EXHIBIT 99.1
VALUEVISION 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 ANNOUNCES FINANCIAL RESULTS
FOR FISCAL SECOND QUARTER 2004
Achieves Second Quarter Record Sales, Redesigns Look of ShopNBC Television
Network, Debuts Key Merchandising Initiative "Our Top Value"
MINNEAPOLIS -- AUGUST 18, 2004 -- VALUEVISION MEDIA (NASDAQ: VVTV) today
announced financial results for its second quarter ended July 31, 2004.
Consolidated net sales were a second-quarter-record $161.5 million, an increase
of 12% over prior-year period. Internet net sales were a second-quarter-record
$31 million, up 20% over previous-year quarter. Net loss was $8 million in the
second quarter and EBITDA, as defined below, was ($3.2) million.
QUARTERLY HIGHLIGHTS
o Sales growth per full-time equivalent home was positive for the second
consecutive quarter, up 3% over year-ago.
o ShopNBC.com continued strong growth, representing 19% of company sales.
o Home, apparel, and cosmetics categories grew to 17.9% from 14.5% over
year-ago quarter.
o New customer count was up 33% over last year's same period.
o Unit volume growth was a second-quarter-record 36% versus year-ago period.
o Average price point was $186, a 21% decrease versus prior-year quarter.
"Our second quarter results were in line with expectations," said William
Lansing, president and CEO ValueVision Media, "and we continued to make great
progress on our key strategic metrics, as noted above. In addition, we recently
launched a redesign of our television network as well as a major merchandising
initiative called Our Top Value. I'm confident we are building a great
foundation and layering on top of that some exciting developments which will
position us for accelerated growth in the second half of 2004 and beyond."
RECENT COMPANY DEVELOPMENTS
o ValueVision Redesigns Look of the ShopNBC Television Network
o Company Debuts Key Merchandising Initiative: "Our Top Value"
o ValueVision Renews Fulfillment and Customer Services Agreement with Ralph
Lauren Media
o FanBuzz Signs E-Commerce and Fulfillment Deals with Chicago Bulls and
Washington Wizards
- MORE -
VALUEVISION REDESIGNS LOOK OF THE SHOPNBC TELEVISION NETWORK
On August 16, ValueVision launched a brand new look for ShopNBC. The new look
for the shopping network incorporates a state-of-the-art television
communication redesign with graphic and sound elements choreographed to present
product offers more clearly and effectively. This includes a higher level of
aesthetic appeal, such as a new tower, original music, a coming-up menu, catchy
promotional packages, and topical transition segments. As part of the redesign,
the Company launched a new tagline "Be Good To Yourself," which will be the
unifying theme across all customer touch points.
"The new look and tagline were designed to provide a much improved viewing
experience for our customers, to further differentiate ShopNBC from the
competition, and to strengthen the visual connection we have with our strategic
partner NBC," said Lansing.
COMPANY DEBUTS KEY MERCHANDISING INITIATIVE: "OUR TOP VALUE"
Coincident with the launch of ShopNBC's TV network redesign, ValueVision debuted
a key merchandising initiative called "Our Top Value" (OTV), a daily special
product offer at an exceptional value for one day only. OTV products are unique,
high quality, and timely. They have broad consumer appeal and are priced at
least 15% below ShopNBC's regular price and well below retail.
"The OTV strategy is one of many elements of our merchandising strategy," said
Lansing. "For our consumers, it's about unbelievable product at unbelievable
values. For vendors, it's a way for new ones to get in the door with us and
existing vendors to expand their relationship with us. Not only does OTV
complement our category diversification strategy, it should also drive
incremental sales and profit."
VALUEVISION RENEWS FULFILLMENT AND CUSTOMER SERVICES AGREEMENT WITH RALPH LAUREN
MEDIA
In the second quarter, ValueVision signed a two-year agreement with Ralph Lauren
Media to continue to provide fulfillment and customer care services. ValueVision
has a 12.5% ownership stake in the venture with NBC and Polo Ralph Lauren, and
has provided these services since the launch of RLM in February 2000.
FANBUZZ SIGNS E-COMMERCE AND FULFILLMENT DEALS WITH CHICAGO BULLS AND WASHINGTON
WIZARDS
During the second quarter, FanBuzz entered into e-commerce and fulfillment
agreements with the Chicago Bulls and the Washington Wizards. This marks the
third NBA franchise to sign with FanBuzz, including the Boston Celtics. FanBuzz
is a wholly owned subsidiary of ValueVision.
- MORE -
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OUTLOOK
The following forward-looking statements reflect ValueVision's expectations for
full year 2004:
o Consolidated net sales growth is expected to be in the low to mid teens.
Unit growth is expected to be approximately 20% as average price points
decline.
o EBITDA was negative in the first half of the year and is expected to be
positive in the second half, as the Company's upfront investment to improve
on-air quality, customer service levels, and test various marketing
initiatives improve the business. The third quarter is expected to be
slightly negative and the fourth quarter is expected to be positive.
o Full-time equivalent (FTE) household growth is expected to be up
approximately 7% to 8%, driven predominantly by satellite and digital cable
growth.
o Net sales per FTE is expected to be up approximately 3% to 6% on average
for the year.
o New customer acquisition is expected to be up over 20% for the year.
A conference call will be held Thursday, August 19, 2004, at 11 a.m. ET / 8 a.m.
PT. To participate via webcast, please go to www.valuevisionmedia.com and select
the link Calendar of Events. A replay of the call will be available through
Thursday, September 2. This call will contain forward-looking statements and
other material information regarding the Company's financial and operating
results.
The Company defines EBITDA as net income (loss) for the respective periods
excluding depreciation and amortization expense, interest income (expense), and
income taxes. Management views EBITDA as an important alternative operating
performance measure because it is commonly used by analysts and institutional
investors in analyzing the financial performance of companies in the broadcast
and television home shopping sectors. However, EBITDA should not be construed as
an alternative to operating income 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. EBITDA, as presented, may not
be comparable to similarly entitled measures reported by other companies.
Management uses EBITDA to evaluate operating performance and as a measure of
performance for incentive compensation purposes.
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.
- MORE -
3
ValueVision Media is an integrated direct marketing company that sells products
directly to consumers through television, the Internet, and direct mail. The
television home shopping industry is a $7 billion industry growing at a
double-digit rate annually. The e-commerce space is even larger and growing
faster. The Company owns and operates the nation's third largest home shopping
network, ShopNBC, with fiscal 2003 sales of $617 million. At the close of fiscal
2003, ShopNBC was broadcast into approximately 56 million full-time equivalent
cable and satellite homes. The Company also operates ShopNBC.com, which
contributed $111 million in sales in fiscal 2003. Through its wholly-owned
subsidiary FanBuzz, the Company provides e-commerce solutions to sports,
entertainment, and media brands, such as the National Hockey League, Elvis
Presley, Peanuts, and ESPN. GE Equity and NBC own approximately 40% of
ValueVision Media. For more information, please visit the Company's website at
www.valuevisionmedia.com.
###
4
VALUEVISION MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)
<Table>
<Caption>
JULY 31, JANUARY 31,
2004 2004
----------- -----------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 25,720 $ 81,033
Short-term investments 86,721 46,148
Accounts receivable, net 83,695 71,166
Inventories 64,014 67,620
Prepaid expenses and other 7,979 5,017
----------- -----------
Total current assets 268,129 270,984
PROPERTY AND EQUIPMENT, NET 53,877 54,511
FCC BROADCASTING LICENSE 31,943 31,943
NBC TRADEMARK LICENSE AGREEMENT, NET 20,301 21,914
CABLE DISTRIBUTION AND MARKETING AGREEMENT, NET 3,998 4,445
GOODWILL 9,442 9,442
OTHER INTANGIBLE ASSETS, NET 437 661
INVESTMENTS AND OTHER ASSETS 3,033 2,691
----------- -----------
$ 391,160 $ 396,591
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 56,731 $ 51,482
Accrued liabilities 36,824 33,355
----------- -----------
Total current liabilities 93,555 84,837
LONG-TERM CAPITAL LEASE OBLIGATIONS 1,702 2,002
SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK,
$.01 PAR VALUE, 5,339,500 SHARES AUTHORIZED; 5,339,500
SHARES ISSUED AND OUTSTANDING 42,888 42,745
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value, 100,000,000 shares authorized;
36,850,664 and 36,487,821 shares issued and outstanding 368 365
Warrants to purchase 8,035,343 and 8,235,343 shares of common stock 46,683 47,638
Additional paid-in capital 248,914 246,143
Accumulated other comprehensive losses --
Deferred compensation (693) (646)
Note receivable from former officer (4,191) (4,158)
Accumulated deficit (38,066) (22,335)
----------- -----------
Total shareholders' equity 253,015 267,007
----------- -----------
$ 391,160 $ 396,591
=========== ===========
</Table>
5
VALUEVISION MEDIA, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
<Table>
<Caption>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
JULY 31, JULY 31,
---------------------------- ----------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
NET SALES $ 161,478 $ 144,214 $ 320,675 $ 287,689
COST OF SALES 107,578 89,933 213,691 180,319
------------ ------------ ------------ ------------
Gross profit 53,900 54,281 106,984 107,370
------------ ------------ ------------ ------------
OPERATING (INCOME) EXPENSE:
Distribution and selling 52,275 45,773 103,077 93,450
General and administrative 5,107 4,939 10,782 10,337
Depreciation and amortization 4,918 4,301 9,702 8,554
Gain on sale of television stations -- -- -- (4,417)
------------ ------------ ------------ ------------
Total operating (income) expense 62,300 55,013 123,561 107,924
------------ ------------ ------------ ------------
OPERATING LOSS (8,400) (732) (16,577) (554)
------------ ------------ ------------ ------------
OTHER INCOME:
Gain on sale and conversion of investments -- 361 -- 361
Other Income 250 -- 250 --
Interest income 322 395 596 749
------------ ------------ ------------ ------------
Total other income 572 756 846 1,110
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES (7,828) 24 (15,731) 556
Income tax provision -- 100 -- 100
------------ ------------ ------------ ------------
NET INCOME (LOSS) (7,828) (76) (15,731) 456
ACCRETION OF REDEEMABLE
PREFERRED STOCK (71) (71) (142) (141)
------------ ------------ ------------ ------------
NET INCOME (LOSS) AVAILABLE TO
COMMON SHAREHOLDERS $ (7,899) $ (147) $ (15,873) $ 315
============ ============ ============ ============
NET INCOME (LOSS) PER COMMON SHARE $ (0.21) $ (0.00) $ (0.43) $ 0.01
============ ============ ============ ============
NET INCOME (LOSS) PER COMMON SHARE
---ASSUMING DILUTION $ (0.21) $ (0.00) $ (0.43) $ 0.01
============ ============ ============ ============
Weighted average number of common shares outstanding:
Basic 36,809,884 35,689,645 36,725,181 35,835,416
============ ============ ============ ============
Diluted 36,809,884 35,689,645 36,725,181 42,489,465
============ ============ ============ ============
</Table>
SUBSCRIBER INFORMATION (ESTIMATED IN MILLIONS)
(Unaudited)
<Table>
<Caption>
ENDING ENDING ENDING
JULY 31, JANUARY 31, JULY 31,
2004 2004 2003
-------- ----------- --------
Full-time Equivalent Subscribers 57.6 55.6 53.1
Total Subscribers 61.5 61.9 59.4
Full-time Subscribers 51.7 49.0 46.4
</Table>
6
VALUE VISION MEDIA, INC.
KEY PERFORMANCE METRICS*
(Unaudited)
<Table>
<Caption>
Q2 YTD
FOR THE THREE MONTHS ENDING 7/31 FOR THE SIX MONTHS ENDING 7/31
-------------------------------- --------------------------------
F04 F03 % F04 F03 %
--------- --------- ------ --------- --------- ------
PROGRAM DISTRIBUTION
Cable FTE's 36,192 34,437 5% 36,046 33,968 6%
Satellite FTE's 20,942 18,413 14% 20,544 18,143 13%
--------- --------- ------ --------- --------- ------
Total FTE's (Average 000's) 57,134 52,850 8% 56,590 52,111 9%
Net Sales per FTE (Annualized) $ 10.83 $ 10.51 3.0% $ 10.81 $ 10.59 2.0%
New Customer Count 129,935 98,001 33% 278,505 212,509 31%
Customer Penetration - 12 month rolling 1.4% 1.4% n/a n/a
PRODUCT MIX
Jewelry 67.4% 70.5% 66.3% 69.2%
Apparel 3.2% 0.4% 3.9% 0.6%
Health & Beauty 2.8% 2.2% 3.1% 2.3%
Computer & Electronics 14.7% 15.0% 14.3% 15.0%
Fitness 0.8% 1.1% 1.4% 1.3%
Home 11.1% 10.8% 10.9% 11.5%
Shipped Units (000's) 1,233 905 36% 2,549 1,834 39%
Average Price Point - shipped units $ 186 $ 237 (21%) $ 177 $ 228 (22%)
</Table>
*Includes ShopNBC TV and ShopNBC.com only.
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RECONCILIATION OF EBITDA TO NET INCOME (LOSS):
<Table>
<Caption>
SECOND QUARTER SECOND QUARTER SIX MONTHS ENDING SIX MONTHS ENDING
31-JUL-04 31-JUL-03 31-JUL-04 31-JUL-03
-------------- -------------- ----------------- -----------------
EBITDA (AS DEFINED) (000'S) (a) $ (3,232) $ 3,930 $ (6,625) $ 8,361
======== ======== ======== ========
A reconciliation of EBITDA to net loss is as follows:
EBITDA, as presented $ (3,232) $ 3,930 $ (6,625) $ 8,361
Adjustments:
Depreciation and amortization (4,918) (4,301) (9,702) (8,554)
Interest income 322 395 596 749
Income taxes -- (100) -- (100)
-------- -------- -------- --------
Net income (loss) $ (7,828) $ (76) $(15,731) $ 456
======== ======== ======== ========
</Table>
(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. Previous to the
second quarter of fiscal 2004, management defined EBITDA as operating
income (loss) excluding depreciation and amortization expense, other
non-operating income (expense) and income taxes. The change was made to
conform to the more common definition of EBITDA. Management views EBITDA
as an important alternative operating performance measure because it is
commonly used by analysts and institutional investors in analyzing the
financial performance of companies in the broadcast and television home
shopping sectors. However, EBITDA should not be construed as an
alternative to operating income 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. EBITDA, as presented, may not be comparable to similarly
entitled measures reported by other companies. Management uses EBITDA to
evaluate operating performance and as a measure of performance for
incentive compensation purposes.
8