The Ultimate Boondoggle?What Happened to Ultimate Electronics?
Notice he didn't include shareholders in that mix. In February, Ultimate indicated its shares likely would be worthless after reorganization. Soon after, a group of shareholders asked the U.S. Trustee to appoint an official equity holders committee to represent outside shareholders. These parties likely believe Ultimate will have equity value beyond bank and vendor debt over time. Ultimate doesn't believe that will be so.
Sales for the fourth quarter ended January 31 were preliminarily reported at about $195.9 million, down 19.4 percent from the fourth quarter a year before. Same-store sales declined about 19 percent. Preliminary sales numbers for fiscal 2005, ended January 31, 2005, were about $658.3 million, down eight percent from fiscal 2004. Same-store sales declined about 13 percent for the year.
Meanwhile, the bankruptcy court gave final approval to the $118.5 million DIP financing. Ultimate, however, defaulted on it on March 16. The lenders agreed to a waiver, provided Wattles and his team promptly present a revised business plan. On March 21, Ultimate's board approved a plan to close 30 stores and lay off about 900 employees. In the process, Ultimate will completely exit Iowa, South Dakota, Texas and Utah, as well as the Kansas City market. Liquidation sales for the affected stores will begin this month and end around June 30. Adding these store closings to a handful of others that occurred early this year, Ultimate said it will operate only 32 stores by July. On March 22, about 65 employees at headquarters were either terminated or told they would be laid off after the store closings.