Delaware		04-3416255
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

		Page
PART I.    FINANCIAL INFORMATION
Item 1.    Financial Statements (unaudited):
Condensed Consolidated Balance Sheets		3
Condensed Consolidated Statements of Operations		4
Condensed Consolidated Statement of Stockholders’ Equity		5
Condensed Consolidated Statements of Cash Flows		6
Notes to Condensed Consolidated Financial Statements		7
Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations		12
Item 3.    Quantitative and Qualitative Disclosures About Market Risk		20
PART II.    OTHER INFORMATION
Item 1.    Legal Proceedings		21
Item 4.    Controls and Procedures		21
Item 6.    Exhibits and Reports on Form 8-K		21
Signatures		22
Certifications		23

		September 29, 2002				December 30, 2001
		(unaudited)
Assets
Current assets:
Cash and cash equivalents		$	37,040			$	39,518
Marketable securities			25,201				39,238
Accounts receivable, net			14,613				10,171
Inventories			4,907				6,659
Prepaid marketing expenses			2,427				12,539
Other current assets			2,987				1,500
Total current assets			87,175				109,625
Fixed assets, net of accumulated depreciation of $28,785 and $23,492, respectively			17,988				23,948
Intangible assets, net			5,747				7,888
Goodwill, net			5,694				14,599
Prepaid marketing expenses			13,168				14,884
Deposits and other assets			378				354
Total assets		$	130,150			$	171,298
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	23,111			$	20,309
Accrued compensation			2,710				2,608
Accrued marketing expenses			2,400				2,249
Other current liabilities			1,650				2,031
Current portion of capital lease obligations			667				1,612
Total current liabilities			30,538				28,809
Capital lease obligations, less current portion			224				638
Stockholders’ equity:
Preferred stock, $.0001 par value, 10,000,000 shares authorized, no shares outstanding			—				—
Common stock, $.0001 par value, stated at amounts paid in:
250,000,000 authorized, 68,207,750 and 66,731,818 issued and outstanding			744,392				742,949
Deferred stock-based compensation			(889	)			(1,400	)
Accumulated deficit			(644,115	)			(599,698	)
Total stockholders’ equity			99,388				141,851
Total liabilities and stockholders’ equity		$	130,150			$	171,298

		Three Months Ended								Nine Months Ended
		Sept. 29, 2002				Sept. 30, 2001				Sept. 29, 2002				Sept. 30, 2001
Net sales		$	47,352			$	34,978			$	138,903			$	101,782
Costs and expenses:
Cost of sales			38,018				29,001				111,800				85,261
Fulfillment and order processing(1)			6,633				6,556				19,800				21,239
Marketing and sales(2)			3,582				7,711				19,887				26,916
Technology and content(3)			2,516				4,970				9,326				15,530
General and administrative(4)			2,884				2,961				8,685				10,528
Impairment and restructuring charges			—				7,667				2,450				14,961
Amortization of intangible assets			712				9,201				2,142				28,593
Amortization of stock-based compensation			258				1,417				1,366				5,866
Total costs and expenses			54,603				69,484				175,456				208,894
Operating loss			(7,251	)			(34,506	)			(36,553	)			(107,112	)
Interest income, net			300				847				1,041				3,780
Loss before cumulative effect of change in accounting principle			(6,951	)			(33,659	)			(35,512	)			(103,332	)
Cumulative effect of change in accounting principle			—				—				(8,905	)			(4,121	)
Extraordinary gain on renegotiation of equity guarantee			—				7,500				—				7,500
Net loss		$	(6,951	)		$	(26,159	)		$	(44,417	)		$	(99,953	)
Basic and diluted loss per share:
Loss before cumulative effect of change in accounting principle and extraordinary gain		$	(0.10	)		$	(0.50	)		$	(0.53	)		$	(1.57	)
Cumulative effect of change in accounting principle			—				—				(0.13	)			(0.06	)
Extraordinary Gain			—				0.11				—				0.11
		$	(0.10	)		$	(0.39	)		$	(0.66	)		$	(1.52	)
Weighted average shares outstanding used to compute basic and diluted loss per share			68,130,576				66,261,576				67,588,023				65,890,933

		Common Stock					Deferred Stock-Based Compensation				Accumulated Deficit				Total
		Shares		Amount
Balance at December 30, 2001		66,731,818		$	742,949		$	(1,400	)		$	(599,698	)		$	141,851
Exercise of stock options		1,162,407			494			—								494
Employee stock purchase plan		61,119			94			—				—				94
Issuance of common stock to settle fair market value guarantee		252,406			—			—				—				—
Deferred stock-based compensation, net of cancellations of $286		—			855			(855	)			—				—
Amortization of stock-based compensation		—			—			1,366				—				1,366
Net loss		—			—			—				(44,417	)			(44,417	)
Balance at September 29, 2002		68,207,750		$	744,392		$	(889	)		$	(644,115	)		$	99,388
			</