Egghead.com Reports Fourth Quarter Results; Details Successful Merger Integration, Strong Holiday Performance.Business Editors MENLO PARK Menlo Park. 1 Residential city (1990 pop. 28,040), San Mateo co., W Calif.; inc. 1874. Electronic equipment and aerospace products are manufactured in the city. Menlo College and a Stanford Univ. research institute are there. 2 Uninc. , Calif.--(BUSINESS WIRE)--Feb. 23, 1999 Egghead.com(R), Inc. (Nasdaq: EGGS), a leading 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 real-time 1. real-time - Describes an application which requires a program to respond to stimuli within some small upper limit of response time (typically milli- or microseconds). Process control at a chemical plant is the classic example. retailer, today announced financial results for its fourth quarter and year ended December December: see month. 31, 1999, and discussed the success of its recent merger between Egghead.com and Onsale, Inc. Revenue for the fourth quarter of 1999 was $146.1 million, compared to combined revenues of $100.9 million in the comparable quarter a year ago, or a 45% increase. Net loss before merger costs for the quarter was $38.9 million, or $1.05 per share on 37.1 million weighted average shares outstanding (both basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ), compared to a net loss of $12.0 million or $0.36 per share in the comparable quarter a year ago. Including one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. merger costs, the net loss for the quarter was $90.4 million or $2.43 per share on 37.1 million weighted average shares outstanding (both basic and diluted). For the year, revenue was $514.8 million, a 44% increase over combined revenues of $356.5 million in 1998.
Condensed Consolidated Statement of Operations
(In millions of dollars, except per share data)
(unaudited)
Three Months Ended Twelve Months
Dec. 31, Dec. 31,
1999 1998 1999 1998
Total revenues 146.1 100.9 514.8 356.4
Gross profit 6.0 8.8 27.6 36.4
Total operating
expenses excluding
merger costs 46.4 25.5 138.1 94.6
Loss from operations
excluding merger costs (40.4) (16.7) (110.5) (58.2)
Merger Costs (51.5) -- (52.2) --
Net loss (90.4) (12.0) (154.9) (49.1)
Loss per share
excluding merger
costs (1.05) (.36) (2.84) (1.50)
Loss per share
including merger
costs (2.43) (.36) (4.29) (1.50)
Diluted weighted
average common shares 37.1 33.1 36.1 32.8
"Revenues for the quarter showed a 45% increase over the same period last year, which exceeded our previous projections, while expenses were in line, resulting in a better bottom line performance than the analysts' expectations." said Jerry Jer·ry n. pl. Jer·ries Chiefly British Slang A German, especially a German soldier. [Alteration of German. Kaplan Kaplan may refer to one of the following:
"Our biggest accomplishment during the quarter was to close the merger on November November: see month. 19, and execute quickly and effectively on merging our web sites, traffic, advertising, and operations. Other highlights include significant increases in traffic and customers, as well as strong repeat buying and increased spending per customer. Overall, the new Egghead.com emerged from this critical holiday season as one of the top retailing brands and destinations on the Internet," he added. The Merger The company's primary goal during the fourth quarter was to complete the merger between Egghead.com Inc. and Onsale, Inc., including fully integrating the companies' web sites and related operations. This was carried out successfully, and the company launched the newly combined site on Monday Monday: see week. , November 22. Former customers of both companies were able to use their existing accounts to place orders; customer service inquiries were consolidated to the company's new joint customer service facility in Vancouver Vancouver, city, Canada Vancouver, city (1991 pop. 471,844), SW British Columbia, Canada, on Burrard Inlet of the Strait of Georgia, opposite Vancouver Island and just N of the Wash. border. , WA; and new orders were routed to the appropriate warehouse facilities. Consolidated Efforts Increase Brand Awareness, Drive Customers During the second half of the quarter the company launched a consolidated national advertising campaign designed to build brand awareness around the Egghead.com brand, and established a new tag line tag line also tag·line n. 1. An ending line, as in a play or joke, that makes a point. 2. An often repeated phrase associated with an individual, organization, or commercial product; a slogan. Noun 1. : "The Computer Store Inside Your Computer." The campaign included extensive television, radio, print and online ads. The major focus of this effort was to take advantage of the widely recognized Egghead name while updating the company's image. Company marketing studies show that this was successful and Egghead.com emerged from the holiday season with one of the best known brand names on the Internet. Strong Growth Egghead.com demonstrated strong growth in a number of important measures. During the fourth quarter, a total of 325,000 new customers registered to bid or buy. After combining the databases of the two companies and eliminating the overlap o·ver·lap n. 1. A part or portion of a structure that extends or projects over another. 2. The suturing of one layer of tissue above or under another layer to provide additional strength, often used in dental surgery. v. , the company ended the quarter with a total registration base of almost three million. During the quarter, 321,000 unique buyers made an average of 2.8 purchases in the quarter with an average order size of $169. The 12-month average spending per customer rose to $811 compared with $765 in the previous quarter (based on Onsale's historical customer base for the appropriate time periods). Repeat customers accounted for 71 percent of the orders. Fourth Quarter Highlights Responding to customer requests, Egghead established open accounts for businesses and educational institutions in November 1999, enabling these organizations to obtain credit lines and use purchase orders to buy products directly through Egghead.com's web site. The availability of open accounts streamlines the process for business customers and encourages repeat business. Previously customers could only purchase using credit cards; open accounts give customers added flexibility and reduce the credit card transaction fees paid by Egghead. Egghead.com Ranked Among Top E-Commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. Sites In December several independent sources ranked Egghead.com among the top e-commerce sites for the holiday season. Media Metrix, an independent reporting firm measuring Internet and digital media audience usage, showed Egghead.com as one of the top ten e-commerce sites for the week ending December 19, 1999. NextCard's Top Ten eHoliday Retail Index, a respected barometer of holiday online spending activity, ranked Egghead first in total spending per their cardholders during the holiday season (November 15 through December 31, 1999). In another study by Nielsen/NetRatings, Egghead.com attracted the most visits of any computer and software reseller An organization that sells hardware and software to the general public. Resellers purchase products from software publishers and hardware manufacturers. web site between November 15 and December 19, 1999. Subsequent Financing Event The company has signed an agreement with Acqua Wellington North Wellington North was a federal electoral district represented in the Canadian House of Commons from 1867 to 1953. It was located in the province of Ontario. It was created by the British North America Act, 1867 which divided the County of Wellington into North, South and American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Equities Fund, Ltd., a multi-billion-dollar fund management company, to purchase up to $100 million of common stock over the next nine months at Egghead.com's option. The stock will be purchased at a small discount to market with no commissions, warrants or other costs, and Egghead.com will control the timing and amount of stock sold. About Egghead.com The new Egghead.com (Nasdaq: EGGS) is a leading Internet retailer specializing in technology products for the office and home. Egghead merged with Onsale, Inc. in November 1999, and offers a wide range of items from computer hardware and software to consumer electronics, sporting goods Noun 1. sporting goods - sports equipment sold as a commodity commodity, trade good, good - articles of commerce sports equipment - equipment needed to participate in a particular sport and vacation VACATION. That period of time between the end of one term and beginning of another. During vacation, rules and orders are made in such cases as are urgent, by a judge at his chambers. packages. Its auction site offers bargains on excess and closeout closeout, closure the finalization of a feeding program in a feedlot. The cattle are sold and a balance sheet is struck which includes the costs of feeding and housing or confining them. 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. . Egghead.com combines broad selection, low prices and excellent service to provide an outstanding online shopping experience for businesses and consumers. Egghead.com is located on the Internet at www.egghead.com. Note to Editors: Egghead.com and Onsale are registered trademarks of Egghead.com, Inc. All other companies and their brand names mentioned are trademarks or registered trademarks of their respective holders. This press release contains "forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. " statements, including projections about our business, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. For example, statements in the future tense future tense n. A verb tense expressing future time. Noun 1. future tense - a verb tense that expresses actions or states in the future future , and statements that we "expect", "plan", "estimate", "anticipate" or "believe", are 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. . These forward-looking statements are based on information available to us at the time of this release and we assume no obligation to update any such forward-looking statements. The statements in this release are not guarantees of future performance and actual results could differ materially from our current expectations as a result of numerous factors. For example: additional issuances of our common stock under our agreement with Acqua Wellington Wellington, city (1996 pop. 157,647; urban agglomeration 334,051), capital of New Zealand, extreme S North Island, on Port Nicholson, an inlet of Cook Strait. may have the effect of lowering the market price of our common stock; it may be more difficult than we anticipate, as a result of continued strong competition, to increase our customer base, average spending, or gross margins; and we may encounter unexpected difficulties in implementing our business plans. These and other risks and uncertainties associated with our business are detailed in our most recent 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. and Form 10-Q Form 10-Q See 10-Q. , and the prospectus and any supplements filed in connection with the registration statement covering this offering, which are on file with the SEC and available through www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. .
Egghead.com, Inc.
BALANCE SHEETS
(in thousands)
(unaudited)
December 31, December 31,
1999 1998
ASSETS
Current assets:
Cash and cash
equivalents $ 68,223 $145,475
Short term
investments 18,000 20,696
Accounts receivable,
net 12,782 7,535
Merchandise
inventory 17,900 23,408
Prepaid expenses
and other
current assets 1,461 1,243
-------- --------
Total current
assets 118,366 198,357
Property and
equipment, net 9,513 13,220
Investment in
joint venture 799 1,800
Goodwill, net -- 31,631
Other assets 452 603
======== ========
Total assets $129,130 $245,611
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts
payable $ 34,512 $ 26,148
Accrued
expenses 29,168 17,586
Deferred
revenue 7,646 1,836
Reserves & liabilities
related to
restructuring 2,336 6,517
-------- --------
Total current
liabilities 73,662 52,087
Long-term liabilities 2,046 2,016
Total stockholders' equity 53,422 191,508
======== ========
Total liabilities and
stockholders' equity $129,130 $245,611
======== ========
Egghead.com, Inc.
STATEMENTS OF OPERATIONS
(amounts in thousands, except per share data)
(unaudited)
Three months ended Years ended
December 31, December 31,
1999 1998 1999 1998
Revenue:
Online $ 142,973 $ 99,353 $ 503,171 $ 352,491
Commission and
other revenue 3,165 1,572 11,633 3,981
-------- ------- ------- -------
Total revenue 146,138 100,925 514,804 356,472
Cost of online
revenue 140,122 92,144 487,177 320,086
-------- ------- ------- -------
Gross profit:
Online 2,851 7,209 15,994 32,405
Commission and
other revenue 3,165 1,572 11,633 3,981
-------- ------- ------- -------
Total gross
profit 6,016 8,781 27,627 36,386
-------- ------- ------- -------
Operating expenses:
Sales and
marketing 35,122 17,555 101,753 62,272
General and
administrative 6,726 4,439 22,017 18,783
Engineering 4,345 3,041 15,521 11,821
Amortization of
goodwill 245 430 1,534 1,708
Merger Costs 51,507 -- 52,215 --
Restructuring and
impairment costs -- -- (2,735) --
-------- ------- ------- -------
Total operating
expenses 97,945 25,465 190,305 94,584
-------- ------- ------- -------
Loss from
operations (91,929) (16,684) (162,678) (58,198)
Equity in net loss
of joint venture (361) -- (1,001) (200)
Interest and other
income, net 1,926 4,672 8,750 9,309
-------- ------- ------- -------
Loss from continuing
operations before
Net loss $ (90,364) $ (12,012) $(154,929) $ (49,089)
======== ======= ======= =======
Net loss per share -
basic and
diluted ($ 2.43) ($ 0.36) ($ 4.29) ($ 1.50)
======== ======= ======= =======
Weighted average
common shares:
Basic and diluted 37,127 33,095 36,146 32,834
======== ======= ======= =======
On November 19, 1999, the Company acquired Egghead.com, Inc. ("Old Egghead") and changed its name from Onsale, Inc. to Egghead.com, Inc. This acquisition was accounted for as a pooling of interests Pooling of Interests An accounting method, used in mergers and acquisitions, where the balance sheet items of the two companies are simply added together. Notes: The opposite of pooling of interests is the purchase acquisition method. . The financial statements for the three months ended December 31, 1999 and 1998 and the years ended December 31, 1999 and 1998 reflect the the Company's financial position and results of operations as if Old Egghead was a wholly-owned subsidiary of the Company since inception. Old Egghead used a 52/53 week fiscal year that ended on the Saturday Saturday: see week; Sabbath. nearest March 31; for convenience, these fiscal years are referred to as "March 31." The consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge combine the financial position of Old Egghead as of March 31, 1999 with the financial position of Onsale as of December 31, 1998. The results of operations of Old Egghead for the three months ended December 31, 1999 and 1998 and fiscal year ended March 31, 1999 are combined with Onsale's results of operations for the three months ended December 31, 1999 and 1998 and the year ended December 31, 1998, respectively. The operations of Old Egghead for the three month period ended March 31, 1999, resulting in 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 and a net loss of $42.3 million and $12.8 million, respectively, have been included in the statement of operations See Income statement. for the year ended December 31, 1998 and for year ended December 31, 1999. |
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