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UNITED STATES
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 26, 1998
VALUEVISION INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
MINNESOTA
(State or other jurisdiction of incorporation)
0-20243 41-1673770
(Commission File Number) (IRS Employer Identification No.)
6740 SHADY OAK ROAD, EDEN PRAIRIE, NM 55344
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 947-5200
NOT APPLICABLE
(Former name or former address, if changed since last report)
Page 1 of ____
Exhibit Index Appears on Page ____
ITEM 5. OTHER EVENTS.
(a) Earnings Release
The Registrant's Press Release dated March 26, 1998, which is filed as
Exhibit 99.1 to this Form 8-K, is incorporated herein by reference.
(b) Quantum Direct Corporation Chief Executive Officer
On March 30, 1998, ValueVision International, Inc. ("ValueVision") and
National Media Corporation ("National Media") announced the selection of
veteran marketing, direct response and retail executive, Gene McCaffery, 50, as
Chief Executive Officer of Quantum Direct Corporation ("Quantum Direct"), the
international electronic commerce company to be formed by the proposed merger
(the "Merger") of ValueVision and National Media. Mr. McCaffery brings to
Quantum Direct 25 years in retail and marketing experience, as well as
substantial executive experience. He currently serves as Chief Executive
Officer and managing partner of Marketing Advocates, a celebrity-driven product
and service development company based in Los Angeles, CA. Mr. McCaffery was
formerly Senior Executive Vice President of Montgomery Ward & Co.,
Incorporated, a $7 billion retail chain ("Montgomery Ward"), in charge of its
merchandising, strategic planning, advertising and marketing operations before
leaving in 1996 to start Marketing Advocates. While at Montgomery Ward, Mr.
McCaffery also oversaw The Signature Group, one of the nation's largest direct
marketing companies, and also served as vice-Chairman of the Board of
ValueVision from August 1995 to March 1996. Mr. McCaffery served as an infantry
officer in Vietnam War and was appointed as Civilian Aide to the Secretary of
the Army by President George Bush in 1991, a position that he still holds.
Mr. McCaffery and Quantum Direct have entered into a three year employment
agreement providing for a base salary of $500,000 during the first year,
$525,000 during the second year, and $550,000 during the third year. The
agreement also provides for bonus salary of up to 100% of the base salary,
which may be earned only upon Quantum Direct meeting certain operating
income, revenue and stock performance criteria. In addition, pursuant to the
agreement, Mr. McCaffery is being issued stock options to acquire 800,000
shares of Quantum Direct's Common Stock, $.01 par value, with an exercise price
equal to $3.375 per share, the last trading price of ValueVision's common stock
on March 27, 1998. The exercise price of such options will be adjusted to the
last trading price of Quantum Direct's common stock on the first day it trades,
to the extent such price is lower than $3.375. Of such options, 200,000 vest
monthly on a pro rata basis over the term of the employment agreement, and
600,000, vest on the earlier of the fifth anniversary of Mr. McCaffery's start
date (provided he is still an employee of Quantum Direct) or in equal 20%
(120,00 share) blocks based on the average closing price of Quantum's common
stock for 20 consecutive trading days being at $5.00, $6.00, $7.00, $8.00 and
$9.00, respectively. Such options are being issued as a stand-alone plan of
Quantum Direct, outside of Quantum Direct's 1998 Equity Participation Plan.
The employment agreement generally provides for a one year non-compete. In
addition, in the event of a change of control (as defined) of Quantum Direct,
Mr. McCaffery's employment can be terminated by Quantum Direct or Mr. McCaffery
in certain circumstances. In the event of such a termination, Mr. McCaffery
would be entitled to receive the base salary and bonus salary remaining to be
paid through the end the term of the employment agreement, together with
accrued benefits. In the event the Merger is not consummated, ValueVision and
Mr. McCaffery have agreed to enter into an employment agreement on
substantially the same terms pursuant to which Mr. McCaffery would become the
Chief Executive Officer of ValueVision. The foregoing description of certain
terms of the employment agreement by and among Quantum Direct, ValueVision and
Mr. McCaffery does not purport to be complete and is subject to and qualified
in its entirety by reference to a copy of the employment agreement attached to
this Form 8-K as Exhibit 10.1
ITEM 7. FINANCIAL STATEMENT, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
10.1 Employment Agreement dated March 30, 1998 by and among Quantum Direct
Corporation, ValueVision International, Inc. and Gene McCaffery.
99.1 Press Release dated March 26, 1998.
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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 thereunto duly authorized.
VALUEVISION INTERNATIONAL, INC.
(Registrant)
Date: March 31, 1997 By: /s/ David T. Quinby
---------------------------------
Name: David T. Quinby
Title: Vice President, General
Counsel and Secretary
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
<S> <C> <C>
10.1 Employment Agreement dated March 30, 1998 by and among
Quantum Direct Corporation, ValueVision International,
Inc. and Gene McCaffery. . . . .
99.1 Press Release . . . . . . . . . . . . . . . . . . . .
</TABLE>
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EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 30th day of March, 1998, by and among
Quantum Direct Corporation, a Delaware corporation ("Employer"), ValueVision
International, Inc., a Minnesota corporation ("ValueVision") and Gene McCaffery
("Employee").
WITNESSETH:
WHEREAS, Employer and Employee have agreed that Employee will be
employed by Employer on the terms and conditions set forth herein and that such
employment shall continue following consummation of the transactions (the
"Transactions") contemplated by that certain Agreement and Plan of
Reorganization and Merger (the "Merger Agreement") dated as of January 5, 1998
by and among ValueVision, National Media Corporation ("NMC") and V-L Holdings
Corp. (subsequently renamed "Quantum Direct Corporation"), whereby ValueVision
and NMC shall each become wholly-owned subsidiaries of Employer;
WHEREAS, ValueVision is being made a party hereto only for purposes of
Section 14 of this Agreement in the event that the Transactions are not
consummated;
NOW, THEREFORE, in consideration of the premises and mutual promises
contained in this Agreement, the parties hereto agree as follows:
1. EMPLOYMENT. Employer hereby agrees to employ Employee, and Employee
hereby agrees to be employed by Employer, on the terms and conditions
set forth herein.
2. TERM. The term of Employee's employment hereunder shall commence on the
date of this Agreement and shall continue on a full-time basis for a
period of three (3) years (such period, the "Term"), unless earlier
terminated as hereinafter provided. The "Employment Period" for
purposes of this Agreement shall be the period beginning on the date
hereof and ending at the time Employee shall cease to act as an
employee of Employer.
3. DUTIES. Employee shall serve as the Chief Executive Officer of Employer
and, subject to approval by the stockholders of Employer and the
consummation of the Transactions, Employee shall serve as a member of
the Board of Directors of Employer (the "Board") for a three-year term,
provided that if Employee's employment with Employer is earlier
terminated in accordance with the provisions herein, Employee shall
immediately resign from the Board upon request by Employer. Employee
shall perform the duties as assigned by the Board from time to time and
shall faithfully and to the best of his ability perform such reasonable
duties and services of an active, executive, administrative and
managerial nature as shall be specified and designated, from time to
time, by the Board. As Chief
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Executive Officer, Employee's duties shall include, without limitation,
making recommendations to the Compensation Committee of Employer with
respect to awards made under Employer's 1998 Equity Participation Plan.
The executive officers of Employer, including the President, shall
report directly to Employee, as Chief Executive Officer, provided that,
if at any time there is no person serving as President, Employee shall
also serve as President for such period until another person is
appointed by the Board to serve as President. Employee agrees to devote
his full time and skills to such employment while he is so employed,
subject to a vacation allowance of not less than three (3) weeks during
each year of the Term, or such additional vacation allowance as may be
granted to other senior executives of Employer.
4. COMPENSATION. During the Employment Period, Employee's compensation for
the services performed under this Agreement shall be as follows:
a. Base Salary. Employee shall receive a base salary as follows: (i)
Five Hundred Thousand and no/100 Dollars ($500,000) for the first
twelve-month period of the Term, (ii) Five Hundred Twenty Five Thousand
and no/100 Dollars ($525,000) for the second twelve-month period of the
Term, and (iii) Five Hundred Fifty Thousand and no/100 Dollars
($550,000) for the third twelve-month period of the Term, in each case,
payable in accordance with Employer's normal payment schedule for its
executive employees (the "Base Salary").
b. Signing Bonus. Upon the execution of this Agreement, Employee shall
receive a payment of One Hundred Thirty Thousand and no/100 Dollars
($130,000) (the "Signing Bonus"), provided, however, that if Employee's
employment with Employer is terminated during the first twelve months
of the Term either by Employer for Cause (as defined below) pursuant to
Section 6.d herein or by Employee pursuant to Section 6.c herein,
Employee shall return to Employer the pro rata portion of the Signing
Bonus (calculated as a percentage of the remaining portion of such
twelve-month period with respect to such twelve-month period).
c. Bonus Salary. Employee may receive bonus salary with respect to any
year in an aggregate amount not to exceed 100% of the Base Salary
applicable with respect to such year (the "Bonus Salary").
The Bonus Salary shall be calculated as follows:
(i) Up to 50% of the applicable Base Salary (the "50% Goal"), if
Employer's Operating Income (as defined below) equals 1% of Employer's
Net Sales (as defined below), then Employee shall receive a bonus
payment equal to 25% of the 50% Goal, which payment shall increase on a
pro rata basis to 100% of the 50% Goal if the Operating Income equals
or exceeds 3% of Employer's Net Sales (the "Operating Income Bonus").
As used in this Agreement, "Operating Income" shall mean earnings
before
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interest, taxes and unusual items, and "Net Sales" shall mean gross
sales, net of returns and related reserves, and excludes shipping,
handling, sales taxes and insurance revenues, each as determined with
respect to any fiscal year and pursuant to generally accepted
accounting principles by Employer, consistently applied.
(ii) Up to 30% of the applicable Base Salary (the "30% Goal") if the
Average Price (defined as the greater of (a) the average closing price
of Employer's common stock for 20 consecutive trading days immediately
prior to the last day of Employer's fiscal year or (b) the average
daily closing price for the final four months of Employer's fiscal
year) meets the following target prices (the "Stock Price Bonus"):
If (A) the Average Price increases at least 25% but not 50% over the
Base Price (defined as the lower of Employer's closing price on the
first day of trading of Employer's common stock and the closing
price of ValueVision's common stock on the date of this Agreement,
which Base Price shall be adjusted at the end of each fiscal year to
the Average Price with respect to such fiscal year, provided that in
no event shall the Base Price, as adjusted, exceed 133% of the Base
Price of the previous fiscal year), the Stock Price Bonus shall be
equal to 25% of the 30% Goal, (B) the Average Price increases at
least 50% but not 75% over the Base Price, the Stock Price Bonus
shall be equal to one-half of the 30% Goal, (C) the Average Price
increases at least 75% but not 100% over the Base Price, the Stock
Price Bonus shall be equal to three-quarters of the 30% Goal, and
(D) the Average Price increases 100% or more over the Base Price,
the Stock Price Bonus shall be equal to 100% of the 30% Goal.
(iii) Up to 20% of the applicable Base Salary (the "20% Goal"), if
Employer has positive Operating Income and Employer's Net Sales
(exclusive of sales of any acquisitions during the then current fiscal
year) increases over the prior fiscal year's Net Sales ("Base Sales")
as follows (the "Sales Bonus"):
If (A) Employer's Net Sales for any fiscal year increase at least 4%
but less than 5% over the Base Sales, the Sales Bonus shall be equal
to one-quarter of the 20% Goal, (B) Employer's Net Sales increase at
least 5% but not 6% over the Base Sales, the Sales Bonus shall be
equal to one-half of the 20% Goal, (C) Employer's net sales increase
at least 6% but not 7% over the Base Sales, the Sales Bonus shall be
equal to three-quarters of the 20% Goal, and (D) Employer's Net
Sales increase at least 7% over the Base Sales, the Sales Bonus
shall be equal to 100% of the 20% Goal.
Notwithstanding anything to the contrary herein, if the aggregate
compensation payable to Employee under this Agreement exceeds the
amount that is deductible under Section
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162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
then any such excess amount shall be deferred and credited by Employer
to an account for the benefit of Employee, which shall be paid to
Employee, with interest at a per annum rate equal to 1.5% plus the
prime rate (as announced by Employer's primary financial lender from
time to time), compounded annually, at such time within five (5) days
after the first date on which Employee no longer constitutes a "covered
employee" within the meaning of Section 162(m) of the Code.
d. Automobile Allowance. Employer shall pay Employee a monthly
automobile allowance of $600.00 per month ("Auto Allowance").
e. Stock Options. As of the date hereof, Employer shall grant to
Employee, employee stock options to purchase an aggregate of 800,000
shares of the common stock, par value $.01 per share (the "Common
Stock") of Employer (collectively, the "Options"). The Options shall be
granted under an option agreement between Employer and Employee dated
as of the date hereof, which option agreement shall be on terms
consistent with the terms of this Agreement. One-half of the Options
shall have a term of five years (the "Five Year Options") and one-half
of the Options shall have a term of ten years (the "Ten Year Options"),
provided that upon the termination of Employee's employment with
Employer, Employee shall have six months from the date of such
termination to exercise any vested Options. The Options shall have a
per share exercise price equal to the closing price of one share of
common stock of ValueVision as of the date of this Agreement; provided,
however, that if the closing price of one share of Common Stock of
Employer on the first trading date is lower than the exercise price,
the exercise price shall be adjusted to equal such lower closing price.
The Options shall vest, in equal amounts of Five Year Options and Ten
Year Options, as follows: (i) Options for 200,000 shares of Common
Stock shall vest in pro rata amounts on a monthly basis over the Term
of this Agreement (the "Pro Rata Options"), and (ii) Options for
600,000 shares of Common Stock shall vest on the earlier of (A) the
fifth anniversary of the date of this Agreement (provided that Employee
is still an employee of Employer) or (B) in equal installments of
options to purchase 120,000 shares of Common Stock, based upon the
attainment of an average closing price of Employer's common stock for
any 20 consecutive trading day period at $5.00, $6.00, $7.00, $8.00 and
$9.00, respectively. All of the Options shall automatically vest upon a
termination of Employee's employment with Employer prior to the end of
the Term (unless pursuant to Sections 6.c or 6.d.) or upon a Change of
Control (as defined below), provided that a Potential Change of Control
(as defined below) which results in such Change of Control first
occurred ninety (90) days or more after the date of this Agreement. If
such Change of Control is a result of a Potential Change of Control
which first occurred less than ninety (90) days after the date of this
Agreement, only the Pro Rata Options shall immediately vest upon the
occurrence of such Change of Control. Notwithstanding the foregoing,
the consummation of the Transactions and any related transactions in
connection therewith shall not be deemed a Change of Control or a
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Potential Change of Control for purposes of vesting of the Options
or for Section 6.f hereof, although any transaction in the future
similar to the Transactions involving Employer shall constitute a
Change of Control.
"Potential Change of Control" shall mean any of the following events:
(i) the authorization by the Board for Employer to enter into a letter
of intent, an agreement in principle or any other written agreement
with respect to a transaction or transactions that, if consummated,
would result in a Change of Control, (ii) the commencement of a tender
offer for the Common Stock of Employer in connection with a transaction
not authorized or approved by the Board, or (iii) the commencement of a
proxy contest with respect to the election of directors to the Board.
5. OTHER BENEFITS DURING THE EMPLOYMENT PERIOD. During the Employment
Period, Employer shall provide Employee with the following benefits:
a. Employee shall receive all benefits made available to executive
officers of Employer, from time to time, at its discretion
("Benefits"). It is understood and agreed that Employer may terminate
such Benefits or change any benefit programs at its sole discretion, as
they are not contractual for the term hereof.
b. Employer shall reimburse Employee for all reasonable and necessary
out-of-pocket business expenses incurred during the regular performance
of services for Employer, including, but not limited to, entertainment
and related expenses so long as Employer has received proper
documentation of such expenses from Employee.
c. Employer shall furnish Employee with such working facilities and
other services as are suitable to Employee's position with Employer and
adequate to the performance of his duties under this Agreement.
6. TERMINATION OF EMPLOYMENT.
a. Death. In the event of Employee's death, the Employment Period shall
terminate and Employee shall cease to receive Base Salary, Bonus
Salary, Auto Allowance, and Benefits as of the date on which his death
occurs. Employer shall provide Employee with a term life insurance
policy (of which Employee shall be the owner) for $1.0 million at
standard rates, provided that Employee shall be responsible for any
premiums in excess of the standard rates applicable to a person of
Employee's age who is in good health at the time of application for
such a policy. In addition, Employee's estate shall be entitled to
receive any payments or Benefits provided herein that have accrued (but
have not been paid) prior to the date of Employee's death (including
the acceleration of any unvested Options pursuant to Section 4.e).
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b. Disability. If Employee becomes disabled such that Employee cannot
perform the essential functions of his job, and the disability shall
have continued for a period of more than one hundred twenty (120)
consecutive days, then Employer may, in its sole discretion, terminate
the Employment Period, provided that a physician to be selected by
Employer, subject to the reasonable satisfaction of Employee, shall
have determined the existence of such disability. Upon the date of such
termination, Employee shall then cease to receive Base Salary, Bonus
Salary, Auto Allowance, and all other Benefits, on the date this
Agreement is so terminated; provided however, Employee shall then be
entitled to such disability, medical, life insurance, and other
benefits as may be provided generally for disabled employees of
Employer when payments and benefits hereunder ceases. In addition,
Employee shall be entitled to receive any payments or Benefits provided
in this Agreement that have accrued (but have not been paid) prior to
the date of such termination (including the acceleration of any
unvested Options pursuant to Section 4.e).
c. Voluntary Termination. In the event that Employee voluntarily
terminates his employment other than pursuant to Section 6.e, the
Employment Period shall terminate and Employee shall cease to receive
Base Salary, Bonus Salary, Auto Allowance, and all other Benefits as of
the date of such termination. Employee shall be entitled to receive any
payments or Benefits provided herein that have accrued (but have not
been paid) prior to the date of such termination (but no unvested
Options shall accelerate as a result of such termination).
d. Termination With Cause. Employer shall be entitled to terminate the
Employment Period and Employee's employment hereunder for Cause (as
defined below), and in the event that Employer elects to do so,
Employee shall cease to receive Base Salary, Bonus Salary, Auto
Allowance, and Benefits as of the date of such termination specified by
Employer. For purposes of this Agreement, "Cause" shall mean: (i) a
material improper act or act of fraud which results in or is intended
to result in Employee's personal enrichment at the direct expense of
Employer, including without limitation, theft or embezzlement from
Employer; (ii) material violation by Employee of any material policy,
regulation or practice or Employer; (iii) conviction of a felony; or
(iv) habitual intoxication, drug use or chemical substance abuse by any
intoxicating or chemical substance. Notwithstanding the forgoing,
Employee shall not be deemed to have been terminated for Cause unless
and until (A) Employee has received thirty (30) days' prior written
notice (a "Dismissal Notice") of such termination and (B) if such
"Cause" event is capable of being cured, Employee has not cured such
"Cause" event within ten (10) days following delivery of such notice.
In the event Employee does not dispute such determination within thirty
(30) days after receipt of the Dismissal Notice, Employee shall not
have the remedies provided pursuant to Section 6.g. of this Agreement.
Employee shall be entitled to receive any payments or Benefits provided
herein that have accrued (but have not been paid) prior to the date of
such termination (but no unvested Options shall accelerate as a result
of such termination).
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e. By Employee for Employer Cause. Employee may terminate the
Employment Period upon thirty (30) days written notice to Employer (the
"Employee Notice") upon the occurrences without Employee's express
written consent, of any one or more of the following events, provided,
however, that Employee shall not have the right to terminate the
Employment Period if Employer is able to cure such event within thirty
(30) days (ten (10) days with regard to Subsection (ii) hereof)
following delivery of such notice:
(i) Employer substantially diminishes Employee's duties such
that they are no longer of an executive nature as contemplated by
Section 3 hereof or
(ii) Employer materially breaches its obligations to pay
Employee as provided for herein and such failure to pay is not a result
of a good faith dispute between Employer and Employee.
(iii) Any purported termination of this Agreement by Employer
not effected in accordance with the provisions set forth herein,
provided that Employee has delivered thirty (30) days' prior written
notice of such termination and Employer has not cured such event within
thirty (30) days following delivery of such notice by Employee.
In the event of a termination of Employee's employment with Employer
under this Section 6.e, Employee shall be entitled to receive the
payments and Benefits as set forth in Section 6.g.
f. Termination After Change of Control. If Employee is terminated by
Employer without Cause within one year after the consummation of a
transaction constituting a Change of Control, Employee shall receive
(i) a payment in an amount equal to one year's Base Salary at the rate
in effect at the time of such termination, if a Potential Change of
Control (which results in such Change of Control) occurs less than
ninety (90) days after the date of this Agreement, or (ii) a payment in
an amount equal to Base Salary and Bonus Salary (based upon the last
paid Bonus Salary received in the previous year, if any, and pro rated
for the number of remaining months until the end of the Term) which
would otherwise be payable until the end of the Term, if a Potential
Change of Control (which results in such Change of Control) occurs
ninety (90) days or more after the date of this Agreement. Any payments
made by Employer to Employee under this Section 6.f shall be paid on a
pro rata basis over the Non-Competition Period (as defined below). In
addition, during the 30 day period immediately following the six month
anniversary of the consummation of a transaction constituting a Change
of Control, Employee may terminate this Agreement for any reason by
providing written notice to Employer and receive the benefits provided
in clauses (i) or (ii) of the immediately preceding sentence, as
applicable, provided that any such termination by Employee under this
Section 6.f shall not also be deemed to be a termination by Employee
under Section 6.c. In the event
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that Employee's employment with Employer is terminated by either
Employer or Employee pursuant to this Section 6.f, Employee shall be
entitled to any payments or Benefits provided in this Agreement that
have accrued (but have not been paid) prior to the date of such
termination, provided that any acceleration of any unvested Options
shall be in accordance with the provisions of Section 4.e).
g. Other Termination. Employer reserves the right to terminate the
Employment Period and Employee's employment hereunder at any time (and
without Cause), in its sole and absolute discretion. If Employer
terminates the Employment Period under this Section 6.g or if Employee
terminates this Agreement pursuant to Section 6.e. above, Employer
shall immediately pay Employee in a lump sum payment an amount equal to
Base Salary which would otherwise be payable until the end of the Term
(the "Severance Payment"), provided that if such remaining Term exceeds
12 months, the Severance Payment attributable to the last twelve months
of the Term shall not be included in the lump sum payment and instead
shall be paid over the Noncompetition Period (as defined below) on a
pro rata basis in accordance with Employer's normal payment schedule
for its executive employees. In addition, Employer shall continue to
provide Employee with Benefits until the end of the Term. Employee
shall be entitled to receive any payments or Benefits provided herein
that have accrued (but have not been paid) prior to the date of such
termination (including the acceleration of any unvested Options
pursuant to Section 4.e).
h. Arbitration. In the event that Employee disputes a determination
that Cause exists for terminating his employment pursuant to Section
6.d. of this Agreement, or Employer disputes the determination that
Cause exists for Employee's termination of his employment pursuant to
Section 6.e of this Agreement, either such disputing party may, in
accordance with the Rules of the American Arbitration Association
("AAA"), and within 30 days of receiving a Dismissal Notice or Employee
Notice, as applicable, file a petition with the AAA in any city in
which Employer's corporate executive offices are located for
arbitration of the dispute, the costs thereof (including legal fees and
expenses) to be shared equally by Employer and Employee unless an order
of the AAA provides otherwise. Such proceeding shall also determine all
other items then in dispute between the parties relating to this
Agreement, except with respect to enforcement of the agreements
contained in Sections 7 and 9 if either party seeks injunctive relief,
and the parties covenant and agree that the decision of the AAA shall
be final and binding and hereby waive their rights to appeal thereof.
7. CONFIDENTIAL INFORMATION. Employee acknowledges that the confidential
information and data obtained by him during the course of his
performance under this Agreement concerning the business or affairs of
Employer, or any entity related thereto, are the property of Employer
and will be confidential to Employer. Such confidential information may
include, but is not limited to, specifications, designs, and processes,
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product formulae, manufacturing, distributing, marketing or selling
processes, systems, procedures, plans, know-how, services or material,
trade secrets, devices (whether or not patented or patentable),
customer or supplier lists, price lists, financial information
including, without limitation, costs of materials, manufacturing
processes and distribution costs, business plans, prospects or
opportunities, and software and development or research work, but does
not include Employee's general business or direct marketing knowledge
(the "Confidential Information"). All the Confidential Information
shall remain the property of Employer and Employee agrees that he will
not disclose to any unauthorized persons or use for his own account or
for the benefit of any third party any of the Confidential Information
without Employer's written consent. Employee agrees to deliver to
Employer at the termination of this employment, all memoranda, notes,
plans, records, reports, video and audio tapes and any and all other
documentation (and copies thereof) relating to the business of
Employer, or any entity related thereto, which he may then possess or
have under his direct or indirect control. Notwithstanding any
provision herein to the contrary, the Confidential Information shall
specifically exclude information which is publicly available to
Employee and others by proper means, readily ascertainable from public
sources known to Employee at the time the information was disclosed or
which is rightfully obtained from a third party, information required
to be disclosed by law provided Employee provides notice to Employer to
seek a protective order, or information disclosed by Employee to his
attorney regarding litigation with Employer.
8. INVENTIONS AND PATENTS. Employee agrees that all inventions,
innovations or improvements in the method of conducting Employer's
business or otherwise related to Employer's business (including new
contributions, improvements, ideas and discoveries, whether patentable
or not) conceived or made by him during the Employment Period belong to
Employer. Employee will promptly disclose such inventions, innovations
and improvements to Employer and perform all actions reasonably
requested by Employer to establish and confirm such ownership.
9. NONCOMPETE AND RELATED AGREEMENTS.
a. Employee agrees that during the Noncompetition Period, he will not:
(i) directly or indirectly own, manage, control, participate in, lend
his name to, act as consultant or advisor to or render services (alone
or in association with any other person, firm, corporation or other
business organization) for any other person or entity engaged in (a)
the television home shopping business, (b) infomercial business, (c)
any mail order business that directly competes with Employer or any of
its affiliates by selling merchandise primarily of the type offered in
and using a similar theme as any of Employer's or its affiliates'
catalogs during the term of this Agreement or (d) any business which
Employer (upon authorization of its board of directors) has invested
significant
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research and development funds or resources and contemplates entering
into during the next twelve (12) months (the "Restricted Business"), in
any country that Employer or any of its affiliates operates during the
term of this Agreement (the "Restricted Area"); (ii) have any interest
directly or indirectly in any business engaged in the Restricted
Business in the Restricted Area other than Employer (provided that
nothing herein will prevent Employee from owning in the aggregate not
more than one percent (1%) of the outstanding stock of any class of a
corporation engaged in the Restricted Business in the Restricted Area
which is publicly traded, so long as Employee has no participation in
the management or conduct of business of such corporation), (iii)
induce or attempt to induce any employee of Employer or any entity
related to Employer to leave his, her or their employ, or in any other
way interfere with the relationship between Employer or any entity
related to Employer and any other employee of Employer or any entity
related to Employer, or (iv) induce or attempt to induce any customer,
supplier, franchisee, licensee, other business relation of any
affiliate of Employer or any entity related to Employer to cease doing
business with Employer or any entity related to Employer, or in any way
interfere with the relationship between any customer, franchisee or
other business relation and Employer or any entity related to Employer,
without the prior written consent of Employer. For purposes of this
Agreement, the "Noncompetition Period" shall commence as of the date
hereof and end on the last day of the period that is equal to twelve
(12) months following the date on which Employee's employment is
terminated under this Agreement for any reason. Notwithstanding
anything to the contrary herein, Employee shall not be bound by the
provisions of this Section 9 if, and only if, (x) a Potential Change of
Control (resulting in a Change of Control) occurs less than ninety (90)
days after the date of this Agreement and (y) the Employment Period is
terminated following the consummation of a transaction constituting
such Change of Control pursuant to Section 6.f.
b. If, at the time of enforcement of any provisions of this Section 9,
a court of competent jurisdiction holds that the restrictions stated
herein are unreasonable under circumstances then existing, the parties
hereto agree that the maximum period, scope or geographical area
reasonable under such circumstances will be substituted for the stated
period, scope or area.
c. Employee agrees that the covenants made in this Section 9 shall be
construed as an agreement independent of any other provision of this
Agreement and shall survive the termination of this Agreement.
10. TERMINATION OF EXISTING AGREEMENTS. This Agreement, effective as of the
date hereof, supersedes and preempts any prior understandings,
agreements or representations, written or oral, by or between Employee
and Employer, which may have related to the employment of Employee,
Employee's Agreement Not to Compete with Employer, or the
10
<PAGE> 11
payment of salary or other compensation by Employer to Employee, and
upon this Agreement becoming effective, all such understandings,
agreements and representations shall terminate and shall be of no
further force or effect.
11. SPECIFIC PERFORMANCE. Employee and Employer acknowledge that in the
event of a breach of this Agreement by either party, money damages
would be inadequate and the nonbreaching party would have no adequate
remedy at law. Accordingly, in the event of any controversy concerning
the rights or obligations under this Agreement, such rights or
obligations shall be enforceable in a court of equity by a decree of
specific performance. Such remedy, however, shall be cumulative and
nonexclusive and shall be in addition to any other remedy to which the
parties may be entitled.
12. SALE, CONSOLIDATION OR MERGER. In the event of a sale of the stock, or
substantially all of the stock, of Employer or consolidation or merger
of Employer with or into another corporation or entity, or the sale of
substantially all of the operating assets of Employer to another
corporation, entity or individual, Employer may assign its rights and
obligations under this Agreement to its successor-in-interest and such
successor-in-interest shall be deemed to have acquired all rights and
assumed all obligations of Employer hereunder.
13. CHANGE OF CONTROL. For purposes of this Agreement, a "Change of
Control" shall mean an event as a result of which: (i) any "person" (as
such term is used in Sections 13(d) and 14(d) of the Securities and
Exchange Act of 1934 (the "Exchange Act")), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act,
except that a person shall be deemed to have "beneficial ownership" of
all securities that such person has a right to acquire, whether such
right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 20% of the total voting power of
the voting stock of Employer (or their successors and assigns); (ii)
Employer consolidates with, or merges with or into another corporation
or sells, assigns, conveys, transfers, leases or otherwise disposes of
all or substantially all of its assets to any person, or any
corporation consolidates with, or merges with or into, Employer, in any
such event pursuant to a transaction in which the outstanding voting
stock of Employer is changed into or exchanged for cash, securities or
other property, other than any such transaction where (A) the
outstanding voting stock of Employer is changed into or exchanged for
(x) voting stock of the surviving or transferee corporation or (y)
cash, securities (whether or not including voting stock) or other
property, and (B) the holders of the voting stock of Employer
immediately prior to such transaction own, directly or indirectly, not
less than 80% of the voting power of the voting stock of the surviving
corporation immediately after such transaction; or (iii) during any
period of two consecutive years, individuals who at the beginning of
such period constituted the Board of Directors of Employer (together
with any new directors whose election by such Board or whose nomination
for election by the stockholders of Employer was approved by a vote of
66-2/3% of the
11
<PAGE> 12
directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a
majority of the Board of Employer then in office, or (iv) Employer is
liquidated or dissolved or adopts a plan of liquidation.
Notwithstanding anything to the contrary herein, the Transactions shall
not constitute a Change of Control.
14. TERMINATION OF MERGER AGREEMENT. In the event the Merger Agreement is
terminated in accordance with the provisions therein and the
Transactions are not consummated, ValueVision and Employee shall enter
into an agreement on substantially the same terms and conditions as set
forth in this Agreement, except that no additional Signing Bonus shall
be payable to Employee and ValueVision shall grant to Employee stock
options to purchase 800,000 shares of common stock, par value $.01 per
share, of ValueVision, to be issued under an existing plan or under a
new plan or agreement to be approved by the shareholders of
ValueVision, with an exercise price equal to the closing price of such
stock on the date of this Agreement and subject to the same vesting
provisions and other terms and conditions set forth in Section 4.e
herein, provided that if ValueVision is unable to issue options under
an existing plan and does not obtain shareholder approval of a new plan
or agreement, Employee may terminate any employment agreement with
ValueVision under this Section 14 and, if no subsequent employment
agreement is entered into between ValueVision and Employee, Employee
shall be entitled to a lump sum payment equal to the Base Salary that
would have been paid under this Agreement for the first twelve months
of the Term. The termination of this Agreement under this Section 14,
and the subsequent entry into a substantially similar agreement between
ValueVision and Employee, shall not itself constitute a termination of
Employee's employment or of the Employment Period for purposes of
Section 6.
15. NO OFFSET - NO MITIGATION. Employee shall not be required to mitigate
damages under this Agreement by seeking other comparable employment.
The amount of any payment or benefit provided for in this Agreement,
including welfare benefits, shall not be reduced by any compensation or
benefits earned by or provided to Employee as the result of employment
by another employer.
16. WAIVER. The failure of either party to insist, in any one or more
instances, upon performance of the terms or conditions of this
Agreement shall not be construed as a waiver or relinquishment of any
right granted hereunder or of the future performance of any such term,
covenant or condition.
17. INDEMNIFICATION. Employee shall be entitled to indemnification to the
fullest extent permitted under the laws of the State of Delaware.
12
<PAGE> 13
18. NOTICES. Any notice to be given hereunder shall be deemed sufficient if
addressed in writing, and delivered by registered or certified mail or
delivered personally: (i) in the case of Employer, to Employer's
principal business office; and (ii) in the case of Employee, to his
address appearing on the records of Employer, or to such other address
as he may designate in writing to Employer.
19. SEVERABILITY. In the event that any provision shall be held to be
invalid or unenforceable for any reason whatsoever, it is agreed such
invalidity or unenforceability shall not affect any other provision of
this Agreement and the remaining covenants, restrictions and provisions
hereof shall remain in full force and effect and any court of competent
jurisdiction may so modify the objectionable provisions as to make it
valid, reasonable and enforceable.
20. AMENDMENT. This Agreement may be amended only by an agreement in
writing signed by the parties hereto.
21. BENEFIT. This Agreement shall be binding upon and inure to the benefit
of and shall be enforceable by and against Employee's heirs,
beneficiaries and legal representatives. It is agreed that the rights
and obligations of Employee may not be delegated or assigned except as
specifically set forth in this Agreement.
22. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of California, provided that any agreement
between ValueVision and Employee entered into pursuant to Section 14
herein shall be governed by and construed in accordance with the laws
of Minnesota.
13
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed as of the day, month and year first above written.
EMPLOYER: QUANTUM DIRECT CORPORATION
By /s/ Robert L. Johander
-----------------------------------------
Its: Co-Chairman and Chief Executive Officer
By /s/ Frederick S. Hammer
-----------------------------------------
Its: Co-Chairman
EMPLOYEE:
/s/ Gene McCaffery
-------------------------------------------
GENE MCCAFFERY
VALUEVISION INTERNATIONAL, INC.
By:/s/ Robert L. Johander
----------------------------------------
Its: Chairman and Chief Executive Officer
14
<PAGE> 1
EXHIBIT 99.1
VVTV: Announces Fourth Quarter and Year-end Results Page 1
FOR IMMEDIATE RELEASE
VALUEVISION REPORTS FISCAL 1998 FOURTH QUARTER
AND YEAR-END RESULTS
MERGER WITH NATIONAL MEDIA ON SCHEDULE
MINNEAPOLIS, MARCH 26, 1998 - ValueVision International, Inc.
(Nasdaq:VVTV), an integrated electronic and print media direct marketing
company and the nation's third-largest television home shopping network,
today reported results for its fourth quarter and fiscal year ended January
31, 1998.
Net sales increased 37% to $217,982,000 for the year ended January 31,
1998, compared with $159,478,000 for the comparable year-ago period. The
company reported net income of $18,104,000, or $0.57 per basic share, for
the year ended January 31, 1998, compared with net income of $18,090,000,
or $0.57 per basic share for the year ended January 31, 1997. Net income
for fiscal 1998 includes a pretax gain of approximately $39 million on the
sale of a television broadcast station. Fiscal 1997 net income includes a
pretax gain on the sale of two television broadcast stations of
approximately $27 million.
For the fourth quarter of fiscal 1998, ValueVision reported net sales of
$60,095,000, compared with $65,231,000 in the corresponding year-ago
period. The company reported a net loss for the fiscal 1998 fourth quarter
of $528,000, or $0.02 per share, compared with net income of $882,000, or
$0.03 per share in the fiscal 1997 fourth quarter.
Commenting on the fourth quarter and year-end, Robert L. Johander,
ValueVision chairman and CEO, noted, "In the fourth quarter the ValueVision
Network generated a 6% increase in net sales on a 2% increase in average
full-time equivalent cable homes. Our ongoing direct mail operations
continued to perform profitably in the quarter, despite somewhat lower mail
order net sales compared to a year ago due to the previously disclosed
downsizing of the HomeVisions catalog [previously named Montgomery Ward
Direct]."
Mr. Johander continued, "Meanwhile, we continue to proceed on schedule with
our planned merger with National Media Corporation. Quantum Direct
Corporation will immediately be recognized as one of the world's
broadest-based marketers of consumer merchandise on a global basis. Quantum
Direct will be ideally positioned to exploit the natural synergies between
its home shopping and infomercial formats, establishing an integrated,
efficient direct response marketer operating at the forefront of the
emerging electronic commerce industry."
OPERATING RESULTS
Net sales for the year ended January 31, 1998 totaled $217,982,000, a 37%
increase over fiscal 1997 net sales of $159,478,000. The growth in net
sales came primarily from the company's acquisition of three direct mail
marketing operations during the second half of fiscal 1997. The company's
direct mail marketing operations contributed 51% of net sales in fiscal
1998 compared with 38% of net sales in fiscal 1997. Net sales for the
company's television home shopping operations increased 7% to $106,571,000
from $99,419,000 for the prior year on a 3% increase in full-time
equivalent cable homes (FTE's). Gross profit margins maintained their
strength for the year ended January 31,
<PAGE> 2
VVTV: Announces Fourth Quarter and Year-end Results Page 2
1998 at 44%, versus 42% for the year ended January 31, 1997. The increase
in revenues and the improvement in gross margins are primarily attributable
to contributions from the company's direct marketing catalog operations.
The company reported an operating loss of $10,975,000 for fiscal 1998,
compared with an operating loss of $2,640,000 for the prior year. Net
income for fiscal 1998 was $18,104,000, or $0.57 per share on 31,745,000
basic weighted average outstanding shares, compared with net income of
$18,090,000, or $0.57 per share on 31,718,000 basic weighted average
outstanding shares for the prior year. The company noted that net income
for fiscal 1998 includes a pretax gain of approximately $39 million on the
sale of its television broadcast station, WVVI Channel 66, serving the
Washington, D.C. market, which was completed in the second quarter. Net
income for fiscal 1997 includes a pretax gain of approximately $27 million
on the sale of two television broadcast stations.
Net sales for the fourth quarter of fiscal 1998 were $60,095,000, an 8%
decrease from the fourth quarter of the prior year when net sales were
$65,231,000. Net sales for the company's television home shopping
operations for the fourth quarter of fiscal 1998 increased 6% to
$29,008,000 from $27,462,000 for the comparable prior year period on a 2%
increase in average FTE's. The company's direct mail operations contributed
52% of net sales for the quarter ended January 31, 1998 compared with 58%
of net sales for the quarter ended January 31, 1997. Gross profit margins
continued to maintain their strength for the fourth quarter ended January
31, 1998 at 45%. The decrease in quarterly net sales primarily resulted
from the downsizing of the company's HomeVisions (f/k/a Montgomery Ward
Direct) mail order catalog operations as a result of the company's fourth
quarter restructuring agreement with Montgomery Ward & Co., Incorporated
whereby, among other things, the company agreed to cease the use of the
Montgomery Ward and Montgomery Ward Direct names in its catalog operations
in exchange for the return of 3.8 million common stock purchase warrants.
ValueVision reported an operating loss of $1,458,000 for the fourth quarter
of fiscal year 1998, compared to an operating loss of $402,000 for the
year-ago period. The company noted that its direct mail catalog operations
contributed positively to fourth quarter operating results, however, the
direct mail catalog operations contributed significantly less than in the
prior year, resulting in the increased operating loss. Television
home-shopping operations performed at the same level of operating loss as
in the prior year.
The company reported a fourth quarter net loss of $528,000, or $0.02 per
share on 30,330,000 basic weighted average outstanding shares, compared
with net income of $882,000, or $0.03 per share on 34,317,000 basic
weighted average outstanding shares, for the prior year period. The company
noted that net income for the fourth quarter ended January 31, 1997
included approximately $1,511,000 of pretax gains relating to the sale of
certain investments and interest income, compared to $746,000 for the
fourth quarter of fiscal 1998.
Total operating expenses were $106,149,000 in fiscal 1998, compared with
$70,003,000 in the prior year. As a percentage of net sales, total
operating expenses were 49% in fiscal 1998 and 44% in fiscal 1997. For the
fourth quarter, total operating expenses decreased 6% to $28,288,000 in
fiscal 1998, compared with $29,988,000 in the comparable prior year period.
As a percentage of net sales, total operating expenses were 47% in the
fourth quarter of fiscal 1998 compared with 46% in the fourth quarter of
fiscal 1997. The increase in the total operating expense ratios was mainly
the result of increased cable access fees, expansion of operations, and
lower than anticipated response rates from Montgomery Ward Direct catalog
solicitations and television home-shopping offerings.
<PAGE> 3
VVTV: Announces Fourth Quarter and Year-end Results Page 3
ValueVision reported negative cash flows from operations before changes in
working capital items and investing and financing activities of $4,000,000
for the year ended January 31, 1998, compared with a positive $3,400,000
for the year-ago period.
EXPANSION OF CABLE HOMES
ValueVision's full-time equivalent cable homes increased 3% from 11.4
million at January 31, 1997 to 11.7 million at January 31, 1998. At January
31, 1998, the company's programming was carried full-time on approximately
8.6 million homes, a 12% increase over 7.7 million full-time homes at
January 31, 1997. The total number of cable homes able to receive
ValueVision's programming increased approximately 6% from 16.4 million at
January 31, 1997 to 17.4 million at January 31, 1998.
STRONG BALANCE SHEET
At year-end, ValueVision had cash and short-term investments of
$31,866,000, compared to $52,859,000 at the end of fiscal 1997, a reduction
of $20,993,000, which was effected primarily by common stock repurchases
aggregating $14,964,000, as well as a $7.0 million loan to National Media
Corporation made in conjunction with the proposed merger during fiscal
1998. As of January 31, 1998, total assets were $134,764,000, current
liabilities were $29,590,000, long-term obligations were $2,906,000 and
shareholders' equity was $102,268,000.
(NOTE: THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 PROVIDES A
"SAFE HARBOR" FOR FORWARD-LOOKING STATEMENTS. CERTAIN INFORMATION INCLUDED
IN THIS NEWS RELEASE CONTAINS STATEMENTS THAT ARE FORWARD-LOOKING, SUCH AS
STATEMENTS RELATING TO CONSUMMATION OF THE MERGER WITH NATIONAL MEDIA
CORPORATION AND ACHIEVEMENT OF SYNERGIES, INCREASED REVENUE, AND INCREASED
CABLE HOME DISTRIBUTION. THERE ARE CERTAIN IMPORTANT FACTORS, SUCH AS
CONSUMER SPENDING AND DEBT LEVELS, INTEREST RATES, COMPETITIVE PRESSURE ON
SALES AND PRICING, AND MAINTENANCE OF CABLE HOME DISTRIBUTION THAT COULD
CAUSE RESULTS TO DIFFER MATERIALLY FROM THOSE ANTICIPATED STATEMENTS.
INVESTORS ARE CAUTIONED THAT ALL FORWARD-LOOKING STATEMENTS INVOLVE RISKS
AND UNCERTAINTY, INCLUDING THE POSSIBILITY THE NATIONAL MEDIA MERGER WILL
NOT BE CONSUMMATED, OR THAT IF CONSUMMATED, THE POTENTIAL SYNERGIES WILL
NOT BE REALIZED, AND THAT REVENUES AND CABLE DISTRIBUTION WILL NOT CONTINUE
TO INCREASE. FOR MORE INFORMATION ON THE POTENTIAL FACTORS THAT COULD
AFFECT THE COMPANY'S FINANCIAL RESULTS, INVESTORS SHOULD REFER TO THE
COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING
THE COMPANY'S PROXY STATEMENT DATED MARCH 16, 1998, AND ITS ANNUAL REPORT
ON FORM 10-K, QUARTERLY REPORTS ON FORM 10-Q, AND CURRENT REPORTS ON FORM
8-K.).
# # #
Contacts: Stuart R. Romenesko Jeff Majtyka
Senior Vice President, Finance Ryan Barr
and Chief Financial Officer Brainerd Communicators, Inc.
ValueVision International, Inc. 212-986-6667
612-947-5207
<PAGE> 4
VALUEVISION INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE TWELVE MONTHS ENDED
January 31, January 31,
-------------------------- --------------------------
1998 1997 1998 1997
-------------- -------------- ----------------- -----------------
<S> <C> <C> <C> <C>
NET SALES $ 60,094,731 $ 65,231,417 $ 217,981,886 $ 159,477,917
COST OF SALES 33,265,022 35,645,613 122,807,613 92,114,663
-------------- -------------- ----------------- -----------------
Gross profit 26,829,709 29,585,804 95,174,273 67,363,254
-------------- -------------- ----------------- -----------------
Margin % 44.6% 45.4% 43.7% 42.2%
OPERATING EXPENSES:
Distribution and selling 24,310,606 25,770,632 89,018,303 56,819,304
General and administrative 2,542,045 2,464,370 10,153,565 7,187,377
Depreciation and amortization 1,435,322 1,752,646 6,977,594 5,996,357
-------------- -------------- ----------------- -----------------
Total operating expenses 28,287,973 29,987,648 106,149,462 70,003,038
-------------- -------------- ----------------- -----------------
OPERATING LOSS (1,458,264) (401,844) (10,975,189) (2,639,784)
-------------- -------------- ----------------- -----------------
OTHER INCOME (EXPENSE):
Gain on sale of broadcast stations - - 38,850,000 27,050,000
Gain on sale of investments 105,142 711,993 214,694 808,449
Equity (loss) in earnings of affiliates (83,629) (249,187) (431,241) 419,430
Interest income 641,249 798,976 2,116,352 3,912,231
Other, net (62,791) 172,194 (171,047) 139,396
-------------- -------------- ----------------- -----------------
Total other income 599,971 1,433,976 40,578,758 32,329,506
-------------- -------------- ----------------- -----------------
INCOME (LOSS) BEFORE PROVISION (BENEFIT)
FOR INCOME TAXES (858,293) 1,032,132 29,603,569 29,689,722
PROVISION (BENEFIT) FOR INCOME TAXES (330,340) 150,000 11,500,000 11,600,000
-------------- -------------- ----------------- -----------------
NET INCOME (LOSS) $ (527,953) $ 882,132 $ 18,103,569 $ 18,089,722
============== ============== ================= =================
NET INCOME (LOSS) PER COMMON SHARE $ (0.02) $ 0.03 $ 0.57 $ 0.57
============== ============== ================= =================
NET INCOME (LOSS) PER COMMON
SHARE - ASSUMING DILUTION $ (0.02) $ 0.03 $ 0.57 $ 0.56
============== ============== ================= =================
Weighted average number of common
shares outstanding:
Basic 30,329,784 34,316,929 31,745,437 31,718,390
============== ============== ================= =================
Diluted 30,329,784 34,625,790 31,888,229 32,342,082
============== ============== ================= =================
</TABLE>
CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
JANUARY 31, JANUARY 31, JANUARY 31,
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Cash and Short-Term Investments $ 31,865,743 $ 52,858,783 $ 46,451,327
Inventories, net 20,426,862 28,109,081 8,889,426
Current Assets 79,661,065 101,028,907 65,045,038
Property and Equipment and Other Assets 55,103,239 67,057,318 51,665,509
Total Assets 134,764,304 168,086,225 116,710,547
Current Liabilities 29,590,094 37,723,874 13,518,648
Long-Term Obligations 2,906,481 3,708,189 447,430
Shareholders' Equity 102,267,729 126,654,162 102,744,469
</TABLE>
CABLE SUBSCRIBER INFORMATION (in millions)
<TABLE>
<S> <C> <C> <C>
Full-time Equivalent Cable Subscribers 11.7 11.4 10.5
Total Cable Subscribers 17.4 16.4 13.6
Full-time Cable Subscribers 8.6 7.7 7.2
</TABLE>
