UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) December 29, 1999
VALUE AMERICA, INC.
(Exact Name of Registrant as Specified in Charter)
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<S> <C>
Virginia 000-25689 33-0712568
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(State or Other Jurisdiction of (Commission File Number) (IRS Employer Identification No.)
Incorporation)
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1560 Insurance Lane, Charlottesville, Virginia 22911
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (804) 817-7700
N/A
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
Not applicable.
(b) PRO FORMA FINANCIAL INFORMATION.
Not applicable.
(c) EXHIBITS.
99.1 Press Release, dated December 29, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VALUE AMERICA, INC.
By: /s/ William A. Pusey, Jr.
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Senior Vice President
and General Counsel
December 29, 1999
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EXHIBIT INDEX
Number Description of Exhibit
99.1 Press Release, dated December 29, 1999.
For Release: December 29, 1999
Contact: David Kuo
Value America, Charlottesville, Virginia
804-951-4225
[email protected]
VALUE AMERICA ANNOUNCES MAJOR RESTRUCTURING TO FOCUS INVENTORY-LESS BUSINESS ON
CORE PRODUCT CATEGORIES
COMPANY TO REFINE OPERATIONS AND REDUCE COSTS BY
ELIMINATING NON-PRODUCTIVE CATEGORIES WHILE INCREASING FOCUS ON PRODUCT
FULFILLMENT AND CUSTOMER SATISFACTION
CHARLOTTESVILLE, Va.--(BUSINESS WIRE)--Dec. 29, 1999-- Value America, Inc.,
(Nasdaq:VUSA - news) today announced a strategic refinement of its core
business - as a specialized online electronics, technology and office products
superstore - to gain maximum competitive advantage from its unique
inventory-less business and unequalled breadth of corporate partners in the
product areas which currently generate almost 95% of revenues.
The restructuring is expected to streamline Value America's operations, improve
product fulfillment performance and dramatically improve customer service, which
will drive additional revenue, reduced expenses and higher gross margins. The
restructuring will include a workforce reduction of approximately 47%, facility
consolidations and other cost-saving measures.
"We are building on Value America's proven strengths and are discarding what
doesn't perform," said Glenda Dorchak, CEO.
Value America also announced that its revenue expectations for the 1999 fourth
quarter would be approximately 6% to 9% below consensus estimates due to product
fulfillment delays and system transition issues that occurred during the
implementation of its new IT infrastructure. Because of expense management
measures implemented during the quarter, the company is on track to beat EPS
estimates.
However, the one-time restructuring charge of approximately $5.6 million is
expected to cause the company to miss consensus EPS estimates for the quarter.
The company's gross margin percentage is expected to exceed analysts' estimates.
"This move gives us focus, leverage and edge," said Dorchak. "Value America is
streamlining to reduce costs and maximize the efficiency of our inventory-less
business. We also realize our customers are our company. Our business must be
designed around customer service and operational efficiency."
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As part of the restructuring and refocused strategy, Value America will
eliminate all non-productive product categories and non-core business
activities. The company will concentrate on categories in which the mix of
product selection, product fulfillment, customer service, and gross margins are
strongest.
As such, its near-term product focus will be in consumer and business PC's and
peripherals, computer software, consumer electronics and office supplies.
Value America also announced that while it will continue to operate in the
consumer market, it also expects to significantly increase its efforts in the
business and government markets. In addition, a predominantly online marketing
strategy will replace the company's traditional offline customer acquisition
approach.
"The Board of Directors has been very involved in this process. We are very
supportive of the management team and its more strategic business focus," said
Wolf Schmitt, Chairman of the Board. "This restructuring and realignment is an
aggressive step which will allow us to take advantage of the opportunities that
we see in Internet commerce. We are confident that the combination of an
exceptional new management team and an obsession with superior customer service
will enable Value America to reach its potential."
The company also announced that the board has appointed a special committee,
headed by FDX Chairman Frederick Smith and including William Savoy of Vulcan
Ventures, Thomas Casey, Vice-Chairman of Global Crossing and Michael Steed,
Managing Director of Pacific Capital Group to explore strategic opportunities
for Value America.
In addition, the company announced that its two founders, Craig Winn and Rex
Scatena, have resigned as executives at the company.
About Value America
Value America, Inc. (Valueamerica.com), based in Charlottesville, Virginia, is a
leading online electronics and office superstore, offering the best selection,
reliable service and competitive prices.
Offering business, government and consumers comprehensiveness in PCs,
electronics, peripherals, office products, DVDs and CDs, Value America brings
the best features of bricks and mortar to Internet commerce, without the costs
of inventory, warehouses or distribution. The matters discussed in this press
release including those relating to the amount of the restructuring charge
expected in the fourth quarter and the revenue projections for the fourth
quarter, include forward-looking statements regarding, among other things,
future operating results.
In addition, when used in this press release, the words "intends to,"
"believes," "anticipates," "expects" and similar expressions are intended to
identify forward-looking statements. Such statements are subject to a number of
risks and uncertainties. Among other things, the expected restructuring charge
is an estimate based on certain assumptions which management believes to be
reasonable at this time.
Expectations concerning financial results for the 1999 fourth quarter are not
actual results and are based on preliminary estimates as well as certain
assumptions which management believes to be reasonable at this time.
Actual results in the future could differ materially and adversely from those
described in the forward-looking statements as a result of various important
factors, including: continued growth of electronic commerce; uncertainties and
risks of Internet-based technologies employed by Value America; competition for
sales over the Internet; anticipated operating losses; fluctuations in quarterly
results; governmental regulation of electronic commerce; and the other risk
factors set forth in Value America's prospectus filed with the Securities and
Exchange Commission on April 6, 1999 and other documents filed by the Company
with the Securities and Exchange Commission.
We undertake no obligation to publicly release the result of any revisions to
these forward-looking statements that may be made to reflect any future events
or circumstances.
