Valley Media Reports Fiscal 2000 First Quarter Results; Sales Increased 20% and Internet Sales Rose 172%.WOODLAND, Calif.--(BUSINESS WIRE)--Valley Media, Inc. (Nasdaq:VMIX), a recognized leader in the full-line distribution of music and video entertainment products, today announced its financial results for the quarter ending July 3, 1999. Valley Media reported a net loss for the first quarter of fiscal 2000 of $799,000 or $0.09 per share versus a loss before an extraordinary item of $1.3 million or $0.26 per share over the same period one year ago. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the quarter increased by 20% from $154.4 million to $185.8 million compared to the same period in fiscal 1999. Full-line Distribution sales decreased 7% from $124.8 million to $116.3 million, New Media sales increased 172% from $21.7 million to $59.1 million and Independent Distribution sales increased 11% from $12.6 million to $14.0 million. Sales growth in the first quarter of fiscal 2000 was primarily driven by sales to Internet retailers by our New Media business and by DVD DVD: see digital versatile disc. DVD in full digital video disc or digital versatile disc Type of optical disc. The DVD represents the second generation of compact-disc (CD) technology. sales increases. This growth was partially offset by weak video sell-through releases. Gross margins increased from 11.0% to 11.8% primarily because of changes in mix including higher volumes in New Media and lower volumes in our relatively lower margin video business. "We achieved an important strategic milestone by moving our Woodland Distribution Center to a new 260,000 square foot building," commented CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Rob Cain. "This facility will streamline our operations and give us the capacity to aggressively pursue significant growth opportunities. The significant costs associated with the move were an investment in our future. Between the Woodland move and the addition of our Louisville facility last year, we have more than tripled our capacity. As we have already disclosed, our first quarter fiscal 2000 financial results were burdened by significant issues associated with the move. We moved the majority of the inventory by the end of May. In June, we focussed on addressing a number of problems created by the inventory move. During the month of July, we successfully moved our automation equipment. We expect to have the financial impact of the move fully behind us by the end of the September 1999 quarter." Cain added, "We are making progress on a number of other fronts as well. We have added important customers such as Buy.com and VirginMega.com and have added strong labels to our roster including Castle and Matador matador In bullfighting, the principal performer, who works the capes and attempts to dispatch the bull with a sword thrust between the shoulder blades. Most of the techniques used by modern matadors were established in the 1910s by Juan Belmonte (b. 1894–d. . We have a number of initiatives under way to further strengthen our New Media business. Our DVD sales are running approximately 350% ahead of the same period last year. We look forward to a strong release schedule for Independent Distribution in September from such artists as Loreena McKennitt Loreena McKennitt, C.M. (born February 17, 1957) is a Canadian singer, composer, harpist and pianist most famous for writing, recording and performing world music with New Age, Celtic and Middle Eastern themes. , John Prine and Ricky Skaggs. Strategically, we are spending significant amounts of time exploring digital distribution and other initiatives to maximize synergies between our Independent Distribution and New Media businesses to better position ourselves for a future that blends physical and digital distribution. For example, we have signed a letter of intent with Amplified.com to work with them on custom compilations for Internet retailers and on digital distribution for the labels we represent." Valley Media is a distributor of music, video and DVD product offering Internet fulfillment, full-line distribution, independent distribution, publications, and proprietary database products. Valley Media operates facilities in seven states with primary distribution facilities in Louisville, Ky., and at its Woodland, Calif., corporate headquarters. Additional information is available at www.valley-media.com. This press release may contain forward-looking statements made pursuant to the "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These statements are identified by words such as "will," "expects," "anticipates," "plans," or "intends" and by other descriptions of future circumstances or conditions. Actual results may differ materially from those projected in these forward-looking statements. Factors that could affect Valley Media's actual results include, without limitation, risks and uncertainties related to the following factors: intense competition, customers' ability or preference to buy product direct, facilities and systems integration upgrades, new electronic delivery technologies and copyright or royalty disputes. More information about these and other factors that could negatively affect Valley Media's financial performance and the value of its common stock is contained in Valley Media's filings with the Securities and Exchange Commia, Inc. Consolidated Statement 1,798 216 Interest expense x benefit (567) $477) (723)(1) ----------- ----------- Net loss $ (799) $ (1,985) =========== =========== Net loss per share: Basic and diluted loss before extraordinary loss $ (0.09) $ (0.26) Basic and diluted extraordinary loss -- (0.15)(1) ----- ------ ----------- Basic and diluted loss per share $ (0.09) $ (0.41) =========== =========== Weighted average shares used in the calculation: Basic and diluted 8,449,009 4,822,211 Supplemental Operating Data: EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become $ 3,363 $ 1,430 Net Sales Information on Reportable Segments: Full-line Distribution $ 116,256 $ 124,796 New Media 59,145 21,650 Independent Distribution 13,991 12,583 Intersegment Eliminations (3,626) (4,656) ----------- ----------- Total net sales $ 185,766 $ 154,373 =========== =========== (1) Represents an extraordinary loss comprised of termination fees and write-off of prepaid financing costs as a result of the termination of a prior line of credit agreement. Valley Media, Inc. Consolidated Balance Sheets consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. Dollars in thousands, except share data July 3, 1999 April 3, 1999 Assets Current assets Current Assets Appearing on a company's balance sheet, it represents cash, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that can be converted to cash within one year. Cash $ 261 $ 1,433 Accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying , less allowance for doubtful accounts of $9,157 at July 3, 1999 and $8,892 at April 3, 1999 123,807 167,925 Inventories, net of reserves of $2,898 at July 3, 1999 and $2,823 at April 3, 1999 225,727 216,807 Deferred income taxes 5,956 5,956 Prepaid expenses and other 1,683 1,551 --------- --------- Total current assets 357,434 393,672 Property and equipment, net 26,012 20,913 Goodwill and other intangibles, net 14,309 14,678 Deferred income taxes 399 399 Other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. 1,403 1,063 --------- --------- Total assets $ 399,557 $ 430,725 ========= ========= Liabilities and stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. Current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. Accounts payable $ 157,956 $ 191,978 Accrued liabilities 6,853 11,534 Revolving line of credit Revolving line of credit A bank line of credit on which the customer pays a commitment fee and can take and repay funds at will. Normally a revolving LOC involves a firm commitment from the bank for a period of several years. 154,352 148,730 Current portion of long-term debt Current Portion Of Long-Term Debt A portion of the balance sheet that represents the total amount of long-term debt that must be paid within the next year. The balance sheet has a liability section, which is broken down into long-term and current debt. 2,595 1,905 Deferred income taxes 3,918 3,918 --------- --------- Total current liabilities 325,674 358,065 --------- --------- Deferred income taxes 2,855 2,855 Long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. 5,814 3,918 Stockholders' equity Preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. , $.001 par value, 2,000,000 shares authorized Shares authorized The maximum number of shares of stock of a company allowed in the articles of incorporation, which may be changed only by a shareholder vote. See: Issued and outstanding. shares authorized See authorized capital stock. , none issued Common Stock, $.001 par value, 20,000,000 shares authorized, 8,449,009 shares issued and outstanding 8 8 Additional paid-in capital additional paid-in capital Stockholder contributions that are in excess of a stock's stated or par value. For example, if a firm issues stock with a par value of $1 per share but sells the stock to investors at $10 per share, the firm's financial statements 52,145 52,145 Stockholders' notes receivable (234) (360) Retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. 13,295 14,094 --------- --------- Total stockholders' equity 65,214 65,887 --------- --------- Total liabilities and stockholders' equity $ 399,557 $ 430,725 ========= ========= |
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