Egghead announces second-quarter results.SPOKANE Spokane, city, United States Spokane (spōkăn`), city (1990 pop. 177,196), seat of Spokane co., E Wash., at the spectacular falls of the Spokane River; inc. 1881. , Wash.--(BUSINESS WIRE)--Oct. 31, 1996--Egghead Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :EGGS) today reported results for its second quarter ended Sept. 28, 1996. These results exclude the discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. of the Corporate Government and Educational division (CGE CGE Computable General Equilibrium CGE Conference des Grandes Ecoles (French) CGE Carrier Grade Edition (COTS Linux platform) CGE Classic Gaming Expo (game) ), which was sold on May 13, 1996. The company's consolidated revenue from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for the second quarter was $80.0 million, a decrease of 21% from the $100.6 million last year. Net loss for the second quarter from continuing operations was $4.7 million, or $0.27 per share, compared to a net loss of $3.1 million, or $0.17 per share last year. For the six months, the company's consolidated revenue from continuing operations was $158.6 million, a decrease of 14% from the $185.3 million from last year. Net loss from continuing operations for the six months was $12.2 million, or $0.70 per share, compared to a net loss of $6.3 million, or $0.37 per share last year. Comparable store sales for the second quarter decreased 22.2% from last year. For the six months comparable store sales decreased 15.1% from last year. Comparable store sales results only include Egghead's retail stores. Excluded are sales through Direct Response and the Egghead Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the site (www.egghead.com). Total and comparable store sales performance for the quarter was adversely affected by the launch of Windows 95 last year and a reduction in the average number of stores in operation this year. For the second quarter comparable store sales decreased 17.2% excluding the sales of Windows 95 in both periods but not Windows 95 related products introduced during the Windows 95 launch period. Analogously a·nal·o·gous adj. 1. Similar or alike in such a way as to permit the drawing of an analogy. 2. Biology Similar in function but not in structure and evolutionary origin. for the six months comparable store sales decreased 12.2% excluding the sales of Windows 95 in both years. The average number of stores in operation during the second quarter this year was 157, down from 164 stores last year. At Sept. 28, 1996, there were 154 stores in operation. During the second quarter Egghead formalized for·mal·ize tr.v. for·mal·ized, for·mal·iz·ing, for·mal·iz·es 1. To give a definite form or shape to. 2. a. To make formal. b. plans to remodel re·mod·el tr.v. re·mod·eled also re·mod·elled, re·mod·el·ing also re·mod·el·ling, re·mod·els also re·mod·els To make over in structure or style; reconstruct. 12 of the company's previous new format (C-3) stores to its C-4 format and convert one store to the C-4 format and open three new C-4 format stores in existing markets. The C-4 format is a more open store whose fixture An article in the nature of Personal Property which has been so annexed to the realty that it is regarded as a part of the real property. That which is fixed or attached to something permanently as an appendage and is not removable. arrangement holds more merchandise and affords greater flexibility in displaying and organizing each category. The company is also modifying an additional 12 stores, 10 of which consist of C-3 stores in new markets. All 28 of these stores will carry broader merchandise assortments, including hardware, than the company's traditional store. Several of them also serve as pilot sites for upgrade and installation departments and walk-in walk-in A new brokerage customer who simply walks into the office. Although walk-ins are generally assigned to brokers, they have the right to specify a preferred broker. sales from surrounding sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. businesses. The hardware assortments include computer systems, notebook computers A laptop computer that weighs in a range from five to seven pounds. The term originated when laptops were routinely more than 10 pounds, and those that became lighter were placed in a special "notebook" category. In practice, notebook computer and laptop computer are synonymous. , monitors, printers, scanners, and digital imaging devices. Management expects to effect these changes prior to the upcoming holiday selling season. As the company has previously stated, the performance of the remodeled and expanded stores in existing markets is better on balance than that of new stores in new markets. Egghead's Chairman George George, river, c.345 mi (560 km) long, rising in a lake on the Quebec-Labrador boundary, E Canada. It flows N through Indian Lake (125 sq mi/324 sq km) to Ungava Bay (an arm of Hudson Strait). P. Orban Orban, also known as Urban, was a Hungarian engineer. After his offer to make artilery for the defense of Constantinople was rejected by the emperor Constantine XI in 1452, he offered his services to the Ottoman sultan Mehmed II. said, "With this initiative we are moving to reposition some key stores in time for the holiday season. We are focusing our attention on our new format stores which may serve as the model for redeveloping the rest of the chain as the majority of the company's leases come up for renewal in the next 18 months." Total gross margin for the quarter was $8.2 million or 10.2% of sales compared to $11.2 million or 11.1% of sales last year. For the six months gross margin was $14.8 million or 9.3% of sales compared to $21.2 million or 11.4% of sales last year. For the quarter and six months the initial margin ratio was higher by 1.4 and 0.8 percentage points respectively, however, gross margin contribution was lower primarily due to the sales decrease. Initial margin ratio in the prior year was negatively affected by the low gross margin associated with Windows 95. The company's selling, general and administrative expense (SG&A) for the quarter was $15.0 million, a decrease of $0.3 million from the $15.3 million last year. The company has reduced its administrative and corporate headquarters expenses, however, the recognition of co-op advertising reimbursements was below last year's level. For the six months SG&A expense was $33.0 million, an increase of $3.5 million from the $29.5 million last year. Consistent with the results for the quarter, reduction in administration and corporate headquarters expense were offset by lower co-op advertising reimbursements. Six-months results also include several one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. restructure costs that were recorded in the first quarter this year. The company's balance sheet remains strong primarily due to a cash balance of $81.9 million at Sept. 28, 1996. For the six months the company's cash position has improved by $32.3 million primarily as a result of the sale of CGE in the first quarter and the subsequent of collection of 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 . These improvements in the cash balance was partially offset by an increase in inventory as the company prepares for the important upcoming holiday selling season, and a decline in accounts payable. Egghead also announced that Edward S Edward killed his father at his mother’s instigation. [Br. Balladry: Edward in Benét, 302] See : Patricide . Wozniak Woz·ni·ak , Stephen Born 1950. American computer engineer who cofounded Apple Computers (1975). , the company's Vice President, Chief Financial Officer and Secretary has accepted a position as Vice President, Chief Administrative Officer A chief administrative officer (CAO) is responsible for administrative management of private, public or governmental corporations. The CAO is one of the highest ranking members of an organization, managing daily operations and usually reporting directly to the chief executive of another company. Egghead is in discussion with a highly qualified candidate to replace Wozniak and expects to make an announcement shortly. This news release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve risks and uncertainties, including risks related to the highly competitive nature of the computer software, hardware and other related products retailing industry, the seasonality and quarterly fluctuation Fluctuation A price or interest rate change. of financial results, the early stage of the company's new store format, the dependence of the company's sales on the purchase and use of personal computers and software, and the development stage of the company's subsidiary ELEKOM, and the risks detailed in the company's SEC reports, including the report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended March 30, 1996 and the report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended June June: see month. 29, 1996. Actual results may differ materially. -0-
EGGHEAD INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Amounts in thousands, except per-share data)
13 Weeks Ended 26 weeks Ended
(unaudited) (unaudited)
Sep 28, Sep 30, Sep 28, Sep 30,
1996 1995 1996 1995
Net sales $79,971 $100,617 $158,617 $185,307
Cost of sales, including
certain buying, occupancy,
and distribution
costs 71,786 89,418 143,822 164,136
Gross margin 8,185 11,199 14,795 21,171
Selling, general, and
administrative expense 15,015 15,256 32,949 29,542
Depreciation and
amortization expense, net
of amounts included in
cost of sales 1,766 1,815 3,513 3,616
Operating income (loss) (8,596) (5,872) (21,667) (11,987)
Other income (expense):
Interest income 992 890 1,791 1,583
Interest expense (9) (16) (22) (37)
Other, net (23) 13 (154) 68
Loss from continuing
operations before income
taxes (7,636) (4,985) (20,052) (10,373)
Income tax benefit 2,978 1,933 7,820 4,035
Net loss from continuing
operations before effects of
discontinued operations and
cumulative effect
of change in accounting
principle (4,658) (3,052) (12,232) (6,338)
Discontinued operations:
Income (loss) from
discontinued
operations, net of tax (462) (14,548) (338)
Gain on disposal of
discontinued operations,
net of tax 22,286
Income from discontinued
operations (462) 7,738 (338)
Net income before cumulative
effect of change in
accounting principles (4,658) (3,514) (4,494) (6,676)
Cumulative effect of change
in accounting principles
net of tax (711)
Net Income (loss) $(4,658) $(3,514) $(5,205) $(6,676)
Earnings (loss) per share:
Continuing operations (0.27) (0.17) (0.70) (0.37)
Discontinued operations:
Income (loss) from
discontinued operations (0.03) (0.83) (0.02)
Gain on disposal of
discontinued operations 1.27
Change in accounting
principle (0.04)
Earnings (loss) per
share $(0.27) $(0.20) $(0.30) $ (0.39)
Weighted average common
shares and common
equivalent
shares outstanding 17,567 17,490 17,561 17,331
EGGHEAD INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands)
ASSETS
Sep 28, 1996 Mar 30, 1996
Current assets:
Cash and cash equivalents $ 81,920 $ 49,590
Non-trade accounts receivables,
net of allowance for
doubtful accounts of
$3,472 and $2,098,
respectively 17,534 24,079
Merchandise inventories, net 99,232 84,712
Prepaid expenses and other current
assets 13,129 9,455
Current deferred income taxes 5,612 4,859
Discontinued operations - net current
assets 2,392 74,473
Total current assets 219,819 247,168
Property and equipment, net 24,950 29,495
Non-current deferred income taxes 4,221 4,221
Other assets 512 1,621
Discontinued operations -
net long-term assets -- 1,727
$ 249,502 $ 284,232
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ -- $ --
Accounts payable 82,722 119,341
Accrued liabilities 12,895 15,817
Current portion of capital
lease obligations 307 295
Liabilities related to CGE disposal 18,559 8,327
Total current liabilities 114,483 143,780
Capital lease obligations,
less current portion 95 280
Deferred rent 709 903
Total liabilities 115,287 144,963
Commitments and contingencies -- --
Shareholders' equity :
Common stock, $.01 par value:
50,000,000 shares authorized;
17,573,920 and 17,546,548 shares
issued and outstanding,
respectively 176 176
Additional paid-in capital 124,295 124,104
Retained earnings 9,744 14,989
Total shareholders' equity 134,215 139,269
$ 249,502 $ 284,232
CONTACT: Egghead Inc. Ed Wozniak, CFO See Chief Financial Officer. , 509/891-4851 or Bob Sundmacher, Corporate Communications Corporate communications is the process of facilitating information and knowledge exchanges with internal and key external groups and individuals that have a direct relationship with an enterprise. , 206/728-1778 |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion