EXHIBIT 99
VALUEVISION MEDIA ANNOUNCES FINANCIAL RESULTS FOR FISCAL THIRD QUARTER 2004
THIRD QUARTER RESULTS IN LINE WITH OCTOBER 24TH EARNINGS PRE-RELEASE; SHOPNBC
ENCOURAGED BY PROGRESS ON SEVERAL KEY INITIATIVES, INCLUDING CUSTOMER
ACQUISITION, CUSTOMER RETENTION, UNIT GROWTH, AND CATEGORY DIVERSIFICATION
MINNEAPOLIS, Nov. 23 -- ValueVision Media (Nasdaq: VVTV - News) today announced
financial results for its third quarter ended October 31, 2004.
Consolidated net sales for the third quarter were $144.3 million. Internet net
sales were a third quarter record $27.6 million. Consolidated net loss was $34.6
million in the third quarter and EBITDA, as defined below, was a loss of $29.9
million.
The Company recorded a third quarter charge of approximately $11.3 million
related to long-lived asset impairments of FanBuzz, a wholly owned subsidiary,
driven primarily by the loss of a major partnership contract. Additionally,
ValueVision recorded a third quarter charge of approximately $3.3 million
associated with the elimination of a number of positions within the company.
QUARTERLY HIGHLIGHTS
o ShopNBC.com represented 19% of consolidated net sales
o Home, apparel, and cosmetics categories grew to 21% from 17% over year
ago quarter
o New customer count was up 17% over last year's same period
o Unit volume growth was up 16% versus year ago period
o Average price point was $180, a 20% decrease versus prior year quarter
RECENT COMPANY DEVELOPMENTS
o ShopNBC Network and ShopNBC.com redesigned
o Company introduced Key Merchandising Initiative: "Our Top Value"
o NBC Cable Executive appointed to Value Vision Board of Directors
o Six New Hosts Hired
SHOPNBC AND SHOPNBC.COM REDESIGN
ValueVision launched a brand new look for ShopNBC and ShopNBC.com. The new look
incorporates a state-of-the-art 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 on screen
graphic, 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 and improved website embodies a number of
features
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and functionality enabling customers to better browse and shop from the
convenience of their home or work place.
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.
NBC UNIVERSAL EXECUTIVE, DOUG HOLLOWAY, JOINS BOARD OF DIRECTORS
Douglas V. Holloway, President of Cable Investments for NBC Universal Cable,
oversees NBC Universal's joint cable ventures, which include A&E Networks and
National Geographic International. He is also responsible for seeking new cable
investments and identifying strategic initiatives for the company.
Previously, Holloway was President of Network Distribution and Affiliate
Relations for Universal Television. His responsibilities included distribution,
affiliate marketing and affiliate relations for USA Network, Sci-Fi Channel,
Trio and News World International. Prior to the sale of USAi to Vivendi and
becoming Universal Television, he held a similar position where he oversaw
regional operations, national accounts, and local ad sales for the networks
revenues for USAi, which included the above television assets plus the Home
Shopping Network and America's Store.
SHOPNBC NEW HOSTS
SARAH ANDERSON has enjoyed a career as an actress which has taken her
across the country and across the globe, with tours of Phantom of the
Opera, Some Like It Hot, Beauty and the Beast, Joseph, Steel Pier, and
as a high-kicking member of the Radio City Rockettes.
KRISTI DONOVAN, a young veteran of the Walt Disney Company as a singer
and host who interviewed numerous celebrities such as Michael J. Fox,
Kevin Bacon, Britney Spears, and Michael Jordan, to name a few. In
2000, she produced and hosted At the Top of Her Game, an award-winning
sports show in Florida that highlighted female athletes.
KATINA FORTE started her career in Pittsburgh as a traffic anchor for
WPXI-TV, an NBC affiliate. She comes to ShopNBC from QVC where she was
a host and an off-air ambassador.
CONNIE KUNKLE is arguably the "infomercial queen" having charted sales
in the multi-million dollars in television sales in the U.S. and
aboard. She recently completed the pilot for her show, Greater Homes,
which combines her personal passions of home decorating, needlework,
crafts and cooking with a big dash of entertainment. She started her
hosting career with America's Health Network and has hosted the
nationally syndicated, Investor's TV News Magazine.
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BRIAN KESSLER started his hosting career working as an entertainment
news anchor for AOL/Time Warner. He was also a host for TVN Home
Shopping, a voice-over talent for advertising campaigns and news
magazine series and a professional sales presenter for companies at
trade shows across the country.
WENDI RUSSO starred in several independent films and TV shows. After
receiving a degree in Broadcast Journalism, she began writing for
entertainment and women's publications. She eventually started her own
production company and created a pilot show called Inside LA, where she
led viewers to the hottest new restaurants, boutiques and clubs.
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 (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. 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.
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
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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, and Peanuts. GE Equity and NBC own
approximately 40% of ValueVision Media. For more information, please visit the
Company's website at http://www.valuevisionmedia.com.
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VALUEVISION MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)
OCTOBER 31, JANUARY 31,
2004 2004
----------- -----------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 26,028 $ 81,033
Short-term investments 70,448 46,148
Accounts receivable, net 65,923 71,166
Inventories 82,736 67,620
Prepaid expenses and other 8,336 5,017
-------- --------
Total current assets 253,471 270,984
PROPERTY AND EQUIPMENT, NET 52,619 54,511
FCC BROADCASTING LICENSE 31,943 31,943
NBC TRADEMARK LICENSE AGREEMENT, NET 19,494 21,914
CABLE DISTRIBUTION AND MARKETING AGREEMENT, NET 3,774 4,445
GOODWILL - 9,442
OTHER INTANGIBLE ASSETS, NET 171 661
INVESTMENTS AND OTHER ASSETS 2,768 2,691
-------- --------
$364,240 $396,591
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 58,112 $ 51,482
Accrued liabilities 40,714 33,355
-------- --------
Total current liabilities 98,826 84,837
LONG-TERM CAPITAL LEASE OBLIGATIONS 1,531 2,002
SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK,
$.01 PAR VALUE, 5,339,500 SHARES AUTHORIZED; 5,339,500
SHARES ISSUED AND OUTSTANDING 42,959 42,745
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value, 100,000,000 shares authorized; 369 365
36,915,448 and 36,487,821 shares issued and outstanding
Warrants to purchase 8,035,343 and 8,235,343 shares of common stock 46,683 47,638
Additional paid-in capital 263,521 260,100
Deferred compensation (403) (646)
Note receivable from former officer (2,598) (4,158)
Accumulated deficit (86,648) (36,292)
-------- --------
Total shareholders' equity 220,924 267,007
-------- --------
$364,240 $396,591
======== ========
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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 FOR THE NINE MONTHS ENDED
OCTOBER 31, OCTOBER 31,
--------------------------- -------------------------
2004 2003 2004 2003
--------- --------- -------- ---------
NET SALES $ 144,341 $ 149,996 $465,016 $ 437,685
COST OF SALES 98,848 96,634 312,539 276,953
----------- ----------- ----------- -----------
Gross profit 45,493 53,362 152,477 160,732
----------- ----------- ----------- -----------
OPERATING (INCOME) EXPENSE:
Distribution and selling 54,556 47,949 157,633 141,399
General and administrative 5,900 3,828 16,682 14,165
Depreciation and amortization 5,102 4,662 14,804 13,216
Asset impairment 11,302 - 11,302 -
Employee termination costs 3,326 - 3,326 -
Gain on sale of television stations - - - (4,417)
----------- ----------- ----------- -----------
Total operating expense 80,186 56,439 203,747 164,363
----------- ----------- ----------- -----------
OPERATING LOSS (34,693) (3,077) (51,270) (3,631)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE):
Gain on sale and conversion of investments - - - 361
Other expense (300) - (50)
Interest income 368 315 964 1,064
----------- ----------- ----------- -----------
Total other income 68 315 914 1,425
----------- ----------- ----------- -----------
LOSS BEFORE INCOME TAXES (34,625) (2,762) (50,356) (2,206)
Income tax provision - 80 - 180
NET LOSS (34,625) (2,842) (50,356) (2,386)
ACCRETION OF REDEEMABLE PREFERRED STOCK (72) (71) (214) (212)
----------- ----------- ----------- -----------
NET LOSS AVAILABLE TO COMMON SHAREHOLDERS $ (34,697) $ (2,913) $(50,570) $ (2,598)
=========== =========== =========== ===========
NET LOSS PER COMMON SHARE $ (0.94) $ (0.08) $ (1.38) $ (0.07)
=========== =========== =========== ===========
NET LOSS PER COMMON SHARE---ASSUMING DILUTION $ (0.94) $ (0.08) $ (1.38) $ (0.07)
=========== =========== =========== ===========
Weighted average number of common shares
outstanding:
Basic $36,870,325 $35,894,859 $36,773,562 $35,855,230
=========== =========== =========== ===========
Diluted $36,870,325 $35,894,859 $36,773,562 $35,855,230
=========== =========== =========== ===========
SUBSCRIBER INFORMATION (estimated in millions)
(Unaudited)
Ending Ending Ending
October 31, January 31, October 31,
2004 2004 2003
----------- ----------- -----------
Full-time Equivalent Subscribers 58.8 55.6 54.1
Total Subscribers 62.5 61.9 60.7
Full-time Subscribers 52.9 49.0 47.4
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RECONCILIATION OF EBITDA TO NET LOSS: Third Third Nine Months Nine Months
Quarter Quarter Ended Ended
31-Oct-04 31-Oct-03 31-Oct-04 31-Oct-03
--------- --------- --------- ---------
EBITDA (AS DEFINED) (000'S) (a) $ (29,891) $ 1,585 $ (36,516) $ 9,946
========= ======= ========= =======
A reconciliation of EBITDA to net loss
is as follows:
EBITDA, as presented $ (29,891) $ 1,585 $ (36,516) $ 9,946
Adjustments:
Depreciation and amortization (5,102) (4,662) (14,804) (13,216)
Interest income 368 315 964 1,064
Income taxes - (80) - (180)
--------- -------- --------- -------
Net loss $ (34,625) $(2,842) $ (50,356) $(2,386)
========= ======= ========= =======
(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.
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VALUE VISION MEDIA, INC.
KEY PERFORMANCE METRICS*
(Unaudited)
--------------------------------------- -------------------------------------
Q3 YTD
FOR THE THREE MONTHS ENDING 10/31 FOR THE NINE MONTHS ENDING 10/31
--------------------------------------- -------------------------------------
F04 F03 % F04 F03 %
--- --- - --- --- -
PROGRAM DISTRIBUTION
Cable FTE's 36,565 34,787 5% 36,231 34,236 6%
Satellite FTE's 21,651 18,843 15% 20,910 18,378 14%
Total FTE's (Average 000's) 58,216 53,630 9% 57,141 52,614 9%
Net Sales per FTE (Annualized) $ 9.46 $ 10.71 -11.7% $ 10.35 $ 10.63 -2.7%
New Customer Count 123,089 105,055 17% 405,515 317,564 28%
Customer Penetration - 12 month rolling 1.4% 1.4% n/a n/a
PRODUCT MIX
Jewelry 58.9% 62.6% 64.0% 67.0%
Apparel 6.3% 2.8% 4.7% 1.4%
Health & Beauty 3.7% 2.7% 3.4% 2.5%
Computer & Electronics 18.8% 19.0% 15.6% 16.4%
Fitness 1.2% 1.2% 1.3% 1.3%
Home 11.1% 11.5% 11.0% 11.5%
Shipped Units (000's) 1,106 952 16% 3,655 2,786 31%
Average Price Point - shipped units $ 180 $ 224 (20%) $ 178 $ 227 (22%)
*Includes ShopNBC TV and ShopNBC.com only.
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