SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Fiscal Quarter Ended 1-8668
September 29, 1995 Commission File Number
___________________________
FINGERHUT COMPANIES, INC.
(Exact name of registrant as specified in its charter)
Minnesota 41-1396490
(State of Incorporation) (I.R.S. Employer Identification No.)
4400 Baker Road, Minnetonka, Minnesota 55343
(Address of principal executive offices)
(612) 932-3100
(Registrant's telephone number, including area code)
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 _____
As of November 6, 1995, 45,949,722 shares of the Registrant's Common Stock,
$.01 par value, were outstanding.
FINGERHUT COMPANIES, INC.
FORM 10-Q
September 29, 1995
TABLE OF CONTENTS
Part I - Financial Information Page
Item 1. Financial Statements
Consolidated Statements of Earnings (Unaudited) -
thirteen weeks and thirty-nine weeks ended
September 29, 1995 and September 30, 1994.............. 3
Consolidated Statements of Financial Position
(Unaudited) - September 29, 1995, September 30, 1994
and December 30, 1994.................................. 4
Consolidated Statements of Cash Flows (Unaudited) -
thirty-nine weeks ended September 29, 1995 and
September 30, 1994 .................................... 5
Condensed Notes to Consolidated Financial
Statements (Unaudited)................................. 6
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition .................... 11
Part II - Other Information
Item 1. Legal Proceedings...................................... 18
Item 6. Exhibits and Reports on Form 8-K ...................... 18
Signatures...................................................... 19
FINGERHUT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands of dollars)
(Unaudited)
Thirteen Weeks Ended Thirty-nine Weeks Ended
Sept. 29, Sept. 30, Sept. 29, Sept. 30,
1995 1994 1995 1994
Revenues:
Net sales $ 406,235 $ 381,526 $1,180,048 $1,094,974
Finance income and
other revenues 72,503 47,919 178,962 142,646
478,738 429,445 1,359,010 1,237,620
Costs and expenses:
Product cost 202,664 187,831 586,670 545,500
Administrative and
selling expenses 175,512 158,952 502,988 443,608
Provision for
uncollectible accounts 59,660 53,958 162,833 144,715
Discount on sale of
accounts receivable 21,162 12,357 55,849 33,310
Interest expense, net 6,499 5,401 18,884 19,132
465,497 418,499 1,327,224 1,186,265
Earnings before taxes 13,241 10,946 31,786 51,355
Provision for income
taxes 4,688 3,859 11,255 18,103
Net earnings $ 8,553 $ 7,087 $ 20,531 $ 33,252
Earnings per share $ .18 $ .14 $ .42 $ .66
Dividends $ .04 $ .04 $ .12 $ .12
Weighted average shares 48,801,047 50,384,859 48,481,302 50,597,745
See accompanying Condensed Notes to Consolidated Financial Statements.
FINGERHUT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In thousands of dollars)
(Unaudited)
Sept. 29, Sept. 30, December 30,
1995 1994 1994
ASSETS
Current assets:
Cash and cash equivalents $ 63,369 $ 52,523 $ 85,382
Customer accounts receivable, net 370,163 314,396 351,605
Inventories, net 203,850 191,524 159,048
Promotional material 117,022 92,765 59,477
Deferred and other income taxes 105,632 64,445 116,755
Other 19,352 17,017 19,645
Total current assets 879,388 732,670 791,912
Property and equipment, net 277,724 209,202 226,385
Excess of cost over fair value of
net assets acquired, net 44,954 45,219 44,321
Customer lists, net 12,385 13,676 12,601
Other assets 25,211 18,767 22,714
$1,239,662 $1,019,534 $1,097,933
LIABILITIES
Current liabilities:
Accounts payable $ 223,056 $ 167,295 $ 156,121
Accrued payroll and employee benefits 29,220 31,874 39,891
Other accrued liabilities 52,950 47,424 55,595
Accrued unusual charges 7,780 - 29,358
Short-term debt 127,000 - -
Current portion of long-term debt 100,131 352 336
Current income taxes payable - 9,941 42,327
Total current liabilities 540,137 256,886 323,628
Long-term debt, less current portion 146,460 246,613 246,516
Deferred income taxes 26,023 9,188 21,762
Other non-current liabilities 8,483 5,086 5,077
721,103 517,773 596,983
STOCKHOLDERS' EQUITY
Preferred stock - - -
Common Stock 459 463 456
Additional paid-in capital 258,474 257,703 253,926
Earnings reinvested 259,626 243,595 246,568
Total stockholders' equity 518,559 501,761 500,950
$1,239,662 $1,019,534 $1,097,933
See accompanying Condensed Notes to Consolidated Financial Statements.
FINGERHUT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
(Unaudited)
Thirty-nine Weeks Ended
Sept. 29, Sept. 30,
1995 1994
Cash flows from operating activities:
Net earnings $ 20,531 $ 33,252
Adjustments to reconcile net earnings to
net cash used by operating activities:
Depreciation and amortization 32,785 26,262
Change in assets and liabilities, excluding
the effects of business divestitures:
Customer accounts receivable, net (18,558) 40,851
Inventories, net (44,802) (39,495)
Promotional material and other current assets (54,165) (40,568)
Accounts payable 66,935 43,368
Accrued payroll and employee benefits (10,671) (6,603)
Accrued liabilities (19,528) (11,761)
Current income taxes payable (41,028) (15,920)
Deferred and other income taxes 15,384 1,006
Other (5,234) (6,034)
Net cash (used) provided by operating activities (58,351) 24,358
Cash flows from investing activities:
Additions to property and equipment (81,485) (43,311)
Proceeds from business divestitures - 12,039
Net cash used by investing activities (81,485) (31,272)
Cash flows from financing activities:
Repayments of long-term debt (261) (200)
Revolving credit facility 127,000 -
Issuance of common stock 4,441 1,523
Repurchase of common stock (7,862) (1,353)
Cash dividends paid (5,495) (5,555)
Net cash provided (used) by financing activities 117,823 (5,585)
Net decrease in cash and cash equivalents (22,013) (12,499)
Cash and cash equivalents at beginning of period 85,382 65,022
Cash and cash equivalents at end of period $ 63,369 $ 52,523
Supplemental noncash investing and financing activities:
Tax benefit from exercise of non-qualified
stock options $ 1,299 $ 1,505
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 18,200 $ 17,180
Cash paid during the period for income taxes $ 36,981 $ 32,517
Included in cash and cash equivalents were liquid investments with
original maturities of fifteen days or less.
See accompanying Condensed Notes to Consolidated Financial Statements.
FINGERHUT COMPANIES, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
1. Consolidated financial statements
The consolidated financial statements of Fingerhut Companies, Inc.
(the "Company") reflect the financial position and results of
operations of the Company and its wholly owned subsidiaries.
The consolidated financial statements as of September 29, 1995 and
September 30, 1994, and for the thirteen and thirty-nine weeks ended
September 29, 1995 and September 30, 1994, included herein are
unaudited and have been prepared by the Company pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. The
interim financial statements reflect all adjustments (consisting of
normal recurring accruals) that are, in the opinion of management,
necessary for a fair statement of the results for the interim
periods. These consolidated financial statements should be read in
conjunction with the consolidated financial statements and the notes
thereto included in the Company's 1994 Annual Report to Shareholders
and incorporated by reference in the Company's annual report on Form
10-K filed with the Securities and Exchange Commission. The results
of operations for the interim period should not be considered
indicative of the results to be expected for the entire year.
Reclassifications have been made to prior periods' consolidated
financial statements whenever necessary to conform to the current
period's presentation.
2. Earnings per share of common stock and common stock equivalents
Earnings per share was computed by dividing net earnings by the
weighted average shares of common stock and common stock equivalents
outstanding during the periods. The dilutive effect of the potential
exercise of outstanding options to purchase shares of common stock
was calculated using the treasury stock method.
3. Unusual Charges
In 1994, the Company recorded charges relating to the cancellation of
its proposed 24-hour cable television shopping channel, substantially
scaling back USA Direct, and provisions for corporate streamlining.
A summary of the change in the Company's reserve for unusual charges
is as follows:
Accrued Accrued
unusual unusual
charges at charges at
December 30, Reserves Reserve Sept. 29,
(In thousands of dollars) 1994 Utilized Adjustments 1995
Product costs $ 5,253 $ (559) $ (1,895) $ 2,799
Administrative and
selling expenses 20,771 (15,278) (675) 4,818
Provision for
uncollectible accounts 3,334 (271) (2,900) 163
$ 29,358 $(16,108) $ (5,470) $ 7,780
4. Sale of accounts receivable
Fingerhut Master Trust
In May 1995, the Company amended the Series 1994-2 Supplement under
the Fingerhut Master Trust to extend the life of the Series 1994-2
certificates. The Series 1994-2 certificates enter into amortization
periods beginning in May 1999.
The proceeds from the sale of accounts receivable to the Fingerhut
Master Trust were $1.034 billion, $899.8 million and $1.096 billion
as of September 29, 1995, September 30, 1994 and December 30, 1994,
respectively. The Company's retained interest in the Fingerhut
Master Trust was approximately $176.7 million, $122.7 million and
$184.2 million as of September 29, 1995, September 30, 1994 and
December 30, 1994, respectively.
Fingerhut Financial Services Master Trust
In May 1995, the Fingerhut Financial Services Master Trust (the "FFS
Master Trust") was established. The FFS Master Trust allows the
Company to sell, on a continuous basis, an undivided interest in a
pool of MasterCard receivables generated or acquired by Direct
Merchants Credit Card Bank, National Association, a wholly owned
subsidiary of the Company. In May 1995, the FFS Master Trust issued
the Series 1995-1 variable funding certificates with a maximum
proceeds amount of $512.6 million. The Series 1995-1 certificates
enter into amortization periods beginning in May 1999. As of
September 29, 1995, the proceeds received from the sale of MasterCard
receivables to the FFS Master Trust were $235.5 million and the
Company's retained interest in the FFS Master Trust was $61.4
million, which includes $5.8 million of excess servicing and $14.4
million in an investor reserve account held by the Trustee of the FFS
Master Trust.
5. Derivative Financial Instruments Held or Issued for Purposes other
than Trading
The Company enters into interest rate cap and swap agreements to
hedge its economic exposure to fluctuating interest rates from
floating rate accounts receivable certificates issued by the
Fingerhut Master Trust and the FFS Master Trust. Any premium paid
for these agreements is amortized to "Discount on sale of accounts
receivable" and "Finance income and other revenues", respectively,
where the economic exposure to fluctuating interest rates exists.
In connection with the amendment of the Series 1994-2 Supplement
under the Fingerhut Master Trust and the issuance of the Series
1995-1 certificates under the FFS Master Trust, the Company entered into
two interest rate cap agreements. The interest rate cap agreements
effectively cap thirty day LIBOR at 11.2% on a maximum notional
amount of $209.7 million of certificates issued by the Fingerhut
Master Trust, and $513.0 million of certificates issued by the FFS
Master Trust.
In June and July 1995, the Company also entered into interest rate
swap agreements for a maximum notional amount of $400.0 million and
$500.0 million, respectively. The agreements exchange an obligation
to pay a variable interest rate for an obligation to pay a fixed
interest rate of 5.8% and 5.7%, respectively. These agreements
expire in July 1998.
6. Customer accounts receivable, net
Customer accounts receivable, net consisted of the following:
(In thousands of dollars) Sept. 29, Sept. 30, December 30,
1995 1994 1994
Due from customers $ 521,612 $ 426,688 $ 484,158
Reserve for uncollectible
accounts, net of anticipated
recoveries (99,100) (73,295) (81,271)
Reserve for returns
and exchanges (14,511) (11,621) (14,889)
Other reserves (17,720) (13,379) (17,223)
Net collectible amount 390,281 328,393 370,775
Unearned finance income (20,118) (13,997) (19,170)
Customer accounts
receivable, net $ 370,163 $ 314,396 $ 351,605
7. Revolving credit facility
Interest expense related to the revolving credit facility for the
thirty-nine week periods ended September 29, 1995 and September 30,
1994 was $4.1 million and $28 thousand, respectively. The average
outstanding balances during such periods were $75.0 million and $586
thousand, respectively, and the average annual interest rate for the
1995 and 1994 periods was 7.1% and 6.8%, respectively.
8. Stockholders' equity
During the thirty-nine week period ended September 29, 1995, 459,399
shares of common stock were issued related to the exercise of
employee stock options and 96,878 shares of common stock were issued
under the Fingerhut Companies, Inc. Employee Stock Purchase Plan.
The Company also repurchased at prevailing market prices 214,100
shares of its common stock for an aggregate of $3.2 million. The
total shares of common stock outstanding as of September 29, 1995 was
45,915,080.
The Company repurchased 1,724,956 options granted under the Fingerhut
Companies, Inc. Performance Enhancement Investment Plan. These
options were repurchased for the original purchase price paid by the
option holders. The repurchase had no impact on the Company's
earnings.
9. Subsequent events
On October 19, 1995, the Company declared a cash dividend in the
amount of $.04 per share, aggregating approximately $1.8 million,
payable on November 22, 1995, to the shareholders of record as of the
close of business on November 2, 1995.
In October 1995, the Company issued 22,442 shares of common stock
under the Fingerhut Companies, Inc. Employee Stock Purchase Plan.
FINGERHUT COMPANIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
THIRTEEN AND THIRTY-NINE WEEKS ENDED
SEPTEMBER 29, 1995 AND SEPTEMBER 30, 1994
Results of Operations
Third Quarter
Net sales for the current 13-week period were $406.2 million compared to
net sales of $381.5 million for the related period in 1994, an increase of
6%. Net sales from Fingerhut's new customer acquisition programs
increased 20% to $70.5 million as the Company increased its investment in
new customers over the prior year in order to strengthen its customer
list. Net sales from Fingerhut's existing customer list were $323.2
million compared to $307.1 million in 1994, an increase of 5%. Mailings
to the existing customer list in the quarter were 5% below prior year
levels, which reflects more stringent mailing decisions to eliminate
marginal programs.
Net finance income and other revenues for the current 13-week period
increased 51% to $72.5 million from $47.9 million in the comparable 1994
period. The increase was due to net revenues from MasterCard accounts
issued by the Company's subsidiary, Direct Merchants Credit Card Bank,
National Association ("Direct Merchants Bank") and increased finance
income from the Fingerhut core business as a result of higher revenues
from existing customers and the effect of lengthened payment plans.
Product cost for the current 13-week period was 49.9% of net sales, or
$202.7 million, compared to 49.2% of net sales, or $187.8 million, during
the comparable prior year period. The increase as a percent of net sales
was primarily due to offering lower retail prices in order to improve the
value package to our customers.
Administrative and selling expenses for the current 13-week period were
$175.5 million, or 43.2% of net sales, compared to $159.0 million, or
41.7% of net sales, in the comparable prior year period. Price increases
for paper and postage, increased investment in new customer acquisition
programs, as well as operating expenses associated with Direct Merchants
Bank contributed to the higher ratio of expense to net sales in the
quarter. These were partially offset by costs in the prior year
associated with discontinued businesses.
The provision for uncollectible accounts for the third quarter of 1995 was
$59.7 million, or 14.7% of net sales, compared to $54.0 million, or 14.1%
of net sales, for the same period in the prior year. The increase in the
provision as a percent of net sales was due primarily to Fingerhut's
aggressive program of new customer acquisitions as well as added
provisions resulting from delinquencies on new customer receivables.
Existing customer receivables are also experiencing higher delinquency
levels as compared to the prior year. If these higher delinquency
levels persist, additional provisions, which could be significant, will
be required. In addition, in the current quarter, provisions were established
for that portion of the MasterCard receivables which remain on the Company's
balance sheet.
Discount on sale of accounts receivable for the 13-week period ended
September 29, 1995 was $21.2 million compared to $12.4 million for the
comparable period in 1994. The increase resulted primarily from the
impact of short-term interest rate increases during 1994 and early 1995,
as well as the impact of extended pay plans and the expenses relating to
interest rate cap agreements entered into in December 1994. During the
third quarter, the Company entered into additional interest rate swap
agreements that will mitigate the impact from ongoing interest rate
fluctuations.
Net interest expense for the current 13-week period was $6.5 million
compared to $5.4 million in the third quarter of 1994. The increase was
due to higher borrowings under the revolving credit facility to fund
normal business needs and to finance the growth of the MasterCard
portfolio.
The effective tax rate for the third quarter of 1995 was 35.4% compared
with 35.3% in the comparable prior year period.
As a result of the items discussed above, net earnings for the 13-week
period ended September 29, 1995 were $8.6 million, or $.18 per share,
compared to third quarter 1994 net earnings of $7.1 million, or $.14 per
share.
Thirty-Nine Week Period
Fingerhut Companies, Inc. net sales for the 39-week period ended September
29, 1995 were $1.180 billion compared to $1.095 billion for the
corresponding period in 1994, an increase of 8%, or 6% excluding Figi's,
which was not consolidated in 1994. Net sales from Fingerhut's new
customer acquisition programs increased 14% to $211.0 million. Net sales
from Fingerhut's existing customer list increased 4% to $891.0 million.
Both increases were primarily due to additional mailings and higher
average order size, partially offset by lower response rates. Other net
sales were $77.9 million compared to $54.3 million for the same period in
1994. The increase was the result of the inclusion of revenues of Figi's,
which was not consolidated in 1994, and sales from infomercials first
aired in 1994.
Net finance income and other revenues year-to-date was $179.0 million
compared to $142.6 million for the same period in 1994. The increase was
primarily due to revenues associated with MasterCard accounts issued by
the Company's subsidiary, Direct Merchants Bank, as well as increased
revenues from Fingerhut's existing customers and the effect of lengthened
payment plans related to those sales, partially offset by the one-time
benefit of implementing the Fingerhut Master Trust in 1994.
Product cost for the 39-week period ended September 29, 1995 was $586.7
million or 49.7% of net sales compared to $545.5 million or 49.8% of net
sales during the comparable prior year period. The reduction as a percent
of net sales was due to cost efficiencies, offset by lower retail prices
in the third quarter.
Administrative and selling expenses year-to-date were $503.0 million, or
42.6% of net sales, compared to $443.6 million or 40.5% of net sales in
the comparable prior year period. The increase as a percent of net sales
was due to higher costs as a result of price increases for paper and
postage, lower response rates from the existing customer list and new
customer acquisition programs, solicitation and operating expenses
associated with Direct Merchants Bank's Master Card products, and costs
associated with Figi's which was not consolidated in 1994. These were
partially offset by lower expenses due to our cost reduction program.
The provision for uncollectible accounts year-to-date was $162.8 million
or 13.8% of net sales compared with $144.7 million or 13.2% of net sales
for the same period in the prior year. The increase in the provision as a
percent of net sales was primarily due to a higher mix of new customer
acquisition programs as well as increased delinquency levels on the core
business. In addition, provisions for MasterCard receivables which remain
on the Company's balance sheet were offset by the recovery of reserves
established for unusual charges in the fourth quarter of 1994.
Discount on sale of accounts receivable for the 39-week period ended
September 29,1995 was $55.8 million compared to $33.3 million for the
comparable period in 1994. The increase resulted primarily from the
impact of short-term interest rate increases during 1994 and early 1995,
expense relating to interest rate cap agreements entered into in December
1994, an increase in the amount of accounts receivable sold due to an
increase in sales from Fingerhut's existing customers, the replacement of
the Receivable Transfer Agreement with the Fingerhut Master Trust, as well
as the impact of extended pay plans.
Net interest expense year-to-date was $18.9 million compared to $19.1
million in the comparable prior year period. The expiration of interest
rate swap agreements in June 1994 offset the higher utilization of the
revolving credit agreement used to fund normal business needs and to
finance the growth of the MasterCard portfolio.
The effective tax rate for the first 39-weeks of 1995 was 35.4% compared
with 35.3% in the prior year.
As a result of the items discussed above, net earnings for the 39-week
period ended September 29, 1995 were $20.5 million, or $.42 per share,
compared to year-to-date 1994 net earnings of $33.3 million, or $.66 per
share.
Liquidity and Capital Resources
The Company funds its operations through internally generated funds, the sale
of accounts receivable pursuant to the Fingerhut Master Trust and the Fingerhut
Financial Services Master Trust, borrowings under the Revolving Credit Facility
and issuance of long-term debt and common stock.
The proceeds received as of September 29, 1995 and December 30, 1994 from
the sale of Fingerhut accounts receivable were $1.034 billion and $l.096
billion, respectively, compared with $899.8 million as of September 30,
1994 and $829.0 million as of December 31, 1993. Proceeds received from
the sale of MasterCard receivables were $235.3 million as of September 29,
1995. The Company plans to issue additional series of certificates to
support future receivables growth.
The Revolving Credit Facility provides for aggregate commitments of $400.0
million, which includes the issuance of up to $200.0 million in letters of
credit. The commitment expires in October 1999. As of September 29,
1995, the Company had an outstanding revolving credit balance of $127.0
million and outstanding letters of credit of $4.6 million. As of
September 30, 1994, the Company had no borrowings under the Revolving
Credit Facility but had outstanding letters of credit of $8.8 million.
Additional outstanding open letters of credit under a separate agreement
aggregated $52.2 million and $43.5 million at September 29, 1995 and
September 30, 1994, respectively.
The Company had an aggregate amount of fixed rate notes outstanding of
$245.0 million as of September 29, 1995 and September 30, 1994. A total
of $65.0 million of the notes mature in June 1996 and an additional $35.0
million mature in August 1996. The Company believes it will be able to
refinance these notes prior to their maturity dates and on acceptable
terms.
The Company used $58.4 million of cash for operations during the 39-week
period ended September 29, 1995, compared with $24.4 million provided by
operations for the related period in 1994. This net $82.7 million
increase in cash used for operations resulted from increased working
capital requirements as well as the $12.7 million decrease in earnings.
The most significant items affecting the increase in working capital
requirements were changes in customer accounts receivable, promotional
material and other current assets, and accounts payable. The change in
customer accounts receivable from a $40.9 million source of cash in 1994
to an $18.6 million use of cash in 1995 resulted primarily from an
increase in the percent of accounts receivable which could be sold in 1994
due to the replacement of the Receivables Transfer Agreement with the
Fingerhut Master Trust in June 1994. The change also reflects retained
receivables associated with MasterCard accounts issued by the Company's
subsidiary, Direct Merchants Bank. The increased use of cash for
promotional material and other current assets was due to higher inventory
levels to support increased mailings and price increases for paper and
postage. These charges were partially offset by additional cash provided
by an increase in accounts payable due to the implementation of a new
payable system during the third quarter of 1995, and the timing of
purchases and disbursements.
The $50.2 million increase in net cash used by investing activities was
the result of increased capital expenditures related to the facility
additions discussed below and proceeds received in 1994 from businesses
divested at the end of 1993.
Several facility additions were approved by the Company's Board of
Directors in 1994. Construction continues in 1995 on a western
distribution center in Spanish Fork, Utah which began in the third quarter
of 1994. Capital spending through September 29, 1995 was $47.5 million.
This one million square-foot facility has projected capital spending of
approximately $60.0 million. The data and technology center in Plymouth,
Minnesota opened in the second quarter of 1995. Capital spending through
September 29, 1995 was $24.7 million.
The owner of certain office and warehouse facilities exercised its right
to require the Company to repurchase those facilities for approximately
$14.9 million. The Company plans to complete the purchase on or before
January 15, 1996.
During 1994, the Company announced that its Board of Directors authorized
the repurchase of up to 2.5 million shares of the Company's common stock
that may be made from time to time at prevailing prices in the open market
or by block purchase and may be discontinued at any time. The purchases
are made within certain restrictions relating to volume, price and timing
in order to minimize the impact of the purchase on the market for the
Company's stock. During the first quarter of 1995, the Company
repurchased at prevailing market prices 214,100 shares of its common stock
for an aggregate of $3.2 million. No purchases were made during the
second or third quarters. Total purchases to date were 1,021,500 shares
for an aggregate of $16.6 million.
On October 19, 1995, the Company declared a cash dividend of $.04 per
share, or an aggregate of $1.8 million, payable on November 22, 1995, to
the shareholders of record as of the close of business on November 2,
1995.
In October 1995, the Company issued 22,442 shares of common stock under
the Fingerhut Companies, Inc. Employee Stock Purchase Plan.
The Company believes it will have sufficient funds available to meet
current and anticipated commitments.
Part II. Other Information
Item 1. Legal Proceedings.
On or about October 16, 1995, the Company was served with a
legal action commenced in federal district court in Arizona by
two shareholders against the Company, a current officer and a
former officer alleging violations of Sections 10(b) and 20 of
the Securities Exchange Act of 1934, as amended and Rule 10b-5
thereunder. The complaint (1) alleges that the Company made
false and misleading statements or omissions with respect to its
plans regarding S The Shopping Network, (2) requests
certification as a class action on behalf of shareholders of the
Company who purchased Common Stock during a specified period and
(3) alleges unspecified damages. The Company considers the
plaintiffs' claims to be without merit and intends to vigorously
defend the matter.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
11 Computation of Earnings per Share
27 Financial Data Schedule
(b) Reports on Form 8-K:
None
SIGNATURES
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.
FINGERHUT COMPANIES, INC.
Date: November 13, 1995 By:
/s/ Peter G. Michielutti
Peter G. Michielutti
Chief Financial Officer
(Principal Financial Officer)
Date: November 13, 1995 By:
/s/ Thomas C. Vogt
Thomas C. Vogt
Corporate Controller
(Principal Accounting Officer)
Exhibit 11
FINGERHUT COMPANIES, INC. AND SUBSIDIARIES
Computation of Earnings Per Share
(In thousands of dollars, except per share data)
Unaudited
Thirteen Weeks Ended Thirty-nine Weeks Ended
Sept. 29, Sept. 30, Sept. 29, Sept. 30,
1995 1994 1995 1994
Primary
Net earnings (a) $ 8,553 $ 7,087 $ 20,531 $ 33,252
Weighted average shares
of common stock
outstanding 45,897,854 46,307,929 45,798,385 46,288,077
Common stock equivalents 2,903,193 4,076,930 2,682,917 4,309,668
Weighted average shares of
common stock and common
stock equivalents 48,801,047 50,384,859 48,481,302 50,597,745
Primary earnings per share
of common stock and common
stock equivalents (a/b) $ .18 $ .14 .42 .66
Fully diluted
Net earnings (c) $ 8,553 $ 7,087 $ 20,531 $ 33,252
Weighted average shares
of common stock
outstanding 45,897,854 46,307,929 45,798,385 46,288,077
Common stock
equivalents 2,961,016 4,122,952 2,877,264 4,328,132
Weighted average shares of
common stock and common
stock equivalents (d) 48,858 870 50,430,881 48,675,649 50,616,209
Fully diluted earnings per
share of common stock and
common stock equivalents
(c/d) $ .18 $ .14 $ .42 $ .66
Common stock equivalents for primary earnings per share are
computed by the treasury stock method using the average market
price.
Common stock equivalents for quarterly fully diluted earnings per
share are computed by the treasury stock method using the ending
market price, average market price for the last month or the average
of the fully diluted monthly amounts used in the quarter, whichever is
higher.
Common stock equivalents for year-to-date fully diluted earnings
per share are computed by the treasury stock method using the
ending market price or the average of the fully diluted monthly
amounts used in the period, which ever is higher.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements of Fingerhut Companies, Inc. for the fiscal
quarter ended September 29, 1995 and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-29-1995
<PERIOD-END> SEP-29-1995
<CASH> 63,369
<SECURITIES> 0
<RECEIVABLES> 521,612
<ALLOWANCES> 151,449
<INVENTORY> 203,850
<CURRENT-ASSETS> 879,388
<PP&E> 397,213
<DEPRECIATION> 119,489
<TOTAL-ASSETS> 1,239,662
<CURRENT-LIABILITIES> 540,137
<BONDS> 146,460
<COMMON> 459
0
0
<OTHER-SE> 518,100
<TOTAL-LIABILITY-AND-EQUITY> 1,239,662
<SALES> 406,235
<TOTAL-REVENUES> 478,738
<CGS> 202,664
<TOTAL-COSTS> 437,836
<OTHER-EXPENSES> 21,162
<LOSS-PROVISION> 59,660
<INTEREST-EXPENSE> 6,499
<INCOME-PRETAX> 13,241
<INCOME-TAX> 4,688
<INCOME-CONTINUING> 8,553
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,553
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
</TABLE>
