<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> OCT-01-1994
<CASH> 39,465
<SECURITIES> 0
<RECEIVABLES> 947,641
<ALLOWANCES> 40,093
<INVENTORY> 627,919
<CURRENT-ASSETS> 1,729,434
<PP&E> 456,524
<DEPRECIATION> 136,913
<TOTAL-ASSETS> 2,414,159
<CURRENT-LIABILITIES> 681,182
<BONDS> 1,114,447
<COMMON> 108,207
0
0
<OTHER-SE> 466,133
<TOTAL-LIABILITY-AND-EQUITY> 2,414,159
<SALES> 1,715,179
<TOTAL-REVENUES> 1,946,575
<CGS> 1,145,691
<TOTAL-COSTS> 1,145,691
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 5,589
<INTEREST-EXPENSE> 59,532
<INCOME-PRETAX> 28,196
<INCOME-TAX> 12,350
<INCOME-CONTINUING> 15,846
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,846
<EPS-PRIMARY> 0.15
<EPS-DILUTED> 0.15
</TABLE>
<PAGE>
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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 October 1, 1994
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 9, 1994 are as follows:
Class A non-voting common stock, $1.00 par value
15,065,244 shares
Class B voting common stock, $1.00 par value
93,141,654 shares.
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<PAGE>
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, 1993.
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheets, October 1, 1994 and December 31, 1993
Consolidated Statements of Earnings,
Three and Nine Months Ended October 1, 1994 and September 30, 1993
Consolidated Statements of Cash Flows,
Nine Months Ended October 1, 1994 and September 30, 1993
Notes to Consolidated Financial Statements
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
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<PAGE>
Spiegel, Inc. and Subsidiaries
Consolidated Balance Sheets
($000s omitted, except per share amounts)
October 1, 1994 and December 31, 1993
<TABLE>
<CAPTION>
(unaudited)
October 1, December 31,
1994 1993
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 39,465 $ 47,389
Receivables, net 907,548 998,525
Inventories, net 627,919 438,869
Prepaid expenses:
Catalog advertising 68,841 45,509
Other 37,632 14,336
Deferred income tax benefit 48,029 48,037
------------ ------------
Total current assets 1,729,434 1,592,665
Property and equipment, net 319,611 288,551
Intangibles, net 186,125 189,454
Other assets 178,989 139,921
------------ ------------
$ 2,414,159 $ 2,210,591
------------ ------------
------------ ------------
LIABILITIES and STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt,including current maturities $ 226,986 $ 89,152
Accounts payable 231,887 226,311
Accrued liabilities:
Salaries and wages 22,146 32,255
General taxes 88,693 97,764
Other accrued liabilities 111,470 142,204
Income taxes 0 39,561
------------ ------------
Total current liabilities 681,182 627,247
Long-term debt, excluding current maturities 1,114,447 971,683
Deferred income taxes 44,190 44,176
------------ ------------
Total liabilities 1,839,819 1,643,106
Stockholders' equity:
Class A non-voting common stock,
$1.00 par value; authorized 16,000,000
shares; issued 15,065,244 shares
at October 1, 1994 and 14,599,824 at
December 31, 1993 15,065 14,600
Class B voting common stock,
$1.00 par value; authorized 94,000,000
shares; issued 93,141,654 shares
at October 1, 1994 and December 31, 1993 93,142 93,142
Additional paid-in capital 215,800 209,029
Retained earnings 250,333 250,714
------------ ------------
Total stockholders' equity 574,340 567,485
------------ ------------
$ 2,414,159 $ 2,210,591
------------ ------------
------------ ------------
</TABLE>
[FN]
See accompanying notes to consolidated financial statements.
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<PAGE>
Spiegel, Inc. and Subsidiaries
Consolidated Statements of Earnings
($000s omitted, except per share amounts)
Fiscal Periods Ended October 1, 1994 and September 30, 1993
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
October 1, September October 1, September
1994 30, 1993 1994 30, 1993
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales and other revenues:
Net sales $ 565,806 $ 485,366 $1,715,179 $1,378,529
Finance revenue 58,771 49,702 173,978 143,723
Other revenue 24,787 15,266 57,418 44,191
----------- ----------- ----------- -----------
649,364 550,334 1,946,575 1,566,443
Cost of sales and operating expenses:
Cost of sales, including buying and
occupancy expenses 384,107 328,564 1,145,691 948,295
Selling, general and administrative
expenses 238,244 189,703 713,156 539,040
Nonrecurring charge 0 39,000 0 39,000
----------- ----------- ----------- -----------
622,351 557,267 1,858,847 1,526,335
----------- ----------- ----------- -----------
Operating income 27,013 (6,933) 87,728 40,108
Interest expense 22,034 18,079 59,532 53,002
----------- ----------- ----------- -----------
Earnings before income taxes 4,979 (25,012) 28,196 (12,894)
Income taxes 2,181 (10,974) 12,350 (5,751)
----------- ----------- ----------- -----------
Net earnings $ 2,798 $ (14,038) $ 15,846 $ (7,143)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net earnings per common share $ 0.03 $ (0.13) $ 0.15 $ (0.07)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average number of common
shares outstanding 108,197,629 104,056,992 108,180,484 104,040,268
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
Spiegel, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
($000s omitted)
Nine Months Ended October 1, 1994 and September 30, 1993
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
October 1, September 30,
1994 1993
------------ ------------
<S> <C> <C>
Net cash provided by (used in) operating activities $ (182,321) $ (125,374)
------------ ------------
Cash flows from investing activities:
Acquisition, net of cash acquired 0 (39,112)
Net additions to property and equipment (58,142) (67,590)
Net additions to other assets (39,068) (29,084)
------------ ------------
Net cash used in investing activities (97,210) (135,786)
------------ ------------
Cash flows from financing activities:
Borrowings of debt 288,198 330,851
Payments of debt (7,600) (32,366)
Dividends paid (16,227) (15,085)
Issuance of common stock 6,894 0
Exercise of stock options 342 471
------------ ------------
Net cash provided by financing activities 271,607 283,871
------------ ------------
Net change in cash and cash equivalents (7,924) 22,711
Cash and cash equivalents at beginning of period 47,389 3,604
------------ ------------
Cash and cash equivalents at end of period $ 39,465 $ 26,315
------------ ------------
------------ ------------
Supplemental cash flow information:
Cash paid during the year for:
Interest $ 52,738 $ 49,545
Income taxes $ 59,885 $ 35,121
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
Spiegel, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
($000s omitted, except share amounts)
(unaudited)
(1) Adjustments
The financial statements reflect all adjustments which are, in
the opinion of management, necessary to a fair presentation of
the results for the periods presented.
(2) Receivables
During the third quarter of 1994, 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 $150,000. This transaction increased other revenue by $10,658 in the
third 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.
(3) Change in Accounting Periods
In 1994, the company modified its quarterly and annual reporting from calendar
periods to a 52/53 week fiscal year ending on the Saturday closest to
December 31. Accordingly, results for the third quarter and year-to-date 1994
periods include 13 and 39 weeks, respectively, and are referred to as the
three and nine months periods ended October 1, 1994. Results for 1993 are
reported on a calendar basis.
(4) Accounting Changes
Postemployment Benefits
The Company adopted SFAS No. 112, Employers' Accounting for Postemployment
Benefits, in the second quarter of 1994. The effect on the financial
statements was immaterial and, therefore, was not separately disclosed.
Investments in Debt and Equity Securities
The Company adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and
Equity Securities, which requires the classification of debt and equity
securities into one of three categories; held to maturity, trading securities
or available-for-sale. The Company's debt securities are short-term in nature
and are recorded in the consolidated balance sheets as cash equivalents and
other assets. These securities are being held-to-maturity and thus, there is
no financial statement impact to adopting SFAS No. 115.
(5) Stockholders' Equity
In January, the underwriters excercised their option to purchase an
additional 400,000 shares of Class A non-voting common stock as part of the
secondary offering of common stock completed in December 1993. Accordingly,
common stock was increased $400 representing the par value of the shares and
additional paid-in capital was increased by $6,494 for the difference between
the proceeds from the issuance and the par value.
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<PAGE>
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 October 1, 1994 Compared With Three Months Ended September
30, 1993
Net sales for the three months ended October 1, 1994, increased 17% to
$565,806 compared to $485,366 for the three months ended September 30, 1993.
This increase is the result of continued growth at Spiegel and Eddie Bauer
mainly in retail sales as well as the incremental sales from the acquisition
of New Hampton, which was completed in August 1993. Eddie Bauer experienced
a comparable store sales increase of 5%. Spiegel continued to see sales
strength in home related merchandise.
Finance revenues increased 18% during the quarter due to the continued
increased levels of FCNB Preferred Charge card receivables. The portfolio
was on average approximately $190,000 greater than the average total for the
comparable period last year. This growth is due to the strong credit sales
achieved and the successful introduction of credit to New Hampton's customer
base. Other revenue for the third quarter of this year includes a gain of
$10,658 recognized on the sale of $150,000 of Preferred Charge receivables
which was completed in September 1994.
The gross profit margin on net sales decreased to 32.1% for the three months
ended October 1, 1994 compared to 32.3% for the comparable 1993 period. This
is primarily the result of a shift in sales mix favoring home products, which
carry lower margins relative to apparel.
Selling, general and administrative expenses as a percentage of total
revenues for the three months ended October 1, 1994 and September 30, 1993
were 36.7% and 34.5%, respectively. This increase primarily reflects the
incremental advertising and circulation costs associated with the Company's
continued strategy of increasing market share through aggressive new catalog
customer acquisition programs. Results also reflect the incremental expenses
incurred as a result of the conversion to a new common order fulfillment
system and dual operating expenses associated with the start-up of and
transition to a new catalog distribution facility. Eddie Bauer completed its
transition to the new facility during the third quarter of 1994. Spiegel has
begun initial shipments out of the facility, and is expected to complete its
transition in early 1995.
The company recorded a $39,000 nonrecurring charge in the third quarter of
1993 to provide for the estimated impact of closing certain of the company's
existing catalog distribution facilities. These facilities are being
consolidated into the new catalog distribution facility in Groveport, Ohio.
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<PAGE>
Interest expense for the three months ended October 1, 1994 increased 22% to
$22,034 compared to $18,079 for the three months ended September 30, 1993.
This increase is due to higher average debt levels and slightly higher
overall effective interest rates. The additional debt is primarily used to
finance working capital requirements including higher levels of customer
accounts receivable and inventory.
Nine Months Ended October 1, 1994 Compared With Nine Months Ended September
30, 1993
Net sales for the nine months ended October 1, 1994 increased 24% to
$1,715,179 compared to $1,378,529 for the nine months ended September 30,
1993. This increase was the result of the continued growth in both catalog
and retail divisions of Spiegel and Eddie Bauer and to the incremental sales
from the acquisition of New Hampton, which was completed in August 1993.
Eddie Bauer comparable store sales increased 10%. Spiegel sales in the home
areas and certain categories of women's apparel were strong.
Finance revenues increased 21% during the nine month period ended October 1,
1994 as compared to the same period of 1993 due to a larger FCNB Preferred
Charge card receivable portfolio throughout the 1994 period as compared to
1993. Higher levels of Preferred Charge net sales and the successful
introduction of credit to New Hampton's customer base helped drive this
increase. Other revenue includes a gain of $10,658 recognized on the sale of
$150,000 of Preferred Card receivables which was completed in September 1994.
The gross profit margin on net sales increased to 33.2% for the nine months
ended October 1, 1994 compared to 31.2% for the comparable 1993 period.
Continued inventory cost control efforts, the Company's expanding private-
label merchandise programs, and the incremental higher gross margin on New
Hampton sales all contributed to this improvement.
Selling, general and administrative expenses as a percentage of total
revenues were 36.6% for the nine months ended October 1, 1994 and 34.4% for
the comparable period in 1993. As discussed above, this increase is driven
primarily by additional advertising and circulation costs associated with new
catalog and credit card customer acquisition programs.
Included in the nine months operating results was a $39,000 nonrecurring
charge recorded in the third quarter of 1993 to provide for the impact of
closing certain of the Company's existing catalog distribution facilities.
The increase of 12.3% in interest expense for the nine months ended October
1, 1994 as compared to the nine months ended September 30, 1993 is driven by
higher debt levels throughout the year. The additional debt is primarily
used to finance working capital requirements including higher levels of
customer accounts receivable and inventory.
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<PAGE>
Seasonality and Quarterly Fluctuations:
The Company, like other retailers, has experienced and expects to continue to
experience 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 $480,000
and $330,000 at October 1, 1994 and December 31, 1993, respectively.
Net cash used in operating activities was $182,321 and $125,374 for the nine
month periods ended October 1, 1994 and September 30, 1993, respectively.
The net increase in cash requirements is the result of several factors
including higher inventory and customer receivable balances in the nine
months ended October 1, 1994 compared to the same period last year. Also,
payments on other working capital items such as income taxes represented
significant uses of cash. The net cash proceeds from the sale of $150,000 of
accounts receivable were reported as operating cash flows in the nine months
ended October 1, 1994.
In August 1993, the Company acquired substantially all of the assets of New
Hampton, Inc. through a bankruptcy proceeding for approximately $40,000 in
cash.
Net additions to property and equipment for the nine months ended October 1,
1994 were $58,142 consisting primarily of capital spending related to the new
catalog distribution facility constructed in Groveport, OH and to the Eddie
Bauer retail division's ongoing store additions and remodels in process.
During the nine month period ended October 1, 1994, $3,100 of expenditures
have been made relating to the $39,000 nonrecurring charge taken in 1993.
The Company expects more of these costs will be paid in 1994 with the
remaining costs paid out in 1995, except for the write-off of property and
equipment of $6,500, which is a noncash item. 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, including expenditures
related to distribution facilities and new store openings.
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<PAGE>
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.
<TABLE>
<CAPTION>
Signature Title Date
- ------------------------- ------------------------ ----------------
<C> <S> <C>
/s/ James W. Sievers Vice President November 10, 1994
James W. Sievers (Chief Financial Officer)
</TABLE>
