Letter from President and CEO Jeff Sheahan
Posted: August 16, 2001
To Egghead.com's Shareholders, Customers, and Vendors:
During the past year, the financial markets in general, and the dot.com sector in particular, have experienced a dramatic downturn. Additionally, over the past six to nine months there has been an across-the-board decline in the sale of technology products, which has affected manufacturers, retailers, and direct marketers alike. Though Egghead.com has made solid progress over the last several quarters in raising margins, lowering operating costs, and reducing losses, the above factors have created an extremely challenging business environment just as we were attempting to strategically re-position the company.
As a result, over the past few months, Egghead.com's management team and Board of Directors have been working closely with key advisors to explore a variety of restructuring options, including mergers, acquisitions, sale of the company, and both private and public sources of financing. While many of these led to very substantial discussions, , the continued softness in the capital markets coupled with a dramatic and unexpected downturn in our sales over the past eight weeks regrettably brought these discussions to an end.
In considering the needs of all our stakeholders - shareholders, employees, customers, and suppliers - we determined that the best course of action was to enter into an agreement to sell certain assets to Fry's Electronics as part of a Chapter 11 restructuring. Accordingly, we intend to file for protection under Chapter 11 of the U.S. Bankruptcy Code this week.
Business will continue as usual pending close of the sale. Once the sale is finalized, Fry's is expected to operate the Egghead.com site. Fry's Electronics is a privately held chain of one-stop electronics shopping superstores based in San Jose, CA.
Though these actions were not the outcome we had hoped or worked for, we are pleased with Fry's offer to purchase the assets of the company and continue running the business, as the Egghead brand name is a strong and vibrant one.
Please continue to monitor this site to keep informed of any further, material developments. In the mean time, thank you for your support.
Sincerely,
Jeff Sheahan
President & CEO
Egghead.com, Inc.
Posted: August 16, 2001
To Egghead.com's Shareholders, Customers, and Vendors:
During the past year, the financial markets in general, and the dot.com sector in particular, have experienced a dramatic downturn. Additionally, over the past six to nine months there has been an across-the-board decline in the sale of technology products, which has affected manufacturers, retailers, and direct marketers alike. Though Egghead.com has made solid progress over the last several quarters in raising margins, lowering operating costs, and reducing losses, the above factors have created an extremely challenging business environment just as we were attempting to strategically re-position the company.
As a result, over the past few months, Egghead.com's management team and Board of Directors have been working closely with key advisors to explore a variety of restructuring options, including mergers, acquisitions, sale of the company, and both private and public sources of financing. While many of these led to very substantial discussions, , the continued softness in the capital markets coupled with a dramatic and unexpected downturn in our sales over the past eight weeks regrettably brought these discussions to an end.
In considering the needs of all our stakeholders - shareholders, employees, customers, and suppliers - we determined that the best course of action was to enter into an agreement to sell certain assets to Fry's Electronics as part of a Chapter 11 restructuring. Accordingly, we intend to file for protection under Chapter 11 of the U.S. Bankruptcy Code this week.
Business will continue as usual pending close of the sale. Once the sale is finalized, Fry's is expected to operate the Egghead.com site. Fry's Electronics is a privately held chain of one-stop electronics shopping superstores based in San Jose, CA.
Though these actions were not the outcome we had hoped or worked for, we are pleased with Fry's offer to purchase the assets of the company and continue running the business, as the Egghead brand name is a strong and vibrant one.
Please continue to monitor this site to keep informed of any further, material developments. In the mean time, thank you for your support.
Sincerely,
Jeff Sheahan
President & CEO
Egghead.com, Inc.
