ValueVision Reports Fiscal Third Quarter 2012 Results

MINNEAPOLIS, MN--(Marketwire - Nov 14, 2012) - ValueVision Media, Inc. (NASDAQ: VVTV), a multichannel electronic retailer operating as ShopNBC (www.shopnbc.com), today announced operating results for its fiscal 2012 third quarter (Q3'12) ended October 27, 2012, and the Company will host an investor conference call/webcast today at 11am ET, details below.

 
SUMMARY RESULTS AND KEY OPERATING METRICS
($ Millions, except average price points)
                     
    Three months ended   Nine months ended
    10/27/ 2012   10/29/ 2011       10/27/ 2012   10/29/ 2011    
    Q3 '12   Q3 '11   Change   YTD   YTD   Change
Net Sales   $ 137.6   $ 135.2     1.8%   $ 409.3   $ 410.9     -0.4%
Gross Profit   $ 50.8   $ 50.2     1.1%   $ 153.5   $ 154.9     -0.9%
Gross Profit %     36.9%     37.2%     -30 bps     37.5%     37.7%     -20 bps
EBITDA, as adjusted   $ 0.6   $ (0.5)   $ 1.1   $ 0.3   $ 3.7   $ (3.4)
                                     
Loss Before Debt Extinguishment   $ (3.7)   $ (6.3)   $ 2.6   $ (15.8)   $ (14.1)   $ (1.7)
  Debt Extinguishment   $ -   $ -     n/a   $ (0.5)   $ (25.7)   $ 25.2
Net Loss   $ (3.7)   $ (6.3)   $ 2.6   $ (16.3)   $ (39.7)   $ 23.5
                                     
Homes (Average 000s)     83,268     80,728     3.1%     82,366     79,366     3.8%
Net Shipped Units (000s)     1,273     1,188     7.2%     3,857     3,480     10.8%
Average Selling Price   $ 100   $ 105     -4.8%   $ 99   $ 108     -8.3%
Return Rate %     23.5%     24.6%     -110 bps     22.1%     22.8%     -70 bps
Internet Net Sales %     44.8%     44.1%     +70 bps     45.4%     45.0%     +40 bps
                                     

ValueVision's Q3'12 net sales rose 1.8% to $137.6 million versus Q3'11, driven by sales improvements in the Beauty, Health, & Fitness category. This performance offset a decrease in the categories of Fashion & Accessories and Home & Consumer Electronics. Gross profit dollars increased 1.1% though gross profit margin decreased by 30 basis points to 36.9% in Q3'12 versus Q3'11, principally reflecting an increase in shipping and handling promotions. ValueVision's operating expenses decreased 3% in Q3'12 versus Q3'11, as rate reductions within variable expenses helped offset an increase in TV distribution fees related to a 3.1% growth in the average number of homes in the Company's distribution footprint. ValueVision reported a Q3'12 adjusted EBITDA gain of $0.6 million compared to an adjusted EBITDA loss of $0.5 million in Q3'11. On a year-to-date basis, adjusted EBITDA is positive $0.3 million compared to $3.7 million in the prior year.

The Company's average selling price decreased 4.8% to $100 in Q3'12 versus Q3'11. Net shipped units rose 7.2% in Q3'12 versus Q3'11. Year-to-date net shipped units rose 10.8% versus the year-ago period. The Company's Internet sales penetration rose 70 basis points to 44.8% in Q3'12 versus Q3'11.

ValueVision CEO Keith Stewart, said, "In Q3 we made progress in many areas of the organization while also addressing areas not yet performing up to expectations. I am pleased with the progress made in the emerging category of Beauty, Health, & Fitness. The Company strategically shifted airtime from Jewelry & Watches to invest in our Home & Consumer Electronics and Beauty, Health, & Fitness categories in Q3. This airtime shift helped diversify our product mix and reduce our average selling price, contributing to improved new and active customer counts in the quarter. We still have work to do in the Home & Consumer Electronics category to further broaden our product mix. Ongoing initiatives to improve customer service and engagement yielded positive results in the third quarter, including improved call center efficiency and lower transaction costs. Additionally, our 'Watch & Shop Anytime, Anywhere' strategy is constantly evolving to align with our customers' shopping preferences. This initiative further supported growth in our mobile penetration, which has more than doubled to approximately 16% of Internet sales year-to-date versus last year."

Added Mr. Stewart, "As previously announced, starting January 1, 2013, ValueVision will benefit from a $15 million annual distribution cost savings as well as a second channel of exposure in approximately 19 million television households. Both enhancements are expected to make important contributions to our operating performance next year."

ValueVision EVP and CFO William McGrath said, "ValueVision's cash, including restricted cash, position totaled $32.6 million at the end of the third quarter, compared to $40.3 million in Q2'12. The Company's working capital position reflects planned seasonal inventory increases in advance of our peak fourth quarter selling season. Inventories rose $8 million to $54 million in Q3'12 versus $46 million in Q2'12. Additionally, accounts receivable increased in the quarter due to higher usage of ValuePay installment sales."

Conference Call / Webcast: Today, Wednesday, November 14 at 11 am ET

WEBCAST/WEB REPLAY: http://www.media-server.com/m/p/7hni5d7c

TELEPHONE: 866-825-3209; Passcode: 64100296

Adjusted EBITDA
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 debt extinguishment, non-operating gains (losses); non-cash impairment charges and write-downs; restructuring; 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), net 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. The company has included a reconciliation of Adjusted EBITDA to net loss, its most directly comparable GAAP financial measure, in this release.

About ValueVision Media/ShopNBC (www.shopnbc.com/ir)
ValueVision Media, Inc. operates ShopNBC, a multichannel electronic retailer that enables customers to shop via TV, phone, Internet and mobile devices and to interact via the ShopNBC website as well as Facebook, Twitter and YouTube. The ShopNBC television network reaches 83 million cable and satellite homes and is also available nationwide on PCs, tablets and iPhone, Android and other mobile devices via live streaming at www.shopnbc.com. ShopNBC's merchandise categories include Home & Consumer Electronics, Beauty, Health & Fitness, Fashion & Accessories, and Jewelry & Watch. Please visit www.shopnbc.com/ir for more investor information.

Forward-Looking Information
This release contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements contained herein that are not statements of historical fact may be deemed forward-looking statements. 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 preferences, spending and debt levels; the general economic and credit environment; interest rates; seasonal variations in consumer purchasing activities; the ability to achieve the most effective product category mixes to maximize sales and margin objectives; competitive pressures on sales; pricing and gross sales margins; the level of cable and satellite distribution for our programming and the associated fees; our ability to establish and maintain acceptable commercial terms with third-party vendors and other third parties with whom we have contractual relationships, and to successfully manage key vendor relationships; our ability to manage our operating expenses successfully and our working capital levels; our ability to remain compliant with our long-term credit facility covenants; the market demand for television station sales; our management and information systems infrastructure; challenges to our data and information security; changes in governmental or regulatory requirements; litigation or governmental proceedings affecting our operations; significant public events that are difficult to predict, or other significant television-covering events causing an interruption of television coverage or that directly compete with the viewership of our programming; and our ability 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. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this announcement. 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.

(tables follow)

VALUEVISION MEDIA, INC.  
AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
(In thousands except share and per share data)  
             
    October 27,     January 28,  
    2012     2012  
    (Unaudited)        
                 
ASSETS  
Current assets:                
  Cash and cash equivalents   $ 30,509     $ 32,957  
  Restricted cash and investments     2,100       2,100  
  Accounts receivable, net     83,418       80,274  
  Inventories     53,884       43,476  
  Prepaid expenses and other     5,363       4,464  
    Total current assets     175,274       163,271  
Property and equipment, net     25,587       27,992  
FCC broadcasting license     23,111       23,111  
NBC Trademark License Agreement, net     4,997       1,215  
Other Assets     833       2,871  
    $ 229,802     $ 218,460  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY  
                 
Current liabilities:                
  Accounts payable   $ 70,806     $ 53,437  
  Accrued liabilities     32,652       37,842  
  Deferred revenue     85       85  
    Total current liabilities     103,543       91,364  
                 
                 
Deferred revenue     442       507  
Term Loan     -       25,000  
Long Term Credit Facility     38,000       -  
    Total liabilities     141,985       116,871  
                 
Commitments and Contingencies                
                 
Shareholders' equity:                
  Common stock, $.01 par value, 100,000,000 shares authorized; 48,939,486 and 48,560,205 shares issued and outstanding     490       486  
                   
  Warrants to purchase 6,007,372 shares of common stock     567       567  
                   
  Additional paid-in capital     406,332       403,849  
                   
  Accumulated deficit     (319,572 )     (303,313 )
    Total shareholders' equity     87,817       101,589  
    $ 229,802     $ 218,460  
   
   
VALUEVISION MEDIA, INC.  
AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF OPERATIONS  
(In thousands, except share and per share data)  
(Unaudited)  
                         
                         
    For the Three Month Periods Ended     For the Nine Month Periods Ended  
                         
    October 27,     October 29,     October 27,     October 29,  
    2012     2011     2012     2011  
Net sales   $ 137,592     $ 135,187     $ 409,320     $ 410,857  
Cost of sales     86,802       84,945       255,818       255,955  
      Gross profit     50,790       50,242       153,502       154,902  
      Margin %     36.9 %     37.2 %     37.5 %     37.7 %
                                 
Operating expense:                                
  Distribution and selling     46,762       47,577       142,308       140,366  
  General and administrative     4,242       4,824       13,446       14,796  
  Depreciation and amortization     3,174       3,210       10,026       9,278  
    Total operating expense     54,178       55,611       165,780       164,440  
Operating loss     (3,388 )     (5,369 )     (12,278 )     (9,538 )
                                 
Other expense:                                
  Interest income     7       17       11       61  
  Interest expense     (379 )     (982 )     (3,571 )     (4,528 )
  Gain on sale of assets     100       -       100       -  
  Loss on debt extinguishment     -       -       (500 )     (25,679 )
    Total other expense     (272 )     (965 )     (3,960 )     (30,146 )
                                 
Loss before income taxes     (3,660 )     (6,334 )     (16,238 )     (39,684 )
                                 
Income tax provision     (15 )     (16 )     (21 )     (52 )
                                 
Net loss   $ (3,675 )   $ (6,350 )   $ (16,259 )   $ (39,736 )
                                 
Net loss per common share   $ (0.08 )   $ (0.13 )   $ (0.33 )   $ (0.87 )
                                 
Net loss per common share --- assuming dilution   $ (0.08 )   $ (0.13 )   $ (0.33 )   $ (0.87 )
                                 
Weighted average number of common shares outstanding:                                
      Basic     48,931,464       48,472,205       48,807,749       45,752,867  
      Diluted     48,931,464       48,472,205       48,807,749       45,752,867  
   
   
VALUEVISION MEDIA, INC.  
AND SUBSIDIARIES  
                         
Reconciliation of Adjusted EBITDA to Net Loss:  
                         
    For the Three Month Periods Ended     For the Nine Month Periods Ended  
                         
    October 27,     October 29,     October 27,     October 29,  
    2012     2011     2012     2011  
                                 
                                 
Adjusted EBITDA (000's)   $ 561     $ (537 )   $ 301     $ 3,677  
Less:                                
  Loss on debt extinguishment     -       -       (500 )     (25,679 )
  Gain on sale of assets     100       -       100       -  
  Non-cash share-based compensation     (725 )     (1,561 )     (2,403 )     (3,737 )
EBITDA (as defined) (a)     (64 )     (2,098 )     (2,502 )     (25,739 )
                                 
                                 
A reconciliation of EBITDA to net loss is as follows:                                
                                 
EBITDA (as defined) (a)     (64 )     (2,098 )     (2,502 )     (25,739 )
Adjustments:                                
  Depreciation and amortization     (3,224 )     (3,271 )     (10,176 )     (9,478 )
  Interest income     7       17       11       61  
  Interest expense     (379 )     (982 )     (3,571 )     (4,528 )
  Income taxes     (15 )     (16 )     (21 )     (52 )
Net loss   $ (3,675 )   $ (6,350 )   $ (16,259 )   $ (39,736 )
                                 

(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 Adjusted EBITDA as EBITDA excluding debt extinguishment, non-operating gains (losses); non-cash impairment charges and writedowns, restructuring costs; and non-cash share-based compensation expense.

Management has included the term Adjusted EBITDA 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 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), net 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. Adjusted EBITDA may not be comparable to similarly entitled measures reported by other companies.



Contact:
Media Relations:
Dawn Zaremba
ShopNBC
dzarembal@shopnbc.com
(952) 943-6043

Investors:
David Collins, Eric Lentini
Catalyst Global LLC
vvtv@catalyst-ir.com
(212) 924-9800 o
(917) 734-0339 m