Egghead.com Announces Fourth Quarter and Year End Results as Company Makes Transition to Internet.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)--May 5, 1998--Egghead.com, 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 released financial results for the fourth quarter and fiscal year ended March 28, 1998. The company said that revenues from ongoing operations in the fourth quarter of fiscal 1998 were $30.5 million. In March the three commerce sites, www.egghead.com, www.surplusdirect.com and www.surplusauction.com were collectively ranked sixth in at-home at-home n. also at home An informal reception in one's home. adj. 1. Being, occurring, or functioning in one's home: at-home workers; at-home care. 2. reach among the shopping sites on the internet by Media Metrix. Visits during the fourth quarter for the three sites exceeded 14 million. In commenting on the fiscal 1998 fourth quarter, Egghead.com 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. 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). 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, "Closing the retail stores in favor of upon the side of; favorable to; for the advantage of. See also: favor repositioning repositioning Laparoscopic surgery The changing of a Pt's position during a procedure to improve access or visualization of the operative field, which may be linked to complications, as it changes anatomic planes of operation. Cf Laparoscopic surgery. Egghead as an internet commerce company culminates an 18 month period of dramatic change. The level of revenues achieved by our ongoing operations in the past fiscal quarter exceeded our expectations as did our cash position of $67 million." In the fourth quarter, Egghead.com entered into marketing alliances with CNET (body) CNET - Centre national d'Etudes des Telecommunications. The French national telecommunications research centre at Lannion. , USA.NET usa.net - Internet Express , GeoCities Yahoo! GeoCities is a webhosting service founded by David Bohnett and John Rezner in late 1994 as Beverly Hills Internet (BHI). In its original form, site users selected a "city" in which to place their webpages. and Yahoo. The company's list of email addresses See Internet address. grew to 1.6 million and the auction site surpassed 100,000 registered bidders on April 7, 1998, 9 months after its inception INCEPTION. The commencement; the beginning. In making a will, for example, the writing is its inception. 3 Co. 31 b; Plowd. 343. Vide Consummation; Progression. . "Our three commerce sites currently offer 33,000 products, and we expect to increase the product offering significantly this year. In the aggregate the sites constitute a true on-line computer products superstore su·per·store n. A very large retail store that stocks highly diversified merchandise, such as groceries, toys, and camera equipment, or a wide variety of mechandise in a specific product line, such as computers or sporting goods. . Our merchandise MERCHANDISE. By this term is understood all those things which merchants sell either wholesale or retail, as dry goods, hardware, groceries, drugs, &c. It is usually applied to personal chattels only, and to those which are not required for food or immediate support, but such as remain offer consists of current version hardware and software titles including electronic software downloads, refurbished goods, and vendor liquidated DAMAGES, LIQUIDATED, contracts. When the parties to a contract stipulate for the payment of a certain sum, as a satisfaction fixed and agreed upon by them, for the not doing of certain things particularly mentioned in the agreement, the sum so fixed upon is called liquidated damages. (q.v. merchandise. We also believe our brands and shopping venues lend themselves to other categories of goods and services In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility (unless the "good" is a "bad"). It is often used when referring to a Goods and Services Tax. , which the company intends to explore as it continues to build a community of customers," Orban said. "In fiscal 1999, we plan to focus on expanding our merchandise offer; to further leverage our infrastructure; improve our technology and business process; develop our affiliate Affiliate Relationship between two companies when one company owns substantial interest, but less than a majority of the voting stock of another company, or when two companies are both subsidiaries of a third company. See: Subsidiaries, parent company. program and marketing partnerships; and enter the international market. In order to further develop revenues and expand our customer base, we expect to invest heavily in marketing and technology and therefore we expect to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. substantial operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. for the foreseeable fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. future," Orban added. Financial Results The company's 1998 fourth quarter and fiscal year results were significantly affected by the reorganization The process of carrying out, through agreements and legal proceedings, a business plan for winding up the affairs of, or foreclosing a mortgage upon, the property of a corporation that has become insolvent. announced on January January: see month. 28, 1998. The reorganization involved, among other things, the closing of all 80 remaining retail stores which was completed in the fourth quarter; a significant reduction in headquarters staff; and involves the closure of the Sacramento Sacramento, city, United States Sacramento (săkrəmĕn`tō), city (1990 pop. 369,365), state capital and seat of Sacramento co., central Calif. distribution center in May of 1998. The $37.6 million fourth quarter 1998 restructure charge includes $17.1 million for retail lease terminations and related fixed asset disposals, $10.0 million for store closing costs Closing Costs The numerous expenses (over and above the price of the property) that buyers and sellers normally incur to complete a real estate transaction. Costs incurred include loan origination fee, discount points, appraisal fee, title search, title insurance, survey, taxes, , $6.2 million for the liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy of inventory, $2.1 million for closure of the Sacramento, California “Sacramento” redirects here. For other uses, see Sacramento (disambiguation). Sacramento is the capital of the State of California and the county seat of Sacramento County. warehouse, and $2.2 million for severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when , fixed asset disposals and other miscellaneous expenses related to the reduction of the company's headquarters operation. The company's consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: 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 fourth quarter of fiscal 1998 were $74.5 million, a decrease of 16% from $88.9 million in fiscal 1997. Fiscal 1998 fourth quarter net sales include $24.5 million of liquidation sales liquidation sale liquid (US) n → Verkauf m wegen Geschäftsaufgabe related to the closing of 80 stores as part of the previously announced reorganization. Ongoing operations achieved revenues of $30.5 million in the fiscal 1998 fourth quarter. The net loss for the fourth quarter of fiscal 1998 was $35.0 million, or $1.51 per share, compared to a net loss of $35.9 million or $2.04 per share for the comparable period of fiscal 1997. The loss for the fiscal 1998 fourth quarter includes a $37.6 million charge for the previously announced closure of all retail stores, partially offset by $5.0 million in savings related to the 1997 retail restructure and final adjustments totaling $4.3 million related to the prior year disposal of the Corporate, Government & Education division. Excluding such charges and income, the company had a loss of $6.8 million 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 fourth quarter of fiscal 1998. Continuing operations includes certain operating and headquarters expenses related to the retail stores prior to their closure. Management expects that the direct effect of the recent reorganization will reduce Selling & Marketing and General & Administrative expenses by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $38 million on an annual basis as compared to fiscal 1998. For fiscal 1998 the company reported consolidated revenue from operations of $293.1 million, a decrease of 18.8% compared to $360.7 million from operations in fiscal 1997. The total net loss for the fiscal 1998 year was $50.2 million or $2.40 per share compared to a net loss of $39.6 million or $2.25 per share for fiscal 1997. The loss for fiscal 1998 includes $37.6 million in restructure charges, savings of $5.0 million related to the 1997 retail restructure and final adjustments of $4.3 million related to the disposal of discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . Excluding such charges and income, the company had a loss from continuing operations for fiscal 1998 of $21.9 million compared to a loss of $20.2 million for fiscal 1998. The company's cash position at the end of the year was $67.4 million. Inventories were reduced from $67.9 million at the end of the third quarter to $12.9 million as of year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. . Also subsequent to the end of the fiscal year, Egghead completed the sale of its headquarters building in Spokane, Washington Spokane (pronounced [spoʊ̯ˈkæn]) is a city located in Eastern Washington. The seat of Spokane County, Spokane is the metropolitan center of the Inland Northwest, the second largest city in Washington state, and on May 1, 1998 for $7.5 million. About Egghead.com Inc. Egghead.com, Inc. is a leading online reseller An organization that sells hardware and software to the general public. Resellers purchase products from software publishers and hardware manufacturers. of personal computer hardware, peripherals, accessories and off-the-shelf computer software. Through its online stores, www.egghead.com, www.surplusdirect.com and www.surplusauction.com, the company believes it provides superior value to its customers by offering one of the largest selections of brand name, high quality software and hardware products available online and the convenience of shopping from home or office 24 hours a day, seven days a week. The company fulfills a customer purchase either through physical delivery, or in the case of software, electronic software delivery. Egghead.com, Inc. believes it is one of the most frequently visited internet shopping sites, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. data provided by Media Metrix. This announcement 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, and actual results may differ materially from predicted results. Potential risks and uncertainties include, among others, risks associated with fluctuations in, and the uncertainty of, future operating results, the intensely competitive nature of selling PC software and hardware and other products over the Internet, the Internet, the, international computer network linking together thousands of individual networks at military and government agencies, educational institutions, nonprofit organizations, industrial and financial corporations of all sizes, and commercial enterprises company's dependence on strategic alliance partners, distributors and certain supply sources, risks associated with the closing of the company's retail store network , including, without limitation, the loss of ongoing revenue from its retail stores, and risks associated with the shift of the Company's business emphasis to Internet commerce, including, without limitation, the rapid evolution of Internet commerce and related technolgy, market acceptance of Internet commerce, the company's limited operating history in Internet commerce and that the company's Internet commerce model is still under development. More information about factors that potentially could affect the company's financial results is included in the Company's 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 fiscal year ended March 29, 1997, Form 10-Q Form 10-Q See 10-Q. for the quarter ended December December: see month. 27, 1997 and Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. dated January 28, 1998, all of which are filed with the Securities and Exchange Commission. -0-
EGGHEAD.COM, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands)
ASSETS
March 28, March 29, Dec. 27,
1998 1997 1997
(unaudited) (unaudited)
Current assets:
Cash and cash equivalents $67,381 $83,473 $57,000
Accounts receivable, net 5,670 13,917 9,979
Receivable from Joint
Venture -- 4,000 --
Merchandise inventories,
net 12,923 49,087 67,908
Prepaid expenses and
other current assets 999 4,116 3,307
Property held for sale 8,047 7,692 7,852
Total current assets 95,020 162,285 146,046
Property and equipment, net 2,806 12,018 13,170
Goodwill, net 33,225 -- 33,658
Other assets 336 1,217 844
===================================
$131,387 $175,520 $193,718
===================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 15,834 $ 43,027 $ 50,202
Accrued liabilities 12,002 12,996 13,879
Liabilities related to
disposition of CGE
division -- 7,754 4,982
Reserves and liabilities
related to restructuring 17,461 11,258 6,746
Total current liabilities 45,297 75,035 75,809
Other long-term liabilities 3 438 106
Total liabilities 45,300 75,473 75,915
Commitments and
contingencies -- -- --
Shareholders' equity:
Preferred stock, $.01 par
value: 10,000,000
authorized no shares
issued and outstanding -- -- --
Common stock, $.01 par
value: 50,000,000
shares authorized;
23,492,502, 17,591,087,
and 23,029,863 shares
issued and outstanding,
respectively 235 176 230
Additional paid-in capital 160,669 124,457 157,350
Retained earnings (deficit) (74,817) (24,586) (39,777)
Total shareholders' equity 86,087 100,047 117,803
==================================
$131,387 $175,520 $193,718
==================================
EGGHEAD.COM, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Amounts in thousands, except per share data)
Year to Date
1998
Costs
related to
restructure
As reported activities Total
(unaudited) (unaudited) (unaudited)
Net Sales:
Retail $216,281 $24,539 $191,742
Ongoing 76,798 76,798
-----------------------------------
293,079 24,539 268,540
Cost of sales:
Retail 190,703 30,755 159,948
Ongoing 66,472 66,472
----------------------------------
257,175 30,755 226,420
Gross margin:
Retail 25,578 (6,216) 31,794
Ongoing 10,326 10,326
==================================
35,904 (6,216) 42,120
==================================
Selling and marketing expense 48,571 6,358 42,213
General and administrative 19,495 516 18,979
Amortization of goodwill 1,009 1,009
Depreciation 4,800 4,800
Restructure and impairment
costs 19,500 19,500
Operating loss (57,471) (32,590) (24,881)
Other (expense) income 2,939 2,939
Loss from continuing
operations (54,532) (32,590) (21,942)
before income taxes -- -- --
Income tax expense -- -- --
Net loss from continuing
operations before
discontinued operations
and change in
accounting principle (54,532) (32,590) (21,942)
Discontinued operations:
Gain on disposal of
discontinued operations,
net of tax expense of
$14,249 -- -- --
Income from discontinued
operations, net of tax
(benefit) expense of $0
and $7,833 4,300 4,300
Net income before cumulative
effect of change in
accounting principle (50,232) (32,590) (17,642)
Cumulative effect of change
in accounting principle,
net of tax of $454 -- -- --
Net loss $(50,232) $(32,590) $(17,642)
Basic loss per share:
Continuing operations $(2.60) $(1.55) --
Discontinued operations:
Gain on disposal of
discontinued operations
Income (loss) from
discontinued operations 0.20 -- --
Change in accounting
principle -- -- --
Earnings (loss) per share $(2.40) $(1.55) --
Weighted average common
shares outstanding 20,967 20,967 --
Basic -- -- --
EGGHEAD.COM, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Amounts in thousands, except per share data)
Year to Date
1997
Costs
related to
restructure
As reported activities Total
Net Sales:
Retail $340,533 $9,621 $330,912
Ongoing 20,182 20,182
-----------------------------------
360,715 9,621 351,094
Cost of sales:
Retail 287,708 15,860 271,848
Ongoing 16,543 16,543
-----------------------------------
304,251 15,860 288,391
Gross margin:
Retail 52,825 (6,239) 59,064
Ongoing 3,639 3,639
==================================
56,464 (6,239) 62,703
==================================
Selling and marketing expense 57,352 1,838 55,514
General and administrative 24,065 326 23,739
Amortization of goodwill
Depreciation 7,352 -- 7,352
Restructure and impairment
costs 15,597 15,597 --
Operating loss (47,902) (24,000) (23,902)
Other (expense) income 3,729 -- 3,729
Loss from continuing
operations (44,173) (24,000) (20,173)
before income taxes
Income tax expense (4,788) -- (4,788)
Net loss from continuing
operations before
discontinued operations
and change in
accounting principle (48,961) (24,000) (24,961)
Discontinued operations:
Gain on disposal of
discontinued operations,
net of tax expense of
$14,249 22,286 -- 22,286
Income from discontinued
operations, net of tax
(benefit) expense of $0
and $7,833 (12,254) -- (12,254)
Net income before cumulative
effect of change
in accounting principle (38,929) (24,000) (14,929)
Cumulative effect of change
in accounting principle,
net of tax of $454 (711) -- (711)
Net loss $(39,640) $(24,000) $(15,460)
Basic loss per share:
Continuing operations $(2.78) $(1.37) --
Discontinued operations:
Gain on disposal of
discontinued operations 1.27 -- --
Income (loss) from
discontinued operations (0.70) -- --
Change in accounting
principle (0.04) -- --
Earnings (loss) per share $(2.25) $(1.37) --
Weighted average common
shares outstanding 17,581 17,581 --
Basic -- -- --
EGGHEAD.COM, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Amounts in thousands, except per share data)
Quarter to Date
1998
Costs
related to
restructure
As reported activities Total
(unaudited)(unaudited)(unaudited)
Net Sales:
Retail $44,059 $24,539 $19,520
Ongoing 30,450 --- 30,450
74,509 24,539 49,970
Cost of sales:
Retail 47,355 30,755 16,600
Ongoing 27,410 --- 27,410
74,765 30,755 44,010
Gross margin:
Retail (3,296) (6,216) 2,920
Ongoing 3,040 --- 3,040
==========================
(256) (6,216) 5,960
==========================
Selling and marketing expense 12,945 6,358 6,587
General and administrative 5,560 516 5,044
Amortization of goodwill 432 --- 432
Depreciation 1,091 --- 1,091
Restructure and impairment costs 19,500 19,500 ---
Operating loss (39,784) (32,590) (7,194)
Other (expense) income 443 --- 443
Loss from continuing operations
Before income taxes (39,341) (32,590) (6,751)
Income tax expense --- --- ---
Net loss from continuing
operations before discontinued
operations and change in
accounting principle (39,341) (32,590) (6,751)
Discontinued operations:
Income from discontinued
operations, net of
tax (benefit)expense
of $0 and $1,467 4,300 --- 4,300
Net income before cumulative
effect of change
in accounting principle (35,041) (32,590) (2,451)
Cumulative effect of
change in accounting
principle, net of tax of $454
Net loss $(35,041) $(32,590) (2,451)
Basic loss per share:
Continuing operations $(1.70) $(1.41) ---
Discontinued operations:
Gain on disposal of
discontinued operations
Income (loss) from
discontinued operations 0.19 --- ---
Change in accounting principle
Earnings (loss) per share $(1.51) $(1.41) ---
Weighted average common
shares outstanding 23,144 23,144 ---
Basic
EGGHEAD.COM, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Amounts in thousands, except per share data)
Quarter to Date
1997
Costs
related to
restructure
As reported activities Total
Net Sales:
Retail $83,320 $9,621 $73,699
Ongoing 5,571 --- 5,571
---------------------------
88,891 9,621 79,270
Cost of sales:
Retail 75,203 15,860 59,343
Ongoing 4,719 4,719
---------------------------
79,922 15,860 64,062
Gross margin:
Retail 8,117 (6,239) 14,356
Ongoing 852 852
==========================
8,969 (6,239) 15,208
==========================
Selling and marketing expense 13,453 1,838 11,615
General and administrative 6,346 326 6,020
Amortization of goodwill
Depreciation 1,276 --- 1,276
Restructure and impairment costs 15,597 15,597
Operating loss (27,703) (24,000) (3,703)
Other (expense) income 1,086 --- 1,086
Loss from continuing operations
Before income taxes (26,617) (24,000) (2,617)
Income tax expense (11,608) --- (11,608)
Net loss from continuing
operations before
discontinued operations
and change in
accounting principle (38,225) (24,000) (14,225)
Discontinued operations:
Income from discontinued
operations, net of tax
(benefit) expense of
$0 and $1,467 2,294 --- 2,294
Net income before
cumulative effect of change
in accounting principle (35,931) (24,000) (11,931)
Cumulative effect of change
in accounting principle,
net of tax of $454
Net loss $(35,931) $(24,000) $(11,931)
Basic loss per share:
Continuing operations $(2.17) $(1.36) ---
Discontinued operations:
Gain on disposal of
discontinued operations
Income (loss) from
discontinued operations 0.13 --- ---
Change in accounting principle
Earnings (loss) per share $(2.04) $(1.36) ---
Weighted average common
shares outstanding 17,591 17,591 ---
Basic
CONTACT: Egghead.com Inc. Brian Bender Sir Brian Geoffrey Bender is the Permanent Secretary, of the Department for Business, Enterprise and Regulatory Reform of the United Kingdom Government. He was previously the Permanent Sectretary of the now defunct Department of Trade and Industry. , 509/891-4851 http://www.businesswire.com/cnn/eggs/htm or The Rockey Company John Hough n. 1. Same as Hock, a joint. v. t. 1. Same as Hock, to hamstring. [ imp. & p. p. os> r>; p. pr. & vb. n. os> n. 1. An adz; a hoe. v. t. 1. To cut with a hoe. , 509/891-4094 jhough@rockey-seattle.com |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion