2. Safe Harbor Statement
2
This document may contain certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may be
identified by words such as anticipate, believe, estimate, expect, intend, predict, hope, should, plan, will or similar expressions. Any statements contained herein that are
not statements of historical fact may be deemed forward-looking statements. These statements are based on management's current expectations and accordingly are
subject to uncertainty and changes in circumstances. Actual results may vary materially from the expectations contained herein due to various important factors, including
(but not limited to): consumer preferences, spending and debt levels; the general economic and credit environment; interest rates; seasonal variations in consumer
purchasing activities; the ability to achieve the most effective product category mixes to maximize sales and margin objectives; competitive pressures on sales; pricing and
gross sales margins; the level of cable and satellite distribution for our programming and the associated fees; our ability to establish and maintain acceptable commercial
terms with third-party vendors and other third parties with whom we have contractual relationships, and to successfully manage key vendor relationships and develop key
partnerships and proprietary brands; our ability to manage our operating expenses successfully and our working capital levels; our ability to remain compliant with our
long-term credit facility covenants; our ability to successfully transition our brand name and corporate name; customer acceptance of our new branding strategy and our
repositioning as a digital commerce company; the market demand for television station sales; changes to our management and information systems infrastructure;
challenges to our data and information security; changes in governmental or regulatory requirements; litigation or governmental proceedings affecting our operations;
significant public events that are difficult to predict, or other significant television-covering events causing an interruption of television coverage or that directly compete
with the viewership of our programming; our ability to obtain and retain key executives and employees; our ability to attract new customers and retain existing customers;
changes in shipping costs; our ability to offer new or innovative products and customer acceptance of the same; changes in customers viewing habits of television
programming; and the risks identified under “Risk Factors” in our recently filed Form 10-K and any additional risk factors identified in our periodic reports since the date of
such Form 10-K. More detailed information about those factors is set forth in our filings with the Securities and Exchange Commission, including our annual report on Form
10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. You are cautioned not to place undue reliance on forward-looking statements, which speak only as
of the date of this announcement. We are under no obligation (and expressly disclaim any such obligation) to update or alter our forward-looking statements whether as a
result of new information, future events or otherwise.
Adjusted EBITDA
EBITDA represents net income (loss) for the respective periods excluding depreciation and amortization expense, interest income (expense) and income taxes. We define
Adjusted EBITDA as EBITDA excluding non-operating gains (losses); activist shareholder response costs; executive and management transition costs; distribution center
consolidation and technology upgrade costs; Shareholder Rights Plan costs and non-cash share-based compensation expense. We have included the term “Adjusted
EBITDA” in our EBITDA reconciliation in order to adequately assess the operating performance of our television and online businesses and in order to maintain
comparability to our analyst's coverage and financial guidance, when given. Management believes that the term Adjusted EBITDA allows investors to make a more
meaningful comparison between our business operating results over different periods of time with those of other similar companies. In addition, management uses
Adjusted EBITDA as a metric to evaluate operating performance under our management and executive incentive compensation programs. Adjusted EBITDA should not be
construed as an alternative to operating income (loss), net income (loss) or to cash flows from operating activities as determined in accordance with generally accepted
accounting principles and should not be construed as a measure of liquidity. Adjusted EBITDA may not be comparable to similarly entitled measures reported by other
companies. We have included a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure, on Slide 12 of this
presentation.
Data in this presentation may be unaudited.
Percentage changes represent Q3 2015 as compared to Q3 2014.
12. Investors are advised to review carefully the risk factors contained in our most recently filed annual report on Form 10-K, quarterly reports on Form 10-Q, and current
reports on Form 8-K.
Appendices
12
16. Key Operating Metrics
16
F09 FY F10 FY F11 FY F12 FY* F13 FY F14 Q1 F14 Q2 F14 Q3 F14 Q4 F14 FY F15 Q1 F15 Q2 F15 Q3
Homes (Average 000s) 73,576 76,437 79,822 82,761 86,120 87,034 87,522 87,466 87,889 87,481 88,303 88,334 87,620
Net Shipped Units (000s) 4,537 5,175 4,947 5,620 7,152 1,913 2,110 2,134 2,898 9,055 2,230 2,434 2,282
Average Selling Price 108$ 101$ 104$ 96$ 81$ 76$ 67$ 67$ 63$ 67$ 65$ 60$ 65$
Return Rate % 21.0% 19.8% 22.6% 22.1% 22.3% 22.2% 22.9% 21.2% 19.9% 21.5% 20.3% 21.4% 18.9%
Internet Sales % 33.7% 41.2% 44.9% 45.7% 45.2% 44.7% 43.5% 43.5% 46.1% 44.6% 45.2% 45.9% 46.0%
Transaction Costs per Unit 3.60$ 2.90$ 2.91$ 2.60$ 2.48$ 2.51$ 2.51$ 2.57$ 2.49$ 2.52$ 2.78$ 2.92$ 3.00$
Total Variable Costs % of Net Sales 7.6% 7.5% 8.0% 7.3% 8.0% 8.4% 9.0% 8.9% 8.5% 8.7% 9.7% 9.5% 9.1%
Mobile % of Internet Sales N/A N/A 7.8% 16.9% 25.2% 31.5% 32.7% 34.0% 34.4% 33.5% 39.6% 42.4% 41.8%
Distribution cost per home - annualized 1.35$ 1.34$ 1.34$ 1.33$ 1.07$ 1.12$ 1.13$ 1.13$ 1.13$ 1.13$ 1.13$ 1.13$ 1.14$
Interactive Voice Response % 11% 11% 19% 27% 25% 29% 30% 30% 27% 29% 30% 29% 26%
Total Customers (000s)** 1,022 1,144 1,060 1,132 1,357 590 574 593 749 1,446 592 593 610
Average Purchase Frequency - Items 4.8x 4.9 5.1 5.4 5.8 3.6 4.1 4.0 4.3 7.0 4.1 4.5 4.1
% of Net Sales by Category:
Jewelry & Watches 55% 52% 53% 52% 43% 47% 43% 40% 37% 42% 45% 42% 36%
Home & Consumer Electronics 32% 33% 28% 27% 33% 27% 25% 29% 38% 29% 25% 22% 33%
Beauty 7% 9% 12% 13% 13% 13% 13% 13% 11% 14% 13% 15% 13%
Fashion & Accessories 6% 6% 7% 8% 11% 14% 19% 18% 14% 15% 16% 21% 18%
100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
*Includes 53rd week
**Customers can be active within one to four quarters per year and therefore quarterly active customer counts are not additive.
***Certain fiscal 2014 product category percentages in the above table have been reclassified to conform to our fiscal 2015 product group hierarchy.
17. Cash Flow
17
(In thousands) Year Ending Year Ending Year Ending Year Ending Year-to-Date
January 28, February 2 February 1 January 31, October 31,
2012 2013 2014 2015 2015
OPERATING ACTIVITIES:
Net loss (48,064)$ (27,676)$ (2,515)$ (1,378)$ (12,951)$
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities-
Depreciation and amortization 12,827 13,424 12,585 8,872 7,265
Share-based payment compensation 5,007 3,257 3,217 3,860 2,138
Asset impairments and write-offs - 11,111 - - -
Amortization of deferred revenue (1,061) (87) (85) (86) (64)
Amortization of debt discount & deferred financing costs 1,184 249 178 231 215
Write-off of deferred financing costs - 2,306 - - -
Debt extinguishment 25,679 500 - - -
Deferred Income Taxes - - 1,158 788 591
Gain on sale of property and investments or assets (416) (102) - - -
Changes in operating assets and liabilities:
Accounts receivable, net 9,909 (18,086) (9,026) (4,889) 16,024
Inventories, net (3,676) 6,321 (14,007) (10,294) (13,265)
Prepaid expenses and other 40 (2,066) 649 815 (1,450)
Accounts payable and accrued liabilities (15,447) 2,367 21,799 766 (7,612)
Accrued dividends payable on Series B Preferred Stock 1,069 - - - -
Net cash provided by (used for) operating activities (12,949) (8,482) 13,953 (1,315) (9,109)
INVESTING ACTIVITIES:
Property and equipment additions, net or proceeds from sale of (10,680) (6,157) (8,247) (25,119) (17,885)
Purchase of NBC trademark license - (4,000) (2,830) - -
Purchase of EVINE trademark - - - (59) -
Proceeds from sale of investments or assets - 102 - - -
Change in restricted cash 2,861 - - - 1,650
Net cash used for investing activities (7,819) (10,055) (11,077) (25,178) (16,235)
FINANCING ACTIVITIES:
Payments for repurchases of Series B Preferred stock (40,853) - - - -
Payment for Series B Preferred Stock Dividend (8,915) - - - -
Payments for deferred financing costs (306) (552) (390) (307) (428)
Proceeds from issuance of term loan - - - 12,152 2,849
Proceeds from issuance of revolving loan - 38,215 - 2,700 14,300
Payments on long term debt - (25,715) - (145) (1,540)
Payments on capital lease - - (13) (50) (39)
Proceeds from exercise of stock options 1,828 109 227 2,794 2,503
Proceeds from issuance of common stock, net 55,500 - - - -
Net cash provided by (used for) financing activities 7,254 12,057 (176) 17,144 17,645
Net increase (decrease) in cash (13,514) (6,480) 2,700 (9,349) (7,699)
BEGINNING CASH 46,471 32,957 26,477 29,177 19,828
ENDING CASH 32,957 26,477 29,177 19,828 12,129
