ValueVision Media Announces 20% Revenue Growth in Fourth Quarter and Return to Profitability

ValueVision Media Announces 20% Revenue Growth in Fourth Quarter and Return to Profitability

Fourth Quarter EBITDA of $8MM

Internet Sales Grow 36%

MINNEAPOLIS, March 14 /PRNewswire-FirstCall/ -- ValueVision Media, Inc. (NASDAQ:VVTV) today announced results for the fourth quarter and fiscal year ended February 4, 2006.

Fourth Quarter Performance

ValueVision's fourth quarter revenues were a record $209.4 million for the quarter ended February 4, 2006, an increase of 20% over last year. Net income was $3.4 million compared to a net loss of ($7.3) million last year. Fourth quarter EBITDA (defined below) was $8.0 million, compared to an EBITDA loss of ($3.4) million in the same quarter last year. Revenue and EBITDA results have been restated to exclude Fanbuzz, which is now classified as a discontinued operation.

William J. Lansing, President and Chief Executive Officer of ValueVision Media, Inc., summarized, "We are pleased with the exceptional performance of our business in the fourth quarter. Our sales increased 20% and we delivered positive EBITDA of $8.0 million. These results reflect solid operating performance throughout the P&L -- strong sales growth, gross margin improvement and modest operating expense increases."

Fourth Quarter Highlights

-- Internet sales grew 36% in the fourth quarter and represented 23% of
revenue.

-- Gross Margins improved by 2.2 percentage points, driven by
merchandising rate improvements across Jewelry, Apparel, Cosmetics,
Electronics and Home.

-- Sales per hour increased for all major product categories.

-- Our featured daily item, 'Our Top Value', delivered 15% of merchandise
sales.

-- Net Sales per Home increased 13% over the prior year quarter.

-- Operating expenses as a percent of sales decreased to 34% from 38% in
the prior year.

-- The balance sheet remains strong with over $82 million in cash & short
term investments and no debt.

Overview of Fiscal Year Performance

Net sales for fiscal 2005 were $691.9 million, an increase of 11% over last year. For the year ended February 4, 2006, the Company recorded a net loss of ($16.0) million compared to a net loss of ($57.9) million last year. The net loss in the current year includes a loss of ($2.3) million related to the discontinued operations of Fanbuzz. The Company's full year EBITDA profit was $3.3 million, compared to an EBITDA loss of ($25.4) million last year. These results are in-line with the Company's original guidance for fiscal 2005 of double-digit sales growth and EBITDA profitability.

Outlook for 2006

"We are optimistic on the outlook for 2006," stated Lansing. "The transformation of our business from predominantly high end jewelry to a more diversified mix of merchandise is largely complete. Our upscale products and attractive values are appealing to an ever larger and more diverse audience. And our Internet business will continue to grow as we leverage new opportunities in 2006."

The home shopping industry continues to grow faster than traditional retail, and ValueVision expects to continue to grow faster than the rest of the home shopping industry. The Company will leverage its multi-channel business model to acquire new customers and to strengthen its relationship with existing customers through its TV network, its rapidly growing internet business and personalized direct mail promotions.

In fiscal 2006, ValueVision expects to grow sales at high single-digit to low double-digit rates. Contributing to the Company's above-industry average growth rate are:

-- Productivity improvements in core concepts and optimization of key
initiatives such as Our Top Value, Off-Air Sales and Spotlight

-- Continued growth in Internet business

-- Broad based marketing programs for customer acquisition and retention

-- The addition of approximately three million homes

Financial Guidance

For fiscal 2006, sales are projected to grow at a high single-digit to low double-digit rate. Profitability is expected to improve significantly in fiscal 2006. Excluding the impact of stock option expensing, EBITDA is expected to be in excess of $12 million. This would represent an improvement of over 250% versus last year's results. Expensing stock options due to the implementation of FAS 123R will add approximately $2 million of non-cash expense in fiscal 2006.

Lansing concluded, "We are excited about the opportunities that lie ahead for ShopNBC. Our business is well positioned to grow sales and EBITDA in fiscal 2006."

Conference Call Information

Management has scheduled a conference call at 11:00 a.m. EST/10:00 a.m. CST on Wednesday, March 15, 2006 to discuss fourth quarter and full year results.

To participate in the conference call, please dial 1-800-369-3360 (Pass code: VALUEVISION) five to ten minutes prior to call time. If you are unable to participate live, a replay will be available for 48 hours after the conference call. To access the replay, please dial 1-866-393-0870.

You also may participate via live audio stream by logging on to https://e-meetings.mci.com/ . To access the audio stream, please use conference number 7161704 with pass code 'VALUEVISION'. A rebroadcast of the audio stream will be available using the same access information for 30 days after the initial broadcast.

To be placed on the Company's e-mail notification list for press releases, SEC filings, certain analytical information, and/or upcoming events, please go to http://www.valuevisionmedia.com/ and click on "Investor Relations." Click on "E-mail Alerts" and complete the requested information.

EBITDA Defined

The Company defines EBITDA as net income (loss) from continuing operations for the respective periods excluding depreciation and amortization expense, interest income (expense), and income taxes. Management views EBITDA as an important alternative operating performance measure because it is commonly used by analysts and institutional investors in analyzing the financial performance of companies in the broadcast and television home shopping sectors. However, EBITDA should not be construed as an alternative to operating income (loss) or to cash flows from operating activities (as determined in accordance with generally accepted accounting principles) and should not be construed as a measure of liquidity. EBITDA, as presented, may not be comparable to similarly entitled measures reported by other companies. Management uses EBITDA to evaluate operating performance and as a measure of performance for incentive compensation purposes.

About ValueVision Media, Inc

Founded in 1990, ValueVision Media is an integrated direct marketing company that sells its products directly to consumers through television, the Internet, and direct mail. For more information, please visit http://www.valuevisionmedia.com/ or http://www.shopnbc.com/ .

Forward-Looking Information

This release contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are accordingly subject to uncertainty and changes in circumstances. Actual results may vary materially from the expectations contained herein due to various important factors, including (but not limited to): consumer spending and debt levels; interest rates; competitive pressures on sales, pricing and gross profit margins; the level of cable distribution for the Company's programming and the fees associated therewith; the success of the Company's e-commerce and rebranding initiatives; the performance of its equity investments; the success of its strategic alliances and relationships; the ability of the Company to manage its operating expenses successfully; risks associated with acquisitions; changes in governmental or regulatory requirements; litigation or governmental proceedings affecting the Company's operations; and the ability of the Company to obtain and retain key executives and employees. More detailed information about those factors is set forth in the Company's filings with the Securities and Exchange Commission, including the Company's annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. The Company is under no obligation (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.

VALUE VISION MEDIA, INC.
Key Performance Metrics*
(Unaudited)

Q4 YTD
For the three months For the twelve months
ending ending
2/4/ 1/31/ 2/4/ 1/31/
2006 2005 % 2006 2005 %
Program Distribution
Cable FTEs 37,851 36,746 3% 37,822 36,351 4%
Satellite FTEs 24,824 22,499 10% 24,088 21,312 13%
Total FTEs (Average 000s) 62,675 59,245 6% 61,910 57,663 7%

Net Sales per FTE
(Annualized) $13.08 $11.58 13% $10.99 $10.66 3%

Active Customers - 12 month
rolling n/a n/a 803,607 754,198

% New Customers - 12 month
rolling n/a n/a 56% 57%

% Retained - 12 month
rolling n/a n/a 44% 43%

Customer Penetration - 12
month rolling n/a n/a 1.3% 1.3%

Product Mix
Jewelry 54% 55% 54% 61%
Apparel, Health & Beauty 11% 11% 10% 8%
Home & All Other 35% 34% 36% 31%

Shipped Units (000s) 1,474 1,348 9% 4,942 5,004 -1%

Average Price Point -
shipped units $198 $182 9% $196 $179 9%

*Includes ShopNBC TV and ShopNBC.com only.

VALUEVISION MEDIA, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)

For the Three Month For the Twelve Month
Periods Ended Periods Ended
February 4, January 31, February 4, January 31,
2006 2005 2006 2005

Net sales $209,370 $174,621 $691,851 $623,634
Cost of sales 135,905 117,235 452,907 419,538
Gross profit 73,465 57,386 238,944 204,096

Operating expense:
Distribution and selling 60,121 53,089 212,369 203,159
General and administrative 6,609 5,201 24,864 20,552
Depreciation and
amortization 5,459 5,086 20,569 18,920
Asset impairments - 1,900 - 1,900
Employee termination costs - 638 82 3,836
Gain on sale of television
station (294) - (294) -
Total operating expense 71,895 65,914 257,590 248,367

Operating income (loss) 1,570 (8,528) (18,646) (44,271)

Other income:
Other expense (3) - (4) (50)
Interest income 926 611 3,048 1,627
Total other income 923 611 3,044 1,577

Income (loss) from continuing
operations before income
taxes 2,493 (7,917) (15,602) (42,694)

Equity in income of affiliates 987 - 1,383 -
Income tax benefit (provision) (51) (25) 762 (25)

Income (loss) from continuing
operations 3,429 (7,942) (13,457) (42,719)

Discontinued operations:
Income (loss) from
discontinued FanBuzz
operations, net of tax - 697 (2,296) (14,882)

Net income (loss) 3,429 (7,245) (15,753) (57,601)
Accretion of redeemable
preferred stock (72) (72) (287) (285)

Net income (loss) available
to common shareholders $3,357 $(7,317) $(16,040) $(57,886)

Net income (loss) per common
share:
Continuing operations $0.09 $(0.22) $(0.37) $(1.17)
Discontinued operations - 0.02 (0.06) (0.40)
Net income (loss) $0.09 $(0.20) $(0.43) $(1.57)

Net income (loss) per common
share
---assuming dilution:
Continuing operations $0.08 $(0.22) $(0.37) $(1.17)
Discontinued operations - 0.02 (0.06) (0.40)
Net income (loss) $0.08 $(0.20) $(0.43) $(1.57)

Weighted average number
of common shares
outstanding:
Basic 37,427,009 36,939,488 37,181,717 36,815,044
Diluted 43,077,577 36,939,488 37,181,717 36,815,044

VALUEVISION MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)

February, 4 January 31,
2006 2005
(Unaudited)

ASSETS
Current assets:
Cash and cash equivalents $43,143 $62,640
Short-term investments 39,207 37,941
Accounts receivable, net 87,478 79,405
Inventories 67,844 54,903
Prepaid expenses and other 8,357 5,635
Total current assets 246,029 240,524
Property and equipment, net 46,958 52,725
FCC broadcasting license 31,943 31,943
NBC Trademark License Agreement, net 15,461 18,687
Cable distribution and marketing
agreement, net 2,654 3,550
Other intangible assets, net - 68
Other assets 4,094 2,799
$347,139 $350,296

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Accounts payable $60,597 $48,012
Accrued liabilities 40,223 41,062
Total current liabilities 100,820 89,074

Long-term capital lease obligations 130 1,380

Series A Redeemable Convertible
Preferred Stock, $.01 par value,
5,339,500 shares authorized; 5,339,500
shares issued and outstanding 43,318 43,030

Shareholders' equity:
Common stock, $.01 par value,
100,000,000 shares authorized;
37,643,676 and 37,043,912 shares
issued and outstanding 376 370

Warrants to purchase 6,380,583 and
7,630,583 shares of common stock 34,029 46,683

Additional paid-in capital 278,266 264,005

Deferred compensation (154) (353)

Accumulated deficit (109,646) (93,893)
Total shareholders' equity 202,871 216,812
$347,139 $350,296

Reconciliation of EBITDA to net income (loss):

Twelve Twelve
Month Month
Fourth Fourth Period Period
Quarter Quarter Ended Ended
4-Feb-06 31-Jan-05 4-Feb-06 31-Jan-05

EBITDA (as defined) (000's) (a) $8,013 $(3,442) $3,302 $(25,401)

A reconciliation of EBITDA to net
income (loss) is as follows:

EBITDA, as presented $8,013 $(3,442) $3,302 $(25,401)
Adjustments:
Depreciation and amortization (5,459) (5,086) (20,569) (18,920)
Interest income 926 611 3,048 1,627
Income taxes (51) (25) 762 (25)
Discontinued operations of FanBuzz - 697 (2,296) (14,882)
Net income (loss) $3,429 $(7,245) $(15,753) $(57,601)

Fiscal 2006 Outlook
A reconciliation of EBITDA to
forecasted net loss is as
follows: (b)

EBITDA, as forecasted $12,000
Less:
Depreciation and amortization, as
forecasted (22,650)
Stock option expense, as forecasted (2,000)
Interest income, as forecasted 2,800
Income taxes, as forecasted (50)
Net loss, as forecasted $(9,900)

(a) EBITDA as defined for this statistical presentation represents net
income (loss) from continuing operations for the respective periods
excluding depreciation and amortization expense, interest income
(expense) and income taxes.

(b) Beginning in fiscal 2006, the definition of EBITDA will be revised
to also exclude the non cash charge for the new accounting standard
requiring the expensing of employee stock options.
Management views EBITDA as an important alternative operating
performance measure because it is commonly used by analysts and
institutional investors in analyzing the financial performance of
companies in the broadcast and television home shopping sectors.
However, EBITDA should not be construed as an alternative to
operating income or to cash flows from operating activities (as
determined in accordance with generally accepted accounting
principles) and should not be construed as a measure of liquidity.
EBITDA, as presented, may not be comparable to similarly entitled
measures reported by other companies. Management uses EBITDA to
evaluate operating performance and as a measure of performance for
incentive compensation purposes.

Source: ValueVision Media, Inc.

CONTACT: Frank Elsenbast, Chief Financial Officer, +1-952-943-6516, or
Amy Kahlow, Director of Communications, +1-952-6717, both of ValueVision
Media, Inc.

Web site: http://www.shopnbc.com/
http://www.valuevisionmedia.com/

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