<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> MAR-30-1996
<CASH> 59,159
<SECURITIES> 0
<RECEIVABLES> 616,390
<ALLOWANCES> 32,247
<INVENTORY> 555,063
<CURRENT-ASSETS> 1,364,117
<PP&E> 592,593
<DEPRECIATION> 183,946
<TOTAL-ASSETS> 2,113,017
<CURRENT-LIABILITIES> 521,089
<BONDS> 1,013,424
<COMMON> 107,747
0
0
<OTHER-SE> 413,504
<TOTAL-LIABILITY-AND-EQUITY> 2,113,017
<SALES> 589,461
<TOTAL-REVENUES> 634,681
<CGS> 403,892
<TOTAL-COSTS> 403,892
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,506
<INCOME-PRETAX> (25,348)
<INCOME-TAX> (11,027)
<INCOME-CONTINUING> (14,321)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (14,321)
<EPS-PRIMARY> (0.13)
<EPS-DILUTED> (0.13)
</TABLE>
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
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 30, 1996
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 May 14,1996 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.
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<PAGE>
SPIEGEL, INC.
Due to the seasonality of the registrant's business, the results for the three
month period 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 30, 1995.
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheets, March 30, 1996 and December 30, 1995
Consolidated Statements of Earnings,
Three Months Ended March 30, 1996 and April 1, 1995
Consolidated Statements of Cash Flows,
Three Months Ended March 30, 1996 and April 1, 1995
Notes to Consolidated Financial Statements
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
- ------------------------------------------------------------------------------
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<PAGE>
Consolidated Balance Sheets
($000s omitted, except per share amounts)
March 30, 1996 and December 30, 1995
<TABLE>
<CAPTION>
(unaudited)
March 30, December 30,
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 59,159 $ 42,302
Receivables, net 584,143 742,480
Inventories 555,063 572,377
Prepaid expenses 82,751 101,324
Refundable income taxes 40,865 29,560
Deferred income tax benefit 42,136 42,234
------------ ------------
Total current assets 1,364,117 1,530,277
Property and equipment, net 408,647 412,934
Intangible assets, net 172,946 173,088
Other assets 167,307 157,683
------------ ------------
Total Assets $ 2,113,017 $ 2,273,982
------------ ------------
------------ ------------
LIABILITIES and STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of debt $ 110,423 $ 111,672
Accounts payable 156,802 256,527
Accrued liabilities:
Salaries and wages 20,864 32,370
General taxes 118,277 125,504
Other accrued liabilities 114,723 140,375
------------ ------------
Total current liabilities 521,089 666,448
Long-term debt, excluding current maturities 973,424 994,692
Indebtedness to related parties 40,000 20,000
Deferred income taxes 57,253 57,269
------------ ------------
Total liabilities 1,591,766 1,738,409
Stockholders' equity:
Class A non-voting common stock,
$1.00 par value; authorized 16,000,000
shares; 14,604,844 shares issued and
outstanding at March 30, 1996 and
December 30, 1995 14,605 14,605
Class B voting common stock,
$1.00 par value; authorized 94,000,000
shares; 93,141,654 shares issued and
outstanding at March 30, 1996 and
December 30, 1995 93,142 93,142
Additional paid-in capital 211,761 211,761
Minimum pension liability (8,650) (8,650)
Retained earnings 210,393 224,715
------------ ------------
Total stockholders' equity 521,251 535,573
------------ -------------
$ 2,113,017 $ 2,273,982
------------ ------------
------------ ------------
</TABLE>
[FN]
See accompanying notes to consolidated financial statements.
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<PAGE>
Consolidated Statements of Earnings
($000s omitted, except per share amounts)
Fiscal Periods Ended March 30, 1996 and April 1, 1995
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 30, April 1,
1996 1995
----------- -----------
<S> <C> <C>
Net sales and other revenues:
Net sales $ 589,461 $ 580,861
Finance revenue 28,341 64,006
Other revenue 16,879 34,760
----------- -----------
634,681 679,627
Cost of sales and operating expenses:
Cost of sales, including buying and
occupancy expenses 403,892 413,629
Selling, general and administrative
expenses 234,631 256,337
---------- ----------
638,523 669,966
----------- -----------
Operating income (loss) (3,842) 9,661
Interest expense 21,506 26,366
----------- -----------
Earnings (loss) before income taxes (25,348) (16,705)
Income tax benefit (11,027) (7,290)
----------- -----------
Net earnings (loss) $ (14,321) $ (9,415)
------------ ----------
Net earnings (loss) per common share $ (0.13) $ (0.09)
----------- ------------
----------- ------------
Weighted average number of common
shares outstanding 107,746,498 108,152,162
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
Consolidated Statements of Cash Flows
($000s omitted)
Three months ended March 30, 1996 and April 1, 1995
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 30, April 1,
1996 1995
------------ ------------
<S> <C> <C>
Net cash provided by operating activities $ 43,401 $ 213,046
------------ ------------
Cash flows from investing activities:
Net additions to property and equipment (9,052) (42,867)
Net additions to other assets (14,974) (7,679)
------------ ------------
Net cash used in investing activities (24,026) (50,546)
------------ ------------
Cash flows from financing activities:
Issuance of debt 310,000 205,000
Payment of debt (312,518) (361,313)
Dividends paid 0 (10,805)
Repurchase of common stock 0 (4,103)
Exercise of stock options 0 18
------------ ------------
Net cash used in financing activities (2,518) (171,203)
------------ ------------
Net change in cash and cash equivalent 16,857 (8,703)
Cash and cash equivalents at beginning of period 42,302 33,439
----------- ------------
Cash and cash equivalents at end of period $ 59,159 $ 24,736
------------ ------------
------------ ------------
Supplemental cash flow information:
Cash paid during the year for:
Interest $ 23,596 $ 19,612
Income taxes $ 1,070 $ 1,345
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
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) Long-term debt
In March 1996, the Company replaced certain of its existing credit
arrangements with new credit facilities and modified certain conditions of
other senior and subordinated term indebtedness. These changes
were made to strengthen the Company's liquidity and provide for
future growth. The Company established a new $600 million revolving
credit agreement with a group of 23 banks. The Company also increased its
existing asset backed commericial paper program to $600 million from $400
million with a corresponding increase in the back-up credit agreement with
the same group of 23 banks. The $400 million asset backed commercial
paper program had been established in December 1995, as a prelude to
these financing modifications. Simultaneously with the establishment
of these new credit facilities,the Company canceled a $600 million
commercial paper facility and a $300 million revolving credit facility.
The Company also sold $70,000 of customer receivables.
(4) Indebtedness to related parties
In addition to the loan from the Company's majority shareholder,
Spiegel Holdings, Inc. which existed as of December 30, 1995, in the first
quarter of 1996, the Company received a term loan from 3 Suisses BVG
(a wholly owned subsidiary of Otto Versand) for $25,000. This loan will be
repaid $5,000 in 1996, $5,000 in 1997 and $15,000 in 1998 and bears
interest at a rate of 5.92%. The amount to be repaid in 1996 is included
in the Company's balance sheet under "Current maturities of debt".
- -----------------------------------------------------------------------------
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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 March 30, 1996 As Compared To Three Months
Ended April 1, 1995
- -------------------------------------------
Net sales for the three months ended March 30, 1996, increased
1.5% to $589,461 compared to $580,861 for the three months ended
April 1, 1995. This increase is primarily the result of higher
retail sales. Eddie Bauer's comparable store sales increased
5%. Catalog sales declined 2% for the quarter.
Finance revenue for the first quarter of 1996 was $28,341 as
compared to $64,006 for the same period in 1995. This decrease
was the result of a significantly lower level of average owned
customer receivables in the first quarter of 1996 compared to
1995 due to sales of customer receivables to support the
Company's financing arrangements. Other revenue for the first
quarter of 1996 decreased $17,881 as compared to the first
quarter of 1995. This was mainly the result of a gain of
$18,637 recognized on the sale of customer receivables in the
first quarter of 1995. There was no comparable gain in the first
quarter of 1996.
The gross profit margin on net sales increased to 31.5% for the
three months ended March 30, 1996 compared to 28.8% for the
comparable 1995 period. Clearance activity in the first quarter
of 1996 was much lower than the same period in 1995. The
Company took aggressive markdowns in the first quarter of 1995
to liquidate overstock merchandise left over from December 1994.
Such markdowns were not required in the same period of 1996 as
the Company had lower inventory levels in general and more
favorable response to the merchandise offerings.
Selling, general and administrative expenses as a percentage of
total revenues for the three months ended March 30, 1996 and
April 1, 1995 were 37.0% and 37.7%, respectively. This decrease
reflected reductions achieved in several operating units'
selling, general and administrative expenses. These reductions
included improvements from the Company's new fulfillment and
distribution facilities and more tightly controlled advertising
expenditures, including catalog production costs. Negatively
impacting the 1996 ratio was an increased level of charge-offs
on customer receivables. The 1996 ratio was also favorably impacted
by 1.8% for the gain ofapproximately $8,000 realized on the sale of
the Company's information technology subsidiary in the first quarter
and for a $4 million reversal of the provision for doubtful accounts on
$70,000 of customer receivables sold in March 1996. The 1995
ratio was favorably impacted by 3.3% for the effects of a sale of
$350,000 of customer receivables in March 1995 including an
$18,637 gain recognized and a reversal of approximately $15,000
of the provision for doubtful accounts on the receivables.
Interest expense for the three months ended March 30, 1996
decreased 18.4% to $21,506 compared to $26,366 for the three
months ended April 1, 1995. This increase was due to lower
average debt levels resulting from the higher level of customer
receivables sold.
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<PAGE>
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
issuance of debt and the sale of customer accounts receivable.
Total customer receivables sold were $1,170,000 at March 30,
1996, $1,100,000 at December 30, 1995 and $750,000 at April 1,
1995.
In March 1996, the Company replaced certain of its existing credit
arrangements with new credit facilities and modified certain conditions
of other senior and subordinated term indebtedness. These
changes were made to strengthen the Company's liquidity and provide
for future growth. The Company established a new $600
million revolving credit agreement with a group of 23 banks.
The Company also increased its existing asset backed commercial
paper program to $600 million from $400 million with a corresponding
increase in the back-up credit line with the same group of 23 banks.
The $400 million asset backed commercial paper program had been
established in December 1995, as a prelude to these financing
modifications. Simultaneously with the establishment of these
new credit facilities, the Company canceled a $600 million
commercial paper facility and a $300 million revolving credit facility.
The Company also sold $70,000 of customer receivables.
Net cash provided by operating activities was $43,401 for the
three month period ended March 30, 1996 as compared to net cash
provided of $213,046 for the three month period ended April 1,
1995. The net cash proceeds from the sale of $70,000 and
$350,000 of customer receivables were reported as operating cash
flows in the three months ended March 30, 1996 and April 1,
1995, respectively. Without the effects of the sale of customer
receivables, net cash used by operating activities would have
been $26,599 and $136,954 for the three month period ended March
30, 1996 and April 1, 1995, respectively. Other working capital
items including decreases in accounts payable and other accrued
liabilities represented significant uses of cash during the
first quarters of 1996 and 1995.
Net additions to property and equipment for the three months
ended March 30, 1996 were $9,052 compared to $42,867 for the
first quarter of 1995. The capital spending in 1996 was
primarily related to the new addition to Eddie Bauer's
headquarters, continued Eddie Bauer retail store expansion, and
improvements to the recently purchased retail distribution
facility in Columbus, OH.
During the three months ended March 30, 1996, the Company
incurred approximately $1,135 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 1996 were primarily for closing costs
incurred relating to the warehouse buildings.
The Company believes that its cash on hand, together with cash
flows anticipated to be generated from operations, and
borrowings under its existing credit facilities and other
available sources of funds, will be adequate to fund the
Company's capital and operating requirements for the foreseeable
future.
- -----------------------------------------------------------------------------
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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 Senior Vice President May 14, 1996
James W. Sievers (Chief Financial Officer)
</TABLE>
