Published:
ShopNBC Announces Third Quarter Fiscal 2008 Financial Results
ShopNBC (NASDAQ: VVTV), a 24-hour TV
shopping network, today announced financial results for its third fiscal
quarter ended November 1, 2008.
Third Quarter Results
Third quarter revenues were $124.8 million, a 32% decrease from the same
period last year. EBITDA, as adjusted, was ($13.3) million compared to
approximately $1 million in the year-ago period. Net loss for the third
quarter was ($20.8) million compared to a net loss of ($5.7) million for
the same quarter last year.
"Revenues in the third quarter were disappointing," said John Buck,
ShopNBC's Chairman and CEO. "While certainly it's been a tough economy with
consumer confidence at historic lows, we take full responsibility for our
sales performance. We are in a transition period at the Company and working
hard to improve the fundamentals of this business for long-term sustained
growth. The Board and management recognize the challenges facing this
business, and we are taking decisive action by working on three strategic
initiatives on parallel paths to increase shareholder value."
The Company stated these initiatives include:
-- Sharp focus on the Company's balance sheet through tight control of
expenses and working capital resulting in a cash and securities balance
which stands at $81 million, an improvement of approximately $2 million
over the previous quarter.
-- Executing key operational efficiencies and initiatives to improve the
fundamentals of ShopNBC's multi-channel, electronic retailing business
model.
-- Actively exploring strategic alternatives to enhance shareholder value
by a Special Committee of Independent Directors of the Company's Board. An
update for this initiative will be provided on tomorrow's investor call by
Special Committee Chairman George Vandeman.
Third Quarter Highlights
-- The Company continued control of operating expenses, which decreased year-
over-year by 12% in the quarter.
-- Increased gross margins from 33.7% in Q2 to 34.5% in the third quarter
while return rates decreased from 31.5% in Q2 to 29.2%, respectively. The
Company will continue to work with its vendors to improve gross margins.
-- Realigned merchandising, broadcast operations, sales and product
planning, calendar and events, and e-commerce teams for improved
operational efficiencies and customer centricity.
-- Continued to aggressively negotiate with its cable and satellite
providers in the quarter. The Company's priority is to achieve a
significant reduction in its distribution costs next year.
Business Outlook
"In this difficult retail environment, we are highly focused on managing
the business thoughtfully yet decisively by protecting our balance sheet
for the long term," said Buck. "At the same time, we are working on
improving the fundamentals of our business and exploring a full range of
strategic alternatives. Given the changes being implemented at the Company
and the volatile economic conditions, we will not be providing guidance at
this time."
Conference Call Information
The Company has scheduled its conference call for 11 a.m. EST / 10 a.m. CST
on Wednesday, November 19, 2008, to discuss the results for the fiscal
third quarter. To participate in the conference call, please dial
1-888-455-9646 (pass code: SHOPNBC) five to ten minutes prior to the call
time. If you are unable to participate live in the conference call, a
replay will be available for 30 days. To access the replay, please dial
1-866-470-4775 with pass code 7467622 (keypad: SHOPNBC).
You also may participate via live audio stream by logging on to
https://e-meetings.verizonbusiness.com. To access the audio stream, please
use conference number 1742627 with pass code: SHOPNBC. A rebroadcast of the
audio stream will be available using the same access information for 30
days after the initial broadcast.
EBITDA and EBITDA, as adjusted
The Company defines EBITDA as net income (loss) from continuing operations
for the respective periods excluding depreciation and amortization expense,
interest income (expense) and income taxes. The Company defines EBITDA, as
adjusted, as EBITDA excluding non-recurring non-operating gains (losses)
and equity in income of Ralph Lauren Media, LLC; non-recurring
restructuring and CEO transition costs; and non-cash share-based payment
expense. Management has included the term EBITDA, as adjusted, in order to
adequately assess the operating performance of the Company's "core"
television and Internet businesses and in order to maintain comparability
to its analyst's coverage and financial guidance. Management believes that
EBITDA, as adjusted, allows investors to make a more meaningful comparison
between our core business operating results over different periods of time
with those of other similar small cap, higher growth companies. In
addition, management uses EBITDA, as adjusted, as a metric measure to
evaluate operating performance under its management and executive incentive
compensation programs. EBITDA, as adjusted, should not be construed as an
alternative to operating income (loss) or to cash flows from operating
activities as determined in accordance with GAAP and should not be
construed as a measure of liquidity. EBITDA, as adjusted, may not be
comparable to similarly entitled measures reported by other companies.
About ShopNBC
ShopNBC is a multi-channel electronic retailer operating with a premium
lifestyle brand. The shopping network reaches 70 million homes in the
United States via cable affiliates and satellite: DISH Network channel 228
and DIRECTV channel 316. www.ShopNBC.com is recognized as a top e-commerce
site. ShopNBC is owned and operated by ValueVision Media (NASDAQ: VVTV).
For more information, please visit www.ShopNBC.com.
Forward-Looking Information
This release contains certain "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements are based on management's current expectations and are
accordingly subject to uncertainty and changes in circumstances. Actual
results may vary materially from the expectations contained herein due to
various important factors, including (but not limited to): consumer
spending and debt levels; interest rates; competitive pressures on sales,
pricing and gross profit margins; the level of cable distribution for the
Company's programming and the fees associated therewith; the success of the
Company's e-commerce and rebranding initiatives; the performance of its
equity investments; the success of its strategic alliances and
relationships; the ability of the Company to manage its operating expenses
successfully; risks associated with acquisitions; changes in governmental
or regulatory requirements; litigation or governmental proceedings
affecting the Company's operations; and the ability of the Company to
obtain and retain key executives and employees. More detailed information
about those factors is set forth in the Company's filings with the
Securities and Exchange Commission, including the Company's annual report
on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form
8-K. The Company is under no obligation (and expressly disclaims any such
obligation) to update or alter its forward-looking statements whether as a
result of new information, future events or otherwise.
VALUEVISION MEDIA, INC.
Key Performance Metrics*
(Unaudited)
Q3 YTD
For the three months ending For the nine months ending
---------- ---------- --- ---------- ---------- ---
11/1/2008 11/3/2007 % 11/1/2008 11/3/2007 %
---------- ---------- --- ---------- ---------- ---
Program Distribution
Cable FTEs 43,326 41,726 4% 42,886 41,156 4%
Satellite FTEs 28,846 27,687 4% 28,632 27,421 4%
---------- ---------- --- ---------- ---------- ---
Total FTEs
(Average 000s) 72,172 69,413 4% 71,518 68,577 4%
Net Sales per FTE
(Annualized) $ 6.92 $ 10.46 -34% $ 7.85 $ 10.77 -27%
Product Mix
Jewelry 33% 38% 39% 39%
Apparel, Fashion
Accessories and
Health & Beauty 12% 10% 10% 9%
Computers &
Electronics 25% 25% 20% 24%
Watches, Coins
& Collectibles 21% 16% 23% 16%
Home & All Other 9% 11% 8% 12%
Shipped Units
(000s) 782 1,069 -27% 2,655 3,350 -21%
Average Price Point
- shipped units $ 212 $ 240 -12% $ 223 $ 233 -4%
---------- ---------- --- ---------- ---------- ---
*Includes ShopNBC TV and ShopNBC.com only.
VALUEVISION MEDIA, INC.
AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
For the Three Month For the Nine Month
Periods Ended Periods Ended
---------- ---------- ---------- ----------
November November November November
1, 3, 1, 3,
2008 2007 2008 2007
---------- ---------- ---------- ----------
Net sales $ 124,769 $ 184,821 $ 422,984 $ 563,543
Cost of sales 81,694 119,837 282,072 365,124
(exclusive of
depreciation
and amortization shown
below)
Operating expense:
Distribution and selling 51,743 59,126 162,653 179,619
General and
administrative 5,582 5,423 17,599 19,128
Depreciation and
amortization 4,246 4,734 12,811 15,581
Restructuring costs 175 1,061 505 3,104
CEO transition costs 1,883 2,096 2,713 2,096
---------- ---------- ---------- ----------
Total operating expense 63,629 72,440 196,281 219,528
---------- ---------- ---------- ----------
Operating loss (20,554) (7,456) (55,369) (21,109)
---------- ---------- ---------- ----------
Other income (loss):
Other loss (969) - (969) (119)
Interest income 745 1,728 2,331 4,543
---------- ---------- ---------- ----------
Total other income (224) 1,728 1,362 4,424
---------- ---------- ---------- ----------
Loss before income taxes
and equity in net income
of affiliates (20,778) (5,728) (54,007) (16,685)
Gain on sale of RLM
investment - - - 40,240
Equity in income of
affiliates - - - 609
Income tax provision - - (33) (921)
---------- ---------- ---------- ----------
Net income (loss) (20,778) (5,728) (54,040) 23,243
Accretion of redeemable
preferred stock (73) (73) (219) (218)
---------- ---------- ---------- ----------
Net income (loss)
available to common
shareholders $ (20,851) $ (5,801) $ (54,259) $ 23,025
========== ========== ========== ==========
Net income (loss) per
common share $ (0.62) $ (0.16) $ (1.62) $ 0.54
========== ========== ========== ==========
Net income (loss) per
common share
---assuming dilution $ (0.62) $ (0.16) $ (1.62) $ 0.54
========== ========== ========== ==========
Weighted average number of
common shares outstanding:
Basic 33,590,834 36,330,800 33,580,955 42,438,322
========== ========== ========== ==========
Diluted 33,590,834 36,330,800 33,580,955 42,458,720
========== ========== ========== ==========
VALUEVISION MEDIA, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands except share and per share data)
November 1, February 2,
2008 2008
------------ ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 56,444 $ 25,605
Short-term investments 4,975 33,473
Accounts receivable, net 43,178 109,489
Inventories 70,513 79,444
Prepaid expenses and other 5,198 4,172
------------ ------------
Total current assets 180,308 252,183
Long term investments 20,487 26,306
Property and equipment, net 33,532 36,627
FCC broadcasting license 31,943 31,943
NBC Trademark License Agreement, net 8,188 10,608
Cable distribution and marketing agreement, net 329 872
Other assets 567 541
------------ ------------
$ 275,354 $ 359,080
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 58,391 $ 73,093
Accrued liabilities 34,073 44,609
Deferred revenue 705 648
------------ ------------
Total current liabilities 93,169 118,350
Deferred revenue 1,997 2,322
Series A Redeemable Convertible Preferred
Stock, $.01 par value, 5,339,500 shares
authorized; 5,339,500 shares issued and
outstanding 44,117 43,898
Shareholders' equity:
Common stock, $.01 par value, 100,000,000
shares authorized; 33,590,834 and
34,070,422 shares issued and outstanding 336 341
Warrants to purchase 2,036,858 shares of
common stock 12,041 12,041
Additional paid-in capital 273,638 274,172
Accumulated other comprehensive losses (6,314) (2,454)
Accumulated deficit (143,630) (89,590)
------------ ------------
Total shareholders' equity 136,071 194,510
------------ ------------
$ 275,354 $ 359,080
============ ============
VALUEVISION MEDIA, INC.
AND SUBSIDIARIES
Reconciliation of EBITDA, as adjusted, to Net Income (Loss):
Nine-Month Nine-Month
Third Third Period Period
Quarter Quarter Ended Ended
1-Nov-08 3-Nov-07 1-Nov-08 3-Nov-07
---------- ---------- ---------- ----------
EBITDA, as adjusted (000s) $ (13,283) $ 947 $ (36,343) $ 1,461
Less:
Non-operating gains
(losses) and equity
in income of RLM (969) - (969) 40,730
Restructuring costs (175) (1,061) (505) (3,104)
CEO transition costs (1,883) (2,096) (2,713) (2,096)
Non-cash share-based
compensation (967) (512) (2,997) (1,789)
---------- ---------- ---------- ----------
EBITDA (as defined) (a) (17,277) (2,722) (43,527) 35,202
---------- ---------- ---------- ----------
A reconciliation of EBITDA
to net income (loss) is as
follows:
EBITDA, as defined (17,277) (2,722) (43,527) 35,202
Adjustments:
Depreciation and
amortization (4,246) (4,734) (12,811) (15,581)
Interest income 745 1,728 2,331 4,543
Income taxes - - (33) (921)
---------- ---------- ---------- ----------
Net income (loss) $ (20,778) $ (5,728) $ (54,040) $ 23,243
========== ========== ========== ==========
(a) EBITDA as defined for this statistical presentation represents net
income (loss) from continuing operations for the respective periods
excluding depreciation and amortization expense, interest income (expense)
and income taxes. The Company defines EBITDA, as adjusted, as EBITDA
excluding non-recurring non-operating gains (losses) and equity in income
of Ralph Lauren Media, LLC; non-recurring restructuring and CEO transition
costs; and non-cash share-based compensation expense.
Management has included the term EBITDA, as adjusted, in its EBITDA
reconciliation in order to adequately assess the operating performance of
the Company's "core" television and Internet businesses and in order to
maintain comparability to its analyst's coverage and financial guidance.
Management believes that EBITDA, as adjusted, allows investors to make a
more meaningful comparison between our core business operating results over
different periods of time with those of other similar small cap, higher
growth companies. In addition, management uses EBITDA, as adjusted, as a
metric measure to evaluate operating performance under its management and
executive incentive compensation programs. EBITDA, as adjusted, should not
be construed as an alternative to operating income (loss) or to cash flows
from operating activities as determined in accordance with GAAP and should
not be construed as a measure of liquidity. EBITDA, as adjusted, may not
be comparable to similarly entitled measures reported by other companies.
Copyright © 2009, MarketWire
Copyright © 2009, NewsBlaze,
Daily NewsTags: ,Lifestyle and Leisure:PersonalCare/Fitness, LifestyleandLeisure:Fashion, LifestyleandLeisure:Women'sInterest, MediaandEntertainment:Television, Retail:Apparel, Retail:ConsumerInterest, Retail:CosmeticsandAccessories, Retail:E-Commerce, ,NASDAQ01,NASDAQ01,NASDAQ01,MN,MINNEAPOLIS, MN
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