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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-------------------- ------------------
Commission File Number 0-20243
------------------------
VALUEVISION INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Minnesota 41-1673770
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6740 Shady Oak Road, Minneapolis, MN 55344
(Address of principal executive offices)
612-947-5200
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
---- ----
As of February 17, 1998, there were 26,780,778 shares of the Registrant's
common stock, $.01 par value, outstanding.
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PART I - FINANCIAL INFORMATION
Item 1 of the Form 10-Q for the quarterly period ended July 31, 1997
previously filed by ValueVision International, Inc. (the "10-Q") is hereby
amended and restated in its entirety as follows. Except as set forth herein,
all other items of the 10-Q remain in full force and effect.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VALUEVISION INTERNATIONAL, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
JULY 31, JANUARY 31,
1997 1997
----------------- -----------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 43,943,696 $ 28,618,943
Short-term investments 14,210,200 24,239,840
Accounts receivable, net 11,134,985 6,488,094
Inventories, net 28,885,513 28,109,081
Prepaid expenses and other 14,236,536 11,483,394
Deferred taxes 392,000 416,000
----------------- -----------------
Total current assets 112,802,930 99,355,352
PROPERTY AND EQUIPMENT, NET 22,279,932 24,283,108
FEDERAL COMMUNICATIONS COMMISSION LICENSES, NET 5,769,191 6,934,546
MONTGOMERY WARD OPERATING AGREEMENT AND LICENSES, NET 14,414,825 15,052,935
INVESTMENT IN PAXSON COMMUNICATIONS CORPORATION 14,284,862 -
GOODWILL AND OTHER INTANGIBLE ASSETS, NET 12,597,224 10,764,011
INVESTMENTS AND OTHER ASSETS, NET 9,441,892 10,022,718
----------------- -----------------
$191,590,856 $166,412,670
================== =================
</TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long-term obligations $ 420,964 $ 392,921
Accounts payable 25,700,261 24,887,904
Accrued liabilities 13,154,156 12,398,041
Income taxes payable 12,242,054 45,008
----------------- -----------------
Total current liabilities 51,517,435 37,723,874
LONG-TERM OBLIGATIONS 1,135,303 1,443,189
----------------- -----------------
Total liabilities 52,652,738 39,167,063
================= =================
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value, 100,000,000 shares authorized;
28,020,778 and 28,842,198 shares issued and outstanding 280,208 288,422
Common stock purchase warrants;
3,842,143 and 5,368,557 26,984,038 26,984,038
Additional paid-in capital 73,069,654 83,309,455
Net unrealized holding gains on investments available-for-sale 2,712,668 69,437
Retained earnings 35,891,550 16,594,255
----------------- -----------------
Total shareholders' equity 138,938,118 127,245,607
----------------- -----------------
$191,590,856 $166,412,670
================= =================
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
balance sheets.
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VALUEVISION INTERNATIONAL, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
JULY 31, JULY 31,
--------------------------------- ---------------------------------
1997 1996 1997 1996
--------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
NET SALES $ 48,500,023 $ 24,340,754 $ 99,561,819 $ 47,128,421
COST OF SALES 28,576,368 14,612,379 56,943,226 28,011,710
--------------- --------------- -------------- ---------------
Gross profit 19,923,655 9,728,375 42,618,593 19,116,711
--------------- --------------- -------------- ---------------
Margin % 41.1% 40.0% 42.8% 40.6%
OPERATING EXPENSES:
Distribution and selling 20,278,997 7,690,723 41,381,831 15,094,677
General and administrative 2,445,438 1,460,663 5,360,137 2,769,169
Depreciation and amortization 1,907,374 1,371,673 3,708,614 2,730,390
--------------- --------------- -------------- --------------
Total operating expenses 24,631,809 10,523,059 50,450,582 20,594,236
--------------- --------------- -------------- --------------
OPERATING LOSS (4,708,154) (794,684) (7,831,989) (1,477,525)
--------------- --------------- -------------- --------------
OTHER INCOME (EXPENSE):
Gain on sale of broadcast stations 38,850,000 - 38,850,000 27,050,000
Equity (loss) in earnings of affiliates 39,421 (95,124) (330,575) (95,124)
Interest income 348,523 1,085,670 875,793 2,158,057
Other, net (18,918) 45,582 35,406 9,446
--------------- --------------- -------------- --------------
Total other income 39,219,026 1,036,128 39,430,624 29,122,379
--------------- --------------- -------------- --------------
INCOME BEFORE PROVISION FOR INCOME TAXES 34,510,872 241,444 31,598,635 27,644,854
PROVISION FOR INCOME TAXES 13,452,340 96,000 12,301,340 11,046,000
--------------- --------------- -------------- --------------
NET INCOME $ 21,058,532 $ 145,444 $ 19,297,295 $ 16,598,854
=============== =============== ============== ==============
NET INCOME PER COMMON AND DILUTIVE
COMMON EQUIVALENT SHARE $ 0.66 $ 0.00 $ 0.59 $ 0.55
=============== =============== ============== ==============
Weighted average number of common and
common equivalent shares outstanding 31,952,713 29,576,724 32,530,842 29,996,576
=============== =============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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VALUEVISION INTERNATIONAL, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JULY 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
UNREALIZED
HOLDING
COMMON STOCK COMMON GAINS
------------------------- STOCK ADDITIONAL ON INVESTMENTS
NUMBER PAR PURCHASE PAID-IN AVAILABLE RETAINED
OF SHARES VALUE WARRANTS CAPITAL FOR-SALE EARNINGS
------------ ----------- -------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 31, 1997 28,842,198 $ 288,422 $ 26,984,038 $ 83,309,455 $ 69,437 $ 16,594,255
Exercise of stock options and warrants 1,596,080 15,961 - 194,436 - -
Common stock repurchases (2,417,500) (24,175) - (10,434,237) - -
Unrealized holding gain on
investments available-for-sale - - - - 2,643,231 -
Net income - - - - - 19,297,295
------------ ----------- -------------- --------------- ------------- ---------------
BALANCE, JULY 31, 1997 28,020,778 $ 280,208 $ 26,984,038 $ 73,069,654 $ 2,712,668 $ 35,891,550
============ =========== ============== ============== ============= ===============
</TABLE>
<TABLE>
<CAPTION>
TOTAL
SHAREHOLDERS'
EQUITY
----------------
<S> <C>
BALANCE, JANUARY 31, 1997 $ 127,245,607
Exercise of stock options and warrants 210,397
Common stock repurchases (10,458,412)
Unrealized holding gain on
investments available-for-sale 2,643,231
Net income 19,297,295
----------------
BALANCE, JULY 31, 1997 $ 138,938,118
================
</TABLE>
The accompanying notes are an integral part of this condensed consolidated
financial statement.
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VALUEVISION INTERNATIONAL, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JULY 31,
-------------------------------------
1997 1996
----------------- ----------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 19,297,295 $ 16,598,854
Adjustments to reconcile net income to net cash
provided by (used for) operating activities-
Depreciation and amortization 3,708,614 2,730,390
Deferred taxes 24,000 -
Loss in earnings of affiliates 330,575 95,124
Gain on sale of investments (100,075) -
Gain on sale of broadcast stations (38,850,000) (27,050,000)
Changes in operating assets and liabilities:
Accounts receivable, net (4,043,690) (3,103,826)
Inventories, net (776,432) (1,436,741)
Prepaid expenses and other (2,797,020) 304,091
Accounts payable and accrued liabilities 53,725 4,267,757
Income taxes payable 12,197,046 4,416,117
----------------- -----------------
Net cash used for operating activities (10,955,962) (3,178,234)
----------------- -----------------
INVESTING ACTIVITIES:
Property and equipment additions, net of retirements (2,749,377) (2,724,410)
Purchase of broadcast stations - (4,618,743)
Proceeds from sale of broadcast stations 29,979,159 40,000,000
Purchase of short-term investments (17,456,305) (60,660,703)
Proceeds from sale of short-term investments 29,595,411 39,011,424
Payment for investments and other assets (3,934,180) (2,526,458)
Proceeds from sale of investments 1,361,118 -
----------------- ----------------
Net cash provided by investing activities 36,795,826 8,481,110
----------------- ----------------
FINANCING ACTIVITIES:
Proceeds from exercise of stock options and warrants 210,397 1,147,545
Payments for repurchases of common stock (10,458,412) -
Payment of long-term obligations (267,096) (141,685)
----------------- ----------------
Net cash provided by (used for)
financing activities (10,515,111) 1,005,860
----------------- ----------------
Net increase in cash and 15,324,753 6,308,736
cash equivalents
BEGINNING CASH AND CASH EQUIVALENTS 28,618,943 20,063,901
----------------- ----------------
ENDING CASH AND CASH EQUIVALENTS $ 43,943,696 $ 26,372,637
================= ================
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 45,000 $ 58,000
================= ================
Income taxes paid $ 75,000 $ 6,638,000
================= ================
SUPPLEMENTAL NON-CASH INVESTING
AND FINANCING ACTIVITIES:
Receipt of 1,197,892 shares of Paxson Communications
Corporation common stock as partial consideration
from sale of broadcast television station $ 14,284,862 $ -
================= ================
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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VALUEVISION INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1997
(UNAUDITED)
(1) GENERAL
ValueVision International, Inc. and its subsidiaries ("ValueVision" or the
"Company") is an integrated direct marketing company which markets its products
directly to consumers through electronic and print media.
The Company's principal electronic media activity is its television home
shopping network which uses recognized on-air television home shopping
personalities to market brand name merchandise and proprietary and private
label consumer products at competitive or discount prices. The Company's
24-hour per day television home shopping programming is distributed primarily
through long-term cable affiliation agreements and the purchase of
month-to-month full- and part-time block lease agreements of cable and
broadcast television time. In addition, the Company distributes its
programming through Company owned or affiliated full power Ultra-High Frequency
("UHF") broadcast television stations, low power television ("LPTV") stations
and to satellite dish owners.
The Company, through its wholly-owned subsidiary, ValueVision Direct
Marketing Company, Inc., d.b.a. Montgomery Ward Direct ("VVDM"), is a
direct-mail marketer of a broad range of quality general merchandise which is
sold to consumers through direct-mail catalogs and other direct marketing
solicitations. Products offered include domestics, housewares, home accessories
and electronics. Through its wholly-owned subsidiary, Catalog Ventures, Inc.
("CVI"), the Company sells a variety of fashion jewelry, health and beauty
aids, books, audio and video cassettes and other related consumer merchandise
through the publication of five consumer specialty catalogs. The Company also
manufactures and markets, via direct-mail, women's foundation undergarments
through its wholly-owned subsidiary Beautiful Images, Inc. ("BII").
Results of operations for the three and six months ended July 31, 1997
include the direct-mail operations of VVDM, BII, and CVI, which were acquired
by the Company effective July 27, 1996, October 22, 1996 and November 1, 1996,
respectively.
(2) BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. The information furnished in the
interim condensed consolidated financial statements includes normal recurring
adjustments and reflects all adjustments which, in the opinion of management,
are necessary for a fair presentation of such financial statements. Although
management believes the disclosures and information presented are adequate to
make the information not misleading, it is suggested that these interim
condensed consolidated financial statements be read in conjunction with the
Company's most recent audited financial statements and notes thereto included
in its fiscal 1997 Annual Report on Form 10-K. Operating results for the six-
month period
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ended July 31, 1997, are not necessarily indicative of the results that may be
expected for the fiscal year ending January 31, 1998.
Certain amounts in the fiscal 1997 financial statements have been
reclassified to conform to the fiscal 1998 presentation with no impact on
previously reported net income or shareholders' equity.
(3) NET INCOME PER SHARE
The Company computes net income per share based on the weighted average
number of shares of common stock and dilutive common stock equivalents
outstanding, if any, during the period. The difference between primary and
fully diluted net income per share and weighted average number of shares
outstanding was not material or was antidilutive, and therefore not presented
separately.
(4) SALE OF BROADCAST STATION
On July 31, 1997, the Company completed the sale of its television
broadcast station, WVVI (TV) Channel 66, which serves the Washington, D.C.
market, to Paxson Communications Corporation. The station was sold for
approximately $30 million in cash and 1,197,892 shares of Paxson Communications
Corporation common stock valued at $11.92 per share as determined pursuant to an
independent financial appraisal. WVVI (TV) was acquired by the Company in
March 1994 for approximately $4,850,000. The pre-tax gain recorded on the sale
of this television station was $38,850,000 and was recognized in the quarter
ended July 31, 1997.
(5) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS No. 128")
in February 1997. SFAS No. 128 establishes accounting standards for computing
and presenting earnings per share ("EPS") and is effective for reporting
periods ending after December 15, 1997. Management believes that the adoption
of SFAS No. 128 will not have a material impact on the Company's calculation of
EPS.
The FASB issued Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information" ("SFAS
No. 131") in June 1997. SFAS No. 131 requires that public business enterprises
report information about operating segments in annual financial statements and
requires selected information in interim financial reports issued to
shareholders. It also establishes standards for related disclosures about
products and services, geographic areas, and major customers and is effective
for fiscal years beginning after December 15, 1997.
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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 thereunto duly authorized.
VALUEVISION INTERNATIONAL, INC. AND SUBSIDIARIES
/s/ Stuart R. Romenesko
----------------------------
Stuart R. Romenesko
Senior Vice President Finance and
Chief Financial Officer
(Principal Financial and Accounting Officer)
February 20, 1998
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