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ValueVision Media Inc. Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: March 22, 2011 10:20PM
ValueVision Media Inc. (VVTV) filed Annual Report for the period ended 2011-01-29. Valuevision Media Inc. has a market cap of $258.3 million; its shares were traded at around $6.85 with and P/S ratio of 0.5.
Highlight of Business Operations:
Our primary form of multi-media retailing is on our live 24-hour per day television shopping network. ShopNBC is the third largest television shopping channel in the United States. ShopNBC.com is a comprehensive e-commerce website with complementary and web-only product. Net sales, including shipping and handling revenues, totaled $562.3 million, $527.9 million and $565.4 million for fiscal 2010, fiscal 2009 and fiscal 2008, respectively. Shoppers can interact and shop via a toll-free telephone number and place orders directly with us or enter an order on the ShopNBC.com website. Our television programming is produced at our Eden Prairie, Minnesota headquarters facility and is transmitted nationally via satellite to cable system operators, satellite system operators, broadcast television station operators and to our owned full power broadcast television station WWDP TV-46 in Boston, Massachusetts.
Net sales from our television home shopping business, inclusive of shipping and handling revenues, totaled $330 million, $350 million and $384 million, representing 59%, 66% and 68% of consolidated net sales for fiscal 2010, fiscal 2009 and fiscal 2008, respectively. Our television programming continues to be the most significant medium through which we reach our customers.
Net sales from our internet website business, inclusive of shipping and handling revenues, totaled $232 million, $178 million and $181 million, representing 41%, 34% and 32% of consolidated net sales for fiscal 2010, fiscal 2009 and fiscal 2008, respectively. We believe that our internet business represents an important component of our future growth opportunities, and we will continue to invest in and enhance our internet-based capabilities.
In March 1999, we entered into a strategic alliance with GE Capital Equity Investments, Inc. (GE Equity) and NBCU, pursuant to which we issued Series A Redeemable Convertible Preferred Stock and common stock warrants, and entered into a shareholder agreement, a registration rights agreement, a distribution and marketing agreement and, the following year, a trademark license agreement. On February 25, 2009, the Company entered into an exchange agreement with the same parties, pursuant to which GE Equity exchanged all outstanding shares of the Companys Series A Preferred Stock for (i) 4,929,266 shares of the Companys Series B Redeemable Preferred Stock, (ii) a warrant to purchase up to 6,000,000 shares of the Companys common stock at an exercise price of $0.75 per share and (iii) a cash payment in the amount of $3.4 million. In connection with the exchange, the parties also amended and restated the 1999 shareholder agreement and registration rights agreement. The outstanding agreements with GE Equity and NBCU are described in more detail below.
On February 25, 2013, a $14,667,000 payment is due and will redeem 30% of the Series B Preferred Stock and any unpaid accrued dividends. The remaining unpaid accrued dividends and outstanding shares of preferred stock will be redeemed on February 25, 2014. In addition, the Series B Preferred Stock includes a cash sweep mechanism that may require accelerated redemptions if we generate excess cash above agreed upon thresholds. Specifically, our excess cash balance at the end of each fiscal year, and at the end of any fiscal quarter during which we dispose of assets or incur indebtedness above agreed upon thresholds, must be used to redeem the Series B Preferred Stock and pay accrued and unpaid dividends thereon. Excess cash balance is defined as our Companys cash and cash equivalents and marketable securities, adjusted to (i) exclude cash pledged to vendors to secure the purchase of inventory, (ii) account for variations that are due to our management of payables, (iii) exclude any operating cash needs for the next twelve months, and (iv) provide us with additional operating cash of $20 million. Any redemption as a result of this cash sweep mechanism will reduce the amounts required to be redeemed on February 25, 2013 and February 25, 2014. The Series B Preferred Stock (including accrued but unpaid dividends) is also required to be redeemed, at the option of the holders, upon a change in control. The Series B Preferred Stock is not convertible into common stock or any other security, but initially will vote with the common stock on a one-for-one basis on general corporate matters other than the election of directors. In addition, the holders of the Series B Preferred Stock have class voting rights and rights to designate members of the Companys board of directors including the right to elect
Stocks Discussed: VVTV,