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
FEBRUARY 29, 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 February 29, 2000, SkyMall, Inc. announced financial results for the
fourth quarter and year ended December 31, 1999.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
99.1 Press Release dated February 29, 2000 regarding SkyMall's
Record Fourth Quarter and Year End Revenues for 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 hereunto duly authorized.
SKYMALL, INC.
(REGISTRANT)
Dated: March 1, 2000 By: /s/ Robert M. Worsley
------------------------------------
Robert M. Worsley
President
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EXHIBIT INDEX
Exhibit Number Description
- -------------- ------------------------------------------------------------
99.1 Press Release dated February 29, 2000 regarding SkyMall's
Record Fourth Quarter and Year End Revenues for 1999.
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EXHIBIT 99.1
SKYMALL REPORTS RECORD FOURTH QUARTER AND YEAR END REVENUES FOR 1999
PHOENIX--Feb. 29, 2000--SkyMall, Inc. (Nasdaq:SKYM) today announced its
financial results for the fourth quarter and year ended December 31, 1999.
SkyMall's net merchandise sales in the fourth quarter of 1999 were $25.7
million, up from $20.3 million in the fourth quarter of 1998 -- an increase of
26.5 percent. Total revenues in the fourth quarter were $31.1 million, compared
with $27.9 million in the fourth quarter of 1998, up 11.5 percent. For fiscal
1999, the Company reported net merchandise sales of $60.9 million, compared with
$49.3 million for fiscal 1998 -- an increase of 23.4 percent. Total revenues for
fiscal 1999 were $78.9 million as compared to $72 million in fiscal 1998, up 9.6
percent.
Gross margin for the fourth quarter of 1999 was $11.4 million or 36.8
percent, as compared to gross margin of $12.5 million or 44.9 percent in the
fourth quarter of 1998. Gross margin for fiscal 1999 totaled $32.5 million or
41.2 percent as compared to $32.8 million or 45.5 percent in fiscal 1998. To
encourage its key merchant partners to expand their product offerings on
skymall.com(TM), SkyMall(R) renegotiated its margin and placement fee agreements
with many of its merchant partners in 1999, which resulted in lower
year-over-year margins and placement fee revenue. This strategy enabled
skymall.com to increase its product offering significantly on its web site and
positions the Company well for increasing its total gross margin dollars as
sales increase.
The Company's continued substantial investment in its e-commerce
initiatives resulted in a $6.9 million loss from operations for the fourth
quarter of 1999 compared to net income from operations of $2.8 million for the
fourth quarter of 1998. In the fourth quarter of 1999, the Company re-evaluated
its treatment of tax benefits recorded earlier in the year and, based on a
variety of factors, the Company elected to reverse these tax benefits, which
totaled $6.0 million. Among the factors considered by the Company in reaching
this determination were that this treatment is consistent with that of other
major e-commerce retailers and the belief by management that this is a
conservative position that is in the long-term best interests of the Company.
The reversal of these tax benefits contributed to the net loss of $13.2 million
or $1.29 per share in the fourth quarter of 1999 as compared to net income of
$1.6 million or $0.18 per share in the fourth quarter of 1998.
The Company's investment in its e-commerce initiatives resulted in a $24.8
million loss from operations in fiscal 1999 compared to net income from
operations of $3.6 million in fiscal 1998. Including the election to reverse the
tax benefits recorded earlier in the year totaling $6.0 million or $0.65 per
share, the Company's net loss for fiscal 1999 was $24.1 million or $2.60 per
share as compared to net income for fiscal 1998 of $2.3 million or $0.27 per
share.
"During 1999, we achieved a number of significant milestones," commented
Robert M. Worsley SkyMall's founder and CEO. "Our holiday season broke all
previous net merchandise sales records, fueled by outstanding results from our
Internet subsidiary, skymall.com, and strong sales growth in our
business-to-business programs, which increased 365 percent in 1999 over the
prior year. Our airline seat pocket catalog program has proven to be a highly
cost effective way to acquire new web customers and enabled us to do 37 percent
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of our core consumer business over the web in the fourth quarter. Our profitable
customer acquisition model together with our strong gross margins form the
foundation for future growth and our plans to return to profitability."
Other recent highlights reported by SkyMall included:
o SkyMall ranked among the top 9 catalog-only retailers in terms of
unique visitors in the month of December, 1999.(1)
o The Company believes that the 37% of its core consumer sales generated
from the web in the fourth quarter of 1999 exceeds the percentage of
sales generated from the web by most of the other catalog-only
retailers.
o SkyMall's conversion rate for its skymall.com web site in December was
11.1%.
o Average order size in SkyMall's business-to-business programs were
$332 in the fourth quarter of 1999, compared to $228 in the fourth
quarter of 1998, an increase of 45%.
The Company spent approximately $15 million during fiscal 1999, including
approximately $8.0 million in capital expenditures, on its
information-technology and web infrastructure. During course of 1999,
skymall.com made three significant improvements to its skymall.com web site.
These improvements included significant enhancements in the overall performance,
speed and stability of the site. In addition, many new consumer features were
added, including improved product search and promotion capabilities, wish lists
and e-cards.
"Our infrastructure technology efforts during last year were a massive
endeavor," stated Robert M. Worsley. "Our technology infrastructure now has the
capability to support a much more significant order volume and provides us with
a platform for expanding our marketing and channel development efforts. Our
focus in 2000 will be on the addition of new consumer features to our site and
on the key drivers for our sales growth, including improving customer reach,
conversion, repeat business and average order size. We look forward to further
tapping into the more than 1.1 million demographically desirable consumers who
see our catalog each day as we work diligently on our revenue growth and
profitability plans."
About SkyMall, Inc.
Founded in 1989, SkyMall(R) is an integrated e-commerce specialty retailer
that provides a vast 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% of all domestic
airlines, reaching over 420 million domestic airline passengers annually.
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. Through another
subsidiary, Durham & Company, 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),
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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 continuing growth of the
Company's web site, whether the fund raising efforts in 1999 are sufficient to
meet further capital needs, and management of an expanding company, as well as
those factors detailed 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 Year ended
December 31, December 31,
1999 1998 1999 1998
REVENUES:
Merchandise sales, net $ 25,670 $ 20,298 $ 60,880 $ 49,320
Placement fees and other(a) 5,465 7,629 18,061 22,722
Total revenues 31,135 27,927 78,941 72,042
COST OF GOODS SOLD(a) 19,686 15,396 46,422 39,292
Gross margin 11,449 12,531 32,519 32,750
OPERATING EXPENSES:
Catalog expenses 4,774 3,250 13,587 11,353
Selling expenses 1,292 973 4,482 3,474
Customer service and
fulfillment expenses 2,295 2,616 7,123 5,567
General and
administrative expenses 9,967 2,844 32,149 8,767
Total operating expenses 18,328 9,683 57,341 29,161
INCOME (LOSS) FROM OPERATIONS (6,879) 2,848 (24,822) 3,589
Interest expense (133) (10) (283) (32)
Other income (130) 42 52 435
INCOME (LOSS) BEFORE
INCOME TAXES (7,142) 2,880 (25,053) 3,992
Income tax expense
(benefit) 6,044 1,264 (913) 1,707
NET INCOME (LOSS) $ (13,186) $ 1,616 $ (24,140) $ 2,285
BASIC NET INCOME (LOSS)
PER COMMON SHARE $ (1.29) $ 0.18 $ (2.60) $ 0.27
DILUTED NET INCOME
(LOSS) PER COMMON SHARE $ (1.29) $ 0.18 $ (2.60) $ 0.27
BASIC WEIGHTED AVERAGE
SHARES OUTSTANDING 10,228 8,794 9,271 8,583
DILUTED WEIGHTED AVERAGE
SHARES OUTSTANDING 10,228 8,908 9,271 8,602
Selected Balance Sheet Data
December 31,
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1999 1998
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Current Assets $ 33,394 $ 22,246
Long Term Assets 17,013 9,679
Total Assets 50,407 31,925
Current Liabilities 29,441 17,240
Long Term Debt 5,348 451
Shareholders' Equity $ 15,618 $ 14,234
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(a) 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.
(1) Source: Media Metrix, December, 1999 data. Category as defined by SkyMall
to include: landsend.com, llbean.com, fingerhut.com, jcrew.com, damark.com,
spiegel.com, igo.com, and roxy.com.
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CONTACT: SkyMall, Inc.
Robert M. Worsley, 602/528-8620
[email protected]
or
Louise M. Kusler
602/528-3224
[email protected]
or
Genesis Select Corporation
Budd Zuckerman, 303/357-6565
[email protected]
