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FINGERHUT REPORTS CONTINUED STRONG PERFORMANCE IN THIRD QUARTER SALES AND EARNINGS

 MINNEAPOLIS, Oct. 14 /PRNewswire/ -- Fingerhut Companies, Inc. (NYSE: FHT) announced that 1993 third quarter net earnings were $13.8 million or $.27 per share compared with 1992 third quarter net earnings of $5.6 million or $.11 per share, representing an increase in earnings per share of approximately 145 percent. (As previously reported, the slower than anticipated startup of the Tennessee distribution center affected net earnings for the third quarter of 1992.) The change in the federal income tax law during the 1993 third quarter resulted in a net favorable effect of $.03 per share. Net revenues for the third quarter were $379.3 million compared with net revenues of $353.2 million for the corresponding period in 1992, an increase of approximately 7 percent or an increase of approximately 11 percent excluding COMB, which was sold in September 1993.
 Net earnings for the first nine months were $34.5 million or $.69 per share compared with $26.4 million or $.51 per share for the related period in 1992, an increase in earnings per share of approximately 35 percent. Net revenues for the first nine months were $1.172 billion compared with net revenues of $1.022 billion for the related period of 1992, an increase of approximately 15 percent.
 "We are pleased with our performance for the third quarter of 1993," said Ted Deikel, chairman and CEO. "Customer response, particularly from our existing customers, continues to be strong. As a result, we continue on target for another record year."
 The company sold the assets of COMB Corporation ("COMB") to Damark International, Inc. effective Sept. 3, 1993. The company recognized a gain on the sale, but the transaction did not have a material impact on the earnings for the quarter. The company is also actively seeking a buyer for Figi's Inc.("Figi's").
 THIRD QUARTER
 The 1993 third quarter results reflected strong performance from Fingerhut Corporation's existing customer list, improved earnings performance from other subsidiaries, and reduced expenditures on acquiring new customers, which were partially offset by increased depreciation and higher fulfillment costs.
 Net sales for the 13 week period ended Sept. 24, 1993 were $339.3 million compared to $323.8 million for the related period in 1992, an increase of approximately 5 percent or an increase of approximately 8 percent excluding COMB. Fingerhut Corporation ("Fingerhut"), the core business, had third quarter net sales of $310.9 million compared to $279.2 million in the corresponding period in 1992, an increase of approximately 11 percent. Net sales from Fingerhut's existing customer list increased approximately 21 percent to $258.5 million from $213.0 million in the comparable period in 1992 primarily as a result of additional mailings. Net sales from Fingerhut's new customer acquisition programs were $52.4 million compared to $66.2 million in 1992. The decrease was primarily a result of a planned reduction in less profitable mass media promotions. Net sales from USA Direct Incorporated ("USA Direct") were $6.2 million compared to $13.9 million for the related period in 1992 reflecting timing of product introductions. Net sales from Figi's were $2.2 million compared to $2.5 million in the comparable period in 1992. Net sales from COMB were $15.4 million for the 10 weeks prior to its sale compared to $23.8 million for the 13 week period of 1992.
 Net finance income for the current thirteen week period was $40.0 million compared to $29.3 million in the related period in 1992. The increase was primarily due to higher sales from Fingerhut's existing customers and extended payment plans on those sales.
 Product cost for the 13 week period ended Sept. 24, 1993 was $176.4 million, or 52.0 percent of net sales, compared to $158.0 million, or 48.8 percent of net sales, during the comparable prior year period. The increase as a percentage of net sales resulted primarily from continuation of the price/value strategy implemented in the fall of 1992 and, to a lesser extent, higher fulfillment costs. Administrative and selling expenses for the current 13 week period were $131.6 million, or 38.8 percent of net sales, compared to $129.3 million, or 39.9 percent of net sales, in the comparable prior year period.
 Administrative and selling expenses as a percentage of net sales decreased primarily due to an increased sales mix from Fingerhut's existing customers (which have a lower advertising cost as a percent of net sales) and, to a lesser extent, improved sales per advertising dollar from Fingerhut's new and existing customers and improved performance of Montgomery Ward Direct, which were partially offset by planned higher depreciation costs included in administrative expenses.
 The provision for uncollectible accounts for the third quarter of 1993 was $39.3 million, or 11.6 percent of net sales, compared with $44.3 million, or 13.7 percent of net sales, for the corresponding period in the prior year due to an increased sales mix from Fingerhut's existing customers (which have a lower provision for uncollectible accounts) and due to lower delinquency rates on sales from both new and existing customers.
 Discount on sale of accounts receivable for the 13 week period ended Sept. 24, 1993 was $6.1 million compared to $4.2 million for the comparable period in 1992, resulting from an increase in sales and, accordingly, in the amount of accounts receivable sold, partially offset by lower average commercial paper rates in 1993.
 Interest expense, net for the current 13 week period was $7.4 million compared to $8.9 million in the third quarter of 1992. The decrease was primarily attributable to the expiration of $160 million of interest rate swap agreements on June 30, 1993. This was partially offset by interest expense on borrowings related to the company's repurchase of stock in December 1992.
 The effective tax rate for the third quarter of 1993 was 25.7 percent compared with 34.2 percent in the corresponding prior year period. As a result of the Omnibus Budget Reconciliation Act of 1993 passed on Aug. 10, 1993 and effective retroactive to Jan. 1, 1993, the company recognized a one-time benefit of $2.0 million on its deferred tax asset as of Dec. 25, 1992 and the act increased the company's current year tax rate by one percentage point, which increased the third quarter provision for income tax by $0.5 million.
 THIRTY-NINE WEEK PERIOD
 Net sales for the 39 week period ended Sept. 24, 1993 were $1.061 billion compared to $936.7 million for the corresponding period in 1992, an increase of approximately 13 percent. Fingerhut had year- to-date net sales of $916.9 million compared to $795.4 million in 1992, an increase of approximately 15 percent. Net sales from Fingerhut's existing customer list increased approximately 20 percent to $741.7 million compared to $616.7 million for the 39 week period in 1992 primarily as a result of increased mailings and improved sales per mailing. Net sales from Fingerhut's new customer acquisition programs were $175.2 million compared to $178.7 million in the related 1992 period. Fingerhut acquired approximately 160 thousand more new customers than during the comparable period in 1992. Net sales from USA Direct were $51.9 million compared to $39.5 million for the corresponding period in 1992. Net sales from Figi's were $13.4 million compared to $18.6 million in the related 1992 period as a result of a planned reduction in mailings. Net sales from COMB were $64.3 million for the 36 week period prior to the sale compared to $70.1 million for the 39 week period in 1992.
 Net finance income year-to-date was $111.4 million compared to $85.1 million for the same period in 1992. The increase was primarily due to higher sales from Fingerhut's existing customers and extended payment plans on those sales.
 Product cost for the 39 week period ended Sept. 24, 1993 was $541.0 million, or 51.0 percent of net sales, compared to $449.8 million, or 48.0 percent of net sales, during the comparable prior year period. The increase as a percentage of net sales resulted primarily from continuation of the price/value strategy implemented in the fall of 1992 and, to a lesser extent, higher fulfillment costs.
 Administrative and selling expenses for the first three quarters of 1993 were $406.9 million, or 38.4 percent of net sales, compared to $368.5 million, or 39.3 percent of net sales, in the comparable prior year period. Administrative and selling expenses as a percentage of net sales decreased due to improved sales per advertising dollar from Fingerhut's existing and new customers and an increased mix of sales from Fingerhut's existing customers (which have a lower advertising cost as a percent of net sales) as well as improved performance of Montgomery Ward Direct, which were partially offset by planned higher depreciation costs included in administrative expenses.
 The provision for uncollectible accounts was $132.1 million, or 12.5 percent of net sales, compared with $125.8 million, or 13.4 percent of net sales, for the related period in the prior year due to an increase in sales mix from Fingerhut's existing customers (which have a lower provision for uncollectible accounts as a percent of net sales) and lower delinquency rates on sales from Fingerhut's new customer acquisition programs and existing customer programs.
 Discount on sale of accounts receivable for the 39 week period ended Sept. 24, 1993 was $15.7 million compared to $13.5 million for the corresponding period in 1992, resulting from an increase in sales and, accordingly, in the amount of accounts receivable sold, partially offset by lower average commercial paper rates in 1993.
 Interest expense, net for the first three quarters of 1993 was $26.9 million compared to $23.9 million in the comparable prior year period. The increase of $3.0 million was primarily attributable to interest expense on borrowings related to the company's repurchase of stock in December 1992 and the 1992 replacement of current debt with longer-term debt agreements.
 The effective tax rate for the first 39 weeks of 1993 was 30.2 percent compared with 34.2 percent in the same period of the prior year. As a result of the Omnibus Budget Reconciliation Act of 1993, the company recognized a one-time benefit of $2.0 million on the company's deferred tax asset as of Dec. 25, 1992 and the act increased the company's current year income tax rate by one percentage point which increased the third quarter provision for income tax by $0.5 million. In addition, the company recognized a favorable cumulative effect of $0.3 million due to the adoption of FAS 109 in the first quarter of 1993.
 The company announced that it has declared a quarterly cash dividend in the amount of $.04 per share payable on Nov. 18, 1993, to the shareholders of record at the close of business on Oct. 28, 1993.
 Fingerhut Companies, Inc. is a multi-media direct marketing company selling a broad range of products and services directly to consumers via catalogs, television and other media. The company employs approximately 8,500 people in Minnesota, Wisconsin and Tennessee. Fingerhut Companies, Inc. common stock trades on the New York Stock Exchange under the symbol FHT.
 FINGERHUT COMPANIES, INC. AND SUBSIDIARIES
 (In thousands of dollars, except per share data)
 (Unaudited)
 13 Weeks Ended 39 Weeks Ended
 9/24/93 9/25/92 9/24/93 9/25/92
 Revenues $379,313 $353,189 $1,171,955 1,021,734
 Net income $13,759 $ 5,609 $34,499 $26,434
 Earnings per share of
 common stock and
 common stock equivalents $.27 $.11 $.69 $.51
 Weighted average shares of
 common stock and common stock
 equivalents (000s) 50,255 51,926 49,897 52,061
 CONSOLIDATED STATEMENTS OF EARNINGS
 (In thousands of dollars, except per share data)
 (Unaudited)
 13 Weeks Ended 39 Weeks Ended
 9/24/93 9/25/92 9/24/93 9/25/92
 Revenues:
 Net sales $339,308 $323,845 $1,060,563 $ 936,655
 Finance income, net 40,005 29,344 111,392 85,079
 -- 379,313 353,189 1,171,955 1,021,734
 Costs and expenses:
 Product cost 176,364 157,957 540,979 449,767
 Administrative and
 selling expenses 131,572 129,250 406,915 368,520
 Provision for
 uncollectible accounts 39,292 44,334 132,082 125,846
 Discount on sale of
 accounts receivable 6,147 4,218 15,663 13,483
 Interest expense, net 7,423 8,906 26,863 23,945
 -- 360,798 344,665 1,122,502 981,561
 Income before income
 tax provision 18,515 8,524 49,453 40,173
 Provision for income taxes 4,756 2,915 14,954 13,739
 Net income $13,759 $ 5,609 $ 34,499 $ 26,434
 Earnings per share of
 common stock and common
 stock equivalents $ .27 $ .11 $ .69 $ .51
 Dividends declared per
 share of common stock $ .04 $ .04 $ .12 $ .12
 Weighted average shares
 of common stock and
 common stock
 equivalents 50,254,733 51,926,056 49,897,175 52,060,758
 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
 (In thousands of dollars)
 (Unaudited)
 Assets 9/24/93 12/25/92
 Current assets:
 Cash and cash equivalents $10,382 $86,682
 Customer accounts receivable, net 298,643 320,692
 Inventories, net 204,767 147,415
 Promotional material 81,356 49,649
 Deferred and other income taxes 123,580 69,368
 Other 8,522 8,308
 Total current assets 727,250 682,114
 Property, plant and equipment, net 187,832 167,697
 Excess of cost over fair value of
 net assets acquired, net 46,245 47,506
 Customer lists, net 14,854 15,692
 Deferred income taxes 20,723 --
 Other assets 11,500 12,640
 -- $1,008,404 $925,649
 Liabilities
 Current liabilities:
 Accounts payable $147,969 $151,419
 Accrued payroll and employee benefits 28,779 36,098
 Other accrued liabilities 51,471 60,546
 Current portion of long-term debt 363 333
 Deferred income taxes 58,061 --
 Current income taxes payable 4,942 20,717
 Total current liabilities 291,585 269,113
 Long-term debt, less current portion 247,001 247,190
 Deferred income taxes 32,605 5,940
 Other non-current liabilities 4,301 3,815
 -- 575,492 526,058
 Stockholders' equity
 Preferred stock $.01 par value;
 5,000,000 shares authorized; none
 issued or outstanding -- --
 Common stock, $.01 par value;
 100,000,000 shares authorized;
 46,117,748 and 45,751,398 issued
 and outstanding in 1993 and 1992,
 respectively 461 458
 Additional paid-in capital 254,491 250,153
 Earnings reinvested 177,960 148,980
 Total shareholders' equity 432,912 399,591
 -- $1,008,404 $925,649
 Share data gives effect to the two-for-one stock split effective
 July 29, 1993.
 -0- 10/14/93
 /CONTACT: Theodore Deikel of Fingerhut Companies, Inc., 612-936-5410/
 (FHT)


CO: Fingerhut Companies, Inc. ST: Minnesota IN: REA SU: ERN

AL -- MN003 -- 1995 10/14/93 07:55 EDT
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Date:Oct 14, 1993
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