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Workman Out At Ultimate; Wattles Named CEO

2/16/2005 09:29:00 AM Eastern

Thornton, Colo. — Ultimate Electronics’ president/CEO Dave Workman has left the company along with key members of his management team.

Workman was succeeded by Mark Wattles, the founder and former CEO of Hollywood Entertainment, who engineered last month’s takeover of the ailing A/V specialty chain, which has since entered Chapter 11 bankruptcy protection. He was named CEO by Ultimate’s newly installed and largely hand-picked board, and has brought in seven former Hollywood Video execs to fill top management roles at the company.

“I am excited to be working with some of the talent that led Hollywood Video through its successful turnaround,” Wattles said in a statement. “As a result of these changes, Ultimate is now a large company with management experienced in running a large company. As a company, we want to thank David Workman for his partnership with [former chairman] Bill Pearse, our company’s founder, in building a great company and a great brand.”

Those departing with Workman included senior VP/sales Neal Bobrick and senior VP/services Gerry Demple, among others. Pearse resigned last month along with Ultimate’s entire board as part of the $125 million deal.

Wattle’s new team includes Bill Besselman, formerly VP/strategic planning and analysis at Hollywood, who now holds the same title at Ultimate, and Hollywood’s former senior VP/operations Lon Weingart, who will oversee operations at the CE chain during a six-month consultancy stint. In addition, board director Jim Marcum, the former CFO of Hollywood Video, will assume an active role in Ultimate’s financial operations and restructuring strategy.

“I am confident with this team in place, not only will Ultimate and Soundtrack be great places to shop, but ultimately we will be financially successful as well,” Wattles said. Despite the chain’s woes, which he attributed in part to an overly aggressive growth strategy, Ultimate is fundamentally “a good business,” he said, adding that the reorganization will allow him to fix the company’s financial and operational structure and provide “new opportunities” for its creditors and employees.

The company said it can’t predict when it would file a reorganization plan with the Bankruptcy Court in Wilmington, Del., or when it could emerge from Chapter 11 protection. But the court last week approved a key component of the turnaround, $118.5 million in debtor-in-possession financing.

Separately, Ultimate reported that net sales for the three months, ended Jan. 31, fell 19.4 percent to $195.9 million, and comparable-store sales declined 19 percent. Sales for the full fiscal year, ended Jan. 31, fell 8 percent to $658.3 million, while comp sales dropped 13 percent.

Workman, a former principal of Dakota Sight and Sound, joined Ultimate Electronics in 1979 as a sales consultant and was promoted to store manager in 1982. He was named VP/ sales and store operations in 1985, and was promoted to executive VP/general manager in 1991. He became president/COO in 1992, joined the board of directors in 1993, and was named CEO in 2003.

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