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
APRIL 12, 1999
Date of Report
(Date of earliest event reported)
SKYMALL, INC.
(Exact Name of Registrant as Specified in Charter)
NEVADA 000-21657 86-0651100
(State or Other (Commission File No.) (IRS Employer
Jurisdiction Identification No.)
of Incorporation)
1520 EAST PIMA STREET, PHOENIX, ARIZONA 85034
(Address of principal executive offices, including zip code)
(602) 254-9777
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
On April 12, 1999, SkyMall, Inc. announced its e.commerce strategy, plans
to launch its travel site, implement e.commerce via broadband technologies,
pursue workplace Web initiatives and announced preliminary first quarter
revenues.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
99.1 Press Release dated April 12, 1999 regarding SkyMall's
announcement of its e.commerce strategy, plans to launch its
travel site, implement e.commerce via broadband
technologies, pursue workplace Web initiatives and
preliminary first quarter revenues.
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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 hereunto duly authorized.
SKYMALL, INC.
(REGISTRANT)
Dated: April 12, 1999 By: /s/ Robert M. Worsley
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Robert M. Worsley
President
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EXHIBIT INDEX
Exhibit Number Description
- -------------- ------------------------------------------------------------
99.1 Press Release dated April 12, 1999 regarding SkyMall's
announcement of its e.commerce strategy, plans to launch its
travel site, implement e.commerce via broadband
technologies, pursue workplace Web initiatives and
preliminary first quarter revenues.
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EXHIBIT 99.1
SKYMALL UNVEILS E.COMMERCE STRATEGY; PLANS TO LAUNCH TRAVEL SITE,
IMPLEMENT E.COMMERCE VIA BROADBAND TECHNOLOGIES AND
PURSUE WORKPLACE WEB INITIATIVES
Preliminary First Quarter Revenues Also Announced
PHOENIX--(BUSINESS WIRE)--April 12, 1999-- SkyMall, Inc. (Nasdaq: SKYM -
news) today unveiled a comprehensive e.commerce strategy focused on shopping and
travel.
SkyMall's e.commerce strategy focuses on three primary areas: developing
its Web infrastructure, expanding its content offering and implementing
marketing initiatives geared towards generating brand awareness and driving
traffic to its sites.
In the third quarter of 1999, SkyMall plans to launch a travel site that
leverages its relationships with its airline and other travel partners. The
Company also plans to implement e.commerce via broadband technologies and
marketing initiatives designed to reach time-pressed consumers via the Web at
work.
"Our strategy is designed to capitalize on the exclusive relationships
developed by our in-flight catalog business and last year's strong performance
of our skymall.com site," said Robert Worsley, Chairman and CEO.
"We are convinced that consumers are not going to navigate and bookmark
numerous sites to cover all their needs. Our ultimate goal is to build a
comprehensive one-stop site that provides consumers with a broad selection of
best-selling merchandise and travel-related services and content that is easy to
navigate and provides unique and entertaining consumer experiences."
INFRASTRUCTURE STRATEGY.
"Over the last eight years we have refined our virtual inventory delivery
system for our in-flight business and have developed expertise in customer
service and support," continued Mr. Worsley.
"A key component of our e.commerce strategy is to apply the knowledge we
have developed from our existing business to further develop the infrastructure
necessary to support our Web efforts. Specifically, we plan to upgrade the
speed, performance and functionality of the Company's existing skymall.com site
to ensure that by the fourth quarter the consumer experience at skymall.com
meets or exceeds that of other major e.commerce sites.
"We also plan to further refine our systems and processes to allow us to
expand our merchandise offering and provide travel-related services and
content."
Three upgrades of the skymall.com site are expected to be implemented in
1999. The first upgrade, which was implemented over a week ago, streamlined the
shopping experience by improving the speed of skymall.com and enhanced the look
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and feel of the user interface. With this upgrade, featured products, product
categories and merchants were brought to prominence on skymall.com's home page.
The second upgrade is planned for the third quarter and is expected to
significantly enhance the speed, performance and scalability of the site,
including reducing the time to serve up Web pages. The second upgrade is also
expected to improve the collaborative filtering technology SkyMall recently
implemented to allow the Company to make more recommendations for additional
products to consumers based on past purchasing behavior.
Because the holiday shopping season typically accounts for 40% of SkyMall's
sales, the most comprehensive upgrade of the site is planned for early in the
fourth quarter. Plans call for the implementation of additional features that
will improve the overall consumer shopping experience by offering consumers
functionality and services beyond merely browsing and purchasing products. These
features will be designed to increase conversion rates and drive additional
traffic to the site. The Company also expects to incorporate logic that will
facilitate implementation of best-of-class solutions regardless of the
underlying technology.
CONTENT STRATEGY.
MERCHANDISING. Merchandising plans call for SkyMall to increase the variety
and selection of merchandise offered on the Web by two primary means. First,
SkyMall plans to further leverage its relationships with its existing base of
over 100 catalog vendors by adding more of their products to SkyMall's database,
in addition to the best-selling items already available in the in-flight
catalog. SkyMall has already made progress in this area in 1999, and has
increased the number of products available through its Internet site to
approximately three times the print catalog offering.
The Company's second merchandising strategy is to secure product content in
new categories that have not been traditionally covered by the catalog industry
by securing relationships directly with the manufacturers and other major
distributors of product.
To date, SkyMall has secured relationships with numerous manufacturers and
other distributors in categories that include electronics, health-related
products and home furnishings. In connection with the second phase of the
planned infrastructure upgrades, the Company anticipates that the products from
many of these manufacturers will be available on its site.
TRAVEL. Leveraging its relationships with its airline and other travel
partners, SkyMall expects to launch a travel site in the third quarter of 1999.
Through its airline and other relationships, the Company expects to be able to
secure travel content and to provide various value-added services to travelers.
Initial plans call for links between skymall.com's travel and shopping sites in
order to increase awareness of both sites. Ultimately, the Company plans to
incorporate shopping and travel into one comprehensive site.
MARKETING ALLIANCE STRATEGY.
SKYMALL.COM STRATEGY. skymall.com's e.commerce strategy is to implement
marketing programs designed to improve brand awareness, drive traffic to its
site and increase consumer spending. SkyMall believes the key to SkyMall's
success in its in-flight catalog business has been to successfully secure and
manage numerous partner relationships with major airlines and merchants.
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SkyMall plans to use its partnership relationship experience to form
additional strategic partnership alliances with third parties, such as financial
service providers and media companies. By bringing SkyMall's product content to
third parties to enable them to conduct e.commerce on a co-branded site, the
Company believes it can also secure additional on-and off-line channels for
promotions to the customer bases of these third parties at little or no cost to
SkyMall.
In turn, through these proposed alliances, SkyMall plans to give its
partners access to some of the most demographically appealing consumers in the
country through its existing in-flight catalog and hotel channels.
BROADBAND TECHNOLOGIES. Experts believe that the convergence of television
and the Web will occur in the foreseeable future, creating the opportunity to
provide a richer content experience to consumers via broadband technologies.
The Company believes that broadband technology will be important to its
future in all its channels. The Company believes that broadband technologies
will allow it to expand its reach, customer base and enhance brand awareness,
while offering much needed support to potential broadband partners. The Company
plans to leverage its merchandising expertise, back-end infrastructure and
customer service experience to implement broadband-related alliances with third
parties.
WORKPLACE WEB INITIATIVES. Given the increasing use of the Internet in the
workplace as well as the significant number of dual-income households, SkyMall
believes that the corporate workplace is an ideal channel for further
distribution of its products and services.
In 1998, SkyMall acquired Durham & Company, a logo merchandise company as a
key step in furthering its workplace marketing strategy. Through Durham's
relationships with large corporations and other organizations, the Company plans
to implement workplace marketing initiatives on Web-based intranet systems that
deliver logo merchandise as well as other product content to consumers at work.
INVESTMENT SPENDING. As previously announced in early March, SkyMall plans
to invest significantly in its e.commerce strategy and the investment is
expected to cause SkyMall to experience a loss for 1999 ranging between $1.00
and $1.20 per share. SkyMall has budgeted an estimated $20 million of
incremental expenditures over 1998 levels primarily for its e.commerce strategy,
bringing the total estimated e.commerce expenditures in 1999 to approximately
$27 million, of which an estimated $7 million will be for capital expenditures.
SkyMall plans to invest the $20 million of expense and $7 million in
capital expenditures in four major areas: $5 million to staff the Internet
development and support team and to operate the recently opened New York office,
$10 million for sales and marketing of the new sites, $5 million for
infrastructure and the management team to lead the Company's growth initiatives,
and $7 million of capital expenditures for computer equipment and software
development.
The Company expects to fund the e.commerce investment through catalog
operations cash flow and its current cash position of approximately $4 million,
as well as by to re-negotiating its line of credit to increase its borrowing
capacity. While these funds are expected to be sufficient to meet skymall.com's
expansion objectives for 1999, the Company is continuing to explore other
financing options.
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FIRST QUARTER REVENUES. SkyMall also announced preliminary revenue results
for the first quarter ending March 31, 1999. Net merchandise sales for the
period are expected to be approximately $9.8 million, an increase of
approximately 6% over net merchandise sales of $9.2 million for the first
quarter of 1998.
Net merchandise sales from the Company's e.commerce initiatives for the
first quarter are expected to triple from approximately $266,000 in 1998 to
$857,000 in 1999, representing approximately nine percent of the Company's net
merchandise sales.
Due to a decrease in placement fee revenue to $2.2 million in the first
quarter of 1999 as compared with $3.3 million in the first quarter a year ago,
total revenues are expected to be $13.0 million for the first quarter compared
with $13.2 million for the same period in 1998.
The Company has continued to renegotiate its agreements with its vendors
toward less placement fees and more variable margin agreements as it expects to
realize more of its sales over the Internet.
SUMMARY. "Research shows that consumers are quickly accepting the Internet
as a new shopping medium, with about half of the households in the U. S. that
had Internet access making at least one purchase on-line in the last six
months," stated Bob Worsley. "We believe the fourth quarter of 1999 will present
us with important opportunities in this new era of Internet shopping and we plan
to capitalize on these opportunities by executing the strategies we have
discussed today."
SkyMall, Inc. (Nasdaq: SKYM - news), based in Phoenix, Arizona, capitalizes
on exclusive agreements to create both print and e.commerce solutions for
consumers and merchants.
The SkyMall print catalog is currently available in 68% of all domestic
airline seat pockets and, with the Company's e.commerce Web site, makes
high-quality products and services available to millions of shoppers. For
additional information, please visit the company at: www.skymall.com.
This news release includes statements that may constitute forward-looking
statements made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. This information may involve risks and
uncertainties that could cause actual results to differ materially from the
forward-looking statements.
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Factors that would cause or contribute to such differences include, but are
not limited to, those factors detailed by SkyMall, Inc. in its filings with the
Securities and Exchange Commission.
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Contact: GCI Financial, Inc.
Doug Sherk, 212/537-8000 (Investor Relations)
[email protected]
or
SkyMall, Inc.
Marti A. Benfield, 602/528-3233 (Investor Relations)
[email protected]
