UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1996
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 June 12, 1996, there were 29,376,748 shares of the Registrant's Common
Stock, $.01 par value, outstanding.
VALUEVISION INTERNATIONAL, INC. AND SUBSIDIARIES
FORM 10-Q TABLE OF CONTENTS
APRIL 30, 1996
PART I: FINANCIAL INFORMATION Page of
Form 10-Q
Item 1. Financial Statements
* Condensed Consolidated Balance Sheets as of April 30, 1996 3
and January 31, 1996
* Condensed Consolidated Statements of Operations for the Three 4
Months Ended April 30, 1996 and 1995
* Condensed Consolidated Statement of Shareholders' Equity for 5
the Three Months Ended April 30, 1996
* Condensed Consolidated Statements of Cash Flows for the Three 6
Months Ended April 30, 1996 and 1995
* Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and 10
Results of Operations
PART II: OTHER INFORMATION 15
Signatures 16
Part I. Financial Information
Item 1. Financial Statements
VALUEVISION INTERNATIONAL, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
APRIL 30, JANUARY 31,
1996 1996
------------- -------------
CURRENT ASSETS:
Cash and cash equivalents $ 28,810,615 $ 20,063,901
Short-term investments 51,509,745 26,387,426
Accounts receivable, net 6,231,441 5,130,502
Inventories 9,536,983 8,889,426
Prepaid expenses and other 4,669,580 4,882,453
Deferred taxes 250,000 250,000
------------- -------------
Total current assets 101,008,364 65,603,708
PROPERTY AND EQUIPMENT, NET 10,838,140 13,813,347
FEDERAL COMMUNICATIONS COMMISSION LICENSES, NET 7,158,440 9,312,437
MONTGOMERY WARD OPERATING AGREEMENT AND LICENSES, NET 16,171,897 16,621,255
INVESTMENTS AND OTHER ASSETS, NET 11,792,466 11,918,470
------------- -------------
$ 146,969,307 $ 117,269,217
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term obligations $ 200,000 $ 200,000
Accounts payable 10,246,598 8,770,685
Accrued liabilities 4,886,116 4,197,963
Income taxes payable 10,882,000 350,000
------------- -------------
Total current liabilities 26,214,714 13,518,648
LONG-TERM OBLIGATIONS 305,745 447,430
------------- -------------
Total liabilities 26,520,459 13,966,078
------------- -------------
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value, 100,000,000 shares authorized;
29,374,248 and 29,343,748 shares issued and outstanding 293,742 293,437
Montgomery Ward common stock purchase warrants;
25,799,860 and 25,770,461 17,500,000 17,500,000
Additional paid-in capital 87,267,760 87,189,939
Net unrealized holding gain (loss) on investments available-for-sale 429,403 (184,770)
Retained earnings (deficit) 14,957,943 (1,495,467)
------------- -------------
Total shareholders' equity 120,448,848 103,303,139
------------- -------------
$ 146,969,307 $ 117,269,217
============= =============
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
VALUEVISION INTERNATIONAL, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
FOR THE THREE MONTHS ENDED
APRIL 30,
-----------------------------
1996 1995
------------ ------------
NET SALES $ 22,787,667 $ 19,258,939
COST OF SALES 13,399,331 11,279,703
------------ ------------
Gross profit 9,388,336 7,979,236
------------ ------------
Margin 41.2% 41.4%
OPERATING EXPENSES:
Distribution and selling 7,403,954 6,288,751
General and administrative 1,308,506 924,444
Depreciation and amortization 1,358,717 913,998
------------ ------------
Total operating expenses 10,071,177 8,127,193
------------ ------------
OPERATING LOSS (682,841) (147,957)
------------ ------------
OTHER INCOME (EXPENSE):
Gain on sale of broadcast stations 27,050,000 --
Litigation costs -- (51,000)
Interest income 1,076,866 436,567
Other, net (40,615) (19,868)
------------ ------------
Total other income 28,086,251 365,699
------------ ------------
INCOME BEFORE INCOME TAXES 27,403,410 217,742
INCOME TAX PROVISION 10,950,000 --
------------ ------------
NET INCOME $ 16,453,410 $ 217,742
============ ============
NET INCOME PER COMMON AND
DILUTIVE COMMON EQUIVALENT SHARE $ 0.54 $ 0.01
============ ============
Weighted average number of common shares
and common equivalent shares outstanding 30,416,427 27,991,875
============ ============
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
VALUEVISION INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED APRIL 30, 1996
NET
MONTGOMERY UNREALIZED
WARD HOLDING
COMMON STOCK COMMON GAIN (LOSS)
----------------------- STOCK ADDITIONAL ON INVESTMENTS RETAINED TOTAL
NUMBER PAR PURCHASE PAID-IN AVAILABLE- EARNINGS SHAREHOLDERS'
OF SHARES VALUE WARRANTS CAPITAL FOR-SALE (DEFICIT) EQUITY
------------ --------- ----------- ------------ ---------- ------------ ------------
BALANCE, JANUARY 31, 1996 29,343,748 $ 293,437 $17,500,000 $ 87,189,939 $ (184,770) $ (1,495,467) $103,303,139
Exercise of stock options 30,500 305 -- 77,821 -- -- 78,126
Unrealized holding gain on
investments available-for-sale -- -- -- -- 614,173 -- 614,173
Net income -- -- -- -- -- 16,453,410 16,453,410
------------ --------- ----------- ------------ ---------- ------------ ------------
BALANCE, APRIL 30, 1996 29,374,248 $ 293,742 $17,500,000 $ 87,267,760 $ 429,403 $ 14,957,943 $120,448,848
============ ========= =========== ============ ========== ============ ============
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
VALUEVISION INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE THREE MONTHS ENDED APRIL 30,
----------------------------
1996 1995
------------ ------------
OPERATING ACTIVITIES:
Net income $ 16,453,410 $ 217,742
Adjustments to reconcile net income to net cash
provided by operating activities-
Depreciation and amortization 1,358,717 913,998
Gain on sale of broadcast stations (27,050,000) --
Changes in operating assets and liabilities:
Accounts receivable, net (1,100,939) (1,166,384)
Inventories (647,557) (2,053,012)
Prepaid expenses and other 212,252 (120,938)
Accounts payable and accrued liabilities 2,033,359 2,883,078
Income taxes payable 10,532,000 --
------------ ------------
Net cash provided by operating activities 1,791,242 674,484
------------ ------------
INVESTING ACTIVITIES:
Property and equipment additions, net of retirements (993,265) (313,228)
Purchase of broadcast station, including acquisition costs (4,618,743) --
Proceeds from sale of broadcast stations 40,000,000 --
Purchase of short-term investments (47,610,783) (11,770,156)
Proceeds from sale of short-term investments 22,488,464 1,181,589
Payment for investments and other assets (1,998,340) (80,737)
Payments of cable launch fees (569,015) --
Proceeds from escrow deposits and claims 320,713 200,000
------------ ------------
Net cash provided by (used for) investing activities 7,019,031 (10,782,532)
------------ ------------
FINANCING ACTIVITIES:
Proceeds from exercise of stock options 78,126 37,969
Payment of offering costs -- (65,210)
Payment of long-term obligations (141,685) (130,500)
------------ ------------
Net cash used for financing activities (63,559) (157,741)
------------ ------------
Net increase (decrease) in cash and cash equivalents 8,746,714 (10,265,789)
BEGINNING CASH AND CASH EQUIVALENTS 20,063,901 21,655,954
------------ ------------
ENDING CASH AND CASH EQUIVALENTS $ 28,810,615 $ 11,390,165
============ ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 58,315 $ 69,500
============ ============
Income taxes paid $ 418,000 $ --
============ ============
SUPPLEMENTAL NONCASH INVESTING AND
FINANCING ACTIVITIES:
Issuance of non-compete obligations $ -- $ --
============ ============
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
VALUEVISION INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1996
(UNAUDITED)
(1) GENERAL
ValueVision International, Inc. ("the Company") is a 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 broadcast television stations, low-power television (LPTV)
stations and to satellite dish owners.
(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 1996
Annual Report on Form 10-K/A1. Operating results for the three month period
ended April 30, 1996, are not necessarily indicative of the results that may be
expected for the fiscal year ending January 31, 1997.
Certain amounts in the fiscal 1996 financial statements have been
reclassified to conform to the fiscal 1997 presentation with no impact on
previously reported net income or shareholders' equity.
(3) NET INCOME PER SHARE
The Company computes primary net income per share based on the weighted
average number of shares of common stock and dilutive common stock equivalents
outstanding during the period. The difference between primary and fully diluted
net income per share and weighted average number of shares outstanding was not
material and therefore not presented separately.
(4) SALE OF BROADCAST STATIONS
On February 28, 1996, the Company completed the sale of two broadcast
stations to Paxson Communications Corporation for $40.0 million cash plus the
assumption of certain obligations. The stations sold were ABC affiliate WAKC-TV,
Channel 23, licensed to Akron, Ohio, and independent station WHAI-TV, Channel
43, licensed to Bridgeport, Connecticut. WAKC-TV was acquired by the Company in
April 1994 for approximately $6.0 million and WHAI-TV was acquired by the
Company in December 1994 for approximately $7.3 million. The net gain on the
sale of these two broadcast television stations of approximately $27.0 million
was recognized in the quarter ended April 30, 1996.
(5) ACQUISITION OF SEATTLE-TACOMA, WASHINGTON, STATION
On March 15, 1996, the Company completed the acquisition of independent
television station KBGE (TV), Channel 33, serving the Seattle-Tacoma, Washington
market, for approximately $4.7 million including the assumption of certain debt
and acquisition related costs. This acquisition was completed in accordance with
the terms of a five-year programming affiliation and financing agreement with
the station which was signed on July 21, 1995. Pursuant to this agreement, the
Company provided financing of up to $1,450,000 pursuant to a working capital
loan for channel operations.
(6) SECOND CLOSING, WVVI-MANASSAS, VIRGINIA STATION
On April 11, 1996, the Company completed a second closing with respect
to its acquisition of independent television station WVVI (TV), Channel 66,
serving the Washington, D.C. market whereby the Company paid $800,000 to the
former owner of WVVI (TV) as a final payment in exchange for not having to pay
$1,600,000 in the event the "must carry" provisions of the Cable Act are upheld
by a final decision. The Company had previously paid $4,050,000 to National
Capital Christian Broadcasting, WVVI's former owners, at an initial closing on
March 28, 1994. The $800,000 additional payment has been classified as excess
purchase price and is being amortized over 25 years on a straight-line basis. In
addition, the Company received certain studio and production equipment from the
former owner of WVVI, in lieu of a cash payment, for the balance outstanding
under a secured convertible debenture in the face amount of $450,000.
(7) INCOME TAXES
As of January 31, 1996, the Company had net operating loss
carryforwards of approximately $1.8 million for income tax reporting purposes.
These carryforwards were fully realized during the quarter ended April 30, 1996
as an offset to taxable income.
(8) SUBSEQUENT EVENT
On June 7, 1996, the Company signed a non-binding Memorandum of
Understanding ("MOU") with Montgomery Ward & Co., Incorporated ("Montgomery
Ward"), pursuant to which the companies agreed to expand and restructure their
ongoing operating and license agreements. In addition, the Company agreed to
acquire Montgomery Ward Direct, a four year old catalog business. The
transaction is subject to certain conditions, including completion of definitive
agreements and due diligence. Pursuant to the provisions of the MOU, the
Company's sales promotion rights will be expanded beyond television home
shopping to include the full use of the service marks of Montgomery Ward for
direct mail catalogs and ancillary promotions. The strategic alliance between
the Companies will be restructured and amended such that (i) 18,000,000 unvested
warrants held by Montgomery Ward will be cancelled, (ii) Montgomery Ward would
commit to providing $20.0 million in supplemental advertising support, (iii) the
Montgomery Ward operating and license agreements would be amended and expanded,
as defined in the MOU, and be extended to May 31, 2008, (iv) the Company will
acquire all of the assets and assume certain obligations of Montgomery Ward
Direct, and (v) the Company will issue to Montgomery Ward warrants to purchase
approximately 3.2 million shares of the Company's common stock at an exercise
price of $.01 per share.
Item 2.
VALUEVISION INTERNATIONAL, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
The following discussion and analysis of financial condition and
results of operations should be read in conjunction with the Company's
accompanying unaudited condensed consolidated financial statements and notes
thereto included elsewhere herein and the audited consolidated financial
statements and notes thereto included in the Company's Annual Report on Form
10-K/A1 for the fiscal year ended January 31, 1996.
SELECTED CONDENSED CONSOLIDATED FINANCIAL DATA
DOLLAR AMOUNTS AS A
PERCENTAGE OF NET SALES
FOR THE THREE MONTHS ENDED APRIL 30,
1996 1995
----- -----
NET SALES 100.0% 100.0%
===== =====
GROSS MARGIN 41.2% 41.4%
----- -----
OPERATING EXPENSES:
Distribution and selling 32.5% 32.7%
General and administrative 5.7% 4.8%
Depreciation and amortization 6.0% 4.7%
----- -----
Total operating expense 44.2% 42.2%
----- -----
OPERATING LOSS (3.0%) (.8%)
===== =====
VALUEVISION INTERNATIONAL, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
PROGRAM DISTRIBUTION
The Company's programming was available to approximately 13.9 million
cable homes as of April 30, 1996, as compared to 13.6 million cable homes as of
January 31, 1996 and to 13.3 million cable homes as of April 30, 1995. The
Company's programming is currently available through affiliation and time-block
purchase agreements with approximately 250 cable systems and through three
wholly owned full-power television broadcast stations. In addition, the
Company's programming is broadcast full-time over nine owned or affiliated
low-power television stations in major markets, and is available unscrambled to
homes equipped with satellite dishes. As of April 30, 1996 and 1995, the
Company's programming was available to approximately 10.7 million and 9.0
million full-time equivalent cable homes ("FTE"), respectively, an approximate
18% increase. As of January 31, 1996, the Company's programming was available to
10.5 million FTE cable homes. Approximately 7.3 million and 5.6 million cable
homes at April 30, 1996 and 1995, respectively, received the Company's
programming on a full-time basis. Homes that receive the Company's programming
24 hours per day are counted as one FTE each and homes that receive the
Company's television home shopping programming for any period less than 24 hours
are counted based upon an analysis of time-of day and day-of week.
NET SALES
Net sales for the three months ended April 30, 1996 (fiscal 1997), were
$22,788,000 compared to net sales of $19,259,000 for the three months ended
April 30, 1995 (fiscal 1996), an 18% increase. The increase in net sales is
primarily attributed to the increase in full-time equivalent cable homes able to
receive the Company's programming which increased approximately 1.7 million or
approximately 18% from 9.0 million at April 30, 1995 to 10.7 million at April
30, 1996. During the 12-month period ended April 30, 1996 the Company added
approximately 1.7 million full time cable homes. In addition to new homes, sales
increased due to the continued addition of new customers from households already
receiving the Company's television home shopping programming offset by a slight
decline in repeat sales to existing customers. The slight decline in repeat
sales to existing customers experienced during the first quarter of fiscal 1997
was due, in part, to the effects of continued testing of certain merchandising
and programming strategies. Certain changes were made to the Company's
merchandising and programming strategies in late March and April 1996 which
resulted in an improvement in sales for April 1996 as compared to April 1995.
The Company intends to continue to test and change its merchandising and
programming strategies with the intent of improving sales results; however,
while the Company is optimistic that results will continue to improve, there can
be no assurance that such changes in strategy will achieve intended results. As
a result of the increased number of households able to receive the Company's
programming, as well as seasonality factors, the Company anticipates net sales
and operating expenses to continue to increase for the balance of fiscal 1997.
GROSS MARGINS
Gross profit margins for the three months ended April 30, 1996 were
41.2%, compared with 41.4%, for the same period last year. The gross margins
between comparable periods remained relatively consistent, primarily as a result
of an increase in gross margin percentages in the jewelry and seasonal product
categories and a greater proportion of higher margin nonjewelry products such as
giftware and houseware products, offset by a decline in volume of higher margin
jewelry products. During the first quarter of fiscal 1997 the Company continued
to broaden its merchandise mix as compared to the same period last year by
expanding the range and quantity of nonjewelry items. As part of the ongoing
shift in merchandise mix, the Company continued to devote increasing program air
time to nonjewelry merchandise. Jewelry accounted for 70% of air time during the
first quarter of fiscal 1997, compared with 72% for the same period last year.
OPERATING EXPENSES
Total operating expenses for the three months ended April 30, 1996 were
$10,071,000 versus $8,127,000 for the comparable prior year period, a 23.9%
increase. Distribution and selling expenses for the first quarter of fiscal 1997
increased approximately $1,115,000 or 17.7%, to $7,404,000 or 32.5% of net sales
compared to $6,289,000, or 32.7% of net sales for the comparable period of
fiscal 1996. Distribution and selling costs increased primarily due to increases
in cable access fees, resulting from the growth in the number of cable homes
receiving the company's programming, additional personnel costs associated with
increased staffing levels and additional costs associated with handling
increased sales volume.
General and administrative expenses for the first quarter of fiscal
1997 increased $385,000 to $1,309,000 or 5.7% of net sales, compared to $924,000
or 4.8% of net sales for the comparable period of fiscal 1996. General and
administrative costs rose as a result of additional personnel required to
support the Company's expanding operations, increased costs associated with
operating broadcast television station WAKC-TV, Akron, Ohio prior to its sale as
compared to the same period last year and additional legal costs incurred
relative to the Company's clarification of certain cable regulations.
Depreciation and amortization costs were $1,359,000 and $914,000 for
the three months ended April 30, 1996 and 1995, respectively, representing an
increase of $445,000 or 48.7% from fiscal 1996 to fiscal 1997. Depreciation and
amortization costs as a percentage of net sales were 6.0% for the first quarter
of fiscal 1997 as compared to 4.7% for the first quarter of fiscal 1996. The
increase in depreciation and amortization is primarily due to amortization of
the Montgomery Ward operating agreement and licenses entered into in August 1995
of $450,000 and amortization of prepaid cable launch fees, offset by the
elimination of depreciation and amortization associated with WAKC and WHAI which
were sold in February 1996.
OPERATING LOSS
For the three months ended April 30, 1996, the Company incurred an
operating loss of $683,000, compared to an operating loss of $148,000, for the
three months ended April 30, 1995. The increase in the operating loss for the
first quarter of fiscal 1997 resulted primarily from a rise in operating costs
due to expanded operations offset by increased sales volumes and a corresponding
increase in gross profits.
NET INCOME
For the three months ended April 30, 1996, net income was $16,453,000
or $0.54 per share on 30,416,000 weighted average common and common equivalent
shares outstanding compared with net income of $218,000, or $.01 per share on
27,992,000 weighted average shares outstanding, for the prior-year period.
Results for the first quarter of fiscal 1997 include a gain of $27,050,000 from
the sale of television stations WAKC and WHAI in February 1996. Excluding the
gain on the sale of the two television stations, the Company had net income of
$223,000, or $.01 per share, for the first quarter ended April 30, 1996. Net
income also reflects a tax provision of $10,950,000, which results in an
effective tax rate of 40%.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
As of April 30, 1996, cash and cash equivalents and short-term
investments were $80,320,000, compared to $46,451,000 as of January 31, 1996, a
$33,869,000 increase. For the three months ended April 30, 1996 working capital
increased $22,709,000 to $74,794,000. The current ratio was 3.9 at April 30,
1996 compared to 4.9 at January 31, 1996. At April 30, 1996 all short-term
investments and cash equivalents were invested in debt securities with original
maturity dates of less than two hundred and seventy (270) days.
Total assets at April 30, 1996 were $146,969,000, compared to
$117,269,000 at January 31, 1996. Shareholders' equity was $120,449,000 at April
30, 1996, compared to $103,303,000 at January 31, 1996, a $17,146,000 increase.
The increase in shareholders' equity resulted from the first quarter net income
of $16,453,000, an unrealized holding gain on investments available-for-sale of
$614,000 and proceeds received on the exercise of stock options.
For the three months ended April 30, 1996 and 1995 net cash provided by
operating activities totaled $1,791,000 and $674,000, respectively. Cash flows
from operations before consideration of changes in working capital items and
investing and financing activities was a positive $676,000 for the quarter ended
April 30, 1996, compared to a positive $766,000 for the same prior-year period.
Net cash provided by operating activities for the first quarter of fiscal 1997
was the result of net income and the related depreciation and amortization and
gain on sale of broadcast stations adjustments and increased accounts payable,
income taxes payable and accrued liabilities offset by funding required to
support higher levels of accounts receivables and inventory. Accounts receivable
primarily increased due to timing relative to receipt of funds from credit card
companies and increased sales volume. Inventories increased from year end to
support increased sales volume and changes in merchandise mix.
Net cash provided by investing activities totaled $7,019,000 for the
first quarter of fiscal 1997 compared to net cash used of $10,783,000 for the
first quarter of fiscal 1996. For the three months ended April 30, 1996 and
1995, expenditures for property and equipment were $993,000 and $313,000,
respectively. Expenditures for property and equipment during the quarters ended
April 30, 1996 and 1995 include (i) the upgrade of broadcast station and
production equipment, studios and transmission equipment and (ii) the upgrade of
computer software and related equipment. Principal future capital expenditures
will be for upgrading television production and transmission equipment, studio
expansions and order fulfillment equipment in support of expanded operations.
During the first quarter of fiscal 1997, the Company received $40 million in
proceeds from the sale of two television stations; Akron ABC affiliate WAKC-TV
and independent station WHAI-TV. In addition, during the quarter ended April 30,
1996 the Company paid approximately $3.8 million toward the acquisition of
independent television station KBGE (TV), including acquisition related costs
and paid $800,000 at the second closing relative to broadcast station WVVI (TV).
Net cash used for financing activities totaled $64,000 and $158,000 for
the quarters ended April 30, 1996 and 1995 respectively, which is primarily
related to installment payments made under a five year noncompete obligation
entered into upon the acquisition of a broadcast television station partially
offset by proceeds received from the exercise of stock options.
Management believes funds currently held by the Company will be
sufficient to fund the Company's operations, Company common stock repurchased,
if any, pursuant to an authorized repurchase plan, and anticipated capital
expenditures and cable launch fees through fiscal 1997. Additional capital may
be required in the event the Company is able to identify television stations in
strategic markets at favorable prices and determines to acquire up to the
maximum of 12 full power television stations it may own under current
regulations.
FORWARD-LOOKING INFORMATION
Forward-looking statements contained herein are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
There are certain important factors that could cause results to differ
materially from those anticipated by some of the statements made herein.
Investors are cautioned that all forward-looking statements involve risks and
uncertainty. The factors, among others, that could cause actual results to
differ materially include: consumer spending and debt levels, interest rates,
continuity of relationships with or purchase from major vendors, product mix,
competitive pressure on sales and pricing, and increases in cable access fees
and other costs which cannot be recovered through improved pricing.
VALUEVISION INTERNATIONAL, INC. AND SUBSIDIARIES
Part II. Other Information
Item 5. Other Information
The Registrant's Press Release dated June 10, 1996, which is
filed as Exhibit 99 to this Form 10-Q.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11 Computation of Net Income Per Share
99 Press Release dated June 10, 1996
(b) Reports on Form 8-K
None
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.
Robert L. Johander
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
Stuart R. Romenesko
Vice President Finance and
Chief Financial Officer
(Principal Financial and Accounting Officer)
Date: June 14, 1996