SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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): March 14, 2000
SHOP AT HOME, INC.
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(Exact name of registrant as specified in its charter)
Tennessee 0-25596 62-1282758
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
5388 Hickory Hollow Parkway, Antioch, Tennessee 37013
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(Address, including zip code, of principal executive office)
(615) 263-8000
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(Registrant's telephone number, including area code)
Item 5. Other Events
On March 14, 2000, Kent E. Lillie, President and Chief Executive
Officer of Shop At Home, Inc., hosted an Internet online question and answer
session with investors of the Company through the use of the Company's website
at www.collectibles.com. The "chat" was held from 7:00 p.m. to approximately
8:10 p.m., C.S.T. A transcript of the chat session is attached hereto as Exhibit
99.1.
SIGNATURE
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 hereunto duly authorized.
SHOP AT HOME, INC.
(Registrant)
By: /s/ George J. Phillips
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George J. Phillips
Vice President and General Counsel
Date: March 14, 2000
<PAGE>
EXHIBIT INDEX
99.1 Transcript of Internet online question and answer chat session with
Kent E. Lillie, President and Chief Executive Officer of the Company,
and Company investors, held on March 14, 2000.
<PAGE>
EXHIBIT 99.1
Those participating in the Internet on-line chat had to sign on to the chat
through a page that contained the following "Safe Harbor" language:
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of
1995 - The ensuing Internet chat and the transcript of the chat that will be
posted may include forward-looking statements within the meaning of Section 27A
of Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934, including statements regarding continued revenue and distribution growth,
the future performance of Shop At Home, Inc. and collectibles.com and the
anticipated impact of new management initiatives. Actual results may differ
materially from those which may be identified for a number of reasons as are
discussed from time to time in Shop At Home's SEC reports, including but not
limited to the registration statement on Form S-3 as amended on July 1, 1999,
the report on Form 10-K/A for the year ended June 30, 1999 (Business and
Management's Discussion and Analysis of Financial Condition and Results of
Operations), and the Form 10-Q for the quarter ending December 31, 1999.
As to any questions concerning the upcoming Annual Meeting scheduled for March
30, 2000, each Stockholder should consult the Proxy Statement for the Annual
Shareholders Meeting. The SEC filed documents are available from the SEC on the
SEC website, http://www.sec.gov, from the Company, including the transcript of
the on-line chat, upon request by calling Investor Relations at (615) 263-8000.
The Proxy Statement, the Annual Report on the Form 10-K/A, and the most recent
Quarterly Report on the Form 10-Q are also posted on collectibles.com's
Internet's site at http://www.collectibles.com/corporate/meeting.htm.
The text of the transcript is set out below:
kent_lillie: Welcome to collectibles.com and our second online chat for
investors and interested parties. With me tonight is Tim Engle, President of
c.c., John Roberson, EVP and Chief Operating Officer of the Shop at Home
network, and Arthur Tek, the company's Chief Financial Officer.
Q: Phico: collectibles.com did a 'soft launch' last November. Can you please
give an update on the official roll out?
A:kent_lillie: We are rolling out c.c. as we furiously work to improve
every aspect, including functionality, SKU count, design features,
etc. of the site. We are just now beginning to ramp up our
promotional efforts outside of the network, including our affiliates
program, which is forcasted to be at 3,000 by the end of June. We
are also beginning to leverage our existing broadcast and cable
distribution to create as much as $8-10 million of broadcast
advertising time over the next year, dedicated to c.c.
Q: blindlemonjefferson: Kent? What happened to ishopathome.com?
A: kent_lillie: It has been rolled in to c.c, which is our singular
online iniative.
Q: Rapidash: Why haven't we seen auctions and the gift registry added to
collectibles.com?
A: kent_lillie: It is expected that we will launch auctions and
gift registrations before the end of next
quarter. These are both high priorities for the company.
Q: Bogey: what is the status of the License Agreements held by Collector's
Edge; per the Annual Report one expired end of February and one expires end
of March
A: kent_lillie: They have been renewed.
Q: Phico: There has been a lot of speculation regarding the potential sale
of a portion of SATH to USA. Can you please comment on the possible
synergies between these two companies.
A: kent_lillie: As you may know, it is extremely difficult and frankly,
irresponsible to comment about ongoing diiscussions or negotiations,
for marketplace and SEC reasons. For these reasons, I cannot and
will not, comment on marketplace rumors or address any
questions specifically about any particular company. When and
if we have any material agreements, we will publicly anounce
them. Obviously, in evaluating potential strategic partners we
look for those that bring the most assets to help us reach our
objectives and that will therefore maximize shareholder value
For example, an appropriate startegic partner would provide at
least some, or all of the following: investment capital for
growth, ability to substantially expand our distribution into
even more homes, merchandising, fulfillment and customer service
experience and capabilities. leading edge technology, and
cross-promotional or other benefits to drive customers to c.c.
Q: Traderhic: How much will be spent as of the end of the quarter on the
investment bankers?
A:kent_lillie: Their fees are contingent on a successful transaction.
Q: Phico: Due to FCC ruling regarding duopolies, you contracted three
investment firms to help explore the possibilities of the sale of TV
stations. Eight months have passed since this process began. Can you give us
an update on their progress?
A: kent_lillie: We have received several offers (which continue) for a
number of our television stations...well in excess of our cost
basis, but less than what we believe is there value based on their
current cash flow contribution and the cost of replacing those lost
households. Further, we feel that the digital licenses we have been
granted for each of our stations will someday have great commercial
value, i.e. wireless interent. (don't forget, our San Fransisco
station currently places an analog and a future digital signal over
Silicon Valley.
Q: Rapidash: SATH is currently trading for $9.50, yet insiders aren't buying at
these levels, why?
A: kent_lillie: There are restriction on when insiders can buy or
sell. We are currently in a blackout situation for insiders since
our quarter ends at the end of the month.
Q: tuckty2: why can't iget sath in longview wa.
A: kent_lillie: You can. Simply go to c.c. and click "on air now",
and you can watch and purchase from our 24 by 7 streaming video of
the Shop at Home network.
Q: jomama1982: Kent, do you believe that you earned the options that the
proxy is requesting the investors to vote on. It has been a long year for
most investors in SATH
A: kent_lillie: First, as background, these options were granted by
the Board as a substantial component of my overall compensation
package in January of 1999, and shareholders are now being asked
to confirm that grant. In return for that plan, I agreed to
extend and widen my non-compete to include e-commerce and to
length of two years. I can assure you that nobody wants a higher
stock price than I do! These options were priced when granted in
January of 1999 (so have negative value at this time) and I only
benefit when we get our true value recognized in the
marketplace...so we are partners in that objective. I don't profit
if you don't profit. I encourage you to read the Proxy
concerning this proposal and make your own decision.
Q: Bambamnj: Has Collectibles.com met your expectations and what is your
feeling for the future profitability, specially against any competing sites?
A: kent_lillie: For a revenue, gross profit margin, sales per browser
and profit basis, it has exceeded our and marketplace expectation.
WE are disappointed that we have not been able to add al
of the functionality and content as we would have liked. We are
also pleased that we've not had the customer aquisition
expense originally forcasted, so we are ahead of all current
forcasts. We're also pleased at the number and quality of
exclusive internet distribution agreements, and expect those to
continue to accelerate.
Q: Rapidash: If the investment bankers are dismissed, will you notify the
street?
A: kent_lillie: Mike Yagemann continues to assist us in exploring and
evaluating strategic opportunities, and I believe Banc of America
stands ready to assist us further if the need arises.
Q: Bogey: Interest expense has been a material drag on earnings, is there
any plan to renegotiate or reduce the debt service
A: kent_lillie: Our bonds are not callable until 2002, but we
believe that this debt is not excessive and can be reasonabl
serviced. These notes were essential in 1998 to the company's
growth and success.
Q: Rapidash: Why are margins off analysts projections and what are you doing to
improve this situation?
A: kent_lillie: Primarily product mix through greater sales of
electronics and collectible coins and currency. The good news is
that revenues were higher than forecasted, and we have recently
reemphasized higher margins in our other categories and believ
that margins will improve as a result of these efforts.
Q: rapolley1: When and where can we expect to see Advertisments or Banners
for c.c
A: kent_lillie: Banners. We have announced our affiliate program
BeFree that should produce a miniimum of 3000 affiliates by the
end of June. Further, we have begun to utilize our broadcast and
cable advertising that come to us as a result of our existing
broadcast and cable relationships. To view one such affiliate
site, visit dickbutkus.com.
Q: Huynguye: Is the lack of PR currently being address? Investors seem to be in
the dark about the company future direction!
A: kent_lillie: First, how many other companies have you noted take
this effort to communicate with the broadest number of investors
possible. I do expect to be more aggressive in shareholder
communications following this quarter's results announcement.Also,
we post the audio and text of our quarterly conference calls on
this site in the "about us" section. Improved shareholder valuation
is among our number one priorities!
Q: Mtudor: What percentage increase in EBITDA do you predict for the coming
year?
A: kent_lillie: As you know, we have had sixteen consecutive
year-to-year quarterly EBITDA increases. We expect
to continue this trend as the network continues to grow revenue at
a rate faster than expenses.
Q: Bogey: any comment on the yahoo and go.com relationships; failures or
successes?
A: kent_lillie: Right now we are disappointed with those results.
Q: Mikeaparker: Can you please comment on the Barry Diller deal???? anything??
A: kent_lillie: Again, we cannot comment specifically to
marketplace rumors. I will say that we believe Mr. Diller is
building great value and we share his vision regarding
convergence and the value of our respective transactional
capabilities and distribution systems.
Q: Bogey: can you elaborate on why you are disappointed with the yahoo and
go.com deals?
A: kent_lillie: We are not getting the traffic and revenue that
we had anticipated. We have found that our network drives the
bulk of our traffic presently, and that the ramp-up of our
"traditional" media will drive still more traffic and revenue.
Q: tgehrke777: what are you doing to get the traffic and revenue up?
A: kent_lillie: More SKUs, more functionality, more effective network
promotion, increasing targeted advertising and promotion, an
new features such as, our auction and gift registry. Also, we're
driving hundreds of new browsers tonight, and we're offering you
all ten dollar gift coupons on your first or next purchase on c.c.
Q: george birch: so far u have not answered the question on future direction?
A: kent_lillie: We are the only nationally distributed, independent,
electronic shopping company in the Country, and we, and many
others, believe that there is tremendous and growing value in our
transactional capabilities, distributin system, television
stations, facilities, technology, infrastructure, including
human resources, and on-line assets...with or without a strategic
partner.
Q: Noiserider: Will you be publishing the upcoming quarterly CC phone number
so we can all listen in to executive remarks and analyst questions? I
notice that only executive remarks are on your web site.
A: kent_lillie: We will make every effort to include the analyst
questions as part of the replay available on c.c.
Q: Rapidash: Are you concerned that a large 4your HH penetration is now
comp which could lead to drop off in revenue growth?
A: kent_lillie: Absolutely not! While we're in 57 million different
cable households, we're not in all of those 24 hours a day. As a
result, we're only reaching about 25% of the available household
hours across all cable households. Further, we continue to
increase revenue per household, especially on our owned and
operated television stations.
Q: Mikeaparker: In bloomberg article about the offer from USAI a couple of
weeks ago talking about up to $20/share buyout 51Xr
total..(fact via bloomberg)Even if no comment, do you believe it's a fair
deal?
A: kent_lillie: It's difficult to say that any price is acceptable
because the publication that would create a ceiling, not a floor,
for the value of our equities. However, it is important to note
that value can come in a number of ways, including on-line
assets, new distribution, revenue enhancements or cost savings
that would increase earnings. By continuing to implement our plan
to increase revenues and earnings, by building our distribution
system, by making c.c. the premiere on-line community for
all things collectible and to effectively communicate those
results to the marketplace. WE expect that the marketplace will
recognize us as a "New Economy" enterprise, as we continue to
implement our convergence strategy.
Q: tgehrke777: great words, but we want the shareholder value up!!!!!!!!!!!!!
A: kent_lillie: So do we. NOw what suggestions do you have on how to
achieve that?
Q: louis35: any possibility of IPO with colectibles.com ?
A: kent_lillie: That is certainly a future option.
Q: Ertatum: I would like to see more news of sath on the yahoo finance site.
Sometimes a month passes before any news is placed. I would like to know if
sath intends to keep the stock holders better informed??
A: kent_lillie: While we don't agree with your assessment that a
"month passes before any news is placed", we do intend to make ou
shareholder communications an even more important priority.
Q: tgehrke777: let the public know who you are. you have a good concept. use it
A: kent_lillie: Thank you, we all agree and recommitt to that goal.
Q: louis35: Just want to say thanks for taking the time to chat...............
A: kent_lillie: You are more than welcome, and I would like to say
for all of the good people of Shop at Home and c.c. that we greatly
respect your confidence in us and are genuinely busting our butts
to maximize this company's value and potential.
kent_lillie: Good night and I look foreward to another on-line chat in the
very near future.
[end]
