrant agent, may also modify or
amend a securities warrant agreement and the terms of the
securities warrants if holders of a majority of the
then-outstanding unexercised securities warrants affected by the
modification or amendment consent. However, no modification or
amendment that accelerates the expiration date, increases the
exercise price, reduces the majority consent requirement for any
such modification or amendment, or otherwise materially
adversely affects the rights of the holders of the securities
warrants may be made without the consent of each holder affected
by the modification or amendment.
Common
Stock Warrant Adjustments
Unless the applicable prospectus supplement states otherwise,
the exercise price of, and the number of shares of common stock
covered by, a common stock warrant will be adjusted in the
manner set forth in the applicable prospectus supplement if
certain events occur, including:
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if we issue capital stock as a dividend or distribution on the
common stock;
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if we subdivide, reclassify or combine the common stock;
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if we issue rights or warrants to all holders of common stock
entitling them to purchase common stock at less than the current
market price; or
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if we distribute to all holders of common stock evidences of our
indebtedness or our assets, excluding certain cash dividends and
distributions described below, or if we distribute to all
holders of common stock rights or warrants, excluding those
referred to in the bullet point above.
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Except as stated above, the exercise price and number of shares
of common stock covered by a common stock warrant will not be
adjusted if we issue common stock or any securities convertible
into or exchangeable
21
for common stock, or securities carrying the right to purchase
common stock or securities convertible into or exchangeable for
common stock.
Holders of common stock warrants may have additional rights
under the following circumstances:
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a reclassification or change of the common stock;
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a consolidation or merger involving our company; or
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a sale or conveyance to another corporation of all or
substantially all of our property and assets.
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If one of the above transactions occurs and holders of our
common stock are entitled to receive stock, securities, other
property or assets, including cash, with respect to or in
exchange for common stock, the holders of the common stock
warrants then outstanding will be entitled to receive upon
exercise of their common stock warrants the kind and amount of
shares of stock and other securities or property that they would
have received upon the reclassification, change, consolidation,
merger, sale or conveyance if they had exercised their common
stock warrants immediately before the transaction.
DESCRIPTION
OF RIGHTS
We may issue rights to purchase our common stock. The rights may
or may not be transferable by the persons purchasing or
receiving the rights. In connection with any rights offering, we
may enter into a standby underwriting or other arrangement with
one or more underwriters or other persons pursuant to which such
underwriters or other persons would purchase any offered
securities remaining unsubscribed for after such rights
offering. Each series of rights will be issued under a separate
rights agent agreement to be entered into between us and one or
more banks, trust companies or other financial institutions, as
rights agent, that we will name in the applicable prospectus
supplement. The rights agent will act solely as our agent in
connection with the rights and will not assume any obligation or
relationship of agency or trust for or with any holders of
rights certificates or beneficial owners of rights.
The prospectus supplement relating to any rights that we offer
will include specific terms relating to the offering, including,
among other matters:
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the date of determining the security holders entitled to the
rights distribution;
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the aggregate number of rights issued and the aggregate number
of shares of common stock purchasable upon exercise of the
rights;
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the exercise price;
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the conditions to completion of the rights offering;
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the date on which the right to exercise the rights will commence
and the date on which the rights will expire; and
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any applicable federal income tax considerations.
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Each right would entitle the holder of the rights to purchase
for cash the principal amount of shares of common stock at the
exercise price set forth in the applicable prospectus
supplement. Rights may be exercised at any time up to the close
of business on the expiration date for the rights provided in
the applicable prospectus supplement. After the close of
business on the expiration date, all unexercised rights will
become void.
If less than all of the rights issued in any rights offering are
exercised, we may offer any unsubscribed securities directly to
persons other than our security holders, to or through agents,
underwriters or dealers or through a combination of such
methods, including pursuant to standby arrangements, as
described in the applicable prospectus supplement.
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DESCRIPTION
OF UNITS
The following description, together with the additional
information we include in any applicable prospectus supplement,
summarizes the material terms and provisions of the units that
we may offer under this prospectus. Units may be offered
independently or together with common stock, preferred stock,
rights
and/or
warrants offered by any prospectus supplement, and may be
attached to or separate from those securities.
While the terms we have summarized below will generally apply to
any future units that we may offer under this prospectus, we
will describe the particular terms of any series of units that
we may offer in more detail in the applicable prospectus
supplement. The terms of any units offered under a prospectus
supplement may differ from the terms described below.
We will incorporate by reference into the registration statement
of which this prospectus is a part the form of unit agreement,
including a form of unit certificate, if any, that describes the
terms of the series of units we are offering before the issuance
of the related series of units. We urge you to read the
applicable prospectus supplements related to the units that we
sell under this prospectus, as well as the complete unit
agreements that contain the terms of the units.
General
We may issue units consisting of common stock, preferred stock,
rights, warrants, or any combination thereof. Each unit will be
issued so that the holder of the unit is also the holder of each
security included in the unit. Thus, the holder of a unit will
have the rights and obligations of a holder of each included
security. The unit agreement under which a unit is issued may
provide that the securities included in the unit may not be held
or transferred separately, at any time, or at any time before a
specified date.
We will describe in the applicable prospectus supplement the
terms of the series of units, including the following:
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the designation and terms of the units and of the securities
comprising the units, including whether and under what
circumstances those securities may be held or transferred
separately;
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any provisions of the governing unit agreement that differ from
those described below; and
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any provisions for the issuance, payment, settlement, transfer,
or exchange of the units or of the securities comprising the
units.
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The provisions described in this section, as well as those
described under Description of Capital Stock,
Description of Warrants and Description of
Rights will apply to each unit and to any common stock,
preferred stock, warrant or right included in each unit,
respectively.
Issuance
in Series
We may issue units in such amounts and in such numerous distinct
series as we determine.
Enforceability
of Rights by Holders of Units
Each unit agent will act solely as our agent under the
applicable unit agreement and will not assume any obligation or
relationship of agency or trust with any holder of any unit. A
single bank or trust company may act as unit agent for more than
one series of units. A unit agent will have no duty or
responsibility in case of any default by us under the applicable
unit agreement or unit, including any duty or responsibility to
initiate any proceedings at law or otherwise, or to make any
demand upon us. Any holder of a unit, without the consent of the
related unit agent or the holder of any other unit, may enforce
by appropriate legal action its rights as holder under any
security included in the unit.
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Title
We, the unit agent, and any of their agents may treat the
registered holder of any unit certificate as an absolute owner
of the units evidenced by that certificate for any purposes and
as the person entitled to exercise the rights attaching to the
units so requested, despite any notice to the contrary.
PLAN OF
DISTRIBUTION
We may sell the securities offered by this prospectus in any one
or more of the following ways:
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directly to investors, including through a specific bidding,
auction, or other process;
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to investors through agents;
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directly to agents;
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to or through brokers or dealers;
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to the public through underwriting syndicates led by one or more
managing underwriters;
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in privately negotiated transactions;
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to one or more underwriters acting alone for resale to investors
or to the public; and
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through a combination of any such methods of sale.
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Our common stock or preferred stock may be issued upon
conversion of preferred stock. Securities may also be issued
upon exercise of warrants or rights and division of units and we
reserve the right to sell securities directly to investors on
their own behalf in those jurisdictions where they are
authorized to do so.
If we sell securities to a dealer acting as principal, the
dealer may resell such securities at varying prices to be
determined by such dealer in its discretion at the time of
resale without consulting with us and such resale prices may not
be disclosed in the applicable prospectus supplement.
Any underwritten offering may be on a best efforts or a firm
commitment basis. We may also offer securities through
subscription rights distributed to our shareholders on a pro
rata basis, which may or may not be transferable. In any
distribution of subscription rights to shareholders, if all of
the underlying securities are not subscribed for, we may then
sell the unsubscribed securities directly to third parties or
may engage the services of one or more underwriters, dealers or
agents, including standby underwriters, to sell the unsubscribed
securities to third parties.
Sales of the securities may be effected from time to time in one
or more transactions, including negotiated transactions:
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at a fixed price or prices, which may be changed;
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at market prices prevailing at the time of sale;
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at prices related to prevailing market prices; or
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at negotiated prices.
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Any of the prices may represent a discount from the then
prevailing market prices.
We may determine the price or other terms of the securities
offered under this prospectus by use of an electronic auction.
We will describe in the applicable prospectus supplement how any
auction will be conducted to determine the price or any other
terms of the securities, how potential investors may participate
in the auction and, where applicable, the nature of the
underwriters obligations with respect to the auction.
In the sale of the securities, underwriters or agents may
receive compensation from us in the form of underwriting
discounts or commissions and may also receive compensation from
purchasers of the securities, for whom they may act as agents,
in the form of discounts, concessions or commissions.
Underwriters may sell the securities to or through dealers, and
such dealers may receive compensation in the form of discounts,
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concessions or commissions from the underwriters
and/or
commissions from the purchasers for whom they may act as agents.
Discounts, concessions and commissions may be changed from time
to time. We do not expect these commissions and discounts to
exceed what is customary in the types of transactions involved.
The maximum commission or discount to be received by any member
of the Financial Industry Regulatory Authority, Inc. (FINRA) or
independent broker-dealer will not be greater than 8% of the
initial gross proceeds from the sale of any security being sold.
Dealers and agents that participate in the distribution of the
securities may be deemed to be underwriters under the Securities
Act, and any discounts, concessions or commissions they receive
from us and any profit on the resale of securities they realize
may be deemed to be underwriting compensation under applicable
federal and state securities laws.
The applicable prospectus supplement will, where applicable:
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identify any such underwriter, dealer or agent;
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describe any compensation in the form of discounts, concessions,
commissions or otherwise received from us by each such
underwriter or agent and in the aggregate by all underwriters
and agents;
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describe any discounts, concessions or commissions allowed by
underwriters to participating dealers;
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identify the amounts underwritten; and
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identify the nature of the underwriters or
underwriters obligation to take the securities.
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Unless otherwise specified in the related prospectus supplement,
each series of securities will be a new issue with no
established trading market, other than shares of common stock,
which are listed on the Nasdaq Global Market, subject to
official notice of issue. Any common stock sold pursuant to a
prospectus supplement will be eligible for listing and trading
on the Nasdaq Global Market. We may elect to list any series of
preferred stock, stock purchase contracts, warrants, rights or
units on an exchange, but we are not obligated to do so. It is
possible that one or more underwriters may make a market in the
securities, but such underwriters will not be obligated to do so
and may discontinue any market making at any time without
notice. No assurance can be given as to the liquidity of, or the
trading market for, any offered securities.
We may enter into derivative transactions with third parties, or
sell securities not covered by this prospectus to third parties
in privately negotiated transactions. If disclosed in the
applicable prospectus supplement, in connection with those
derivative transactions third parties may sell securities
covered by this prospectus and such prospectus supplement,
including in short sale transactions. If so, the third party may
use securities pledged by us or borrowed from us or from others
to settle those short sales or to close out any related open
borrowings of securities, and may use securities received from
us in settlement of those derivative transactions to close out
any related open borrowings of securities. If the third party is
or may be deemed to be an underwriter under the Securities Act,
it will be identified in the applicable prospectus supplement.
In connection with any offering of the securities offered under
this prospectus, underwriters may engage in transactions that
stabilize, maintain or otherwise affect the price of such
securities or any other securities the prices of which may be
used to determine payments on such securities. These
transactions may include short sales, stabilizing transactions
and purchases to cover positions created by short sales. Short
sales involve the sale by underwriters of a greater number of
securities than the underwriters are required to purchase in the
offering. Stabilizing transactions consist of certain bids or
purchases made for the purpose of preventing or retarding a
decline in the market price of the securities while the offering
is in progress.
Underwriters may engage in over-allotment. If any underwriters
create a short position in the securities in an offering in
which they sell more securities than are set forth on the cover
page of the applicable prospectus supplement, the underwriters
may reduce that short position by purchasing the securities in
the open market.
Underwriters may also impose a penalty bid in any offering of
securities offered under this prospectus through a syndicate of
underwriters. This occurs when a particular underwriter repays
to the underwriters a portion of the underwriting discount
received by it because the other underwriters have repurchased
securities sold by or for the account of such underwriter in
stabilizing or short covering transactions.
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These activities by underwriters may stabilize, maintain or
otherwise affect the market price of the securities offered
under this prospectus. As a result, the price of such securities
may be higher than the price that otherwise might exist in the
open market. If these activities are commenced, they may be
discontinued by underwriters at any time. These transactions may
be effected in the
over-the-counter
market or otherwise.
We do not make any representation or prediction as to the
direction or magnitude of any effect that the transactions
described above might have on the price of the securities. In
addition, we do not make any representation that underwriters
will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
Under agreements into which we may enter, underwriters, dealers
and agents who participate in the distribution of the securities
may be entitled to indemnification by us against or contribution
towards certain civil liabilities, including liabilities under
the applicable securities laws.
If indicated in the applicable prospectus supplement, we will
authorize underwriters or other persons acting as our agents to
solicit offers by particular institutions to purchase securities
from us at the public offering price set forth in such
prospectus supplement pursuant to delayed delivery contracts
providing for payment and delivery on the date or dates stated
in such prospectus supplement. Each delayed delivery contract
will be for an amount no less than, and the aggregate amounts of
securities sold under delayed delivery contracts shall be not
less nor more than, the respective amounts stated in the
applicable prospectus supplement. Institutions with which such
contracts, when authorized, may be made include commercial and
savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions and others,
but will in all cases be subject to our approval. The
obligations of any purchaser under any such contract will be
subject to the conditions that (a) the purchase of the
securities shall not at the time of delivery be prohibited under
the laws of any jurisdiction in the United States to which the
purchaser is subject, and (b) if the securities are being
sold to underwriters, we shall have sold to the underwriters the
total amount of the securities less the amount thereof covered
by the contracts. The underwriters and such other agents will
not have any responsibility in respect of the validity or
performance of such contracts.
To comply with applicable state securities laws, the securities
offered by this prospectus will be sold, if necessary, in such
jurisdictions only through registered or licensed brokers or
dealers. In addition, securities may not be sold in some states
unless they have been registered or qualified for sale in the
applicable state or an exemption from the registration or
qualification requirement is available and is complied with.
Underwriters, dealers or agents that participate in the offer of
securities, or their affiliates or associates, may have engaged
or engage in transactions with and perform services for us or
our affiliates in the ordinary course of business for which they
may have received or receive customary fees and reimbursement of
expenses.
LEGAL
MATTERS
Faegre & Benson LLP, Minneapolis, Minnesota, will
issue an opinion about the legality of the securities offered
under this prospectus.
EXPERTS
The consolidated financial statements and schedule of
ValueVision Media, Inc. and subsidiaries incorporated in this
prospectus by reference from our annual report on
Form 10-K
and the effectiveness of our internal control over financial
reporting have been audited by Deloitte & Touche LLP,
an independent registered public accounting firm, as stated in
their reports, which are incorporated by reference herein. Such
financial statements and financial statement schedule have been
so incorporated in reliance upon the reports of such firm given
upon their authority as experts in accounting and auditing.
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Shares
ValueVision Media,
Inc.
Common Stock
PROSPECTUS SUPPLEMENT
Piper Jaffray
Dougherty &
Co.
Feltl and Company
March , 2011