-----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, P7ZgLlr0kKz745mYqT2UOitipjyD/04vGGjTHnVA1gllFbMl0/3NYKzobKovPqNy Gp/Eo8woESeon+DBUPVchQ== 0000276641-95-000006.txt : 19960716 0000276641-95-000006.hdr.sgml : 19960716 ACCESSION NUMBER: 0000276641-95-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPIEGEL INC CENTRAL INDEX KEY: 0000276641 STANDARD INDUSTRIAL CLASSIFICATION: 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: 95592001 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 3RD QUARTER 10-Q
5 1,000 9-MOS DEC-31-1995 SEP-30-1995 32,092 0 890,955 42,795 708,514 1,782,288 570,171 168,259 2,518,427 803,574 1,150,911 107,747 0 0 403,885 2,518,427 1,837,252 2,064,830 1,274,601 1,274,601 0 (7,892) 76,217 (83,202) (36,309) (46,893) 0 0 0 (46,893) (0.43) (0.43)
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 September 30, 1995 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) 708-986-8800 (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 November 8, 1995 are as follows: Class A non-voting common stock, $1.00 par value 14,604,844 shares Class B voting common stock, $1.00 par value 93,141,654 shares. - - - ------------------------------------------------------------------------------ - - - ------------------------------------------------------------------------------ SPIEGEL, INC. AND SUBSIDIARIES Due to the seasonality of the registrant's business, the results for the three and nine month periods are not necessarily indicative of the results for the year. The financial statements have been prepared from the books and records of the registrant. They reflect all adjustments which are, in the opinion of management, necessary to a fair presentation of the results for the interim periods. These financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the registrant's Annual Report on Form 10-K, which includes financial statements for the year ended December 31, 1994. PART I - FINANCIAL INFORMATION Item 1 - Financial Statements Consolidated Balance Sheets, September 30, 1995 and December 31, 1994 Consolidated Statements of Earnings, Three and Nine Months Ended September 30, 1995 and October 1, 1994 Consolidated Statements of Cash Flows, Three and Nine Months Ended September 30, 1995 and October 1, 1994 Notes to Consolidated Financial Statements Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations - - - ------------------------------------------------------------------------------ - - - ------------------------------------------------------------------------------ Spiegel, Inc. and Subsidiaries Consolidated Balance Sheets ($000s omitted, except per share amounts) September 30, 1995 and December 31, 1994
(unaudited) September 30, December 31, 1995 1994 ------------ ------------ ASSETS Current assets: Cash and cash equivalents $ 32,092 $ 33,439 Receivables, net 848,160 1,125,728 Inventories 708,514 597,781 Prepaid expenses: Catalog advertising 60,214 51,524 Other 36,931 29,446 Deferred income tax benefit 96,377 70,484 ------------ ------------ Total current assets 1,782,288 1,908,402 Property and equipment, net 401,912 335,103 Intangibles, net 176,966 180,446 Other assets 157,261 136,336 ------------ ------------ $ 2,518,427 $ 2,560,287 ------------ ------------ ------------ ------------ LIABILITIES and STOCKHOLDERS' EQUITY Current liabilities: Short-term debt,including current maturities $ 302,260 $ 80,320 Accounts payable 218,307 265,752 Indebtedness to related parties-current 52,743 -- Accrued liabilities: Salaries and wages 20,717 31,114 General taxes 109,567 118,266 Other accrued liabilities 99,980 132,894 ------------ ------------ Total current liabilities 803,574 628,346 Long-term debt, excluding current maturities 1,150,911 1,300,364 Deferred income taxes 52,310 52,360 ------------ ------------ Total liabilities 2,006,795 1,981,070 Stockholders' equity: Class A non-voting common stock, $1.00 par value; authorized 16,000,000 shares; issued 14,604,844 shares at September 30, 1995 and 15,065,244 at December 31, 1994 14,605 15,065 Class B voting common stock, $1.00 par value; authorized 94,000,000 shares; issued 93,141,654 shares at September 30, 1995 and December 31, 1994 93,142 93,142 Additional paid-in capital 211,761 215,800 Retained earnings 192,124 255,210 ------------ ------------ Total stockholders' equity 511,632 579,217 ------------ ------------ $ 2,518,427 $ 2,560,287 ------------ ------------ ------------ ------------
[FN] See accompanying notes to consolidated financial statements. - - - ------------------------------------------------------------------------------ - - - ------------------------------------------------------------------------------ Spiegel, Inc. and Subsidiaries Consolidated Statements of Earnings ($000s omitted, except per share amounts) Fiscal Periods Ended September 30, 1995 and October 1, 1994 (unaudited)
Three Months Ended None Months Ended September 30, October 1, September 30, October 1, 1995 1994 1995 1994 ----------- ----------- ----------- ----------- Net sales and other revenues: Net sales $ 619,632 $ 565,806 $1,837,252 $1,715,179 Finance revenue 49,390 58,771 158,719 173,978 Other revenue 16,901 24,787 68,859 57,418 ----------- ----------- ----------- ----------- 685,923 649,364 2,064,830 1,946,575 Cost of sales and operating expenses: Cost of sales, including buying and occupancy expenses 431,399 384,107 1,274,601 1,145,691 Selling, general and administrative expenses 268,297 238,244 797,214 713,156 ----------- ----------- ----------- ----------- 699,696 622,351 2,071,815 1,858,847 ----------- ----------- ----------- ----------- Operating income (loss) (13,773) 27,013 (6,985) 87,728 Interest expense 26,358 22,034 76,217 59,532 ----------- ----------- ----------- ----------- Earnings (loss) before income taxes (40,131) 4,979 (83,202) 28,196 Income tax provision (benefit) (17,513) 2,181 (36,309) 12,350 ----------- ----------- ----------- ----------- Net earnings (loss) $ (22,618) $ 2,798 $ (46,893) $ 15,846 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Net earnings (loss) per common share $ (0.21) $ 0.03 $ (0.43) $ 0.15 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Weighted average number of common shares outstanding 107,736,680 108,197,629 107,868,490 108,180,484 ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
See accompanying notes to consolidated financial statements. - - - ------------------------------------------------------------------------------- - - - ------------------------------------------------------------------------------- Spiegel, Inc. and Subsidiaries Consolidated Statements of Cash Flows ($000s omitted) Nine Months Ended September 30, 1995 and October 1, 1994 (unaudited)
Nine Months Ended September 30, October 1, 1995 1994 ------------ ------------ Net cash provided by (used in) operating activities $ 10,427 $ (191,255) ------------ ------------ Cash flows from investing activities: Net additions to property and equipment (101,868) (58,142) Net additions to other assets (13,715) (30,134) ------------ ------------ Net cash used in investing activities (115,583) (88,276) ------------ ------------ Cash flows from financing activities: Borrowings of debt 306,351 288,198 Payments of debt (181,851) (7,600) Dividends paid (16,192) (16,227) Issuance of common stock 0 6,894 Repurchase of common stock (4,742) 0 Exercise of stock options 243 342 ------------ ------------ Net cash provided by financing activities (103,809) 271,607 ------------ ------------ Net change in cash and cash equivalents (1,347) (7,924) Cash and cash equivalents at beginning of period 33,439 47,389 ------------ ------------ Cash and cash equivalents at end of period $ 32,092 $ 39,465 ------------ ------------ ------------ ------------ Supplemental cash flow information: Cash paid during the year for: Interest $ 72,132 $ 52,738 Income taxes $ 5,351 $ 59,885 ------------ ------------ ------------ ------------
See accompanying notes to consolidated financial statements. - - - ------------------------------------------------------------------------- - - - ------------------------------------------------------------------------- Spiegel, Inc. and Subsidiaries Notes to Consolidated Financial Statements ($000s omitted, except share amounts) (unaudited) (1) Adjustments The financial statements reflect all adjustments, consisting only of normal accruals, which are, in the opinion of management, necessary to a fair presentation of the results for the periods presented. (2) Reclassifications Certain prior year amounts have been reclassified to conform to the current presentation. (3) Receivables During the first quarter of 1995, the Company transferred portions of its customer receivables to a trust which, in turn, sold certificates representing undivided interests in the trust to investors. Certificates sold were $350,000. This transaction increased other revenue by $18,637 in the first quarter. The Company owns the remaining undivided interest in the trust not represented by the certificates and will continue to service all receivables for the trust. (4) Treasury Stock During the first six months of 1995, the Company purchased and retired 500,000 shares of Class A Non-Voting Common Stock at market value for a total cost of $4,742. As discussed in the 1994 Annual Report on Form 10-K, the Executive Committee of the Board of Directors approved the purchase and retirement of up to 500,000 shares. (5) Indebtedness to related parties - current During the third quarter of 1995, the Company received a subordinated loan from 3 Suisses BVG (a wholly owned subsidiary of Otto Versand) for 75 million Deutschemarks payable by December 31, 1995 bearing interest at a rate of 4.7%. - - - ----------------------------------------------------------------------------- - - - ----------------------------------------------------------------------------- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (000's omitted except per share amounts) Results of Operations Three Months Ended September 30, 1995 As Compared To Three Months Ended October 01, 1994 - - - ------------------------------------------- Net sales for the three months ended September 30, 1995, were $619,632, a 10% increase from $565,806 for the three months ended October 1, 1994. This increase in the quarter was driven by retail sales which were 23% above the third quarter 1994 levels. Eddie Bauer had 395 stores at the end of the third quarter of 1995 as compared to 328 at the same time in 1994. Eddie Bauer comparable store sales increased 4% for the quarter. Catalog sales increased 2% for the quarter as compared to 1994 despite a reduction in the number of catalogs circulated. Finance revenues decreased 16% during the quarter due primarily to a net decrease in the receivables owned by the Company. There were $830,000 and $480,000 of receivables sold at September 30, 1995 and October 1, 1994, respectively. Other revenue for the third quarter of 1994 includes a gain of $10,658 recognized on the sale of $150,000 of Preferred Card receivables in September, 1994. The gross profit margin on net sales was 30.4% and 32.1% for the three month periods ended September 30, 1995 and October 1, 1994, respectively. Catalog margins declined from 1994 reflecting the effects from a shift in the mix of catalog sales towards home products as a result of weaker apparel sales. Home products generally carry a lower gross profit margin than apparel. The overall decline in gross profit margin for the quarter is also effected by a higher level of retail sales generated from the outlet divisions at lower gross profit margins. Selling, general and administrative expenses as a percentage of total revenues for the three months ended September 30, 1995 and October 1, 1994 were 39.1% and 36.7%, respectively. This increase is due to the results of the Company's proprietary credit card, (the Preferred Card). The Company has experienced higher delinquencies and account charge-offs primarily due to the current credit card industry trends toward higher delinquencies and account charge-offs as well as the rapid growth of the Preferred Card portfolio. As a result of the Company's aggressive new credit customer acquisition programs, the portfolio mix has shifted toward higher levels of new credit accounts which typically carry a higher initial credit risk than the more matured segment of the portfolio. The Company increased its provision for doubtful accounts during the third quarter of 1995 due to the higher delinquency rates. In addition, the selling, general and administrative expense ratio was favorably impacted in the third quarter of 1994 by the effects of the sale of customer accounts receivable. Since there was no sale of customer receivables in the third quarter of 1995, the ratio was not similarly affected. These increases were slightly offset by improvements in some operating selling, general and administrative expense ratios. Interest expense for the three months ended September 30, 1995 increased 20% to $26,358 compared to $22,034 for the three months ended October 1, 1994. This increase is due to higher average debt levels as well as higher overall effective interest rates. Nine Months Ended September 30, 1995 Compared With Nine Months Ended October 1, 1994 Net sales for the nine months ended September 30, 1995 increased 7% to $1,837,252 compared to $1,715,179 for the nine months ended October 1, 1994. While total catalog sales remained relatively flat for the first nine months of 1995 as compared to the same period of 1994, total retail sales increased approximately 21%. This increase in retail sales was fueled primarily by an increase in the number of total Eddie Bauer retail stores to 395 at September 30, 1995 from 328 at October 1, 1994. Eddie Bauer comparable store sales increased 1% during the nine months ended September 30, 1995 as compared to 1994. Finance revenues decreased 9% during the nine month period ended September 30,1995 as compared to the same period of 1994 due to the decrease of receivables owned by the Company as noted above. Other revenue for the first nine months of 1995 includes a gain of $18,637 recognized on the sale of $350,000 of Preferred Card receivables in March, 1995, and other revenue for the first nine months of 1994 includes a gain of $10,658 recognized on the sale of $150,000 of Preferred Card receivables in September, 1994. The gross profit margin on net sales declined to 30.6% for the nine months ended September 30, 1995 compared to 33.2% for the comparable 1994 period. This decline is the result of several factors including a higher level of retail sales generated from the outlet divisions, a shift in the mix of catalog sales towards lower gross profit margin home products as a result of weaker apparel sales, and aggressive markdowns taken in the first quarter to liquidate excess inventories remaining from 1994. Selling, general and administrative expenses as a percentage of total revenues were 38.6% for the nine months ended September 30, 1995 and 36.6% for the comparable period in 1994. There are several issues impacting this increase on a year-to-date basis for 1995. The costs of producing and mailing catalogs has increased due to significantly higher paper costs and the postal rate increase effected in January, 1995. Also, the Company incurred higher warehouse related costs during the first half of 1995 during the transition of Spiegel catalog operations to the new distribution facility in Groveport, Ohio. The operating efficiencies from this facility are beginning to be realized and are expected to improve during the higher volume holiday season. Finally, as discussed above, the increased credit card charge-off rate particularly in the third quarter has resulted in additional selling, general and administrative expenses for the Company. The 28% increase in interest expense for the nine months ended September 30, 1995 as compared to the nine months ended October 1, 1994 is driven by higher debt levels throughout the year as well as higher interest rates. Seasonality and Quarterly Fluctuations: The Company, like other retailers, experiences seasonal fluctuations in its merchandise sales and net income. 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 issuance of debt and the sale of customer accounts receivable. Total customer receivables sold were $830,000 at September 30, 1995 and $480,000 at December 31, 1994. Net cash provided by operating activities was $10,427 for the nine month period ended September 30,1995 as compared to net cash used of $191,255 for the nine month period ended October 1, 1994. The net cash proceeds from the sales of $350,000 and $150,000 of accounts receivable were reported as operating cash flows in the nine months ended September 30, 1995 and October 1, 1994, respectively. During the first nine months of 1995, significant uses of cash for operating activities were funding seasonal increases in inventory and receivables, and decreases in accounts payable and other accrued liabilities as well as the Company's net loss. Net additions to property and equipment for the nine months ended September 30, 1995 were $101,868 consisting primarily of capital spending related to the new retail distribution facility in Columbus, OH, continued Eddie Bauer retail store expansion, and the construction of a corporate headquarters addition at Eddie Bauer. The Company purchased and retired 500,000 shares of Class A Non-Voting Common Stock at a total cost of $4,742 during the first nine months of 1995. The shares were purchased at market value, and they represent less than one percent of the Company's total shares outstanding. No additional shares are currently approved for repurchase. During the nine months ended September 30, 1995, the Company incurred approximately $7,700 of expenditures related to the $39,000 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 nine months of 1995 were primarily for certain employee termination benefits as well as inventory transfers from Spiegel warehouse operations in Chicago to the new facility in Groveport, Ohio. The remaining balance of the reserve at September 30, 1995, was $8,200. The Company believes that its cash on hand, together with cash flows anticipated to be generated from operations, borrowings under its existing credit facilities and other available sources of credit, will be adequate to fund the Company's capital and operating requirements for the foreseeable future. In March, 1995, SFAS 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, was issued. This statement establishes accounting standards for the recognition of losses resulting from impairment of long-lived assets to be held and used or to be disposed of. The Company has not yet adopted this policy and is not required to adopt it until the 1996 fiscal year. However, management believes that the effects of adoption of this statement will be immaterial. - - - ----------------------------------------------------------------------------- - - - ----------------------------------------------------------------------------- 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 November 14, 1995 James W. Sievers (Chief Financial Officer)
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