EVINE LIVE INC., 10-Q filed on 9/8/2011
Quarterly Report
Document and Entity Information
6 Months Ended
Jul. 30, 2011
Sep. 2, 2011
Document Information [Line Items]
 
 
Entity Registrant Name
VALUEVISION MEDIA INC 
 
Entity Central Index Key
0000870826 
 
Current Fiscal Year End Date
--01-28 
 
Entity Filer Category
Accelerated Filer 
 
Document Type
10-Q 
 
Document Period End Date
Jul. 30, 2011 
 
Document Fiscal Year Focus
2011 
 
Document Fiscal Period Focus
Q2 
 
Amendment Flag
FALSE 
 
Entity Common Stock, Shares Outstanding
 
48,464,205 
Condensed Consolidated Balance Sheets (USD $)
In Thousands
Jul. 30, 2011
Jan. 29, 2011
Current assets:
 
 
Cash and cash equivalents
$ 37,503 
$ 46,471 
Restricted cash and investments
4,961 
4,961 
Accounts receivable, net
82,930 
90,183 
Inventories
52,720 
39,800 
Prepaid expenses and other
5,240 
3,942 
Total current assets
183,354 
185,357 
Property and equipment, net
28,181 
25,775 
FCC broadcasting license
23,111 
23,111 
NBC trademark license agreement, net
3,298 
928 
Other assets
2,895 
3,188 
Total Assets
240,839 
238,359 
Current liabilities:
 
 
Accounts payable
59,817 
58,310 
Accrued liabilities
41,934 
43,405 
Current portion of accrued dividends
1,355 
Deferred revenue
728 
728 
Total current liabilities
102,479 
103,798 
Deferred revenue
61 
425 
Long-term payable
4,894 
Term loan
25,000 
25,000 
Accrued dividends - Series B Preferred Stock
6,491 
Series B Mandatory Redeemable Preferred Stock, $.01 per share par value, 4,929,266 shares authorized; 0 and 4,929,266 shares issued and outstanding
14,599 
Total liabilities
127,540 
155,207 
Commitments and Contingencies
 
 
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
485 
378 
Warrants to purchase 6,014,744 shares of common stock
602 
602 
Additional paid-in capital
400,847 
337,421 
Accumulated deficit
(288,635)
(255,249)
Total shareholders’ equity
113,299 
83,152 
Total Liabilities and Equity
$ 240,839 
$ 238,359 
Consolidated Balance Sheets (Parentheticals) (USD $)
Jul. 30, 2011
Jan. 29, 2011
Liabilities:
 
 
Series B Mandatory Redeemable Preferred Stock, Par Value
$ 0.01 
$ 0.01 
Series B Mandatory Redeemable Preferred Stock, Shares Authorized
4,929,266 
4,929,266 
Series B Mandatory Redeemable Preferred Stock, Shares, Issued
4,929,266 
Series B Mandatory Redeemable Preferred Stock, Shares, Outstanding
4,929,266 
Stockholders' Equity:
 
 
Common stock, par value
$ 0.01 
$ 0.01 
Common stock, shares authorized
100,000,000 
100,000,000 
Common stock, shares issued
48,472,205 
37,781,688 
Common stock, shares outstanding
48,472,205 
37,781,688 
Warrants, Outstanding
6,014,744 
6,014,744 
Condensed Consolidated Statements of Operations (USD $)
In Thousands, except Share data
3 Months Ended
Jul. 30, 2011
3 Months Ended
Jul. 31, 2010
6 Months Ended
Jul. 30, 2011
6 Months Ended
Jul. 31, 2010
Net sales
$ 132,137 
$ 126,177 
$ 275,670 
$ 251,154 
Cost of sales
80,869 
79,021 
171,010 
158,261 
Gross profit
51,268 
47,156 
104,660 
92,893 
Operating expense:
 
 
 
 
Distribution and selling
46,313 
45,021 
92,789 
91,063 
General and administrative
5,408 
4,795 
9,972 
9,562 
Depreciation and amortization
3,086 
3,527 
6,068 
7,218 
Restructuring costs
50 
426 
Total operating expense
54,807 
53,393 
108,829 
108,269 
Operating loss
(3,539)
(6,237)
(4,169)
(15,376)
Other income (expense):
 
 
 
 
Interest income
44 
44 
51 
Interest expense
(944)
(2,095)
(3,546)
(3,945)
Debt extinguishment
(25,679)
Total other expense
(900)
(2,086)
(29,181)
(3,894)
Loss before income taxes
(4,439)
(8,323)
(33,350)
(19,270)
Income tax (provision) benefit
(17)
630 
(36)
606 
Net loss
$ (4,456)
$ (7,693)
$ (33,386)
$ (18,664)
Net loss per common share
$ (0.09)
$ (0.24)
$ (0.75)
$ (0.57)
Net loss per common share — assuming dilution
$ (0.09)
$ (0.24)
$ (0.75)
$ (0.57)
Weighted average number of common shares outstanding:
 
 
 
 
Basic
48,131,218 
32,703,164 
44,393,198 
32,691,334 
Diluted
48,131,218 
32,703,164 
44,393,198 
32,691,334 
Condensed Consolidated Statement of Shareholders' Equity (USD $)
In Thousands, except Share data
Total
Common Stock [Member]
Warrant [Member]
Additional Paid-in Capital [Member]
Accumulated Deficit
Total Shareholders' Equity period beginning at Jan. 29, 2011
$ 83,152 
$ 378 
$ 602 
$ 337,421 
$ (255,249)
Common Stock, Shares, Outstanding period beginning at Jan. 29, 2011
37,781,688 
37,781,688 
 
 
 
Net loss
(33,386)
(33,386)
Common stock issuances pursuant to equity compensation plans, Shares
 
513,362 
 
 
 
Common stock issuances pursuant to equity compensation plans, Value
1,692 
1,687 
Share-based compensation
 
 
 
 
Share-based compensation
2,175 
2,175 
Common stock issuances - equity offerings, Shares
 
9,487,500 
 
 
 
Common stock issuances - equity offerings, Value
55,500 
95 
55,405 
Common stock issuances - NBCU, Shares
 
689,655 
 
 
 
Common stock issuances - NBCU, Value
4,166 
4,159 
Total Shareholders' Equity period end at Jul. 30, 2011
$ 113,299 
$ 485 
$ 602 
$ 400,847 
$ (288,635)
Common Stock, Shares, Outstanding period end at Jul. 30, 2011
48,472,205 
48,472,205 
 
 
 
Condensed Consolidated Statements of Cash Flows (USD $)
In Thousands
6 Months Ended
Jul. 30, 2011
6 Months Ended
Jul. 31, 2010
OPERATING ACTIVITIES:
 
 
Net loss
$ (33,386)
$ (18,664)
Adjustments to reconcile net loss to net cash provided by (used for) operating activities:
 
 
Depreciation and amortization
6,208 
7,218 
Share-based payment compensation
2,175 
1,498 
Amortization of deferred revenue
(364)
(364)
Amortization of debt discount
575 
711 
Amortization of deferred finance costs
303 
121 
Asset impairments and write-offs
276 
Debt extinguishment
25,679 
Gain on the disposal of equipment
(405)
Changes in operating assets and liabilities:
 
 
Accounts receivable, net
7,253 
16,509 
Inventories, net
(12,920)
(3,079)
Prepaid expenses and other
(1,281)
(306)
Accounts payable and accrued liabilities
(5,162)
(1,304)
Accrued dividends payable — Series B Preferred Stock
1,069 
2,773 
Net cash provided by (used for) operating activities
(10,256)
5,389 
INVESTING ACTIVITIES:
 
 
Property and equipment additions
(6,496)
(4,332)
Change in restricted cash and investments
99 
Proceeds from disposal of equipment
405 
55 
Net cash used for investing activities
(6,091)
(4,178)
FINANCING ACTIVITIES:
 
 
Payments for Series B Preferred Stock and other issuance costs
(263)
Payment for Series B Preferred stock redemption
(40,853)
Payment for Series B Preferred stock dividend
(8,915)
Payments for deferred issuance costs
(45)
Proceeds from exercise of stock options
1,692 
Procceeds from issuance of common stock, net
55,500 
Net cash provided by (used for) financing activities
7,379 
(259)
Net increase (decrease) in cash and cash equivalents
(8,968)
952 
BEGINNING CASH AND CASH EQUIVALENTS
46,471 
17,000 
ENDING CASH AND CASH EQUIVALENTS
37,503 
17,952 
SUPPLEMENTAL CASH FLOW INFORMATION:
 
 
Interest paid
1,899 
133 
Income taxes paid
24 
48 
SUPPLEMENTAL NON CASH INVESTING AND FINANCING ACTIVITIES:
 
 
Property and equipment purchases included in accounts payable
322 
501 
Deferred financing costs included in accrued liabilities
448 
Issuance of 689,655 shares of common stock
$ 4,166 
$ 0 
Condensed Consolidated Statement of Cash Flows (Parentheticals)
6 Months Ended
Jul. 30, 2011
Common Stock Shares Issued
689,655 
General
Nature of Operations [Text Block]
General
ValueVision Media, Inc. and its subsidiaries (the “Company”) is a multichannel electronic retailer that markets, sells and distributes products to consumers through TV, telephone, online, mobile and social media. Our principal form of product exposure is our 24-hour television shopping network, ShopNBC, which markets brand name and private label products in the categories of Jewelry & Watches; Home & Electronics; Beauty, Health & Fitness; and Fashion. Orders are fulfilled via telephone, online and mobile channels. ShopNBC is distributed into approximately 80 million homes, primarily through cable and satellite affiliation agreements and the purchase of month-to-month full- and part-time lease agreements of cable and broadcast television time. ShopNBC programming is also streamed live on the Internet at www.ShopNBC.com and www.ShopNBC.tv. We also distribute our programming through a company-owned full power television station in Boston, Massachusetts and through leased carriage on full power television stations in Pittsburgh, Pennsylvania and Seattle, Washington.


The Company also operates ShopNBC.com, a comprehensive e-commerce platform that sells products appearing on our television shopping channel as well as an extended assortment of online-only merchandise. Its programming and products are also marketed via mobile devices - including smartphones and tablets such as the iPad, and through the leading social networking sites Facebook, Twitter and YouTube.


The Company has an exclusive trademark license from NBCUniversal Media, LLC, formerly known as NBC Universal, Inc. (“NBCU”), for the worldwide use of an NBC-branded name through May 2012. Additionally, the agreement allows for a one-year extension to May 2013 upon the mutual agreement of both parties. Pursuant to the license, we operate our television home shopping network and our Internet websites, ShopNBC.com and ShopNBC.tv.
Basis of Financial Statement Presentation
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]
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. 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 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 29, 2011. Operating results for the three and six-month periods ended July 30, 2011 are not necessarily indicative of the results that may be expected for the fiscal year ending January 28, 2012.
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 most recently completed fiscal year ended on January 29, 2011 and is designated “fiscal 2010.” The Company’s fiscal year ending January 28, 2012 is designated “fiscal 2011.” The Company reports on a 52/53 week fiscal year which ends on the Saturday nearest to January 31. The 52/53 week fiscal year allows for the weekly and monthly comparability of sales results relating to the Company’s television home-shopping and internet businesses. Each of fiscal 2011 and fiscal 2010 contains 52 weeks.
Fair Value Measurements
Fair Value Disclosures [Text Block]
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 and the lowest priority to unobservable inputs.
As of July 30, 2011 and January 29, 2011 the Company had $4,961,000 in Level 2 investments in the form of bank Certificates of Deposit which are used as collateral for the issuance of commercial letters of credit. The Company has no Level 3 investments that use significant unobservable inputs.
Intangible Assets
Intangible Assets Disclosure [Text Block]
Intangible Assets
Intangible assets in the accompanying consolidated balance sheets consisted of the following:
 
 
Weighted
Average
Life
(Years)
 
July 30, 2011
 
January 29, 2011
 
 
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Gross
Carrying
Amount
 
Accumulated
Amortization
Finite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
NBC trademark license renewal
 
1.0
 
$
4,166,000


 
$
(868,000
)
 
$


 
$


NBC trademark license agreement
 
10.5
 
$
34,437,000


 
$
(34,437,000
)
 
$
34,437,000


 
$
(33,509,000
)
Indefinite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
FCC broadcast license
 
 
 
$
23,111,000


 
 
 
$
23,111,000


 
 
On May 16, 2011 the Company issued 689,655 shares of the Company's common stock as consideration for a one-year license agreement renewal with NBCU for the use of the ShopNBC brand name in connection with its television shopping network and its e-commerce websites. The renewed license agreement expires in May 2012 and allows for a one-year extension to May 2013 upon the mutual agreement of both parties. Shares issued were valued at $6.04 per share, representing the fair market value of the Company's stock on the date of issuance.
Amortization expense was $989,000 and $1,796,000 for the three and six-month periods ended July 30, 2011 and $807,000 and $1,613,000 for the three and six-month periods ended July 31, 2010. Estimated amortization expense for fiscal 2011 is $3,878,000.


Preferred Stock and Deferred Payables
Other Liabilities Disclosure [Text Block]
Preferred Stock and Long-Term Payable
 
 
July 30,

2011
 
January 29,

2011
Series B Preferred Stock
 
$


 
$
40,854,000


Unamortized debt discount on Series B Preferred Stock
 


 
(26,255,000
)
Series B Preferred Stock, carrying value
 
$


 
$
14,599,000


Long-Term Payable
 
$


 
$
4,894,000




In February 2011, the Company made a $2.5 million payment to GE Capital Equity Investments, Inc. ("GE Equity"), in connection with obtaining a consent for the execution of a common stock equity offering in December 2010, reducing the outstanding accrued dividends payable on the Series B Preferred Stock and recorded a $1.2 million charge to income related to the early preferred stock debt extinguishment. In April 2011, the Company redeemed all of its outstanding Series B Preferred Stock for $40.9 million, paid accrued Series B Preferred dividends of $6.4 million and recorded a $24.5 million charge related to the early preferred stock debt extinguishment.
In the third quarter of fiscal 2009, the Company entered into a long-term agreement with one of its larger service providers to defer a material portion of its monthly contractual cash payment obligation for services over the next three fiscal years. All services under this arrangement are being recognized as expense ratably over the term of the agreement. Amounts recognized as expense in excess of amounts paid, plus interest at 5% annually totaled $11,063,000 and is included in accrued liabilities in the accompanying July 30, 2011 balance sheet. As of January 29, 2011, the total deferred amount was $16,820,000, of which $11,926,000 was included in accrued liabilities and $4,894,000 was reported as a deferred long-term payable in the accompanying January 29, 2011 balance sheet. In February 2011, the Company made an $11,926,000 required payment under the agreement. Remaining estimated future cash commitments, inclusive of accrued interest, relating to this deferred cash payment agreement is approximately $12.4 million which will be paid in March 2012. In connection with this deferral agreement, the Company granted a security interest in its Eden Prairie, Minnesota headquarters facility and its Boston television station to the service provider.
Term Loan Credit Agreement
Debt Disclosure [Text Block]
Term Loan Credit Agreement
On November 17, 2010, the Company entered into a credit agreement with Crystal Financial LLC, as agent for the lending group, which provides for a term loan of $25 million (the “Credit Agreement”). The Credit Agreement has a five-year maturity and bears interest on the outstanding principal amount based on fixed interest rates and floating interest rates based on LIBOR plus variable margins. The interest rate calculated for the first quarter and second quarters of fiscal 2011 was 11%. The term loan is subject to a minimum borrowing base of $25 million which is based on eligible accounts receivable, eligible inventory, certain real estate and certain eligible cash and is secured by substantially all of the Company's personal property, as well as the Company's real property located in 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 term loan is subject to mandatory prepayment in certain circumstances. In addition, any voluntary or mandatory prepayments made prior to November 18, 2013 would require an early termination fee of the greater of the first year's yield revenue or 3% of the amount prepaid if terminated in year one; 2% of the amount prepaid if terminated in year two; and 1% of the amount prepaid if terminated in year three. The $25 million term loan matures and is payable in November 2015. Interest paid for the three and six-month period ended July 30, 2011 was $695,000 and $1,367,000, respectively.  
The Credit Agreement contains customary covenants and conditions, including, among other things, a covenant requiring the Company to maintain a minimum of unrestricted cash of $5,000,000 at all times. In addition, the Credit Agreement 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 and preferred shareholders. As of July 30, 2011, the Company was in compliance with the applicable covenants of the facility and was in compliance with its minimum borrowing base requirement and expects to be in compliance in the near and long term. Costs incurred to obtain the Credit Agreement totaling approximately $3,011,000 have been capitalized and are being expensed as additional interest over the five-year term of the Credit Agreement.
Stock Based Compensation
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]
Stock-Based Compensation
Compensation is recognized for all stock-based compensation arrangements by the Company. Stock-based compensation expense for the second quarter of fiscal 2011 and 2010 related to stock option awards was $1,026,000 and $701,000, respectively. Stock-based compensation expense for the first half of fiscal 2011 and 2010 related to stock option awards was $1,568,000 and $1,460,000, 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 July 30, 2011, the Company had two active omnibus stock plans for which stock awards can be currently granted: the 2011 Omnibus Incentive Plan that provides for the issuance of up to 3,000,000 shares of the Company's stock and the 2004 Omnibus Stock Plan (as amended and restated in fiscal 2006) that provides for the issuance of up to 4,000,000 shares of the Company's common stock. The 2001 Omnibus Stock Plan expired on June 21, 2011. As of July 30, 2011, there have been no stock awards granted out of the 2011 Omnibus Incentive Plan. These plans are administered by the human resources and compensation committee of the board of directors and provide for awards for employees, directors and consultants. All employees and directors of the Company and its affiliates are eligible to receive awards under the plans. The types of awards that may be granted under these plans include restricted and unrestricted stock, incentive and nonstatutory 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 ten years after the effective date of the respective plan's inception or be exercisable more than ten years after the date of grant. Options granted to outside directors are nonstatutory stock options with an exercise price equal to 100% of the fair market value of the underlying stock as of the date of grant. 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 generally have contractual terms of either five years from the date of vesting or ten years from the date of grant.
The fair value of each 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 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 2011
 
Fiscal 2010
Expected volatility
88%
 
80% — 88%
Expected term (in years)
6 years
 
6 years
Risk-free interest rate
2.3% — 2.7%
 
1.9% — 3.3%
A summary of the status of the Company’s stock option activity as of July 30, 2011 and changes during the six-months then ended is as follows:
 
 
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 29, 2011
 
2,374,000


 
$
5.72


 
1,746,000


 
$
5.97


 
525,000


 
$
3.58


Granted
 
280,000


 
$
7.53


 


 
$


 
150,000


 
$
6.44


Exercised
 
(268,000
)
 
$
4.31


 
(195,000
)
 
$
2.67


 
(8,000
)
 
$
2.02


Forfeited or canceled
 
(27,000
)
 
$
10.43


 
(217,000
)
 
$
9.09


 


 
$


Balance outstanding, July 30, 2011
 
2,359,000


 
$
6.04


 
1,334,000


 
$
5.95


 
667,000


 
$
4.24


Options exercisable at July 30, 2011
 
1,706,000


 
$
6.51


 
922,000


 
$
6.87


 
127,000


 
$
3.84


The following table summarizes information regarding stock options outstanding at July 30, 2011:
Option Type
 
Options
Outstanding
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual Life
(Years)
 
Aggregate
Intrinsic
Value
 
Vested or
Expected to
Vest
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual Life
(Years)
 
Aggregate
Intrinsic
Value
2004 Incentive:
 
2,359,000


 
$
6.04


 
7.2
 
$
5,597,000


 
2,293,000


 
$
6.08


 
7.1
 
$
5,423,000


2001 Incentive:
 
1,334,000


 
$
5.95


 
6.9
 
$
3,334,000


 
1,293,000


 
$
6.02


 
6.7
 
$
3,177,000


Non-Qualified:
 
667,000


 
$
4.24


 
9.0
 
$
2,165,000


 
613,000


 
$
4.23


 
9.0
 
$
1,995,000


The weighted average grant-date fair value of options granted in the first six-months of fiscal 2011 and 2010 was $5.27 and $2.54, respectively. The total intrinsic value of options exercised during the first six-months of fiscal 2011 and 2010 was $1,806,000 and $38,000, respectively. As of July 30, 2011, total unrecognized compensation cost related to stock options was $2,904,000 and is expected to be recognized over a weighted average period of approximately 1.1 years.
Restricted Stock
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block]
Restricted Stock
Compensation expense recorded in the first six-months of fiscal 2011 and 2010 relating to restricted stock grants was $607,000 and $38,000, respectively. As of July 30, 2011, there was $2,985,000 of total unrecognized compensation cost related to non-vested restricted stock granted. That cost is expected to be recognized over a weighted average period of 1.2 years. The total fair value of restricted stock vested during the first half of fiscal 2011 and 2010 was $316,000 and $68,000, respectively. On March 31, 2011, the Company granted a total of 522,000 shares of restricted stock to employees in lieu of an annual cash bonus for fiscal 2010. The restricted stock vests in two equal annual installments beginning March 31, 2012 and ending March 31, 2013. The aggregate market value of the restricted stock at the date of the award was $3,323,000 and is being amortized as compensation expense over the two-year vesting period. On June 15, 2011, the Company granted a total of 50,000 shares of restricted stock to seven non-management board members as part of the Company's annual director compensation program. The restricted stock 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 $377,000 and is being amortized as director compensation expense over the twelve-month vesting period.
A summary of the status of the Company’s non-vested restricted stock activity as of July 30, 2011 and changes during the six-month period then ended is as follows:
 
 
Shares
 
Weighted
Average
Grant Date
Fair Value
Non-vested outstanding, January 29, 2011
 
40,000


 
$
1.90


Granted
 
572,000


 
$
6.46


Vested
 
(42,000
)
 
$
2.17


Forfeited
 
(21,000
)
 
$
6.36


Non-vested outstanding, July 30, 2011
 
549,000


 
$
6.46


Equity Offering
Stockholders' Equity Note Disclosure [Text Block]
Equity Offering
On March 30, 2011, the Company completed a public equity offering of 9,487,500 common shares at a price to the public of $6.25 per share. Net proceeds from the offering were approximately $55.5 million after deducting the underwriting discount and other offering expenses.
Net Loss Per Common Share
Earnings Per Share [Text Block]
Net Loss Per Common Share
Basic earnings per share is computed by dividing reported earnings by the weighted average number of common shares outstanding for the reported period. Diluted earnings 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 earnings per share calculations and the number of shares used in the calculation of basic earnings per share and diluted earnings per share is as follows:
 
 
Three-Month Periods Ended
 
Six-Month Periods Ended
 
 
July 30,

2011
 
July 31,

2010
 
July 30,

2011
 
July 31,

2010
Net loss (a)
 
$
(4,456,000
)
 
$
(7,693,000
)
 
$
(33,386,000
)
 
$
(18,664,000
)
Weighted average number of common shares outstanding — Basic
 
48,131,000


 
32,703,000


 
44,393,000


 
32,691,000


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


 


 


 


Weighted average number of common shares outstanding — Diluted
 
48,131,000


 
32,703,000


 
44,393,000


 
32,691,000


Net loss per common share
 
$
(0.09
)
 
$
(0.24
)
 
$
(0.75
)
 
$
(0.57
)
Net loss per common share-assuming dilution
 
$
(0.09
)
 
$
(0.24
)
 
$
(0.75
)
 
$
(0.57
)


(a) The net loss for the six-month period ended July 30, 2011 includes a $25.7 million one-time charge related to the early preferred stock debt extinguishment made during the first quarter of fiscal 2011.
(b) For the three-month periods ended July 30, 2011 and July 31, 2010, approximately 6,704,000 and 3,801,000, respectively, incremental in-the-money potentially dilutive common share stock options and warrants have been excluded from the computation of diluted earnings per share, as the effect of their inclusion would be antidilutive. For the six-month periods ended July 30, 2011 and July 31, 2010, approximately 6,483,000 and 4,588,000 respectively, incremental in-the-money potentially dilutive common share stock options and warrants have been excluded from the computation of diluted earnings per share, as the effect of their inclusion would be antidilutive.
Sales by Product Group
Revenue from External Customers by Products and Services [Table Text Block]
Sales by Product Group
Information on net sales by significant product groups are as follows (in thousands):
 
 
Three-Month Periods Ended
 
Six-Month Periods Ended
 
 
July 30,

2011
 
July 31,

2010
 
July 30,

2011
 
July 31,

2010
Jewelry & Watches
 
$
68,474


 
$
66,739


 
$
136,031


 
$
131,412


Home & Electronics
 
31,677


 
33,071


 
74,835


 
69,993


Beauty, Health & Fitness
 
14,749


 
9,592


 
29,627


 
18,527


Fashion (apparel, outerwear & accessories)
 
7,084


 
6,822


 
13,387


 
12,590


All other
 
10,153


 
9,953


 
21,790


 
18,632


Total
 
$
132,137


 
$
126,177


 
$
275,670


 
$
251,154


Restructuring Costs
Restructuring and Related Activities Disclosure [Text Block]
Restructuring Costs
As a result of a number of restructuring initiatives taken by the Company in order to simplify and streamline the Company’s organizational and capital structure, reduce operating costs and pursue and evaluate strategic alternatives, the Company recorded restructuring charges in fiscal 2010. Restructuring costs in fiscal 2010 primarily include employee severance costs associated with streamlining the Company's organizational structure, incremental costs associated with the refinancing of our debt facilities, restructuring advisory service fees and costs associated with strategic alternative initiatives. All restructuring costs were paid as of January 29, 2011.
Income Taxes
Income Tax Disclosure [Text Block]
Income Taxes
At January 29, 2011, the Company had federal net operating loss carryforwards (NOL's) of approximately $254 million, which are available to offset future taxable income.  The Company's federal NOLs expire in varying amounts each year from 2023 through 2031 in accordance with applicable federal tax regulations and the timing of when the NOLs were incurred.  During the quarter ending April 30, 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 NOLs and capital loss carryforwards, incurred prior to a change in ownership. The limitations imposed by Sections 382 and 383 are not expected to impair the Company's ability to fully realize its NOL's; however, the annual usage of NOL's incurred prior to the change in ownership will be limited.  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 and capital gains in the future, as well as the timing of such income.
Litigation
Legal Matters and Contingencies [Text Block]
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 have not had a material adverse effect on the Company’s operations or consolidated financial statements.
In the third quarter of fiscal 2009, the U.S. Customs and Border Protection agency commenced an investigation into an undervaluation and corresponding underpayment of the customs duty owed by a vendor relating to a particular shipment of goods to the United States. The Company notified the vendor and has withheld certain funds from the vendor under contractual indemnification obligations to cover any potential costs, penalties or fees that may result from the investigation. The Company made a formal request for indemnification from the vendor but the request was refused. As a result, in December 2009, through the U.S. District Court of Minnesota, the Company commenced litigation against the vendor for breach of contract. The vendor filed counterclaims for payments it claims were owed by the Company. The case has been stayed by the district court pending the outcome of the U.S. Customs investigation. The Company believes that the funds it is withholding from the vendor will be sufficient to cover any costs or possible liabilities against the Company that may result from the investigation.


Related Party Transactions
Related Party Transactions Disclosure [Text Block]
Related Party Transactions
The Company entered into marketing agreements with Creative Commerce and its subsidiary, International Commerce Agency, LLC (“International Commerce”), under which Creative Commerce and International Commerce agreed to provide vendor sourcing and retailing consulting services to the Company. One of the Company's directors, Edwin Garrubbo, is the majority owner of both Creative Commerce and International Commerce. The Company has made payments totaling approximately $655,000 for the six-month period ending July 30, 2011 and the Company made payments totaling approximately $787,000 during fiscal 2010 relating to these services.


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 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. As of July 30, 2011, the direct equity ownership of GE Equity in the Company consists of warrants to purchase up to 6,000,000 shares of common stock and the direct ownership of NBCU in the Company consists of 7,141,849 shares of common stock and warrants to purchase 14,744 shares of common stock. The Company is currently making arm's length negotiated payments to Comcast for cable distribution under a pre-existing contract.
In connection with the transfer of its ownership in NBCU, GE also agreed with Comcast that, for so long as GE Equity is entitled to appoint two members of our board of directors, NBCU will be entitled to retain a board seat provided that NBCU beneficially owns at least 5% of our adjusted outstanding common stock. Furthermore, GE agreed to obtain the consent of NBCU prior to consenting to our adoption of any shareholders rights plan or certain other actions that would impede or restrict the ability of NBCU to acquire or dispose of shares of our 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.