EVINE LIVE INC., 10-Q filed on 8/28/2015
Quarterly Report
Document and Entity Information (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Aug. 1, 2015
Aug. 1, 2015
Aug. 26, 2015
Jan. 31, 2015
Document Information [Line Items]
 
 
 
 
Entity Registrant Name
 
EVINE Live Inc. 
 
 
Entity Central Index Key
 
0000870826 
 
 
Current Fiscal Year End Date
 
--01-30 
 
 
Entity Filer Category
 
Accelerated Filer 
 
 
Document Type
 
10-Q 
 
 
Document Period End Date
 
Aug. 01, 2015 
 
 
Document Fiscal Year Focus
 
2015 
 
 
Document Fiscal Period Focus
 
Q2 
 
 
Amendment Flag
 
false 
 
 
Entity Common Stock, Shares Outstanding
 
 
57,125,435 
 
Entity Well-known Seasoned Issuer
No 
 
 
 
Entity Voluntary Filers
No 
 
 
 
Entity Current Reporting Status
Yes 
 
 
 
Entity Public Float
 
 
 
$ 197,088,722 
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Aug. 1, 2015
Jan. 31, 2015
Document Period End Date
Aug. 01, 2015 
 
Current assets:
 
 
Cash and cash equivalents
$ 14,073 
$ 19,828 
Restricted cash and investments
2,100 
2,100 
Accounts receivable, net
91,954 
112,275 
Inventories
59,311 
61,456 
Prepaid expenses and other
6,449 
5,284 
Total current assets
173,887 
200,943 
Property and equipment, net
50,790 
42,759 
FCC broadcasting license
12,000 
12,000 
Other assets
1,975 
1,989 
Total Assets
238,652 
257,691 
Current liabilities:
 
 
Accounts payable
62,221 
81,457 
Accrued liabilities
34,307 
36,683 
Line of Credit, Current
2,143 
1,736 
Deferred revenue
85 
85 
Total current liabilities
98,756 
119,961 
Capital Lease Obligations, Noncurrent
36 
Deferred revenue
207 
249 
Deferred Tax Liabilities, Net, Noncurrent
2,340 
1,946 
Long term credit facility
56,709 
50,971 
Total liabilities
158,021 
173,163 
Preferred stock, $.01 per share par value, 400,000 shares authorized; zero shares issued and outstanding
Shareholders' equity:
 
 
Common stock, $.01 per share par value, 100,000,000 shares authorized; 48,472,205 and 37,781,688 shares issued and outstanding
571 
564 
Additional paid-in capital
422,718 
418,846 
Accumulated deficit
(342,658)
(334,882)
Total shareholders’ equity
80,631 
84,528 
Liabilities and Equity
$ 238,652 
$ 257,691 
Consolidated Balance Sheets (Parentheticals) (USD $)
Aug. 1, 2015
Jan. 31, 2015
Stockholders' Equity:
 
 
Common stock, par value
$ 0.01 
$ 0.01 
Common stock, shares authorized
100,000,000 
100,000,000 
Common stock, shares issued
57,045,062 
56,448,663 
Common stock, shares outstanding
57,045,062 
56,448,663 
Preferred stock, par value
$ 0.01 
$ 0.01 
Preferred stock, shares authorized
400,000 
Preferred stock, shares issued
Preferred stock, shares outstanding
Consolidated Statements of Operations (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Aug. 1, 2015
Aug. 2, 2014
Aug. 1, 2015
Aug. 2, 2014
Document Period End Date
 
 
Aug. 01, 2015 
 
Net sales
$ 161,061 
$ 156,587 
$ 319,512 
$ 316,288 
Cost of sales
102,205 
96,152 
203,351 
195,847 
Gross profit
58,856 
60,435 
116,161 
120,441 
Operating expense:
 
 
 
 
Distribution and selling
51,357 
50,110 
102,156 
99,839 
General and administrative
6,391 
6,776 
12,103 
12,688 
Depreciation and amortization
2,107 
2,163 
4,238 
4,431 
Activist Shareholder Costs
2,473 
3,518 
Severance Costs
205 
2,620 
2,795 
2,620 
Distribution facility consolidation and technology upgrade costs
972 
972 
Total operating expense
61,032 
64,142 
122,264 
123,096 
Operating income (loss)
(2,176)
(3,707)
(6,103)
(2,655)
Other income (expense):
 
 
 
 
Interest income
Interest expense
(669)
(387)
(1,267)
(778)
Total other expense
(667)
(381)
(1,263)
(772)
Income (loss) before income taxes
(2,843)
(4,088)
(7,366)
(3,427)
Income tax (provision) benefit
(205)
(201)
(410)
(402)
Net income (loss)
$ (3,048)
$ (4,289)
$ (7,776)
$ (3,829)
Net income (loss) per common share
$ (0.05)
$ (0.08)
$ (0.14)
$ (0.08)
Net income (loss) per common share — assuming dilution
$ (0.05)
$ (0.08)
$ (0.14)
$ (0.08)
Weighted average number of common shares outstanding:
 
 
 
 
Basic
57,092,654 
52,199,792 
56,866,711 
51,022,023 
Diluted
57,092,654 
52,199,792 
56,866,711 
51,022,023 
Consolidated Statement of Shareholders' Equity (USD $)
In Thousands, except Share data
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Accumulated Deficit
Total Shareholders' Equity period beginning at Jan. 31, 2015
$ 84,528 
$ 564 
$ 418,846 
$ (334,882)
Common Stock, Shares, Outstanding period beginning at Jan. 31, 2015
56,448,663 
56,448,663 
 
 
Net income (loss)
(7,776)
(7,776)
Stock Issued During Period, Shares, New Issues
 
676,772 
 
 
Stock Issued During Period, Value, New Issues
2,503 
2,496 
Share-based payment compensation
1,376 
1,376 
Share-based payment compensation
 
 
 
Total Shareholders' Equity period end at Aug. 01, 2015
$ 80,631 
$ 571 
$ 422,718 
$ (342,658)
Common Stock, Shares, Outstanding period end at Aug. 01, 2015
57,045,062 
57,125,435 
 
 
Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Aug. 1, 2015
Aug. 2, 2014
Document Period End Date
Aug. 01, 2015 
 
Proceeds from Stock Options Exercised
$ 2,503 
$ 232 
OPERATING ACTIVITIES:
 
 
Net loss
(7,776)
(3,829)
Adjustments to reconcile net loss to net cash provided by (used for) operating activities:
 
 
Depreciation and amortization
4,707 
4,641 
Share-based compensation
1,376 
2,918 
Amortization of deferred revenue
(42)
(43)
Amortization of deferred finance costs
144 
102 
Deferred income taxes
394 
393 
Changes in operating assets and liabilities:
 
 
Accounts receivable, net
20,321 
14,414 
Inventories, net
2,145 
(1,170)
Prepaid expenses and other
(1,122)
(399)
Accounts payable and accrued liabilities
(20,709)
(19,182)
Net cash provided by (used for) operating activities
(562)
(2,155)
INVESTING ACTIVITIES:
 
 
Property and equipment additions
(13,628)
(6,138)
Net cash used for investing activities
(13,628)
(6,138)
FINANCING ACTIVITIES:
 
 
Payments for deferred issuance costs
(186)
(300)
Repayments of Long-term Capital Lease Obligations
(27)
(26)
Net cash provided by (used for) financing activities
8,435 
(94)
Net increase (decrease) in cash and cash equivalents
(5,755)
(8,387)
BEGINNING CASH AND CASH EQUIVALENTS
19,828 
29,177 
ENDING CASH AND CASH EQUIVALENTS
14,073 
20,790 
Interest Paid
1,084 
676 
Income Taxes Paid
33 
22 
Property and equipment purchases included in accounts payable
1,100 
643 
Proceeds from Issuance of Long-term Debt
4,300 
Proceeds from Issuance of Other Long-term Debt
2,849 
Repayments of Long-term Debt
1,004 
Deferred financing costs included in accrued liabilities
12 
Stock and Warrants Issued During Period, Value, Preferred Stock and Warrants
$ 0 
$ 533 
General
The Company
General
EVINE Live Inc. and its subsidiaries ("we," "our," "us," or the "Company") are collectively a digital commerce company that offers a mix of proprietary and name brands directly to consumers in an engaging and informative shopping experience through TV, online and mobile devices. The Company operates a 24-hour television shopping network, EVINE Live, which is distributed primarily on cable and satellite systems, through which it offers brand name and proprietary products in the categories of jewelry & watches; home & consumer electronics; beauty; and fashion & accessories. Orders are taken via telephone, online and mobile channels. The television network is distributed into approximately 88 million homes, primarily through cable and satellite affiliation agreements and agreements with telecommunications companies such as AT&T and Verizon. Programming is also streamed live online at evine.com and is also available on mobile channels. Programming is also distributed through a Company-owned full power television station in Boston, Massachusetts and through leased carriage on a full power television station in Seattle, Washington.
The Company also operates evine.com, a comprehensive digital commerce platform that sells products which appear on its television shopping network as well as an extended assortment of online-only merchandise. The live programming and products are also marketed via mobile devices, including smartphones and tablets, and through the leading social media channels.
On November 18, 2014, the Company announced that it had changed its corporate name to EVINE Live Inc. from ValueVision Media, Inc. Effective November 20, 2014, the Company's NASDAQ trading symbol also changed to EVLV from VVTV. The Company transitioned from doing business as "ShopHQ" to "EVINE Live" and evine.com on February 14, 2015.
Basis of Financial Statement Presentation
Basis of Financial Statement Presentation
Basis of Financial Statement Presentation
Principles of Consolidation
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 ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles ("GAAP") in the United States of America have been condensed or omitted in accordance with these rules and regulations. The accompanying condensed consolidated balance sheet as of January 31, 2015 has been derived from the Company's audited financial statements for the fiscal year ended January 31, 2015. The information furnished in the interim condensed consolidated financial statements includes normal recurring accruals and reflects all adjustments which, in the opinion of management, are necessary for a fair presentation of these financial statements. Although management believes the disclosures and information presented are adequate, these interim condensed consolidated financial statements should be read in conjunction with the Company’s most recent audited financial statements and notes thereto included in its annual report on Form 10-K for the fiscal year ended January 31, 2015. Operating results for the six-month period ended August 1, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending January 30, 2016.
The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.
Fiscal Year
The Company's fiscal year ends on the Saturday nearest to January 31. References to years in this report relate to fiscal years, rather than to calendar years. The Company’s most recently completed fiscal year, fiscal 2014, ended on January 31, 2015, and consisted of 52 weeks. Fiscal 2015 will end on January 30, 2016, and will contain 52 weeks. The quarters ended August 1, 2015 and August 2, 2014 each consisted of 13 weeks.
Recently Issued Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board issued Revenue from Contracts with Customers, Topic 606 (Accounting Standards Update (ASU) No. 2014-09), which provides a framework for the recognition of revenue, with the objective that recognized revenues properly reflect amounts an entity is entitled to receive in exchange for goods and services. The guidance, also includes additional disclosure requirements regarding revenue, cash flows and obligations related to contracts with customers. In July 2015, the Financial Accounting Standards Board approved a one year deferral of the effective date of ASU 2014-09. The standard will now become effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted for interim and annual reporting periods beginning after December 15, 2016. We are currently evaluating the impact of adopting ASU 2014-09 on our consolidated financial statements.
In April 2015, the Financial Accounting Standards Board issued Simplifying the Presentation of Debt Issuance Costs, Subtopic 835-30 (ASU No 2015-03). ASU 2015-03 requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying value of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by ASU 2015-03. The amendments in this ASU are effective retrospectively for fiscal years, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted. We are currently evaluating the impact of adopting ASU 2015-03 on our consolidated financial statements.
In July 2015, the Financial Accounting Standards Board issued Simplifying the Measurement of Inventory, Topic 330 (ASU No 2015-11). ASU 2015-11 changes the measurement principle for inventory from the lower of cost or market to lower of cost or net realizable value. The new standard is effective for the Company for fiscal years and interim periods beginning after December 15, 2016. We are currently evaluating the impact of adopting ASU 2015-11 on our consolidated financial statements.
Fair Value Measurements
Fair Value Measurements
Fair Value Measurements
GAAP utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to observable quoted prices (unadjusted) in active markets for identical assets and liabilities (Level 1 measurement), then priority to quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market (Level 2 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).
As of August 1, 2015 and January 31, 2015 the Company had $2,100,000 in Level 2 investments in the form of bank certificates of deposit which are used as cash collateral for the issuance of commercial letters of credit. The Company's investments in certificates of deposits were measured using inputs based upon quoted prices for similar instruments in active markets and, therefore, were classified as Level 2 investments. As of August 1, 2015 and January 31, 2015 the Company also had a long-term variable rate Credit Facility with carrying values of $58,852,000 and $52,707,000, respectively. As of August 1, 2015 and January 31, 2015, respectively, $2,143,000 and $1,736,000 was classified as current. The fair value of the variable rate Credit Facility approximates and is based on its carrying value. The Company has no Level 3 investments that use significant unobservable inputs.
Intangible Assets
Intangible Assets
Intangible Assets
Intangible assets in the accompanying consolidated balance sheets consisted of the following:
 
 
Weighted
Average
Life
(Years)
 
August 1, 2015
 
January 31, 2015
 
 
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Gross
Carrying
Amount
 
Accumulated
Amortization
Finite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
  EVINE trademark
 
15
 
$
1,103,000

 
$
(43,000
)
 
$
1,103,000

 
$
(18,000
)
Total finite-lived intangible assets
 
 
 
$
1,103,000

 
$
(43,000
)
 
$
1,103,000

 
$
(18,000
)
Indefinite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
  FCC broadcast license
 
 
 
$
12,000,000

 
 
 
$
12,000,000

 
 
As of January 31, 2015, the Company had an intangible FCC broadcasting license with a carrying value of $12,000,000 and an estimated fair value of $13,100,000. The Company annually reviews its FCC television broadcast license for impairment in the fourth quarter, or more frequently if an impairment indicator is present. The Company estimates the fair value of its FCC television broadcast license primarily by using income-based discounted cash flow models with the assistance of an independent outside fair value consultant. The discounted cash flow models utilize a range of assumptions including revenues, operating profit margin, projected capital expenditures and an unobservable discount rate. The Company concluded that the inputs used in its intangible FCC broadcasting license asset valuation are Level 3 inputs related to this valuation. The Company also considers comparable asset market and sales data for recent comparable market transactions for standalone television broadcasting stations to assist in determining fair value.
While the Company believes that its estimates and assumptions regarding the valuation of the license are reasonable, different assumptions or future events could materially affect its valuation. In addition, due to the illiquid nature of this asset, the Company's valuation for this license could be materially different if it were to decide to sell it in the short term which, upon revaluation, could result in a future impairment of this asset.
Amortization expense related to the EVINE trademark license was $18,000 and $25,000 for the three and six month periods ended August 1, 2015.
Credit Agreements
Credit Agreements
Credit Facility
The Company's long-term credit facility consists of:
 
 
August 1, 2015
 
January 31, 2015
Credit Facility
 
 
 
 
  Revolving loan
 
$
45,000,000

 
$
40,700,000

  Term loan
 
13,852,000

 
12,007,000

Total long-term credit facility
 
58,852,000

 
52,707,000

Less current portion of long-term credit facility
 
(2,143,000
)
 
(1,736,000
)
Long-term credit facility, excluding current portion
 
$
56,709,000

 
$
50,971,000


On February 9, 2012, the Company entered into a credit and security agreement (as amended on March 6, 2015, the "Credit Facility") with PNC Bank, N.A. ("PNC"), a member of The PNC Financial Services Group, Inc., as lender and agent. The Credit Facility, which includes The Private Bank as part of the facility, provides a revolving line of credit of $75.0 million and provides for a $15.0 million term loan on which the Company has drawn to fund improvements at the Company's distribution facility in Bowling Green, Kentucky. The Credit Facility also provides an accordion feature that would allow the Company to expand the size of the revolving line of credit by another $15.0 million upon certain conditions being met.
All borrowings under the Credit Facility mature and are payable on May 1, 2018. Subject to certain conditions, the Credit Facility also provides for the issuance of letters of credit in an aggregate amount up to $6.0 million which, upon issuance, would be deemed advances under the Credit Facility. Maximum borrowings and available capacity under the revolving line of credit under the Credit Facility are equal to the lesser of $75.0 million or a calculated borrowing base comprised of eligible accounts receivable and eligible inventory. The Credit Facility is secured by substantially all of the Company’s personal property, as well as the Company’s real properties located in Eden Prairie, Minnesota and Bowling Green, Kentucky. Under certain circumstances, the borrowing base may be adjusted if there were to be a significant deterioration in value of the Company’s accounts receivable and inventory.
The revolving line of credit under the Credit Facility bears interest at LIBOR plus 3% per annum. The term loan bears interest at either (i) a fixed rate based on the LIBOR Rate for interest periods of one, two, three or six months, or (ii) a daily floating alternate base rate (the “Base Rate”), plus until January 31, 2015, a margin of 5% on the Base Rate and 6% on the LIBOR Rate and then the margin adjusts each fiscal year to a rate consisting of between 4% and 5% on Base Rate term loans and 5% to 6% on LIBOR Rate term loans based on the Company’s leverage ratio as demonstrated in its financial statements. As of August 1, 2015, the Company had borrowings of $45.0 million under its revolving credit facility. Remaining capacity under the revolving credit facility as of August 1, 2015 is $28.0 million, of which approximately $3.0 million is earmarked for our distribution facility expansion, with the balance providing liquidity for working capital and general corporate purposes. The Credit Facility also provides for a $15.0 million term loan on which the Company has drawn to fund an expansion at the Company's distribution facility in Bowling Green, Kentucky. As of August 1, 2015, there was approximately $13.9 million outstanding under the Credit Facility term loan of which $2.1 million was classified as current in the accompanying balance sheet.
Principal borrowings under the term loan are to be payable in monthly installments over an 84 month amortization period commencing on January 1, 2015 and are also subject to mandatory prepayment in certain circumstances, including, but not limited to, upon receipt of certain proceeds from dispositions of collateral. Borrowings under the term loan are also subject to mandatory prepayment starting in the fiscal year ending January 30, 2016 in an amount equal to fifty percent (50%) of excess cash flow for such fiscal year, with any such payment not to exceed $2.0 million in any such fiscal year. The Credit Facility is also subject to other mandatory prepayment in certain circumstances. In addition, if the total Credit Facility is terminated prior to maturity, the Company would be required to pay an early termination fee of 0.5% if terminated on or before May 1, 2016; and no fee if terminated after May 1, 2016. Interest expense recorded under the Credit Facility for the three- and six-month periods ended August 1, 2015 was $668,000, and $1,260,000, respectively and $383,000 and $774,000 for the three- and six-month periods ended August 2, 2014, respectively.
The Credit Facility contains customary covenants and conditions, including, among other things, maintaining a minimum of unrestricted cash plus facility availability of $10.0 million at all times and limiting annual capital expenditures. As our unused line availability was greater than $10.0 million at August 1, 2015, no additional cash was required to be restricted. Certain financial covenants, including minimum EBITDA levels (as defined in the Credit Facility) and a minimum fixed charge coverage ratio, become applicable only if unrestricted cash plus facility availability falls below $16.0 million or upon an event of default. In addition, the Credit Facility places restrictions on the Company’s ability to incur additional indebtedness or prepay existing indebtedness, to create liens or other encumbrances, to sell or otherwise dispose of assets, to merge or consolidate with other entities, and to make certain restricted payments, including payments of dividends to common shareholders.
Costs incurred to obtain amendments to the Credit Facility totaling $877,000 and unamortized costs incurred to obtain the original Credit Facility totaling $466,000 have been deferred and are being expensed as additional interest over the five-year term of the Credit Facility.
The aggregate maturities of the Company's long-term Credit Facility as of August 1, 2015 is as follows:
 
 
Credit Facility
 
 
Fiscal year
 
Term loan
 
Revolving loan
 
Total
2015
 
$
1,072,000

 
$

 
$
1,072,000

2016
 
2,143,000

 

 
2,143,000

2017
 
2,143,000

 

 
2,143,000

2018
 
8,494,000

 
45,000,000

 
53,494,000

2019
 

 

 

 
 
$
13,852,000

 
$
45,000,000

 
$
58,852,000

(Notes)
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]
-Based Compensation - Stock Option Awards
Compensation is recognized for all share-based compensation arrangements by the Company. Stock-based compensation expense for the second quarters of fiscal 2015 and fiscal 2014 related to stock option awards was $326,000 and $1,319,000, respectively. Stock-based compensation expense for the first six-months of fiscal 2015 and fiscal 2014 related to stock option awards was $587,000 and $2,063,000, respectively. The Company has not recorded any income tax benefit from the exercise of stock options due to the uncertainty of realizing income tax benefits in the future.
As of August 1, 2015, the Company had one omnibus stock plan for which stock awards can be currently granted: the 2011 Omnibus Incentive Plan that provides for the issuance of up to 6,000,000 shares of the Company's stock. The 2004 Omnibus Plan expired on June 22, 2014. No further awards may be made under the 2004 Omnibus Plan, but any award granted under the 2004 Omnibus Plan and outstanding on June 22, 2014 will remain outstanding in accordance with its terms. The 2001 Omnibus Stock Plan expired on June 21, 2011. The 2011 plan is administered by the human resources and compensation committee of the board of directors and provides for awards for employees, directors and consultants. All employees and directors of the Company and its affiliates are eligible to receive awards under the plan. The types of awards that may be granted under the plan include restricted and unrestricted stock, restricted stock units, incentive and non-statutory stock options, stock appreciation rights, performance units, and other stock-based awards. Incentive stock options may be granted to employees at such exercise prices as the human resources and compensation committee may determine but not less than 100% of the fair market value of the underlying stock as of the date of grant. No incentive stock option may be granted more than 10 years after the effective date of the respective plan's inception or be exercisable more than 10 years after the date of grant. Options granted to outside directors are non-statutory stock options with an exercise price equal to 100% of the fair market value of the underlying stock as of the date of grant. With the exception of market-based options, options granted generally vest over three years in the case of employee stock options and vest immediately on the date of grant in the case of director options, and have contractual terms of 10 years from the date of grant.
The fair value of each time-based vesting option award is estimated on the date of grant using the Black-Scholes option pricing model that uses assumptions noted in the following table. Expected volatilities are based on the historical volatility of the Company's stock. Expected term is calculated using the simplified method taking into consideration the option's contractual life and vesting terms. The Company uses the simplified method in estimating its expected option term because it believes that historical exercise data cannot be accurately relied upon at this time to provide a reasonable basis for estimating an expected term due to the extreme volatility of its stock price and the resulting unpredictability of its stock option exercises. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Expected dividend yields were not used in the fair value computations as the Company has never declared or paid dividends on its common stock and currently intends to retain earnings for use in operations.
 
Fiscal 2015
 
Fiscal 2014
Expected volatility
76 - 82%
 
97% - 98%
Expected term (in years)
6 years
 
5 - 6 years
Risk-free interest rate
1.7% - 1.9%
 
1.5% - 2.2%

Market-Based Stock Option Awards
On October 3, 2012, the Company granted 2,125,000 non-qualified market-based stock options to its executive officers as part of the Company's long-term executive compensation program. The options were granted with an exercise price of $4.00 and each option will become exercisable in three tranches, as follows, on the dates when the Company's average closing stock price for 20 consecutive trading days equals or exceeds the following prices: Tranche 1 (50% of the shares subject to the option at $6.00 per share); Tranche 2 (25% at $8.00 per share); and Tranche 3 (25% at $10.00 per share). On August 14, 2013, 50% of this stock option grant (Tranche 1) vested and as a result, the vesting of the second and third tranches can occur any time on or before the fifth anniversary of the grant date. As of August 1, 2015, 953,127 market-based stock option awards were outstanding. The total grant date fair value was estimated to be $1,998,000 and was amortized over the derived service periods for each tranche.
Grant date fair values and derived service periods for each tranche were determined using a Monte Carlo valuation model based on assumptions, which included a weighted average risk-free interest rate of 0.38%, a weighted average expected life of 3.3 years and an implied volatility of 78% and were as follows for each tranche:
 
Fair Value
(Per Share)
 
Derived Service
Period
Tranche 1 ($6.00/share)
$0.93
 
15
months
Tranche 2 ($8.00/share)
$0.95
 
20
months
Tranche 3 ($10.00/share)
$0.95
 
24
months

A summary of the status of the Company’s stock option activity as of August 1, 2015 and changes during the six months then ended is as follows:
 
2011
Incentive
Stock
Option
Plan
 
Weighted
Average
Exercise
Price
 
2004
Incentive
Stock
Option
Plan
 
Weighted
Average
Exercise
Price
 
2001
Incentive
Stock
Option
Plan
 
Weighted
Average
Exercise
Price
 
Other Non-
Qualified
Stock
Options
 
Weighted
Average
Exercise
Price
Balance outstanding,
January 31, 2015
2,463,000

 
$
4.09

 
1,206,000

 
$
6.71

 
826,000

 
$
6.89

 
450,000

 
$
4.51

Granted
295,000

 
$
5.77

 

 
$

 

 
$

 

 
$

Exercised
(78,000
)
 
$
4.30

 
(30,000
)
 
$
2.70

 
(385,000
)
 
$
5.44

 
(372,000
)
 
$
4.57

Forfeited or canceled
(609,000
)
 
$
4.08

 
(333,000
)
 
$
7.52

 
(22,000
)
 
$
12.76

 
(78,000
)
 
$
4.23

Balance outstanding,
August 1, 2015
2,071,000

 
$
4.32

 
843,000

 
$
6.53

 
419,000

 
$
7.91

 

 
$

Options exercisable at
August 1, 2015
1,264,000

 
$
3.95

 
825,000

 
$
6.57

 
419,000

 
$
7.91

 

 
$



The following table summarizes information regarding stock options outstanding at August 1, 2015:
 
Options Outstanding
 
Options Vested or Expected to Vest
Option Type
Number of
Shares
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Life
(Years)
 
Aggregate
Intrinsic
Value
 
Number of
Shares
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Life
(Years)
 
Aggregate
Intrinsic
Value
2011 Incentive:
2,071,000

 
$
4.32

 
7.9
 
$
17,000

 
2,022,000

 
$
4.30

 
7.7
 
$
16,000

2004 Incentive:
843,000

 
$
6.53

 
3.4
 
$
7,000

 
842,000

 
$
6.47

 
3.4
 
$
7,000

2001 Incentive:
419,000

 
$
7.91

 
2.7
 
$

 
419,000

 
$
7.91

 
2.7
 
$

Non-Qualified:

 
$

 
 
$

 

 
$

 
 
$


The weighted average grant-date fair value of options granted in the first six-months of fiscal 2015 and fiscal 2014 was $4.10 and $3.75, respectively. The total intrinsic value of options exercised during the first six-months of fiscal 2015 and fiscal 2014 was $1,441,000 and $842,000, respectively. As of August 1, 2015, total unrecognized compensation cost related to stock options was $2,251,000 and is expected to be recognized over a weighted average expected life of approximately 2.1 years.
Restricted Stock and Warrant Exercise (Notes)
Restricted Stock
Restricted Stock and Warrant Exercise
Restricted Stock
Compensation expense recorded for the second quarter of fiscal 2015 and fiscal 2014 relating to restricted stock grants was $442,000 and $555,000, respectively. Compensation expense recorded for the first six-months of fiscal 2015 and fiscal 2014 relating to restricted stock grants was $789,000 and $855,000, respectively. As of August 1, 2015, there was $3,314,000 of total unrecognized compensation cost related to non-vested restricted stock grants. That cost is expected to be recognized over a weighted average expected life of 1.9 years. The total fair value of restricted stock vested during the first six months of fiscal 2015 and fiscal 2014 was $249,000 and $518,000, respectively.
During the second quarter of fiscal 2015, the Company granted a total of 182,334 shares of restricted stock to eight non-management board members as part of the Company's annual director compensation program. Each restricted stock award vests on the day immediately preceding the next annual meeting of shareholders following the date of grant. The aggregate market value of the restricted stock at the date of the award was $520,000 and is being amortized as director compensation expense over the twelve-month vesting period. During the second quarter of fiscal 2015, the Company also granted a total of 26,810 shares of time-based restricted stock awards to certain key employees as part of the Company's long-term incentive program. The restricted stock will vest in three equal annual installments beginning in May 2016. The aggregate market value of the restricted stock at the date of the award was $158,000 and is being amortized as compensation expense over the three-year vesting period.
During the first quarter of fiscal 2015, the Company granted a total of 67,786 shares of time-based restricted stock awards to certain key employees as part of the Company's long-term incentive program. The restricted stock will vest in three equal annual installments beginning March 20, 2016. The aggregate market value of the restricted stock at the date of the award was $417,593 and is being amortized as compensation expense over the three-year vesting period.
During the first quarter of fiscal 2015, the Company also granted a total of 106,963 shares of market-based restricted stock performance units to certain executives as part of the Company's long-term incentive program. The number of restricted stock units earned is based on the Company's total shareholder return ("TSR") relative to a group of industry peers over a three-year performance measurement period. The total grant date fair value was estimated to be $776,865, or $7.26 per share and is being amortized over the three-year performance period. Grant date fair values were determined using a Monte Carlo valuation model based on assumptions, which included a weighted average risk-free interest rate of 0.9%, a weighted average expected life of three years and an implied volatility of 54% - 55%. The percent of the target market-based performance vested restricted stock unit award that will be earned based on the Company's TSR relative to the peer group is as follows:
Percentile Rank
Percentage of
Units Vested
< 33%
0%
33%
50%
50%
100%
100%
150%

On November 17, 2014, the Company granted 199,790 shares of market-based restricted stock units to its chief executive officer and 79,916 shares of market-based restricted stock units to its chief strategy officer in conjunction with the hiring of these positions. As of August 1, 2015, these market-based restricted stock awards were outstanding. The total grant date fair value was estimated to be $1,373,000, or $4.91 per share and is being amortized over the three-year performance period. Grant date fair values were determined using a Monte Carlo valuation model based on assumptions, which included a weighted average risk-free interest rate of 1.03%, a weighted average expected life of three years and an implied volatility of 60%. Each restricted stock award will vest if at any time during the three-year performance period the closing price of the Company's stock equals or exceeds, for ten consecutive trading days, the following cumulative total shareholder return ("TSR") thresholds:
Cumulative TSR Thresholds
Percentage of
Units Vested
< 25%
0%
25%
25%
33%
50%
40%
75%
50%
100%

On June 18, 2014, the Company granted a total of 56,000 shares of restricted stock to seven non-management board members as part of the Company's annual director compensation program. Each restricted stock award vests on the day immediately preceding the next annual meeting of shareholders following the date of grant. The aggregate market value of the restricted stock at the date of the award was $281,000 and was amortized as director compensation expense over the twelve-month vesting period.
On March 13, 2014, the Company granted a total of 53,000 shares of restricted stock to certain key employees as part of the Company's long-term incentive program. The restricted stock will vest in three equal annual installments beginning March 13, 2015. The aggregate market value of the restricted stock at the date of the award was $290,000 and is being amortized as compensation expense over the three-year vesting period. During the first quarter of fiscal 2014, the Company also granted a total of 4,000 shares of restricted stock to two new non-management board members as part of the Company's annual director compensation program. Each restricted stock award vested on the day immediately preceding the next annual meeting of shareholders following the date of grant. The aggregate market value of the restricted stock at the date of the award was $23,500 and was amortized as director compensation expense through June 2014.
A summary of the status of the Company’s non-vested restricted stock activity as of August 1, 2015 and changes during the six-month period then ended is as follows:
 
Shares
 
Weighted
Average
Grant Date
Fair Value
Non-vested outstanding, January 31, 2015
704,000

 
$4.54
Granted
384,000

 
$4.88
Vested
(71,000
)
 
$5.12
Forfeited
(79,000
)
 
$4.86
Non-vested outstanding, August 1, 2015
938,000

 
$4.61

Warrant Exercise
On June 24, 2014, GE Capital Equity Investments, Inc. ("GE Equity") exercised its common stock purchase warrant in a cashless exercise acquiring 5,058,741 shares of the Company's common stock. The warrant was issued in connection with the issuance of the Company's Series B Redeemable Preferred Stock in February 2009. See Note 12 for information about a recent SEC filing made by GE Equity regarding the proposed sale of the shares owned by GE Equity.
Net Income (Loss) Per Common Share (Notes)
Net Income (Loss) Per Common Share
Net Loss Per Common Share
Basic net loss per share is computed by dividing reported loss by the weighted average number of shares of common stock outstanding for the reported period. Diluted income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock of the Company during reported periods.
A reconciliation of net loss per share calculations and the number of shares used in the calculation of basic loss per share and diluted loss per share is as follows:
        
 
 
Three-Month Periods Ended
 
Six-Month Periods Ended
 
 
August 1,
2015
 
August 2,
2014
 
August 1,
2015
 
August 2,
2014
Net loss (a)
 
$
(3,048,000
)
 
$
(4,289,000
)
 
$
(7,776,000
)
 
$
(3,829,000
)
Weighted average number of shares of common stock outstanding — Basic
 
57,092,654

 
52,199,792

 
56,866,711

 
51,022,023

Dilutive effect of stock options, non-vested shares and warrants (b)
 

 

 

 

Weighted average number of shares of common stock outstanding — Diluted
 
57,092,654

 
52,199,792

 
56,866,711

 
51,022,023

Net loss per common share
 
$
(0.05
)
 
$
(0.08
)
 
$
(0.14
)
 
$
(0.08
)
Net loss per common share — assuming dilution
 
$
(0.05
)
 
$
(0.08
)
 
$
(0.14
)
 
$
(0.08
)
(a) The net loss for the three and six-month periods ended August 1, 2015 includes costs related to executive and management transition of $205,000 and $2,795,000, respectively, and distribution facility consolidation and technology upgrade costs totaling $972,000 for the three and six-month periods ended August 1, 2015. The net loss for the three and six-month periods ended August 2, 2014 includes costs related to an activist shareholder response of $2,473,000 and $3,518,000, respectively, and costs related to executive and management transition of $2,620,000 for the three and six-month periods ended August 2, 2014.
(b) For the three and six-month periods ended August 1, 2015, approximately -0- and 148,000 incremental in-the-money potentially dilutive common share options have been excluded from the computation of diluted earnings per share, as the effect of their inclusion would be antidilutive. For the three and six-month periods ended August 2, 2014, approximately 3,891,000 and 5,182,000 incremental in-the-money potentially dilutive common share options have been excluded from the computation of diluted earnings per share, as the effect of their inclusion would be antidilutive.
Business Segments and Sales by Product Group
Business Segments and Sales by Product Group
Business Segments and Sales by Product Group
The Company has one reporting segment, which encompasses its digital commerce retailing. The Company markets, sells and distributes its products to consumers primarily through its digital commerce television, online website evine.com and mobile platforms. The Company's television shopping, online and mobile platforms have similar economic characteristics with respect to products, product sourcing, vendors, marketing and promotions, gross margins, customers, and methods of distribution. In addition, the Company believes that its television shopping program is a key driver of traffic to both the evine.com website and mobile applications whereby many of the online sales originate from customers viewing the Company's television program and then place their orders online or through mobile devices. All of the Company's sales are made to customers residing in the United States. The chief operating decision maker is the Chief Executive Officer of the Company. Certain fiscal 2014 product category amounts in the accompanying table have been reclassified to conform to our fiscal 2015 product group hierarchy.
Information on net sales by significant product groups are as follows (in thousands):
 
 
Three-Month Periods Ended
 
Six-Month Periods Ended
 
 
August 1,
2015
 
August 2,
2014
 
August 1,
2015
 
August 2,
2014
Jewelry & Watches
 
$
62,044

 
$
61,212

 
$
127,852

 
$
130,116

Home & Consumer Electronics
 
31,682

 
36,036

 
68,793

 
74,944

Beauty
 
22,640

 
18,380

 
42,165

 
36,710

Fashion & Accessories
 
30,714

 
26,335

 
54,042

 
46,062

All other (primarily shipping & handling revenue)
 
13,981

 
14,624

 
26,660

 
28,456

Total
 
$
161,061

 
$
156,587

 
$
319,512

 
$
316,288

Income Taxes
Income Taxes
Income Taxes
At January 31, 2015, the Company had federal net operating loss carryforwards ("NOLs") of approximately $298.5 million, and state NOLs of approximately $188.0 million which are available to offset future taxable income.  The Company's federal NOLs expire in varying amounts each year from 2023 through 2034 in accordance with applicable federal tax regulations and the timing of when the NOLs were incurred. 
In the first quarter of fiscal 2011, the Company had a change in ownership (as defined in Section 382 of the Internal Revenue Code) as a result of the issuance of common stock coupled with the redemption of all the Series B Preferred Stock held by GE Equity.  Sections 382 and 383 limit the annual utilization of certain tax attributes, including NOL carryforwards, incurred prior to a change in ownership. Currently, the limitations imposed by Sections 382 and 383 are not expected to impair the Company's ability to fully realize its NOLs; however, the annual usage of NOLs incurred prior to the change in ownership is limited.  In addition, if the Company were to experience another ownership change, as defined by Sections 382 and 383, its ability to utilize its NOL's could be further substantially limited and depending on the severity of the annual NOL limitation, the Company could permanently lose its ability to use a significant amount of its accumulated NOL's. The Company currently has recorded a full valuation allowance for its net deferred tax assets.  The ultimate realization of these deferred tax assets and related limitations depend on the ability of the Company to generate sufficient taxable income in the future, as well as the timing of such income.
For the second quarters of fiscal 2015 and fiscal 2014, the income tax provision included a non-cash tax charge of approximately $197,000 and $196,000, respectively, relating to changes in the Company's long-term deferred tax liability related to the tax amortization of the Company's indefinite-lived intangible FCC license asset that is not available to offset existing deferred tax assets in determining changes to our income tax valuation allowance. For the first six-months of fiscal 2015 and fiscal 2014, the income tax provision included a non-cash charge of approximately $394,000 and $393,000, respectively. The Company expects the continued tax amortization of its indefinite-lived intangible asset and resulting book versus tax asset carrying value difference to result in approximately $394,000 of additional non-cash income tax expense over the remainder of fiscal 2015.
Shareholder Rights Plan
During the second quarter of fiscal 2015, the Company adopted a Shareholder Rights Plan to preserve the value of certain deferred tax benefits, including those generated by net operating losses. On July 10, 2015, the Company declared a dividend distribution of one purchase right (a “Right”) for each outstanding share of the Company’s common stock to shareholders of record as of the close of business on July 23, 2015 and issuable as of that date, and on July 13, 2015, the Company entered into a Shareholder Rights Plan (the “Plan”) with Wells Fargo Bank, N.A., a national banking association, with respect to the Rights. Except in certain circumstances set forth in the Plan, each Right entitles the holder to purchase from the Company one one-thousandth of a share of Series A Junior Participating Cumulative Preferred Stock, $0.01 par value, of the Company (“Preferred Stock” and each one one-thousandth of a share of Preferred Stock, a “Unit”) at a price of $9.00 per Unit.
The Rights initially trade together with the common stock and are not exercisable. Subject to certain exceptions specified in the Plan, the Rights will separate from the common stock and become exercisable following (i) the tenth calendar day after a public announcement or filing that a person or group has become an “Acquiring Person,” which is defined as a person who has acquired, or obtained the right to acquire, beneficial ownership of 4.99% or more of the common stock then outstanding, subject to certain exceptions, or (ii) the tenth calendar day (or such later date as may be determined by the board of directors) after any person or group commences a tender or exchange offer, the consummation of which would result in a person or group becoming an Acquiring Person. If a person or group becomes an Acquiring Person, each Right will entitle its holders (other than such Acquiring Person) to purchase one Unit at a price of $9.00 per Unit. A Unit is intended to give the shareholder approximately the same dividend, voting and liquidation rights as would one share of Common Stock, and should approximate the value of one share of Common Stock. At any time after a person becomes an Acquiring Person, the board of directors may exchange all or part of the outstanding Rights (other than those held by an Acquiring Person) for shares of common stock at an exchange rate of one share of common stock (and, in certain circumstances, a Unit) for each Right. The Company will promptly give public notice of any exchange (although failure to give notice will not affect the validity of the exchange).
The Rights will expire upon certain events described in the Plan, including the close of business on the earlier of the first anniversary of the date of the Plan or the date of the Company’s 2016 annual meeting of shareholders, if the Plan has not been approved by the Company’s shareholders, or the close of business on the date of the third annual meeting of shareholders following the last annual meeting of shareholders of the Company at which the Plan was most recently approved by shareholders, unless the Plan is re-approved by shareholders at that third annual meeting of shareholders.  However, in no event will the Plan will expire later than the close of business on July 13, 2025. Until the close of business on the tenth calendar day after the day a public announcement or a filing is made indicating that a person or group has become an Acquiring Person, the Company may in its sole and absolute discretion amend the Rights or the Plan agreement without the approval of any holders of the Rights or shares of common stock in any manner, including without limitation, amendments that increase or decrease the purchase price or redemption price or accelerate or extend the final expiration date or the period in which the Rights may be redeemed. The Company may also amend the Plan after the close of business on the tenth calendar day after the day such public announcement or filing is made to cure ambiguities, to correct defective or inconsistent provisions, to shorten or lengthen time periods under the Plan or in any other manner that does not adversely affect the interests of holders of the Rights. No amendment of the Plan may extend its expiration date.
In connection with the issuance of the Plan, the Company incurred $364,000 of professional fees, included within general and administrative expense, during the second quarter of fiscal 2015.
Litigation
Litigation
Litigation
The Company is involved from time to time in various claims and lawsuits in the ordinary course of business. In the opinion of management, the claims and suits individually and in the aggregate will not have a material effect on the Company’s operations or consolidated financial statements.
Related Party Transactions
Related Party Transactions
Related Party Transactions
Relationship with GE Equity and NBCU
In January 2011, General Electric Company ("GE") consummated a transaction with Comcast Corporation ("Comcast") pursuant to which GE contributed all of its holdings in NBC Universal Media, LLC ("NBCU") to NBCUniversal, LLC, a newly formed entity beneficially owned 51% by Comcast and 49% by GE. As a result of that transaction, NBCU is now a wholly-owned subsidiary of NBCUniversal, LLC. In March 2013, GE sold its remaining 49% common equity interest in NBCUniversal, LLC to Comcast pursuant to an agreement reached in February 2013. As of August 1, 2015, the direct equity ownership of GE Equity in the Company consists of 3,545,049 shares of common stock and the direct ownership of NBCU in the Company consists of 7,141,849 shares of common stock. The Company has a significant cable distribution agreement with Comcast and believes that the terms of this agreement are comparable to those with other cable system operators.
In connection with the January 2011 transfer of its ownership in NBCU to NBCUniversal, LLC, GE also agreed with Comcast that, for so long as GE Equity is entitled to appoint two members of the Company's board of directors, NBCU will be entitled to retain a board seat provided that NBCU beneficially owns at least 5% of the Company's adjusted outstanding common stock. Furthermore, GE agreed to obtain the consent of NBCU prior to consenting to the Company's adoption of any shareholder rights plan or certain other actions that would impede or restrict the ability of NBCU to acquire or dispose of shares of the Company's voting stock or taking any action that would result in NBCU being deemed to be in violation of the Federal Communications Commission multiple ownership regulations. For additional information regarding arrangements between the Company and Comcast, GE, GE Equity and NBCU, see the Company's definitive Proxy Statement on Schedule 14A, filed with the SEC on May 8, 2015.
On July 9, 2015, the Company entered into a letter agreement with GE Equity pursuant to which GE Equity consented to the Company’s adoption of the Plan in consideration for the Company’s agreement to provide GE Equity, NBCU and certain of their respective affiliates with exemptions from the Plan described in Note 10 above. GE’s consent was required pursuant to the terms of an Amended and Restated Shareholder Agreement dated as of February 25, 2009, among the Company, GE Equity and NBC Universal, Inc., the predecessor of NBCU (the “Shareholder Agreement”). This discussion is a summary of the terms of the letter agreement. This summary does not purport to be complete and is qualified in its entirety by reference to the letter agreement, a copy of which is attached as Exhibit 10.1 and is incorporated herein by reference.
In the letter agreement, the Company agreed that if any of GE Equity, NBCU or any of their respective affiliates that holds shares of the Company’s common stock from time to time (each a “Grandfathered Investor”) sells or otherwise transfers shares of Company common stock currently owned by such Grandfathered Investor to any third party identified to the Company in writing (any such third party, a “Exempt Purchaser”), the Company will take all actions necessary under the Plan so that such third party will not be deemed an Acquiring Person (as defined in the Plan) by virtue of the acquisition of such shares. The Company further agreed that, subject to certain limitations, upon request of any Grandfathered Investor or Exempt Purchaser, and in connection with a transfer by such Grandfathered Investor or Exempt Purchaser of shares of the Company’s common stock to an Exempt Purchaser, the Company will enter into an agreement with the acquiring Exempt Purchaser granting such acquiring Exempt Purchaser substantially the same rights as set forth above with respect to any sale of the Company’s outstanding shares of common stock to any other third party. Additionally, the Company agreed that without the consent of any Grandfathered Investor that is an affiliate of GE Equity and any Grandfathered Investor that is an affiliate of NBCU, the Company will not (i) amend the Plan in any material respect, other than to accelerate the Expiration Date or the Final Expiration Date, (ii) adopt another shareholders' rights plan or (iii) amend the letter agreement.
As of August 1, 2015, Comcast, through NBCU, held approximately 12.5% of the Company’s outstanding common stock and GE Equity held approximately 6.2% of the Company’s outstanding common stock. Consequently, the letter agreement with GE Equity may significantly limit the Company’s ability to grant exemptions from the Plan to other shareholders.
In an SEC filing made on August 18, 2015, GE Equity disclosed that on August 14, 2015, it and ASF Radio, L.P. ("ASF Radio") entered into a Stock Purchase Agreement pursuant to which GE Equity agreed to sell 3,545,049 shares of the Company's common stock, which is all of the shares GE Equity currently owns, to ASF Radio for $2.15 per share. The closing of the sale is subject to certain conditions and is scheduled for October 15, 2015. According to the SEC filing, ASF Radio is an affiliate of Ardian, an independent private equity investment company.
Asset Acquisition of Dollars Per Minute Inc.
On November 18, 2014, the Company entered into an asset purchase agreement with Dollars Per Minute Inc., a Delaware corporation ("DPM") to purchase certain assets of DPM, including the EVINE brand and trademark.
The principal stockholders of DPM are Mark Bozek, the Company's Chief Executive Officer, and Russell Nuce, who became the Company's Chief Strategy Officer effective November 17, 2014. At the time of the transaction, DPM had debt outstanding under certain convertible bridge notes issued to several individuals, including Thomas Beers, one of the Company's directors and a trust in which Russell Nuce has a contingent pecuniary interest. As consideration for the purchase of these assets, primarily related to intellectual property, the Company issued 178,842 unregistered shares of its common stock, which represented an aggregate value of $1,044,000 based on the closing price of our common stock on November 13, 2014 and paid $20,000 in cash consideration and incurred $39,000 in professional fees associated with acquiring the asset.
Distribution Facility Expansion (Notes)
Property, Plant and Equipment, Schedule of Significant Acquisitions and Disposals [Table Text Block]
Distribution Facility Expansion, Consolidation & Technology Upgrade
During fiscal 2014, we began a significant operational expansion initiative with respect to overall warehousing capacity and new equipment and system technology upgrades at our Bowling Green, Kentucky distribution facility. During the first quarter of fiscal 2015 the new building was substantially completed and expanded our 262,000 square foot facility to an approximately 600,000 square foot facility. The physical building expansion portion of the initiative was completed in the first half of fiscal 2015 and the Company moved out of its leased satellite warehouse space during the second quarter of fiscal 2015. The updated facilities and technology upgrade will include a new high-speed parcel shipping and item sortation system coupled with a new warehouse management system to support our increased level of shipments and units and a new call center facility to better serve our customers. The new sortation and warehouse management systems are expected to be phased into production through the first quarter of fiscal 2016, which is approximately two quarters later than originally anticipated. Total cost of the physical building expansion, new sortation equipment and call center facility is estimated to be approximately $25 million and is being financed with our expanded PNC revolving line of credit and a $15 million PNC term loan. As of August 1, 2015, we have expended approximately $21 million in cash relating to the Bowling Green expansion initiative with additional cash commitments of approximately $4 million expected to be made over the next three quarters and primarily funded from the Credit Facility.
As a result of our distribution facility consolidation and technology upgrade initiative, the Company incurred approximately $972,000 in incremental expenses during the second quarter of fiscal 2015, relating primarily to increased labor, inventory and other warehousing transportation costs, training costs and increased equipment rental costs associated with: the move into the new expanded warehouse building, the move out of previously leased warehouse space and the preparation of our expanded facility for the new high-speed parcel shipping and item sortation system and upgraded warehouse management system.
Activist Shareholder Costs (Notes)
Other Operating Income and Expense [Text Block]
Activist Shareholder Response Costs
In October 2013, the Company received a demand from an activist shareholder to call a special meeting of shareholders for the purpose, among other things, of voting on a new slate of directors and amending certain of the Company’s bylaws. The Company retained a team of advisers, including a financial adviser, proxy solicitor, investor relations firm and legal counsel, to assist in responding to the demand and the solicitation of proxies. In conjunction with such activities, the Company recorded charges to income for the three and six-month periods ended August 2, 2014 totaling $2,473,000 and $3,518,000, respectively, which includes $750,000 as reimbursement for a portion of the activist shareholder’s expenses in fiscal 2014. In exchange for paying certain activist shareholder expenses, the Company obtained a customary standstill agreement from the activist shareholder.
Executive Transition Costs (Notes)
Executive Transition Costs [Text Block]
Executive and Management Transition Costs
On March 26, 2015, the Company announced the termination and departure of three executive officers, namely its Chief Financial Officer, its Senior Vice President and General Counsel and President. In addition, during the first quarter of fiscal 2015, the Company also announced the hiring of a new Chief Financial Officer and a new Chief Merchandising Officer. In conjunction with these executive changes as well as other management terminations made during the first half of fiscal 2015, the Company recorded charges to income of $205,000 and $2,795,000 for the three and six-months ended August 1, 2015, respectively, which relates primarily to severance payments to be made as a result of the executive officer terminations and other direct costs associated with the Company's 2015 executive and management transition.
On June 22, 2014, Keith R. Stewart resigned as a member of the Company's board of directors and as Chief Executive Officer of the Company. In conjunction with Mr. Stewart's resignation and separation agreement, as well as other executive terminations made subsequent to June 22, 2014, the Company recorded charges to income of $2,620,000 for the three and six-months ended August 2, 2014, relating primarily to severance payments which Mr. Stewart is entitled to in accordance with the terms of his employment agreement with the Company and other costs associated with the transition. Following Mr. Stewart's resignation, the Company's board of directors appointed Mr. Mark Bozek as Chief Executive Officer of the Company effective June 22, 2014.
Basis of Financial Statement Presentation (Policies)
tly Issued Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board issued Revenue from Contracts with Customers, Topic 606 (Accounting Standards Update (ASU) No. 2014-09), which provides a framework for the recognition of revenue, with the objective that recognized revenues properly reflect amounts an entity is entitled to receive in exchange for goods and services. The guidance, also includes additional disclosure requirements regarding revenue, cash flows and obligations related to contracts with customers. In July 2015, the Financial Accounting Standards Board approved a one year deferral of the effective date of ASU 2014-09. The standard will now become effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted for interim and annual reporting periods beginning after December 15, 2016. We are currently evaluating the impact of adopting ASU 2014-09 on our consolidated financial statements.
In April 2015, the Financial Accounting Standards Board issued Simplifying the Presentation of Debt Issuance Costs, Subtopic 835-30 (ASU No 2015-03). ASU 2015-03 requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying value of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by ASU 2015-03. The amendments in this ASU are effective retrospectively for fiscal years, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted. We are currently evaluating the impact of adopting ASU 2015-03 on our consolidated financial statements.
In July 2015, the Financial Accounting Standards Board issued Simplifying the Measurement of Inventory, Topic 330 (ASU No 2015-11). ASU 2015-11 changes the measurement principle for inventory from the lower of cost or market to lower of cost or net realizable value. The new standard is effective for the Company for fiscal years and interim periods beginning after December 15, 2016. We are currently evaluating the impact of adopting ASU 2015-11 on our consolidated financial statements.
Fiscal Year
The Company's fiscal year ends on the Saturday nearest to January 31. References to years in this report relate to fiscal years, rather than to calendar years. The Company’s most recently completed fiscal year, fiscal 2014, ended on January 31, 2015, and consisted of 52 weeks. Fiscal 2015 will end on January 30, 2016, and will contain 52 weeks. The quarters ended August 1, 2015 and August 2, 2014 each consisted of 13 weeks.
Intangible Assets (Tables)
Schedule of Finite-lived and Infinite-lived Intangible Asset [Table Text Block]
Intangible assets in the accompanying consolidated balance sheets consisted of the following:
 
 
Weighted
Average
Life
(Years)
 
August 1, 2015
 
January 31, 2015
 
 
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Gross
Carrying
Amount
 
Accumulated
Amortization
Finite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
  EVINE trademark
 
15
 
$
1,103,000

 
$
(43,000
)
 
$
1,103,000

 
$
(18,000
)
Total finite-lived intangible assets
 
 
 
$
1,103,000

 
$
(43,000
)
 
$
1,103,000

 
$
(18,000
)
Indefinite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
  FCC broadcast license
 
 
 
$
12,000,000

 
 
 
$
12,000,000

 
 
Credit Agreements Credit Facility (Tables)
 
 
Credit Facility
 
 
Fiscal year
 
Term loan
 
Revolving loan
 
Total
2015
 
$
1,072,000

 
$

 
$
1,072,000

2016
 
2,143,000

 

 
2,143,000

2017
 
2,143,000

 

 
2,143,000

2018
 
8,494,000

 
45,000,000

 
53,494,000

2019
 

 

 

 
 
$
13,852,000

 
$
45,000,000

 
$
58,852,000

 
 
August 1, 2015
 
January 31, 2015
Credit Facility
 
 
 
 
  Revolving loan
 
$
45,000,000

 
$
40,700,000

  Term loan
 
13,852,000

 
12,007,000

Total long-term credit facility
 
58,852,000

 
52,707,000

Less current portion of long-term credit facility
 
(2,143,000
)
 
(1,736,000
)
Long-term credit facility, excluding current portion
 
$
56,709,000

 
$
50,971,000

(Tables)
The fair value of each time-based vesting option award is estimated on the date of grant using the Black-Scholes option pricing model that uses assumptions noted in the following table. Expected volatilities are based on the historical volatility of the Company's stock. Expected term is calculated using the simplified method taking into consideration the option's contractual life and vesting terms. The Company uses the simplified method in estimating its expected option term because it believes that historical exercise data cannot be accurately relied upon at this time to provide a reasonable basis for estimating an expected term due to the extreme volatility of its stock price and the resulting unpredictability of its stock option exercises. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Expected dividend yields were not used in the fair value computations as the Company has never declared or paid dividends on its common stock and currently intends to retain earnings for use in operations.
 
Fiscal 2015
 
Fiscal 2014
Expected volatility
76 - 82%
 
97% - 98%
Expected term (in years)
6 years
 
5 - 6 years
Risk-free interest rate
1.7% - 1.9%
 
1.5% - 2.2%
Grant date fair values and derived service periods for each tranche were determined using a Monte Carlo valuation model based on assumptions, which included a weighted average risk-free interest rate of 0.38%, a weighted average expected life of 3.3 years and an implied volatility of 78% and were as follows for each tranche:
 
Fair Value
(Per Share)
 
Derived Service
Period
Tranche 1 ($6.00/share)
$0.93
 
15
months
Tranche 2 ($8.00/share)
$0.95
 
20
months
Tranche 3 ($10.00/share)
$0.95
 
24
months
A summary of the status of the Company’s stock option activity as of August 1, 2015 and changes during the six months then ended is as follows:
 
2011
Incentive
Stock
Option
Plan
 
Weighted
Average
Exercise
Price
 
2004
Incentive
Stock
Option
Plan
 
Weighted
Average
Exercise
Price
 
2001
Incentive
Stock
Option
Plan
 
Weighted
Average
Exercise
Price
 
Other Non-
Qualified
Stock
Options
 
Weighted
Average
Exercise
Price
Balance outstanding,
January 31, 2015
2,463,000

 
$
4.09

 
1,206,000

 
$
6.71

 
826,000

 
$
6.89

 
450,000

 
$
4.51

Granted
295,000

 
$
5.77

 

 
$

 

 
$

 

 
$

Exercised
(78,000
)
 
$
4.30

 
(30,000
)
 
$
2.70

 
(385,000
)
 
$
5.44

 
(372,000
)
 
$
4.57

Forfeited or canceled
(609,000
)
 
$
4.08

 
(333,000
)
 
$
7.52

 
(22,000
)
 
$
12.76

 
(78,000
)
 
$
4.23

Balance outstanding,
August 1, 2015
2,071,000

 
$
4.32

 
843,000

 
$
6.53

 
419,000

 
$
7.91

 

 
$

Options exercisable at
August 1, 2015
1,264,000

 
$
3.95

 
825,000

 
$
6.57

 
419,000

 
$
7.91

 

 
$

The following table summarizes information regarding stock options outstanding at August 1, 2015:
 
Options Outstanding
 
Options Vested or Expected to Vest
Option Type
Number of
Shares
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Life
(Years)
 
Aggregate
Intrinsic
Value
 
Number of
Shares
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Life
(Years)
 
Aggregate
Intrinsic
Value
2011 Incentive:
2,071,000

 
$
4.32

 
7.9
 
$
17,000

 
2,022,000

 
$
4.30

 
7.7
 
$
16,000

2004 Incentive:
843,000

 
$
6.53

 
3.4
 
$
7,000

 
842,000

 
$
6.47

 
3.4
 
$
7,000

2001 Incentive:
419,000

 
$
7.91

 
2.7
 
$

 
419,000

 
$
7.91

 
2.7
 
$

Non-Qualified:

 
$

 
 
$

 

 
$

 
 
$

Restricted Stock and Warrant Exercise (Tables)
restricted stock vesting criteria [Table Text Block]
Percentile Rank
Percentage of
Units Vested
< 33%
0%
33%
50%
50%
100%
100%
150%
Cumulative TSR Thresholds
Percentage of
Units Vested
< 25%
0%
25%
25%
33%
50%
40%
75%
50%
100%
Restricted Stock and Warrant Exercise Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity (Tables)
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block]
A summary of the status of the Company’s non-vested restricted stock activity as of August 1, 2015 and changes during the six-month period then ended is as follows:
 
Shares
 
Weighted
Average
Grant Date
Fair Value
Non-vested outstanding, January 31, 2015
704,000

 
$4.54
Granted
384,000

 
$4.88
Vested
(71,000
)
 
$5.12
Forfeited
(79,000
)
 
$4.86
Non-vested outstanding, August 1, 2015
938,000

 
$4.61
Net Income (Loss) Per Common Share (Tables)
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]
A reconciliation of net loss per share calculations and the number of shares used in the calculation of basic loss per share and diluted loss per share is as follows:
        
 
 
Three-Month Periods Ended
 
Six-Month Periods Ended
 
 
August 1,
2015
 
August 2,
2014
 
August 1,
2015
 
August 2,
2014
Net loss (a)
 
$
(3,048,000
)
 
$
(4,289,000
)
 
$
(7,776,000
)
 
$
(3,829,000
)
Weighted average number of shares of common stock outstanding — Basic
 
57,092,654

 
52,199,792

 
56,866,711

 
51,022,023

Dilutive effect of stock options, non-vested shares and warrants (b)
 

 

 

 

Weighted average number of shares of common stock outstanding — Diluted
 
57,092,654

 
52,199,792

 
56,866,711

 
51,022,023

Net loss per common share
 
$
(0.05
)
 
$
(0.08
)
 
$
(0.14
)
 
$
(0.08
)
Net loss per common share — assuming dilution
 
$
(0.05
)
 
$
(0.08
)
 
$
(0.14
)
 
$
(0.08
)
(a) The net loss for the three and six-month periods ended August 1, 2015 includes costs related to executive and management transition of $205,000 and $2,795,000, respectively, and distribution facility consolidation and technology upgrade costs totaling $972,000 for the three and six-month periods ended August 1, 2015. The net loss for the three and six-month periods ended August 2, 2014 includes costs related to an activist shareholder response of $2,473,000 and $3,518,000, respectively, and costs related to executive and management transition of $2,620,000 for the three and six-month periods ended August 2, 2014.
(b) For the three and six-month periods ended August 1, 2015, approximately -0- and 148,000 incremental in-the-money potentially dilutive common share options have been excluded from the computation of diluted earnings per share, as the effect of their inclusion would be antidilutive. For the three and six-month periods ended August 2, 2014, approximately 3,891,000 and 5,182,000 incremental in-the-money potentially dilutive common share options have been excluded from the computation of diluted earnings per share, as the effect of their inclusion would be antidilutive.
Business Segments and Sales by Product Group (Tables)
Revenue from External Customers by Products and Services [Table Text Block]
Information on net sales by significant product groups are as follows (in thousands):
 
 
Three-Month Periods Ended
 
Six-Month Periods Ended
 
 
August 1,
2015
 
August 2,
2014
 
August 1,
2015
 
August 2,
2014
Jewelry & Watches
 
$
62,044

 
$
61,212

 
$
127,852

 
$
130,116

Home & Consumer Electronics
 
31,682

 
36,036

 
68,793

 
74,944

Beauty
 
22,640

 
18,380

 
42,165

 
36,710

Fashion & Accessories
 
30,714

 
26,335

 
54,042

 
46,062

All other (primarily shipping & handling revenue)
 
13,981

 
14,624

 
26,660

 
28,456

Total
 
$
161,061

 
$
156,587

 
$
319,512

 
$
316,288

General (Details)
Aug. 1, 2015
Households
General [Abstract]
 
Household Broadcast Penetration, Number of Households Period End
88,000,000 
Basis of Financial Statement Presentation (Details)
6 Months Ended 12 Months Ended
Aug. 1, 2015
Aug. 2, 2014
Feb. 2, 2013
Organization, Consolidation and Presentation of Financial Statements [Abstract]
 
 
 
Number of Weeks in Fiscal Year, Minimum
364 days 
 
 
Number of Weeks in Fiscal Year, Maximum
 
 
371 days 
Number Of Weeks In Fiscal Period
P13W 
P13W 
 
Fair Value Measurements (Details) (USD $)
Aug. 1, 2015
Jan. 31, 2015
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Line of Credit, Current
$ 2,143,000 
$ 1,736,000 
Restricted Cash and Investments, Current
2,100,000 
2,100,000 
Long term, Total Credit Facility
58,852,000 
52,707,000 
Long-term Line of Credit, Noncurrent
56,709,000 
50,971,000 
Indefinite-Lived License Agreements
12,000,000 
12,000,000 
Operating and Broadcast Rights [Member]
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Indefinite-Lived License Agreements
$ 12,000,000 
$ 12,000,000 
Intangible Assets (Details) (USD $)
3 Months Ended 6 Months Ended
Aug. 1, 2015
Jan. 31, 2015
Aug. 1, 2015
Operating and Broadcast Rights [Member]
Jan. 31, 2015
Operating and Broadcast Rights [Member]
Aug. 1, 2015
EVINE trademark [Member]
Jan. 31, 2015
EVINE trademark [Member]
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
 
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life
 
 
 
 
15 years 
 
Finite-Lived Intangible Assets, Gross
$ 1,103,000 
$ 1,103,000 
 
 
$ 1,103,000 
$ 1,103,000 
Finite-Lived Intangible Assets, Accumulated Amortization
(43,000)
(18,000)
 
 
(43,000)
(18,000)
Indefinite-Lived License Agreements
12,000,000 
12,000,000 
12,000,000 
12,000,000 
 
 
Fair Market Value of FCC License
 
13,100,000 
 
 
 
 
Amortization of Intangible Assets
$ 18,000 
 
 
 
 
 
Credit Agreements (Details) (USD $)
6 Months Ended 0 Months Ended 3 Months Ended 6 Months Ended 0 Months Ended 0 Months Ended
Aug. 1, 2015
Jan. 31, 2015
Mar. 6, 2015
2015 Line Of Credit Agreement - PNC Bank, N.A. [Member]
Feb. 1, 2014
2012 Line Of Credit Agreement - PNC Bank, N.A. [Member]
Aug. 1, 2015
2012 Line Of Credit Agreement - PNC Bank, N.A. [Member]
Aug. 2, 2014
2012 Line Of Credit Agreement - PNC Bank, N.A. [Member]
Aug. 1, 2015
2012 Line Of Credit Agreement - PNC Bank, N.A. [Member]
Aug. 2, 2014
2012 Line Of Credit Agreement - PNC Bank, N.A. [Member]
Jan. 31, 2014
2012 Line Of Credit Agreement - PNC Bank, N.A. [Member]
Feb. 9, 2012
2012 Line Of Credit Agreement - PNC Bank, N.A. [Member]
Feb. 1, 2014
2014 Line Of Credit Amendment - PNC Bank, N.A. [Member]
Aug. 1, 2015
2014 Line Of Credit Amendment - PNC Bank, N.A. [Member]
Mar. 6, 2015
2014 Line Of Credit Amendment - PNC Bank, N.A. [Member]
Jan. 31, 2015
2014 Line Of Credit Amendment - PNC Bank, N.A. [Member]
Aug. 1, 2015
Long-term Debt [Member]
Aug. 1, 2015
Line of Credit [Member]
Feb. 1, 2014
LIBOR [Member]
2012 Line Of Credit Agreement - PNC Bank, N.A. [Member]
Feb. 1, 2014
LIBOR [Member]
2014 Line Of Credit Amendment - PNC Bank, N.A. [Member]
Feb. 1, 2014
Base Rate Option [Member]
2014 Line Of Credit Amendment - PNC Bank, N.A. [Member]
Feb. 1, 2014
Year Three [Member]
2012 Line Of Credit Agreement - PNC Bank, N.A. [Member]
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term Line of Credit
 
 
 
 
 
 
 
 
 
 
 
$ 45,000,000 
 
$ 40,700,000 
 
 
 
 
 
 
Long-term Debt, Maturities, Repayments of Principal in Next Rolling Twelve Months
1,072,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,072,000 
 
 
 
 
Line of Credit Facility, Maximum Borrowing Capacity
 
 
75,000,000 
 
 
 
 
 
 
 
 
 
15,000,000 
 
 
 
 
 
 
 
Line of Credit, Accordion Feature
 
 
15,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Maturity Date Range, End
 
 
 
5 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Basis Spread on Variable Rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.00% 
6.00% 
5.00% 
 
Line of Credit Facility, Capacity Available for Trade Purchases
 
 
 
 
 
 
 
 
6,000,000 
 
 
 
 
 
 
 
 
 
 
 
Document Period End Date
Aug. 01, 2015 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Line of Credit Facility, Remaining Borrowing Capacity
 
 
 
 
28,000,000 
 
28,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earmarked for Distribution Facility Expansion
 
 
 
 
3,000,000 
 
3,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Early Termination Fee
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.50% 
Interest Expense, Debt
 
 
 
 
668,000 
383,000 
1,260,000 
774,000 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Covenant Compliance, Minimum Unrestricted Cash Requirement
 
 
 
 
 
 
 
 
10,000,000 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Covenant Compliance, Minimum Unrestricted Cash Threshold for Additional Covenants
 
 
 
 
 
 
 
 
16,000,000 
 
 
 
 
 
 
 
 
 
 
 
Deferred Finance Costs, Noncurrent, Net
 
 
 
 
 
 
 
 
877,000 
466,000 
 
 
 
 
 
 
 
 
 
 
LIBOR Rate Period One
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 month 
 
 
LIBOR Rate Period Two
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2 months 
 
 
LIBOR Rate Period Three
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3 months 
 
 
LIBOR Rate Period Four
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6 months 
 
 
Debt Instrument Minimum Basis Spread
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5.00% 
4.00% 
 
Debt Instrument Maximum Basis Spread
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6.00% 
5.00% 
 
Debt Instrument, Term
 
 
 
 
 
 
 
 
 
 
84 months 
 
 
 
 
 
 
 
 
 
Mandatory Prepayment Percentage
 
 
 
 
 
 
 
 
 
 
50.00% 
 
 
 
 
 
 
 
 
 
Mandatory Prepayment Maximum Amount
 
 
 
 
 
 
 
 
 
 
2,000,000 
 
 
 
 
 
 
 
 
 
Long-term Debt
 
 
 
 
 
 
 
 
 
 
 
13,852,000 
 
12,007,000 
 
 
 
 
 
 
Long-term Line of Credit, Noncurrent
56,709,000 
50,971,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term Debt, Maturities, Repayments of Principal in Year Two
2,143,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,143,000 
 
 
 
 
Long-term Debt, Maturities, Repayments of Principal in Year Three
2,143,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,143,000 
 
 
 
 
Long-term Debt, Maturities, Repayments of Principal in Year Four
53,494,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
8,494,000 
45,000,000 
 
 
 
 
Long-term Debt, Maturities, Repayments of Principal in Year Five
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long term, Total Credit Facility
58,852,000 
52,707,000 
 
 
 
 
 
 
 
 
 
58,852,000 
 
52,707,000 
13,852,000 
45,000,000 
 
 
 
 
Line of Credit, Current
(2,143,000)
(1,736,000)
 
 
 
 
 
 
 
 
 
(2,143,000)
 
(1,736,000)
 
 
 
 
 
 
Long-term Debt, Excluding Current Maturities
 
 
 
 
 
 
 
 
 
 
 
$ 56,709,000 
 
$ 50,971,000 
 
 
 
 
 
 
Stock Grant Volatility (Details)
6 Months Ended
Aug. 1, 2015
Aug. 2, 2014
Equity [Abstract]
 
 
Award Vesting Period
3 years 
 
Expected Volatility Rate, Minimum
76.00% 
97.00% 
Risk Free Interest Rate, Minimum
1.70% 
1.50% 
Risk Free Interest Rate, Maximum
1.90% 
2.20% 
Expected Term
6 years 
5 years 
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Maximum Expected Term
6 years 
6 years 
Grant Term Limit
10 years 
 
Exercise Term Limit
10 years 
 
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate, Maximum
82.00% 
98.00% 
Stock Option Activity (Details) (USD $)
3 Months Ended 6 Months Ended
Aug. 1, 2015
Aug. 2, 2014
Aug. 1, 2015
2011 Omnibus Incentive Plan [Member]
Aug. 1, 2015
2004 Omnibus Incentive Stock Plan [Member]
Aug. 1, 2015
2001 Omnibus Stock Plan [Member]
Aug. 1, 2015
Stock Option [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
 
 
 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Exercisable Options, Weighted Average Remaining Contractual Term
 
 
7 years 8 months 29 days 
3 years 4 months 9 days 
2 years 8 months 9 days 
0 years 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term
 
 
7 years 10 months 24 days 
3 years 4 months 13 days 
2 years 8 months 9 days 
0 years 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
 
 
 
 
 
 
Balance outstanding at beginning of period
 
 
2,463,000 
1,206,000 
826,000 
450,000 
Granted
 
 
295,000 
Exercised
 
 
(78,000)
(30,000)
(385,000)
(372,000)
Forfeited or canceled
 
 
(609,000)
(333,000)
(22,000)
(78,000)
Balance outstanding at end of period
 
 
2,071,000 
843,000 
419,000 
Options exercisable
 
 
1,264,000 
825,000 
419,000 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
 
 
 
 
 
 
Balance outstanding at beginning of period, weighted average exercise price
 
 
$ 4.09 
$ 6.71 
$ 6.89 
$ 4.51 
Granted, weighted average grant date fair value
$ 4.10 
$ 3.75 
$ 5.77 
$ 0.00 
$ 0.00 
$ 0.00 
Exercised, weighted average exercise price
 
 
$ 4.30 
$ 2.70 
$ 5.44 
$ 4.57 
Forfeited or canceled, weighted average grant date fair value
 
 
$ 4.08 
$ 7.52 
$ 12.76 
$ 4.23 
Balance outstanding at end of period, weighted average exercise price
 
 
$ 4.32 
$ 6.53 
$ 7.91 
$ 0.00 
Options exercisable, weighted average exercise price
 
 
$ 3.95 
$ 6.57 
$ 7.91 
$ 0.00 
Outstanding Stock Options (Details) (USD $)
6 Months Ended
Aug. 1, 2015
Jan. 31, 2015
2011 Omnibus Incentive Plan [Member]