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ValueVision Media Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: June 7, 2011 04:53PM

ValueVision Media Inc. (VVTV) filed Quarterly Report for the period ended 2011-04-30. Valuevision Media Inc. has a market cap of $307.8 million; its shares were traded at around $6.68 with and P/S ratio of 0.5.



Highlight of Business Operations:

Consolidated net sales for the fiscal 2011 first quarter were $143,533,000 compared to $124,977,000 for the fiscal 2010 first quarter, which represents a 15% increase. We reported an operating loss of $630,000 and a net loss of $28,930,000 for the fiscal 2011 first quarter, primarily attributed to a one-time $25,679,000 debt extinguishment charge recorded in the first quarter resulting from the full redemption of our Series B preferred stock obligation. We reported an operating loss of $9,139,000 and a net loss

Total operating expenses for the fiscal 2011 first quarter were $54,022,000 compared to $54,876,000 for the comparable prior year period, a decrease of 1.6%. Distribution and selling expense increased $434,000, or 1%, to $46,476,000, or 32% of net sales during the fiscal 2011 first quarter compared to $46,042,000 or 37% of net sales for the comparable prior year fiscal quarter. Distribution and selling expense increased over the prior year's fiscal quarter primarily due to increased credit card fees and bad debt expense totaling $697,000, each as a result of the overall increase in net sales and order transactions over prior year. The increase over the prior year's fiscal quarter was also due to increased bonus accrual of $594,000 and increased restricted stock expense of $86,000. The distribution and selling expense increases during the year were offset by: decreases in customer service and telemarketing expense of $428,000 resulting primarily from efficiencies gained in the areas of increased order process automation as well as reductions achieved in our average talk time for both order capture and customer service and decreases in advertising and promotion expense of $518,000.

For the fiscal 2011 first quarter, we reported a net loss of $28,930,000 or $.71 per common share on 40,655,177 weighted average common shares outstanding compared with a net loss of $10,971,000 or $.34 per share on 32,679,504 weighted average common shares outstanding in the fiscal 2010 first quarter. Net loss for the first quarter of fiscal 2011 includes a $25.7 million charge related to the early preferred stock debt extinguishment and interest expense of $2,602,000, relating primarily to accrued interest and debt discount amortization on our Series B Preferred Stock, bank term loan interest expense and the amortization of fees paid to obtain our bank credit facilities. Net loss available to common shareholders for the first quarter of fiscal 2010 includes interest expense of $1,850,000 relating primarily to interest on our Series B Preferred Stock, bank fee amortization, and interest income totaling $42,000 earned on our cash and investments.

As of April 30, 2011, we had cash and cash equivalents of $40,324,000 and had restricted cash and investments of $4,961,000 pledged as collateral for our issuances of standby and commercial letters of credit. Our restricted cash is generally restricted for a period ranging from 30-60 days and / or to the extent that standby and commercial letters of credit remain outstanding. As of January 29, 2011 we had cash and cash equivalents of $46,471,000 and had restricted cash and investments of $4,961,000 pledged as collateral for our issuances of standby and commercial letters of credit. For the first three months of fiscal 2011, working capital increased $1,693,000 to $83,252,000. The current ratio (our total current assets over total current liabilities) was 1.9 at April 30, 2011 compared to 1.8 at January 29, 2011.

Net cash used for investing activities totaled $2,464,000 for the first three months of fiscal 2011 compared to net cash used for investing activities of $1,582,000 for the comparable prior period. For the three months ended April 30, 2011 and May 1, 2010, expenditures for property and equipment were $2,800,000 and $1,681,000, respectively. Expenditures for property and equipment during the fiscal 2011 and 2010 periods primarily include capital expenditures made for the development, upgrade and replacement of computer software, customer care management and merchandising systems, related computer equipment, digital broadcasting equipment and other office equipment, warehouse equipment and production equipment. Principal future capital expenditures are expected to include the development, upgrade and replacement of various enterprise software systems, the expansion of warehousing capacity and security in our fulfillment network, the upgrade and digitalization of television production and transmission equipment and related computer equipment associated with the expansion of our home shopping business and e-commerce initiatives. During the three-month period ended May 1, 2010, we reduced our restricted cash and investments by $99,000 to $4,961,000.

Net cash provided by financing activities totaled $5,960,000 for the three months ended April 30, 2011 and related primarily to cash proceeds received of $55.5 million as a result of our common stock equity offering and cash proceeds received of $263,000 from the exercise of stock options, offset by payments of $40.9 million for the repurchase of all our outstanding Series B Redeemable Preferred Stock and $8.9 million for all accrued Series B Preferred dividends and payment of deferred issuance costs of $35,000. Net cash used for financing activities totaled $17,000 for the three months ended May 1, 2010 and related primarily to a $22,000 payment made in conjunction with our Series B Preferred Stock issuance, offset by cash proceeds received of $5,000 from the exercise of stock options.

Read the The complete Report



Stocks Discussed: VVTV,
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