ValueVision Media Inc. (VVTV, Financial) filed Quarterly Report for the period ended 2010-05-01.
Valuevision Media Inc. has a market cap of $53.3 million; its shares were traded at around $1.63 with and P/S ratio of 0.1. VVTV is in the portfolios of Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors.
On November 25, 2009, we entered into an agreement with PNC Bank, National Association to establish a senior secured revolving credit facility. On June 8, 2010, the Company amended its Revolving Credit and Security Agreement with PNC Bank to amend certain financial covenants related to the credit facility. The credit facility has a three-year term and provides for up to a $20 million revolving line of credit. Borrowings under the credit facility may bear interest at either fixed rates or floating rates of interest based on either the prime rate or LIBOR, plus variable margins. Borrowings are secured primarily by our eligible accounts receivable and inventory as well as other assets as defined in the revolving credit and security agreement (including a negative pledge on our distribution facility in Bowling Green, Kentucky) and are subject to customary financial and other covenants and conditions, including, among other things, minimum EBITDA (as defined in the revolving credit and security agreement), tangible net worth, and annual capital expenditure limits. Certain financial covenants (including the EBITDA and tangible net worth covenants) become applicable only if we choose to make borrowings in excess of $8 million. As of May 1, 2010, there were no borrowings against the credit facility and we were in compliance with all covenants required by the revolving credit and security agreement. If we are unable to comply with these covenants, our access to our secured bank line of credit may be limited. For example, in order to borrow more than $8 million under the credit agreement, we must satisfy certain EBITDA thresholds or fixed charge ratios on certain dates. While we are currently in compliance, because borrowings were not in excess of $8 million, we currently believe that borrowings in excess of $8 million would result in a covenant violation at the quarter ended January 29, 2011. This effectively will limit our borrowing capacity to $8 million at January 29, 2011 unless these covenants are amended prior to or at that time. PNC Bank has the right to terminate the revolving credit facility in the event of a material adverse effect (as defined in the agreement) condition is met.
Total operating expenses for the fiscal 2010 first quarter were $54,876,000 compared to $53,836,000 for the comparable prior year period, an increase of 2%. Distribution and selling expense increased $803,000, or 2%, to $46,042,000, or 37% of net sales during the 2010 first fiscal quarter compared to $45,239,000 or 34% of net sales for the comparable prior year fiscal quarter. Distribution and selling expense increased over the prior years fiscal quarter primarily due to a $1,773,000 increase in net cable and satellite fees as a result of increased homes and increased credit card fees of $490,000 due to increased order transactions, offset by decreases in advertising and promotion expense of $517,000; a decrease in third-party cable affiliation fees of $100,000; and decreases in bad debt expense of $853,000.
General and administrative expense for the fiscal 2010 first quarter increased $141,000, or 3%, to $4,768,000, or 3.8% of net sales, compared to $4,627,000, or 3.5% of net sales for the fiscal 2009 first quarter. General and administrative expense increased over the prior years fiscal quarter primarily as a result of an increase in relocation expense associated with filling key positions and other salary related benefits totaling $498,000, offset by decreases in legal fees of $136,000 and share-based compensation expense of $196,000.
For the fiscal 2010 first quarter, we reported a net loss available to common shareholders of ($10,971,000) or ($.34) per common share on 32,680,000 weighted average common shares outstanding compared with reported net income available to common shareholders of $15,288,000 or $.46 per share on 33,104,000 weighted average common shares outstanding ($.46 per share on 33,110,000 weighted average diluted shares) in the fiscal 2009 first quarter. 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 and the amortization of fees paid on our bank line of credit facility, and interest income totaling $42,000 earned on our cash and investments. Net income available to common shareholders for the first quarter of fiscal 2009 includes a $27,362,000 addition to earnings related to the recording of the excess of the carrying amount of the Series A Preferred Stock over the fair value of the Series B Preferred Stock. Other factors affecting our net income in the first quarter of fiscal 2009 include interest expense of $743,000 related to the Series B preferred stock and interest income totaling $216,000 earned on our cash and investments.
Our principal source of liquidity is our available cash and cash equivalents of $20.9 million as of May 1, 2010 and $20 million of additional borrowing capacity relating to our revolving asset-backed bank line of credit with PNC Bank, National Association. Certain financial covenants (including the defined EBITDA and tangible net worth covenants) become applicable only if we choose to borrow in excess of $8 million. However, there can be no assurance that the Company will remain in compliance with each of these financial covenants. If we are unable to comply with these covenants, our access to our secured bank line of credit may be limited. For example, in order to borrow more than $8 million under the credit agreement, we must satisfy certain EBITDA thresholds or fixed charge ratios on certain dates. While we are currently in compliance, because borrowings were not in excess of $8 million, we currently believe that borrowings in excess of $8 million would result in a covenant violation at the quarter ended January 29, 2011. This effectively will limit our borrowing capacity to $8 million at January 29, 2011 unless these covenants are amended prior to or at that time. We also have the ability to increase our short-term liquidity and cash resources by reducing the percentage of our sales offered to customers using our ValuePay installment program and by decreasing the length of time we extend credit to our customers using the ValuePay program. Taking these actions could, however, have an adverse impact on our net sales. We ended May 1, 2010 with cash and cash equivalents of $20.9 million and restricted cash and investments of $5.0 million. Our $5.0 million restricted cash and investment balance which is used as collateral for our issuances of standby and commercial letters of credit is expected to fluctuate in relation to the level of our seasonal overseas inventory purchases. As a result of our recent and continuing operating losses, it is possible that our existing cash and cash equivalent balances and line of credit borrowi
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Valuevision Media Inc. has a market cap of $53.3 million; its shares were traded at around $1.63 with and P/S ratio of 0.1. VVTV is in the portfolios of Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:
Consolidated net sales for the fiscal 2010 first quarter were $124,977,000 compared to $133,802,000 for the fiscal 2009 first quarter, a 7% decrease. We reported an operating loss of ($9,139,000) and a net loss of ($10,971,000) for the 2010 first quarter. We reported an operating loss of ($11,647,000) and a net loss of ($12,012,000) for the fiscal 2009 first quarter.On November 25, 2009, we entered into an agreement with PNC Bank, National Association to establish a senior secured revolving credit facility. On June 8, 2010, the Company amended its Revolving Credit and Security Agreement with PNC Bank to amend certain financial covenants related to the credit facility. The credit facility has a three-year term and provides for up to a $20 million revolving line of credit. Borrowings under the credit facility may bear interest at either fixed rates or floating rates of interest based on either the prime rate or LIBOR, plus variable margins. Borrowings are secured primarily by our eligible accounts receivable and inventory as well as other assets as defined in the revolving credit and security agreement (including a negative pledge on our distribution facility in Bowling Green, Kentucky) and are subject to customary financial and other covenants and conditions, including, among other things, minimum EBITDA (as defined in the revolving credit and security agreement), tangible net worth, and annual capital expenditure limits. Certain financial covenants (including the EBITDA and tangible net worth covenants) become applicable only if we choose to make borrowings in excess of $8 million. As of May 1, 2010, there were no borrowings against the credit facility and we were in compliance with all covenants required by the revolving credit and security agreement. If we are unable to comply with these covenants, our access to our secured bank line of credit may be limited. For example, in order to borrow more than $8 million under the credit agreement, we must satisfy certain EBITDA thresholds or fixed charge ratios on certain dates. While we are currently in compliance, because borrowings were not in excess of $8 million, we currently believe that borrowings in excess of $8 million would result in a covenant violation at the quarter ended January 29, 2011. This effectively will limit our borrowing capacity to $8 million at January 29, 2011 unless these covenants are amended prior to or at that time. PNC Bank has the right to terminate the revolving credit facility in the event of a material adverse effect (as defined in the agreement) condition is met.
Total operating expenses for the fiscal 2010 first quarter were $54,876,000 compared to $53,836,000 for the comparable prior year period, an increase of 2%. Distribution and selling expense increased $803,000, or 2%, to $46,042,000, or 37% of net sales during the 2010 first fiscal quarter compared to $45,239,000 or 34% of net sales for the comparable prior year fiscal quarter. Distribution and selling expense increased over the prior years fiscal quarter primarily due to a $1,773,000 increase in net cable and satellite fees as a result of increased homes and increased credit card fees of $490,000 due to increased order transactions, offset by decreases in advertising and promotion expense of $517,000; a decrease in third-party cable affiliation fees of $100,000; and decreases in bad debt expense of $853,000.
General and administrative expense for the fiscal 2010 first quarter increased $141,000, or 3%, to $4,768,000, or 3.8% of net sales, compared to $4,627,000, or 3.5% of net sales for the fiscal 2009 first quarter. General and administrative expense increased over the prior years fiscal quarter primarily as a result of an increase in relocation expense associated with filling key positions and other salary related benefits totaling $498,000, offset by decreases in legal fees of $136,000 and share-based compensation expense of $196,000.
For the fiscal 2010 first quarter, we reported a net loss available to common shareholders of ($10,971,000) or ($.34) per common share on 32,680,000 weighted average common shares outstanding compared with reported net income available to common shareholders of $15,288,000 or $.46 per share on 33,104,000 weighted average common shares outstanding ($.46 per share on 33,110,000 weighted average diluted shares) in the fiscal 2009 first quarter. 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 and the amortization of fees paid on our bank line of credit facility, and interest income totaling $42,000 earned on our cash and investments. Net income available to common shareholders for the first quarter of fiscal 2009 includes a $27,362,000 addition to earnings related to the recording of the excess of the carrying amount of the Series A Preferred Stock over the fair value of the Series B Preferred Stock. Other factors affecting our net income in the first quarter of fiscal 2009 include interest expense of $743,000 related to the Series B preferred stock and interest income totaling $216,000 earned on our cash and investments.
Our principal source of liquidity is our available cash and cash equivalents of $20.9 million as of May 1, 2010 and $20 million of additional borrowing capacity relating to our revolving asset-backed bank line of credit with PNC Bank, National Association. Certain financial covenants (including the defined EBITDA and tangible net worth covenants) become applicable only if we choose to borrow in excess of $8 million. However, there can be no assurance that the Company will remain in compliance with each of these financial covenants. If we are unable to comply with these covenants, our access to our secured bank line of credit may be limited. For example, in order to borrow more than $8 million under the credit agreement, we must satisfy certain EBITDA thresholds or fixed charge ratios on certain dates. While we are currently in compliance, because borrowings were not in excess of $8 million, we currently believe that borrowings in excess of $8 million would result in a covenant violation at the quarter ended January 29, 2011. This effectively will limit our borrowing capacity to $8 million at January 29, 2011 unless these covenants are amended prior to or at that time. We also have the ability to increase our short-term liquidity and cash resources by reducing the percentage of our sales offered to customers using our ValuePay installment program and by decreasing the length of time we extend credit to our customers using the ValuePay program. Taking these actions could, however, have an adverse impact on our net sales. We ended May 1, 2010 with cash and cash equivalents of $20.9 million and restricted cash and investments of $5.0 million. Our $5.0 million restricted cash and investment balance which is used as collateral for our issuances of standby and commercial letters of credit is expected to fluctuate in relation to the level of our seasonal overseas inventory purchases. As a result of our recent and continuing operating losses, it is possible that our existing cash and cash equivalent balances and line of credit borrowi
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