-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Kh1isbDEiqUUH2w5mYr9KCoSkr8/UZsqx65r9g9wub6lpev9TOqFVg1Sd4ewUXL7 DIyCnf9IRdrMmQoIFzAAtg== 0000276641-97-000002.txt : 19970514 0000276641-97-000002.hdr.sgml : 19970514 ACCESSION NUMBER: 0000276641-97-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970329 FILED AS OF DATE: 19970513 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPIEGEL INC CENTRAL INDEX KEY: 0000276641 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-CATALOG & MAIL-ORDER HOUSES [5961] IRS NUMBER: 362593917 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16126 FILM NUMBER: 97601847 BUSINESS ADDRESS: STREET 1: 3500 LACEY RD CITY: DOWNERS GROVE STATE: IL ZIP: 60515-5432 BUSINESS PHONE: 7089868800 MAIL ADDRESS: STREET 1: 3500 LACEY ROAD CITY: DOWNERS GROVE STATE: IL ZIP: 60515-5432 EX-27 1 ART. 5 FDS FOR 1ST QUARTER 10-Q
5 1,000 3-MOS JAN-03-1998 MAR-29-1997 39,195 0 437,208 8,186 520,934 1,154,062 569,924 177,493 1,881,835 534,786 734,650 118,106 0 0 442,256 1,881,835 569,785 601,812 400,935 400,935 0 0 16,370 (56,233) (25,024) (31,209) 0 0 0 (31,209) (0.28) (0.28)
10-Q 2 - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ UNITED STATES SECURITIES AND EXCHANGE COMMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) /X/ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarter ended March 29, 1997 or / / Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ............. to ............... Commission file number 0-16126 SPIEGEL, INC. (Exact name of registrant as specified in its charter) Delaware 36-2593917 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3500 Lacey Road, Downers Grove, Illinois 60515-5432 (Address of principal executive offices) (Zip Code) 630-986-8800 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS The number of shares outstanding of each of the issuer's classes of common stock, as of May 9,1997 are as follows: Class A non-voting common stock, $1.00 par value 14,623,104 shares Class B voting common stock, $1.00 par value 103,483,298 shares. - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ SPIEGEL,INC. AND SUBSIDIARIES PART I - FINANCIAL INFORMATION Item 1 - Financial Statements Consolidated Balance Sheets, March 29, 1997 and December 28, 1996 Consolidated Statements of Earnings, Three Months Ended March 29, 1997 and March 30, 1996 Consolidated Statements of Cash Flows, Three Months Ended March 29, 1997 and March 30, 1996 Notes to Consolidated Financial Statements Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ Consolidated Balance Sheets ($000s omitted, except per share amounts) March 29, 1997 and December 28, 1996
(unaudited) March 29, December 28, 1997 1996 ------------ ------------ ASSETS Current assets: Cash and cash equivalents $ 39,195 $ 86,917 Receivables, net 429,022 485,242 Inventories 520,934 502,209 Prepaid expenses 86,338 84,634 Refundable income taxes 43,042 16,991 Deferred income tax benefit 35,531 35,542 ------------ ------------ Total current assets 1,154,062 1,211,535 Property and equipment, net 392,431 399,910 Intangible assets, net 165,952 166,275 Other assets 169,390 167,905 ------------ ------------ Total Assets $ 1,881,835 $ 1,945,625 ------------ ------------ ------------ ------------ LIABILITIES and STOCKHOLDERS' EQUITY Current liabilities: Current maturities of debt $ 94,274 $ 89,292 Indebtedness to related parties 20,000 20,000 Accounts payable 165,286 270,973 Accrued liabilities: Salaries and wages 20,189 36,636 General taxes 113,082 127,170 Allowance for returns 25,791 41,691 Other accrued liabilities 96,164 109,634 ------------ ------------ Total current liabilities 534,786 695,396 Long-term debt, excluding current maturities 709,650 676,656 Indebtedness to related parties 25,000 -- Deferred income taxes 52,037 52,024 ------------ ------------ Total liabilities 1,321,473 1,424,076 Stockholders' equity: Class A non-voting common stock, $1.00 par value; authorized 16,000,000 shares; issued 14,623,104 shares at March 29, 1997 and 14,618,404 at December 28, 1996 14,623 14,618 Class B voting common stock, $1.00 par value; authorized 104,000,000 shares; issued 103,483,298 shares at March 29, 1997 and 93,141,654 at December 28, 1996 103,483 93,142 Additional paid-in capital 271,504 211,828 Minimum pension liability (9,365) (9,365) Retained earnings 180,117 211,326 ------------ ------------ Total stockholders' equity 560,362 521,549 ------------ ------------ $ 1,881,835 $ 1,945,625 ------------ ------------ ------------ ------------
[FN] See accompanying notes to consolidated financial statements. - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ Consolidated Statements of Earnings ($000s omitted, except per share amounts) Fiscal Periods Ended March 29, 1997 and March 30, 1996 (unaudited)
Three Months Ended March 29, March 30, 1997 1996 ----------- ----------- Net sales and other revenues: Net sales $ 569,785 $ 589,461 Finance revenue 22,528 28,341 Other revenue 9,499 16,879 ---------- ------------ 601,812 634,681 Cost of sales and operating expenses: Cost of sales, including buying and occupancy expenses 400,935 403,892 Selling, general and administrative expenses 240,740 234,631 --------- ----------- 641,675 638,523 ---------- ------------ Operating income (loss) (39,863) (3,842) Interest expense 16,370 21,506 ----------- ------------ Earnings (loss) before income taxes (56,233) (25,348) Income tax benefit (25,024) (11,027) ----------- ----------- Net earnings (loss) $ (31,209) $ (14,321) ----------- ----------- ----------- ----------- Net earnings (loss) per common share $ (0.28) $ (0.13) ----------- ----------- ----------- ----------- Weighted average number of common shares outstanding 110,261,774 107,746,498 ----------- ----------- ----------- -----------
[FN] See accompanying notes to consolidated financial statements. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Consolidated Statements of Cash Flows ($000s omitted) Three months ended March 29, 1997 and March 30, 1996 (unaudited)
Three Months Ended March 29, March 30, 1997 1996 ------------ ------------ Cash flows from operating activities: Net earnings (loss) $ (31,209) $ (14,321) Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 20,467 19,815 Change in assets and liabilities: Increase (decrease) in sold customer receivables (113,572) 70,000 Decrease in receivables, net 169,792 88,337 (Increase) decrease in inventories (18,725) 17,315 (Increase) decrease in prepaid expenses (1,704) 18,573 Decrease in accounts payable (105,687) (99,726) Decrease in accrued liabilities (59,904) (44,385) Decrease in income taxes (26,027) (11,223) ------------ ------------ Total adjustments (135,360) 58,706 ------------ ------------ Net cash provided by (used in) operating activities $ (166,569) $ 44,385 ------------ ------------ Cash flows from investing activities: Net additions to property and equipment (7,356) (9,052) Net additions to other assets (6,795) (15,958) ------------ ------------ Net cash used in investing activities (14,151) (25,010) ------------ ------------ Cash flows from financing activities: Issuance of debt 108,000 310,000 Payment of debt (45,024) (312,518) Issuance of Class B common stock 70,000 -- Exercise of stock options 22 -- ------------ ------------ Net cash provided by (used in) financing activities 132,998 (2,518) ------------ ------------ Net change in cash and cash equivalents (47,722) 16,857 Cash and cash equivalents at beginning of year 86,917 42,302 ------------ ------------ Cash and cash equivalents at end of period $ 39,195 $ 59,159 ------------ ------------ ------------ ------------ Supplemental cash flow information: Cash paid during the period for: Interest $ 12,926 $ 23,596 Income taxes $ 3,170 $ 1,070 ------------ ------------ ------------ ------------
[FN] See accompanying notes to consolidated financial statements. - ------------------------------------------------------------------------- - ------------------------------------------------------------------------- Spiegel, Inc. and Subsidiaries Notes to Consolidated Financial Statements ($000s omitted, except per share amounts) (unaudited) (1) Basis of Presentation The consolidated financial statements at March 29, 1997 are unaudited and have been prepared from the books and records of the registrant in accordance with generally accepted accounting principles and the rules and regulations of the Securities and Exchange Commission. All adjustments (consisting only of normal recurring accruals) which are, in the opinion of management, necessary for a fair presentation of financial position and operating results for the interim periods are reflected. These financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the registrant's most recent Annual Report on Form 10-K, which includes financial statements for the year ended December 28, 1996. Due to the seasonality of the registrant's business, the results for interim periods are not necessarily indicative of the results for the year. (2) Reclassifications Certain prior period amounts have been reclassified to conform to the current presentation. (3) Indebtedness to related parties In addition to the $20,000 loan from the Company's majority shareholder, Spiegel Holdings, Inc., which existed as of December 28, 1996, the Company received a term loan in the first quarter from 3 Suisses BVG (a wholly owned subsidiary of Otto Versand) for $25,000. The loan bears interest at a variable rate based on LIBOR plus a margin. This loan is due in its entirety in August, 1999. (4) Issuance of Class B common stock On March 7, 1997, the Company issued 10,341,644 shares of Class B voting common stock for $70,000 to its majority shareholder, Spiegel Holdings, Inc. The proceeds from this issuance will be used primarily to fund capital needs, including the continued expansion of Eddie Bauer. - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (000s omitted, except per share amounts) Results of Operations Three Months Ended March 29, 1997 As Compared To Three Months Ended March 30, 1996 - ---------------------------------------------------------------------------- Net sales for the three months ended March 29, 1997, were $569,785 which was a 3.3% decrease compared to net sales of $589,461 for the three months ended March 30, 1996. This decrease was driven by lower Spiegel Catalog net sales due to the decreased productivity of catalog mailings. In addition, sales were also impacted by the tightened credit policies on the Company's Preferred Credit card as a significant portion of Spiegel Catalog sales are generated on this propriety credit card. These declines were offset somewhat by increases in net sales at Eddie Bauer. Comparable store sales for Eddie Bauer retail stores increased 4% in the first quarter of 1997 compared to the first quarter of 1996. Finance revenue for the first quarter of 1997 was $22,528 compared to $28,341 for the same period in 1996. This decrease was primarily the result of a significantly lower level of average owned customer receivables in the first quarter of 1997 compared to 1996 due to sales of customer receivables completed in 1996 and to decreases in sales on the Company's proprietary credit card. Other revenue for the first quarter of 1997 decreased $7,380 as compared to the first quarter of 1996 due to the sale of the Company's technology consulting subsidiary at the end of the first quarter of 1996. The gross profit margin on net sales decreased to 29.6% for the three months ended March 29, 1997 compared to 31.5% for the comparable 1996 period. This decrease was primarily driven by lower gross profit margin at Spiegel Catalog resulting from a higher percentage of clearance catalog sales compared to sales from in-season, regular priced catalogs. Somewhat offsetting this was an increase in the gross profit margin at Eddie Bauer. Selling, general and administrative expenses as a percentage of total revenues for the three months ended March 29, 1997 and March 30, 1996 were 40.0% and 37.0%, respectively. This increase is due to several factors including less leverage of selling, general and administrative expenses, especially advertising expense, at Spiegel Catalog as a result of lower productivity from catalog offerings. In addition, the 1996 ratio was favorably impacted by the gain of approximately $8,000 realized on the sale of the Company's information technology subsidiary. Finally, the 1996 ratio was favorably impacted by a $4 million reversal of the provision for doubtful accounts on customer receivables sold in the first quarter of 1996. Interest expense for the three months ended March 29, 1997 decreased 23.9% to $16,370 compared to $21,506 for the three months ended March 30, 1996. This decrease was due to lower average debt levels offset slightly by higher effective interest rates. Debt levels have declined as a result of a higher lever of customer receivables sold and the Company's lower inventory levels. - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- Seasonality and Quarterly Fluctuations: The Company, like other retailers, experiences seasonal fluctuations in its merchandise sales and net earnings. Historically, a disproportionate amount of the Company's net sales and a majority of its net earnings have been realized during the fourth quarter. Accordingly, the results for the individual quarters are not necessarily indicative of the results to be expected for the entire year. Liquidity and Capital Resources: The Company has historically met its operating and cash requirements through funds generated from operations, the sale of customer accounts receivable, and the issuance of debt and common stock. Total customer receivables sold were $1,350,158 at March 29, 1997, $1,463,730 at December 28, 1996 and $1,250,000 at March 30, 1996. Net cash used by operating activities was $166,569 for the three month period ended March 29, 1997. Significant uses of cash for the 1997 quarter were seasonal decreases in accounts payable and accrued liabilities of approximately $192,000 and funding of the $31,209 net loss. These were offset somewhat by a $56,220 net decrease in owned receivables during the 1997 quarter. For the three month period ended March 30, 1996, there was net cash provided by operations of $44,385. Significant sources of cash for the first quarter of 1996 included a net decrease in owned receivables of $158,337 and decreases in inventories and prepaids totaling approximately $36,000. These sources were somewhat offset by decreases in accounts payable and accrued liabilities of approximately $155,000 during the first quarter of 1996. Net additions to property and equipment for the three months ended March 29, 1997 were $7,356 compared to $9,052 for the first quarter of 1996. The capital spending in 1997 was primarily related to continued Eddie Bauer retail store expansion. On March 7, 1997, the Company issued 10,341,644 shares of Class B voting common stock for $70,000 to its majority shareholder, Spiegel Holdings, Inc. The proceeds from this issuance will be primarily used to fund capital needs, including continued expansion of Eddie Bauer. During the three months ended March 29, 1997, the Company incurred approximately $2,500 of expenditures related to the nonrecurring charge taken in 1993. The charge provided for the estimated impact of closing certain of the Company's existing catalog distribution facilities. Expenditures incurred during the first quarter of 1997 were primarily for closing costs relating to the warehouse buildings. All buildings associated with the reserve have now been sold or transferred to third parties. There is no reserve balance remaining. In February 1997, the FASB issued SFAS No. 128, "Earnings per Share", effective for both interim and annual periods ending after December 15, 1997. The Company will adopt the new standard, as required, in the fourth quarter of 1997. For the quarter ended March 29, 1997, SFAS No. 128 would not have had a material impact on the Company's loss per share calculation. The Company believes that its cash on hand, together with cash flows anticipated to be generated from operations, borrowings under its existing credit facilities, sales of customer receivables and other available sources of funds, will be adequate to fund the Company's capital and operating requirements for the foreseeable future. Forward Looking Statements: This report contains statements which are forward looking statements within the meaning of applicable federal securities laws and are based upon the Company's current expectations and assumptions. Such forward looking statements are subject to a number of risks and uncertainties which could cause actual results to materially differ from those anticipated including but not limited to, financial strength and performance of the retail and direct marketing industry, changes in consumer spending patterns, dependence on the securitization of accounts receivable to fund operations, the impact of competitive activities, inventory risks due to shifts in the market demand, risks associated with collections on the Company's credit card portfolios, interest rate fluctuations, and postal rate, paper or printing cost increases, as well as other risks indicated in other filings with the Securities and Exchange Commission such as the Company's most recent Form 10-K. - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SPIEGEL, INC.
Signature Title Date - ------------------------- ------------------------ ---------------- /s/ James W. Sievers Senior Vice President May 13, 1997 James W. Sievers (Chief Financial Officer)
-----END PRIVACY-ENHANCED MESSAGE-----