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<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): MAY 23, 1998
EGGHEAD. COM, INC.
(Exact name of registrant as specified in charter)
WASHINGTON 0-16930 91-1296187
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
22705 E. MISSION AVENUE
LIBERTY LAKE, WASHINGTON 99019
(Address of principal executive offices) (Zip Code)
(509) 922-7031
(Registrant's telephone number, including area code)
<PAGE>
ITEM 2. DISPOSITION OF ASSETS
On May 23, 1998, Egghead.com, Inc. (the "Company") closed its distribution
center in Sacramento, California and thereby substantially completed the
disposition of assets in connection with its restructuring relating to the shift
of the Company's business emphasis to Internet commerce, the closure of all of
the Company's retail stores and the closure of its distribution center in
Sacramento, California (collectively, the "Restructuring"). The Company's plan
to undertake the actions included in the Restructuring was disclosed in the
Company's Report on Form 8-K filed on January 28, 1998.
In the Restructuring, the Company disposed of assets with an aggregate book
value of approximately $56.4 million, including, without limitation, the
liquidation of inventory, with an aggregate book value of approximately $46.3
million, from its former retail stores and the sale or abandonment of fixed
assets and leasehold improvements with an aggregate book value of approximately
$10.1 million. The fixed assets and leasehold improvements related to the
Company's former retail stores and the Sacramento distribution center. A
portion of the inventory assets were sold to individual and business consumers
for aggregate cash consideration of approximately $27 million. Such sales were
made at reduced, sale prices determined based on demand. The remainder of the
inventory assets were sold to vendors for credits in the aggregate amount of
approximately $10 million. The amounts of such credits were determined based
on negotiations on a case-by-case basis. The fixed assets and leasehold
improvements were sold to individuals and businesses for aggregate cash
consideration of approximately $100,000. The amount of cash consideration paid
for such assets was determined based on negotiations on a case-by-case basis.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements.
None.
(b) Pro Forma Financial Information
The following pro forma condensed statement of operations gives effect to
the disposition of assets by Egghead.com, Inc. related to the closure of its
retail stores and Sacramento distribution center. The pro forma condensed
statement of operations has been prepared from the historical unaudited
consolidated financial statements of Egghead.com, Inc. as publicly disclosed in
the Company's press release regarding its fourth quarter and fiscal year ended
March 28, 1998. The pro forma condensed financial information is presented for
illustrative purposes only and is not necessarily indicative of the results of
operations that would have actually been reported had the disposition of assets
occurred at the beginning of the fiscal year, nor is it necessarily indicative
of future results of operations.
The balance sheet as of March 28, 1998 includes the effects of the
disposition of assets and, therefore, there are no pro forma adjustments. The
pro forma statement of operations gives effect to the disposition of assets as
if it had occurred on March 29, 1997, the beginning of Egghead's 1998 fiscal
year.
EGGHEAD.COM, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
(Dollars in thousands)
(Please see notes)
<TABLE>
<CAPTION>
ASSETS
March 28, March 28,
1998 Adjustments 1998
-------- ----------- --------
(unaudited) (unaudited) (unaudited)
Current assets:
<S> <C> <C> <C>
Cash and cash equivalents $ 67,381 $ 67,381
Accounts receivable, net 5,670 5,670
Receivable from Joint Venture - -
Merchandise inventories, net 12,923 12,923
Prepaid expenses and other current assets 999 999
Property held for sale 8,047 8,047
------------- -------------- --------------
Total current assets 95,020 95,250
------------- -------------- --------------
Property and equipment, net 2,806 2,806
Goodwill, net 33,225 33,225
Other assets 336 336
------------- -------------- --------------
$131,387 $131,387
============= ============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 15,834 $ 15,834
Accrued liabilities 12,002 12,002
Liabilities related to disposition of CGE division - -
Reserves and liabilities related to restructuring 17,461 17,461
------------- -------------- --------------
Total current liabilities 45,297 45,297
------------- -------------- --------------
Other long-term liabilities 3 3
------------- -------------- --------------
Total liabilities 45,300 45,300
------------- -------------- --------------
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 shares issued
and outstanding 235 235
Additional paid-in capital 160,669 160,669
Retained earnings (deficit) (74,817) (74,817)
------------- -------------- --------------
Total shareholders' equity 86,087 86,087
------------- -------------- --------------
$131,387 $131,387
============= ============== ==============
</TABLE>
<TABLE>
<CAPTION>
EGGHEAD.COM, INC. AND SUBSIDIARIES
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma Consolidated Statements of Operations
(Amounts in thousands, except per share data)
(Please see notes)
Year ended March 28, 1998
-----------------------------------------------------------------------------
Costs
related to
restructure Adjusted
As reported activities Adjustments Total
----------- ----------- ----------- ----------
(unaudited) (unaudited) (unaudited) (unaudited
Net Sales:
<S> <C> <C> <C> <C>
Retail $216,281 $ 24,539 $191,742 (a) $ -
Ongoing 76,789 76,798
------------- ------------- ------------- -------------
293,070 24,539 191,742 76,798
Cost of sales
Retail 190,703 30,755 159,948 (a) -
Ongoing 66,472 66,472
------------- ------------- ------------- -------------
257,175 30,755 159,948 66,472
Gross margin:
Retail 25,578 (6,216) 31,794 (a) -
Ongoing 10,326 10,326
------------- ------------- ------------- -------------
35,904 (6,216) 31,794 10,326
------------- ------------- ------------- -------------
Selling and marketing expense 48,571 6,358 27,237 (b) 14,976
General and administrative 19,495 516 4,923 (c) 14,056
Amortization of goodwill 1,009 1,009
Depreciation 4,800 3,306 (d) 1,494
Restructure and impairment costs 19,500 19,500 -
------------- ------------- ------------- -------------
Operating loss (57,471) (32,590) (3,672) (21,209)
Other (expense) income 2,939 2,939
------------- ------------- ------------- -------------
Loss from continuing operations (54,532) (32,590) (3,672) (18,270)
------------- ------------- ------------- -------------
Before income taxes
Income tax (expense) benefit
------------- ------------- ------------- -------------
Net loss from continuing operations before
discontinued operations and change in
------------- ------------- ------------- -------------
accounting principle $(54,532) $(32,590) $ (3,672) $(18,270)
============= ============= ============= =============
Basic loss per share from continuing
------------- ------------- ------------- -------------
operations $(2.60) $(0.88)
------------- ------------- ------------- -------------
Basic weighted average common shares
outstanding 20,967 20,967
============= ============= ============= =============
</TABLE>
Notes:
(a) Reflects results of closed retail division.
(b) Includes selling and marketing expenses of retail stores.
(c) Reflects the elimination of general and administrative activities related
to the closing of the retail stores and Sacramento distribution center.
(d) Includes depreciation expense of disposed retail, headquarters and
distribution assets.
(c) Exhibits.
27 Financial Data Schedule
-2-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, hereunto duly authorized.
EGGHEAD.COM, INC.
By: /s/ George P. Orban
----------------------------------------
George P. Orban, Chairman of the Board
and Chief Executive Officer
Dated: June 5, 1998
-3-
<PAGE>
EXHIBIT INDEX
-------------
Exhibit Number Title
-------------- -----
27 Financial Data Schedule
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-28-1998
<PERIOD-END> MAR-28-1998
<CASH> 67,381
<SECURITIES> 0
<RECEIVABLES> 8,281
<ALLOWANCES> 2,611
<INVENTORY> 12,923
<CURRENT-ASSETS> 95,020
<PP&E> 5,676
<DEPRECIATION> 2,870
<TOTAL-ASSETS> 131,387
<CURRENT-LIABILITIES> 45,297
<BONDS> 0
0
0
<COMMON> 235
<OTHER-SE> 85,852
<TOTAL-LIABILITY-AND-EQUITY> 131,387
<SALES> 293,079
<TOTAL-REVENUES> 293,079
<CGS> 257,175
<TOTAL-COSTS> 257,175
<OTHER-EXPENSES> 22,338
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 32
<INCOME-PRETAX> (54,532)
<INCOME-TAX> 0
<INCOME-CONTINUING> (54,532)
<DISCONTINUED> 4,300
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (50,232)
<EPS-PRIMARY> (2.40)
<EPS-DILUTED> (2.40)
</TABLE>
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