MINNEAPOLIS, Nov. 18 -- ValueVision Media (Nasdaq: VVTV ) today announced final financial results for the third quarter ended October 31, 2002.

Consolidated net sales for the Company was a third quarter record $136 million, up 24% over prior year period and a 6% increase in comparable net sales per full-time equivalent (FTE) homes over the previous year. ShopNBC.com net sales was an all-time high of $26 million, a 71% increase over previous year quarter. FTE homes grew to 48 million, up 1 million households over the prior quarter.

"We continue to see the momentum of strong TV and Internet sales experienced in the latter part of third quarter carry over into the fourth quarter with November order trends in the high 20 percent range versus prior year," said Gene McCaffery, ValueVision Media Chairman & CEO. "Gross margins, while adversely impacted in the third quarter for reasons stated in our previously issued preliminary results announcement, are back to historical norms. Additionally, our systems issues remain under control, and we are working closely with our vendors on aggressive merchandise promotions to ensure a strong close to the year."

Consolidated gross margin in the quarter was 31%. EBITDA for the quarter was a loss of $9 million, both in line with preliminary estimates released on November 5. The Company's negative EBITDA performance can be attributed to lower than expected sales volume and several factors that affected gross margin and operating expenses.

Dick Barnes, ValueVision Media COO & CFO, said: "Contributors to our EBITDA shortfall are in line with those identified in our November 5 release with the primary factors being a gross margin shortfall driven mostly by a shift in mix to PCs with lower margins in that category as well as incremental spending arising from our systems conversion for customer amends programs and temporarily higher operational expenses." "

Continued Barnes, "We have returned to a normalized merchandise mix in the fourth quarter with our higher margin jewelry business performing strongly. We continue to experience no substantive issues in taking customer orders and fulfilling them on a timely basis. Additionally, customer service calls have been reduced by a half to two-thirds versus the high levels experienced in the second and early third quarters. I would like to reiterate our confidence that we have made significant strides in stabilizing the systems platform and that our business, customer service, and all functions that support our operations are all performing at appropriate levels needed to continue our growth going forward."

Operating loss in the quarter was $13 million reflecting depreciation and amortization of $4 million. Consolidated net loss per share was $(0.22) for the quarter.

As of October 31, 2002, cash and short-term investment balance was approximately $153 million. The decline in cash balance from the second to the third quarter can be attributed to share repurchases of approximately $18 million, working capital increases of $20 million (net of cash and income taxes receivable changes), and the EBITDA shortfall.

The increase in net working capital was driven by a reduction in accounts payables due primarily to payments made to vendors in the third quarter for inventory received in the second quarter and higher customer accounts receivable mostly attributable to the strong sales performance in the last month of the quarter. The cash impact of lower inventories, which declined by over $10 million in the third quarter despite the addition of approximately $4 million from FanBuzz to support the recently announced commerce agreement with the National Hockey League, was off-set by the timing of inventory returns to vendors that was predominantly back-end loaded in the third quarter and will be deducted from fourth quarter vendor payments thereby benefiting cash flow in that quarter.

Commented Barnes, "We made substantial progress in the third quarter in returning our inventory levels closer to our target. We will continue to focus on streamlining inventory, and we fully expect working capital to be a source of cash in our fourth quarter."

In addition to these financial highlights, ValueVision today announced that its Board of Directors has authorized the Company to repurchase an additional $25 million of its common stock over a period of time. This is the third $25 million share buy back program the Company has initiated in the last 18 months. In August 2001 and July 2002, the Board authorized two separate $25 million stock buy back programs. As of market close October 31, 2002, the Company has purchased approximately 3.2 million shares at an average price of $14.82 or $47.8 million in total against the original authorization.

"We expect that our top line revenue growth and margins will continue to improve," said McCaffery. "With over $150 million in cash and no debt, complemented by a business that will generate positive operating cash flow going forward, this very difficult market provides us an opportunity to invest in our own company."

Continued McCaffery, "The current market offers an opportunity to buyback shares at prices that we believe to be significantly discounted compared to the long-term strategic value of our business model. We and the Board are confident about the future of this company and the continuing value inherent in its business model."

Other recent highlights included:

- ShopNBC Announced Commerce and Programming Agreement With Brookstone

- FanBuzz Entered Into Commerce Alliance With The National Hockey League

- ShopNBC Announced "Salute to Heroes" Programming Initiative on September 11; All Profits of Day of Programming to be Donated to 9-11 Charities

ShopNBC and Brookstone Enter Into Commerce and Programming Agreement

In the quarter, ShopNBC announced a strategic commerce and programming agreement with Brookstone, Inc. (Nasdaq: BKST), a nationwide specialty retailer, that will leverage the multi-channel assets of both companies to offer compelling merchandise values to the network's viewers. As part of the agreement, ShopNBC will produce and air a series of shows that will incorporate Brookstone's theme of "What a Gift Should Be" over the course of the upcoming Holiday season. The shows will promote innovative products by Brookstone that make people's lives easier, better and more enjoyable. Brookstone is the newest vendor to ShopNBC's roster of programming partners, including AOL, Bose, Solutions, and Gevalia.

FanBuzz Entered Into Commerce Alliance With The National Hockey League

In the quarter, FanBuzz, a leading provider of commerce solutions to sports and media brands, and the National Hockey League, announced a long-term alliance to develop and operate the NHL catalog and online stores for the League and its 30 member clubs. Under the agreement, fans will have access to a broad selection of NHL licensed products, including the traditionally popular team jerseys, which can be personalized with the name and number of any NHL player or the customer's own name and number. FanBuzz, under the NHL's direction, will be responsible for all facets of operation including catalog production, web site development, merchandising, customer service, order processing, garment decoration and product fulfillment. Located at shop.nhl.com , the new online store launched in October for the start of the 2002-03 NHL season.

ShopNBC Announced "Salute to Heroes" Programming Initiative on September 11; All Profits of Day of Programming to be Donated to 9-11 Charities

In the quarter, ShopNBC announced its "Salute To Heroes" programming initiative on September 11. All profits generated during the day to be donated to three distinct 9-11 charities: the New York City Law Enforcement Foundation, which includes the New York City Police and Fire Departments, the New York City Port Authority, and the New York City Emergency Services; Ground Hero Kids; and the VFW 9-11 Memorial. As part of the initiative, ShopNBC interrupted its regular programming throughout the day and provided live coverage of important and relevant stories that honor and commemorate particular moments as well as speeches and ceremonies of national significance.

Outlook for the Fourth Quarter Ending January 31, 2003 and Fiscal Year Ending January 31, 2003

The Company expects fourth quarter 2002 consolidated net sales to be in the range of $160 million to $165 million, an increase of 18% to 21% over the prior year period. EBITDA is expected to be in the range of $8 million to $12 million, up from $2.9 million in the year-ago quarter. Operating profit is expected to be $4 million to $8 million. Earnings per share is expected to be $0.04 to $0.09, including equity losses in affiliates related to Ralph Lauren Media of approximately $(1.7) million and interest income of approximately $0.6 million.

"Our guidance for the fourth quarter is slightly more cautious than our previous expectations primarily due to uncertainty about the state of the retail economy," said Barnes. "The system conversion issues we experienced in the second and third quarters are behind us. We will continue to incur some additional expenses in the fourth quarter, albeit much reduced, to ensure a high level of customer service support and loyalty."

For fiscal year 2002 ending January 31, 2003, the Company is updating its previous guidance for net sales to $557 million to $562 million, an increase of 20% to 22% over the previous year, and EBITDA of $8 million to $12 million, a 17% to 75% increase over the prior year. Our revised full year EBITDA guidance reflects the lower than expected levels of EBITDA achieved in the second and third quarters primarily due to margin and expense issues associated with the systems implementation as well as a slower retail economy. Fiscal 2002 operating loss is expected to be in the range of $4 million to $8 million, reflecting $16 million of depreciation and amortization expense. Fiscal 2002 net loss per share is expected to be $0.14 to $0.19.

ValueVision Media operates in the rapidly growing converged world of television, the Internet, and e-commerce. In an effort to capitalize on this industry, ValueVision Media owns and operates a number of assets and is organized into five synergistic entities: ShopNBC, ShopNBC Interactive, Enhanced Broadcast Technologies, ValueVision Direct, and FanBuzz. GE Equity and NBC own approximately 40% of ValueVision Media. For more information, please see the Company's website at www.valuevisionmedia.com .

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 initiatives; the performance of its equity investments; the success of its strategic alliances and relationships; the performance of the Ralph Lauren Media venture; the ability of the Company to manage its operating expenses successfully; risks associated with acquisitions; changes in governmental or regulatory requirements; risks and unanticipated expenses and business disruption related to the company-wide ERP implementation; 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.