<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUL-01-1995
<CASH> 26,809
<SECURITIES> 0
<RECEIVABLES> 843,650
<ALLOWANCES> 35,451
<INVENTORY> 597,521
<CURRENT-ASSETS> 1,600,870
<PP&E> 547,385
<DEPRECIATION> 161,902
<TOTAL-ASSETS> 2,324,414
<CURRENT-LIABILITIES> 609,005
<BONDS> 1,123,605
<COMMON> 107,718
0
0
<OTHER-SE> 431,750
<TOTAL-LIABILITY-AND-EQUITY> 2,324,414
<SALES> 1,217,620
<TOTAL-REVENUES> 1,378,907
<CGS> 843,202
<TOTAL-COSTS> 843,202
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (15,190)
<INTEREST-EXPENSE> 49,859
<INCOME-PRETAX> (43,071)
<INCOME-TAX> (18,796)
<INCOME-CONTINUING> (24,275)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (24,275)
<EPS-PRIMARY> (0.22)
<EPS-DILUTED> (0.22)
</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 July 1, 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 August 8, 1995 are as follows:
Class A non-voting common stock, $1.00 par value
14,604,244 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 six 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, July 1, 1995 and December 31, 1994
Consolidated Statements of Earnings,
Three and Six Months Ended July 1, 1995 and July 2, 1994
Consolidated Statements of Cash Flows,
Three and Six Months Ended July 1, 1995 and July 2, 1994
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)
July 1, 1995 and December 31, 1994
<TABLE>
<CAPTION>
(unaudited)
July 1, December 31,
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 26,809 $ 33,439
Receivables, net 808,199 1,125,728
Inventories 597,521 597,781
Prepaid expenses:
Catalog advertising 58,842 51,524
Other 30,897 29,446
Refundable income taxes 33,011 24,904
Deferred income tax benefit 45,591 45,580
------------ ------------
Total current assets 1,600,870 1,908,402
Property and equipment, net 385,483 335,103
Intangibles, net 178,320 180,446
Other assets 159,741 136,336
------------ ------------
$ 2,324,414 $ 2,560,287
------------ ------------
------------ ------------
LIABILITIES and STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt,including current maturities $ 200,171 $ 80,320
Accounts payable 190,201 265,752
Accrued liabilities:
Salaries and wages 19,745 31,114
General taxes 106,384 118,266
Other accrued liabilities 92,504 132,894
------------ ------------
Total current liabilities 609,005 628,346
Long-term debt, excluding current maturities 1,123,605 1,300,364
Deferred income taxes 52,336 52,360
------------ ------------
Total liabilities 1,784,946 1,981,070
Stockholders' equity:
Class A non-voting common stock,
$1.00 par value; authorized 16,000,000
shares; issued 14,575,544 shares
at July 1, 1995 and 15,065,244 at
December 31, 1994 14,576 15,065
Class B voting common stock,
$1.00 par value; authorized 94,000,000
shares; issued 93,141,654 shares
at July 1, 1995 and December 31, 1994 93,142 93,142
Additional paid-in capital 211,621 215,800
Retained earnings 220,129 255,210
------------ ------------
Total stockholders' equity 539,468 579,217
------------ ------------
$ 2,324,414 $ 2,560,287
------------ ------------
------------ ------------
</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 July 1, 1995 and July 2, 1994
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
July 1, July 2, July 1, July 2,
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales and other revenues:
Net sales $ 636,759 $ 600,650 $1,217,620 $1,149,373
Finance revenue 45,323 56,975 109,329 115,207
Other revenue 17,198 17,452 51,958 32,631
----------- ----------- ----------- -----------
699,280 675,077 1,378,907 1,297,211
Cost of sales and operating expenses:
Cost of sales, including buying and
occupancy expenses 429,573 392,971 843,202 761,584
Selling, general and administrative
expenses 272,580 250,741 528,917 474,912
----------- ----------- ----------- -----------
702,153 643,712 1,372,119 1,236,496
----------- ----------- ----------- -----------
Operating income (loss) (2,873) 31,365 6,788 60,715
Interest expense 23,492 19,792 49,859 37,498
----------- ----------- ----------- -----------
Earnings (loss) before income taxes (23,365) 11,573 (43,071) 23,217
Income tax provision (benefit) (11,505) 5,069 (18,796) 10,169
----------- ----------- ----------- -----------
Net earnings (loss) $ (14,860) $ 6,504 $ (24,275) $ 13,048
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net earnings (loss) per common share $ (0.14) $ 0.06 $ (0.22) $ 0.12
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average number of common
shares outstanding 107,716,627 108,191,064 107,934,394 108,171,958
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
Spiegel, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
($000s omitted)
Six Months Ended July 1, 1995 and July 2, 1994
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
July 1, July 2,
1995 1994
------------ ------------
<S> <C> <C>
Net cash provided by (used in) operating activities $ 149,764 $ (159,943)
------------ ------------
Cash flows from investing activities:
Net additions to property and equipment (73,169) (34,488)
Net additions to other assets (10,842) (22,401)
------------ ------------
Net cash used in investing activities (84,011) (56,889)
------------ ------------
Cash flows from financing activities:
Borrowings of debt 171,250 273,599
Payments of debt (228,159) (61,850)
Dividends paid (10,805) (10,818)
Issuance of common stock 0 (6,894)
Repurchase of common stock (4,742) 0
Exercise of stock options 73 272
------------ ------------
Net cash provided by financing activities (72,383) 208,097
------------ ------------
Net change in cash and cash equivalents (6,630) (8,735)
Cash and cash equivalents at beginning of period 33,439 47,389
------------ ------------
Cash and cash equivalents at end of period $ 26,809 $ 38,654
------------ ------------
------------ ------------
Supplemental cash flow information:
Cash paid during the year for:
Interest $ 51,301 $ 37,808
Income taxes $ 4,387 $ 57,387
------------ ------------
------------ ------------
</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) 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 retird 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.
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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 July 1, 1995 As Compared To Three Months
Ended July 2, 1994
-------------------------------------------
Net sales for the three months ended July 1, 1995, increased 6%
to $636,759 compared to $600,650 for the three months ended July
2, 1994. This increase in the quarter was driven by retail
sales which were approximately 22% above the second quarter 1994
levels. Eddie Bauer had 374 stores at the end of the second
quarter of 1995 as compared to 306 at the same time in 1994.
Eddie Bauer comparable store sales increased 3%.
Finance revenues decreased 20% during the quarter due primarily
to a net decrease in the receivables owned by the Company.
There were $830,000 and $330,000 of receivables sold at July 1,
1995 and July 2, 1994, respectively.
The gross profit margin on net sales declined to 32.5% for the
three months ended July 1, 1995 compared to 34.6% for the
comparable 1994 period. The decline is the result of a higher
level of retail sales generated from the outlet divisions. In
addition, catalog margins declined due to 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.
Selling, general and administrative expenses as a percentage of
total revenues for the three months ended July 1, 1995 and July
2, 1994 were 39.0% and 37.1%, respectively. This increase
reflects the incremental expenses incurred as a result of the
transition of the Company's catalog operations to the new
distribution facility in Groveport, Ohio. The Company is
anticipating an increased level of operating productivity from
this facility, especially going into the higher volume holiday
season. Also effecting selling, general and administrative
expense are the increasing costs of producing and mailing
catalogs driven by significantly higher paper costs and the
postal rate increase effected in January, 1995.
Interest expense for the three months ended July 1, 1995
increased 19% to $23,492 compared to $19,792 for the three
months ended July 2, 1994. This increase is due to higher
average debt levels as well as higher overall effective interest
rates.
Six Months Ended July 1, 1995 Compared With Six Months Ended
July 2, 1994
------------------------------------------
Net sales for the six months ended July 1, 1995 increased 6% to
$1,217,620 compared to $1,149,373 for the six months ended July
1, 1994. While total catalog sales remained relatively flat for
the first six months of 1995 as compared to the same period of
1994, total retail sales increased approximately 19%. This
increase in retail sales was fueled primarily by an increase in
the number of total Eddie Bauer retail stores to 374 at July 2,
1994 from 306 at July 1, 1994. Eddie Bauer comparable store
sales decreased 1% for the first half of 1995 as compared to 1994
as the comparable store decrease from the first quarter of 1995
was only partially offset by the second quarter increase.
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<PAGE>
Finance revenues decreased 5% during the six month period ended
July 1,1995 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 six months of this year includes a
gain of $18,637 recognized on the sale of $350,000 of Preferred
Card receivables in March, 1995.
The gross profit margin on net sales declined to 30.7% for the
six months ended July 1, 1995 compared to 33.7% for the
comparable 1994 period. This decline is the result of a number
of factors including a higher level of retail sales generated
from the outlet divisions, aggressive markdowns taken in the
first quarter to liquidate excess inventories remaining from
1994, and a shift in the mix of catalog sales towards lower
gross profit margin home products as a result of weaker apparel
sales.
Selling, general and administrative expenses as a percentage of
total revenues were 38.4% for the six months ended July 1, 1995
and 36.6% for the comparable period in 1994. As discussed
previously, the Company experienced higher warehouse related
costs during the first half of 1995 due to the transition of
Spiegel catalog operations to the new facility. Also, the
increased postal and paper costs in 1995 continue to be factors
in the higher selling, general and administrative expenses.
The 33% increase in interest expense for the six months ended
July 1, 1995 as compared to the six months ended July 2, 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 July 1, 1995
and $480,000 at December 31, 1994.
Net cash provided by operating activities was $149,764 for the
six month period ended July 1,1995 as compared to net cash used
of $159,943 for the six month period ended July 2,1995. The net
cash proceeds from the sale of $350,000 of accounts receivable
were reported as operating cash flows in the six months ended
July 1, 1995. During the first six months of 1995, funding of
the Company's net loss as well as decreases in accounts payable
and other accrued liabilities represented significant uses of
cash .
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<PAGE>
Net additions to property and equipment for the six months ended
July 1, 1995 were $73,169 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 six 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 six months ended July 1, 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 six 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 July
1, 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, including
expenditures related to distribution facilities and new store
openings.
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
currently estimates that the effects of adoption of this
statement will be immaterial.
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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 Senior Vice President August 15, 1995
James W. Sievers (Chief Financial Officer)
</TABLE>
