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
MAY 2, 2000
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 May 2, 2000, SkyMall, Inc. announced financial results for the quarter
ended March 31, 2000.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
99.1 Press Release dated May 2, 2000 regarding SkyMall's
Record First Quarter Revenues.
2
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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: May 5, 2000 By: /s/ Robert M. Worsley
------------------------------------
Robert M. Worsley
President
3
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EXHIBIT INDEX
Exhibit Number Description
- -------------- ------------------------------------------------------------
99.1 Press Release dated May 2, 2000 regarding SkyMall's
Record First Quarter Revenues.
4
EXHIBIT 99.1
SKYMALL REPORTS RECORD FIRST QUARTER REVENUES
Net Merchandise Sales Up 59 Percent
PHOENIX, AZ (May 2, 2000) -- SkyMall, Inc. (Nasdaq: SKYM) Tuesday announced its
financial results for the first quarter ended March 31, 2000.
SkyMall's net merchandise sales in the first quarter of 2000 were $15.6 million,
a 59 percent increase over 1999 first quarter net merchandise sales of $9.8
million.
Net merchandise sales from the Internet totaled $4.3 million or 34 percent of
business-to-consumer net merchandise sales in the first quarter of 2000 as
compared to $825,000 or 9 percent of business-to-consumer net merchandise sales
in the first quarter of 1999. Total revenues in the first quarter were $20
million, compared with $14.2 million in the first quarter of 1999, up 41
percent.
Gross margin for the first quarter of 2000 was $7.3 million or 36 percent, as
compared to gross margin of $6.7 million or 47 percent for the same period in
1999.
Gross margin rates declined in the first quarter of 2000 due to the increase in
net merchandise sales from loyalty programs, the mix of fixed and variable
vendor arrangements, a reduction in shipping and handling revenue due to
promotions, and a reduction in revenues from upsell programs.
The Company took certain corrective actions in the first quarter of 2000 that
are focused on obtaining the optimal mix between variable and fixed placement
fees and discontinued a free shipping promotion. In addition, in April of 2000,
the Company revamped an upsell program in its call center. The Company's goal is
to increase margins by the second half of the year to more historical levels.
The launch of the Company's Web site and the completion of its Web
infrastructure during the first quarter, which were the culmination of the
Company's development efforts over the last 12 months, contributed significantly
to a $7.2 million loss from operations for the first quarter of 2000 compared to
a loss from operations of $3.6 million in the first quarter of 1999.
The Company's net loss for the first quarter of 2000 was $7.5 million or $0.57
per share as compared to a net loss of $2.2 million or $0.24 per share in the
first quarter of 1999.
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"The 59 percent increase in net merchandise sales marks one of the largest
quarter over quarter sales increases in our history," commented Robert M.
Worsley, SkyMall's founder and chief executive officer.
"Our record first quarter merchandise sales growth is largely the result of our
efforts last year which focused on leveraging our brand, merchandise and
fulfillment and technology infrastructure into new channels.
"Our new Marriott relationship and our existing loyalty programs, which provide
us with increased exposure to our target customer -- the frequent traveler --
contributed significantly to the increase in net merchandise sales. Northwest
Airlines, the fourth largest domestic airline, which began participation in the
SkyMall program last July, also contributed to the revenue increase.
"In addition, due in part to our new loyalty business, our average order size
increased over 12 percent during the first quarter of 2000 as compared to the
first quarter of 1999.
"Our focus over the coming months will be on continuing to drive revenue growth
and returning the Company to profitability by the fourth quarter of 2000,"
continued Worsley.
"Now that the development of our Web infrastructure is largely completed, we
have a highly scalable, stable site that we believe is competitive with those of
other major e-tailers that we can use to continue to leverage our brand,
merchandise and fulfillment capabilities into new channels.
"Much of our general and administrative expenses that were attributable to this
effort have been eliminated or reduced in the second quarter. In addition, as
previously announced by the Company, we have taken steps in the second quarter
to further reduce our general and administrative expenditures.
"These measures will be important in reaching our goal of profitability by the
fourth quarter of 2000."
Other recent highlights reported by SkyMall include:
SkyMall launched a new loyalty initiative in April 2000, with
General Motors which will allow GM customers to receive
discounts on SkyMall merchandise by redeeming their loyalty
points.
SkyMall signed an agreement with employeesavings.com in April
of 2000, through which SkyMall merchandise will be made
available to more than 1.4 million consumers in the workplace.
About SkyMall Inc.
Founded in 1989, SkyMall(R) is a multi-channel specialty retailer that provides
a large selection of premium-quality products and services to consumers from a
wide variety of merchants and partners. SkyMall is best known for its in-flight
catalog, which is available on more than 70 percent of all domestic airlines,
reaching approximately 500 million domestic airline passengers annually.
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Through its skymall.com, inc. subsidiary, which operates the skymall.com(TM) and
skymalltravel.com(TM) Web sites, SkyMall offers an expanded selection of
products and services to online shoppers and enables other companies to conduct
electronic commerce using skymall.com's merchant solution.
SkyMall provides a merchandise redemption program for a number of loyalty
programs, allowing consumers to purchase SkyMall merchandise with loyalty points
earned in other programs. Through Durham & Company, a SkyMall subsidiary,
SkyMall offers high-quality logo merchandise via its catalogs, workplace
initiatives and the durham.skymall.com Web site.
SkyMall's subsidiary, Disc Publishing, Inc., produces the CD-ROM, SkyDisc(TM),
which provides advertising, entertainment and e-commerce shopping links to
business travelers through airline seat pocket distribution and the skydisc.com
Web site. For further information and prior press releases, please visit
SkyMall's Web site 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.
Factors that would cause or contribute to such differences include, but are not
limited to the continued stability of the Company's Web site and information
technology infrastructure, the technical ability to meet the demands of changing
consumer needs and managing a growing business, the ability of the Company to
implement the programs described herein and those factors that are included by
SkyMall, Inc. in its filings with the Securities and Exchange Commission.
Note to Editors: SkyMall(R) is a registered trademark of SkyMall, Inc. and
skymall.com(TM), skymalltravel.com(TM) and SkyDisc(TM) are trademarks of
SkyMall, Inc.
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SkyMall, Inc.
Summary Financial Data
(Amounts in thousands, except per share amounts)
Three months ended
March 31,
---------------------
2000 1999(a)
Revenues: -------- ---------
Merchandise sales, net $ 15,645 $ 9,818
Placement fees and other 4,362 4,361
-------- --------
Total revenues 20,007 14,179
Cost of goods sold 12,761 7,511
-------- --------
Gross margin 7,246 6,668
-------- --------
Operating expenses:
Catalog expenses 3,026 2,602
Selling expenses 1,086 834
Customer service and fulfillment expenses 1,837 1,798
General and administrative expenses 8,544 5,032
-------- --------
Total operating expenses 14,493 10,266
-------- --------
Income (loss) from operations (7,247) (3,598)
-------- --------
Interest expense (150) (11)
Other income (expense) (61) 76
-------- --------
Income (loss) before income taxes (7,458) (3,533)
Income tax expense (benefit) -- (1,318)
-------- --------
Net income (loss) $ (7,458) $ (2,215)
======== ========
Basic net income (loss) per
common share $ (0.57) $ (0.24)
======== ========
Diluted net income (loss) per
common share $ (0.57) $ (0.24)
======== ========
Basic weighted average
shares outstanding 12,984 9,119
======== ========
Diluted weighted average
shares outstanding 12,984 9,119
======== ========
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SELECTED BALANCE SHEET DATA
March 31, December 31,
2000 1999
--------- -----------
Current Assets $18,943 $33,236
Long Term Assets 16,590 17,013
Total Assets 35,533 50,249
Current Liabilities 18,727 29,441
Long Term Debt 8,526 5,190
Shareholders' Equity $ 8,280 $15,618
During 1999, the company changed its method of reporting shipping and handling
revenue and costs in order to conform to more widely accepted industry
practices. As a result, shipping and handling revenues are included in placement
fees and other revenues and the costs associated with shipping and handling are
included in cost of goods sold. Prior period balances have been reclassified to
conform to this presentation.
(a) Disc Publishing Inc. was acquired in September 1999, and was accounted for
as a pooling of interests. The Company's 1999 consolidated financial
statements have been restated to include the combined financial results of
SkyMall, Inc. and Disc Publishing, Inc.
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Contact: SkyMall Inc., Phoenix
Christine A. Aguilera, 602/528-3249
[email protected]
or
Genesis Select Corp.
Budd Zuckerman, 303/357-6565
[email protected]
