-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SHwOv0YVp3waG8NKZYQrR9lpkqMrG93ZpQyM5J3c2DTBtTisMnGKyTllKYntiK35 7puoVM/+KnDs2fBo4ClGlg== 0000950124-98-001304.txt : 19980317 0000950124-98-001304.hdr.sgml : 19980317 ACCESSION NUMBER: 0000950124-98-001304 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970731 FILED AS OF DATE: 19980313 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: VALUEVISION INTERNATIONAL INC CENTRAL INDEX KEY: 0000870826 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-CATALOG & MAIL-ORDER HOUSES [5961] IRS NUMBER: 411673770 STATE OF INCORPORATION: MN FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 000-20243 FILM NUMBER: 98565324 BUSINESS ADDRESS: STREET 1: 6740 SHADY OAK RD CITY: EDEN PRAIRIE STATE: MN ZIP: 55344-3433 BUSINESS PHONE: 6129475200 MAIL ADDRESS: STREET 1: 6740 SHADY OAK RAOD CITY: EDEN PRAIRIE STATE: MN ZIP: 55344-3433 10-Q/A 1 FORM 10-Q/A 1 ===================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to -------------------- ------------------ Commission File Number 0-20243 ------------------------ VALUEVISION INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Minnesota 41-1673770 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 6740 Shady Oak Road, Minneapolis, MN 55344 (Address of principal executive offices) 612-947-5200 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ---- ---- As of February 17, 1998, there were 26,780,778 shares of the Registrant's common stock, $.01 par value, outstanding. ======================================================================== 2 PART I - FINANCIAL INFORMATION Item 1 of the Form 10-Q for the quarterly period ended July 31, 1997 previously filed by ValueVision International, Inc. (the "10-Q") is hereby amended and restated in its entirety as follows. Except as set forth herein, all other items of the 10-Q remain in full force and effect. PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS VALUEVISION INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) ASSETS
JULY 31, JANUARY 31, 1997 1997 ----------------- ----------------- CURRENT ASSETS: Cash and cash equivalents $ 43,943,696 $ 28,618,943 Short-term investments 14,210,200 24,239,840 Accounts receivable, net 11,134,985 6,488,094 Inventories, net 28,885,513 28,109,081 Prepaid expenses and other 14,236,536 11,483,394 Deferred taxes 392,000 416,000 ----------------- ----------------- Total current assets 112,802,930 99,355,352 PROPERTY AND EQUIPMENT, NET 22,279,932 24,283,108 FEDERAL COMMUNICATIONS COMMISSION LICENSES, NET 5,769,191 6,934,546 MONTGOMERY WARD OPERATING AGREEMENT AND LICENSES, NET 14,414,825 15,052,935 INVESTMENT IN PAXSON COMMUNICATIONS CORPORATION 14,284,862 - GOODWILL AND OTHER INTANGIBLE ASSETS, NET 12,597,224 10,764,011 INVESTMENTS AND OTHER ASSETS, NET 9,441,892 10,022,718 ----------------- ----------------- $191,590,856 $166,412,670 ================== =================
LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of long-term obligations $ 420,964 $ 392,921 Accounts payable 25,700,261 24,887,904 Accrued liabilities 13,154,156 12,398,041 Income taxes payable 12,242,054 45,008 ----------------- ----------------- Total current liabilities 51,517,435 37,723,874 LONG-TERM OBLIGATIONS 1,135,303 1,443,189 ----------------- ----------------- Total liabilities 52,652,738 39,167,063 ================= ================= SHAREHOLDERS' EQUITY: Common stock, $.01 par value, 100,000,000 shares authorized; 28,020,778 and 28,842,198 shares issued and outstanding 280,208 288,422 Common stock purchase warrants; 3,842,143 and 5,368,557 26,984,038 26,984,038 Additional paid-in capital 73,069,654 83,309,455 Net unrealized holding gains on investments available-for-sale 2,712,668 69,437 Retained earnings 35,891,550 16,594,255 ----------------- ----------------- Total shareholders' equity 138,938,118 127,245,607 ----------------- ----------------- $191,590,856 $166,412,670 ================= =================
The accompanying notes are an integral part of these condensed consolidated balance sheets. 3 3 VALUEVISION INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED JULY 31, JULY 31, --------------------------------- --------------------------------- 1997 1996 1997 1996 --------------- --------------- -------------- --------------- NET SALES $ 48,500,023 $ 24,340,754 $ 99,561,819 $ 47,128,421 COST OF SALES 28,576,368 14,612,379 56,943,226 28,011,710 --------------- --------------- -------------- --------------- Gross profit 19,923,655 9,728,375 42,618,593 19,116,711 --------------- --------------- -------------- --------------- Margin % 41.1% 40.0% 42.8% 40.6% OPERATING EXPENSES: Distribution and selling 20,278,997 7,690,723 41,381,831 15,094,677 General and administrative 2,445,438 1,460,663 5,360,137 2,769,169 Depreciation and amortization 1,907,374 1,371,673 3,708,614 2,730,390 --------------- --------------- -------------- -------------- Total operating expenses 24,631,809 10,523,059 50,450,582 20,594,236 --------------- --------------- -------------- -------------- OPERATING LOSS (4,708,154) (794,684) (7,831,989) (1,477,525) --------------- --------------- -------------- -------------- OTHER INCOME (EXPENSE): Gain on sale of broadcast stations 38,850,000 - 38,850,000 27,050,000 Equity (loss) in earnings of affiliates 39,421 (95,124) (330,575) (95,124) Interest income 348,523 1,085,670 875,793 2,158,057 Other, net (18,918) 45,582 35,406 9,446 --------------- --------------- -------------- -------------- Total other income 39,219,026 1,036,128 39,430,624 29,122,379 --------------- --------------- -------------- -------------- INCOME BEFORE PROVISION FOR INCOME TAXES 34,510,872 241,444 31,598,635 27,644,854 PROVISION FOR INCOME TAXES 13,452,340 96,000 12,301,340 11,046,000 --------------- --------------- -------------- -------------- NET INCOME $ 21,058,532 $ 145,444 $ 19,297,295 $ 16,598,854 =============== =============== ============== ============== NET INCOME PER COMMON AND DILUTIVE COMMON EQUIVALENT SHARE $ 0.66 $ 0.00 $ 0.59 $ 0.55 =============== =============== ============== ============== Weighted average number of common and common equivalent shares outstanding 31,952,713 29,576,724 32,530,842 29,996,576 =============== =============== ============== ==============
The accompanying notes are an integral part of these condensed consolidated financial statements. 4 4 VALUEVISION INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY FOR THE SIX MONTHS ENDED JULY 31, 1997 (Unaudited)
UNREALIZED HOLDING COMMON STOCK COMMON GAINS ------------------------- STOCK ADDITIONAL ON INVESTMENTS NUMBER PAR PURCHASE PAID-IN AVAILABLE RETAINED OF SHARES VALUE WARRANTS CAPITAL FOR-SALE EARNINGS ------------ ----------- -------------- --------------- ------------- --------------- BALANCE, JANUARY 31, 1997 28,842,198 $ 288,422 $ 26,984,038 $ 83,309,455 $ 69,437 $ 16,594,255 Exercise of stock options and warrants 1,596,080 15,961 - 194,436 - - Common stock repurchases (2,417,500) (24,175) - (10,434,237) - - Unrealized holding gain on investments available-for-sale - - - - 2,643,231 - Net income - - - - - 19,297,295 ------------ ----------- -------------- --------------- ------------- --------------- BALANCE, JULY 31, 1997 28,020,778 $ 280,208 $ 26,984,038 $ 73,069,654 $ 2,712,668 $ 35,891,550 ============ =========== ============== ============== ============= ===============
TOTAL SHAREHOLDERS' EQUITY ---------------- BALANCE, JANUARY 31, 1997 $ 127,245,607 Exercise of stock options and warrants 210,397 Common stock repurchases (10,458,412) Unrealized holding gain on investments available-for-sale 2,643,231 Net income 19,297,295 ---------------- BALANCE, JULY 31, 1997 $ 138,938,118 ================
The accompanying notes are an integral part of this condensed consolidated financial statement. 5 5 VALUEVISION INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
FOR THE SIX MONTHS ENDED JULY 31, ------------------------------------- 1997 1996 ----------------- ---------------- OPERATING ACTIVITIES: Net income $ 19,297,295 $ 16,598,854 Adjustments to reconcile net income to net cash provided by (used for) operating activities- Depreciation and amortization 3,708,614 2,730,390 Deferred taxes 24,000 - Loss in earnings of affiliates 330,575 95,124 Gain on sale of investments (100,075) - Gain on sale of broadcast stations (38,850,000) (27,050,000) Changes in operating assets and liabilities: Accounts receivable, net (4,043,690) (3,103,826) Inventories, net (776,432) (1,436,741) Prepaid expenses and other (2,797,020) 304,091 Accounts payable and accrued liabilities 53,725 4,267,757 Income taxes payable 12,197,046 4,416,117 ----------------- ----------------- Net cash used for operating activities (10,955,962) (3,178,234) ----------------- ----------------- INVESTING ACTIVITIES: Property and equipment additions, net of retirements (2,749,377) (2,724,410) Purchase of broadcast stations - (4,618,743) Proceeds from sale of broadcast stations 29,979,159 40,000,000 Purchase of short-term investments (17,456,305) (60,660,703) Proceeds from sale of short-term investments 29,595,411 39,011,424 Payment for investments and other assets (3,934,180) (2,526,458) Proceeds from sale of investments 1,361,118 - ----------------- ---------------- Net cash provided by investing activities 36,795,826 8,481,110 ----------------- ---------------- FINANCING ACTIVITIES: Proceeds from exercise of stock options and warrants 210,397 1,147,545 Payments for repurchases of common stock (10,458,412) - Payment of long-term obligations (267,096) (141,685) ----------------- ---------------- Net cash provided by (used for) financing activities (10,515,111) 1,005,860 ----------------- ---------------- Net increase in cash and 15,324,753 6,308,736 cash equivalents BEGINNING CASH AND CASH EQUIVALENTS 28,618,943 20,063,901 ----------------- ---------------- ENDING CASH AND CASH EQUIVALENTS $ 43,943,696 $ 26,372,637 ================= ================ SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid $ 45,000 $ 58,000 ================= ================ Income taxes paid $ 75,000 $ 6,638,000 ================= ================ SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES: Receipt of 1,197,892 shares of Paxson Communications Corporation common stock as partial consideration from sale of broadcast television station $ 14,284,862 $ - ================= ================
The accompanying notes are an integral part of these condensed consolidated financial statements. 6 6 VALUEVISION INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JULY 31, 1997 (UNAUDITED) (1) GENERAL ValueVision International, Inc. and its subsidiaries ("ValueVision" or the "Company") is an integrated direct marketing company which markets its products directly to consumers through electronic and print media. The Company's principal electronic media activity is its television home shopping network which uses recognized on-air television home shopping personalities to market brand name merchandise and proprietary and private label consumer products at competitive or discount prices. The Company's 24-hour per day television home shopping programming is distributed primarily through long-term cable affiliation agreements and the purchase of month-to-month full- and part-time block lease agreements of cable and broadcast television time. In addition, the Company distributes its programming through Company owned or affiliated full power Ultra-High Frequency ("UHF") broadcast television stations, low power television ("LPTV") stations and to satellite dish owners. The Company, through its wholly-owned subsidiary, ValueVision Direct Marketing Company, Inc., d.b.a. Montgomery Ward Direct ("VVDM"), is a direct-mail marketer of a broad range of quality general merchandise which is sold to consumers through direct-mail catalogs and other direct marketing solicitations. Products offered include domestics, housewares, home accessories and electronics. Through its wholly-owned subsidiary, Catalog Ventures, Inc. ("CVI"), the Company sells a variety of fashion jewelry, health and beauty aids, books, audio and video cassettes and other related consumer merchandise through the publication of five consumer specialty catalogs. The Company also manufactures and markets, via direct-mail, women's foundation undergarments through its wholly-owned subsidiary Beautiful Images, Inc. ("BII"). Results of operations for the three and six months ended July 31, 1997 include the direct-mail operations of VVDM, BII, and CVI, which were acquired by the Company effective July 27, 1996, October 22, 1996 and November 1, 1996, respectively. (2) BASIS OF FINANCIAL STATEMENT PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The information furnished in the interim condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments which, in the opinion of management, are necessary for a fair presentation of such financial statements. Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim condensed consolidated financial statements be read in conjunction with the Company's most recent audited financial statements and notes thereto included in its fiscal 1997 Annual Report on Form 10-K. Operating results for the six- month period 7 7 ended July 31, 1997, are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 1998. Certain amounts in the fiscal 1997 financial statements have been reclassified to conform to the fiscal 1998 presentation with no impact on previously reported net income or shareholders' equity. (3) NET INCOME PER SHARE The Company computes net income per share based on the weighted average number of shares of common stock and dilutive common stock equivalents outstanding, if any, during the period. The difference between primary and fully diluted net income per share and weighted average number of shares outstanding was not material or was antidilutive, and therefore not presented separately. (4) SALE OF BROADCAST STATION On July 31, 1997, the Company completed the sale of its television broadcast station, WVVI (TV) Channel 66, which serves the Washington, D.C. market, to Paxson Communications Corporation. The station was sold for approximately $30 million in cash and 1,197,892 shares of Paxson Communications Corporation common stock valued at $11.92 per share as determined pursuant to an independent financial appraisal. WVVI (TV) was acquired by the Company in March 1994 for approximately $4,850,000. The pre-tax gain recorded on the sale of this television station was $38,850,000 and was recognized in the quarter ended July 31, 1997. (5) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS The Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS No. 128") in February 1997. SFAS No. 128 establishes accounting standards for computing and presenting earnings per share ("EPS") and is effective for reporting periods ending after December 15, 1997. Management believes that the adoption of SFAS No. 128 will not have a material impact on the Company's calculation of EPS. The FASB issued Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information" ("SFAS No. 131") in June 1997. SFAS No. 131 requires that public business enterprises report information about operating segments in annual financial statements and requires selected information in interim financial reports issued to shareholders. It also establishes standards for related disclosures about products and services, geographic areas, and major customers and is effective for fiscal years beginning after December 15, 1997. 8 8 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. VALUEVISION INTERNATIONAL, INC. AND SUBSIDIARIES /s/ Stuart R. Romenesko ---------------------------- Stuart R. Romenesko Senior Vice President Finance and Chief Financial Officer (Principal Financial and Accounting Officer) February 20, 1998 17 -----END PRIVACY-ENHANCED MESSAGE-----