SOURCE: ShopNBC

May 20, 2008 07:00 ET

ShopNBC Reports First Quarter Fiscal 2008 Results

MINNEAPOLIS, MN--(Marketwire - May 20, 2008) - ShopNBC (NASDAQ: VVTV), a 24-hour TV shopping network, today reported financial results for its first fiscal quarter ended May 3, 2008. These results are consistent with what the Company previously announced on May 12.

First quarter revenues were $156 million, a 17% decrease compared with revenues of $188 million in the first quarter of 2007. EBITDA, as adjusted, was ($12) million compared with ($1.2) million in the year-ago period. Net Loss for Q1 was ($18) million vs. Net Income for the same quarter last year of $34.4 million, driven by a $40 million gain on the sale of the Company's equity interest in Polo.com. Included in the first quarter results is a non-cash inventory impairment charge of $3.8 million.

"We are in a transitional period at ShopNBC, and I am confident that we can successfully address the challenges before us," said Rene Aiu, ShopNBC's president and CEO. "ShopNBC has a compelling business model with tremendous underlying strength and assets: a strong cash position, national cable and satellite distribution, a strategic relationship with NBC Universal, and a new, experienced management team that understands what it takes to succeed in TV shopping. Importantly, we have a plan and are taking steps to improve future performance and deliver long-term shareholder value by returning to a focus on the basics that make home shopping companies thrive."

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 reaches 70 million homes in the United States via cable affiliates and satellite: Dish Network channel 228 and Direct TV channel 316. ShopNBC.com is recognized as a top e-commerce site. ShopNBC is owned and operated by ValueVision Media (NASDAQ: VVTV). For more information, please visit www.ShopNBC.com.

Forward-Looking Information

This release contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are accordingly subject to uncertainty and changes in circumstances. Actual results may vary materially from the expectations contained herein due to various important factors, including (but not limited to): consumer spending and debt levels; interest rates; competitive pressures on sales, pricing and gross profit margins; the level of cable distribution for the Company's programming and the fees associated therewith; the success of the Company's e-commerce and rebranding initiatives; the performance of its equity investments; the success of its strategic alliances and relationships; the ability of the Company to manage its operating expenses successfully; risks associated with acquisitions; changes in governmental or regulatory requirements; litigation or governmental proceedings affecting the Company's operations; and the ability of the Company to obtain and retain key executives and employees. More detailed information about those factors is set forth in the Company's filings with the Securities and Exchange Commission, including the Company's annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. The Company is under no obligation (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.

                         VALUE VISION MEDIA, INC.
                         Key Performance Metrics*
                                (Unaudited)

                                                         Q1
                                             For the three months ending
                                           -------------------------------
                                           5/3/2008   5/5/2007       %
                                           ---------  ---------  ---------
Program Distribution
   Cable FTEs                                 42,361     40,379          5%
   Satellite FTEs                             28,394     27,136          5%
                                           ---------  ---------  ---------
Total FTEs (Average 000s)                     70,755     67,515          5%

Net Sales per FTE (Annualized)             $    8.72  $   10.98        -21%

Product Mix
   Jewelry                                        44%        40%
   Apparel, Fashion Accessories and Health
    & Beauty                                      10%         9%
   Computers & Electronics                        17%        23%
   Watches, Coins & Collectibles                  20%        15%
   Home & All Other                                9%        13%

Shipped Units (000s)                           1,004      1,149        -13%

Average Price Point - shipped units        $     228  $     225          1%
                                           ---------  ---------  ---------


*Includes ShopNBC TV and ShopNBC.com only.





                          VALUEVISION MEDIA, INC.
                             AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
              (In thousands except share and per share data)


                                                     May 3,     February 2,
                                                      2008         2008
                                                  -----------  -----------
                                                  (Unaudited)
                                 ASSETS
Current assets:
    Cash and cash equivalents                     $    44,367  $    25,605
    Short-term investments                             17,886       33,473
    Accounts receivable, net                           72,100      109,489
    Inventories                                        69,254       79,444
    Prepaid expenses and other                          4,632        4,172
                                                  -----------  -----------
        Total current assets                          208,239      252,183

Long term investments                                  23,802       26,306
Property and equipment, net                            35,818       36,627
FCC broadcasting license                               31,943       31,943
NBC Trademark License Agreement, net                    9,801       10,608
Cable distribution and marketing agreement, net           676          872
Other assets                                              526          541
                                                  -----------  -----------
                                                  $   310,805  $   359,080
                                                  ===========  ===========

                   LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
    Accounts payable                              $    52,895  $    73,093
    Accrued liabilities                                36,936       44,609
    Deferred revenue                                      678          648
                                                  -----------  -----------
        Total current liabilities                      90,509      118,350

Deferred revenue                                        2,258        2,322

Series A Redeemable Convertible Preferred Stock,
 $.01 par value, 5,339,500 shares authorized;
 5,339,500 shares issued and outstanding               43,971       43,898

Shareholders' equity:
    Common stock, $.01 par value, 100,000,000
     shares authorized; 33,550,834 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                        271,856      274,172
    Accumulated other comprehensive losses             (2,998)      (2,454)
    Accumulated deficit                              (107,168)     (89,590)
                                                  -----------  -----------
        Total shareholders' equity                    174,067      194,510
                                                  -----------  -----------
                                                  $   310,805  $   359,080
                                                  ===========  ===========






                          VALUEVISION MEDIA, INC.
                             AND SUBSIDIARIES

       Reconciliation of EBITDA, as adjusted, to Net Income (Loss):


                                                       First       First
                                                      Quarter     Quarter
                                                     3-May-08    4-May-07
                                                    ----------  ----------


EBITDA, as adjusted (000's)                         $  (12,394) $   (1,249)
Less:
   Non-operating gains (losses) and equity in
    income of RLM                                            -      40,849
   Restructuring costs                                    (330)          -
   CEO transition costs                                   (277)          -
   Non-cash share-based compensation                    (1,068)       (593)
                                                    ----------  ----------
EBITDA (as defined) (a)                                (14,069)     39,007
                                                    ----------  ----------


A reconciliation of EBITDA to net income (loss) is
 as follows:

EBITDA, as defined                                     (14,069)     39,007
Adjustments:
Depreciation and amortization                           (4,319)     (5,586)
Interest income                                            825       1,240
Income taxes                                               (15)       (281)
                                                    ----------  ----------
   Net income (loss)                                $  (17,578) $   34,380
                                                    ==========  ==========


(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.





                          VALUEVISION MEDIA, INC.
                             AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF OPERATIONS
              (In thousands, except share and per share data)
                                (Unaudited)


                                                      For the Three Month
                                                        Periods Ended
                                                    ----------------------
                                                      May 3,      May 5,
                                                       2008        2007
                                                    ----------  ----------
Net sales                                           $  156,288  $  188,109
Cost of sales                                          106,332     121,996
    (exclusive of depreciation and amortization
     shown below)
Operating expense:
    Distribution and selling                            57,083      60,460
    General and administrative                           6,335       7,495
    Depreciation and amortization                        4,319       5,586
    Restructuring costs                                    330           -
    CEO transition costs                                   277           -
                                                    ----------  ----------
       Total operating expense                          68,344      73,541
                                                    ----------  ----------
Operating loss                                         (18,388)     (7,428)
                                                    ----------  ----------
Other income:
    Interest income                                        825       1,240
                                                    ----------  ----------
       Total other income                                  825       1,240
                                                    ----------  ----------
Loss before income taxes and equity in net income
 of affiliates                                         (17,563)     (6,188)
Gain on sale of RLM investment                               -      40,240
Equity in income of affiliates                               -         609
Income tax provision                                       (15)       (281)
                                                    ----------  ----------

Net income (loss)                                      (17,578)     34,380
Accretion of redeemable preferred stock                    (73)        (72)
                                                    ----------  ----------
Net income (loss) available to common shareholders  $  (17,651) $   34,308
                                                    ==========  ==========

Net income (loss) per common share                  $    (0.53) $     0.80
                                                    ==========  ==========

Net income (loss) per common share
       ---assuming dilution                         $    (0.53) $     0.80
                                                    ==========  ==========

Weighted average number of common shares
 outstanding:
        Basic                                       33,577,899  42,938,624
                                                    ==========  ==========
        Diluted                                     33,577,899  42,938,684
                                                    ==========  ==========

Contact Information

  • Contact Info:
    Frank Elsenbast
    CFO
    952-943-6262