SOURCE: ShopNBC

ShopNBC

March 16, 2010 09:00 ET

ShopNBC Reports Fiscal Fourth Quarter and Full Year 2009 Results

MINNEAPOLIS, MN--(Marketwire - March 16, 2010) - ShopNBC (NASDAQ: VVTV), the premium lifestyle brand in electronic retailing, today announced financial results for its fiscal fourth quarter and full year ended January 30, 2010.

Fourth Quarter Results

Fourth quarter revenues were $155.3 million, a 7.4% increase from the same period last year. The company's e-commerce sales penetration was 39% of total sales in the quarter, up 690 basis points vs. last year. EBITDA, as adjusted, was a loss of ($1.3) million compared to an EBITDA, as adjusted, loss of ($15.1) million in the year-ago period. Net loss for the fourth quarter was ($8.8) million compared to a net loss of ($43.8) million for the same quarter last year.

Full Year 2009 Results

Net sales for fiscal 2009 were $528 million, a decrease of 7% vs. the previous year. The company's e-commerce sales penetration for the full year was 33.7%, up 170 basis points vs. last year. Full year EBITDA loss, as adjusted, was ($19.4) million, compared to an EBITDA, as adjusted, loss of ($51.4) million last year. For the fiscal year, the company is reporting a net loss of ($42.0) million compared to a net loss of ($97.8) million in the prior year.

Fourth Quarter Highlights

The company noted several key improvements and developments in the quarter:

Bob Ayd Named President. The company appointed Bob Ayd, a multichannel retailing veteran with more than 30 years of experience, as president of ShopNBC, reporting to CEO Keith Stewart. Mr. Ayd brings an extensive background and proven track record of success to the company, including executive leadership roles at multi-billion-dollar retailers QVC and Macy's. Most recently, he served as Executive Vice President and Chief Merchandising Officer at QVC (U.S.). At Macy's, Mr. Ayd held a number of executive leadership positions.

Customers. Customer trends continued to improve with new and active customers up 38% and 32%, respectively, in the fourth quarter vs. the same period last year. For the full year, new and active customers were up 63% and 36% respectively. Return rates for the quarter were 19% vs. 26% in the year-ago quarter, reflecting improvements in delivery time, customer service, product quality, and lower price points. For the full year, return rates were 21% vs. 31% in the previous year.

Gross Profit Margin. For the quarter, gross profit margin was 32.4%, 350 basis points higher compared to last year, driven by merchandise rate improvements in several key categories and favorable mix change. For the full year, gross profit margin was 32.9%, up 70 basis points from the year-ago period.

Net Average Selling Price. The fourth quarter net average selling price was strategically lowered to $96 vs. $139 in the year-ago period. For the full year, the net average selling price was lowered to $108 vs. $176 in the previous year.

Net Shipped Units. In the quarter, net shipped units increased by 54% as lower price points and new merchandise drove increased customer activity. Net shipped units for the full year were up 47% vs. prior year.

Cash and Cash Equivalents Balance. Fourth quarter cash and cash equivalents balance ended at $22.1 million, including $5.1 million of restricted cash. This cash and securities balance is a decrease of $10.4 million vs. the prior quarter driven by the EBITDA loss, capital expenditures, and working capital use. In the fourth quarter, the company entered into a 3-year revolving credit facility for up to $20 million to finance working capital investment and fund other company growth initiatives.

Operating Expenses. Fourth quarter operating expenses decreased $17.4 million year-over-year or 23%. For the full year, operating expenses decreased $56.3 million year-over-year or 21% vs. the prior-year period.

"The fourth quarter proved to be another positive step toward achieving sustained growth and profitability," said Keith Stewart, ShopNBC's CEO. "We surpassed the 1 million customer mark. Leading indicators across all fronts continued to trend in the right direction with our Internet business achieving industry-leading e-commerce sales penetration of 39%. As our merchandising strategies continue to take form and be well-received by the customer, we remain excited about the broadening appeal of our business."

Added Stewart: "I am encouraged by the continued progress made throughout the year to improve ShopNBC's performance. While we are not providing guidance for 2010, we have clearly defined initiatives in place to further drive sustained sales growth, increased margins, and predictable performance. With a lean cost-structure, I remain confident in our 2010 plans and execution capabilities to deliver on the expectations of the shareholders."

Conference Call Information

The company has scheduled its conference call for 11 a.m. EDT / 10 a.m. CDT on Tuesday, March 16, 2010, to discuss the results for the fiscal fourth quarter and full year 2009. To participate in the conference call, please dial 1-888-606-5948 (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 1-800-945-6332 with pass code 6059802 (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 6059802 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.

About ShopNBC

ShopNBC is a multichannel electronic retailer operating with a premium lifestyle brand. Over 1 million customers benefit from ShopNBC as an authority and destination in the categories of home, electronics, beauty, fashion, jewelry and watches. As part of the company's "ShopNBC Anywhere" initiative, customers can interact and shop via cable and satellite TV in 75 million homes (DISH Network channels 134 and 228; and DIRECTV channel 316); mobile devices including iPhone, BlackBerry and Droid; online at www.ShopNBC.com; live streaming at www.ShopNBC.TV; and social networking sites Facebook, Twitter, and YouTube. ShopNBC is owned and operated by ValueVision Media (NASDAQ: VVTV). For more information, please visit www.ShopNBC.com/IR.

EBITDA and EBITDA, as adjusted

EBITDA represents net loss for the respective periods excluding depreciation and amortization expense, interest income (expense) and income taxes. The company defines Adjusted EBITDA as EBITDA excluding non-operating gains (losses); non-cash impairment charges and write-downs; restructuring and chief executive officer transition costs; and non-cash share-based compensation expense. The company has included the term "Adjusted EBITDA" in our EBITDA reconciliation in order to adequately assess the operating performance of our "core" television and internet businesses and in order to maintain comparability to our analyst's coverage and financial guidance, when given. Management believes that Adjusted EBITDA allows investors to make a more meaningful comparison between our core business operating results over different periods of time with those of other similar companies. In addition, management uses Adjusted EBITDA as a metric measure to evaluate operating performance under its management and executive incentive compensation programs. Adjusted EBITDA should not be construed as an alternative to operating income (loss) or to cash flows from operating activities as determined in accordance with generally accepted accounting principles and should not be construed as a measure of liquidity. Adjusted EBITDA may not be comparable to similarly entitled measures reported by other companies.

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 accordingly are 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 and satellite distribution for the company's programming and the fees associated therewith; the success of the company's e-commerce and new sales initiatives; the success of its strategic alliances and relationships; the ability of the company to manage its operating expenses successfully; the ability of the Company to establish and maintain acceptable commercial terms with third party vendors and other third parties with whom the Company has contractual relationships; 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.
                             AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
              (In thousands except share and per share data)


                                                  January 30,  January 31,
                                                      2010         2009
                                                  -----------  -----------
                                                  (Unaudited)

                      ASSETS
Current assets:
   Cash and cash equivalents                      $    17,000  $    53,845
   Restricted cash and investments                      5,060        1,589
   Accounts receivable, net                            68,891       51,310
   Inventories                                         44,077       51,057
   Prepaid expenses and other                           4,333        3,668
                                                  -----------  -----------
     Total current assets                             139,361      161,469
Long term investments                                       -       15,728
Property and equipment, net                            28,342       31,723
FCC broadcasting license                               23,111       23,111
NBC Trademark License Agreement, net                    4,154        7,381
Other Assets                                            1,246        2,088
                                                  -----------  -----------
                                                  $   196,214  $   241,500
                                                  ===========  ===========

       LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Accounts payable                               $    58,777  $    64,615
   Accrued liabilities                                 26,487       30,657
   Deferred revenue                                       728          716
                                                  -----------  -----------
     Total current liabilities                         85,992       95,988

Deferred revenue                                        1,153        1,849
Long Term Payable                                       4,841            -
Accrued Dividends - Series B Preferred Stock            4,681            -
Series B Mandatorily Redeemable Preferred Stock        11,243            -
 $.01 par value, 4,929,266 shares authorized;
 4,929,266 shares issued and outstanding
                                                  -----------  -----------
     Total liabilities                                107,910       97,837

Commitments and Contingencies

Series A Redeemable Convertible Preferred Stock,
 $.01 par value, 5,339,500 shares authorized                -       44,191

Shareholders' equity:
   Common stock, $.01 par value, 100,000,000
    shares authorized; 32,672,735 and 33,690,266
    shares issued and outstanding                         327          337
   Warrants to purchase 6,022,115 and 29,487
    shares of common stock                                637          138
   Additional paid-in capital                         316,721      286,380
   Accumulated deficit                               (229,381)    (187,383)
                                                  -----------  -----------
     Total shareholders' equity                        88,304       99,472
                                                  -----------  -----------
                                                  $   196,214  $   241,500
                                                  ===========  ===========









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

           
                             For the Three Month     For the Twelve Month
                                Periods Ended           Periods Ended
                            ----------  ----------  ----------  ----------
                            January 30  January 31  January 30  January 31
                               2010        2009        2010        2009
                            ----------  ----------  ----------  ----------
 Net sales                  $  155,285  $  144,526  $  527,873  $  567,510
 Cost of sales                 104,929     102,690     354,101     384,761
  (exclusive of
  depreciation
  and amortization shown
  below)

 Operating expense:
   Distribution and selling     47,117      52,303     178,015     214,956
   General and
    administrative               5,173       5,542      18,373      23,142
   Depreciation and
    amortization                 3,597       4,486      14,320      17,297
   Restructuring costs           1,588       3,794       2,303       4,299
   CEO transition costs             65         (32)      1,932       2,681
   FCC licence impairment            -       8,832           -       8,832
                            ----------  ----------  ----------  ----------
     Total operating
      expense                   57,540      74,925     214,943     271,207
                            ----------  ----------  ----------  ----------
 Operating loss                 (7,184)    (33,089)    (41,171)    (88,458)
                            ----------  ----------  ----------  ----------
 Other income (expense):
   Interest income                  17         408         382       2,739
   Interest expense             (1,600)          -      (4,928)          -
   Writedown of auction
    rate investments                 -     (11,072)          -     (11,072)
   Gain (loss) on sale of
    investments                      -           -       3,628        (969)
                            ----------  ----------  ----------  ----------
     Total other income
      (expense)                 (1,583)    (10,664)       (918)     (9,302)
                            ----------  ----------  ----------  ----------
 Loss before income taxes       (8,767)    (43,753)    (42,089)    (97,760)
 Income tax (provision)
  benefit                          (66)          -          91         (33)
                            ----------  ----------  ----------  ----------

 Net loss                       (8,833)    (43,753)    (41,998)    (97,793)
 Excess of preferred stock
  carrying value
  over redemption value              -           -      27,362           -
 Accretion of redeemable
  Series A preferred stock           -         (74)        (62)       (293)
                            ----------  ----------  ----------  ----------
 Net loss available to
  common shareholders       $   (8,833) $  (43,827) $  (14,698) $  (98,086)
                            ==========  ==========  ==========  ==========

 Net loss per common share  $    (0.27) $    (1.30) $    (0.45) $    (2.92)
                            ==========  ==========  ==========  ==========

 Net loss per common share
   ---assuming dilution     $    (0.27) $    (1.30) $    (0.45) $    (2.92)
                            ==========  ==========  ==========  ==========

 Weighted average number of
 common shares outstanding:
       Basic                32,442,541  33,649,843  32,537,849  33,598,177
                            ==========  ==========  ==========  ==========
       Diluted              32,442,541  33,649,843  32,537,849  33,598,177
                            ==========  ==========  ==========  ==========








                          VALUEVISION MEDIA, INC.
                             AND SUBSIDIARIES

            Reconciliation of EBITDA, as adjusted, to Net Loss:



                              For the Three Month    For the Twelve Month
                                Periods Ended           Periods Ended
                            ----------------------  ----------------------
                            January 30  January 31  January 30  January 31
                               2010        2009        2010        2009
                            ----------  ----------  ----------  ----------


EBITDA, as adjusted (000's) $   (1,259) $  (15,078) $  (19,411) $  (51,421)
Less:
     Non-operating gains
      (losses) and equity
      in income of RLM               -           -       3,628        (969)
     FCC license impairment          -      (8,832)          -      (8,832)
     Write down of auction
      rate investments               -     (11,072)          -     (11,072)
     Restructuring costs        (1,588)     (3,794)     (2,303)     (4,299)
     CEO transition costs          (65)         32      (1,932)     (2,681)
     Non-cash share-based
      compensation                (675)       (931)     (3,205)     (3,928)
                            ----------  ----------  ----------  ----------
EBITDA (as defined) (a)         (3,587)    (39,675)    (23,223)    (83,202)
                            ----------  ----------  ----------  ----------


A reconciliation of EBITDA
 to net loss is as follows:

EBITDA, as defined              (3,587)    (39,675)    (23,223)    (83,202)
Adjustments:
Depreciation and
 amortization                   (3,597)     (4,486)    (14,320)    (17,297)
Interest income                     17         408         382       2,739
Interest expense                (1,600)          -      (4,928)          -
Income taxes                       (66)          -          91         (33)
                            ----------  ----------  ----------  ----------
     Net loss               $   (8,833) $  (43,753) $  (41,998) $  (97,793)
                            ==========  ==========  ==========  ==========


(a) EBITDA as defined for this statistical presentation represents net
income (loss) 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-operating
gains (losses); non-cash impairment charges and writedowns, 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
when given.  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
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.









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


                            Q4                            YTD
               For the three months ending    For the twelve months ending
              1/30/2010  1/31/2009     %     1/30/2010  1/31/2009     %
               --------  --------  --------  ---------  --------  --------
Program
 Distribution
  Cable FTEs     44,543    43,614         2%    43,927    43,127         2%
  Satellite
   FTEs          30,158    28,843         5%    29,649    28,613         4%
               --------  --------  --------  ---------  --------  --------
Total FTEs
 (Average
 000s)           74,701    72,457         3%    73,576    71,740         3%

Net Sales per
 FTE
 (Annualized)  $   8.32  $   7.98         4% $    7.17  $   7.88        -9%

Customer
 Counts
 Year-to-Date
New             168,926   122,311        38%   523,314   321,054        63%
Active          491,814   372,292        32% 1,021,725   753,538        36%

Product Mix
  Jewelry            20%       29%                  23%       36%
  Apparel,
   Fashion
   Accessories
   and
   Health &
   Beauty            15%       15%                  13%       12%
  Computers &
   Electronics       17%       28%                  18%       22%
  Watches,
   Coins &
   Collectibles      33%       22%                  34%       22%
  Home & All
   Other             15%        6%                  12%        8%

Net Shipped
 Units (000s)     1,519       988        54%     4,537     3,088        47%

Average Price
 Point - net
 units         $     96  $    139       -31% $     108  $    176       -39%

Return Rate        19.0%     25.9%  -6.9ppt       21.0%     31.2% -10.2ppt
               --------  --------  --------  ---------  --------  --------

*Includes ShopNBC TV and ShopNBC.com only.

Contact Information