EXHIBIT 99
[VALUEVISION. LOGO] VALUEVISION MEDIA
6740 Shady Oak Road
Minneapolis, MN 55344-3433
Contact: Anthony Giombetti
Director, Corporate Communications
952-943-6017, agiombetti@shopnbc.com
For Immediate Release
VALUEVISION MEDIA REPORTS RECORD FISCAL FIRST QUARTER 2003
TV AND INTERNET SALES
Company Meets Guidance, Exceeds Topline Estimates
MINNEAPOLIS, MINN. -- MAY 20, 2003 -- VALUEVISION MEDIA (NASDAQ: VVTV), which
owns and operates ShopNBC and ShopNBC.com, today announced financial results for
the first quarter ended April 30, 2003.
FINANCIAL AND DISTRIBUTION HIGHLIGHTS FOR THE FIRST QUARTER ENDED APRIL 30, 2003
o Consolidated net sales a first quarter record $143 million, up 8% over
prior-year period
o Internet net sales a first quarter record $25 million, up 8% over
previous-year quarter
o EBITDA (as defined below) was $4.4 million
o Full-time equivalent (FTE) homes of 52.6 million, up 2.1 million from last
quarter
"The past few months continued to present a challenging retail environment. The
confluence of a difficult economy, the war in Iraq, and retail sales in general
continue to affect consumer confidence and purchase decision making," said Gene
McCaffery, ValueVision Media Chairman and CEO. "Our revenue for the quarter
exceeded our expectations with a strong finish in April. We had pre-planned for
a difficult sales environment anticipating the conflict in Iraq. Promotional
activity was heightened to increase our penetration during lower viewership
created by news and events."
Added McCaffery, "We continue to experience significant household growth with
each quarter, adding 2.1 million new homes this period in addition to the 2.4
million added last quarter. While the added distribution costs are always
challenging in the short run, the positioning for longer-term benefits is
compelling. We continue to invest in strengthening our management and buying
staff to address the opportunities afforded by these distribution additions, and
to better merchandise and price our programs to increase sales and margin per
household."
Dick Barnes, ValueVision Media EVP, COO, & CFO, said: "While net sales were
higher than expected in the quarter, EBITDA was impacted by approximately $1.3
million of incremental operating expenses associated with the stronger than
expected FTE growth in the period, the establishment of a reserve for a pending
litigation settlement, and legal fees for a discontinued business development
initiative. Gross margin of 37% improved again versus the prior quarter, but
continued to be impacted by higher levels of promotion in a difficult retail
environment."
Added Barnes, "Cash, cash equivalents, and short-term investments ended the
quarter at $138 million. Inventory balances declined again by a further $2
million and have returned to more normalized levels. Finally, we repurchased
567,000 shares of common stock at average prices of $10.90 per share or $6.2
million."
EBITDA as reported was $4.4 million. The Company defines EBITDA as its operating
income for respective periods being reported excluding depreciation and
amortization expense. This includes a gain of $4.4 million on the previously
reported sale of 10 low-powered television stations, which closed during the
quarter. Net income was $532,000 inclusive of the item identified above. There
has been no tax provision recorded in the current quarter due to the Company's
ability to utilize previously reserved capital loss carryforwards against the
low-power television station gain.
BUSINESS HIGHLIGHTS FOR THE FIRST QUARTER ENDED APRIL 30, 2003
ValueVision Media Completes Purchase of Full Power Television Station WWDP in
Boston, Completes Sale of Low Power Television Stations
o ShopNBC Continues to Add New Brands and Shows
o ShopNBC Credit Card Surpasses 150,000 Account Holders
o FanBuzz Continues to Expand Client List
o Annual Shareholders' Meeting Announced
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VALUEVISION MEDIA COMPLETES PURCHASE OF FULL POWER TELEVISION STATION WWDP IN
BOSTON, COMPLETES SALE OF LOW POWER TELEVISION STATIONS
During the quarter, ValueVision completed the purchase of the full power
television station WWDP TV-46 in Boston, which reaches approximately 1.8 million
cable households. The Company invested approximately $33 million to acquire the
television station in order to build a long-term and cost effective distribution
strategy in the attractive Boston area. The deal closed with FCC approval.
ValueVision also completed the sale of 10 low power television stations for
approximately $5 million in the period, resulting in a $4.4 million gain on the
sale.
SHOPNBC CONTINUES TO ADD NEW BRANDS AND SHOWS
ShopNBC continued to add new brands and shows to its programming line-up. During
the first quarter, the Company entered into commerce agreements with Dell,
Discovery Channel's retail division, Sirius Satellite Radio, Danbury Mint,
Premier Collectibles (coins), Versace and Mikasa crystal, Dirt Devil, and
Cuisinart, to mention a few. These developments are the latest additions to an
on-going list of brand names including Bose, Solutions, AOL, Gevalia,
ProFlowers, and Omaha Steaks.
SHOPNBC CREDIT CARD SURPASSES 150,000 ACCOUNT HOLDERS
ShopNBC achieved a milestone with its 18 month old private label credit card by
surpassing the 150,000 account holders mark with an open-to-buy of approximately
$300 million. The ShopNBC card has proven to be a successful marketing promotion
and customer loyalty tool as well as financially attractive because it generates
incremental revenue to our top line and significant savings to our bottom line
by lowering processing fees.
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FANBUZZ CONTINUES TO EXPAND CLIENT LIST
FanBuzz, a wholly owned subsidiary of ValueVision and a leading provider of
e-commerce solutions to major media and brand companies, continued to expand its
client list of sports and entertainment media companies during the first
quarter. In addition to signing e-commerce and fulfillment agreements with the
Arena Football League and two national governing bodies of amateur sports (USA
Basketball, and USA Gymnastics), FanBuzz also now powers the online store of The
Weather Channel.
ANNUAL SHAREHOLDERS' MEETING ANNOUNCED
The Company will hold its Annual Shareholders Meeting on Thursday, June 26, 2003
at the Marriott Southwest in Minnetonka, MN, from 10:00 a.m. to noon. Details
will be mailed to shareholders of record in late May.
OUTLOOK FOR THE SECOND QUARTER ENDING JULY 31, 2003
o Consolidated net sales expected to be $142 million to $147 million, up 11%
to 15% over the prior- year period
o EBITDA for the quarter expected to be $2 million to $4 million
"With the war in Iraq behind us and signs of improvement in consumer confidence,
we are cautiously optimistic as we look forward," said Barnes. "However, we do
expect the retail promotional environment to remain challenging in the
short-term. Moreover, we will continue to invest in expanding our program
distribution and putting in place the building blocks to support category
diversification."
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
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distribution for the Company's programming and the fees associated therewith;
the success of the Company's e-commerce initiatives; 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 operates in the converged world of television, the Internet,
and e-commerce. The live home shopping industry, the majority of ValueVision's
business, is $7 billion and growing at a double digit rate annually while the
attendant e-commerce space is many times that size and also growing
substantially. The Company owns and operates the nation's third largest home
shopping network, ShopNBC, with fiscal 2002 sales of $555 million. At the close
of fiscal 2002, ShopNBC was broadcast into approximately 55 million cable and
satellite homes. The Company also operates ShopNBC.com, which contributed $94
million in sales in fiscal 2002. In addition, the Company operates wholly owned
subsidiary FanBuzz, a leading provider of e-commerce solutions to sports,
entertainment, and media brands, such as the National Hockey League and The
Weather Channel. GE Equity and NBC own approximately 40% of ValueVision Media.
For more information, please visit the Company's website at
www.valuevisionmedia.com
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VALUEVISION MEDIA, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
FOR THE THREE MONTHS ENDED
APRIL 30,
----------------------------
2003 2002
------------ ------------
NET SALES $ 143,475 $ 132,849
COST OF SALES 90,386 81,030
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Gross profit 53,089 51,819
------------ ------------
OPERATING (INCOME) EXPENSE:
Distribution and selling 47,677 42,352
General and administrative 5,398 4,161
Depreciation and amortization 4,253 3,321
Gain on sale of television stations (4,417) --
------------ ------------
Total operating (income) expense 52,911 49,834
------------ ------------
OPERATING INCOME 178 1,985
------------ ------------
OTHER INCOME (EXPENSE):
Loss on sale and conversion of investments -- (6)
Unrealized gain on security holdings -- 1,021
Write-down of investments -- (985)
Equity in losses of affiliates -- (2,098)
Interest income 354 1,035
------------ ------------
Total other income (expense) 354 (1,033)
------------ ------------
INCOME BEFORE INCOME TAXES 532 952
Income tax provision -- 343
------------ ------------
NET INCOME 532 609
ACCRETION OF REDEEMABLE
PREFERRED STOCK (71) (70)
------------ ------------
NET INCOME AVAILABLE TO
COMMON SHAREHOLDERS $ 461 $ 539
============ ============
NET INCOME PER COMMON SHARE $ 0.01 $ 0.01
============ ============
NET INCOME PER COMMON SHARE
---ASSUMING DILUTION $ 0.01 $ 0.01
============ ============
Weighted average number of common shares outstanding:
Basic 35,981,187 38,153,172
============ ============
Diluted 42,500,565 46,558,647
============ ============
SUBSCRIBER INFORMATION (estimated in millions)
APRIL 30, JANUARY 31, APRIL 30,
2003 2003 2002
---------- ----------- ----------
Full-time Equivalent Subscribers 52.6 50.5 45.2
Total Subscribers 58.6 55.1 53.0
Full-time Subscribers 45.8 44.1 37.7
VALUEVISION MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 30, JANUARY 31,
2003 2003
--------- -----------
(In thousands, except share data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 74,749 $ 55,109
Short-term investments 63,316 113,525
Accounts receivable, net 60,641 76,734
Inventories 59,347 61,246
Prepaid expenses and other 7,193 7,449
--------- ---------
Total current assets 265,246 314,063
PROPERTY AND EQUIPMENT, NET 52,298 39,905
FCC LICENSES 31,943 --
NBC TRADEMARK LICENSE AGREEMENT, NET 24,334 25,141
CABLE DISTRIBUTION AND MARKETING AGREEMENT, NET 5,117 5,341
GOODWILL 9,442 9,442
OTHER INTANGIBLE ASSETS, NET 1,064 1,242
INVESTMENTS AND OTHER ASSETS 10,405 11,140
--------- ---------
$ 399,849 $ 406,274
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 53,977 $ 56,961
Accrued liabilities 32,396 30,310
Income taxes payable 76 226
--------- ---------
Total current liabilities 86,449 87,497
LONG-TERM CAPITAL LEASE OBLIGATIONS 1,323 1,669
SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK,
$.01 PAR VALUE, 5,339,500 SHARES AUTHORIZED; 5,339,500
SHARES ISSUED AND OUTSTANDING 42,533 42,462
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value, 100,000,000 shares authorized;
35,657,277 and 36,171,250 shares issued and outstanding 356 362
Common stock purchase warrants;
8,235,343 and 8,235,343 shares 47,638 47,638
Additional paid-in capital 239,677 244,134
Accumulated other comprehensive losses (2,233) (2,517)
Deferred compensation (1,367) --
Note receivable from officer (4,115) (4,098)
Accumulated deficit (10,412) (10,873)
--------- ---------
Total shareholders' equity 269,544 274,646
--------- ---------
$ 399,849 $ 406,274
========= =========
VALUE VISION MEDIA, INC.
OPERATING STATISTICS
FIRST QUARTER FIRST QUARTER
30-APR-03 30-APR-02
--------- ---------
ENDING FTE HOUSEHOLDS: (IN MILLIONS)
Cable 34.4 29.1
Satellite 18.2 16.1
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Total 52.6 45.2
=================================================
SHOPNBC MERCHANDISE SALES MIX:
Jewelry 68% 71%
Computers & Accessories 15% 16%
Others 17% 13%
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Total 100% 100%
=================================================
EBITDA (AS DEFINED) (000'S) (A) $ 4,431 $ 5,306
=================================================
A reconciliation of EBITDA to operating income is as follows:
EBITDA as presented $ 4,431 $ 5,306
Less:
Depreciation and amortization (4,253) (3,321)
-------------------------------------------------
Operating income $ 178 $ 1,985
=================================================
(a) EBITDA as defined for this statistical presentation represents operating
income for the respective periods excluding depreciation and amortization
expense.