Article (PRNewswire): ValueVision Reports Record Revenue and Profits For Fourth Quarter and Twelve Months
Fourth Quarter Highlights:
-- TV home shopping sales increase to $87 million, 82% over prior-year quarter
-- EPS rises to $0.10 on 47,889,000 diluted shares, compared with $0.02 on 26,491,000 diluted shares in prior-year quarter, representing an 11-fold increase in net income
-- Consolidated net income available to common shareholders (excluding non-recurring charges and gains) improves by $2,292,000 - 137% over prior-year quarter
-- Development well underway of launching ValueVision as a new shopping network to SnapTV and web site to snaptv.com
Full Year Highlights:
-- TV home shopping sales improved 69% for the year
-- Consolidated net income available to common shareholders was $0.73 per diluted share, compared with $0.18 per share in the prior year
-- Operating income improved by $12.6 million from previous year
-- Operating expenses as a percentage of sales improved to 37%, compared with 46% in the prior year
MINNEAPOLIS, March 23 /PRNewswire/ -- ValueVision International, Inc. (Nasdaq: VVTV), a leading national shopping network, today announced record television home shopping sales for the third straight quarter, resulting in all-time high revenue and profit levels for both the fourth quarter and fiscal year ended January 31, 2000.
Gene McCaffery, ValueVision's chairman and chief executive officer, said, "Our television home shopping operations demonstrated dramatic improvements throughout the year, which have been instrumental in fueling our resurging financial performance and development work for the future. It is very important to note that growth in our core business has allowed us to fund ValueVision Interactive development, SnapTV programming and development staff, and creative and account personnel, along with a host of support staff and consultants all working toward the launch of SnapTV later this year. We are not only launching ValueVision as a new shopping network to SnapTV, but also taking a leading position in the convergence of television with the Internet, including strategic alliances that will broaden our technological and marketing capabilities."
Record Quarterly Revenue
ValueVision's consolidated net sales for the recent quarter totaled $87,335,000, a 32% increase over comparable revenues of $65,943,000 in the prior-year quarter. Television home shopping operations contributed $86,672,000 to the revenue total, an 82% gain from $47,744,000 during the comparable 1999 fourth quarter. The home shopping sales increase more than offset a revenue decline of $17,535,000 -- when comparing the respective fourth quarters -- that resulted from the divestiture of ValueVision's catalog operations.
Increase in Fourth Quarter Net Income
Net income available to common shareholders for the fourth quarter ended January 31, 2000, amounted to $4,610,000, or $0.10 per diluted share ($0.12 per basic share), compared with net income of $422,000, or $0.02 per basic and diluted share in the fiscal 1999 fourth quarter. Excluding non-recurring charges and gains, net income in the 1999 quarter was $1,670,000, or $0.06 per diluted share ($0.07 per basic share).
Improvement in Quarterly Operating Income
Consolidated operating income during the quarter ended January 31, 2000, was $2,241,000, compared with $2,080,000 in the same prior-year quarter. The operating income increase when comparing the respective fourth quarters is directly attributable to home shopping sales, which improved by $932,000, a 60% increase. This more than offset an operating decrease of $771,000, which resulted from the divestiture of the catalog operations.
Fiscal 2000 Results
For the fiscal year ended January 31, 2000, ValueVision's consolidated net sales totaled a record $274,927,000, a 35% increase over $203,728,000 in the previous fiscal year. Net sales from television home shopping operations rose to $250,223,000, a 69% improvement over fiscal 1999. The sales from television home shopping again more than offset a revenue decline resulting from the divestiture of catalog operations during the past year, which totaled $30,826,000.
Net income available to common shareholders for the full year was $29,123,000, or $0.73 per diluted share ($0.89 per basic share), compared with $4,639,000, or $0.18 per basic and diluted share for the 1999 fiscal year. Operating income amounted to $3,996,000 for the year ended January 31, 2000, compared with an operating loss of $8,569,000 in the year earlier.
Subscriber Distribution
ValueVision's full-time equivalent homes were approximately 25.0 million at January 31, 2000, compared with 14.9 million a year ago, with approximately 6 million homes turned on July 1, 1999. "Many of these new homes were not productive during most of the year because of the normal and expected sales ramp-up period. However, increased productivity in existing homes more than compensated for the delay in productivity of the new homes, which in the long run will add to our profitability," said McCaffery. "It is also important to note that we absorbed some $12 million in new cable distribution fees compared to last year."
In addition to the financial results, other highlights during the fourth quarter included:
New SnapTV Programming Initiatives
ValueVision successfully conducted its first TV-Internet simulcast, teaming with wine.com -- the renowned wine portal -- in presenting a two-hour, prime time show in which live TV programming was converged with Internet technology for the sale of wines. The program was one of the initial steps ValueVision is taking in preparation for the upgraded programming that will be incorporated into the Company's efforts in launching the new SnapTV shopping network. ValueVision has also reached agreements with wine.com, petopia.com, roxy.com, bigstar.com, and selfcare.com to initiate new weekly, regularly scheduled television programs starting in the second quarter.
Strategic Alliances
ValueVision solidified its relationships with NBC and NBC Internet, Inc. (Nasdaq: NBCI) during the past quarter with several strategic alliances as well as making other agreements in preparation for the launch of SnapTV. These included:
-- ValueVision joined NBC, NBCi and GE Equity in taking equity positions in Telocity, Inc., an alliance that will bring "plug-and-play" broadband Internet services into homes nationwide.
-- NBCi and ValueVision entered into a strategic alliance and minority equity investment in roxy.com, the fastest growing online consumer electronics retailer. Roxy will ultimately be featured on the SnapTV network and snaptv.com
-- ValueVision made an equity investment in BigStar Entertainment, Inc. (Nasdaq: BGST), the parent company of bigstar.com, a leading Shop-A-Tainment(TM) destination and online movie store. The companies will produce a weekly television show featuring news and gossip about movies, celebrities and celebrity merchandise with BigStar's filmed entertainment products available for sale.
-- NBC and ValueVision made minority investments in petopia.com, the "Internet Pet Paradise" and leading online pet store. As part of the agreement, ValueVision and petopia.com will co-produce programming for a one-hour weekly show on ValueVision's SnapTV network and snaptv.com.
-- NBC Daytime, NBCi and ValueVision launched the Passions Internet boutique (http://www.shoppassions.nbc.com), featuring ValueVision jewelry inspired by NBC Daytime's critically acclaimed drama and worn by its fictional characters. The online marketing venture uniquely leverages the primary strengths of each of its respective parties:
broadcast promotion and brand building, targeted electronic commerce and marketing, and product sourcing.
ValueVision's strategic alliance activities have continued into the new fiscal year:
-- The company jointly announced with Polo Ralph Lauren, NBC and NBCi the formation of Ralph Lauren Media, a new and separate company that will bring Polo Ralph Lauren products to consumers via multiple media platforms. As part of the project, ValueVision will provide fulfillment, distribution and customer service by converting its 300,000-square-foot Bowling Green, KY distribution center into a dedicated facility for polo.com, the new company's premier initiative.
-- ValueVision, NBC and NBCi announced an alliance with selfcare.com, a health and wellness e-commerce site focusing on women and their families. selfcare.com will use a combination of cash and equity to purchase programming, e-commerce, distribution and promotion packages from its alliance partners.
New Cable Affiliation Agreements
During the fourth quarter, ValueVision announced new and renewed affiliation agreements with Cox Communications Inc., Charter Communications Inc., and Adelphia Communications Corp., all among the nation's largest cable television operators, for expanded carriage of ValueVision programming following the launch of the new SnapTV network in 2000. Currently, a total of approximately 33 million homes are able to receive ValueVision on a full- or part-time basis.
Cox cited SnapTV's combination of video programming and Internet e-commerce as a complement to Cox's full-service broadband offering of voice and data services, allowing customers to see the natural synergies between television and the Internet. As a result of the agreement, Cox customers will receive home shopping options by either Cox Cable or Cox@Home platforms.
About ValueVision International
ValueVision International, Inc. owns and operates the third largest and fastest growing home shopping network and a companion Internet shopping web site. Both are being rebranded as SnapTV and snaptv.com, respectively, as part of a wide-ranging direct e-commerce strategy the Company is pursuing with NBC Internet, Inc. (Nasdaq: NBCI). The moves are expected to position SnapTV and NBCi as the leaders in the ongoing convergence of television and the Internet, combining the promotional and selling power of television with the purely digital world of e-commerce. ValueVision, which is approximately 36% owned by GE Equity and NBC, offers live programming 24 hours a day, 365 days a year. As of January 31, 2000, approximately 33 million homes are able to receive the Company's programming on either a full- or part-time basis. Additionally, the programming appears live on the Company's web site via webcasting. ValueVision also holds a 12.5% equity stake in Ralph Lauren Media, a new and separate company that will bring the Polo Ralph Lauren American lifestyle experience to consumers. For more information about ValueVision, please see the Company's web site at www.vvtv.com.
ValueVision Interactive is a wholly owned e-commerce subsidiary of ValueVision. Created in mid-1999, the subsidiary's purpose is to manage and develop the Company's Internet e-commerce initiatives using the snaptv.com brand, as well as manage the Company's e-commerce investment strategies and portfolio.
ValueVision International Safe Harbor
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Certain information included in this news release contains statements that are forward-looking such as statements relating to increased revenue and cable home distribution, the Company's future profitability, entrance into e-commerce, the launching of the Company's Internet initiative snaptv.com, the timing of the SnapTV launch, the success of the Ralph Lauren Media joint venture, and the continuing success in developing new strategic alliances (including the GE Equity, NBC, and Ralph Lauren Media alliances). There are certain important factors, such as consumer spending and debt levels, interest rates, competitive pressure on sales and pricing, and the maintenance of distribution of the Company's programming that could cause results to differ materially from those forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainty, including the possibility that revenues and cable distribution will not continually increase, that gross profit margins will decrease, that e-commerce and the Company's rebranding to SnapTV will not be successful, the successful performance of our equity investments, and other strategic alliances (including the GE Equity, NBC, and Ralph Lauren Media) may not result in increased revenues, earnings, or subscribers. For more information on the potential factors that could affect the Company's financial results, investors should refer to the Company's recent 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. |
