The Spokesman-Review Newspaper
The Spokesman-Review Newspaper The Spokesman-Review
Spokane, Washington  Est. May 19, 1883
Current Temperature
40°F
Current Conditions
Light rain
View complete weather report

Color Scheme

Subscribe now

Restructuring Charges Add Up To Big Loss At Egghead Software Company Posts Fiscal 1997 Loss Of More Than $39 Million

Michael Murphey Staff writer

Egghead Software suffered more losses during its fourth quarter, and company officials expect a return to profitability to be at least two more quarters away.

But, in announcing its year-end results, Egghead said it made important strides in narrowing losses during the fourth quarter. The Spokane-based company is a national reseller of personal computer hardware, software, peripherals and accessories.

“The recent reorganization and related reductions in administration and distribution functions contributed to the year-end improvements in the company’s balance sheets,” George Orban, Egghead’s board chairman, said in a news release Thursday.

Egghead reported a loss of $39.6 million, or $2.25 per share, on sales of $360.7 million during fiscal 1997. That compares with a net loss of $10.7 million, or 62 cents per share, on sales of $403.8 million during fiscal 1996.

For the fourth quarter, ended March 29, Egghead lost $35.9 million, or $2.04 per share, on sales of $88.9 million. That compares with a net loss of $3.1 million, or 18 cents per share, on sales of $96.8 million, during the fourth quarter of fiscal 1996.

Losses for the fourth quarter and the fiscal year, though, include several non-recurring costs:

A $24 million charge for the company’s fourth-quarter reorganization and restructuring;

A $13.1 million non-cash charge related to a change dictated by accounting standards;

A $3.8 million charge related to last year’s sale of Egghead’s corporate, government and education division.

Excluding those charges, company officials say, the fourth-quarter loss from continuing operations was $2.6 million, and the fiscal 1997 loss from continuing operations was $20.2 million.

Egghead’s fourth-quarter reorganization was extensive.

It involved the closing of 70 of 156 Egghead retail stores nationwide, which reduced the number of markets in which Egghead operates from 54 to 26.

The company trimmed 70 workers from its Spokane headquarters staff and closed its Lancaster, Calif., distribution center.

Through the reorganization, Orban said, “The company reduced its inventory from $92.4 million at the end of the third quarter to $49.1 million at year-end.

“Egghead’s cash position increased $13.8 million to $83.5 million at year-end vs. $69.7 million at the end of the third quarter,” he said.

, DataTimes