Delaware (State or other jurisdiction of incorporation or organization) | 20-3509435 (I.R.S. Employer Identification No.) |
1618 Main Street Dallas, Texas (Address of principal executive offices) | 75201 (Zip code) |
Large accelerated filer ¨ | Accelerated filer ¨ | |
Non-accelerated filer x (Do not check if a smaller reporting company) | Smaller reporting company ¨ | |
Emerging growth company ¨ |
Page No. | ||
• | our ability to maintain a relevant, enjoyable and reliable omni-channel experience and to anticipate and meet our customers' evolving shopping preferences, the failure of which could adversely affect our financial performance and brand image; |
• | economic conditions that negatively impact consumer spending and demand for our merchandise; |
• | the highly competitive nature of the luxury retail industry; |
• | our ability to anticipate, identify and respond effectively to changing fashion trends and to accurately forecast merchandise demand, the failure of which could adversely affect our business, financial condition and results of operations; |
• | our ability to anticipate, identify and address risks related to the complexity of our omni‑channel plans, the failure of which could adversely affect our revenues or margins as well as damage our reputation, brands and competitive position; |
• | the success of our advertising and marketing programs; |
• | our ability to drive customer traffic to our retail stores and the success of the expansion, growth and remodel of our retail stores, which are subject to numerous risks, some of which are beyond our control; |
• | costs associated with our expansion and growth strategies, which could adversely affect our performance and results of operations; |
• | the significance of the portion of our revenues from our stores in four states, which exposes us to economic circumstances and catastrophic occurrences unique to those states, such as the impact of fluctuations in the global price of crude oil in our Texas markets; |
• | our dependence on our relationships with certain designers, vendors and other sources of merchandise as they relate to, among other things: (i) the manner in which goods are available to us, (ii) the levels of merchandise made available to us and (iii) the pricing and payment terms with respect to our purchases; |
• | a material disruption in our information systems, delays or difficulties in implementing or integrating new systems or enhancing or expanding current systems, or our failure to achieve the anticipated benefits of any new or updated information systems, which could adversely affect our business or results of operations; |
• | our dependence on positive perceptions of our company, which, if eroded, could adversely affect our customer, employee and vendor relationships; |
• | a breach in information privacy, which could negatively impact our operations; |
• | inflation and foreign currency fluctuations, primarily fluctuations in the U.S. dollar against the Euro and British pound, which could adversely affect our results of operations; |
• | the loss of, or disruption in, one or more of our distribution facilities, which could adversely affect our business and operations; |
• | our substantial indebtedness, which could adversely affect our business, financial condition, results of operations, credit ratings and ability to obtain additional debt financing, and our ability to fulfill our obligations with respect to such indebtedness; |
• | the restrictions in our debt agreements that may limit our flexibility in operating our business and our ability to pursue future strategic investments and initiatives; |
• | our failure to comply with, or developments in, laws, rules or regulations, which could affect our business or results of operations; and |
• | other risks, uncertainties and factors set forth in this Annual Report on Form 10-K, including those set forth under “Risk Factors” in Item 1A. |
• | omni-channel marketing programs designed to promote customer awareness of our offerings of the latest fashion trends and services; |
• | our InCircle loyalty program designed to cultivate long-term relationships with our customers; |
• | our proprietary credit card program facilitating the extension of credit to our customers; |
• | knowledgeable, professional and well-trained sales associates; and |
• | customer-friendly websites. |
Fiscal year ended | |||||||||
July 29, 2017 | July 30, 2016 | August 1, 2015 | |||||||
Women’s Apparel | 32 | % | 32 | % | 32 | % | |||
Women’s Shoes, Handbags and Accessories | 29 | 28 | 28 | ||||||
Men’s Apparel and Shoes | 12 | 12 | 12 | ||||||
Cosmetics and Fragrances | 12 | 11 | 11 | ||||||
Designer and Precious Jewelry | 9 | 10 | 10 | ||||||
Home Furnishings and Decor | 5 | 5 | 5 | ||||||
Other | 1 | 2 | 2 | ||||||
100 | % | 100 | % | 100 | % |
• | Bal Harbour, Florida; |
• | Chicago, Illinois; |
• | Oak Brook, Illinois; |
• | Beverly Hills, California; and |
• | Palo Alto, California. |
• | Roosevelt Field: We opened a 111,000 square‑foot full‑line Neiman Marcus store in Garden City, New York in February of fiscal year 2016. |
• | Hudson Yards: We signed a lease to open a flagship full‑line Neiman Marcus store on Manhattan’s flourishing west side at Hudson Yards, a new $25 billion, 28‑acre mixed‑use development project. The approximately 190,000 square‑foot, multi‑level store, which we currently expect to open in fiscal year 2019, marks the first full‑line Neiman Marcus store in New York City and will anchor the one‑million square‑foot Shops at Hudson |
• | our approach to omni-channel retailing; |
• | distinctive merchandise assortments, which we believe are more upscale than other luxury and premium multi-branded retailers, and exclusive merchandise offerings that are only available in our stores; |
• | excellent customer service; |
• | prime real estate locations; |
• | premier online websites; and |
• | elegant shopping environments. |
• | our omni-channel approach to business; |
• | strong national brands; |
• | diverse product selection; |
• | loyalty program; |
• | customer service; |
• | prime shopping locations; and |
• | strong designer relationships that allow us to offer the top merchandise from each designer. |
• | general economic and industry conditions, including inflation, deflation, changes related to interest rates and foreign currency exchange rates, rates of economic growth, current and expected unemployment levels and government fiscal and monetary policies; |
• | the performance of the financial, equity and credit markets; |
• | consumer disposable income levels, consumer confidence levels, the availability, cost and level of consumer debt and consumer behaviors towards incurring and paying debt; |
• | national and global geo-political uncertainty; |
• | the strength of the U.S. dollar against international currencies, most notably the Euro and British pound, and a resulting impact on tourism and spending by international customers in the U.S.; |
• | a significant and sustained decline in the global price of crude oil and the resulting impact on stakeholders in the oil and gas industries, particularly in the Texas markets in which we have a significant presence; |
• | changes in prices for commodities and energy, including fuel; and |
• | current and expected tax rates and policies. |
• | expansion of product or service offerings by existing competitors; |
• | entry by new competitors into markets and channels in which we currently operate; |
• | alteration of the distribution channels used by designers for the sale of their goods to consumers; and |
• | adoption by existing competitors of innovative retail sales methods. |
• | making it more difficult for us to satisfy our obligations with respect to our indebtedness; |
• | limiting our ability to incur, or guarantee, additional indebtedness or obtain additional financing to fund future working capital, capital expenditures, acquisitions, execution of our business and growth strategies or other general corporate requirements; |
• | requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other general corporate purposes and future growth; |
• | limiting our ability to pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock; |
• | increasing our vulnerability to general adverse economic, industry and competitive conditions and government regulations; |
• | exposing us to the risk of increased interest rates as certain of our borrowings, including borrowings under our credit facilities, are at variable rates of interest; |
• | limiting our flexibility in planning for and reacting to changes in the industry in which we compete and our ability to take advantage of new business opportunities; |
• | placing us at a disadvantage compared to other, less leveraged competitors; |
• | increasing our cost of borrowing; and |
• | causing our suppliers or other parties with which we maintain business relationships to experience uncertainty about our future and seek alternative relationships with third parties or seek to alter their business relationships with us. |
• | incur additional indebtedness and guarantee indebtedness; |
• | create liens; |
• | make investments, loans or advances; |
• | merge or consolidate; |
• | sell assets, including capital stock of subsidiaries or make acquisitions; |
• | pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock; |
• | prepay, redeem or repurchase certain indebtedness; |
• | enter into transactions with affiliates; and |
• | alter our lines of business. |
Owned | Owned Subject to Ground Lease | Leased | Total | ||||||||
Neiman Marcus Stores | 856,000 | 2,329,000 | 2,411,000 | 5,596,000 | |||||||
Bergdorf Goodman Stores | — | — | 316,000 | 316,000 | |||||||
Last Call Stores and Other | — | — | 972,000 | 972,000 | |||||||
Distribution, Support and Office Facilities | 1,330,000 | 150,000 | 1,638,000 | 3,118,000 |
Locations | Fiscal Year Operations Began | Gross Store Sq. Feet | Locations | Fiscal Year Operations Began | Gross Store Sq. Feet | |||||||
Dallas, Texas (Downtown)(1)* | 1908 | 129,000 | Denver, Colorado(3) | 1991 | 90,000 | |||||||
Dallas, Texas (NorthPark)(2) | 1965 | 218,000 | Scottsdale, Arizona(2) | 1992 | 114,000 | |||||||
Houston, Texas (Galleria)(3) | 1969 | 224,000 | Troy, Michigan(3) | 1993 | 157,000 | |||||||
Bal Harbour, Florida(2) | 1971 | 97,000 | Short Hills, New Jersey(3) | 1996 | 137,000 | |||||||
Atlanta, Georgia(2) | 1973 | 206,000 | King of Prussia, Pennsylvania(3) | 1996 | 145,000 | |||||||
St. Louis, Missouri(2) | 1975 | 145,000 | Paramus, New Jersey(3) | 1997 | 141,000 | |||||||
Northbrook, Illinois(2) | 1976 | 144,000 | Honolulu, Hawaii(3) | 1999 | 181,000 | |||||||
Fort Worth, Texas(2) | 1977 | 92,000 | Palm Beach, Florida(2) | 2001 | 53,000 | |||||||
Washington, D.C.(2) | 1978 | 130,000 | Plano, Texas (Willow Bend)(4)* | 2002 | 156,000 | |||||||
Newport Beach, California(3) | 1978 | 153,000 | Tampa, Florida(3) | 2002 | 96,000 | |||||||
Beverly Hills, California(1)* | 1979 | 185,000 | Coral Gables, Florida(2) | 2003 | 136,000 | |||||||
Westchester, New York(2) | 1981 | 138,000 | Orlando, Florida(4)* | 2003 | 95,000 | |||||||
Las Vegas, Nevada(2) | 1981 | 174,000 | San Antonio, Texas(4) | 2006 | 120,000 | |||||||
Oak Brook, Illinois(2) | 1982 | 98,000 | Boca Raton, Florida(2) | 2006 | 136,000 | |||||||
San Diego, California(2) | 1982 | 106,000 | Charlotte, North Carolina(3) | 2007 | 80,000 | |||||||
Fort Lauderdale, Florida(3) | 1983 | 92,000 | Austin, Texas(3) | 2007 | 80,000 | |||||||
San Francisco, California(4)* | 1983 | 252,000 | Natick, Massachusetts(4)* | 2008 | 103,000 | |||||||
Chicago, Illinois (Michigan Ave.)(2) | 1984 | 188,000 | Woodland Hills, California(3) | 2009 | 120,000 | |||||||
Boston, Massachusetts(2) | 1984 | 111,000 | Bellevue, Washington(2) | 2010 | 125,000 | |||||||
Palo Alto, California(3) | 1986 | 120,000 | Walnut Creek, California(3) | 2012 | 88,000 | |||||||
McLean, Virginia(4) | 1990 | 130,000 | Garden City, New York(3) | 2016 | 111,000 |
Locations | Fiscal Year Operations Began | Gross Store Sq. Feet | |||
New York City (Main)(1) | 1901 | 250,000 | |||
New York City (Men’s)(1) | 1991 | 66,000 |
Fiscal year ended | Thirty-nine weeks ended | Thirteen weeks ended | Fiscal year ended | |||||||||||||||||||||
July 29, 2017 | July 30, 2016 | August 1, 2015 | August 2, 2014 | November 2, 2013 | August 3, 2013 (1) | |||||||||||||||||||
(in millions, except per share data) | (Successor) | (Successor) | (Successor) | (Successor) | (Predecessor) | (Predecessor) | ||||||||||||||||||
OPERATING RESULTS DATA | ||||||||||||||||||||||||
Revenues | $ | 4,706.0 | $ | 4,949.5 | $ | 5,095.1 | $ | 3,710.2 | $ | 1,129.1 | $ | 4,648.2 | ||||||||||||
Cost of goods sold including buying and occupancy costs (excluding depreciation) | 3,220.0 | 3,322.5 | 3,305.5 | 2,563.0 | 685.4 | 2,995.4 | ||||||||||||||||||
Selling, general and administrative expenses (excluding depreciation) | 1,129.3 | 1,117.9 | 1,162.1 | 835.0 | 266.4 | 1,047.8 | ||||||||||||||||||
Income from credit card program | (60.1 | ) | (60.6 | ) | (52.8 | ) | (40.7 | ) | (14.7 | ) | (53.4 | ) | ||||||||||||
Depreciation and amortization (2) | 329.5 | 338.1 | 322.8 | 262.0 | 46.0 | 188.9 | ||||||||||||||||||
Impairment charges (3) | 510.7 | 466.2 | — | — | — | — | ||||||||||||||||||
Operating earnings (loss) | (453.2 | ) | (261.7 | ) | 318.0 | 8.8 | 32.1 | 446.4 | ||||||||||||||||
Net earnings (loss) | $ | (531.8 | ) | $ | (406.1 | ) | $ | 14.9 | $ | (134.1 | ) | $ | (13.1 | ) | $ | 163.7 |
BALANCE SHEET DATA (at period end) | ||||||||||||||||||||||
Total assets | $ | 7,703.5 | $ | 8,256.9 | $ | 8,719.8 | $ | 8,574.9 | $ | 5,247.9 | ||||||||||||
Total liabilities | 7,236.9 | 7,313.8 | 7,306.0 | 7,142.3 | 4,416.9 | |||||||||||||||||
Long-term debt, net of debt issuance costs (excluding current maturities) | $ | 4,675.5 | $ | 4,584.3 | $ | 4,556.0 | $ | 4,432.8 | $ | 2,672.4 |
Fiscal year ended | Thirty-nine weeks ended | Thirteen weeks ended | Fiscal year ended | |||||||||||||||||||||
July 29, 2017 | July 30, 2016 | August 1, 2015 | August 2, 2014 | November 2, 2013 | August 3, 2013 (1) | |||||||||||||||||||
(dollars in millions, except sales per square foot) | (Successor) | (Successor) | (Successor) | (Successor) | (Predecessor) | (Predecessor) | ||||||||||||||||||
OTHER DATA | ||||||||||||||||||||||||
Change in comparable revenues (4) | (5.2 | )% | (4.1 | )% | 3.9 | % | 5.4 | % | 5.7 | % | 4.9 | % | ||||||||||||
Number of full-line stores open at period end | 44 | 44 | 43 | 43 | 43 | 43 | ||||||||||||||||||
Sales per square foot (5) | $ | 505 | $ | 548 | $ | 590 | $ | 440 | $ | 138 | $ | 552 | ||||||||||||
Percentage of revenues transacted online | 31.3 | % | 29.0 | % | 26.3 | % | 24.6 | % | 21.4 | % | 22.2 | % | ||||||||||||
Adjusted EBITDA (6) | $ | 433.8 | $ | 584.9 | $ | 710.6 | $ | 501.3 | $ | 197.2 | $ | 682.7 | ||||||||||||
Adjusted EBITDA as a percentage of revenues | 9.2 | % | 11.8 | % | 13.9 | % | 13.5 | % | 17.5 | % | 14.7 | % | ||||||||||||
Capital expenditures (7) | 204.6 | $ | 301.4 | $ | 270.5 | $ | 138.0 | $ | 36.0 | $ | 146.5 | |||||||||||||
Depreciation expense | 225.5 | 226.9 | 185.6 | 113.3 | 34.2 | 141.5 | ||||||||||||||||||
Rent expense and related occupancy costs | 116.1 | 119.4 | 117.1 | 79.6 | 24.1 | 96.7 |
(1) | Fiscal year 2013 consists of the fifty-three weeks ended August 3, 2013. All other fiscal years consist of fifty-two weeks. |
(2) | Amounts include incremental depreciation expense arising from fair value adjustments recorded in connection with purchase accounting. |
(3) | Based upon our assessment of economic conditions in fiscal year 2017 and fiscal year 2016, our expectations of future business conditions and trends, our projected revenues, earnings and cash flows as well as other market factors such as the weighted average cost of capital and valuation multiples, we determined certain of our tradenames, goodwill and long-lived assets to be impaired and recorded impairment charges in fiscal year 2017 aggregating $510.7 million and in fiscal year 2016 aggregating $466.2 million. |
(4) | Comparable revenues include (i) revenues derived from our retail stores open for more than fifty-two weeks, including stores that have been relocated or expanded, and (ii) revenues from our online operations. Comparable revenues exclude revenues of (i) closed stores and (ii) designer websites created and operated pursuant to contractual arrangements with certain designer brands that had expired by the first quarter of fiscal year 2015. As MyTheresa was acquired in October 2014, comparable revenues for fiscal year 2015 exclude revenues from MyTheresa. Comparable revenues for fiscal year 2016 include revenues from MyTheresa beginning in the second quarter of fiscal year 2016. The calculation of the change in comparable revenues for fiscal year 2013 is based on revenues for the fifty-two weeks ended July 27, 2013 compared to revenues for the fifty-two weeks ended July 28, 2012. |
(5) | Sales per square foot are calculated as revenues of our Neiman Marcus and Bergdorf Goodman full-line stores for the applicable period divided by weighted average square footage. Weighted average square footage includes a percentage of period-end square footage for new and closed stores equal to the percentage of the period during which they were open. The calculation of sales per square foot for fiscal year 2013 is based on revenues for the fifty-two weeks ended July 27, 2013. |
(6) | For an explanation of Adjusted EBITDA as a measure of our operating performance and a reconciliation to net earnings (loss), see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Non-GAAP Financial Measures.” |
(7) | Amounts represent gross capital expenditures and exclude developer contributions of $37.4 million, $38.3 million, $34.7 million, $5.7 million, $0.0 million and $7.2 million, respectively, for the periods presented. |
• | We are investing in technology to enhance the customer shopping experiences in both our online and store operations, including the launch of NMG One in fiscal year 2017. NMG One is an integrated merchandising and distribution system designed to enable us to purchase, share, manage and sell our inventories across our omni-channel operations and brands more efficiently; |
• | We are making capital investments to remodel our existing stores as well as to open new stores in select markets such as Garden City, New York (opened in February 2016), Fort Worth, Texas (opened in February 2017) and New York City (currently scheduled to open in fiscal year 2019); |
• | We are re-engineering our costs to optimize our resources and organizational processes through a comprehensive review project we refer to as "Organizing for Growth". In connection with Organizing for Growth, we eliminated approximately 315 positions in fiscal year 2017 and approximately 500 positions in fiscal year 2016 across our stores, divisions and facilities; and |
• | We have expanded our international footprint by acquiring MyTheresa in October 2014. |
• | Revenues — Our revenues for fiscal year 2017 were $4,706.0 million, a decrease of 4.9% from $4,949.5 million in fiscal year 2016. Comparable revenues for fiscal year 2017 decreased 5.2% compared to fiscal year 2016. In fiscal year 2017, revenues generated by our online operations were $1,471.7 million, or 31.3% of consolidated revenues. Comparable revenues from our online operations in fiscal year 2017 increased 2.5% from fiscal year 2016. |
Fiscal year 2017 | |||
Fourth quarter | (0.5 | )% | |
Third quarter | (4.9 | ) | |
Second quarter | (6.8 | ) | |
First quarter | (8.0 | ) |
• | the volatility and uncertainty in domestic and global economic conditions and the resulting impact on the market for luxury merchandise; |
• | the strength of the U.S. dollar against international currencies, most notably the Euro and British pound, and a resulting impact on tourism and spending by international customers in the U.S.; |
• | a significant and sustained decline in the global price for crude oil and the resulting impact on stakeholders in the oil and gas industries, particularly in the Texas markets in which we have a significant presence; and |
• | implementation and conversion issues related to NMG One, which prevented us from fulfilling certain customer demand both in our stores and websites. |
• | Cost of Goods Sold Including Buying and Occupancy Costs (Excluding Depreciation) ("COGS") — Compared to fiscal year 2016, COGS as a percentage of revenues increased 130 basis points in fiscal year 2017. The increase in COGS, as a percentage of revenues, was primarily attributable to: |
• | decreased product margins due primarily to: |
• | higher markdowns and promotional costs incurred on lower than expected revenues; and |
• | higher delivery and processing costs; and |
• | the deleveraging of buying and occupancy costs. |
• | Selling, General and Administrative Expenses (Excluding Depreciation) ("SG&A") — Compared to fiscal year 2016, SG&A as a percentage of revenues increased 140 basis points in fiscal year 2017. The higher levels of SG&A expenses, as a percentage of revenues, were primarily attributable to: |
• | the deleveraging of a significant portion of our SG&A expenses, primarily payroll and benefits; |
• | higher levels of expenses and other costs incurred in connection with: |
• | (i) investments in technology, (ii) the growth of our international footprint through MyTheresa and (iii) costs related to the opening of new stores and the remodeling of existing stores; and |
• | certain corporate expenses, primarily professional fees; |
• | lower favorable non-cash adjustments to the required liability for stock option awards requiring variable accounting; and |
• | higher credit card chargebacks and other fees. |
• | Impairment Charges — Based upon (i) the continuation of adverse economic and business trends, (ii) revisions to our anticipated future operating results and (iii) increases in the weighted average cost of capital used in estimating the fair value of our tradenames and our reporting units under a discounted cash flow model, we determined certain of our tradenames, goodwill, and long-lived assets to be impaired and recorded impairment charges aggregating $510.7 million in fiscal year 2017 and $466.2 million in fiscal year 2016. |
Fiscal year ended | |||||||||
July 29, 2017 | July 30, 2016 | August 1, 2015 | |||||||
Revenues | 100.0 | % | 100.0 | % | 100.0 | % | |||
Cost of goods sold including buying and occupancy costs (excluding depreciation) | 68.4 | 67.1 | 64.9 | ||||||
Selling, general and administrative expenses (excluding depreciation) | 24.0 | 22.6 | 22.8 | ||||||
Income from credit card program | (1.3 | ) | (1.2 | ) | (1.0 | ) | |||
Depreciation expense | 4.8 | 4.6 | 3.6 | ||||||
Amortization of intangible assets | 1.1 | 1.2 | 1.6 | ||||||
Amortization of favorable lease commitments | 1.1 | 1.1 | 1.1 | ||||||
Other expenses | 0.6 | 0.5 | 0.8 | ||||||
Impairment charges | 10.9 | 9.4 | — | ||||||
Operating earnings (loss) | (9.6 | ) | (5.3 | ) | 6.2 | ||||
Interest expense, net | 6.3 | 5.8 | 5.7 | ||||||
Earnings (loss) before income taxes | (15.9 | ) | (11.1 | ) | 0.6 | ||||
Income tax expense (benefit) | (4.6 | ) | (2.9 | ) | 0.3 | ||||
Net earnings (loss) | (11.3 | )% | (8.2 | )% | 0.3 | % |
Fiscal year ended | ||||||||||||
July 29, 2017 | July 30, 2016 | August 1, 2015 | ||||||||||
Change in comparable revenues (1) | ||||||||||||
Total revenues | (5.2 | )% | (4.1 | )% | 3.9 | % | ||||||
Online revenues | 2.5 | % | 4.4 | % | 13.0 | % | ||||||
Percentage of revenues transacted online | 31.3 | % | 29.0 | % | 26.3 | % | ||||||
Store count | ||||||||||||
Neiman Marcus and Bergdorf Goodman full-line stores open at end of period | 44 | 44 | 43 | |||||||||
Last Call stores open at end of period | 38 | 42 | 43 | |||||||||
Sales per square foot (2) | $ | 505 | $ | 548 | $ | 590 | ||||||
Capital expenditures (3) | 204.6 | 301.4 | 270.5 | |||||||||
Depreciation expense | 225.5 | 226.9 | 185.6 | |||||||||
Rent expense and related occupancy costs | 116.1 | 119.4 | 117.1 | |||||||||
Non-GAAP financial measures | ||||||||||||
EBITDA (4) | $ | (123.7 | ) | $ | 76.4 | $ | 640.8 | |||||
Adjusted EBITDA (4) | $ | 433.8 | $ | 584.9 | $ | 710.6 |
(1) | Comparable revenues include (i) revenues derived from our retail stores open for more than fifty-two weeks, including stores that have been relocated or expanded, and (ii) revenues from our online operations. Comparable revenues exclude revenues of (i) closed stores and (ii) designer websites created and operated pursuant to contractual arrangements with certain designer brands that had expired by the first quarter of fiscal year 2015. As MyTheresa was acquired in October 2014, comparable revenues for fiscal year 2015 exclude revenues from MyTheresa. |
(2) | Sales per square foot are calculated as revenues of our Neiman Marcus and Bergdorf Goodman full-line stores for the applicable period divided by weighted average square footage. Weighted average square footage includes a percentage of period-end square footage for new and closed stores equal to the percentage of the period during which they were open. |
(3) | Amounts represent gross capital expenditures and exclude developer contributions of $37.4 million, $38.3 million and $34.7 million, respectively, for the periods presented. |
(4) | For an explanation of EBITDA and Adjusted EBITDA as measures of our operating performance and a reconciliation to net earnings (loss), see “—Non-GAAP Financial Measures.” |
• | Sales of merchandise — Revenues are recognized at the later of the point-of-sale or the delivery of goods to the customer. Revenues are reduced when our customers return goods previously purchased. We maintain reserves for anticipated sales returns based primarily on our historical trends. Revenues exclude sales taxes collected from our customers. |
• | Delivery and processing — We generate revenues from delivery and processing charges related to certain merchandise deliveries to our customers. |
• | general domestic and global economic and industry conditions, including inflation, deflation, changes related to interest rates and foreign currency exchange rates, rates of economic growth, current and expected unemployment levels and government fiscal and monetary policies; |
• | the performance of the financial, equity and credit markets; |
• | our ability to anticipate, identify and respond effectively to changing consumer demands, fashion trends and consumer shopping preferences and acquire goods meeting customers’ tastes and preferences; |
• | consumer disposable income levels, consumer confidence levels, the availability, cost and level of consumer debt and consumer behaviors towards incurring and paying debt; |
• | national and global geo-political uncertainty; |
• | changes in the level of consumer spending generally and, specifically, on luxury goods; |
• | the strength of the U.S. dollar against international currencies, most notably the Euro and British pound, and a resulting impact on tourism and spending by international customers in the U.S.; |
• | a significant and sustained decline in the global price for crude oil and the resulting impact on stakeholders in the oil and gas industries, particularly in the Texas markets in which we have a significant presence; |
• | changes in prices for commodities and energy, including fuel; |
• | current and expected tax rates and policies; |
• | a material disruption in our information systems, or delays or difficulties in implementing or integrating new systems or enhancing or expanding current systems, or our failure to achieve the anticipated benefits of any new or updated information systems; |
• | changes in the level of full-price sales; |
• | changes in the level and timing of promotional events conducted; |
• | changes in the level of delivery and processing revenues collected from our customers; and |
• | changes in the composition and the rate of growth of our sales transacted in store and online. |
• | Inventory costs — We utilize the retail inventory method of accounting. Under the retail inventory method, the valuation of inventories at cost and the resulting gross margins are determined by applying a calculated cost-to-retail ratio, for various groupings of similar items, to the retail value of our inventories. The cost of the inventory reflected in the Consolidated Financial Statements is decreased by charges to cost of goods sold at average cost and the retail value of the inventory is lowered through the use of markdowns. Earnings are negatively impacted when merchandise is marked down. With the introduction of new fashions in the first and third fiscal quarters of each fiscal year and our emphasis on full-price selling in these quarters, a lower level of markdowns and higher margins are characteristic of these quarters. |
• | Buying costs — Buying costs consist primarily of salaries and expenses incurred by our merchandising and buying operations. |
• | Occupancy costs — Occupancy costs consist primarily of rent, property taxes and operating costs of our retail, distribution and support facilities. A significant portion of our buying and occupancy costs are fixed in nature and are not dependent on the revenues we generate. |
• | Delivery and processing costs — Delivery and processing costs consist primarily of delivery charges we pay to third party carriers and other costs related to the fulfillment of customer orders not delivered at the point-of-sale. |
• | our ability to order an appropriate amount of merchandise to match customer demand and the related impact on the level of net markdowns and promotions costs incurred; |
• | customer acceptance of and demand for the merchandise we offer in a given season and the related impact of such factors on the level of full-price sales; |
• | factors affecting revenues generally, including pricing and promotional strategies, product offerings and actions taken by competitors; |
• | changes in delivery and processing costs and our ability to pass such costs on to our customers; |
• | changes in occupancy costs associated primarily with the opening of new stores or distribution facilities; and |
• | the amount of vendor reimbursements we receive during the reporting period. |
• | changes in the level of our revenues; |
• | changes in the number of sales associates, which are due primarily to new store openings and expansion of existing stores, and the health care and related benefits expenses incurred as a result of such changes; |
• | changes in expenses incurred in connection with our advertising and marketing programs; and |
• | changes in expenses related to employee benefits due to general economic conditions such as rising health care costs. |
• | increase or decrease based upon the level of utilization of our proprietary credit cards by our customers; |
• | increase or decrease based upon the overall profitability and performance of the credit card portfolio due to the level of bad debts incurred or changes in interest rates, among other factors; |
• | increase or decrease based upon future changes to our credit card program in response to changes in regulatory requirements or other changes related to, among other things, the interest rates applied to unpaid balances and the assessment of late fees; and |
• | decrease based upon the level of future marketing and other services we provide to Capital One. |
• | the volatility and uncertainty in domestic and global economic conditions and the resulting impact on the market for luxury merchandise; |
• | the strength of the U.S. dollar against international currencies, most notably the Euro and British pound, and a resulting impact on tourism and spending by international customers in the U.S.; and |
• | a significant and sustained decline in the global price for crude oil and the resulting impact on stakeholders in the oil and gas industries, particularly in the Texas markets in which we have a significant presence. |
Fiscal year 2017 | |||
Fourth quarter | (0.5 | )% | |
Third quarter | (4.9 | ) | |
Second quarter | (6.8 | ) | |
First quarter | (8.0 | ) |
• | the volatility and uncertainty in domestic and global economic conditions and the resulting impact on the market for luxury merchandise; |
• | the strength of the U.S. dollar against international currencies, most notably the Euro and British pound, and a resulting impact on tourism and spending by international customers in the U.S.; |
• | a significant and sustained decline in the global price for crude oil and the resulting impact on stakeholders in the oil and gas industries, particularly in the Texas markets in which we have a significant presence; and |
• | the implementation and conversion issues related to NMG One, which prevented us from fulfilling certain customer demand both in our stores and websites. |
• | decreased product margins of approximately 100 basis points due primarily to: |
• | higher markdowns and promotional costs of approximately 70 basis points incurred on lower than expected revenues; and |
• | higher delivery and processing costs of approximately 20 basis points; and |
• | the deleveraging of buying and occupancy costs of approximately 30 basis points. |
• | the deleveraging of a significant portion of our SG&A expenses, primarily payroll and benefits, of approximately 50 basis points on the lower level of revenues; |
• | higher levels of expenses and other costs of approximately 45 basis points incurred in connection with: |
• | (i) investments in technology, (ii) the growth of our international footprint through MyTheresa and (iii) costs related to the opening of new stores and the remodeling of existing stores; and |
• | certain corporate expenses, primarily professional fees; |
• | lower favorable non-cash adjustments to the required liability for stock option awards requiring variable accounting of approximately 20 basis points; and |
• | higher credit card chargebacks and other fees of approximately 15 basis points. |
Fiscal year ended | ||||||||
(in millions) | July 29, 2017 | July 30, 2016 | ||||||
Expenses incurred in connection with strategic initiatives | $ | 21.3 | $ | 24.3 | ||||
MyTheresa acquisition costs | 3.3 | 4.4 | ||||||
Expenses related to Cyber-Attack, net of insurance recoveries | 1.5 | 1.0 | ||||||
Net gain from facility closure | — | (5.6 | ) | |||||
Other expenses | 3.6 | 2.9 | ||||||
Total | $ | 29.7 | $ | 27.1 |
• | impairment charges of $510.7 million; and |
• | other expenses of $29.7 million. |
• | impairment charges of $466.2 million; and |
• | other expenses of $27.1 million. |
Fiscal year ended | ||||||||
(in millions) | July 29, 2017 | July 30, 2016 | ||||||
Asset-Based Revolving Credit Facility | $ | 7.0 | $ | 3.1 | ||||
Senior Secured Term Loan Facility | 130.1 | 124.8 | ||||||
mytheresa.com Credit Facilities | 0.1 | — | ||||||
Cash Pay Notes | 76.8 | 76.8 | ||||||
PIK Toggle Notes | 53.8 | 52.5 | ||||||
2028 Debentures | 8.9 | 8.9 | ||||||
Amortization of debt issue costs | 24.5 | 24.6 | ||||||
Capitalized interest | (6.3 | ) | (7.3 | ) | ||||
Other, net | 0.7 | 2.2 | ||||||
Interest expense, net | $ | 295.7 | $ | 285.6 |
Fiscal year 2016 | |||
Fourth quarter | (4.1 | )% | |
Third quarter | (5.0 | ) | |
Second quarter | (2.4 | ) | |
First quarter | (5.6 | ) |
• | the volatility and uncertainty in domestic and global economic conditions and the resulting impact on the market for luxury merchandise; |
• | the strengthening of the U.S. dollar against international currencies, most notably the Euro and British pound, a resulting impact on tourism and spending by international customers in the U.S.; and |
• | a significant decline in the global price for crude oil and the resulting impact on stakeholders in the oil and gas industries, particularly in the Texas markets in which we have a significant presence. |
• | decreased product margins of approximately 200 basis points due primarily to higher markdowns and promotional costs incurred on lower than expected revenues; and |
• | the deleveraging of buying and occupancy costs of approximately 20 basis points. |
• | payroll, incentive compensation and benefits expense savings realized of approximately 50 basis points in connection with Organizing for Growth and other efficiency initiatives; and |
• | lower non-cash stock compensation expenses of approximately 20 basis points due to a reduction in the required liability for stock option awards requiring variable accounting; partially offset by |
• | higher levels of expenses of approximately 30 basis points incurred in connection with our strategic initiatives, including costs related to the opening of new stores (our store in Garden City, New York opened in February 2016), the remodeling of existing stores, investments in technology and the growth of our international revenues through MyTheresa; and |
• | higher selling costs of approximately 20 basis points due to higher marketing expenses, related primarily to our online operations, and higher levels of credit card chargebacks subsequent to regulatory changes effective October 2015 with respect to retailers' liabilities for such losses. |
Fiscal year ended | ||||||||
(in millions) | July 30, 2016 | August 1, 2015 | ||||||
Expenses incurred in connection with strategic initiatives | $ | 24.3 | $ | 11.6 | ||||
MyTheresa acquisition costs | 4.4 | 19.4 | ||||||
Expenses related to Cyber-attack, net of insurance recoveries | 1.0 | 4.1 | ||||||
Net gain from facility closure | (5.6 | ) | — | |||||
Other expenses | 2.9 | 4.3 | ||||||
Total | $ | 27.1 | $ | 39.5 |
• | impairment charges of $466.2 million; and |
• | other expenses of $27.1 million. |
• | other expenses of $39.5 million; and |
• | impact of purchase accounting adjustments that increased COGS by $6.8 million related to the step-up in the carrying value of the acquired MyTheresa inventories. |
Fiscal year ended | ||||||||
(in millions) | July 30, 2016 | August 1, 2015 | ||||||
Asset-Based Revolving Credit Facility | $ | 3.1 | $ | 1.5 | ||||
Senior Secured Term Loan Facility | 124.8 | 125.6 | ||||||
mytheresa.com Credit Facilities | — | — | ||||||
Cash Pay Notes | 76.8 | 76.8 | ||||||
PIK Toggle Notes | 52.5 | 52.5 | ||||||
2028 Debentures | 8.9 | 8.9 | ||||||
Amortization of debt issue costs | 24.6 | 24.6 | ||||||
Capitalized interest | (7.3 | ) | (2.4 | ) | ||||
Other, net | 2.2 | 2.5 | ||||||
Interest expense, net | $ | 285.6 | $ | 289.9 |
• | state income taxes; and |
• | the non-deductible portion of transaction and other costs incurred in connection with the MyTheresa acquisition. |
• | EBITDA and Adjusted EBITDA: |
• | exclude certain tax payments that may represent a reduction in cash available to us; |
• | do not reflect changes in, or cash requirements for, our working capital needs, capital expenditures or contractual commitments; |
• | do not reflect our significant interest expense; and |
• | do not reflect the cash requirements necessary to service interest or principal payments on our debt. |
• | although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements; and |
• | other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. |
Fiscal year ended | Thirty-nine weeks ended | Thirteen weeks ended | Fiscal year ended | |||||||||||||||||||||
July 29, 2017 | July 30, 2016 | August 1, 2015 | August 2, 2014 | November 2, 2013 | August 3, 2013 | |||||||||||||||||||
(dollars in millions) | (Successor) | (Successor) | (Successor) | (Successor) | (Predecessor) | (Predecessor) | ||||||||||||||||||
Net earnings (loss) | $ | (531.8 | ) | $ | (406.1 | ) | $ | 14.9 | $ | (134.1 | ) | $ | (13.1 | ) | $ | 163.7 | ||||||||
Income tax expense (benefit) | (217.1 | ) | (141.1 | ) | 13.1 | (89.8 | ) | 7.9 | 113.7 | |||||||||||||||
Interest expense, net | 295.7 | 285.6 | 289.9 | 232.7 | 37.3 | 169.0 | ||||||||||||||||||
Depreciation expense | 225.5 | 226.9 | 185.6 | 113.3 | 34.2 | 141.5 | ||||||||||||||||||
Amortization of intangible assets and favorable lease commitments | 104.0 | 111.2 | 137.3 | 148.6 | 11.7 | 47.4 | ||||||||||||||||||
EBITDA | $ | (123.7 | ) | $ | 76.4 | $ | 640.8 | $ | 270.8 | $ | 78.1 | $ | 635.3 | |||||||||||
EBITDA as a percentage of revenues | (2.6 | )% | 1.5 | % | 12.6 | % | 7.3 | % | 6.9 | % | 13.7 | % | ||||||||||||
Impairment charges (1) | 510.7 | 466.2 | — | — | — | — | ||||||||||||||||||
Amortization of inventory step-up (2) | — | — | 6.8 | 129.6 | — | — | ||||||||||||||||||
Incremental rent expense (3) | 9.7 | 10.5 | 11.0 | 8.5 | 0.8 | 4.0 | ||||||||||||||||||
Transaction and other costs (4) | 3.3 | 4.4 | 19.4 | 55.4 | 109.4 | — | ||||||||||||||||||
Non-cash stock-based compensation (5) | (1.2 | ) | (10.4 | ) | 0.1 | 6.2 | 2.5 | 9.7 | ||||||||||||||||
Expenses incurred in connection with openings of new stores / remodels of existing stores (6) | 8.6 | 15.1 | 12.3 | 4.0 | 1.8 | 5.1 | ||||||||||||||||||
Expenses incurred in connection with strategic initiatives (7) | 21.3 | 24.3 | 11.6 | 5.7 | 0.2 | — | ||||||||||||||||||
Expenses related to Cyber-Attack, net of insurance recoveries (8) | 1.5 | 1.0 | 4.1 | 12.6 | — | — | ||||||||||||||||||
Net gain from facility closure (9) | — | (5.6 | ) | — | — | — | — | |||||||||||||||||
Equity in loss of Asian e-commerce retailer / professional fees (10) | — | — | — | 3.6 | 1.5 | 14.2 | ||||||||||||||||||
Management fee due to Former Sponsors (11) | — | — | — | — | 2.8 | 10.0 | ||||||||||||||||||
Other expenses | 3.6 | 2.9 | 4.3 | 4.8 | — | 4.3 | ||||||||||||||||||
Adjusted EBITDA (12) | $ | 433.8 | $ | 584.9 | $ | 710.6 | $ | 501.3 | $ | 197.2 | $ | 682.7 | ||||||||||||
Adjusted EBITDA as a percentage of revenues | 9.2 | % | 11.8 | % | 13.9 | % | 13.5 | % | 17.5 | % | 14.7 | % |
(1) | In fiscal year 2017, we recorded pretax impairment charges related to (i) $309.7 million for the writedown to fair value of the net carrying value of tradenames, (ii) $196.2 million for the writedown to fair value of goodwill and (iii) $4.8 million for the writedown to fair value of the net carrying value of certain long-lived assets. |
(2) | The carrying values of inventories acquired in connection with the Acquisition and the acquisition of MyTheresa were stepped up to estimated fair value as of the respective acquisition dates and amortized into cost of goods sold as the acquired inventories were sold. |
(3) | Rental obligations and deferred real estate credits were revalued at fair value in connection with the Acquisition. These fair value adjustments increase post‑acquisition rent expense. |
(4) | Amounts relate to costs and expenses incurred in connection with the Acquisition and the acquisition of MyTheresa and are not expected to recur subsequent to fiscal year 2017. |
(5) | Non-cash stock-based compensation includes a $4.7 million adjustment recorded in fiscal year 2017 and a $14.3 million adjustment recorded in fiscal year 2016 to reduce our liability awards to estimated fair value. |
(6) | Amounts represent direct and incremental expenses incurred in connection with the openings of new stores as well as remodels to our existing stores. |
(7) | Amounts represent direct expenses incurred in connection with strategic initiatives, primarily NMG One and Organizing for Growth. |
(8) | For a further description of the Cyber‑Attack, see Item 1A, “Risk Factors—Risks Related to Our Business and Industry—A breach in information privacy could negatively impact our operations” and Note 12 of the Notes to Consolidated Financial Statements. |
(9) | Amount represents a net gain related to the closure and relocation of our regional service center in New York. |
(10) | Amounts relate to our equity in losses and professional fees incurred in connection with our prior non‑controlling investment in an Asian e‑commerce retailer. |
(11) | Amounts represent management fees paid to the Former Sponsors prior to the Acquisition. |
(12) | Excluded from the adjustments to calculate Adjusted EBITDA are the estimated impacts from the launch of our new NMG One integrated merchandising and distribution system in the first quarter of fiscal year 2017. We experienced issues with respect to the functionality and capabilities of certain portions of the new system. These issues primarily related to the processing of inventory receipts at our distribution centers, the timely payment of certain merchandise receipts, the transfer of inventories to our stores and the presentation of inventories on our websites. These issues prevented us from fulfilling certain customer demand in both our stores and websites. |
• | our revenues were adversely impacted; |
• | incremental markdowns were incurred; |
• | additional incremental costs, primarily for consulting services, were incurred; and |
• | significant internal resources were allocated to address these issues. |
• | the funding of our merchandise purchases; |
• | operating expense requirements; |
• | debt service requirements; |
• | capital expenditures for expansion and growth strategies, including new store construction, store remodels and upgrades of our management information systems; |
• | income tax payments; and |
• | obligations related to our defined benefit pension plan ("Pension Plan"). |
Payments Due by Period | ||||||||||||||||||||
(in millions) | Total | Fiscal Year 2018 | Fiscal Years 2019-2020 | Fiscal Years 2021-2022 | Fiscal Year 2023 and Beyond | |||||||||||||||
Contractual obligations: | ||||||||||||||||||||
Asset-Based Revolving Credit Facility | $ | 263.0 | $ | — | $ | — | $ | 263.0 | $ | — | ||||||||||
Senior Secured Term Loan Facility (1) | 2,839.6 | 29.4 | 58.8 | 2,751.4 | — | |||||||||||||||
mytheresa.com Credit Facilities (2) | — | — | — | — | — | |||||||||||||||
Cash Pay Notes | 960.0 | — | — | 960.0 | — | |||||||||||||||
PIK Toggle Notes | 600.0 | — | — | 600.0 | — | |||||||||||||||
2028 Debentures | 125.0 | — | — | — | 125.0 | |||||||||||||||
Interest requirements (3) | 1,137.5 | 285.1 | 577.1 | 223.4 | 51.9 | |||||||||||||||
Lease obligations | 2,054.8 | 86.5 | 159.9 | 139.6 | 1,668.8 | |||||||||||||||
Minimum pension funding obligation (4) | 240.5 | 25.1 | 60.2 | 54.2 | 101.0 | |||||||||||||||
Other long-term liabilities (5) | 76.2 | 7.8 | 15.2 | 15.5 | 37.7 | |||||||||||||||
Inventory purchase and construction commitments (6) | 1,370.1 | 1,354.1 | 16.0 | — | — | |||||||||||||||
$ | 9,666.7 | $ | 1,788.0 | $ | 887.2 | $ | 5,007.1 | $ | 1,984.4 |
(1) | The above table does not reflect future excess cash flow prepayments, if any, that may be required under the Senior Secured Term Loan Facility. |
(2) | At July 29, 2017, there were no outstanding borrowings under the mytheresa.com Credit Facilities. |
(3) | The cash obligations for interest requirements assume (a) interest requirements on our fixed-rate debt obligations at their contractual rates, with interest paid in PIK interest for the October 2017 payment and the remaining interest paid entirely in cash with respect to the PIK Toggle Notes, (b) interest requirements on floating rate debt obligations not subject to interest rate swaps at rates in effect at July 29, 2017 and (c) interest requirements on floating rate debt obligations subject to interest rate swaps at the fixed rates provided through the swap agreements. Borrowings pursuant to the Senior Secured Term Loan Facility bear interest at floating rates, primarily based on LIBOR, but in no |
(4) | At July 29, 2017 (the most recent measurement date), our actuarially calculated projected benefit obligation for our Pension Plan was $620.9 million and the fair value of the assets was $380.2 million, resulting in a net liability of $240.7 million, which is included in other long-term liabilities at July 29, 2017. Our policy is to fund our Pension Plan at or above the minimum amount required by law. We made contributions of $10.7 million to the Pension Plan in fiscal year 2017 and no contributions during fiscal year 2016. As of July 29, 2017, we believe we will be required to contribute $25.1 million to the Pension Plan in fiscal year 2018. The amounts and timing of our contributions to our Pension Plan are subject to a number of uncertainties, including interest rate fluctuations and the investment performance of the assets held by the Pension Plan. We do not believe these uncertainties will have a material impact on our future liquidity. See Note 11 of the Notes to Consolidated Financial Statements in Item 15, which contains a further description of our Pension Plan. |
(5) | Included in other long-term liabilities at July 29, 2017 are our liabilities for our SERP and Postretirement Plans aggregating $111.9 million. Our scheduled obligations with respect to our SERP Plan and Postretirement Plan liabilities consist of expected benefit payments through 2027, as currently estimated using information provided by our actuaries. In addition, other long-term liabilities at July 29, 2017 included our liabilities related to (i) uncertain tax positions (including related accruals for interest and penalties) of $2.6 million and (ii) other obligations aggregating $44.2 million, primarily for employee benefits and accrued interest related to our PIK Toggle Notes. Future cash obligations related to these liabilities are not currently estimable. |
(6) | Construction commitments relate primarily to obligations pursuant to contracts for the construction of new stores and the remodels of existing stores expected as of July 29, 2017. These amounts represent the gross construction costs and exclude developer contributions of approximately $54.5 million, which we expect to receive pursuant to the terms of the construction contracts. |
Amount of Commitment by Expiration Period | ||||||||||||||||||||
(in millions) | Total | Fiscal Year 2018 | Fiscal Years 2019-2020 | Fiscal Years 2021-2022 | Fiscal Years 2023 and Beyond | |||||||||||||||
Other commercial commitments: | ||||||||||||||||||||
Asset-Based Revolving Credit Facility (1) | $ | 900.0 | $ | — | $ | — | $ | 900.0 | $ | — | ||||||||||
mytheresa.com Credit Facilities | 17.1 | — | — | — | 17.1 | |||||||||||||||
Surety bonds | 3.4 | 3.2 | 0.2 | — | — | |||||||||||||||
$ | 920.5 | $ | 3.2 | $ | 0.2 | $ | 900.0 | $ | 17.1 |
(1) | As of July 29, 2017, we had outstanding borrowings of $263.0 million under the Asset-Based Revolving Credit Facility, outstanding letters of credit of $1.8 million and unused commitments of $635.3 million, subject to a borrowing base, of which $90.0 million of such capacity is available to us subject to certain restrictions as more fully described in Note 8 of the Notes to Consolidated Financial Statements in Item 15. Our working capital requirements are greatest in the first and second fiscal quarters as a result of higher seasonal requirements. See “—Financing Structure at July 29, 2017—Asset-Based Revolving Credit Facility” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Seasonality.” |
• | Level 1 — Unadjusted quoted prices for identical instruments traded in active markets. |
• | Level 2 — Observable market-based inputs or unobservable inputs corroborated by market data. |
• | Level 3 — Unobservable inputs reflecting management’s estimates and assumptions. |
• | future revenue and profitability projections associated with the tradename; |
• | estimated market royalty rates that could be derived from the licensing of our tradenames to third parties in order to establish the cash flows accruing to the benefit of the Company as a result of our ownership of our tradenames; and |
• | rate used to discount the estimated royalty cash flow projections to their present value (or estimated fair value). |
• | estimated future cash flows; |
• | growth assumptions for future revenues as well as future gross margin rates, expense rates, capital expenditures and other estimates; and |
• | rate, based on our estimated weighted average cost of capital, used to discount our estimated future cash flow projections to their present value (or estimated fair value). |
Using Sensitivity Rate | ||||||||||||||
Actual Rate | Sensitivity Rate Increase/(Decrease) | (Decrease)/ Increase in Liability (in millions) | Increase in Expense (in millions) | |||||||||||
Pension Plan: | ||||||||||||||
Discount rate | 3.80 | % | 0.25 | % | $ | (18.5 | ) | $ | 0.2 | |||||
Expected long-term rate of return on plan assets | 5.50 | % | (0.50 | )% | N/A | $ | 1.9 | |||||||
SERP Plan: | ||||||||||||||
Discount rate | 3.69 | % | 0.25 | % | $ | (2.8 | ) | $ | 0.1 | |||||
Postretirement Plan: | ||||||||||||||
Discount rate | 3.71 | % | 0.25 | % | $ | (0.2 | ) | $ | — | |||||
Ultimate health care cost trend rate | 5.00 | % | 1.00 | % | $ | 0.8 | $ | — |
• | future revenue, cash flow and/or profitability projections; |
• | growth assumptions for future revenues as well as future gross margin rates, expense rates, capital expenditures and other estimates; |
• | rates, based on our estimated weighted average cost of capital, used to discount the estimated cash flow projections to their present value (or estimated fair value); |
• | recent transactions and valuation multiples for publicly held companies deemed similar to Parent; |
• | economic conditions and other factors deemed material to the valuation process; and |
• | valuations of Parent performed by third parties. |
Index | Page Number | |
a. | Disclosure Controls and Procedures |
b. | Internal Control Over Financial Reporting |
c. | Changes in Internal Control Over Financial Reporting |
Name | Age | Position with Company | ||
Karen W. Katz | 60 | Director, President and Chief Executive Officer | ||
James J. Gold | 53 | President, Chief Merchandising Officer | ||
John E. Koryl | 47 | President, Neiman Marcus Stores and Online | ||
Carrie M. Tharp | 37 | Senior Vice President and Chief Marketing Officer | ||
Sarah W. Miller | 48 | Senior Vice President and Chief Information Officer | ||
Tracy M. Preston | 51 | Senior Vice President, General Counsel and Corporate Secretary | ||
T. Dale Stapleton | 59 | Interim Chief Financial Officer, Senior Vice President and Chief Accounting Officer | ||
Joseph N. Weber | 50 | Senior Vice President, Chief Human Resources Officer | ||
David B. Kaplan | 50 | Chairman of the Board | ||
Nora A. Aufreiter | 57 | Director | ||
Norman H. Axelrod | 65 | Director | ||
Philippe E. Bourguignon | 69 | Director | ||
Adam B. Brotman | 48 | Director | ||
Graeme M. Eadie | 64 | Director | ||
Dennis T. Gies | 38 | Director | ||
Scott T. Nishi | 42 | Director |
• | Karen W. Katz, who serves as President and Chief Executive Officer and a member of the Parent Board and is our principal executive officer; |
• | James J. Gold, who serves as President, Chief Merchandising Officer; |
• | John E. Koryl, who serves as President, Neiman Marcus Stores and Online; |
• | Carrie M. Tharp, who serves as Senior Vice President and Chief Marketing Officer; |
• | T. Dale Stapleton, who serves as Interim Chief Financial Officer, Senior Vice President and Chief Accounting Officer and our principal financial officer; |
• | Michael Fung, who served as Interim Executive Vice President, Chief Financial Officer and Chief Operating Officer pursuant to a temporary consulting agreement during fiscal year 2017; |
• | Donald T. Grimes, former Executive Vice President, Chief Operating Officer and Chief Financial Officer; and |
• | Joshua G. Schulman, former President of Bergdorf Goodman and NMG International. |
• | Recruit and retain executives who possess exceptional ability, experience and vision to sustain and promote our preeminence in the marketplace. |
• | Motivate and reward the achievement of our short- and long-term goals and operating plans. |
• | Align the interests of our executives with the financial and strategic objectives of our stockholders. |
• | Provide total compensation opportunities that meet the expectations of a highly skilled executive team, are aligned and consistent with our underlying performance, and are competitive with the compensation practices and levels offered by companies with whom we compete for executive talent. |
• | Base salaries are determined by an industry peer group analysis and on the overall experience of each individual. Merit increases are based on financial as well as individual performance and are generally kept within a specified percentage range for all employees, including the named executive officers. |
• | We grant long-term incentive awards in the form of stock option grants and restricted share awards to align the interests of participants with those of our equity investors. |
• | Annual incentive bonus awards are based on our Plan Earnings (as defined below under the heading "2017 Executive Officer Compensation") and sales. For Bergdorf Goodman, annual incentive bonus awards are based on Plan Earnings and sales of both the Company as a whole and Bergdorf Goodman specifically. The annual incentive bonus awards are all set at the beginning of each fiscal year based on the achievement of goals that the Compensation Committee believes will be challenging yet attainable. Maximum target payouts are capped at a pre-established percentage of base salary. |
Abercrombie & Fitch | Michael Kors |
Coach | Nordstrom |
The Gap | Ralph Lauren |
Hudson's Bay | Restoration Hardware |
J.C. Penney | Tiffany & Co. |
Kohl’s | Urban Outfitters |
L Brands (formerly Limited) | Williams-Sonoma |
Macy's |
2016 and 2017 Annual Base Salary ($) | |||
Karen W. Katz | $ | 1,100,000 | |
James J. Gold | 820,000 | ||
John E. Koryl | 625,000 | ||
Carrie M. Tharp (1) | 430,000 | ||
T. Dale Stapleton | 397,000 | ||
Donald T. Grimes (2) | 725,000 | ||
Joshua G. Schulman (2) | 610,000 |
(1) | Ms. Tharp joined the Company in October 2016 and was not an executive officer during any part of fiscal year 2016; amount reflects her annualized base salary. |
(2) | Mr. Grimes resigned effective November 14, 2016 and Mr. Schulman resigned effective May 10, 2017; amounts reflect their respective annualized base salaries during their employment. |
Name | Target Bonus As Percent of Base Salary | Plan Earnings | Sales | ||||||
Karen W. Katz | 125 | % | 70 | % | 30 | % | |||
James J. Gold | 75 | % | 70 | % | 30 | % | |||
John E. Koryl | 75 | % | 70 | % | 30 | % | |||
Carrie M. Tharp (1) | 40 | % | 70 | % | 30 | % | |||
T. Dale Stapleton | 40 | % | 70 | % | 30 | % | |||
Donald T. Grimes (2) | 75 | % | 70 | % | 30 | % | |||
Joshua G. Schulman (2)(3) | 75 | % | 70 | % | 30 | % |
(1) | Ms. Tharp joined the Company in October 2016. |
(2) | Mr. Grimes resigned effective November 14, 2016 and Mr. Schulman resigned effective May 10, 2017. |
(3) | Since Mr. Schulman had responsibility over Bergdorf Goodman, 50% of his performance goals were to be based on the results of Bergdorf Goodman. |
Payout As Percent of Target | |||
Neiman Marcus Group | |||
Plan Earnings | — | % | |
Sales | — | % | |
Bergdorf Goodman | |||
Plan Earnings | — | % | |
Sales | — | % |
COMPENSATION COMMITTEE | |
David Kaplan | |
Graeme Eadie |
Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Option Awards ($)(2) | Non-Equity Incentive Plan Compen-sation ($)(3) | Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($)(4) | All Other Compensation ($)(5) | Total ($) | |||||||||||||||||||||||||
Karen W. Katz President and Chief Executive Officer | 2017 | $ | 1,100,000 | $ | — | $ | 3,499,776 | $ | — | $ | — | $ | 4,363 | $ | 254,823 | $ | 4,858,962 | |||||||||||||||||
2016 | 1,100,000 | — | — | — | — | 905,001 | 274,866 | 2,279,867 | ||||||||||||||||||||||||||
2015 | 1,100,000 | — | — | — | — | 247,294 | 425,914 | 1,773,208 | ||||||||||||||||||||||||||
James J. Gold President, Chief Merchandising Officer | 2017 | 820,000 | 75,000 | 1,999,872 | — | — | — | 144,265 | 3,039,137 | |||||||||||||||||||||||||
2016 | 820,000 | 50,000 | — | — | — | 219,000 | 157,101 | 1,246,101 | ||||||||||||||||||||||||||
2015 | 820,000 | — | — | — | — | 45,000 | 200,057 | 1,065,057 | ||||||||||||||||||||||||||
John E. Koryl President, Neiman Marcus Stores and Online | 2017 | 625,000 | 75,000 | 1,999,872 | — | — | — | 70,671 | 2,770,543 | |||||||||||||||||||||||||
2016 | 625,000 | 50,000 | — | — | — | — | 66,509 | 741,509 | ||||||||||||||||||||||||||
2015 | 625,000 | — | — | — | — | — | 78,425 | 703,425 | ||||||||||||||||||||||||||
Carrie M. Tharp Senior Vice President and Chief Marketing Officer | 2017 | 355,577 | — | 300,288 | 347,644 | — | — | 16,034 | 1,019,543 | |||||||||||||||||||||||||
T. Dale Stapleton Interim Chief Financial Officer, Senior Vice President and Chief Accounting Officer | 2017 | 397,000 | — | 400,128 | — | — | — | 54,249 | 851,377 | |||||||||||||||||||||||||
Michael Fung Former Interim Executive Vice President, Chief Financial Officer and Chief Operating Officer | 2017 | 420,000 | — | — | 42,515 | — | — | 53,178 | 515,693 | |||||||||||||||||||||||||
Donald T. Grimes Former Executive Vice President, Chief Operating Officer and Chief Financial Officer | 2017 | 206,346 | — | 1,999,872 | 440,660 | — | — | 8,143 | 2,655,021 | |||||||||||||||||||||||||
2016 | 725,000 | 75,000 | — | — | — | — | 59,649 | 859,649 | ||||||||||||||||||||||||||
2015 | 97,596 | 300,000 | — | 3,825,580 | — | — | 31,786 | 4,254,962 | ||||||||||||||||||||||||||
Joshua G. Schulman Former President of Bergdorf Goodman and President of NMG International | 2017 | 476,270 | — | 1,999,872 | — | — | — | 59,164 | 2,535,306 | |||||||||||||||||||||||||
2016 | 610,000 | 50,000 | — | — | — | — | 68,295 | 728,295 | ||||||||||||||||||||||||||
2015 | 610,000 | — | — | — | 53,802 | — | 74,994 | 738,796 |
(1) | The amounts for Messrs. Gold and Koryl for fiscal year 2017 represent discretionary bonuses described above under "Compensation Discussion and Analysis — 2017 Executive Officer Compensation — 2017 Discretionary Bonuses." The amounts for Messrs. Gold, Koryl, Grimes and Schulman for fiscal year 2016 represent discretionary bonuses. The amount for Mr. Grimes for fiscal year 2015 represents a one-time signing bonus pursuant to the terms and conditions of his employment agreement. |
(2) | The amounts reflect the aggregate grant date fair value for the awards computed in accordance with ASC Topic 718. These amounts reflect the grant date fair value and do not represent the actual value that may be realized by the named executive officers. |
(3) | The amounts reported in the Non‑Equity Incentive Plan Compensation column reflect the actual amounts earned under the performance‑based annual cash incentive compensation plan described under “Annual Incentive Bonus.” |
(4) | The amounts in this column represent the change in the actuarial value of the named executive officers’ benefits under our retirement and supplemental executive retirement plans from July 31, 2016 to July 29, 2017. This “change in the actuarial value” is the difference between the fiscal year 2016 and fiscal year 2017 present value of the pension benefits accumulated as of year-end by the named executive officers, assuming that the benefit is not paid until age 65. These amounts were computed using the same assumptions used for financial statement reporting purposes under ASC Subtopic 715-30, “Defined Benefit Plans - Pension” as described in Note 11 of the Notes to Consolidated Financial Statements. |
(5) | Includes all items listed in the following table entitled “All Other Compensation.” The value of perquisites and other personal benefits is provided in this column and in the footnotes below even if the amount is less than the reporting threshold established by the SEC. |
All Other Compensation for Fiscal Year 2017 | Karen W. Katz ($) | James J. Gold ($) | John E. Koryl ($) | Carrie M. Tharp ($) | T. Dale Stapleton ($) | Michael Fung ($) | Donald T. Grimes ($) | Joshua G. Schulman ($) | ||||||||||||||||||||||||
401(k) plan contributions paid by us | $ | 11,097 | $ | 9,003 | $ | 12,150 | $ | 4,631 | $ | 12,228 | $ | — | $ | 349 | $ | 12,150 | ||||||||||||||||
Deferred compensation plan match | 23,613 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
DC SERP contributions paid by us | 136,301 | 94,942 | 42,525 | — | 23,292 | — | — | 35,227 | ||||||||||||||||||||||||
Group term life insurance | 4,291 | 2,182 | 1,216 | 376 | 3,930 | — | 637 | 760 | ||||||||||||||||||||||||
Supplemental executive medical insurance | 11,940 | 11,940 | 11,940 | 9,950 | 11,940 | — | 3,980 | 9,950 | ||||||||||||||||||||||||
Financial counseling/tax preparation | 8,720 | — | — | — | 1,459 | — | 2,800 | — | ||||||||||||||||||||||||
Long-term disability | 1,400 | 1,400 | 1,400 | 1,077 | 1,400 | — | 377 | 1,077 | ||||||||||||||||||||||||
New York travel reimbursement (1) | 23,866 | 12,531 | — | — | — | — | — | — | ||||||||||||||||||||||||
Gross-ups for New York non-resident taxes (2) | 33,595 | 12,267 | 1,440 | — | — | — | — | — | ||||||||||||||||||||||||
Temporary residence (3) | — | — | — | — | — | 32,807 | — | — | ||||||||||||||||||||||||
Personal travel reimbursements (4) | — | — | — | — | — | 20,371 | ||||||||||||||||||||||||||
Totals | $ | 254,823 | $ | 144,265 | $ | 70,671 | $ | 16,034 | $ | 54,249 | $ | 53,178 | $ | 8,143 | $ | 59,164 |
(1) | The amount for Ms. Katz reflects an annual payment of $15,000 in lieu of reimbursement for New York accommodations, as well as a tax gross-up for associated income taxes, paid pursuant to Ms. Katz’s employment contract. The amount for Mr. Gold reflects an annual payment of $7,500 in lieu of reimbursement for New York accommodations, as well as a tax gross-up for associated income taxes, pursuant to an arrangement with Mr. Gold. |
(2) | The amounts shown represent gross-up payments made in connection with New York non-resident taxes. |
(3) | Amount represents reimbursements for Mr. Fung's temporary living expenses in Dallas, Texas. |
(4) | Amount represents reimbursements for the costs of commuting to and from Mr. Fung's personal residence in Austin, Texas to our corporate headquarters in Dallas, Texas, and for miscellaneous personal expenses in connection with his provision of services to us in Dallas. |
Stock Awards: Number of Shares of Stock (#)(2) | All Other Option Awards | Grant Date Fair Value of Stock and Option Awards ($)(6) | |||||||||||||||||||||||||||||||||||||||||||||
Estimated Possible Future Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Possible Future Payouts Under Equity Incentive Plan Awards | Number of Securities Underlying Options (#) | Exercise Or Base Price of Option Awards ($)(5) | ||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold ($) | Target ($) | Maximum($) | ||||||||||||||||||||||||||||||||||||||||
Karen W. Katz | 9/6/2016 | $ | 550,000 | $ | 1,375,000 | $ | 2,750,000 | $ | — | $ | — | $ | — | — | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||
10/27/2016 | — | — | — | — | — | — | 4,557 | — | — | 3,499,776 | |||||||||||||||||||||||||||||||||||||
James J. Gold | 9/6/2016 | 205,000 | 615,000 | 1,230,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
10/27/2016 | — | — | — | — | — | — | 2,604 | — | — | 1,999,872 | |||||||||||||||||||||||||||||||||||||
John E. Koryl | 9/6/2016 | 93,750 | 468,750 | 750,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
10/27/2016 | — | — | — | — | — | — | 2,604 | — | — | 1,999,872 | |||||||||||||||||||||||||||||||||||||
Carrie M. Tharp | 9/6/2016 | 43,000 | 172,000 | 344,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
10/27/2016 | — | — | — | — | — | — | — | — | — | — | — | 1,100 | (3 | ) | 1,000 | 173,822 | |||||||||||||||||||||||||||||||
— | — | — | — | — | — | 1,100 | (4 | ) | — | — | — | 1,000 | 173,822 | ||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | — | 391 | — | — | 300,288 | ||||||||||||||||||||||||||||||||||||
T. Dale Stapleton | 9/6/2016 | 39,700 | 158,500 | 317,600 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
10/27/2016 | — | — | — | — | — | — | 521 | — | — | 400,128 | |||||||||||||||||||||||||||||||||||||
Michael Fung | 2/6/2017 | — | — | — | — | — | — | — | 393 | (3 | ) | 1,000 | 21,257 | ||||||||||||||||||||||||||||||||||
— | — | — | — | 393 | (4 | ) | — | — | — | 1,000 | 21,257 | ||||||||||||||||||||||||||||||||||||
Donald T. Grimes | 9/6/2016 | 181,250 | 543,750 | 1,087,500 | — | — | — | — | 5,500 | (7 | ) | 1,000 | 220,330 | ||||||||||||||||||||||||||||||||||
— | — | — | — | 5,500 | (8 | ) | — | — | — | 1,000 | 220,330 | ||||||||||||||||||||||||||||||||||||
10/27/2016 | — | — | — | — | — | — | — | 2,604 | — | — | 1,999,872 | ||||||||||||||||||||||||||||||||||||
Joshua G. Schulman | 9/6/2016 | 91,500 | 457,500 | 732,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
10/27/2016 | — | — | — | — | — | — | 2,604 | — | — | 1,999,872 |
(1) | Non‑equity incentive plan awards represent the threshold, target and maximum opportunities under our performance‑based annual incentive bonus program for fiscal year 2017. The actual amounts earned under this plan are disclosed in the Summary Compensation Table. For a detailed discussion of the annual incentive awards for fiscal year 2017, see “2017 Executive Officer Compensation — Annual Incentive Bonus.” Mr. Grimes and Mr. Schulman's annual incentive awards were forfeited upon their resignations from the Company in November 2016 and May 2017, respectively. |
(2) | Represents the number of restricted shares granted to each of our named executive officers during fiscal year 2017 other than Mr. Fung. For a description of the terms of the restricted shares, see "2017 Executive Officer Compensation — Restricted Share Awards" above. Mr. Grimes and Mr. Schulman's restricted share awards were forfeited without compensation upon their departures from the Company in November 2016 and May 2017, respectively. |
(3) | Represents time‑vested non‑qualified stock options awarded in fiscal year 2017 pursuant to the Management Incentive Plan. The time‑vested options vest 20% on each of the first five anniversaries of the date of the recipient's start date, resulting in the options becoming fully vested on the fifth anniversary date of the start date, and expire on the tenth anniversary of the grant date. For a detailed discussion, see “Long‑term Incentives” and “Stock Options.” |
(4) | Represents performance‑vested non‑qualified stock options awarded in fiscal year 2017 pursuant to the Management Incentive Plan. The performance‑vested non‑qualified options expire on the tenth anniversary of the grant date. The performance‑vested options vest on the achievement of certain performance hurdles. The performance‑vested options vest when the amount of capital returned to the Sponsors (at least 50% of which is in cash) exceeds the applicable multiple of the capital invested by the Sponsors, and the internal rate of return exceeds 10%. The applicable multiple with respect to 40% of the performance‑vested options is 1.5x, with respect to 30% of the performance‑vested options |
(5) | Because we were privately held and there was no public market for Parent common stock, the exercise price of the stock options was determined by the Parent Board or Compensation Committee, as applicable, at the time option grants are awarded and was in excess of the fair market value of Parent common stock. In determining the fair market value of Parent common stock, the Parent Board or the Compensation Committee, as applicable, considered such factors as any recent transactions involving Parent common stock, our actual and projected financial results, the principal amount of our indebtedness, valuations of us performed by third parties and other factors it believes are material to the valuation process. |
(6) | For option and restricted share awards in fiscal year 2017, these amounts reflect the aggregate grant date fair value for the awards computed in accordance with ASC Topic 718. The assumptions used in calculating these amounts are described under the caption Stock-Based Awards in Note 14 of the Notes to Consolidated Financial Statements. On September 6, 2016, the Compensation Committee repriced the exercise price of options to purchase 11,000 shares held by Mr. Grimes from $1,205 per share to $1,000 per share. Amount reported in this column for Mr. Grimes includes the incremental fair value of such stock options calculated in accordance with FASB ASC Topic 718. |
(7) | Represents time‑vested non‑qualified stock options initially awarded in fiscal year 2015 to Mr. Grimes under the Management Incentive Plan and repriced in September 2016 as described in footnote (6) above. |
(8) | Represents performance‑vested non‑qualified stock options initially awarded in fiscal year 2015 to Mr. Grimes under the Management Incentive Plan and repriced in September 2016 as described in footnote (6) above. |
Option Awards | Stock Awards | ||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Awards (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares of Stock that Have Not Vested (#) | Fair Market Value of Shares of Stock that Have Not Vested ($) | ||||||||||||||||||||
Karen W. Katz | 5,699 | — | (1) | — | $ | 363.08 | (1) | 9/30/2017 | |||||||||||||||||||
9,211 | — | (1) | — | 450.26 | (1) | 10/1/2018 | |||||||||||||||||||||
4,556 | — | (1) | — | 644.37 | (1) | 11/7/2019 | |||||||||||||||||||||
15,059 | 10,040 | (2) | — | 1,000.00 | (2) | 11/5/2023 | |||||||||||||||||||||
— | — | 25,099 | (3) | 1,000.00 | (3) | 11/5/2023 | |||||||||||||||||||||
— | — | — | 4,557 | (4) | 1,221,276 | (5) | |||||||||||||||||||||
James J. Gold | 1,375 | — | (1) | — | 363.08 | (1) | 9/30/2017 | ||||||||||||||||||||
4,979 | — | (1) | — | 450.26 | (1) | 10/1/2018 | |||||||||||||||||||||
2,671 | — | (1) | — | 644.37 | (1) | 11/7/2019 | |||||||||||||||||||||
4,840 | 3,228 | (2) | — | 1,000.00 | (2) | 11/5/2023 | |||||||||||||||||||||
— | — | 8,067 | (3) | 1,000.00 | (3) | 11/5/2023 | |||||||||||||||||||||
— | — | — | 2,604 | (4) | 697,872 | (5) | |||||||||||||||||||||
John E. Koryl | (6) | 5,164 | — | (1) | — | 450.26 | (1) | 10/1/2018 | |||||||||||||||||||
2,689 | 1,793 | (2) | — | 1,000.00 | (2) | 11/5/2023 | |||||||||||||||||||||
— | — | 4,483 | (3) | 1,000.00 | (3) | 11/5/2023 | |||||||||||||||||||||
— | — | — | 2,604 | (4) | 697,872 | (5) | |||||||||||||||||||||
Carrie M. Tharp | — | 1,100 | (7) | 1,000.00 | 10/27/2026 | ||||||||||||||||||||||
— | — | 1,100 | (8) | 1,000.00 | 10/27/2026 | ||||||||||||||||||||||
— | — | — | 391 | (4) | 104,788 | (5) | |||||||||||||||||||||
T. Dale Stapleton | 428 | — | (1) | — | 271.27 | 12/15/2017 | |||||||||||||||||||||
287 | — | (1) | — | 347.40 | 12/15/2017 | ||||||||||||||||||||||
672 | 448 | 44 | (2) | 1,000.00 | 11/5/2023 | ||||||||||||||||||||||
— | — | 1,120 | (3) | 1,000.00 | 11/5/2023 | ||||||||||||||||||||||
— | — | — | 521 | (4) | 139,628 | (5) | |||||||||||||||||||||
Michael Fung | (8) | — | — | — | — | — | — | — | |||||||||||||||||||
Donald T. Grimes | (8) | — | — | — | — | — | — | — | |||||||||||||||||||
Joshua G. Schulman | (8) | 3,407 | — | (1) | — | 576.59 | (1) | 5/25/2019 | — | — | |||||||||||||||||
(1) | Non‑qualified Co‑Invest Options rolled over from Predecessor Stock Options as a result of the Acquisition with number of options and exercise prices adjusted pursuant to an exchange ratio. The Co‑Invest Options are fully vested and exercisable at any time prior to the expiration dates related to the original grant of the Predecessor Stock Options. Co‑Invest Options and Predecessor Stock Options are more fully described in the sections entitled “Co‑Invest Options” and “Predecessor Stock Options.” On September 8, 2017, the Co-Invest Options reported in this table were replaced by grants of New Co-Invest Options with the effect of extending the expiration date to the tenth anniversary of the grant date, but otherwise with the same terms. |
(2) | Non‑qualified stock options designated as time‑vested stock options granted pursuant to the Management Incentive Plan on November 5, 2013 at an exercise price of $1,000. Each grant of time‑vested stock options consists of options to purchase an equal number of shares of Class A Common Stock and Class B Common Stock. Subject to continued employment, 20% of the time‑vested non‑qualified options vest and become exercisable on each of the first five anniversaries of the closing date of the Acquisition, resulting in such options becoming fully vested and exercisable on October 25, 2018. The time‑vested stock options expire on the tenth anniversary of the grant date. |
(3) | Non‑qualified stock options designated as performance‑vested stock options granted pursuant to the Management Incentive Plan on November 5, 2013 at an exercise price of $1,000. The performance‑vested options vest on the achievement of certain performance hurdles. In September 2016, the Compensation Committee approved amendments to the performance-vested options to revise the performance hurdles. As amended, the performance‑vested options vest when the amount of capital returned to the Sponsors (at least 50% of which is in cash) exceeds the applicable multiple of the capital invested by the Sponsors, and the internal rate of return exceeds ten percent. The applicable multiple with respect to 40% of the performance‑vested options is 1.5x, with respect to 30% of the performance‑vested options is 1.75x and with respect to 30% of the performance‑vested options is 2.25x. If the named executive’s officer employment is terminated by us without cause or by the named executive officer for good reason, the performance-vested stock options will be eligible to vest in connection with a change in control or initial public offering for 180 days following such termination. If Ms. Katz's employment is terminated as a result of her retirement after the third anniversary of the grant date, certain of her awards remain eligible to vest following such retirement. Each grant of performance‑vested non‑qualified stock options consists of options to purchase an equal number of shares of Class A Common Stock and Class B Common Stock. |
(4) | Restricted shares granted October 27, 2016. These restricted shares vest, subject to continued employment, in equal annual installments with the first vesting date on December 1, 2017. Restricted shares held by Ms. Katz, and Messrs. Gold and Koryl vest in four equal annual installments and restricted shares held by Ms. Tharp and Mr. Stapleton vest in three equal annual installments. |
(5) | There is no public market for our common stock. Amounts reported in this column are based on the fair market value of our Class A Common Stock and Class B Common Stock as of April 30, 2017, the most recent practicable date prior to July 29, 2017. |
(6) | In February 2017, Mr. Koryl transferred all of the equity awards reported in this table to trusts for the benefit of his family for no consideration. |
(7) | Non‑qualified stock options designated as time‑vested stock options granted pursuant to the Management Incentive Plan on October 27, 2016 at an exercise price of $1,000. Each grant of time‑vested stock options consists of options to purchase an equal number of shares of Class A Common Stock and Class B Common Stock. Subject to continued employment, 20% of the time‑vested non‑qualified options vest and become exercisable on each of the first five anniversaries of October 3, 2016, resulting in such options becoming fully vested and exercisable on October 3, 2021. The time‑vested stock options expire on the tenth anniversary of the grant date. |
(8) | Non‑qualified stock options designated as performance‑vested stock options granted pursuant to the Management Incentive Plan on October 27, 2016 at an exercise price of $1,000. The performance‑vested stock options vest on the achievement of the performance hurdles described in footnote (4) to this table. If Ms. Tharp's employment is terminated by us without cause or by her for good reason, the performance-vested stock options will be eligible to vest in connection with a change in control or initial public offering for 30 days following such termination. Each grant of performance‑vested non‑qualified stock options consists of options to purchase an equal number of shares of Class A Common Stock and Class B Common Stock. |
(8) | Each of Messrs. Fung, Grimes and Schulman forfeited his outstanding equity awards without consideration upon his respective departure from the Company, with the exception of Mr. Schulman's co-invest options. |
Name | Plan Name | Number of Years Credited Service (#)(1) | Present Value of Accumulated Benefit ($)(2) | Payments During Last Fiscal Year ($) | |||||||||||
Karen W. Katz | Pension Plan | 25 | (3) | $ | 607,000 | $ | — | ||||||||
SERP Plan | 26 | (3) | 5,209,000 | — | |||||||||||
James J. Gold | Pension Plan | 17 | (4) | 267,000 | — | ||||||||||
SERP Plan | 17 | (4) | 787,000 | — | |||||||||||
John E. Koryl | Pension Plan | — | — | — | |||||||||||
SERP Plan | — | — | — | ||||||||||||
Carrie M. Tharp | Pension Plan | — | — | — | |||||||||||
SERP Plan | — | — | — | ||||||||||||
T. Dale Stapleton | Pension Plan | 6 | (4) | 187,000 | — | ||||||||||
SERP Plan | 6 | (4) | 134,000 | — | |||||||||||
Michael Fung | Pension Plan | — | — | — | |||||||||||
SERP Plan | — | — | — | ||||||||||||
Donald T. Grimes | Pension Plan | — | — | — | |||||||||||
SERP Plan | — | — | — | ||||||||||||
Joshua G. Schulman | Pension Plan | — | — | — | |||||||||||
SERP Plan | — | — | — |
(1) | Computed as of July 29, 2017, which is the same pension measurement date used for financial statement reporting purposes with respect to our Consolidated Financial Statements and notes thereto. |
(2) | For purposes of calculating the amounts in this column, retirement age was assumed to be the normal retirement age of the later of age 65 or the fifth anniversary of the individual’s "date of hire," as defined in the Pension Plan. A description of the valuation method and all material assumptions applied in quantifying the present value of accumulated benefit is set forth in Note 11 of the Notes to Consolidated Financial Statements. |
(3) | Ms. Katz’s service credit exceeds the 25-year maximum set forth in the SERP Plan. Pursuant to an agreement with us, Ms. Katz was entitled to an additional year of credit for each full year of service after she reached the 25-year maximum until December 31, 2010, with all service frozen as of such date. In addition, if her employment is terminated by us for any reason other than death, “disability,” “cause,” if we do not renew her employment term, or if she terminates her employment with us for “good reason” or “retirement” and she has not yet reached 65, her SERP Plan benefit will not be reduced solely by reason of her failure to reach 65 as of the termination date. Ms. Katz’s employment agreement also provides that the amount credited to her under the DC SERP shall not be less than the present value of the additional benefits she would have accrued under the SERP Plan after December 31, 2010 had the SERP Plan remained in effect through the end of her employment term. The value of Ms. Katz’s benefit with all service is $5,209,000. The value with 25 years of service under the SERP Plan is $4,984,000; therefore, the value of the additional year of service in excess of her actual service is $225,000. |
(4) | Effective December 31, 2007, benefit accruals for Mr. Gold and Mr. Stapleton under the Pension Plan and the SERP Plan were frozen, as further described below. |
Name | Executive Contributions in Last Fiscal Year ($)(1) | Registrant Contributions in Last Fiscal Year ($) | Aggregate Earnings in Last Fiscal Year ($) | Aggregate Withdrawals / Distributions ($) | Aggregate Balance at Last Fiscal Year- End ($) | ||||||||||||||||
Karen W. Katz | KEDC | $ | 120,998 | $ | 23,613 | $ | 21,544 | $ | — | $ | 721,470 | ||||||||||
DC SERP | — | 136,301 | 24,221 | — | 798,633 | ||||||||||||||||
James J. Gold | KEDC | — | — | — | — | — | |||||||||||||||
DC SERP | — | 94,942 | 12,255 | — | 412,711 | ||||||||||||||||
John E. Koryl | KEDC | — | — | — | — | — | |||||||||||||||
DC SERP | — | 42,525 | 5,079 | — | 168,969 | ||||||||||||||||
Carrie M. Tharp | KEDC | — | — | — | — | — | |||||||||||||||
DC SERP (2) | — | — | — | — | — | ||||||||||||||||
T. Dale Stapleton | KEDC | — | — | — | — | — | |||||||||||||||
DC SERP | — | 23,292 | 2,728 | — | 87,914 | ||||||||||||||||
Michael Fung | KEDC | — | — | — | — | — | |||||||||||||||
DC SERP | — | — | — | — | — | ||||||||||||||||
Donald T. Grimes | KEDC | — | — | — | — | — | |||||||||||||||
DC SERP | — | — | — | — | — | ||||||||||||||||
Joshua G. Schulman | KEDC | — | — | — | — | — | |||||||||||||||
DC SERP | — | 35,227 | 4,633 | — | 148,620 |
(1) | The amounts reported as Executive Contributions in Last Fiscal Year are also included as Salary in the Summary Compensation Table. |
(2) | Ms. Tharp will become eligible to participate in the DC SERP in January 2018, the first January after the one-year anniversary of her start date. |
Executive Benefits and Payments Upon Separation | Retirement ($)(1) | Termination due to death ($)(2) | Termination due to disability ($)(3) | Termination without cause or for good reason ($)(4) | Change in Control ($)(5) | |||||||||||||||
Compensation: | ||||||||||||||||||||
Severance | $ | 1,100,000 | $ | — | $ | — | $ | 4,950,000 | $ | — | ||||||||||
Bonus | 1,375,000 | 1,375,000 | 1,375,000 | 1,375,000 | — | |||||||||||||||
Option Acceleration(6) | — | — | — | — | — | |||||||||||||||
Restricted Stock Acceleration(7) | — | — | — | 305,252 | 1,221,276 | |||||||||||||||
Benefits & Perquisites: | ||||||||||||||||||||
SERP Enhancement | 202,000 | — | — | 202,000 | — | |||||||||||||||
DC SERP | 798,633 | 798,633 | 798,633 | 798,633 | 798,633 | |||||||||||||||
Deferred Compensation Plan | 721,470 | 721,470 | 721,470 | 721,470 | 721,470 | |||||||||||||||
Long-Term Disability | — | — | 240,000 | — | — | |||||||||||||||
Health and Welfare Benefits | — | — | — | 60,448 | — | |||||||||||||||
Life Insurance Benefits | — | 1,000,000 | — | 9,342 | — | |||||||||||||||
Total | $ | 4,197,103 | $ | 3,895,103 | $ | 3,135,103 | $ | 8,422,145 | $ | 2,741,379 |
(1) | Represents a lump sum payment of one times the sum of base salary and target bonus payable if Ms. Katz retires and provides at least 12 months' notice to the Parent Board, the SERP benefit level enhancement provided in Ms. Katz's employment agreement, 12 months' acceleration of Ms. Katz's time-vested stock options and a lump sum payout under the deferred compensation plans. See “Non-qualified Deferred Compensation” for a more detailed discussion of the deferred compensation plans. Additionally, Ms. Katz would receive the SERP benefits as described in footnote (3) to the table under “Pension Benefits” above. |
(2) | Represents Ms. Katz’s target bonus (payable in a lump sum), a lump sum payout under the deferred compensation plan and defined contribution plan, and a lump sum basic life insurance benefit payment of $1,000,000 payable by the Company’s life insurance provider to Ms. Katz’s beneficiaries upon her death. |
(3) | Represents Ms. Katz’s target bonus (payable in a lump sum), lump sum payout under the deferred compensation plan and defined contribution plan, and long-term disability payments of $20,000 per month for 12 months payable from the Company’s long-term disability insurance provider. |
(4) | Represents a lump sum payment of two times target bonus and two times base salary, an additional one times target bonus (payable in a lump sum), the SERP benefit level enhancement provided in Ms. Katz's employment agreement, 12 months' acceleration of Ms. Katz's time-vested stock options and restricted shares, and a lump sum payout under the deferred compensation plan and defined contribution plan. The amount included for health and welfare benefits represents a lump-sum payment equal to the value of 18 months of COBRA premiums and six months of retiree medical premiums. Calculations were based on COBRA rates currently in effect. The amount included for life insurance represents coverage for a period of two years at the same benefit level in effect at the time of termination. Additionally, Ms. Katz would receive the SERP benefits as described in footnote (3) to the table under “Pension Benefits” above. Also see “Employment and Other Compensation Agreements” in this section. |
(5) | Represents full acceleration of Ms. Katz's time-vested stock options and restricted shares (applicable only in connection with a termination by the Company without cause or by Ms. Katz for good reason (i) prior to an initial public offering and (ii) following a change in control) and a lump sum payout under the deferred compensation plan and defined contribution plan. In connection with such a termination, Ms. Katz would also receive (without duplication) the amounts described in the column under the heading "Termination without cause or for good reason" and the SERP benefits as described in footnote (3) to the table under “Pension Benefits” above. |
(6) | As of July 29, 2017, the fair market value of Parent common stock underlying Ms. Katz's options was lower than the exercise price of such options. |
(7) | Amounts reported are based on the fair market value of our Class A Common Stock and Class B Common Stock as of April 30, 2017, the most recent practicable date prior to July 29, 2017. |
Executive Benefits and Payments Upon Separation | Retirement ($)(1) | Termination due to death ($)(2) | Termination due to disability ($)(3) | Termination without cause or for good reason ($)(4) | Change in Control ($)(5) | |||||||||||||||
Compensation: | ||||||||||||||||||||
Severance | $ | — | $ | — | $ | — | $ | 2,152,500 | $ | — | ||||||||||
Bonus | — | 615,000 | 615,000 | 615,000 | — | |||||||||||||||
Benefits & Perquisites: | ||||||||||||||||||||
DC SERP | 412,711 | 412,711 | 412,711 | 412,711 | 412,711 | |||||||||||||||
Long-Term Disability | — | — | 240,000 | — | — | |||||||||||||||
Health and Welfare Benefits | — | — | — | 59,607 | — | |||||||||||||||
Life Insurance Benefits | — | 1,000,000 | — | — | — | |||||||||||||||
Total | $ | 412,711 | $ | 2,027,711 | $ | 1,267,711 | $ | 3,239,818 | $ | 412,711 |
(1) | Represents a lump sum payout under the deferred compensation plan. See “Non-qualified Deferred Compensation” for a more detailed discussion. |
(2) | Represents Mr. Gold’s target bonus, a lump sum payout under the defined contribution plan and a lump sum basic life insurance benefit payment of $1,000,000 payable by the Company’s life insurance provider to Mr. Gold’s beneficiaries upon his death. |
(3) | Represents Mr. Gold’s target bonus, lump sum payout under the defined contribution plan, and long‑term disability payments of $20,000 per month for 12 months payable from the Company’s long‑term disability insurance provider. |
(4) | Represents 1.5 times Mr. Gold’s base salary and target bonus, an additional one times target bonus, a payout under the defined contribution plan, and 18 months of COBRA premiums. Calculations were based on COBRA rates currently in effect. All these amounts are payable in a lump sum except for the salary payment to the extent that it is not subject to a particular exemption from Section 409A of the Code, in which case the non‑exempt portion will be paid in installments. See “Employment and Other Compensation Agreements” in this section. |
(5) | Represents a lump sum payout under the defined contribution plan. |
Executive Benefits and Payments Upon Separation | Retirement ($)(1) | Termination due to death ($)(1)(2) | Termination due to disability ($)(1)(3) | Termination without cause or for good reason ($)(1)(4) | Change in Control ($)(1)(5) | |||||||||||||||
John E. Koryl | ||||||||||||||||||||
Compensation: | ||||||||||||||||||||
Severance | $ | — | $ | — | $ | — | $ | 937,500 | $ | — | ||||||||||
Benefits & Perquisites: | ||||||||||||||||||||
DC SERP | 168,969 | 168,969 | 168,969 | 168,969 | 168,969 | |||||||||||||||
Long-Term Disability | — | — | 240,000 | — | — | |||||||||||||||
Health and Welfare Benefits | — | — | — | 59,607 | — | |||||||||||||||
Life Insurance Benefits | — | 1,000,000 | — | — | — | |||||||||||||||
Total | $ | 168,969 | $ | 1,168,969 | $ | 408,969 | $ | 1,166,076 | $ | 168,969 | ||||||||||
Carrie M. Tharp | ||||||||||||||||||||
Compensation: | ||||||||||||||||||||
Severance | $ | — | $ | — | $ | — | $ | 430,000 | $ | — | ||||||||||
Benefits & Perquisites: | ||||||||||||||||||||
DC SERP | — | — | — | — | — | |||||||||||||||
Long-Term Disability | — | — | 240,000 | — | — | |||||||||||||||
Health and Welfare Benefits | — | — | — | 21,978 | — | |||||||||||||||
Life Insurance Benefits | — | 860,000 | — | — | — | |||||||||||||||
Total | $ | — | $ | 860,000 | $ | 240,000 | $ | 451,978 | $ | — | ||||||||||
T. Dale Stapleton | ||||||||||||||||||||
Compensation: | ||||||||||||||||||||
Severance | $ | — | $ | — | $ | — | $ | 595,500 | $ | — | ||||||||||
Benefits & Perquisites: | ||||||||||||||||||||
DC SERP | 87,914 | 87,914 | 87,914 | 87,914 | 87,914 | |||||||||||||||
Long-Term Disability | — | — | 240,000 | — | — | |||||||||||||||
Health and Welfare Benefits | — | — | — | 32,967 | — | |||||||||||||||
Life Insurance Benefits | — | 1,000,000 | — | — | — | |||||||||||||||
Total | $ | 87,914 | $ | 1,087,914 | $ | 327,914 | $ | 716,381 | $ | 87,914 |
(1) | Represents a lump sum payout under the defined contribution plan. See “Non-qualified Deferred Compensation” for a detailed discussion. |
(2) | Represents a lump sum basic life insurance benefit payment of $1,000,000 payable by the Company’s life insurance provider to each of Mr. Koryl, Ms. Tharp and Mr. Stapleton upon their death and a lump sum payout under the defined contribution plan. |
(3) | Represents long-term disability payments of $20,000 per month for 12 months payable from the Company’s long-term disability insurance provider and a lump sum payout under the defined contribution plan. |
(4) | Represents a lump sum payment of 1.5 times base salary Mr. Koryl and Mr. Stapleton and 1 times base salary for Ms. Tharp. The amount included for health and welfare benefits represents a continuation of COBRA benefits for a period of 18 months for Mr. Koryl and Mr. Stapleton and 12 months for Ms. Tharp. Calculations were based on COBRA rates currently in effect. See “Employment and Other Compensation Agreements” in this section. |
(5) | Represents a lump sum payout under the DC SERP. |
Name | Fees Earned or Paid in Cash ($) | Option Awards ($)(1) | Total ($) | |||||||||
Nora A. Aufreiter | $ | 50,000 | $ | — | $ | 50,000 | ||||||
Norman H. Axelrod | 50,000 | — | 50,000 | |||||||||
Philippe E. Bourguignon | 50,000 | — | 50,000 | |||||||||
Adam B. Brotman | 50,000 | — | 50,000 |
(1) | Each director listed in the table above holds 393 time‑vested stock options, of which 235 are vested, and 393 performance‑based stock options, none of which are vested, to purchase Class A Common Stock and Class B Common Stock at an aggregate exercise price of $1,000 per unit, consisting of a share of Class A Common Stock and Class B Common Stock together. |
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | ||||||||
(a) | (b) | (c) | |||||||||
Equity compensation plans approved by stockholders | 196,416 | (1) | $ | 853.81 | 49,109 | (1) | |||||
. | |||||||||||
Equity compensation plans not approved by stockholders | — | — | — | ||||||||
Total | 196,416 | $ | 853.81 | 49,109 |
(1) | This number represents shares of Class A Common Stock and Class B Common Stock issuable under the Management Incentive Plan that was approved by holders of a majority of the shares of Parent common stock on October 25, 2013 and the NM Mariposa Holdings, Inc. Vice President Long Term Incentive Plan (the "VP Long Term Incentive Plan") that was approved by a majority of the shares of Parent common stock on February 25, 2014. The Management Incentive Plan became effective on October 25, 2013 and will expire on October 25, 2023 and the VP Long Term Incentive Plan became effective on February 25, 2014 and will expire on February 25, 2024. |
Name of Beneficial Owner (1)(2) | Number of Shares of Class A Common Stock Beneficially Owned | Percent of Class A Common Stock Beneficially Owned | Number of Shares of Class B Common Stock Beneficially Owned | Percent of Class B Common Stock Beneficially Owned | ||||||||
Affiliates of Ares Management, L.P. (3) | 929,454 | 58.85 | % | 1,152,504 | (4) | 72.97 | % | |||||
CPP Investment Board (USRE) Inc. (5) | 929,454 | 58.85 | % | 706,404 | 44.72 | % | ||||||
Norman Axelrod (6) | 235 | 0.01 | % | 235 | 0.01 | % | ||||||
Nora Aufreiter (6) | 235 | 0.01 | % | 235 | 0.01 | % | ||||||
Phillip Bourguignon (6) | 235 | 0.01 | % | 235 | 0.01 | % | ||||||
Adam Brotman (6)(7) | 235 | 0.01 | % | 235 | 0.01 | % | ||||||
David Kaplan (8) | — | — | — | — | ||||||||
Dennis Gies (8) | — | — | — | — | ||||||||
Scott Nishi (9) | — | — | — | — | ||||||||
Graeme Eadie (9) | — | — | — | — | ||||||||
Karen W. Katz (6) | 44,102 | 2.72 | % | 44,102 | 2.72 | % | ||||||
James J. Gold (6) | 18,083 | 1.13 | % | 18,083 | 1.13 | % | ||||||
John E. Koryl (6) (10) | 11,353 | 0.71 | % | 11,353 | 0.71 | % | ||||||
Carrie M. Tharp (6) | 611 | 0.04 | % | 611 | 0.04 | % | ||||||
T. Dale Stapleton (6) | 2,132 | 0.13 | % | 2,132 | 0.13 | % | ||||||
Michael Fung | — | — | — | — | ||||||||
Donald T. Grimes | — | — | — | — | ||||||||
Joshua G. Schulman (6) | 3,407 | 0.22 | % | 3,407 | 0.22 | % | ||||||
All current executive officers and directors as a group (17 persons) (11) | — | — | — | — |
(1) | Except as otherwise noted, the address of each beneficial owner is c/o Neiman Marcus, 1618 Main Street, Dallas, Texas 75201. |
(2) | Pursuant to the terms of the Stockholders Agreement, each of our Sponsors has the right to designate three members of the Parent Board and to jointly designate two independent members of the Parent Board, in each case for so long as they or their respective affiliates own at least 25% of the shares of Class A Common Stock that they owned as of the closing of the Acquisition. Each stockholder that is a party to the Stockholders Agreement has agreed to vote their shares of Parent common stock in favor of such designees. The Stockholders Agreement also contains significant transfer restrictions and certain rights of first offer, tag-along rights, and drag-along rights. As a result, each of our Sponsors may be deemed to be the beneficial owner of the Class A Common Stock and Class B Common Stock |
(3) | Represents shares of Parent common stock held directly by Ares Corporate Opportunities Fund III, L.P. ("ACOF III"), Ares Corporate Opportunities Fund IV, L.P. ("ACOF IV") and ACOF Mariposa Holdings LLC ("ACOF Mariposa"). The manager of ACOF III is ACOF Operating Manager III, LLC ("ACOF Operating Manager III"), and the sole member of ACOF Operating Manager III is Ares Management LLC. The manager of ACOF IV is ACOF Operating Manager IV, LLC ("ACOF Operating Manager IV"), and the sole member of ACOF Operating Manager IV is Ares Management LLC. The manager of ACOF Mariposa is ACOF IV. |
(4) | 223,050 of these shares of Class B Common Stock are subject to (i) a call right that allows CPP Investment Board (USRE) Inc. to repurchase such shares at any time for de minimis consideration and (ii) a proxy set forth in the Stockholders Agreement which may be exercised if ACOF Mariposa fails to take certain actions requested by CPP Investment Board (USRE) Inc. to elect or remove the directors of Parent or certain other matters. |
(5) | CPP Investment Board (USRE) Inc. is a wholly owned subsidiary of Canada Pension Plan Investment Board ("CPPIB"). CPPIB is managed by a board of directors. Because the board of directors acts by consensus/majority approval, none of the directors of the board of directors has sole voting or dispositive power with respect to the shares of common stock of Parent owned by CPP Investment Board (USRE) Inc. The address of each of CPP Investment Board (USRE) Inc. and CPPIB is c/o Canada Pension Plan Investment Board, One Queen Street East, Suite 2500, Toronto, ON, M5C 2W5. |
(6) | Consists of (i) shares of Class A Common Stock and Class B Common Stock issuable upon the exercise of options which are currently exercisable or which will become exercisable within 60 days of September 21, 2017 and (ii) in the case of Ms. Katz, Messrs. Gold and Koryl, Ms. Tharp and Mr. Stapleton, outstanding restricted shares of Class A Common Stock and Class B Common Stock , all of which shares are subject to the provisions of the Stockholders Agreement. In the case of Ms. Aufreiter and Messrs. Axelrod and Bourguignon, excludes shares of Class A Common Stock and Class B Common Stock held directly by such persons and in which such persons have a pecuniary interest but that are deemed to be beneficially owned by our Sponsors by virtue of the Stockholders Agreement. |
(7) | Mr. Brotman’s address is c/o of Starbucks, 2401 Utah Avenue S, Seattle, Washington 98134. |
(8) | The address of Messrs. Kaplan and Gies is c/o Ares Management LLC, 2000 Avenue of the Stars, 12th Floor, Los Angeles, California 90067. Mr. Kaplan is a Senior Partner of Ares Management GP and a Senior Partner of Ares Management, Co-Head of its Private Equity Group and a member of its board of managers. Mr. Gies is a Principal in the Private Equity Group of Ares Management. Messrs. Kaplan and Gies each expressly disclaim beneficial ownership of the shares of Parent common stock owned by the Ares Entities. |
(9) | The address of Messrs. Eadie and Nishi is c/o Canada Pension Plan Investment Board, One Queen Street East, Suite 2600, Toronto, ON, M5C 2W5. Mr. Eadie is Senior Managing Director at CPPIB Equity. Mr. Nishi is a Principal at CPPIB Equity. Messrs. Eadie and Nishi each expressly disclaim beneficial ownership of the shares of Parent common stock owned by CPP Investment Board (USRE) Inc. |
(10) | Mr. Koryl's shares of Class A Common Stock and Class B Common Stock and options to purchase shares of Class A Common Stock and Class B Common Stock are held by trusts for the benefit of his family. |
(11) | Excludes shares of Class A Common Stock and Class B Common Stock in which such persons have a pecuniary interest but that are deemed to be beneficially owned by our Sponsors by virtue of the Stockholders Agreement. |
1. | Financial Statements |
2. | Index to Financial Statement Schedules |
Page Number | |
Report of Independent Registered Public Accounting Firm | F-3 |
Schedule II—Valuation and Qualifying Accounts and Reserves |
• | Newton Acquisition, Inc. was renamed Neiman Marcus, Inc. in February 2006; |
• | Newton Acquisition Merger Sub, Inc. merged with and into The Neiman Marcus Group, Inc. in October 2005, with The Neiman Marcus Group, Inc. continuing as the surviving corporation; |
• | Neiman Marcus, Inc. was renamed Neiman Marcus Group LTD Inc. on August 28, 2013; |
• | Neiman Marcus Group LTD Inc. was renamed Neiman Marcus Group LTD LLC on October 28, 2013; |
• | The Neiman Marcus Group, Inc. was renamed The Neiman Marcus Group LLC on October 28, 2013; and |
• | NM Mariposa Holdings, Inc. was renamed Neiman Marcus Group, Inc. on May 29, 2015. |
Exhibit | Method of Filing | ||
3.1 | Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended November 2, 2013. | ||
3.2 | Incorporated herein by reference to the Company’s Current Report on Form 8-K filed on October 29, 2013. | ||
4.1 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on October 29, 2013. | ||
4.2 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on October 29, 2013. | ||
4.3 | Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended August 1, 2009. | ||
4.4 | Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended August 1, 2009. | ||
4.5 | Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended July 30, 2011. | ||
4.6 | Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended July 30, 2011. | ||
4.7 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on October 29, 2013. | ||
4.8 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on October 29, 2013. | ||
10.1 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on October 29, 2013. | ||
10.2 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on March 13, 2014. | ||
10.3 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on October 29, 2013. | ||
10.4 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on October 16, 2014. | ||
10.5 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on October 27, 2016. | ||
10.6 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on October 29, 2013. | ||
10.7 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on June 3, 2015. | ||
10.8 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on November 25, 2016. | ||
10.9 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on October 29, 2013. | ||
10.10 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on October 29, 2013. | ||
10.11 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on November 2, 2016. | ||
10.12 | Filed herewith. | ||
10.13 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on October 29, 2013. | ||
10.14 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on October 29, 2013. | ||
10.15 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on November 2, 2016. | ||
10.16 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on November 2, 2016. | ||
10.17 | Incorporated herein by reference to the Company’s Amendment No. 1 to the Form S-1 Registration Statement dated August 7, 2013. | ||
10.18 | Incorporated herein by reference to the Company’s Amendment No. 1 to the Form S-1 Registration Statement dated August 7, 2013. | ||
10.19 | Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended July 30, 2011. | ||
10.20 | Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2009. | ||
10.21 | Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended April 26, 2008. | ||
10.22 | Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2009. | ||
10.23 | Filed herewith. | ||
10.24 | Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2009. | ||
10.25 | Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2010. | ||
10.26 | Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended August 2, 2008. | ||
10.27 | Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2009. | ||
10.28 | Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2010. | ||
10.29 | Filed herewith. | ||
10.30 | Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended August 2, 2014. | ||
10.31 | Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended August 2, 2014. | ||
10.32 | Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended August 2, 2014. | ||
10.33 | Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended February 1, 2014. | ||
10.34 | Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended August 2, 2014. | ||
10.35 | Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended August 2, 2014. | ||
12.1 | Filed herewith. | ||
14.1 | Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended August 3, 2013. | ||
14.2 | Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2010. | ||
21.1 | Filed herewith. | ||
31.1 | Filed herewith. | ||
31.2 | Filed herewith. | ||
32.1 | Furnished herewith. | ||
101.INS | XBRL Instance Document | Filed herewith electronically. | |
101.SCH | XBRL Taxonomy Extension Schema Document | Filed herewith electronically. | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | Filed herewith electronically. | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | Filed herewith electronically. | |
101.LAB | XBRL Taxonomy Extension Labels Linkbase Document | Filed herewith electronically. | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | Filed herewith electronically. |
Page | |
/S/ ERNST & YOUNG LLP | |
Dallas, Texas | |
October 10, 2017 |
(in thousands, except units) | July 29, 2017 | July 30, 2016 | ||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 49,239 | $ | 61,843 | ||||
Credit card receivables | 38,836 | 38,813 | ||||||
Merchandise inventories | 1,153,657 | 1,125,325 | ||||||
Other current assets | 137,118 | 108,065 | ||||||
Total current assets | 1,378,850 | 1,334,046 | ||||||
Property and equipment, net | 1,586,961 | 1,588,121 | ||||||
Favorable lease commitments, net | 930,585 | 985,534 | ||||||
Other definite-lived intangible assets, net | 401,081 | 451,722 | ||||||
Tradenames | 1,499,750 | 1,807,246 | ||||||
Goodwill | 1,880,894 | 2,072,818 | ||||||
Other long-term assets | 25,395 | 17,401 | ||||||
Total assets | $ | 7,703,516 | $ | 8,256,888 | ||||
LIABILITIES AND MEMBER EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 316,830 | $ | 317,736 | ||||
Accrued liabilities | 456,937 | 492,646 | ||||||
Current portion of long-term debt | 29,426 | 29,426 | ||||||
Total current liabilities | 803,193 | 839,808 | ||||||
Long-term liabilities: | ||||||||
Long-term debt, net of debt issuance costs | 4,675,540 | 4,584,281 | ||||||
Deferred income taxes | 1,156,833 | 1,296,793 | ||||||
Deferred real estate credits and deferred financing obligations | 201,892 | 127,618 | ||||||
Other long-term liabilities | 399,406 | 465,257 | ||||||
Total long-term liabilities | 6,433,671 | 6,473,949 | ||||||
Membership unit (1 unit issued and outstanding at July 29, 2017 and July 30, 2016) | — | — | ||||||
Member capital | 1,587,086 | 1,584,216 | ||||||
Accumulated other comprehensive loss | (63,431 | ) | (115,841 | ) | ||||
Accumulated deficit | (1,057,003 | ) | (525,244 | ) | ||||
Total member equity | 466,652 | 943,131 | ||||||
Total liabilities and member equity | $ | 7,703,516 | $ | 8,256,888 |
Fiscal year ended | ||||||||||||
(in thousands) | July 29, 2017 | July 30, 2016 | August 1, 2015 | |||||||||
Revenues | $ | 4,705,993 | $ | 4,949,472 | $ | 5,095,087 | ||||||
Cost of goods sold including buying and occupancy costs (excluding depreciation) | 3,220,027 | 3,322,508 | 3,305,478 | |||||||||
Selling, general and administrative expenses (excluding depreciation) | 1,129,309 | 1,117,928 | 1,162,075 | |||||||||
Income from credit card program | (60,082 | ) | (60,648 | ) | (52,769 | ) | ||||||
Depreciation expense | 225,463 | 226,868 | 185,550 | |||||||||
Amortization of intangible assets | 50,769 | 57,011 | 82,953 | |||||||||
Amortization of favorable lease commitments | 53,262 | 54,178 | 54,327 | |||||||||
Other expenses | 29,730 | 27,127 | 39,474 | |||||||||
Impairment charges | 510,736 | 466,155 | — | |||||||||
Operating earnings (loss) | (453,221 | ) | (261,655 | ) | 317,999 | |||||||
Interest expense, net | 295,668 | 285,596 | 289,923 | |||||||||
Earnings (loss) before income taxes | (748,889 | ) | (547,251 | ) | 28,076 | |||||||
Income tax expense (benefit) | (217,130 | ) | (141,141 | ) | 13,127 | |||||||
Net earnings (loss) | $ | (531,759 | ) | $ | (406,110 | ) | $ | 14,949 |
Fiscal year ended | ||||||||||||
(in thousands) | July 29, 2017 | July 30, 2016 | August 1, 2015 | |||||||||
Net earnings (loss) | $ | (531,759 | ) | $ | (406,110 | ) | $ | 14,949 | ||||
Other comprehensive earnings (loss): | ||||||||||||
Foreign currency translation adjustments, before tax | 9,297 | (2,663 | ) | (21,910 | ) | |||||||
Change in unrealized gain (loss) on financial instruments, before tax | 14,306 | (11,266 | ) | (3,076 | ) | |||||||
Reclassification of realized loss on financial instruments to earnings, before tax | 6,615 | 576 | — | |||||||||
Change in unrealized loss on unfunded benefit obligations, before tax | 52,832 | (91,828 | ) | (24,737 | ) | |||||||
Tax effect related to items of other comprehensive earnings (loss) | (30,640 | ) | 40,568 | 15,924 | ||||||||
Total other comprehensive earnings (loss) | 52,410 | (64,613 | ) | (33,799 | ) | |||||||
Total comprehensive loss | $ | (479,349 | ) | $ | (470,723 | ) | $ | (18,850 | ) |
Fiscal year ended | ||||||||||||
(in thousands) | July 29, 2017 | July 30, 2016 | August 1, 2015 | |||||||||
CASH FLOWS - OPERATING ACTIVITIES | ||||||||||||
Net earnings (loss) | $ | (531,759 | ) | $ | (406,110 | ) | $ | 14,949 | ||||
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization expense | 354,004 | 362,629 | 347,390 | |||||||||
Impairment charges | 510,736 | 466,155 | — | |||||||||
Deferred income taxes | (171,152 | ) | (102,841 | ) | (69,736 | ) | ||||||
Payment-in-kind interest | 16,599 | — | — | |||||||||
Other | (3,244 | ) | (11,945 | ) | 17,712 | |||||||
175,184 | 307,888 | 310,315 | ||||||||||
Changes in operating assets and liabilities: | ||||||||||||
Merchandise inventories | (25,852 | ) | 29,046 | (52,641 | ) | |||||||
Other current assets | (30,357 | ) | (20,758 | ) | (17,314 | ) | ||||||
Accounts payable and accrued liabilities | 1,268 | (43,877 | ) | (45,756 | ) | |||||||
Deferred real estate credits | 37,431 | 38,293 | 34,708 | |||||||||
Funding of defined benefit pension plan | (10,700 | ) | — | — | ||||||||
Net cash provided by operating activities | 146,974 | 310,592 | 229,312 | |||||||||
CASH FLOWS - INVESTING ACTIVITIES | ||||||||||||
Capital expenditures | (204,636 | ) | (301,445 | ) | (270,468 | ) | ||||||
Acquisition of MyTheresa | — | (896 | ) | (181,727 | ) | |||||||
Net cash used for investing activities | (204,636 | ) | (302,341 | ) | (452,195 | ) | ||||||
CASH FLOWS - FINANCING ACTIVITIES | ||||||||||||
Borrowings under senior secured asset-based revolving credit facility | 889,000 | 555,000 | 530,000 | |||||||||
Repayment of borrowings under senior secured asset-based revolving credit facility | (791,000 | ) | (520,000 | ) | (400,000 | ) | ||||||
Repayment of borrowings under senior secured term loan facility | (29,426 | ) | (29,426 | ) | (29,427 | ) | ||||||
Payment of contingent earn-out obligation | (22,857 | ) | (27,185 | ) | — | |||||||
Debt issuance costs paid | (5,359 | ) | — | (265 | ) | |||||||
Net cash provided by (used for) financing activities | 40,358 | (21,611 | ) | 100,308 | ||||||||
Effect of exchange rate changes on cash and cash equivalents | 4,700 | 2,229 | (927 | ) | ||||||||
CASH AND CASH EQUIVALENTS | ||||||||||||
Decrease during the period | (12,604 | ) | (11,131 | ) | (123,502 | ) | ||||||
Beginning balance | 61,843 | 72,974 | 196,476 | |||||||||
Ending balance | $ | 49,239 | $ | 61,843 | $ | 72,974 | ||||||
Supplemental Schedule of Cash Flow Information | ||||||||||||
Cash paid (received) during the period for: | ||||||||||||
Interest | $ | 286,746 | $ | 268,657 | $ | 267,368 | ||||||
Income taxes | $ | (42,264 | ) | $ | (19,207 | ) | $ | 85,203 | ||||
Non-cash - investing and financing activities: | ||||||||||||
Property and equipment acquired through developer financing obligations | $ | 50,799 | $ | 46,124 | $ | — | ||||||
Contingent earn-out obligation incurred in connection with acquisition of MyTheresa | $ | — | $ | — | $ | 50,043 |
(in thousands) | Member capital | Accumulated other comprehensive earnings (loss) | Retained earnings (deficit) | Total member equity | ||||||||||||
Balance at August 2, 2014 | $ | 1,584,106 | $ | (17,429 | ) | $ | (134,083 | ) | $ | 1,432,594 | ||||||
Comprehensive loss: | ||||||||||||||||
Net earnings | — | — | 14,949 | 14,949 | ||||||||||||
Foreign currency translation adjustments, net of tax of ($5,024) | — | (16,886 | ) | — | (16,886 | ) | ||||||||||
Adjustments for fluctuations in fair market value of financial instruments, net of tax of ($1,204) | — | (1,872 | ) | — | (1,872 | ) | ||||||||||
Change in unfunded benefit obligations, net of tax of ($9,696) | — | (15,041 | ) | — | (15,041 | ) | ||||||||||
Total comprehensive loss | (18,850 | ) | ||||||||||||||
Balance at August 1, 2015 | 1,584,106 | (51,228 | ) | (119,134 | ) | 1,413,744 | ||||||||||
Stock option exercises and other | 110 | — | — | 110 | ||||||||||||
Comprehensive loss: | ||||||||||||||||
Net loss | — | — | (406,110 | ) | (406,110 | ) | ||||||||||
Foreign currency translation adjustments, net of tax of ($381) | — | (2,282 | ) | — | (2,282 | ) | ||||||||||
Adjustments for fluctuations in fair market value of financial instruments, net of tax of ($4,416) | — | (6,850 | ) | — | (6,850 | ) | ||||||||||
Reclassification to earnings, net of tax of $226 | — | 350 | — | 350 | ||||||||||||
Change in unfunded benefit obligations, net of tax of ($35,997) | — | (55,831 | ) | — | (55,831 | ) | ||||||||||
Total comprehensive loss | (470,723 | ) | ||||||||||||||
Balance at July 30, 2016 | 1,584,216 | (115,841 | ) | (525,244 | ) | 943,131 | ||||||||||
Stock option exercises and other | 2,870 | — | — | 2,870 | ||||||||||||
Comprehensive loss: | ||||||||||||||||
Net loss | — | — | (531,759 | ) | (531,759 | ) | ||||||||||
Foreign currency translation adjustments, net of tax of $1,729 | — | 7,568 | — | 7,568 | ||||||||||||
Adjustments for fluctuations in fair market value of financial instruments, net of tax of $5,608 | — | 8,698 | — | 8,698 | ||||||||||||
Reclassification to earnings, net of tax of $2,593 | — | 4,022 | — | 4,022 | ||||||||||||
Change in unfunded benefit obligations, net of tax of $20,710 | — | 32,122 | — | 32,122 | ||||||||||||
Total comprehensive loss | $ | (479,349 | ) | |||||||||||||
Balance at July 29, 2017 | $ | 1,587,086 | $ | (63,431 | ) | $ | (1,057,003 | ) | $ | 466,652 |
• | Level 1 — Unadjusted quoted prices for identical instruments traded in active markets. |
• | Level 2 — Observable market-based inputs or unobservable inputs corroborated by market data. |
• | Level 3 — Unobservable inputs reflecting management’s estimates and assumptions. |
2018 | $ | 97,960 | |
2019 | 94,943 | ||
2020 | 88,247 | ||
2021 | 82,321 | ||
2022 | 82,473 |
• | future revenue and profitability projections associated with the tradename; |
• | estimated market royalty rates that could be derived from the licensing of our tradenames to third parties in order to establish the cash flows accruing to the benefit of the Company as a result of our ownership of our tradenames; and |
• | rate used to discount the estimated royalty cash flow projections to their present value (or estimated fair value). |
• | estimated future cash flows; |
• | growth assumptions for future revenues as well as future gross margin rates, expense rates, capital expenditures and other estimates; and |
• | rate, based on our estimated weighted average cost of capital, used to discount our estimated future cash flow projections to their present value (or estimated fair value). |
• | future revenue, cash flow and/or profitability projections; |
• | growth assumptions for future revenues as well as future gross margin rates, expense rates, capital expenditures and other estimates; |
• | rates, based on our estimated weighted average cost of capital, used to discount the estimated cash flow projections to their present value (or estimated fair value); |
• | recent transactions and valuation multiples for publicly held companies deemed similar to Parent; |
• | economic conditions and other factors deemed material to the valuation process; and |
• | valuations of Parent performed by third parties. |
(in thousands) | Fair Value Hierarchy | July 29, 2017 | July 30, 2016 | |||||||
Assets: | ||||||||||
Interest rate swaps (included in other long-term assets) | Level 2 | $ | 3,628 | $ | — | |||||
Liabilities: | ||||||||||
Interest rate swaps (included in other long-term liabilities) | Level 2 | — | 13,167 | |||||||
Contingent earn-out obligation (included in accrued liabilities) | Level 3 | — | 26,264 | |||||||
Stock-based award liability (included in other long-term liabilities) | Level 3 | 1,344 | 5,500 |
July 29, 2017 | July 30, 2016 | |||||||||||||||||
(in thousands) | Fair Value Hierarchy | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||
Long-term debt: | ||||||||||||||||||
Asset-Based Revolving Credit Facility | Level 2 | $ | 263,000 | $ | 263,000 | $ | 165,000 | $ | 165,000 | |||||||||
Senior Secured Term Loan Facility | Level 2 | 2,839,633 | 2,113,766 | 2,869,059 | 2,705,896 | |||||||||||||
Cash Pay Notes | Level 2 | 960,000 | 532,253 | 960,000 | 818,995 | |||||||||||||
PIK Toggle Notes | Level 2 | 600,000 | 297,000 | 600,000 | 480,000 | |||||||||||||
2028 Debentures | Level 2 | 122,677 | 87,490 | 122,463 | 120,325 |
(in thousands) | July 29, 2017 | July 30, 2016 | |||||
Land, buildings and improvements | $ | 1,280,214 | $ | 1,237,568 | |||
Fixtures and equipment | 914,489 | 699,469 | |||||
Construction in progress | 145,108 | 201,903 | |||||
2,339,811 | 2,138,940 | ||||||
Less: accumulated depreciation | 752,850 | 550,819 | |||||
Property and equipment, net | $ | 1,586,961 | $ | 1,588,121 |
(in thousands) | Favorable Lease Commitments | Other Definite-lived Intangible Assets | Tradenames | Goodwill | |||||||||||
Balance at August 1, 2015 | $ | 1,040,440 | $ | 521,275 | $ | 2,036,847 | $ | 2,272,483 | |||||||
Amortization | (54,178 | ) | (57,011 | ) | — | — | |||||||||
Impairment of goodwill and intangible assets | (201 | ) | (12,433 | ) | (228,877 | ) | (199,218 | ) | |||||||
Foreign currency translation adjustment | — | (109 | ) | (724 | ) | (447 | ) | ||||||||
Write-offs related to facility closures and other | (527 | ) | — | — | — | ||||||||||
Balance at July 30, 2016 | $ | 985,534 | $ | 451,722 | $ | 1,807,246 | $ | 2,072,818 | |||||||
Amortization | (53,262 | ) | (50,769 | ) | — | — | |||||||||
Impairment of goodwill and intangible assets | (1,687 | ) | — | (309,744 | ) | (196,164 | ) | ||||||||
Foreign currency translation adjustment | — | 128 | 2,248 | 4,240 | |||||||||||
Balance at July 29, 2017 | $ | 930,585 | $ | 401,081 | $ | 1,499,750 | $ | 1,880,894 | |||||||
Total accumulated amortization at July 29, 2017 | $ | 200,438 | $ | 299,451 |
• | the volatility and uncertainty in domestic and global economic conditions and the resulting impact on the market for luxury merchandise; |
• | the strength of the U.S. dollar against international currencies, most notably the Euro and British pound, and a resulting impact on tourism and spending by international customers in the U.S.; and |
• | a significant and sustained decline in the global price for crude oil and the resulting impact on stakeholders in the oil and gas industries, particularly in the Texas markets in which we have a significant presence. |
Fiscal year ended | |||||||
(in thousands) | July 29, 2017 | July 30, 2016 | |||||
Tradenames | $ | 309,744 | $ | 228,877 | |||
Goodwill | 196,164 | 199,218 | |||||
Property and equipment | 3,141 | 25,426 | |||||
Other definite-lived intangible assets | 1,687 | 12,634 | |||||
Total | $ | 510,736 | $ | 466,155 |
(in thousands) | July 29, 2017 | July 30, 2016 | |||||
Accrued salaries and related liabilities | $ | 64,293 | $ | 66,009 | |||
Amounts due customers | 140,330 | 132,805 | |||||
Self-insurance reserves | 36,545 | 36,197 | |||||
Interest payable | 31,935 | 59,781 | |||||
Sales returns reserves | 47,006 | 45,336 | |||||
Sales taxes payable | 28,811 | 26,688 | |||||
Contingent earn-out obligation | — | 26,264 | |||||
Other | 108,017 | 99,566 | |||||
Total | $ | 456,937 | $ | 492,646 |
(in thousands) | Interest Rate | July 29, 2017 | July 30, 2016 | |||||||
Asset-Based Revolving Credit Facility | variable | $ | 263,000 | $ | 165,000 | |||||
Senior Secured Term Loan Facility | variable | 2,839,633 | 2,869,059 | |||||||
mytheresa.com Credit Facilities | 2.25%/2.39% | — | — | |||||||
Cash Pay Notes | 8.00% | 960,000 | 960,000 | |||||||
PIK Toggle Notes | 8.75%/9.50% | 600,000 | 600,000 | |||||||
2028 Debentures | 7.125% | 122,677 | 122,463 | |||||||
Total debt | 4,785,310 | 4,716,522 | ||||||||
Less: current portion of Senior Secured Term Loan Facility | (29,426 | ) | (29,426 | ) | ||||||
Less: unamortized debt issuance costs | (80,344 | ) | (102,815 | ) | ||||||
Long-term debt, net of debt issuance costs | $ | 4,675,540 | $ | 4,584,281 |
• | a first-priority security interest in personal property consisting of inventory and related accounts, cash, deposit accounts, all payments received by the Company or the subsidiary guarantors from credit card clearinghouses and processors or otherwise in respect of all credit card charges for sales of inventory by the Company and the subsidiary guarantors, certain related assets and proceeds of the foregoing; |
• | a second-priority pledge of 100% of the Company’s capital stock and certain of the capital stock held by Holdings, the Company or any subsidiary guarantor (which pledge, in the case of any foreign subsidiary is limited to 100% of the non-voting stock (if any) and 65% of the voting stock of such foreign subsidiary); and |
• | a second-priority security interest in, and mortgages on, a significant portion of the Company's owned real property and equipment and substantially all other tangible and intangible assets of Holdings, the Company and each subsidiary guarantor, but excluding, among other things, leasehold interests. |
• | a first-priority pledge of 100% of the Company's capital stock and certain of the capital stock held by the Company, Holdings or any subsidiary guarantor (which pledge, in the case of any foreign subsidiary is limited to 100% of the non-voting stock (if any) and 65% of the voting stock of such foreign subsidiary); |
• | a first-priority security interest in, and mortgages on, a significant portion of the Company's owned real property and equipment and substantially all other tangible and intangible assets of the Company, Holdings and each subsidiary guarantor, but excluding, among other things, leasehold interests and the collateral described below; and |
• | a second-priority security interest in personal property consisting of inventory and related accounts, cash, deposit accounts, all payments received by the Company or the subsidiary guarantors from credit card clearinghouses and processors or otherwise in respect of all credit card charges for sales of inventory by the Company and the subsidiary guarantors, certain related assets and proceeds of the foregoing. |
2018 | $ | 29.4 | |
2019 | 29.4 | ||
2020 | 29.4 | ||
2021 | 3,014.4 | ||
2022 | 1,560.0 | ||
Thereafter | 122.7 |
Fiscal year ended | ||||||||||||
(in thousands) | July 29, 2017 | July 30, 2016 | August 1, 2015 | |||||||||
Asset-Based Revolving Credit Facility | $ | 7,022 | $ | 3,104 | $ | 1,463 | ||||||
Senior Secured Term Loan Facility | 130,129 | 124,775 | 125,558 | |||||||||
mytheresa.com Credit Facilities | 58 | 23 | 8 | |||||||||
Cash Pay Notes | 76,800 | 76,800 | 76,800 | |||||||||
PIK Toggle Notes | 53,810 | 52,500 | 52,500 | |||||||||
2028 Debentures | 8,906 | 8,906 | 8,906 | |||||||||
Amortization of debt issue costs | 24,510 | 24,572 | 24,560 | |||||||||
Capitalized interest | (6,270 | ) | (7,298 | ) | (2,361 | ) | ||||||
Other, net | 703 | 2,214 | 2,489 | |||||||||
Interest expense, net | $ | 295,668 | $ | 285,596 | $ | 289,923 |
Fiscal year ended | ||||||||||||
(in thousands) | July 29, 2017 | July 30, 2016 | August 1, 2015 | |||||||||
Realized hedging losses related to interest rate swaps – included in net interest expense | $ | 5,191 | $ | — | $ | — | ||||||
Realized hedging losses related to interest rate caps – included in net interest expense | 1,424 | 576 | — | |||||||||
Total | $ | 6,615 | $ | 576 | $ | — |
Fiscal year ended | ||||||||||||
(in thousands) | July 29, 2017 | July 30, 2016 | August 1, 2015 | |||||||||
Current: | ||||||||||||
Federal | $ | (38,337 | ) | $ | (36,557 | ) | $ | 73,928 | ||||
State | (8,567 | ) | (7,691 | ) | 7,955 | |||||||
Foreign | 926 | 5,948 | 980 | |||||||||
(45,978 | ) | (38,300 | ) | 82,863 | ||||||||
Deferred: | ||||||||||||
Federal | (148,359 | ) | (78,804 | ) | (60,780 | ) | ||||||
State | (22,357 | ) | (18,189 | ) | (6,080 | ) | ||||||
Foreign | (436 | ) | (5,848 | ) | (2,876 | ) | ||||||
(171,152 | ) | (102,841 | ) | (69,736 | ) | |||||||
Income tax expense (benefit) | $ | (217,130 | ) | $ | (141,141 | ) | $ | 13,127 |
Fiscal year ended | ||||||||||||
(in thousands) | July 29, 2017 | July 30, 2016 | August 1, 2015 | |||||||||
United States | $ | (752,705 | ) | $ | (542,310 | ) | $ | 38,399 | ||||
Foreign | 3,816 | (4,941 | ) | (10,323 | ) | |||||||
Earnings (loss) before income taxes | $ | (748,889 | ) | $ | (547,251 | ) | $ | 28,076 |
Fiscal year ended | ||||||||||||
(in thousands) | July 29, 2017 | July 30, 2016 | August 1, 2015 | |||||||||
Income tax expense (benefit) at statutory rate | $ | (262,111 | ) | $ | (191,538 | ) | $ | 9,827 | ||||
State income taxes, net of federal income tax benefit | (21,132 | ) | (15,480 | ) | 1,235 | |||||||
Impact of non-deductible expenses, including goodwill impairment | 64,875 | 64,372 | 3,330 | |||||||||
Tax expense (benefit) related to tax settlements and other changes in tax liabilities | (2,022 | ) | (554 | ) | (555 | ) | ||||||
Impact of foreign tax differential | 51 | 377 | (706 | ) | ||||||||
Unbenefitted losses of foreign subsidiary | 703 | 1,444 | — | |||||||||
Other | 2,506 | 238 | (4 | ) | ||||||||
Total | $ | (217,130 | ) | $ | (141,141 | ) | $ | 13,127 | ||||
Effective tax rate | 29.0 | % | 25.8 | % | 46.8 | % |
(in thousands) | July 29, 2017 | July 30, 2016 | ||||||
Deferred income tax assets: | ||||||||
Accruals and reserves | $ | 34,727 | $ | 31,628 | ||||
Employee benefits | 179,565 | 202,778 | ||||||
Other | 72,882 | 36,406 | ||||||
Total deferred tax assets | $ | 287,174 | $ | 270,812 | ||||
Deferred income tax liabilities: | ||||||||
Inventory | $ | (13,264 | ) | $ | (10,125 | ) | ||
Depreciation and amortization | (322,184 | ) | (285,563 | ) | ||||
Intangible assets | (1,083,459 | ) | (1,241,497 | ) | ||||
Other | (25,100 | ) | (30,420 | ) | ||||
Total deferred tax liabilities | (1,444,007 | ) | (1,567,605 | ) | ||||
Net deferred income tax liability | $ | (1,156,833 | ) | $ | (1,296,793 | ) |
(in thousands) | July 29, 2017 | July 30, 2016 | ||||||
Balance at beginning of fiscal year | $ | 3,661 | $ | 1,854 | ||||
Gross amount of decreases for prior year tax positions | (3,005 | ) | (1,290 | ) | ||||
Gross amount of increases for current year tax positions | 1,533 | 3,097 | ||||||
Balance at end of fiscal year | $ | 2,189 | $ | 3,661 |
(in thousands) | July 29, 2017 | July 30, 2016 | ||||||
Pension Plan: | ||||||||
Projected benefit obligation | $ | 620,900 | $ | 683,493 | ||||
Less: Plan assets | (380,163 | ) | (383,817 | ) | ||||
Pension Plan, net | 240,737 | 299,676 | ||||||
SERP Plan | 112,739 | 118,484 | ||||||
Postretirement Plan | 6,916 | 8,600 | ||||||
360,392 | 426,760 | |||||||
Less: current portion | (7,803 | ) | (7,345 | ) | ||||
Long-term portion of benefit obligations | $ | 352,589 | $ | 419,415 |
Pension Plan | SERP Plan | Postretirement Plan | ||||||||||||||||||||||
Fiscal years | Fiscal years | Fiscal years | ||||||||||||||||||||||
(in thousands) | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||||
Projected benefit obligations: | ||||||||||||||||||||||||
Beginning of year | $ | 683,493 | $ | 612,762 | $ | 118,484 | $ | 111,157 | $ | 8,600 | $ | 9,121 | ||||||||||||
Service cost | — | — | — | — | 1 | 3 | ||||||||||||||||||
Interest cost | 19,479 | 21,716 | 3,134 | 3,569 | 219 | 285 | ||||||||||||||||||
Actuarial (gain) loss | (56,329 | ) | 72,786 | (3,270 | ) | 8,862 | (1,006 | ) | (193 | ) | ||||||||||||||
Benefits paid, net | (25,743 | ) | (23,771 | ) | (5,609 | ) | (5,104 | ) | (898 | ) | (616 | ) | ||||||||||||
End of year | $ | 620,900 | $ | 683,493 | $ | 112,739 | $ | 118,484 | $ | 6,916 | $ | 8,600 |
Fiscal year ended | ||||||||||||
(in thousands) | July 29, 2017 | July 30, 2016 | August 1, 2015 | |||||||||
Pension Plan: | ||||||||||||
Interest cost | $ | 19,479 | $ | 21,716 | $ | 25,527 | ||||||
Expected return on plan assets | (21,323 | ) | (23,229 | ) | (24,935 | ) | ||||||
Net amortization of losses | 2,653 | — | — | |||||||||
Pension Plan expense (income) | $ | 809 | $ | (1,513 | ) | $ | 592 | |||||
SERP Plan: | ||||||||||||
Interest cost | $ | 3,134 | $ | 3,569 | $ | 4,505 | ||||||
Net amortization of losses | 93 | — | — | |||||||||
SERP Plan expense | $ | 3,227 | $ | 3,569 | $ | 4,505 | ||||||
Postretirement Plan: | ||||||||||||
Service cost | $ | 1 | $ | 3 | $ | 11 | ||||||
Interest cost | 219 | 285 | 451 | |||||||||
Net amortization of gains | (585 | ) | (582 | ) | (372 | ) | ||||||
Postretirement Plan expense (income) | $ | (365 | ) | $ | (294 | ) | $ | 90 |
Pension | SERP | Postretirement | ||||||||||
(in thousands) | Plan | Plan | Plan | |||||||||
Fiscal year 2018 | $ | 28,299 | $ | 7,271 | $ | 532 | ||||||
Fiscal year 2019 | 29,578 | 7,070 | 490 | |||||||||
Fiscal year 2020 | 30,708 | 7,193 | 439 | |||||||||
Fiscal year 2021 | 31,856 | 7,297 | 448 | |||||||||
Fiscal year 2022 | 32,958 | 7,350 | 427 | |||||||||
Fiscal years 2023-2027 | 177,469 | 35,680 | 2,034 |
Fiscal years | ||||||||
(in thousands) | 2017 | 2016 | ||||||
Fair value of assets at beginning of year | $ | 383,817 | $ | 394,150 | ||||
Actual return on assets | 11,389 | 13,438 | ||||||
Benefits paid | (25,743 | ) | (23,771 | ) | ||||
Contributions | 10,700 | — | ||||||
Fair value of assets at end of year | $ | 380,163 | $ | 383,817 |
Pension Plan | |||||||||
Allocation at | Allocation at | ||||||||
Target Allocation | July 31, 2017 | July 31, 2016 | |||||||
Equity securities | 60 | % | 60 | % | 59 | % | |||
Fixed income securities | 40 | % | 40 | % | 41 | % | |||
Total | 100 | % | 100 | % | 100 | % |
July 29, 2017 | ||||||||||||||||
(in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Corporate debt securities | $ | — | $ | 102,013 | $ | — | $ | 102,013 | ||||||||
Mutual funds | 22,096 | — | — | 22,096 | ||||||||||||
U.S. government securities | 26,041 | — | — | 26,041 | ||||||||||||
Other | — | 2,679 | — | 2,679 | ||||||||||||
$ | 48,137 | $ | 104,692 | $ | — | |||||||||||
Investments measured at net asset value: | ||||||||||||||||
Common/collective trusts | 66,156 | |||||||||||||||
Hedge funds | 157,486 | |||||||||||||||
Limited partnership interests | 3,692 | |||||||||||||||
Total investments at fair value | $ | 380,163 |
July 30, 2016 | ||||||||||||||||
(in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Corporate debt securities | $ | — | $ | 96,389 | $ | — | $ | 96,389 | ||||||||
Mutual funds | 22,987 | — | — | 22,987 | ||||||||||||
U.S. government securities | 28,894 | — | — | 28,894 | ||||||||||||
Other | — | 7,442 | — | 7,442 | ||||||||||||
$ | 51,881 | $ | 103,831 | $ | — | |||||||||||
Investments measured at net asset value: | ||||||||||||||||
Common/collective trusts | 59,071 | |||||||||||||||
Hedge funds | 165,003 | |||||||||||||||
Limited partnership interests | 4,031 | |||||||||||||||
Total investments at fair value | $ | 383,817 |
July 31, 2017 | July 31, 2016 | July 31, 2015 | |||||||
Pension Plan: | |||||||||
Discount rate | 3.80 | % | 3.44 | % | 4.30 | % | |||
Expected long-term rate of return on plan assets | 5.50 | % | 5.50 | % | 6.00 | % | |||
SERP Plan: | |||||||||
Discount rate | 3.69 | % | 3.30 | % | 4.15 | % | |||
Postretirement Plan: | |||||||||
Discount rate | 3.71 | % | 3.33 | % | 4.15 | % | |||
Initial health care cost trend rate | 8.50 | % | 7.50 | % | 7.50 | % | |||
Ultimate health care cost trend rate | 5.00 | % | 5.00 | % | 5.00 | % |
Fiscal year ended | ||||||||||||
(in thousands) | July 29, 2017 | July 30, 2016 | August 1, 2015 | |||||||||
Minimum rent | $ | 81,700 | $ | 81,300 | $ | 73,700 | ||||||
Contingent rent | 20,400 | 21,900 | 27,700 | |||||||||
Other occupancy costs | 18,200 | 18,300 | 16,500 | |||||||||
Amortization of deferred real estate credits | (4,200 | ) | (2,100 | ) | (800 | ) | ||||||
Total rent expense | $ | 116,100 | $ | 119,400 | $ | 117,100 |
2018 | $ | 86,500 | |
2019 | 83,900 | ||
2020 | 76,000 | ||
2021 | 71,300 | ||
2022 | 68,300 | ||
Thereafter | 1,668,800 |
(in thousands) | Foreign Currency Translation Adjustments | Unrealized Gains (Losses) on Financial Instruments | Unfunded Benefit Obligations | Total | ||||||||||||
Balance, July 30, 2016 | $ | (19,168 | ) | $ | (9,326 | ) | $ | (87,347 | ) | $ | (115,841 | ) | ||||
Other comprehensive earnings | 7,568 | 8,698 | 32,122 | 48,388 | ||||||||||||
Amounts reclassified from accumulated other comprehensive loss | — | 4,022 | — | 4,022 | ||||||||||||
Balance, July 29, 2017 | $ | (11,600 | ) | $ | 3,394 | $ | (55,225 | ) | $ | (63,431 | ) |
Fiscal year ended | ||||||||
(in thousands) | July 29, 2017 | July 30, 2016 | ||||||
Balance at beginning of fiscal year | $ | 5,500 | $ | 15,873 | ||||
Stock option expense (benefit) | (2,337 | ) | (10,373 | ) | ||||
Reclassifications to equity | (2,995 | ) | — | |||||
Balance at end of fiscal year | $ | 168 | $ | 5,500 |
Fiscal year ended July 29, 2017 | |||||||||
Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (years) | |||||||
Outstanding at July 30, 2016 | 217,597 | $ | 881 | ||||||
Granted | 9,971 | 1,000 | |||||||
Exercised | (609 | ) | 180 | ||||||
Forfeited | (30,543 | ) | 1,004 | ||||||
Outstanding at July 29, 2017 | 196,416 | $ | 854 | 5.1 | |||||
Options exercisable at end of fiscal year | 95,131 | $ | 692 | 3.4 |
Fiscal year ended | ||||||||||||
July 29, 2017 | July 30, 2016 | August 1, 2015 | ||||||||||
Weighted average exercise price | $ | 1,000 | $ | 1,205 | $ | 1,166 | ||||||
Weighted term in years | 5 | 5 | 5 | |||||||||
Weighted average volatility | 31.43 | % | 29.43 | % | 30.20 | % | ||||||
Risk-free interest rate | 1.27% - 1.88% | 1.33 | % | 1.55% - 1.63% | ||||||||
Dividend yield | — | — | — | |||||||||
Weighted average fair value | $ | 149 | $ | 341 | $ | 343 |
Fiscal year ended July 29, 2017 | |||||||
Shares | Weighted Average Grant-Date Fair Value | ||||||
Outstanding at July 30, 2016 | — | $ | — | ||||
Granted | 26,954 | 768 | |||||
Forfeited | (5,599 | ) | 768 | ||||
Outstanding at July 29, 2017 | 21,355 | $ | 768 |
Fiscal year ended | ||||||||||||
(in thousands) | July 29, 2017 | July 30, 2016 | August 1, 2015 | |||||||||
Stock compensation expense (benefit): | ||||||||||||
Stock options | $ | (2,337 | ) | $ | (10,373 | ) | $ | 83 | ||||
Restricted stock | 1,177 | — | — | |||||||||
Total | $ | (1,160 | ) | $ | (10,373 | ) | $ | 83 |
Fiscal year ended | |||||||||
July 29, 2017 | July 30, 2016 | August 1, 2015 | |||||||
Women’s Apparel | 32 | % | 32 | % | 32 | % | |||
Women’s Shoes, Handbags and Accessories | 29 | 28 | 28 | ||||||
Men’s Apparel and Shoes | 12 | 12 | 12 | ||||||
Cosmetics and Fragrances | 12 | 11 | 11 | ||||||
Designer and Precious Jewelry | 9 | 10 | 10 | ||||||
Home Furnishings and Decor | 5 | 5 | 5 | ||||||
Other | 1 | 2 | 2 | ||||||
100 | % | 100 | % | 100 | % |
Fiscal year ended | ||||||||||||
(in thousands) | July 29, 2017 | July 30, 2016 | August 1, 2015 | |||||||||
Expenses incurred in connection with strategic initiatives | $ | 21,347 | $ | 24,318 | $ | 11,644 | ||||||
MyTheresa acquisition costs | 3,286 | 4,443 | 19,414 | |||||||||
Expenses related to Cyber-Attack, net of insurance recoveries | 1,500 | 1,032 | 4,078 | |||||||||
Net gain from facility closure | — | (5,577 | ) | — | ||||||||
Other expenses | 3,597 | 2,911 | 4,338 | |||||||||
Total | $ | 29,730 | $ | 27,127 | $ | 39,474 |
July 29, 2017 | ||||||||||||||||||||||||
(in thousands) | Company | NMG | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 28,301 | $ | 649 | $ | 20,289 | $ | — | $ | 49,239 | ||||||||||||
Credit card receivables | — | 35,091 | — | 3,745 | — | 38,836 | ||||||||||||||||||
Merchandise inventories | — | 915,910 | 151,193 | 86,554 | — | 1,153,657 | ||||||||||||||||||
Other current assets | — | 125,853 | 9,956 | 1,896 | (587 | ) | 137,118 | |||||||||||||||||
Total current assets | — | 1,105,155 | 161,798 | 112,484 | (587 | ) | 1,378,850 | |||||||||||||||||
Property and equipment, net | — | 1,333,487 | 149,932 | 103,542 | — | 1,586,961 | ||||||||||||||||||
Intangible assets, net | — | 509,757 | 2,249,290 | 72,369 | — | 2,831,416 | ||||||||||||||||||
Goodwill | — | 1,338,844 | 414,402 | 127,648 | — | 1,880,894 | ||||||||||||||||||
Other long-term assets | — | 23,705 | 1,690 | — | — | 25,395 | ||||||||||||||||||
Investments in subsidiaries | 466,652 | 3,239,816 | — | — | (3,706,468 | ) | — | |||||||||||||||||
Total assets | $ | 466,652 | $ | 7,550,764 | $ | 2,977,112 | $ | 416,043 | $ | (3,707,055 | ) | $ | 7,703,516 | |||||||||||
LIABILITIES AND MEMBER EQUITY | ||||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||
Accounts payable | $ | — | $ | 288,079 | $ | — | $ | 28,751 | $ | — | $ | 316,830 | ||||||||||||
Accrued liabilities | — | 350,773 | 74,832 | 31,919 | (587 | ) | 456,937 | |||||||||||||||||
Current portion of long-term debt | — | 29,426 | — | — | — | 29,426 | ||||||||||||||||||
Total current liabilities | — | 668,278 | 74,832 | 60,670 | (587 | ) | 803,193 | |||||||||||||||||
Long-term liabilities: | ||||||||||||||||||||||||
Long-term debt, net of debt issuance costs | — | 4,675,540 | — | — | — | 4,675,540 | ||||||||||||||||||
Deferred income taxes | — | 1,144,022 | — | 12,811 | — | 1,156,833 | ||||||||||||||||||
Other long-term liabilities | — | 596,272 | 5,379 | (353 | ) | — | 601,298 | |||||||||||||||||
Total long-term liabilities | — | 6,415,834 | 5,379 | 12,458 | — | 6,433,671 | ||||||||||||||||||
Total member equity | 466,652 | 466,652 | 2,896,901 | 342,915 | (3,706,468 | ) | 466,652 | |||||||||||||||||
Total liabilities and member equity | $ | 466,652 | $ | 7,550,764 | $ | 2,977,112 | $ | 416,043 | $ | (3,707,055 | ) | $ | 7,703,516 |
July 30, 2016 | ||||||||||||||||||||||||
(in thousands) | Company | NMG | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 39,791 | $ | 936 | $ | 21,116 | $ | — | $ | 61,843 | ||||||||||||
Credit card receivables | — | 35,165 | — | 3,648 | — | 38,813 | ||||||||||||||||||
Merchandise inventories | — | 917,138 | 145,518 | 62,669 | — | 1,125,325 | ||||||||||||||||||
Other current assets | — | 94,498 | 15,082 | 1,256 | (2,771 | ) | 108,065 | |||||||||||||||||
Total current assets | — | 1,086,592 | 161,536 | 88,689 | (2,771 | ) | 1,334,046 | |||||||||||||||||
Property and equipment, net | — | 1,440,968 | 144,186 | 2,967 | — | 1,588,121 | ||||||||||||||||||
Intangible assets, net | — | 566,084 | 2,605,413 | 73,005 | — | 3,244,502 | ||||||||||||||||||
Goodwill | — | 1,412,146 | 537,263 | 123,409 | — | 2,072,818 | ||||||||||||||||||
Other long-term assets | — | 15,153 | 2,248 | — | — | 17,401 | ||||||||||||||||||
Intercompany notes receivable | — | — | 196,686 | — | (196,686 | ) | — | |||||||||||||||||
Investments in subsidiaries | 943,131 | 3,541,121 | — | — | (4,484,252 | ) | — | |||||||||||||||||
Total assets | $ | 943,131 | $ | 8,062,064 | $ | 3,647,332 | $ | 288,070 | $ | (4,683,709 | ) | $ | 8,256,888 | |||||||||||
LIABILITIES AND MEMBER EQUITY | ||||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||
Accounts payable | $ | — | $ | 257,047 | $ | 37,082 | $ | 23,607 | $ | — | $ | 317,736 | ||||||||||||
Accrued liabilities | — | 373,108 | 70,488 | 51,821 | (2,771 | ) | 492,646 | |||||||||||||||||
Current portion of long-term debt | — | 29,426 | — | — | — | 29,426 | ||||||||||||||||||
Total current liabilities | — | 659,581 | 107,570 | 75,428 | (2,771 | ) | 839,808 | |||||||||||||||||
Long-term liabilities: | ||||||||||||||||||||||||
Long-term debt, net of debt issuance costs | — | 4,584,281 | — | — | — | 4,584,281 | ||||||||||||||||||
Intercompany notes payable | — | — | — | 196,686 | (196,686 | ) | — | |||||||||||||||||
Deferred income taxes | — | 1,285,829 | — | 10,964 | — | 1,296,793 | ||||||||||||||||||
Other long-term liabilities | — | 589,242 | 3,633 | — | — | 592,875 | ||||||||||||||||||
Total long-term liabilities | — | 6,459,352 | 3,633 | 207,650 | (196,686 | ) | 6,473,949 | |||||||||||||||||
Total member equity | 943,131 | 943,131 | 3,536,129 | 4,992 | (4,484,252 | ) | 943,131 | |||||||||||||||||
Total liabilities and member equity | $ | 943,131 | $ | 8,062,064 | $ | 3,647,332 | $ | 288,070 | $ | (4,683,709 | ) | $ | 8,256,888 |
Fiscal year ended July 29, 2017 | ||||||||||||||||||||||||
(in thousands) | Company | NMG | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
Revenues | $ | — | $ | 3,708,882 | $ | 731,503 | $ | 265,608 | $ | — | $ | 4,705,993 | ||||||||||||
Cost of goods sold including buying and occupancy costs (excluding depreciation) | — | 2,534,910 | 512,362 | 172,755 | — | 3,220,027 | ||||||||||||||||||
Selling, general and administrative expenses (excluding depreciation) | — | 921,195 | 133,108 | 75,006 | — | 1,129,309 | ||||||||||||||||||
Income from credit card program | — | (54,623 | ) | (5,459 | ) | — | — | (60,082 | ) | |||||||||||||||
Depreciation expense | — | 205,993 | 16,214 | 3,256 | — | 225,463 | ||||||||||||||||||
Amortization of intangible assets and favorable lease commitments | — | 54,640 | 46,379 | 3,012 | — | 104,031 | ||||||||||||||||||
Other expenses | — | 28,015 | — | 1,715 | — | 29,730 | ||||||||||||||||||
Impairment charges | — | 510,736 | — | — | — | 510,736 | ||||||||||||||||||
Operating earnings (loss) | — | (491,984 | ) | 28,899 | 9,864 | — | (453,221 | ) | ||||||||||||||||
Interest expense, net | — | 295,717 | — | (49 | ) | — | 295,668 | |||||||||||||||||
Intercompany royalty charges (income) | — | 150,719 | (150,719 | ) | — | — | — | |||||||||||||||||
Equity in loss (earnings) of subsidiaries | 531,759 | (189,041 | ) | — | — | (342,718 | ) | — | ||||||||||||||||
Earnings (loss) before income taxes | (531,759 | ) | (749,379 | ) | 179,618 | 9,913 | 342,718 | (748,889 | ) | |||||||||||||||
Income tax expense (benefit) | — | (217,620 | ) | — | 490 | — | (217,130 | ) | ||||||||||||||||
Net earnings (loss) | $ | (531,759 | ) | $ | (531,759 | ) | $ | 179,618 | $ | 9,423 | $ | 342,718 | $ | (531,759 | ) | |||||||||
Total other comprehensive earnings (loss), net of tax | 52,410 | 44,842 | — | 7,568 | (52,410 | ) | 52,410 | |||||||||||||||||
Total comprehensive earnings (loss) | $ | (479,349 | ) | $ | (486,917 | ) | $ | 179,618 | $ | 16,991 | $ | 290,308 | $ | (479,349 | ) |
Fiscal year ended July 30, 2016 | ||||||||||||||||||||||||
(in thousands) | Company | NMG | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
Revenues | $ | — | $ | 3,963,977 | $ | 783,689 | $ | 201,806 | $ | — | $ | 4,949,472 | ||||||||||||
Cost of goods sold including buying and occupancy costs (excluding depreciation) | — | 2,660,197 | 532,796 | 129,515 | — | 3,322,508 | ||||||||||||||||||
Selling, general and administrative expenses (excluding depreciation) | — | 923,379 | 135,741 | 58,808 | — | 1,117,928 | ||||||||||||||||||
Income from credit card program | — | (55,070 | ) | (5,578 | ) | — | — | (60,648 | ) | |||||||||||||||
Depreciation expense | — | 205,011 | 20,858 | 999 | — | 226,868 | ||||||||||||||||||
Amortization of intangible assets and favorable lease commitments | — | 58,347 | 47,983 | 4,859 | — | 111,189 | ||||||||||||||||||
Other expenses | — | 22,283 | — | 4,844 | — | 27,127 | ||||||||||||||||||
Impairment charges | — | 466,155 | — | — | — | 466,155 | ||||||||||||||||||
Operating earnings (loss) | — | (316,325 | ) | 51,889 | 2,781 | — | (261,655 | ) | ||||||||||||||||
Interest expense, net | — | 285,381 | (8,080 | ) | 8,295 | — | 285,596 | |||||||||||||||||
Intercompany royalty charges (income) | — | 150,285 | (150,285 | ) | — | — | — | |||||||||||||||||
Equity in loss (earnings) of subsidiaries | 406,110 | (204,639 | ) | — | — | (201,471 | ) | — | ||||||||||||||||
Earnings (loss) before income taxes | (406,110 | ) | (547,352 | ) | 210,254 | (5,514 | ) | 201,471 | (547,251 | ) | ||||||||||||||
Income tax expense (benefit) | — | (141,242 | ) | — | 101 | — | (141,141 | ) | ||||||||||||||||
Net earnings (loss) | $ | (406,110 | ) | $ | (406,110 | ) | $ | 210,254 | $ | (5,615 | ) | $ | 201,471 | $ | (406,110 | ) | ||||||||
Total other comprehensive earnings (loss), net of tax | (64,613 | ) | (62,331 | ) | — | (2,282 | ) | 64,613 | (64,613 | ) | ||||||||||||||
Total comprehensive earnings (loss) | $ | (470,723 | ) | $ | (468,441 | ) | $ | 210,254 | $ | (7,897 | ) | $ | 266,084 | $ | (470,723 | ) |
Fiscal year ended August 1, 2015 | ||||||||||||||||||||||||
(in thousands) | Company | NMG | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
Revenues | $ | — | $ | 4,127,954 | $ | 844,459 | $ | 122,674 | $ | — | $ | 5,095,087 | ||||||||||||
Cost of goods sold including buying and occupancy costs (excluding depreciation) | — | 2,677,767 | 542,474 | 85,237 | — | 3,305,478 | ||||||||||||||||||
Selling, general and administrative expenses (excluding depreciation) | — | 975,259 | 148,270 | 38,546 | — | 1,162,075 | ||||||||||||||||||
Income from credit card program | — | (47,434 | ) | (5,335 | ) | — | — | (52,769 | ) | |||||||||||||||
Depreciation expense | — | 163,737 | 21,133 | 680 | — | 185,550 | ||||||||||||||||||
Amortization of intangible assets and favorable lease commitments | — | 82,185 | 50,933 | 4,162 | — | 137,280 | ||||||||||||||||||
Other expenses | — | 31,881 | — | 7,593 | — | 39,474 | ||||||||||||||||||
Operating earnings (loss) | — | 244,559 | 86,984 | (13,544 | ) | — | 317,999 | |||||||||||||||||
Interest expense, net | — | 287,941 | (165 | ) | 2,147 | — | 289,923 | |||||||||||||||||
Intercompany royalty charges (income) | — | 148,678 | (148,678 | ) | — | — | — | |||||||||||||||||
Equity in loss (earnings) of subsidiaries | (14,949 | ) | (222,032 | ) | — | — | 236,981 | — | ||||||||||||||||
Earnings (loss) before income taxes | 14,949 | 29,972 | 235,827 | (15,691 | ) | (236,981 | ) | 28,076 | ||||||||||||||||
Income tax expense (benefit) | — | 15,023 | — | (1,896 | ) | — | 13,127 | |||||||||||||||||
Net earnings (loss) | $ | 14,949 | $ | 14,949 | $ | 235,827 | $ | (13,795 | ) | $ | (236,981 | ) | $ | 14,949 | ||||||||||
Total other comprehensive earnings (loss), net of tax | (33,799 | ) | (16,913 | ) | — | (16,886 | ) | 33,799 | (33,799 | ) | ||||||||||||||
Total comprehensive earnings (loss) | $ | (18,850 | ) | $ | (1,964 | ) | $ | 235,827 | $ | (30,681 | ) | $ | (203,182 | ) | $ | (18,850 | ) |
Fiscal year ended July 29, 2017 | ||||||||||||||||||||||||
(in thousands) | Company | NMG | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
CASH FLOWS - OPERATING ACTIVITIES | ||||||||||||||||||||||||
Net earnings (loss) | $ | (531,759 | ) | $ | (531,759 | ) | $ | 179,618 | $ | 9,423 | $ | 342,718 | $ | (531,759 | ) | |||||||||
Adjustments to reconcile net earnings (loss) to net cash provided by (used for) operating activities: | ||||||||||||||||||||||||
Depreciation and amortization expense | — | 285,143 | 62,593 | 6,268 | — | 354,004 | ||||||||||||||||||
Impairment charges | — | 510,736 | — | — | — | 510,736 | ||||||||||||||||||
Deferred income taxes | — | (172,611 | ) | — | 1,459 | — | (171,152 | ) | ||||||||||||||||
Payment-in-kind interest | — | 16,599 | — | — | — | 16,599 | ||||||||||||||||||
Other | — | (5,172 | ) | 2,400 | (472 | ) | — | (3,244 | ) | |||||||||||||||
Intercompany royalty income payable (receivable) | — | 150,719 | (150,719 | ) | — | — | — | |||||||||||||||||
Equity in loss (earnings) of subsidiaries | 531,759 | (189,041 | ) | — | — | (342,718 | ) | — | ||||||||||||||||
Changes in operating assets and liabilities, net | — | 59,095 | (67,800 | ) | (19,505 | ) | — | (28,210 | ) | |||||||||||||||
Net cash provided by (used for) operating activities | — | 123,709 | 26,092 | (2,827 | ) | — | 146,974 | |||||||||||||||||
CASH FLOWS - INVESTING ACTIVITIES | ||||||||||||||||||||||||
Capital expenditures | — | (171,372 | ) | (26,379 | ) | (6,885 | ) | — | (204,636 | ) | ||||||||||||||
Investment in subsidiaries | — | (27,042 | ) | — | 27,042 | — | — | |||||||||||||||||
Net cash provided by (used for) investing activities | — | (198,414 | ) | (26,379 | ) | 20,157 | — | (204,636 | ) | |||||||||||||||
CASH FLOWS - FINANCING ACTIVITIES | ||||||||||||||||||||||||
Borrowings under Asset-Based Revolving Credit Facility | — | 889,000 | — | — | — | 889,000 | ||||||||||||||||||
Repayment of borrowings | — | (820,426 | ) | — | — | — | (820,426 | ) | ||||||||||||||||
Payment of contingent earn-out obligation | — | — | — | (22,857 | ) | — | (22,857 | ) | ||||||||||||||||
Debt issuance costs paid | — | (5,359 | ) | — | — | — | (5,359 | ) | ||||||||||||||||
Net cash provided by (used for) financing activities | — | 63,215 | — | (22,857 | ) | — | 40,358 | |||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | — | 4,700 | — | 4,700 | ||||||||||||||||||
CASH AND CASH EQUIVALENTS | ||||||||||||||||||||||||
Increase (decrease) during the period | — | (11,490 | ) | (287 | ) | (827 | ) | — | (12,604 | ) | ||||||||||||||
Beginning balance | — | 39,791 | 936 | 21,116 | — | 61,843 | ||||||||||||||||||
Ending balance | $ | — | $ | 28,301 | $ | 649 | $ | 20,289 | $ | — | $ | 49,239 |
Fiscal year ended July 30, 2016 | ||||||||||||||||||||||||
(in thousands) | Company | NMG | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
CASH FLOWS—OPERATING ACTIVITIES | ||||||||||||||||||||||||
Net earnings (loss) | $ | (406,110 | ) | $ | (406,110 | ) | $ | 210,254 | $ | (5,615 | ) | $ | 201,471 | $ | (406,110 | ) | ||||||||
Adjustments to reconcile net earnings (loss) to net cash provided by (used for) operating activities: | ||||||||||||||||||||||||
Depreciation and amortization expense | — | 287,930 | 68,841 | 5,858 | — | 362,629 | ||||||||||||||||||
Impairment charges | — | 466,155 | — | — | — | 466,155 | ||||||||||||||||||
Deferred income taxes | — | (97,167 | ) | — | (5,674 | ) | — | (102,841 | ) | |||||||||||||||
Other | — | (18,505 | ) | (8,663 | ) | 15,223 | — | (11,945 | ) | |||||||||||||||
Intercompany royalty income payable (receivable) | — | 150,285 | (150,285 | ) | — | — | — | |||||||||||||||||
Equity in loss (earnings) of subsidiaries | 406,110 | (204,639 | ) | — | — | (201,471 | ) | — | ||||||||||||||||
Changes in operating assets and liabilities, net | — | 126,863 | (74,438 | ) | (49,721 | ) | — | 2,704 | ||||||||||||||||
Net cash provided by (used for) operating activities | — | 304,812 | 45,709 | (39,929 | ) | — | 310,592 | |||||||||||||||||
CASH FLOWS—INVESTING ACTIVITIES | ||||||||||||||||||||||||
Capital expenditures | — | (254,094 | ) | (45,479 | ) | (1,872 | ) | — | (301,445 | ) | ||||||||||||||
Acquisition of MyTheresa | — | — | — | (896 | ) | — | (896 | ) | ||||||||||||||||
Investment in subsidiaries | — | (30,204 | ) | — | 30,204 | — | — | |||||||||||||||||
Net cash provided by (used for) investing activities | — | (284,298 | ) | (45,479 | ) | 27,436 | — | (302,341 | ) | |||||||||||||||
CASH FLOWS—FINANCING ACTIVITIES | ||||||||||||||||||||||||
Borrowings under Asset-Based Revolving Credit Facility | — | 555,000 | — | — | — | 555,000 | ||||||||||||||||||
Repayment of borrowings | — | (549,426 | ) | — | — | — | (549,426 | ) | ||||||||||||||||
Payment of contingent earn-out obligation | — | — | — | (27,185 | ) | — | (27,185 | ) | ||||||||||||||||
Intercompany notes payable (receivable) | — | (39,459 | ) | — | 39,459 | — | — | |||||||||||||||||
Net cash provided by (used for) financing activities | — | (33,885 | ) | — | 12,274 | — | (21,611 | ) | ||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | — | 2,229 | — | 2,229 | ||||||||||||||||||
CASH AND CASH EQUIVALENTS | ||||||||||||||||||||||||
Increase (decrease) during the period | — | (13,371 | ) | 230 | 2,010 | — | (11,131 | ) | ||||||||||||||||
Beginning balance | — | 53,162 | 706 | 19,106 | — | 72,974 | ||||||||||||||||||
Ending balance | $ | — | $ | 39,791 | $ | 936 | $ | 21,116 | $ | — | $ | 61,843 |
Fiscal year ended August 1, 2015 | ||||||||||||||||||||||||
(in thousands) | Company | NMG | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
CASH FLOWS—OPERATING ACTIVITIES | ||||||||||||||||||||||||
Net earnings (loss) | $ | 14,949 | $ | 14,949 | $ | 235,827 | $ | (13,795 | ) | $ | (236,981 | ) | $ | 14,949 | ||||||||||
Adjustments to reconcile net earnings (loss) to net cash provided by (used for) operating activities: | ||||||||||||||||||||||||
Depreciation and amortization expense | — | 270,482 | 72,066 | 4,842 | — | 347,390 | ||||||||||||||||||
Deferred income taxes | — | (62,143 | ) | — | (7,593 | ) | — | (69,736 | ) | |||||||||||||||
Other | — | (5,265 | ) | 1,821 | 21,156 | — | 17,712 | |||||||||||||||||
Intercompany royalty income payable (receivable) | — | 148,678 | (148,678 | ) | — | — | — | |||||||||||||||||
Equity in loss (earnings) of subsidiaries | (14,949 | ) | (222,032 | ) | — | — | 236,981 | — | ||||||||||||||||
Changes in operating assets and liabilities, net | — | 11,467 | (140,710 | ) | 48,240 | — | (81,003 | ) | ||||||||||||||||
Net cash provided by (used for) operating activities | — | 156,136 | 20,326 | 52,850 | — | 229,312 | ||||||||||||||||||
CASH FLOWS—INVESTING ACTIVITIES | ||||||||||||||||||||||||
Capital expenditures | — | (248,286 | ) | (20,988 | ) | (1,194 | ) | — | (270,468 | ) | ||||||||||||||
Acquisition of MyTheresa | — | — | — | (181,727 | ) | — | (181,727 | ) | ||||||||||||||||
Net cash provided by (used for) investing activities | — | (248,286 | ) | (20,988 | ) | (182,921 | ) | — | (452,195 | ) | ||||||||||||||
CASH FLOWS—FINANCING ACTIVITIES | ||||||||||||||||||||||||
Borrowings under Asset-Based Revolving Credit Facility | — | 530,000 | — | — | — | 530,000 | ||||||||||||||||||
Repayment of borrowings | — | (429,427 | ) | — | — | — | (429,427 | ) | ||||||||||||||||
Intercompany notes payable (receivable) | — | (150,000 | ) | — | 150,000 | — | — | |||||||||||||||||
Debt issuance costs paid | — | (265 | ) | — | — | — | (265 | ) | ||||||||||||||||
Net cash provided by (used for) financing activities | — | (49,692 | ) | — | 150,000 | — | 100,308 | |||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | — | (927 | ) | — | (927 | ) | ||||||||||||||||
CASH AND CASH EQUIVALENTS | ||||||||||||||||||||||||
Increase (decrease) during the period | — | (141,842 | ) | (662 | ) | 19,002 | — | (123,502 | ) | |||||||||||||||
Beginning balance | — | 195,004 | 1,368 | 104 | — | 196,476 | ||||||||||||||||||
Ending balance | $ | — | $ | 53,162 | $ | 706 | $ | 19,106 | $ | — | $ | 72,974 |
(in thousands) | July 29, 2017 | ||
Total assets | $ | 415,974 | |
Net assets | 137,661 |
Fiscal year ended | |||
(in thousands) | July 29, 2017 | ||
Revenues | $ | 265,608 | |
Net earnings | 3,700 |
July 29, 2017 | ||||||||||||||||||||
(in thousands) | Company | NMG | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
ASSETS | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 28,301 | $ | 20,938 | $ | — | $ | 49,239 | ||||||||||
Credit card receivables | — | 35,091 | 3,745 | — | 38,836 | |||||||||||||||
Merchandise inventories | — | 915,910 | 237,747 | — | 1,153,657 | |||||||||||||||
Other current assets | — | 125,853 | 11,852 | (587 | ) | 137,118 | ||||||||||||||
Total current assets | — | 1,105,155 | 274,282 | (587 | ) | 1,378,850 | ||||||||||||||
Property and equipment, net | — | 1,333,487 | 253,474 | — | 1,586,961 | |||||||||||||||
Intangible assets, net | — | 509,757 | 2,321,659 | — | 2,831,416 | |||||||||||||||
Goodwill | — | 1,338,844 | 542,050 | — | 1,880,894 | |||||||||||||||
Other long-term assets | — | 23,705 | 1,690 | — | 25,395 | |||||||||||||||
Investments in subsidiaries | 466,652 | 3,239,816 | — | (3,706,468 | ) | — | ||||||||||||||
Total assets | $ | 466,652 | $ | 7,550,764 | $ | 3,393,155 | $ | (3,707,055 | ) | $ | 7,703,516 | |||||||||
LIABILITIES AND MEMBER EQUITY | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Accounts payable | $ | — | $ | 288,079 | $ | 28,751 | $ | — | $ | 316,830 | ||||||||||
Accrued liabilities | — | 350,773 | 106,751 | (587 | ) | 456,937 | ||||||||||||||
Current portion of long-term debt | — | 29,426 | — | — | 29,426 | |||||||||||||||
Total current liabilities | — | 668,278 | 135,502 | (587 | ) | 803,193 | ||||||||||||||
Long-term liabilities: | ||||||||||||||||||||
Long-term debt, net of debt issuance costs | — | 4,675,540 | — | — | 4,675,540 | |||||||||||||||
Deferred income taxes | — | 1,144,022 | 12,811 | — | 1,156,833 | |||||||||||||||
Other long-term liabilities | — | 596,272 | 5,026 | — | 601,298 | |||||||||||||||
Total long-term liabilities | — | 6,415,834 | 17,837 | — | 6,433,671 | |||||||||||||||
Total member equity | 466,652 | 466,652 | 3,239,816 | (3,706,468 | ) | 466,652 | ||||||||||||||
Total liabilities and member equity | $ | 466,652 | $ | 7,550,764 | $ | 3,393,155 | $ | (3,707,055 | ) | $ | 7,703,516 |
July 30, 2016 | ||||||||||||||||||||
(in thousands) | Company | NMG | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
ASSETS | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 39,791 | $ | 22,052 | $ | — | $ | 61,843 | ||||||||||
Credit card receivables | — | 35,165 | 3,648 | — | 38,813 | |||||||||||||||
Merchandise inventories | — | 917,138 | 208,187 | — | 1,125,325 | |||||||||||||||
Other current assets | — | 94,498 | 13,567 | — | 108,065 | |||||||||||||||
Total current assets | — | 1,086,592 | 247,454 | — | 1,334,046 | |||||||||||||||
Property and equipment, net | — | 1,440,968 | 147,153 | — | 1,588,121 | |||||||||||||||
Intangible assets, net | — | 566,084 | 2,678,418 | — | 3,244,502 | |||||||||||||||
Goodwill | — | 1,412,146 | 660,672 | — | 2,072,818 | |||||||||||||||
Other long-term assets | — | 15,153 | 2,248 | — | 17,401 | |||||||||||||||
Investments in subsidiaries | 943,131 | 3,541,121 | — | (4,484,252 | ) | — | ||||||||||||||
Total assets | $ | 943,131 | $ | 8,062,064 | $ | 3,735,945 | $ | (4,484,252 | ) | $ | 8,256,888 | |||||||||
LIABILITIES AND MEMBER EQUITY | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Accounts payable | $ | — | $ | 257,047 | $ | 60,689 | $ | — | $ | 317,736 | ||||||||||
Accrued liabilities | — | 373,108 | 119,538 | — | 492,646 | |||||||||||||||
Current portion of long-term debt | — | 29,426 | — | — | 29,426 | |||||||||||||||
Total current liabilities | — | 659,581 | 180,227 | — | 839,808 | |||||||||||||||
Long-term liabilities: | ||||||||||||||||||||
Long-term debt, net of debt issuance costs | — | 4,584,281 | — | — | 4,584,281 | |||||||||||||||
Deferred income taxes | — | 1,285,829 | 10,964 | — | 1,296,793 | |||||||||||||||
Other long-term liabilities | — | 589,242 | 3,633 | — | 592,875 | |||||||||||||||
Total long-term liabilities | — | 6,459,352 | 14,597 | — | 6,473,949 | |||||||||||||||
Total member equity | 943,131 | 943,131 | 3,541,121 | (4,484,252 | ) | 943,131 | ||||||||||||||
Total liabilities and member equity | $ | 943,131 | $ | 8,062,064 | $ | 3,735,945 | $ | (4,484,252 | ) | $ | 8,256,888 |
Fiscal year ended July 29, 2017 | ||||||||||||||||||||
(in thousands) | Company | NMG | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Revenues | $ | — | $ | 3,708,882 | $ | 997,111 | $ | — | $ | 4,705,993 | ||||||||||
Cost of goods sold including buying and occupancy costs (excluding depreciation) | — | 2,534,910 | 685,117 | — | 3,220,027 | |||||||||||||||
Selling, general and administrative expenses (excluding depreciation) | — | 921,195 | 208,114 | — | 1,129,309 | |||||||||||||||
Income from credit card program | — | (54,623 | ) | (5,459 | ) | — | (60,082 | ) | ||||||||||||
Depreciation expense | — | 205,993 | 19,470 | — | 225,463 | |||||||||||||||
Amortization of intangible assets and favorable lease commitments | — | 54,640 | 49,391 | — | 104,031 | |||||||||||||||
Other expenses | — | 28,015 | 1,715 | — | 29,730 | |||||||||||||||
Impairment charges | — | 510,736 | — | — | 510,736 | |||||||||||||||
Operating earnings (loss) | — | (491,984 | ) | 38,763 | — | (453,221 | ) | |||||||||||||
Interest expense, net | — | 295,717 | (49 | ) | — | 295,668 | ||||||||||||||
Intercompany royalty charges (income) | — | 150,719 | (150,719 | ) | — | — | ||||||||||||||
Equity in loss (earnings) of subsidiaries | 531,759 | (189,041 | ) | — | (342,718 | ) | — | |||||||||||||
Earnings (loss) before income taxes | (531,759 | ) | (749,379 | ) | 189,531 | 342,718 | (748,889 | ) | ||||||||||||
Income tax expense (benefit) | — | (217,620 | ) | 490 | — | (217,130 | ) | |||||||||||||
Net earnings (loss) | $ | (531,759 | ) | $ | (531,759 | ) | $ | 189,041 | $ | 342,718 | $ | (531,759 | ) | |||||||
Total other comprehensive earnings (loss), net of tax | 52,410 | 44,842 | 7,568 | (52,410 | ) | 52,410 | ||||||||||||||
Total comprehensive earnings (loss) | $ | (479,349 | ) | $ | (486,917 | ) | $ | 196,609 | $ | 290,308 | $ | (479,349 | ) |
Fiscal year ended July 30, 2016 | ||||||||||||||||||||
(in thousands) | Company | NMG | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Revenues | $ | — | $ | 3,963,977 | $ | 985,495 | $ | — | $ | 4,949,472 | ||||||||||
Cost of goods sold including buying and occupancy costs (excluding depreciation) | — | 2,660,197 | 662,311 | — | 3,322,508 | |||||||||||||||
Selling, general and administrative expenses (excluding depreciation) | — | 923,379 | 194,549 | — | 1,117,928 | |||||||||||||||
Income from credit card program | — | (55,070 | ) | (5,578 | ) | — | (60,648 | ) | ||||||||||||
Depreciation expense | — | 205,011 | 21,857 | — | 226,868 | |||||||||||||||
Amortization of intangible assets and favorable lease commitments | — | 58,347 | 52,842 | — | 111,189 | |||||||||||||||
Other expenses | — | 22,283 | 4,844 | — | 27,127 | |||||||||||||||
Impairment charges | — | 466,155 | — | — | 466,155 | |||||||||||||||
Operating earnings (loss) | — | (316,325 | ) | 54,670 | — | (261,655 | ) | |||||||||||||
Interest expense, net | — | 285,381 | 215 | — | 285,596 | |||||||||||||||
Intercompany royalty charges (income) | — | 150,285 | (150,285 | ) | — | — | ||||||||||||||
Equity in loss (earnings) of subsidiaries | 406,110 | (204,639 | ) | — | (201,471 | ) | — | |||||||||||||
Earnings (loss) before income taxes | (406,110 | ) | (547,352 | ) | 204,740 | 201,471 | (547,251 | ) | ||||||||||||
Income tax expense (benefit) | — | (141,242 | ) | 101 | — | (141,141 | ) | |||||||||||||
Net earnings (loss) | $ | (406,110 | ) | $ | (406,110 | ) | $ | 204,639 | $ | 201,471 | $ | (406,110 | ) | |||||||
Total other comprehensive earnings (loss), net of tax | (64,613 | ) | (62,331 | ) | (2,282 | ) | 64,613 | (64,613 | ) | |||||||||||
Total comprehensive earnings (loss) | $ | (470,723 | ) | $ | (468,441 | ) | $ | 202,357 | $ | 266,084 | $ | (470,723 | ) |
Fiscal year ended August 1, 2015 | ||||||||||||||||||||
(in thousands) | Company | NMG | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Revenues | $ | — | $ | 4,127,954 | $ | 967,133 | $ | — | $ | 5,095,087 | ||||||||||
Cost of goods sold including buying and occupancy costs (excluding depreciation) | — | 2,677,767 | 627,711 | — | 3,305,478 | |||||||||||||||
Selling, general and administrative expenses (excluding depreciation) | — | 975,259 | 186,816 | — | 1,162,075 | |||||||||||||||
Income from credit card program | — | (47,434 | ) | (5,335 | ) | — | (52,769 | ) | ||||||||||||
Depreciation expense | — | 163,737 | 21,813 | — | 185,550 | |||||||||||||||
Amortization of intangible assets and favorable lease commitments | — | 82,185 | 55,095 | — | 137,280 | |||||||||||||||
Other expenses | — | 31,881 | 7,593 | — | 39,474 | |||||||||||||||
Operating earnings (loss) | — | 244,559 | 73,440 | — | 317,999 | |||||||||||||||
Interest expense, net | — | 287,941 | 1,982 | — | 289,923 | |||||||||||||||
Intercompany royalty charges (income) | — | 148,678 | (148,678 | ) | — | — | ||||||||||||||
Equity in loss (earnings) of subsidiaries | (14,949 | ) | (222,032 | ) | — | 236,981 | — | |||||||||||||
Earnings (loss) before income taxes | 14,949 | 29,972 | 220,136 | (236,981 | ) | 28,076 | ||||||||||||||
Income tax expense (benefit) | — | 15,023 | (1,896 | ) | — | 13,127 | ||||||||||||||
Net earnings (loss) | $ | 14,949 | $ | 14,949 | $ | 222,032 | $ | (236,981 | ) | $ | 14,949 | |||||||||
Total other comprehensive earnings (loss), net of tax | (33,799 | ) | (16,913 | ) | (16,886 | ) | 33,799 | (33,799 | ) | |||||||||||
Total comprehensive earnings (loss) | $ | (18,850 | ) | $ | (1,964 | ) | $ | 205,146 | $ | (203,182 | ) | $ | (18,850 | ) |
Fiscal year ended July 29, 2017 | ||||||||||||||||||||
(in thousands) | Company | NMG | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
CASH FLOWS - OPERATING ACTIVITIES | ||||||||||||||||||||
Net earnings (loss) | $ | (531,759 | ) | $ | (531,759 | ) | $ | 189,041 | $ | 342,718 | $ | (531,759 | ) | |||||||
Adjustments to reconcile net earnings (loss) to net cash provided by (used for) operating activities: | ||||||||||||||||||||
Depreciation and amortization expense | — | 285,143 | 68,861 | — | 354,004 | |||||||||||||||
Impairment charges | — | 510,736 | — | — | 510,736 | |||||||||||||||
Deferred income taxes | — | (172,611 | ) | 1,459 | — | (171,152 | ) | |||||||||||||
Payment-in-kind interest | — | 16,599 | — | — | 16,599 | |||||||||||||||
Other | — | (5,172 | ) | 1,928 | — | (3,244 | ) | |||||||||||||
Intercompany royalty income payable (receivable) | — | 150,719 | (150,719 | ) | — | — | ||||||||||||||
Equity in loss (earnings) of subsidiaries | 531,759 | (189,041 | ) | — | (342,718 | ) | — | |||||||||||||
Changes in operating assets and liabilities, net | — | 59,095 | (87,305 | ) | — | (28,210 | ) | |||||||||||||
Net cash provided by (used for) operating activities | — | 123,709 | 23,265 | — | 146,974 | |||||||||||||||
CASH FLOWS - INVESTING ACTIVITIES | ||||||||||||||||||||
Capital expenditures | — | (171,372 | ) | (33,264 | ) | — | (204,636 | ) | ||||||||||||
Investment in subsidiaries | — | (27,042 | ) | 27,042 | — | — | ||||||||||||||
Net cash provided by (used for) investing activities | — | (198,414 | ) | (6,222 | ) | — | (204,636 | ) | ||||||||||||
CASH FLOWS - FINANCING ACTIVITIES | ||||||||||||||||||||
Borrowings under Asset-Based Revolving Credit Facility | — | 889,000 | — | — | 889,000 | |||||||||||||||
Repayment of borrowings | — | (820,426 | ) | — | — | (820,426 | ) | |||||||||||||
Payment of contingent earn-out obligation | — | — | (22,857 | ) | — | (22,857 | ) | |||||||||||||
Debt issuance costs paid | — | (5,359 | ) | — | — | (5,359 | ) | |||||||||||||
Net cash provided by (used for) financing activities | — | 63,215 | (22,857 | ) | — | 40,358 | ||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | 4,700 | — | 4,700 | |||||||||||||||
CASH AND CASH EQUIVALENTS | ||||||||||||||||||||
Increase (decrease) during the period | — | (11,490 | ) | (1,114 | ) | — | (12,604 | ) | ||||||||||||
Beginning balance | — | 39,791 | 22,052 | — | 61,843 | |||||||||||||||
Ending balance | $ | — | $ | 28,301 | $ | 20,938 | $ | — | $ | 49,239 |
Fiscal year ended July 30, 2016 | ||||||||||||||||||||
(in thousands) | Company | NMG | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
CASH FLOWS—OPERATING ACTIVITIES | ||||||||||||||||||||
Net earnings (loss) | $ | (406,110 | ) | $ | (406,110 | ) | $ | 204,639 | $ | 201,471 | $ | (406,110 | ) | |||||||
Adjustments to reconcile net earnings (loss) to net cash provided by (used for) operating activities: | ||||||||||||||||||||
Depreciation and amortization expense | — | 287,930 | 74,699 | — | 362,629 | |||||||||||||||
Impairment charges | — | 466,155 | — | — | 466,155 | |||||||||||||||
Deferred income taxes | — | (97,167 | ) | (5,674 | ) | — | (102,841 | ) | ||||||||||||
Other | — | (18,505 | ) | 6,560 | — | (11,945 | ) | |||||||||||||
Intercompany royalty income payable (receivable) | — | 150,285 | (150,285 | ) | — | — | ||||||||||||||
Equity in loss (earnings) of subsidiaries | 406,110 | (204,639 | ) | — | (201,471 | ) | — | |||||||||||||
Changes in operating assets and liabilities, net | — | 126,863 | (124,159 | ) | — | 2,704 | ||||||||||||||
Net cash provided by (used for) operating activities | — | 304,812 | 5,780 | — | 310,592 | |||||||||||||||
CASH FLOWS—INVESTING ACTIVITIES | ||||||||||||||||||||
Capital expenditures | — | (254,094 | ) | (47,351 | ) | — | (301,445 | ) | ||||||||||||
Acquisition of MyTheresa | — | — | (896 | ) | — | (896 | ) | |||||||||||||
Investment in subsidiaries | — | (30,204 | ) | 30,204 | — | — | ||||||||||||||
Net cash provided by (used for) investing activities | — | (284,298 | ) | (18,043 | ) | — | (302,341 | ) | ||||||||||||
CASH FLOWS—FINANCING ACTIVITIES | ||||||||||||||||||||
Borrowings under Asset-Based Revolving Credit Facility | — | 555,000 | — | — | 555,000 | |||||||||||||||
Repayment of borrowings | — | (549,426 | ) | — | — | (549,426 | ) | |||||||||||||
Payment of contingent earn-out obligation | — | — | (27,185 | ) | — | (27,185 | ) | |||||||||||||
Intercompany notes payable (receivable) | — | (39,459 | ) | 39,459 | — | — | ||||||||||||||
Net cash provided by (used for) financing activities | — | (33,885 | ) | 12,274 | — | (21,611 | ) | |||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | 2,229 | — | 2,229 | |||||||||||||||
CASH AND CASH EQUIVALENTS | ||||||||||||||||||||
Increase (decrease) during the period | — | (13,371 | ) | 2,240 | — | (11,131 | ) | |||||||||||||
Beginning balance | — | 53,162 | 19,812 | — | 72,974 | |||||||||||||||
Ending balance | $ | — | $ | 39,791 | $ | 22,052 | $ | — | $ | 61,843 |
Fiscal year ended August 1, 2015 | ||||||||||||||||||||
(in thousands) | Company | NMG | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
CASH FLOWS—OPERATING ACTIVITIES | ||||||||||||||||||||
Net earnings (loss) | $ | 14,949 | $ | 14,949 | $ | 222,032 | $ | (236,981 | ) | $ | 14,949 | |||||||||
Adjustments to reconcile net earnings (loss) to net cash provided by (used for) operating activities: | ||||||||||||||||||||
Depreciation and amortization expense | — | 270,482 | 76,908 | — | 347,390 | |||||||||||||||
Deferred income taxes | — | (62,143 | ) | (7,593 | ) | — | (69,736 | ) | ||||||||||||
Other | — | (5,265 | ) | 22,977 | — | 17,712 | ||||||||||||||
Intercompany royalty income payable (receivable) | — | 148,678 | (148,678 | ) | — | — | ||||||||||||||
Equity in loss (earnings) of subsidiaries | (14,949 | ) | (222,032 | ) | — | 236,981 | — | |||||||||||||
Changes in operating assets and liabilities, net | — | 11,467 | (92,470 | ) | — | (81,003 | ) | |||||||||||||
Net cash provided by (used for) operating activities | — | 156,136 | 73,176 | — | 229,312 | |||||||||||||||
CASH FLOWS—INVESTING ACTIVITIES | ||||||||||||||||||||
Capital expenditures | — | (248,286 | ) | (22,182 | ) | — | (270,468 | ) | ||||||||||||
Acquisition of MyTheresa | — | — | (181,727 | ) | — | (181,727 | ) | |||||||||||||
Net cash provided by (used for) investing activities | — | (248,286 | ) | (203,909 | ) | — | (452,195 | ) | ||||||||||||
CASH FLOWS—FINANCING ACTIVITIES | ||||||||||||||||||||
Borrowings under Asset-Based Revolving Credit Facility | — | 530,000 | — | — | 530,000 | |||||||||||||||
Repayment of borrowings | — | (429,427 | ) | — | — | (429,427 | ) | |||||||||||||
Intercompany notes payable (receivable) | — | (150,000 | ) | 150,000 | — | — | ||||||||||||||
Debt issuance costs paid | — | (265 | ) | — | — | (265 | ) | |||||||||||||
Net cash provided by (used for) financing activities | — | (49,692 | ) | 150,000 | — | 100,308 | ||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | (927 | ) | — | (927 | ) | |||||||||||||
CASH AND CASH EQUIVALENTS | ||||||||||||||||||||
Increase (decrease) during the period | — | (141,842 | ) | 18,340 | — | (123,502 | ) | |||||||||||||
Beginning balance | — | 195,004 | 1,472 | — | 196,476 | |||||||||||||||
Ending balance | $ | — | $ | 53,162 | $ | 19,812 | $ | — | $ | 72,974 |
Fiscal year 2017 | ||||||||||||||||||||
(in millions) | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Total | |||||||||||||||
Revenues | $ | 1,079.1 | $ | 1,395.6 | $ | 1,111.4 | $ | 1,119.9 | $ | 4,706.0 | ||||||||||
Gross profit (1) | 379.2 | 413.1 | 380.9 | 312.8 | 1,486.0 | |||||||||||||||
Net loss (2) | (23.5 | ) | (117.1 | ) | (24.9 | ) | (366.3 | ) | (531.8 | ) |
Fiscal year 2016 | ||||||||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Total | ||||||||||||||||
Revenues | $ | 1,164.9 | $ | 1,487.0 | $ | 1,169.3 | $ | 1,128.3 | $ | 4,949.5 | ||||||||||
Gross profit (1) | 428.8 | 460.7 | 425.8 | 311.7 | 1,627.0 | |||||||||||||||
Net earnings (loss) (2) | (10.5 | ) | 7.9 | 3.8 | (407.3 | ) | (406.1 | ) |
(1) | Gross profit includes revenues less cost of goods sold including buying and occupancy costs (excluding depreciation). |
(2) | For fiscal years 2017 and 2016, net earnings (loss) includes pretax impairment charges to writedown the net carrying value of certain tradenames, goodwill and long-lived assets to fair value, which were as follows: |
Fiscal year 2017 | Fiscal year 2016 | |||||||||||||||||||
(in thousands) | Second Quarter | Fourth Quarter | Total | Fourth Quarter | Total | |||||||||||||||
Tradenames | $ | 150.1 | $ | 159.6 | $ | 309.7 | $ | 228.9 | $ | 228.9 | ||||||||||
Goodwill | — | 196.2 | 196.2 | 199.2 | 199.2 | |||||||||||||||
Long-lived assets | 3.7 | 1.2 | 4.8 | 38.1 | 38.1 | |||||||||||||||
Total | $ | 153.8 | $ | 357.0 | $ | 510.7 | $ | 466.2 | $ | 466.2 |
NEIMAN MARCUS GROUP LTD LLC | |||
By: | /s/ T. DALE STAPLETON | ||
T. Dale Stapleton Interim Chief Financial Officer, Senior Vice President and Chief Accounting Officer | |||
Dated: | October 10, 2017 |
Signature | Title | Date | ||
/s/ KAREN W. KATZ | President and Chief Executive Officer, Director | October 10, 2017 | ||
Karen W. Katz | (principal executive officer) | |||
/s/ T. DALE STAPLETON | Interim Chief Financial Officer, Senior Vice President and Chief Accounting Officer (principal financial and accounting officer) | October 10, 2017 | ||
T. Dale Stapleton | ||||
/s/ DAVID KAPLAN | Chairman of the Board | October 10, 2017 | ||
David Kaplan | ||||
/s/ NORA AUFREITER | Director | October 10, 2017 | ||
Nora Aufreiter | ||||
/s/ NORMAN AXELROD | Director | October 10, 2017 | ||
Norman Axelrod | ||||
/s/ PHILIPPE BOURGUIGNON | Director | October 10, 2017 | ||
Philippe Bourguignon | ||||
/s/ ADAM BROTMAN | Director | October 10, 2017 | ||
Adam Brotman | ||||
/s/ GRAEME EADIE | Director | October 10, 2017 | ||
Graeme Eadie | ||||
/s/ DENNIS GIES | Director | October 10, 2017 | ||
Dennis Gies | ||||
/s/ SCOTT NISHI | Director | October 10, 2017 | ||
Scott Nishi |
Column A | Column B | Column C | Column D | Column E | ||||||||||||||||||
Additions | ||||||||||||||||||||||
Description | Balance at Beginning of Period | Charged to Costs and Expenses | Charged to Other Accounts | Deductions | Balance at End of Period | |||||||||||||||||
Reserve for estimated sales returns | ||||||||||||||||||||||
Year ended July 29, 2017 | $ | 45,336 | $ | 944,682 | $ | — | $ | (943,012 | ) | (B) | $ | 47,006 | ||||||||||
Year ended July 30, 2016 | $ | 44,046 | $ | 977,811 | $ | — | $ | (976,521 | ) | (B) | $ | 45,336 | ||||||||||
Year ended August 1, 2015 | $ | 38,869 | $ | 953,238 | $ | — | $ | (948,061 | ) | (B) | $ | 44,046 | ||||||||||
Reserves for self-insurance (A) | ||||||||||||||||||||||
Year ended July 29, 2017 | $ | 36,197 | $ | 69,095 | $ | — | $ | (68,747 | ) | (C) | $ | 36,545 | ||||||||||
Year ended July 30, 2016 | $ | 37,943 | $ | 75,821 | $ | — | $ | (77,567 | ) | (C) | $ | 36,197 | ||||||||||
Year ended August 1, 2015 | $ | 38,732 | $ | 76,306 | $ | — | $ | (77,095 | ) | (C) | $ | 37,943 |
Number of Units | Exercise Price | Expiration Date |
Fiscal year ended | Thirty-nine weeks ended | Thirteen weeks ended | Fiscal year ended | ||||||||||||||||||||||
(in thousands, except ratios) | July 29, 2017 | July 30, 2016 | August 1, 2015 | August 2, 2014 | November 2, 2013 | August 3, 2013 | |||||||||||||||||||
(Successor) | (Successor) | (Successor) | (Successor) | (Predecessor) | (Predecessor) | ||||||||||||||||||||
Fixed charges: | |||||||||||||||||||||||||
Interest on debt | $ | 277,642 | $ | 268,395 | $ | 267,752 | $ | 216,281 | $ | 34,998 | $ | 160,839 | |||||||||||||
Amortization of debt discount and expense | 24,510 | 24,572 | 24,560 | 17,117 | 2,466 | 8,404 | |||||||||||||||||||
Interest element of rentals | 33,693 | 34,320 | 33,462 | 23,232 | 7,293 | 29,139 | |||||||||||||||||||
Total fixed charges | $ | 335,845 | $ | 327,287 | $ | 325,774 | $ | 256,630 | $ | 44,757 | $ | 198,382 | |||||||||||||
Earnings (loss): | |||||||||||||||||||||||||
Earnings (loss) from continuing operations before income taxes | $ | (748,889 | ) | $ | (547,251 | ) | $ | 28,076 | $ | (223,908 | ) | $ | (5,179 | ) | $ | 277,432 | |||||||||
Add back: | |||||||||||||||||||||||||
Fixed charges | 335,845 | 327,287 | 325,774 | 256,630 | 44,757 | 198,382 | |||||||||||||||||||
Amortization of capitalized interest | 1,540 | 2,180 | 1,208 | 886 | 295 | 1,181 | |||||||||||||||||||
Less: | |||||||||||||||||||||||||
Capitalized interest | (6,270 | ) | (7,298 | ) | (2,361 | ) | (630 | ) | (140 | ) | (237 | ) | |||||||||||||
Total earnings (loss) | $ | (417,774 | ) | $ | (225,082 | ) | $ | 352,697 | $ | 32,978 | $ | 39,733 | $ | 476,758 | |||||||||||
Ratio of earnings to fixed charges (a) | (b) | (c) | 1.1 | (d) | (e) | 2.4 |
(a) | Interest associated with income tax liabilities is excluded from our calculation. |
(b) | For the fiscal year ended July 29, 2017, the aggregate amount of fixed charges exceeded our earnings by approximately $753.6 million, which is the amount of additional earnings that would have been required to achieve a ratio of earnings to fixed charges of 1.0x for such period. The deficiency of the ratio of earnings to fixed charges for fiscal year 2017 is due primarily to (1) pretax impairment charges related to (i) $309.7 million for the writedown to fair value of the net carrying value of tradenames, (ii) $196.2 million for the writedown to fair value of goodwill and (iii) $4.8 million for the writedown to fair value of the net carrying value of certain long-lived assets and (2) the continuation of adverse economic and business trends resulting in lower than expected revenues. |
(c) | For the fiscal year ended July 30, 2016, the aggregate amount of fixed charges exceeded our earnings by approximately $552.4 million, which is the amount of additional earnings that would have been required to achieve a ratio of earnings to fixed charges of 1.0x for such period. The deficiency of the ratio of earnings to fixed charges for fiscal year 2016 is due primarily to the pretax impairment charges related to (i) $228.9 million for the writedown to fair value of the net carrying value of tradenames, (ii) $199.2 million for the writedown to fair value of goodwill and (iii) $38.1 million for the writedown to fair value of the net carrying value of certain long-lived assets. |
(d) | For the thirty-nine weeks ended August 2, 2014, the aggregate amount of fixed charges exceeded our earnings by approximately $223.7 million, which is the amount of additional earnings that would have been required to achieve a ratio of earnings to fixed charges of 1.0x for such period. |
(e) | For the thirteen weeks ended November 2, 2013, the aggregate amount of fixed charges exceeded our earnings by approximately $5.0 million, which is the amount of additional earnings that would have been required to achieve a ratio of earnings to fixed charges of 1.0x for such period. |
JURISDICTION OF SUBSIDIARY/AFFILIATE | INCORPORATION OR FORMATION | STOCKHOLDER OR MEMBER | ||
Bergdorf Goodman, Inc. | New York | The Neiman Marcus Group LLC | ||
Bergdorf Graphics, Inc. | New York | Bergdorf Goodman, Inc. | ||
BergdorfGoodman.com, LLC | Delaware | The Neiman Marcus Group LLC | ||
BG Productions, Inc. | Delaware | The Neiman Marcus Group LLC | ||
Mariposa Borrower, Inc. | Delaware | Neiman Marcus Group LTD LLC | ||
NEMA Beverage Corporation | Texas | NEMA Beverage Holding Corporation | ||
NEMA Beverage Holding Corporation | Texas | NEMA Beverage Parent Corporation | ||
NEMA Beverage Parent Corporation | Texas | The Neiman Marcus Group LLC | ||
NM Financial Services, Inc. | Delaware | The Neiman Marcus Group LLC | ||
NMG International LLC | Delaware | The Neiman Marcus Group LLC | ||
NMG Global Mobility, Inc. | Delaware | The Neiman Marcus Group LLC | ||
NMGP, LLC | Virginia | The Neiman Marcus Group LLC | ||
NM Nevada Trust | Massachusetts | The Neiman Marcus Group LLC (90%) Bergdorf Goodman, Inc. (10%) | ||
The Neiman Marcus Group LLC | Delaware | Neiman Marcus Group LTD LLC | ||
Worth Avenue Leasing Company | Florida | The Neiman Marcus Group LLC | ||
NM Bermuda, LLC | Delaware | The Neiman Marcus Group LLC | ||
Neiman Marcus Bermuda, L.P. | Bermuda | The Neiman Marcus Group LLC (99%) NM Bermuda, LLC (1%) | ||
NMG Asia Holdings Limited | Hong Kong | Neiman Marcus Bermuda, L.P. | ||
NMG Asia Limited | Hong Kong | NMG Asia Holdings Limited | ||
Mariposa Luxembourg I S.a.r.l. | Luxembourg | NMG International LLC | ||
Mariposa Luxembourg II S.a.r.l. | Luxembourg | Mariposa Luxembourg I S.a.r.l. | ||
NMG Germany GmbH | Germany | Mariposa Luxembourg II S.a.r.l. | ||
Mytheresa.com GmbH | Germany | NMG Germany GmbH | ||
Theresa Warenvertrieb GmbH | Germany | NMG Germany GmbH |
JURISDICTION OF SUBSIDIARY/AFFILIATE | INCORPORATION OR FORMATION | STOCKHOLDER OR MEMBER | ||
Mytheresa.com Service GmbH | Germany | Mytheresa.com GmbH | ||
Nancy Holdings LLC | Delaware | The Neiman Marcus Group LLC | ||
NMG Salon Holdings LLC | Delaware | The Neiman Marcus Group LLC | ||
NMG Salons LLC | Delaware | NMG Salon Holdings LLC | ||
NMG California Salon LLC | California | NMG Salon Holdings LLC | ||
NMG Florida Salon LLC | Florida | NMG Salon Holdings LLC | ||
NMG Texas Salon LLC | Texas | NMG Salon Holdings LLC |
1. | I have reviewed this annual report on Form 10-K of Neiman Marcus Group LTD LLC; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | October 10, 2017 | |
/s/ KAREN W. KATZ | ||
Karen W. Katz | ||
President and Chief Executive Officer |
1. | I have reviewed this annual report on Form 10-K of Neiman Marcus Group LTD LLC; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | October 10, 2017 | |
/s/ T. DALE STAPLETON | ||
T. Dale Stapleton | ||
Interim Chief Financial Officer, Senior Vice President and Chief Accounting Officer |
Dated: | October 10, 2017 | /s/ KAREN W. KATZ |
Karen W. Katz | ||
President and Chief Executive Officer |
Dated: | October 10, 2017 | /s/ T. DALE STAPLETON |
T. Dale Stapleton | ||
Interim Chief Financial Officer, Senior Vice President and Chief Accounting Officer |
Document and Entity Information - USD ($) |
12 Months Ended | |
---|---|---|
Jul. 29, 2017 |
Oct. 10, 2017 |
|
Document and Entity Information | ||
Entity Registrant Name | Neiman Marcus Group LTD LLC | |
Entity Central Index Key | 0001358651 | |
Current Fiscal Year End Date | --07-29 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-K | |
Document Period End Date | Jul. 29, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | FY | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 0 | |
Membership Interest Description | The registrant is privately held. There is no trading in the registrant's membership units and therefore an aggregate market value based on the registrant's membership units is not determinable. | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | Yes | |
Entity Current Reporting Status | No | |
Entity Public Float | $ 0 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares |
Jul. 29, 2017 |
Jul. 30, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Membership units issued (shares) | 1 | 1 |
Membership units outstanding (shares) | 1 | 1 |
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jul. 29, 2017 |
Jul. 30, 2016 |
Aug. 01, 2015 |
|
Income Statement [Abstract] | |||
Revenues | $ 4,705,993 | $ 4,949,472 | $ 5,095,087 |
Cost of goods sold including buying and occupancy costs (excluding depreciation) | 3,220,027 | 3,322,508 | 3,305,478 |
Selling, general and administrative expenses (excluding depreciation) | 1,129,309 | 1,117,928 | 1,162,075 |
Income from credit card program | (60,082) | (60,648) | (52,769) |
Depreciation expense | 225,463 | 226,868 | 185,550 |
Amortization of intangible assets | 50,769 | 57,011 | 82,953 |
Amortization of favorable lease commitments | 53,262 | 54,178 | 54,327 |
Other expenses | 29,730 | 27,127 | 39,474 |
Impairment charges | 510,736 | 466,155 | 0 |
Operating earnings (loss) | (453,221) | (261,655) | 317,999 |
Interest expense, net | 295,668 | 285,596 | 289,923 |
Earnings (loss) before income taxes | (748,889) | (547,251) | 28,076 |
Income tax expense (benefit) | (217,130) | (141,141) | 13,127 |
Net earnings (loss) | $ (531,759) | $ (406,110) | $ 14,949 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jul. 29, 2017 |
Jul. 30, 2016 |
Aug. 01, 2015 |
|
Statement of Comprehensive Income [Abstract] | |||
Net earnings (loss) | $ (531,759) | $ (406,110) | $ 14,949 |
Other comprehensive earnings (loss): | |||
Foreign currency translation adjustments, before tax | 9,297 | (2,663) | (21,910) |
Change in unrealized gain (loss) on financial instruments, before tax | 14,306 | (11,266) | (3,076) |
Reclassification of realized loss on financial instruments to earnings, before tax | 6,615 | 576 | 0 |
Change in unrealized loss on unfunded benefit obligations, before tax | 52,832 | (91,828) | (24,737) |
Tax effect related to items of other comprehensive earnings (loss) | (30,640) | 40,568 | 15,924 |
Total other comprehensive earnings (loss), net of tax | 52,410 | (64,613) | (33,799) |
Total comprehensive earnings (loss) | $ (479,349) | $ (470,723) | $ (18,850) |
CONSOLIDATED STATEMENTS OF MEMBER EQUITY (PARENTHETICAL) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jul. 29, 2017 |
Jul. 30, 2016 |
Aug. 01, 2015 |
|
Statement of Stockholders' Equity [Abstract] | |||
Foreign currency translation adjustments, tax | $ 1,729 | $ (381) | $ (5,024) |
Adjustments for fluctuations in fair market value of financial instruments, tax | 5,608 | (4,416) | (1,204) |
Reclassification to earnings, tax | 2,593 | 226 | |
Change in unfunded benefit obligations, tax | $ (20,710) | $ 35,997 | $ 9,696 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 29, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION Neiman Marcus Group LTD LLC (the "Company") is a luxury omni-channel retailer conducting store and online operations principally under the Neiman Marcus, Bergdorf Goodman, Last Call and MyTheresa brand names. References to “we,” “our” and “us” are used to refer to the Company or collectively to the Company and its subsidiaries, as appropriate to the context. The Company is a subsidiary of Mariposa Intermediate Holdings LLC ("Holdings"), which in turn is a subsidiary of Neiman Marcus Group, Inc., a Delaware corporation ("Parent"). Parent is owned by entities affiliated with Ares Management, L.P. and Canada Pension Plan Investment Board (together, the "Sponsors") and certain co-investors. The Sponsors acquired the Company on October 25, 2013 (the "Acquisition"). The Company’s operations are conducted through its direct wholly owned subsidiary, The Neiman Marcus Group LLC ("NMG"). In October 2014, we acquired MyTheresa, a luxury retailer headquartered in Munich, Germany. The operations of MyTheresa are conducted primarily through the mytheresa.com website. The accompanying Consolidated Financial Statements set forth financial information of the Company and its subsidiaries on a consolidated basis. All significant intercompany accounts and transactions have been eliminated. Our fiscal year ends on the Saturday closest to July 31. Like many other retailers, we follow a 4-5-4 reporting calendar, which means that each fiscal quarter consists of thirteen weeks divided into periods of four weeks, five weeks and four weeks. All references to (i) fiscal year 2017 relate to the fifty-two weeks ended July 29, 2017, (ii) fiscal year 2016 relate to the fifty-two weeks ended July 30, 2016 and (iii) fiscal year 2015 relate to the fifty-two weeks ended August 1, 2015. ESTIMATES AND CRITICAL ACCOUNTING POLICIES We are required to make estimates and assumptions about future events in preparing our financial statements in conformity with generally accepted accounting principles ("GAAP"). These estimates and assumptions affect the amounts of assets, liabilities, revenues and expenses and the disclosure of gain and loss contingencies at the date of the accompanying Consolidated Financial Statements. While we believe that our past estimates and assumptions have been materially accurate, the amounts currently estimated are subject to change if different assumptions as to the outcome of future events were made. We evaluate our estimates and assumptions on an ongoing basis and predicate those estimates and assumptions on historical experience and on various other factors that we believe are reasonable under the circumstances. We make adjustments to our estimates and assumptions when facts and circumstances dictate. Since future events and their effects cannot be determined with absolute certainty, actual results may differ from the estimates and assumptions used in preparing the accompanying Consolidated Financial Statements. Purchase Accounting. We account for acquisitions in accordance with the provisions of Accounting Standards Codification ("ASC") Topic 805, Business Combinations, whereby the purchase price paid to effect the acquisitions was allocated to state the acquired assets and liabilities at fair value. The Acquisition and the allocation of the purchase price were recorded for accounting purposes as of November 2, 2013, the end of our first quarter of fiscal year 2014. The MyTheresa acquisition and the allocation of the purchase price were recorded for accounting purposes as of November 1, 2014, the end of our first quarter of fiscal year 2015. In connection with the allocations of the purchase price, we made estimates of the fair values of our long-lived and intangible assets based upon assumptions related to the future cash flows, discount rates and asset lives utilizing currently available information, and in some cases, valuation results from independent valuation specialists, which resulted in increases in the carrying value of our property and equipment and inventory, the revaluation of intangible assets for our tradenames, customer lists and favorable lease commitments, the revaluation of our long-term benefit plan obligations and, with respect to the MyTheresa acquisition, the recording of our contingent earn-out obligation at estimated fair value, among other things. Fair Value Measurements. Certain of our assets and liabilities are required to be measured at fair value on a recurring basis. Fair value is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. Assets and liabilities are classified using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value as follows:
Cash and Cash Equivalents. Cash and cash equivalents primarily consist of cash on hand in our stores, deposits with banks and overnight investments with banks and financial institutions. Cash equivalents are stated at cost, which approximates fair value. Our cash management system provides for the reimbursement of all major bank disbursement accounts on a daily basis. Accounts payable includes outstanding checks not yet presented for payment of $39.6 million at July 29, 2017 and $47.4 million at July 30, 2016. Merchandise Inventories and Cost of Goods Sold. We utilize the retail inventory method of accounting. Under the retail inventory method, the valuation of inventories at cost and the resulting gross margins are determined by applying a calculated cost-to-retail ratio, for various groupings of similar items, to the retail value of our inventories. The cost of the inventory reflected in the Consolidated Financial Statements is decreased by charges to cost of goods sold at average cost and the retail value of the inventory is lowered through the use of markdowns. Earnings are negatively impacted when merchandise is marked down. As we adjust the retail value of our inventories through the use of markdowns to reflect market conditions, our merchandise inventories are stated at the lower of cost or market. The areas requiring significant management judgment related to the valuation of our inventories include (i) setting the original retail value for the merchandise held for sale, (ii) recognizing merchandise for which the customer’s perception of value has declined and appropriately marking the retail value of the merchandise down to the perceived value and (iii) estimating the shrinkage that has occurred between physical inventory counts. These judgments and estimates, coupled with the averaging processes within the retail method, can, under certain circumstances, produce varying financial results. Factors that can lead to different financial results include (i) determination of original retail values for merchandise held for sale, (ii) identification of declines in perceived value of inventories and processing the appropriate retail value markdowns and (iii) overly optimistic or conservative estimation of shrinkage. In prior years, we have not made material changes to our estimates of shrinkage or markdown requirements on inventories held as of the end of our fiscal years. Consistent with industry business practice, we receive allowances from certain of our vendors in support of the merchandise we purchase for resale. Certain allowances are received to reimburse us for markdowns taken or to support the gross margins that we earn in connection with the sales of the vendor’s merchandise. These allowances result in an increase to gross margin when we earn the allowances and they are approved by the vendor. Other allowances we receive represent reductions to the amounts we pay to acquire the merchandise. These allowances reduce the cost of the acquired merchandise and are recognized at the time the goods are sold. The amounts of vendor allowances we receive fluctuate based partially on the level of markdowns taken and did not have a significant impact on the year-over-year change in gross margin during fiscal years 2017, 2016 or 2015. We received vendor allowances of $83.6 million, or 1.8% of revenues, in fiscal year 2017, $100.8 million, or 2.0% of revenues, in fiscal year 2016 and $94.8 million, or 1.9% of revenues, in fiscal year 2015. We obtain certain merchandise, primarily precious jewelry, on a consignment basis to expand our product assortment. Consignment merchandise held by us with a cost basis of $393.1 million at July 29, 2017 and $416.5 million at July 30, 2016 is not reflected in our Consolidated Balance Sheets. Cost of goods sold also includes delivery charges we pay to third party carriers and other costs related to the fulfillment of customer orders not delivered at the point-of-sale. Long-lived Assets. Property and equipment are stated at cost less accumulated depreciation. In connection with the Acquisition, the cost basis of the acquired property and equipment was adjusted to its estimated fair value. For financial reporting purposes, we compute depreciation principally using the straight-line method over the estimated useful lives of the assets. Buildings and improvements are depreciated over five to 30 years while fixtures and equipment are depreciated over three to 15 years. Leasehold improvements are amortized over the shorter of the asset life or the lease term (which may include renewal periods when exercise of the renewal option is at our discretion and exercise of the renewal option is considered reasonably assured). Costs incurred for the development of internal computer software are capitalized and amortized using the straight-line method over three to ten years. We assess the recoverability of the carrying values of our store assets, consisting of property and equipment, customer lists and favorable lease commitments, annually and upon the occurrence of certain events. The recoverability assessment with respect to our long-lived assets is performed at the store level. This assessment is based upon the comparison of the undiscounted cash flows anticipated to be generated from the store to the net carrying value of the store assets. To the extent the undiscounted store-level cash flows are not sufficient to recover the net carrying value of the store assets, the assets are impaired and written down to their estimated fair value based upon discounted future cash flows. Based upon the review of our store-level assets, we identified certain property and equipment, other definite-lived intangible assets and favorable lease commitments to be impaired by $4.8 million in fiscal year 2017 and $38.1 million in fiscal year 2016. The recoverability assessment related to store-level assets requires judgments and estimates of future revenues, gross margin rates and store expenses. We base these estimates upon our past and expected future performance. We believe our estimates are appropriate in light of current and future market conditions and the best information available at the assessment date. However, future impairment charges could be required if we do not achieve our current revenue or cash flow projections. Intangible Assets Subject to Amortization. Favorable lease commitments are amortized straight-line over the remaining lives of the leases, ranging from four to 55 years (weighted average life of 30 years) from the Acquisition date. Our definite-lived intangible assets, which primarily consist of customer lists, are amortized using accelerated methods which reflect the pattern in which we receive the economic benefit of the asset, currently estimated at six to 16 years (weighted average life of 13 years) from the respective acquisition dates. Total amortization of all intangible assets recorded in connection with acquisitions for the next five fiscal years is currently estimated as follows (in thousands):
Indefinite-lived Intangible Assets and Goodwill. Indefinite-lived intangible assets, such as our Neiman Marcus, Bergdorf Goodman and MyTheresa tradenames and goodwill, are not subject to amortization. Rather, we assess the recoverability of indefinite-lived intangible assets and goodwill in the fourth quarter of each fiscal year and upon the occurrence of certain events. The recoverability assessment with respect to each of the tradenames used in our operations requires us to estimate the fair value of the asset as of the assessment date. Such determination is made using discounted cash flow techniques (Level 3 determination of fair value). Significant inputs to the valuation model include:
If the recorded carrying value of the tradename exceeds its estimated fair value, an impairment charge is recorded to write the tradename down to its estimated fair value. Based upon the review of our tradenames in fiscal years 2017 and 2016, we determined certain of our tradenames were impaired and recorded impairment charges aggregating $309.7 million in fiscal year 2017 and $228.9 million in fiscal year 2016. Pursuant to current accounting guidance related to the testing of goodwill for impairment adopted in the fourth quarter of fiscal year 2017, the assessment of the recoverability of the goodwill associated with our Neiman Marcus, Bergdorf Goodman and MyTheresa reporting units involves the comparison of the estimated enterprise fair value of each of our reporting units to its recorded carrying value. We estimate the enterprise fair value based on discounted cash flow techniques (Level 3 determination of fair value). Significant inputs to the valuation model include:
If the recorded carrying value of a reporting unit exceeds its estimated enterprise fair value, an impairment charge is recorded to goodwill for the amount by which the carrying amount exceeds the reporting unit's fair value. Based upon the review of our recorded goodwill balances, we determined that certain of our goodwill balances were impaired and recorded impairment charges aggregating $196.2 million in fiscal year 2017. Prior to the adoption of the new accounting guidance, our assessment process involved a second step in which we allocated the enterprise fair value to the fair value of the reporting unit's net assets. Any enterprise value in excess of amounts allocated to such net assets represented the implied fair value of goodwill for that reporting unit. If the carrying value of goodwill for a reporting unit exceeded the implied fair value of goodwill, an impairment charge was recorded to write goodwill down to its fair value. The assessment performed in the fourth quarter of fiscal year 2016 was performed utilizing the two-step process. Based on this process, we determined that certain of our goodwill balances were impaired and recorded impairment charges aggregating $199.2 million in fiscal year 2016. The impairment testing process related to our indefinite-lived intangible assets is subject to inherent uncertainties and subjectivity. The use of different assumptions, estimates or judgments with respect to the estimation of the projected future cash flows and the determination of the discount rate used to reduce such projected future cash flows to their net present value could materially increase or decrease any related impairment charge. We believe our estimates are appropriate based upon current and future market conditions and the best information available at the assessment date. However, future impairment charges could be required if we do not achieve our current cash flow, revenue and profitability projections, market royalty rates decrease or the weighted average cost of capital increases. Leases. We lease a significant portion of our retail stores and office facilities. Stores we own are often subject to ground leases. The terms of our real estate leases, including renewal options, range from ten to 130 years. Most leases provide for fixed monthly minimum rentals or contingent rentals based upon sales in excess of stated amounts and normally require us to pay real estate taxes, insurance, common area maintenance costs and other occupancy costs. For leases that contain predetermined, fixed calculations of minimum rentals, we recognize rent expense on a straight-line basis over the lease term. We recognize contingent rent expenses when it is probable that the sales thresholds will be reached during the year. We typically receive cash allowances from developers related to the construction of our stores. We record these allowances as deferred real estate credits, which we recognize as a reduction of rent expense on a straight-line basis over the lease term beginning with the date we take possession of the leased asset. We received construction allowances aggregating $37.4 million in fiscal year 2017, $38.3 million in fiscal year 2016 and $34.7 million in fiscal year 2015. In some cases, a developer will construct a retail store to our requirements pursuant to a lease agreement between the developer and the Company. Typically, the lease agreement provides for the construction and financing of the store shell by the developer and our subsequent construction and financing of the interior finish-out of the store. Since we are involved in the construction of the leased store in these types of arrangements, we must consider the nature and extent of our involvement during the construction period which, in some cases, may result in us being deemed the accounting owner of the construction project. In such cases, ASC Topic 840, Leases, ("ASC Topic 840") requires that we record an asset for the developer's construction costs related to the store shell (included in construction in progress) and recognize an offsetting deferred financing obligation. Upon completion of the project, we perform a sale-leaseback analysis to determine if these assets and the related financing obligation can be derecognized from our Consolidated Balance Sheets. Capitalized costs incurred by a developer aggregated $96.9 million at July 29, 2017 and $46.1 million at July 30, 2016 related to a retail store under construction. Benefit Plans. We sponsor a defined benefit pension plan ("Pension Plan"), an unfunded supplemental executive retirement plan ("SERP Plan") which provides certain employees additional pension benefits and a postretirement plan providing eligible employees limited postretirement health care benefits ("Postretirement Plan"). In calculating our obligations and related expense, we make various assumptions and estimates, after consulting with outside actuaries and advisors. The annual determination of expense involves calculating the estimated total benefits ultimately payable to plan participants. We utilize a spot rate methodology in the estimation of the interest cost component of net periodic benefit cost, which uses the individual spot rates along the yield curve corresponding to benefit payments. The Pension Plan, SERP Plan and Postretirement Plan are valued as of the end of each fiscal year. As of the third quarter of fiscal year 2010, benefits offered to all employees under our Pension Plan and SERP Plan were frozen. Significant assumptions related to the calculation of our obligations include the discount rates used to calculate the present value of benefit obligations to be paid in the future, the expected long-term rate of return on assets held by the Pension Plan and the health care cost trend rate for the Postretirement Plan, as more fully described in Note 11. We review these assumptions annually based upon currently available information, including information provided by our actuaries. Our obligations related to our employee benefit plans are included in other long-term liabilities. Self-insurance and Other Employee Benefit Reserves. We use estimates in the determination of the required accruals for general liability, workers’ compensation and health insurance. We base these estimates upon an examination of historical trends, industry claims experience and independent actuarial estimates. Although we do not expect that we will ultimately pay claims significantly different from our estimates, self-insurance reserves could be affected if future claims experience differs significantly from our historical trends and assumptions. Derivative Financial Instruments. We enter into derivative financial instruments, primarily interest rate swap and cap agreements, to hedge the variability of our cash flows related to a portion of our floating rate indebtedness. The derivative financial instruments are recorded at estimated fair value at each balance sheet date and included in assets or liabilities in our Consolidated Balance Sheets. Revenues. Revenues include sales of merchandise and services and delivery and processing revenues related to merchandise sold. Revenues are recognized at the later of the point of sale or the delivery of goods to the customer. Revenues associated with gift cards are recognized at the time of redemption by the customer. Revenues exclude sales taxes collected from our customers. Delivery and processing revenues were $58.7 million in fiscal year 2017, $50.6 million in fiscal year 2016 and $50.1 million in fiscal year 2015. Revenues are reduced when customers return goods previously purchased. We maintain reserves for anticipated sales returns primarily based on our historical trends related to returns by our customers. Our reserves for anticipated sales returns were $47.0 million at July 29, 2017 and $45.3 million at July 30, 2016. Buying and Occupancy Costs. Our buying costs consist primarily of salaries and expenses incurred by our merchandising and buying operations. Occupancy costs primarily include rent, property taxes and operating costs of our retail, distribution and support facilities and exclude depreciation expense. Selling, General and Administrative Expenses (Excluding Depreciation). Selling, general and administrative expenses consist principally of costs related to employee compensation and benefits in the selling and administrative support areas and advertising and marketing costs. We receive allowances from certain merchandise vendors in connection with compensation programs for employees who sell the vendors’ merchandise. These allowances are netted against the related compensation expenses that we incur. Amounts received from vendors related to compensation programs were $62.4 million, or 1.3% of revenues, in fiscal year 2017, $70.3 million, or 1.4% of revenues, in fiscal year 2016 and $76.4 million, or 1.5% of revenues, in fiscal year 2015. Consistent with industry practice, we receive advertising allowances from certain of our merchandise vendors. Substantially all the advertising allowances we receive represent reimbursements of direct, specific and incremental costs that we incur to promote the vendor’s merchandise in connection with our various advertising programs, primarily catalogs and other print media and digital media. Advertising allowances fluctuate based on the level of advertising expenses incurred and are recorded as a reduction of our advertising costs when earned. Advertising allowances were approximately $50.1 million, or 1.1% of revenues, in fiscal year 2017, $54.8 million, or 1.1% of revenues, in fiscal year 2016 and $55.0 million, or 1.1% of revenues, in fiscal year 2015. We incur costs to advertise and promote the merchandise assortment offered through our store and online operations. We expense advertising costs for print media costs and promotional materials mailed to our customers at the time of mailing to the customer. We amortize the costs of print catalogs during the periods we expect to generate revenues from such catalogs, generally three months. We expense the costs incurred to produce the photographic content on our websites, as well as website design and web marketing costs, as incurred. Net marketing and advertising expenses were $183.0 million, or 3.9% of revenues, in fiscal year 2017, $178.9 million, or 3.6% of revenues, in fiscal year 2016 and $165.7 million, or 3.3% of revenues, in fiscal year 2015. Stock Compensation. At the date of grant, the stock option exercise price equals or exceeds the fair market value of Parent's common stock. Because Parent is privately held and there is no public market for its common stock, the fair market value of Parent's common stock is determined by the Board of Directors of Parent (the "Parent Board") or the Compensation Committee, as applicable, at the time option grants are awarded. The estimate of the fair market value of Parent's common stock utilizes both discounted cash flow techniques and the review of market data and involves assumptions regarding a number of complex and subjective variables. Significant inputs to the common stock valuation model include:
Income from Credit Card Program. We maintain a proprietary credit card program through which credit is extended to customers and have a related marketing and servicing alliance with affiliates of Capital One Financial Corporation ("Capital One"). Pursuant to our agreement with Capital One (the "Program Agreement"), Capital One currently offers credit cards and non-card payment plans under both the "Neiman Marcus" and "Bergdorf Goodman" brand names. Effective July 1, 2013, we amended and extended the Program Agreement to July 2020 (renewable thereafter for three-year terms), subject to early termination provisions. We receive payments from Capital One based on sales transacted on our proprietary credit cards. These payments are based on the profitability of the credit card portfolio as determined under the Program Agreement and are impacted by a number of factors including credit losses incurred and our allocable share of the profits generated by the credit card portfolio, which in turn may be impacted by credit ratings as determined by various rating agencies. In addition, we receive payments from Capital One for marketing and servicing activities we provide to Capital One. We recognize income from our credit card program when earned. Additionally, beginning in July 2017, in accordance with the contractual provisions of the credit card program agreement, our allocable share of the profits generated by the credit card portfolio was reduced as a result of our current credit ratings by S&P and Moody's. Gift Cards. The gift cards sold to our customers have no stated expiration dates and, in some cases, are subject to actual and/or potential escheatment rights in various of the jurisdictions in which we operate. Unredeemed gift cards were $45.5 million at July 29, 2017 and $44.3 million at July 30, 2016. We recognized gift card breakage of $1.7 million in fiscal year 2017, $1.3 million in fiscal year 2016 and $1.4 million in fiscal year 2015 as a component of revenues. Loyalty Program. We maintain a customer loyalty program in which customers earn points for qualifying purchases. Upon reaching specified levels, points are redeemed for awards, primarily gift cards. The estimates of the costs associated with the loyalty program require us to make assumptions related to customer purchasing levels and redemption rates. At the time the qualifying sales giving rise to the loyalty program points are made, we defer the portion of the revenues on the qualifying sales transactions equal to the estimated retail value of the gift cards to be redeemed upon conversion of the earned points to gift cards. We record the deferral of revenues related to gift card awards under our loyalty program as a reduction of revenues. Income Taxes. We use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. We are routinely under audit by federal, state or local authorities in the area of income taxes. We regularly evaluate the likelihood of realization of tax benefits derived from positions we have taken in various federal and state filings after consideration of all relevant facts, circumstances and available information. If we believe it is more likely than not that our position will be sustained, we recognize the benefit we believe is cumulatively greater than 50% likely to be realized. Foreign Currency. We translate the assets and liabilities denominated in a foreign currency into U.S. dollars using the exchange rate in effect at the balance sheet date. Revenues and expenses are translated into U.S. dollars using weighted average exchange rates during the year. We record these translation adjustments as a component of accumulated other comprehensive loss on the Consolidated Balance Sheets. Segments. We conduct our specialty retail store and online operations on an omni-channel basis. As our store and online operations have similar economic characteristics, products, services and customers, our operations constitute a single omni-channel reportable segment. Newly Adopted Accounting Pronouncements. In April 2015, the Financial Accounting Standards Board (the "FASB") issued guidance related to the accounting for cloud computing arrangements. Under this guidance, if a cloud computing arrangement includes a software license, the software license element should be accounted for in a manner consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the arrangement should be accounted for as a service contract. We adopted this guidance in the first quarter of fiscal year 2017 on a prospective basis. The adoption of this guidance did not have a material impact on our Consolidated Financial Statements. In January 2017, the FASB issued guidance to simplify how an entity is required to test goodwill for impairment. The new standard allows (i) entities to perform annual, or interim, goodwill impairment testing by comparing the reporting unit's fair value with its carrying amount and (ii) recognize impairment charges for the amount by which the carrying amount exceeds the reporting unit’s fair value. Pursuant to prior guidance, a goodwill impairment loss was determined by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill. In computing the implied fair value of goodwill, an entity had to perform procedures to determine the fair value of its assets and liabilities at the impairment testing date consistent with procedures that are required in determining the fair value of assets acquired and liabilities assumed in a business combination. We adopted this guidance in fiscal year 2017 on a prospective basis in connection with our assessment of the recoverability of the carrying values of our indefinite-lived intangible assets and goodwill. Prior to adopting this guidance, our assessment process involved a second step in which we allocated the enterprise fair value to the fair value of the reporting unit's net assets. Any enterprise value in excess of amounts allocated to such net assets represented the implied fair value of goodwill for that reporting unit. If the carrying value of goodwill for a reporting unit exceeded the implied fair value of goodwill, an impairment charge was recorded to write goodwill down to its fair value. The assessment performed in the fourth quarter of fiscal year 2016 was performed utilizing the two-step process. Recent Accounting Pronouncements. In March 2016, the FASB issued guidance to simplify how share-based payments are accounted for and presented in the financial statements, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The standard allows (i) entities to withhold an amount up to the employees' maximum individual tax rate in the relevant jurisdiction without resulting in liability classification of the award and (ii) forfeitures to be either estimated, as required currently, or recognized when they occur. This new guidance is effective for us as of the first quarter of fiscal year 2018. In May 2014, the FASB issued guidance to clarify the principles for revenue recognition. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes previous revenue recognition guidance. While our evaluation of the impact of adopting this standard is ongoing, we believe the new guidance will impact our accounting for sales returns, our loyalty program and certain promotional programs. This new guidance is effective for us no earlier than the first quarter of fiscal year 2019. In May 2017, the FASB issued guidance to clarify which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The standard requires modification accounting only if changes in the terms or conditions results in changes of the fair value, the vesting conditions or the classification of the award as an equity instrument or a liability. This new guidance is effective for us as of the first quarter of fiscal year 2019. In February 2016, the FASB issued guidance that requires a lessee to recognize assets and liabilities arising from leases on the balance sheet. Previous GAAP did not require lease assets and liabilities to be recognized for most leases. Additionally, companies are permitted to make an accounting policy election not to recognize lease assets and liabilities for leases with a term of 12 months or less. For both finance leases and operating leases, the lease liability should be initially measured at the present value of the remaining contractual lease payments. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee will not significantly change under this new guidance. This new guidance is effective for us as of the first quarter of fiscal year 2020. In August 2017, the FASB issued guidance to simplify how hedge accounting arrangements are accounted for and presented in the financial statements, including the assessment of hedge effectiveness. Under the new standard, all changes in the value of the hedging instrument included in the assessment of effectiveness will be recorded in other comprehensive income and reclassified to earnings in the same income statement line item when the hedged item affects earnings. This new guidance is effective for us as of the first quarter of fiscal year 2020. With respect to each of the recent accounting pronouncements described above, we are currently evaluating which application methods to adopt and the impact of adopting these new accounting standards on our Consolidated Financial Statements. |
MYTHERESA ACQUISITION |
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Business Combinations [Abstract] | |
MyTheresa Acquisition | MYTHERESA ACQUISITION In October 2014, we acquired MyTheresa, a luxury retailer headquartered in Munich, Germany. The operations of MyTheresa are conducted primarily through the mytheresa.com website. The purchase price paid to acquire MyTheresa, net of cash acquired, was $181.7 million, which was financed through a combination of cash and debt. In addition, the MyTheresa purchase agreement contained contingent earn-out payments to the sellers aggregating up to €55.0 million based on operating performance for calendar years 2015 and 2016. In March 2017, we paid $26.9 million, or €25.5 million, to the sellers related to calendar year 2016 (of which $22.9 million, or €18.1 million, represented the acquisition date fair value of the obligation). In April 2016, we paid $29.8 million, or €26.5 million, to the sellers related to calendar year 2015 (of which $27.2 million, or €21.6 million, represented the acquisition date fair value of the obligation). As of July 29, 2017, the Company has no further obligation related to the contingent earn-out payments to the sellers of MyTheresa. MyTheresa results of operations are included in our consolidated results of operations beginning in the second quarter of fiscal year 2015. |
FAIR VALUE MEASUREMENTS |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | FAIR VALUE MEASUREMENTS The following table shows the Company’s financial assets and liabilities that are required to be measured at fair value on a recurring basis in our Consolidated Balance Sheets:
The fair value of the interest rate swaps is estimated using industry standard valuation models using market-based observable inputs, including interest rate curves. The fair value of the contingent earn-out obligation incurred in connection with the acquisition of MyTheresa was estimated as of the acquisition date using a valuation model that measured the present value of the probable cash payments based upon the forecasted operating performance of MyTheresa and a discount rate that captured the risk associated with the obligation. We updated our assumptions based on new developments and adjusted the carrying value of the obligation to its estimated fair value at each reporting date. As of July 29, 2017, the Company has no further earn-out obligations. Because Parent is privately held and there is no public market for its common stock, the fair market value of Parent's common stock is determined by the Parent Board or the Compensation Committee, as applicable. In determining the fair market value of Parent's common stock, the Parent Board or the Compensation Committee, as applicable, considers such factors as any recent transactions involving Parent's common stock, the Company’s actual and projected financial results, the principal amount of the Company’s indebtedness, valuations of the Company performed by third parties and other factors it believes are material to the valuation process. Significant inputs to the common stock valuation model are updated as applicable and the carrying value of the obligation is adjusted to its estimated fair value at each reporting date. The carrying values of cash and cash equivalents, credit card receivables and accounts payable approximate fair value due to their short-term nature. We determine the fair value of our long-term debt on a non-recurring basis, which results are summarized as follows:
We estimated the fair value of long-term debt using (i) prevailing market rates for debt of similar remaining maturities and credit risk for the senior secured asset-based revolving credit facility (as amended, the "Asset-Based Revolving Credit Facility") and the senior secured term loan facility (as amended, the "Senior Secured Term Loan Facility" and, together with the Asset-Based Revolving Credit Facility, the "Senior Secured Credit Facilities") and (ii) quoted market prices of the same or similar issues for the $960.0 million aggregate principal amount of 8.00% Senior Cash Pay Notes due 2021 (the "Cash Pay Notes"), the $600.0 million aggregate principal amount of 8.75%/9.50% Senior PIK Toggle Notes due 2021 (the "PIK Toggle Notes") and the $125.0 million aggregate principal amount of 7.125% Debentures due 2028 (the "2028 Debentures" and, together with the Cash Pay Notes and the PIK Toggle Notes, the "Notes"). In connection with purchase accounting, we adjusted the carrying values of our long-lived and intangible assets to their estimated fair values at the acquisition date. The fair value estimates were based upon assumptions related to the future cash flows, discount rates and asset lives utilizing currently available information, and in some cases, valuation results from independent valuation specialists (Level 3 determination of fair value). Subsequent to the Acquisition, we determine the fair value of our long-lived and intangible assets on a non-recurring basis in connection with our periodic evaluations of such assets for potential impairment and record impairment charges when such fair value estimates are lower than the carrying values of the assets. |
PROPERTY AND EQUIPMENT, NET |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment, Net | PROPERTY AND EQUIPMENT, NET The significant components of our net property and equipment are as follows:
Included in construction in progress are $96.9 million at July 29, 2017 and $46.1 million at July 30, 2016 of capitalized costs incurred by a developer to construct the shell of a building that we will lease and operate as a retail store upon completion of construction. We are deemed to be the owner of the building shell for accounting purposes and are therefore required to recognize an asset for a developer's construction costs related to the store shell and an offsetting deferred financing obligation. |
INTANGIBLE ASSETS, NET AND GOODWILL |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets, Net and Goodwill | INTANGIBLE ASSETS, NET AND GOODWILL The significant components of our intangible assets and goodwill are as follows:
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IMPAIRMENT CHARGES |
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Impairment Charges | IMPAIRMENT CHARGES Since fiscal year 2016, we have experienced declines in our operating results and we believe our operating results have been adversely impacted by a number of factors including, among other things:
Based upon our assessment of current economic conditions, our expectations of future business conditions and trends, our projected revenues, earnings, and cash flows as well as other market factors such as the weighted average cost of capital and valuation multiples, we determined that impairment charges were required to state certain of our intangible and long-lived assets to their estimated fair value as follows:
We recorded impairment charges aggregating $466.2 million in fiscal year 2016. These impairment charges were driven primarily by revisions to our anticipated future operating trends in light of adverse economic and business trends existing as of the end of fiscal year 2016 and, to a lesser extent, increases in the weighted average cost of capital used in estimating the fair value of our tradenames and reporting units under a discounted cash flow model. These impairments related to certain of our tradenames, goodwill and long-lived assets primarily associated with our Neiman Marcus brand. Our assessment in fiscal year 2016 was performed prior to the adoption of new accounting guidance issued related to the testing of goodwill for impairment and utilized a second step wherein we allocated the enterprise fair value to the fair value of the reporting unit's net assets to determine the writedown of goodwill. We recorded impairment charges aggregating $510.7 million in fiscal year 2017. These impairment charges were driven both by (i) changes in market conditions related to increases in the weighted average cost of capital and valuation multiples and (ii) further deterioration of operating trends during such periods. In fiscal year 2017, we recorded impairment charges of $153.8 million in the second quarter and $357.0 million in the fourth quarter. These impairment charges related to certain of our tradenames, goodwill and long-lived assets primarily associated with our Neiman Marcus and Bergdorf Goodman brands. Our assessment in fiscal year 2017 was performed subsequent to the adoption of new accounting guidance issued related to the testing of goodwill for impairment as discussed in Note 1 under "— Newly Adopted Accounting Pronouncements". We continue to undertake initiatives to help drive revenues and streamline business activities and will continue to closely monitor our financial condition and results of operations. However, there is a risk that we may continue to experience challenging economic conditions and operating pressures, which in turn could increase the risk of additional impairment charges in future periods. |
ACCRUED LIABILITIES |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Liabilities | ACCRUED LIABILITIES The significant components of accrued liabilities are as follows:
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LONG-TERM DEBT |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | LONG-TERM DEBT The significant components of our long-term debt are as follows:
Asset-Based Revolving Credit Facility. At July 29, 2017, we have an Asset-Based Revolving Credit Facility with a maximum committed borrowing capacity of $900.0 million. The Asset-Based Revolving Credit Facility matures on July 25, 2021 (or July 25, 2020 if our obligations under our Senior Secured Term Loan Facility or any permitted refinancing thereof have not been repaid or the maturity date thereof has not been extended to October 25, 2021 or later). At July 29, 2017, we had outstanding borrowings of $263.0 million under this facility, outstanding letters of credit of $1.8 million and unused commitments of $635.3 million, subject to a borrowing base, of which $90.0 million of such capacity is available to us subject to certain restrictions as more fully described below. Availability under the Asset-Based Revolving Credit Facility is subject to a borrowing base. The Asset-Based Revolving Credit Facility includes borrowing capacity available for letters of credit (up to $150.0 million, with any such issuance of letters of credit reducing the amount available under the Asset-Based Revolving Credit Facility on a dollar-for-dollar basis) and for borrowings on same-day notice. The borrowing base is equal to at any time the sum of (a) 90% of the net orderly liquidation value of eligible inventory, net of certain reserves, plus (b) 90% of the amounts owed by credit card processors in respect of eligible credit card accounts constituting proceeds from the sale or disposition of inventory, less certain reserves, plus (c) 100% of segregated cash held in a restricted deposit account. To the extent that excess availability is not equal to or greater than the greater of (a) 10% of the lesser of (1) the aggregate revolving commitments and (2) the borrowing base and (b) $50.0 million, we will be required to maintain a minimum fixed charge coverage ratio. Additional restrictions will apply if this condition is not met for five consecutive business days, including increased reporting requirements and additional administrative agent control rights over certain of our accounts. These restrictions will continue until the condition is satisfied and their imposition may limit our operational flexibility. The Asset-Based Revolving Credit Facility permits us to increase commitments under the Asset-Based Revolving Credit Facility or add one or more incremental term loans to the Asset-Based Revolving Credit Facility by an amount not to exceed $200.0 million. However, the lenders are under no obligation to provide any such additional commitments or loans, and any increase in commitments or incremental term loans will be subject to customary conditions precedent. If we were to request any such additional commitments and the existing lenders or new lenders were to agree to provide such commitments, the size of the Asset-Based Revolving Credit Facility could be increased to $1,100.0 million, but our ability to borrow would still be limited by the amount of the borrowing base. The cash proceeds of any incremental term loans may be used for working capital and general corporate purposes. At July 29, 2017, borrowings under the Asset-Based Revolving Credit Facility bore interest at a rate per annum equal to, at our option, either (a) a base rate determined by reference to the highest of (1) the prime rate of Deutsche Bank AG New York Branch (the administrative agent), (2) the federal funds effective rate plus ½ of 1.00% and (3) the adjusted one-month LIBOR plus 1.00% or (b) LIBOR, subject to certain adjustments, in each case plus an applicable margin of 0.75% with respect to base rate borrowings and 1.75% with respect to LIBOR borrowings at July 29, 2017. The applicable margin is based on the average historical excess availability under the Asset-Based Revolving Credit Facility, and is up to 1.00% with respect to base rate borrowings and up to 2.00% with respect to LIBOR borrowings, in each case with one 0.25% step down based on achievement and maintenance of a certain senior secured first lien net leverage ratio (as defined in the credit agreement governing the Asset-Based Revolving Credit Facility). The weighted average interest rate on the outstanding borrowings pursuant to the Asset-Based Revolving Credit Facility was 3.11% at July 29, 2017. In addition, we are required to pay a commitment fee in respect of unused commitments at a rate of up to 0.375% per annum. We must also pay customary letter of credit fees and agency fees. If at any time the aggregate amount of outstanding revolving loans, unreimbursed letter of credit drawings and undrawn letters of credit under the Asset-Based Revolving Credit Facility exceeds the lesser of (a) the aggregate revolving commitments and (b) the borrowing base, we will be required to repay outstanding loans or cash collateralize letters of credit in an aggregate amount equal to such excess, with no reduction of the commitment amount. If the excess availability under the Asset-Based Revolving Credit Facility is less than the greater of (a) 10% of the lesser of (1) the aggregate revolving commitments and (2) the borrowing base and (b) $50.0 million for a period of five or more consecutive business days, funds held in a collection account maintained with the agent would be applied to repay the loans and other obligations and cash collateralize letters of credit. We would then be required to make daily deposits in the collection account maintained with the agent under the Asset-Based Revolving Credit Facility. We may voluntarily reduce the unutilized portion of the commitment amount and repay outstanding loans at any time without premium or penalty other than customary breakage costs with respect to LIBOR loans. There is no scheduled amortization under the Asset-Based Revolving Credit Facility. The principal amount of the revolving loans outstanding thereunder will be due and payable in full on July 25, 2021 (or July 25, 2020 if our obligations under our Senior Secured Term Loan Facility or any permitted refinancing thereof have not been repaid or the maturity date thereof has not been extended to October 25, 2021 or later). The Asset-Based Revolving Credit Facility is guaranteed by Holdings and each of our current and future direct and indirect wholly owned subsidiaries (subsidiary guarantors) other than (a) unrestricted subsidiaries, (b) certain immaterial subsidiaries, (c) foreign subsidiaries and any domestic subsidiary of a foreign subsidiary, (d) certain holding companies of foreign subsidiaries, (e) captive insurance subsidiaries, not for profit subsidiaries, or a subsidiary which is a special purpose entity for securitization transactions or like special purposes and (f) any subsidiary that is prohibited by applicable law or contractual obligation from acting as a guarantor or which would require governmental approval to provide a guarantee. At July 29, 2017, the assets of non-guarantor subsidiaries, primarily (i) NMG Germany GmbH, through which we conduct the operations of MyTheresa, (ii) NMG International LLC, a holding company with respect to our foreign operations and (iii) Nancy Holdings LLC, which holds legal title to certain real property used by us in conducting our operations, aggregated $416.0 million, or 5.4% of consolidated total assets. All obligations under the Asset-Based Revolving Credit Facility, and the guarantees of those obligations, are secured, subject to certain significant exceptions described below, by substantially all of the assets of Holdings, the Company and the subsidiary guarantors, including:
Capital stock and other securities of a subsidiary of the Company that are owned by the Company or any subsidiary guarantor will not constitute collateral under the Asset-Based Revolving Credit Facility to the extent that such securities cannot secure the 2028 Debentures or other secured public debt obligations without requiring the preparation and filing of separate financial statements of such subsidiary in accordance with applicable SEC rules. As a result, the collateral under the Asset-Based Revolving Credit Facility will include shares of capital stock or other securities of subsidiaries of the Company or any subsidiary guarantor only to the extent that the applicable value of such securities (on a subsidiary-by-subsidiary basis) is less than 20% of the aggregate principal amount of the 2028 Debentures or other secured public debt obligations of the Company. The Asset-Based Revolving Credit Facility contains covenants limiting, among other things, dividends and other restricted payments, investments, loans, advances and acquisitions, and prepayments or redemptions of other indebtedness. These covenants permit such restricted actions in an unlimited amount, subject to the satisfaction of certain payment conditions, principally that we must have (x) pro forma excess availability under the Asset-Based Revolving Credit Facility for each day of the 30-day period prior to such actions, which exceeds the greater of $90.0 million or 15% of the lesser of (a) the revolving commitments under the Asset-Based Revolving Credit Facility and (b) the borrowing base and (y) a pro forma fixed charge coverage ratio of at least 1.0 to 1.0, unless pro forma excess availability for each day of the 30-day period prior to such actions under the Asset-Based Revolving Credit Facility would exceed the greater of (1) $200.0 million and (2) 25% of the lesser of (i) the aggregate revolving commitments under the Asset-Based Revolving Credit Facility and (ii) the borrowing base. The Asset-Based Revolving Credit Facility also contains customary affirmative covenants and events of default, including a cross-default provision in respect of any other indebtedness that has an aggregate principal amount exceeding $50.0 million. Senior Secured Term Loan Facility. We have a credit agreement and related security and other agreements for the $2,950.0 million Senior Secured Term Loan Facility. At July 29, 2017, the outstanding balance under the Senior Secured Term Loan Facility was $2,839.6 million. The principal amount of the loans outstanding is due and payable in full on October 25, 2020. The Senior Secured Term Loan Facility permits us to increase the term loans or add a separate tranche of term loans by an amount not to exceed $650.0 million plus an unlimited amount that would result (a) in the case of any incremental term loan facility to be secured equally and ratably with the term loans, a senior secured first lien net leverage ratio equal to or less than 4.25 to 1.00, and (b) in the case of any incremental term loan facility to be secured on a junior basis to the term loans, to be subordinated in right of payment to the term loans or unsecured and pari passu in right of payment with the term loans, a total net leverage ratio equal to or less than the total net leverage ratio as of October 25, 2013. At July 29, 2017, borrowings under the Senior Secured Term Loan Facility bore interest at a rate per annum equal to, at our option, either (a) a base rate determined by reference to the highest of (1) the prime rate of Credit Suisse AG (the administrative agent), (2) the federal funds effective rate plus ½ of 1.00% and (3) the adjusted one-month LIBOR plus 1.00%, or (b) an adjusted LIBOR (for a period equal to the relevant interest period, and in any event, never less than 1.00%), subject to certain adjustments, in each case plus an applicable margin. The applicable margin is up to 2.25% with respect to base rate borrowings and up to 3.25% with respect to LIBOR borrowings. The applicable margin is subject to adjustment based on our senior secured first lien net leverage ratio. The applicable margin with respect to outstanding LIBOR borrowings was 3.25% at July 29, 2017. The interest rate on the outstanding borrowings pursuant to the Senior Secured Term Loan Facility was 4.47% at July 29, 2017. Subject to certain exceptions and reinvestment rights, the Senior Secured Term Loan Facility requires that 100% of the net cash proceeds from certain asset sales and debt issuances and 50% (which percentage will be reduced to 25% if our senior secured first lien net leverage ratio, as defined in the credit agreement governing the Senior Secured Term Loan Facility, is equal to or less than 4.0 to 1.0 but greater than 3.5 to 1.0 and will be reduced to 0% if our senior secured first lien net leverage ratio is equal to or less than 3.5 to 1.0) from excess cash flow, as defined in the credit agreement governing the Senior Secured Term Loan Facility, for each of our fiscal years (commencing with the period ended July 26, 2015) must be used to prepay outstanding term loans under the Senior Secured Term Loan Facility at 100% of the principal amount to be prepaid, plus accrued and unpaid interest. We were not required to prepay any outstanding term loans pursuant to the annual excess cash flow requirements for fiscal years 2017 and 2016. We may repay all or any portion of the Senior Secured Term Loan Facility at any time, subject to redeployment costs in the case of prepayment of LIBOR borrowings other than the last day of the relevant interest period. The Senior Secured Term Loan Facility amortizes in equal quarterly installments of $7.4 million, less certain voluntary and mandatory prepayments, with the remaining balance due at final maturity. The Senior Secured Term Loan Facility is guaranteed by Holdings and each of our current and future subsidiary guarantors other than (a) unrestricted subsidiaries, (b) certain immaterial subsidiaries, (c) foreign subsidiaries and any domestic subsidiary of a foreign subsidiary, (d) certain holding companies of foreign subsidiaries, (e) captive insurance subsidiaries, not for profit subsidiaries, or a subsidiary which is a special purpose entity for securitization transactions or like special purposes and (f) any subsidiary that is prohibited by applicable law or contractual obligation from acting as a guarantor or which would require governmental approval to provide a guarantee. At July 29, 2017, the assets of non-guarantor subsidiaries, primarily (i) NMG Germany GmbH, through which we conduct the operations of MyTheresa, (ii) NMG International LLC, a holding company with respect to our foreign operations and (iii) Nancy Holdings LLC, which holds legal title to certain real property used by us in conducting our operations, aggregated $416.0 million, or 5.4% of consolidated total assets. All obligations under the Senior Secured Term Loan Facility, and the guarantees of those obligations, are secured, subject to certain significant exceptions described below, by substantially all of the assets of Holdings, the Company and the subsidiary guarantors, including:
Capital stock and other securities of a subsidiary of the Company that are owned by the Company or any subsidiary guarantor will not constitute collateral under the Senior Secured Term Loan Facility to the extent that such securities cannot secure the 2028 Debentures or other secured public debt obligations without requiring the preparation and filing of separate financial statements of such subsidiary in accordance with applicable SEC rules. As a result, the collateral under the Senior Secured Term Loan Facility will include shares of capital stock or other securities of subsidiaries of the Company or any subsidiary guarantor only to the extent that the applicable value of such securities (on a subsidiary-by-subsidiary basis) is less than 20% of the aggregate principal amount of the 2028 Debentures or other secured public debt obligations of the Company. The credit agreement governing the Senior Secured Term Loan Facility contains a number of negative covenants and covenants related to the security arrangements for the Senior Secured Term Loan Facility. The credit agreement also contains customary affirmative covenants and events of default, including a cross-default provision in respect of any other indebtedness that has an aggregate principal amount exceeding $50.0 million. Cash Pay Notes. The Company, along with Mariposa Borrower, Inc. as co-issuer, incurred indebtedness in the form of $960.0 million aggregate principal amount of 8.00% Senior Cash Pay Notes due 2021. Interest on the Cash Pay Notes is payable semi-annually in arrears on each April 15 and October 15. The Cash Pay Notes are guaranteed by the same entities that guarantee the Senior Secured Term Loan Facility, other than Holdings. The Cash Pay Notes are unsecured and the guarantees are full and unconditional. At July 29, 2017, the redemption price at which we may redeem the Cash Pay Notes, in whole or in part, as set forth in the indenture governing the Cash Pay Notes, was 106.000%. The Cash Pay Notes mature on October 15, 2021. The Cash Pay Notes include certain restrictive covenants that limit our ability to, among other things: (i) incur additional debt or issue certain preferred stock, (ii) pay dividends, redeem stock or make other distributions, (iii) make other restricted payments or investments, (iv) create liens on assets, (v) transfer or sell assets, (vi) create restrictions on payment of dividends or other amounts by us to our restricted subsidiaries, (vii) engage in mergers or consolidations, (viii) engage in certain transactions with affiliates and (ix) designate our subsidiaries as unrestricted subsidiaries. The Cash Pay Notes also contain a cross-acceleration provision in respect of other indebtedness that has an aggregate principal amount exceeding $50.0 million. PIK Toggle Notes. The Company, along with Mariposa Borrower, Inc. as co-issuer, incurred indebtedness in the form of $600.0 million aggregate principal amount of 8.75%/9.50% Senior PIK Toggle Notes due 2021. The PIK Toggle Notes are guaranteed by the same entities that guarantee the Senior Secured Term Loan Facility, other than Holdings. The PIK Toggle Notes are unsecured and the guarantees are full and unconditional. At July 29, 2017, the redemption price at which we may redeem the PIK Toggle Notes, in whole or in part, as set forth in the indenture governing the PIK Toggle Notes, was 106.563%. The PIK Toggle Notes mature on October 15, 2021. Interest on the PIK Toggle Notes is payable semi-annually in arrears on each April 15 and October 15. Interest on the PIK Toggle Notes, subject to certain restrictions, may be paid (i) entirely in cash ("Cash Interest"), (ii) entirely by increasing the principal amount of the PIK Toggle Notes by the relevant interest payment amount ("PIK Interest"), or (iii) 50% in Cash Interest and 50% in PIK Interest. Cash Interest on the PIK Toggle Notes accrues at a rate of 8.75% per annum. PIK Interest on the PIK Toggle Notes accrues at a rate of 9.50% per annum. Interest on the PIK Toggle Notes was paid entirely in cash for the first seven interest payments. We elected to pay the October 2017 interest payment in the form of PIK Interest, which will result in the issuance of $28.5 million of additional PIK Toggle Notes in October 2017. We intend to elect to pay interest in the form of PIK Interest or partial PIK Interest on our semi-annual interest payment due in April 2018 and may additionally elect to do so with respect to the payment due in October 2018. If we elect PIK Interest or partial PIK Interest with respect to these interest payments, we must deliver a notice of such election to the trustee no later than one day prior to the beginning of the relevant semi-annual interest period. We will evaluate our financial position prior to each future interest period to determine the appropriate election at that time. The PIK Toggle Notes include certain restrictive covenants that limit our ability to, among other things: (i) incur additional debt or issue certain preferred stock, (ii) pay dividends, redeem stock or make other distributions, (iii) make other restricted payments or investments, (iv) create liens on assets, (v) transfer or sell assets, (vi) create restrictions on payment of dividends or other amounts by us to our restricted subsidiaries, (vii) engage in mergers or consolidations, (viii) engage in certain transactions with affiliates and (ix) designate our subsidiaries as unrestricted subsidiaries. The PIK Toggle Notes also contain a cross-acceleration provision in respect of other indebtedness that has an aggregate principal amount exceeding $50.0 million. 2028 Debentures. NMG has outstanding $125.0 million aggregate principal amount of our 7.125% Senior Debentures due 2028. The 2028 Debentures are secured by a first lien security interest on certain collateral subject to liens granted under the Senior Secured Credit Facilities constituting (a) (1) 100% of the capital stock of certain of NMG’s existing and future domestic subsidiaries, and (2) 100% of the non-voting stock and 65% of the voting stock of certain of NMG’s existing and future foreign subsidiaries and (b) a significant portion of NMG's owned real property, in each case, to the extent required by the terms of the indenture governing the 2028 Debentures. The 2028 Debentures contain covenants that restrict NMG’s ability to create liens and enter into sale and lease back transactions. The collateral securing the 2028 Debentures will be released upon the release of liens on such collateral under the Senior Secured Credit Facilities and any other debt (other than the 2028 Debentures) secured by such collateral. Capital stock and other securities of a subsidiary of NMG that are owned by NMG or any subsidiary will not constitute collateral under the 2028 Debentures to the extent such property does not constitute collateral under the Senior Secured Credit Facilities as described above. The 2028 Debentures are guaranteed on an unsecured, senior basis by the Company. The guarantee is full and unconditional. The guarantee of the 2028 Debentures is subject to automatic release if the requirements for legal defeasance or covenant defeasance of the 2028 Debentures are satisfied, or if NMG’s obligations under the indenture governing the 2028 Debentures are discharged. At July 29, 2017, our non-guarantor subsidiaries consisted principally of (i) Bergdorf Goodman, Inc., through which we conduct the operations of our Bergdorf Goodman stores; (ii) NM Nevada Trust, which holds legal title to certain real property and intangible assets used by us in conducting our operations; (iii) NMG Germany GmbH, through which we conduct the operations of MyTheresa; (iv) NMG International LLC, a holding company with respect to our foreign operations; and (v) Nancy Holdings LLC, which holds legal title to certain real property used by us in conducting our operations. The 2028 Debentures include certain restrictive covenants and a cross-acceleration provision in respect of any other indebtedness that has an aggregate principal amount exceeding $15.0 million. The 2028 Debentures mature on June 1, 2028. Mytheresa.com Credit Facilities. Our subsidiary mytheresa.com GmbH, through which we operate mytheresa.com, is party to two credit facility agreements (the "mytheresa.com Credit Facilities"). The first facility, entered into October 1, 2015, is a revolving credit line for up to €6.5 million in availability and bears interest at a fixed rate of 2.39% (until further notice) for any loan drawn under the overdraft facility and at rates to be agreed on a case-by-case basis for money market loans and guarantees. The second facility, entered into June 8, 2017, is a revolving credit line for up to €8.5 million in availability and bears interest at a fixed rate of 2.25% (until further notice) for any loan drawn under the overdraft facility and at rates to be agreed on a case-by-case basis for any other loans. Both facilities are secured by certain inventory held by mytheresa.com GmbH and certain contractual claims. The facilities are not guaranteed by, and are non-recourse to, us or any of our U.S. subsidiaries or affiliates. Each facility contains restrictive covenants prohibiting mytheresa.com GmbH from distributing or making available loan proceeds to any affiliates including us or any of our other subsidiaries and requiring mytheresa.com GmbH to maintain a minimum economic equity ratio. The agreements also contain usual and customary events of default, the occurrence of which may result in all outstanding amounts under the facility agreements becoming due and payable immediately. There is no scheduled amortization under either facility and neither facility has a specified maturity date. However, each lender may terminate its respective facility at any time provided that mytheresa.com GmbH is given a customary reasonable opportunity to secure alternative financing. As of July 29, 2017, mytheresa.com GmbH had no outstanding borrowings, guarantees of $1.2 million, or €1.1 million, and unused commitments of $15.9 million, or €13.9 million. Maturities of Long-term Debt. At July 29, 2017, annual maturities of long-term debt during the next five fiscal years and thereafter are as follows (in millions):
The previous table does not reflect future excess cash flow prepayments, if any, that may be required under the Senior Secured Term Loan Facility. Interest Expense, net. The significant components of interest expense are as follows:
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DERIVATIVE FINANCIAL INSTRUMENTS |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | DERIVATIVE FINANCIAL INSTRUMENTS Interest Rate Swaps. At July 29, 2017, we had outstanding floating rate debt obligations of $3,102.6 million. In April and June of 2016, we entered into floating to fixed interest rate swap agreements for an aggregate notional amount of $1,400.0 million to limit our exposure to interest rate increases related to a portion of our floating rate indebtedness. These swap agreements hedge a portion of our contractual floating rate interest commitments related to our Senior Secured Term Loan Facility from December 2016 to October 2020. As a result of the April 2016 swap agreements, our effective interest rate as to $700.0 million of floating rate indebtedness will be fixed at 4.9120% from December 2016 through October 2020. As a result of the June 2016 swap agreements, our effective interest rate as to an additional $700.0 million of floating rate indebtedness will be fixed at 4.7395% from December 2016 to October 2020. The fair value of our interest rate swap agreements was a gain of $3.6 million at July 29, 2017, which amount is included in other long-term assets, and a loss of $13.2 million at July 30, 2016, which amount is included in other long-term liabilities. The interest rate swap agreements expire in October 2020. We designated the interest rate swaps as cash flow hedges. As cash flow hedges, unrealized gains on our outstanding interest rate swaps are recognized as assets while unrealized losses are recognized as liabilities. Our interest rate swap agreements are highly, but not perfectly, correlated to the changes in interest rates to which we are exposed. As a result, unrealized gains and losses on our interest rate swap agreements are designated as effective or ineffective. The effective portion of such gains or losses will be recorded as a component of accumulated other comprehensive loss while the ineffective portion of such gains or losses will be recorded as a component of interest expense. In addition, we realize a gain or loss on our interest rate swap agreements in connection with each required interest payment on our floating rate indebtedness. The realized gains or losses effectively adjust the contractual interest requirements pursuant to the terms of our floating rate indebtedness to the interest requirements at the fixed rates established in the interest rate swap agreements. These realized gains or losses are reclassified to interest expense from accumulated other comprehensive loss. Interest Rate Caps. In April 2014, we entered into interest rate cap agreements (at a cost of $2.0 million) for an aggregate notional amount of $1,400.0 million to hedge the variability of our cash flows related to a portion of our floating rate indebtedness. The interest rate cap agreements effectively capped LIBOR related to our Senior Secured Term Loan Facility at 3.00% from December 2014 through December 2016 with respect to the $1,400.0 million notional amount of such agreements. The interest rate cap agreements expired in December 2016. Gains and losses realized due to the expiration of applicable portions of the interest rate caps were reclassified to interest expense at the time our quarterly interest payments were made. A summary of the recorded amounts related to our interest rate swaps and interest rate caps reflected in our Consolidated Statements of Operations is as follows:
The amount of losses recorded in other comprehensive loss at July 29, 2017 that is expected to be reclassified into interest expense in the next 12 months, if interest rates remain unchanged, is approximately $3.4 million. |
INCOME TAXES |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | INCOME TAXES The significant components of income tax expense (benefit) are as follows:
The significant components of earnings (loss) before income taxes are as follows:
A reconciliation of income tax expense (benefit) to the amount calculated based on the federal and state statutory rates is as follows:
Our effective income tax rates of 29.0% and 25.8% on the losses for fiscal years 2017 and 2016 were less than the federal statutory tax rate of 35%. No income tax benefits exist related to the goodwill impairment charges of $196.2 million recorded in fiscal year 2017 and $199.2 million recorded in fiscal year 2016. Excluding the impact of the goodwill impairment charges, our effective income tax rates were 39.3% for fiscal year 2017 and 40.6% for fiscal year 2016, which exceeded the federal statutory tax rate due primarily to state income taxes. Our effective income tax rate of 46.8% on the earnings for fiscal year 2015 exceeded the federal statutory tax rate due primarily to state income taxes and the non-deductible portion of transaction and other costs incurred in connection with the MyTheresa acquisition. We have and intend to continue to reinvest all earnings generated by our foreign operations outside of the U.S. As such, no provision for federal or state income taxes is required as of July 29, 2017. If our intentions change or if these funds are needed for our U.S. operations, we would be required to accrue or pay U.S. taxes on some or all of these undistributed earnings and our effective tax rate would increase. Determination of the unrecognized deferred tax liability that would be incurred if such amounts were repatriated, if any, is not practicable because the calculation is complex and subject to significant volatility. Significant components of our net deferred income tax asset (liability) are as follows:
The net deferred tax liability of $1,156.8 million at July 29, 2017 decreased from $1,296.8 million at July 30, 2016. This decrease of $140.0 million was comprised primarily of (i) $117.4 million decrease in deferred tax liabilities resulting from impairment charges incurred in connection with our tradenames and (ii) $38.3 million increase in deferred tax assets related to a federal net operating loss ("NOL") carryforward. At July 29, 2017, the Company has gross U.S. federal NOLs of $97.7 million and credit carryforwards of $2.0 million. Gross state NOLs are $28.5 million and state credit carryforwards are $1.7 million. The federal NOLs and credit carryforwards will expire in 2037 while the state NOLs and credit carryforwards will expire beginning in 2021 through 2037, if not utilized. All NOLs are expected to be used prior to the end of the carryforward period. A gross net operating loss of $8.5 million exists in the foreign jurisdiction of Luxembourg. A full valuation allowance has been set up against the Luxembourg NOL. The Company assesses whether deferred tax assets should be recognized based upon the consideration of both positive and negative evidence. Although realization is not assured, the Company believes that the realization of the recognized deferred tax assets is more likely than not based on expectations of future taxable income. At July 29, 2017, the gross amount of unrecognized tax benefits was $2.2 million ($1.4 million of which would impact our effective tax rate, if recognized). We classify interest and penalties as a component of income tax expense (benefit) and our liability for accrued interest and penalties was $0.4 million at July 29, 2017 and $0.4 million at July 30, 2016. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
We file income tax returns in the U.S. federal jurisdiction and various state, local and foreign jurisdictions. The Internal Revenue Service ("IRS") finalized its audits of our fiscal year 2012 and short-year 2013 (prior to the Acquisition) federal income tax returns. With respect to state, local and foreign jurisdictions, with limited exceptions, we are no longer subject to income tax audits for fiscal years before 2013. We believe our recorded tax liabilities as of July 29, 2017 are sufficient to cover any potential assessments made by the IRS or other taxing authorities and we will continue to review our recorded tax liabilities for potential audit assessments based upon subsequent events, new information and future circumstances. We believe it is reasonably possible that adjustments to the amounts of our unrecognized tax benefits could occur within the next 12 months as a result of settlements with tax authorities or expiration of statutes of limitations. At this time, we do not believe such adjustments will have a material impact on our Consolidated Financial Statements. Subsequent to the Acquisition, Parent and its subsidiaries, including the Company, file U.S. federal income taxes as a consolidated group. The Company has elected to be treated as a corporation for U.S. federal income tax purposes and all operations of Parent are conducted through Holdings and its subsidiaries, including the Company. Income taxes incurred by Parent are reflected by the Company and its subsidiaries in the preparation of our Consolidated Financial Statements. There are no differences in current and deferred income taxes between the Company and Parent. |
EMPLOYEE BENEFIT PLANS |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans | EMPLOYEE BENEFIT PLANS Description of Benefit Plans. We currently maintain defined contribution plans consisting of a retirement savings plan ("RSP") and a defined contribution supplemental executive retirement plan ("Defined Contribution SERP Plan"). As of January 1, 2011, employees may make pretax contributions to the RSP and we match an employee’s contribution up to a maximum of 6% of the employee’s compensation subject to statutory limitations for a potential maximum match of 75% of employee contributions. We also sponsor an unfunded key employee deferred compensation plan, which provides certain employees with additional benefits. Our aggregate expense related to these plans was approximately $27.7 million in fiscal year 2017, $28.0 million in fiscal year 2016 and $30.5 million in fiscal year 2015. In addition, we sponsor a defined benefit pension plan ("Pension Plan") and an unfunded supplemental executive retirement plan ("SERP Plan") that provides certain employees additional pension benefits. As of the third quarter of fiscal year 2010, benefits offered to all participants in our Pension Plan and SERP Plan were frozen. Retirees and active employees hired prior to March 1, 1989 are eligible for certain limited postretirement health care benefits ("Postretirement Plan") if they meet certain service and minimum age requirements. Our obligations for employee benefit plans, included in other long-term liabilities, are as follows:
Benefit Obligations. Our obligations for the Pension Plan, SERP Plan and Postretirement Plan are valued as of the end of each fiscal year. Changes in our obligations pursuant to our Pension Plan, SERP Plan and Postretirement Plan during fiscal years 2017 and 2016 are as follows:
Cost of Benefits. The components of the expenses (income) we incurred under our Pension Plan, SERP Plan and Postretirement Plan are as follows:
For purposes of determining pension expense, the expected return on plan assets is calculated using the market related value of plan assets. The market related value of plan assets does not immediately recognize realized gains and losses. Rather, these effects of realized gains and losses are deferred initially and amortized over three years in the determination of the market related value of plan assets. At July 29, 2017, the market related value of plan assets exceeded the fair value by $12.4 million. Actuarial Loss (Gain). Our projected benefit obligation is adjusted at the end of each fiscal year based upon updated assumptions as to discount rates (as further described below), differences between the actual and expected earnings on our Pension Plan assets, mortality assumptions and other factors. In fiscal year 2017, we decreased our obligations for our employee benefit plans for actuarial gains of $60.6 million ($36.8 million net of taxes) primarily as a result of increases in applicable discount rates and updates to our mortality assumptions. Expected Benefit Payments. A summary of expected benefit payments related to our Pension Plan, SERP Plan and Postretirement Plan is as follows:
Pension Plan Assets and Investment Valuations. Changes in the assets held by our Pension Plan in fiscal years 2017 and 2016 are as follows:
The Pension Plan’s investments are stated at fair value or estimated fair value, as more fully described below. Purchases and sales of securities are recorded on the trade date. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Assets held by our Pension Plan are invested in accordance with the provisions of our approved investment policy. The Pension Plan’s strategic asset allocation was structured to reduce volatility through diversification and enhance return to approximate the amounts and timing of the expected benefit payments. The asset allocation for our Pension Plan at the end of fiscal years 2017 and 2016 and the target allocation for fiscal year 2018, by asset category, are as follows:
Pension Plan investments in mutual funds and U.S. government securities are classified as Level 1 investments within the fair value hierarchy. Investments in mutual funds and U.S. government securities are valued at fair value based on quoted market prices at year-end. Pension Plan investments in corporate debt securities and certain other investments are classified as Level 2 investments within the fair value hierarchy. Other Level 2 investments are valued using updated quotes from market makers or broker-dealers recognized as market participants, information from market sources integrating relative credit information, observed market movements and sector news, all of which are applied to pricing applications and models. Pension Plan investments in common/collective trusts, hedge funds and limited partnership interests are not classified within the fair value hierarchy. Investments in common/collective trusts are valued based on net asset values on the last business day of the Pension Plan's year end as determined by the sponsors of such trusts and can be redeemed daily. Hedge funds are valued at estimated fair value based on net asset value as determined by the respective fund manager based on the valuation of the underlying securities. Limited partnership interests in venture capital investments are valued at estimated fair value based on net asset value as determined by the respective fund investment manager. The hedge funds and limited partnerships allocate gains, losses and expenses to the Pension Plan as described in the agreements. Hedge funds and limited partnership interests are redeemable at net asset value to the extent provided in the documentation governing the investments. Redemption of these investments may be subject to restrictions including lock-up periods where no redemptions are allowed, restrictions on redemption frequency and advance notice periods for redemptions. As of July 29, 2017, certain of these investments were subject to restrictions on redemption frequency, ranging from daily to every three years and certain of these investments are subject to advance notice requirements, ranging from three-day notification to 180-day notification. Investment securities, in general, are exposed to various risks such as interest rate, credit and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statements of net assets available for benefits. The valuation methods previously described above may produce a fair value calculation that may not be indicative of net realized value or reflective of future fair values. The following tables set forth by level, within the fair value hierarchy, the Pension Plan’s assets at fair value as of July 29, 2017 and July 30, 2016.
Funding Policy and Status. Our policy is to fund the Pension Plan at or above the minimum level required by law. In fiscal year 2017, we were required to contribute $10.7 million to the Pension Plan. In fiscal year 2016, we were not required to make contributions to the Pension Plan. As of July 29, 2017, we believe we will be required to contribute $25.1 million to the Pension Plan in fiscal year 2018. Assumptions. Significant assumptions related to the calculation of our obligations pursuant to our employee benefit plans include the discount rates used to calculate the present value of benefit obligations to be paid in the future, the expected long-term rate of return on assets held by our Pension Plan and the health care cost trend rate for the Postretirement Plan. We review these assumptions annually based upon currently available information. The assumptions we utilized in calculating the projected benefit obligations and periodic expense of our Pension Plan, SERP Plan and Postretirement Plan are as follows:
Discount Rate. The assumed discount rate utilized is based on a spot rate methodology in the estimation of the interest cost component of net periodic benefit cost, which uses the individual spot rates along the yield curve corresponding to benefit payments. The discount rate is utilized principally in calculating the present values of our benefit obligations and related expenses. Expected Long-Term Rate of Return on Plan Assets. The assumed expected long-term rate of return on assets is the weighted average rate of earnings, net of investment and administrative expenses, expected on the funds invested or to be invested by the Pension Plan to provide for the plan’s obligations. At July 29, 2017, the expected long-term rate of return on plan assets was 5.50%. We estimate the expected average long-term rate of return on assets based on historical returns, our future asset performance expectations using currently available market and other data and the advice of our outside actuaries and advisors. To the extent the actual rate of return on assets realized over the course of a year is greater than the assumed rate, that year’s annual pension expense is not affected. Rather, this gain reduces future pension expense over a period of approximately 22 years. To the extent the actual rate of return on assets is less than the assumed rate, that year’s annual pension expense is likewise not affected. Rather, this loss increases pension expense over approximately 22 years. Health Care Cost Trend Rate. The assumed health care cost trend rate represents our estimate of the annual rates of change in the costs of the health care benefits currently provided by the Postretirement Plan. The health care cost trend rate implicitly considers estimates of health care inflation, changes in health care utilization and delivery patterns, technological advances and changes in the health status of the plan participants. |
COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Leases. We lease certain property and equipment under various operating leases. The leases provide for fixed monthly rentals and/or contingent rentals based upon sales in excess of stated amounts and normally require us to pay real estate taxes, insurance, common area maintenance costs and other occupancy costs. Generally, the leases have primary terms ranging from five to 99 years and include renewal options ranging from three to 80 years. Rent expense and related occupancy costs under operating leases is as follows:
Future minimum rental commitments (excluding renewal options) under non-cancelable leases for the next five fiscal years and thereafter are as follows (in thousands):
Employment and Consumer Class Actions Litigation. In 2007, Bernadette Tanguilig filed a lawsuit in the Superior Court of California for San Francisco County alleging wrongful termination and retaliation arising from her refusal to sign the Company’s mandatory arbitration agreement. Ms. Tanguilig later filed several amendments to her complaint adding claims under the California Labor Code Private Attorneys General Act ("PAGA") and class action allegations of wage and hour violations. She also added Juan Carlos Pinela as an additional plaintiff. In December 2013, the Company filed a motion to dismiss Ms. Tanguilig’s claims based on her failure to bring her claims to trial within five years as required by California law. In February 2014, the Company’s motion was granted and Ms. Tanguilig’s claims were dismissed. Ms. Tanguilig appealed. Briefing is complete, and a judicial panel has been assigned. The parties have requested oral argument, but no date has been set. In October 2011, the court ordered Mr. Pinela (a co-plaintiff in the Tanguilig case) to arbitrate his claims in accordance with the mandatory arbitration agreement. Mr. Pinela filed a demand for arbitration seeking to arbitrate both his individual and class claims, which the Company argued was in violation of the class action waiver in the arbitration agreement. This led to further proceedings in the trial court, a stay of the arbitration, and a decision by the trial court to reconsider and vacate its order compelling arbitration, which the Company appealed. In June 2015, the appellate court upheld the trial court’s denial of the Company’s motion to compel arbitration of Mr. Pinela’s claims. The Company’s petition for rehearing by the appellate court and petition for review by the California Supreme Court were denied, and the case was returned to the trial court. On December 10, 2015, the trial court issued a stay of the case pending the conclusion of the Tanguilig appeal, which remains in effect. We recorded our currently estimable liabilities with respect to Ms. Tanguilig's employment class action litigation claims in fiscal year 2014, which amount was not material to our financial condition or results of operations. We will continue to evaluate the Tanguilig matter, and our recorded reserve for such matter, based on subsequent events, new information and future circumstances. The National Labor Relations Board ("NLRB") has been pursuing a complaint alleging that the Mandatory Arbitration Agreement’s class action prohibition violates employees’ rights to engage in concerted activity. The administrative law judge issued a recommended decision and order finding that the Company's Arbitration Agreement and class action waiver violated the National Labor Relations Act, which were affirmed by the NLRB in August 2015. On August 12, 2015, we filed our petition for review of the NLRB's order with the U.S. Court of Appeals for the Fifth Circuit. This case is stayed while another similar case is pending before the U.S. Supreme Court. On August 7, 2014, a putative class action complaint was filed against The Neiman Marcus Group LLC in Los Angeles County Superior Court by a customer, Linda Rubenstein, in connection with the Company's Last Call stores in California. Ms. Rubenstein alleges that the Company has violated various California consumer protection statutes by implementing a marketing and pricing strategy that suggests that clothing sold at Last Call stores in California was originally offered for sale at full-line Neiman Marcus stores when allegedly, it was not, and that the Company lacks adequate information to support its comparative pricing labels. In September 2014, we removed the case to the U.S. District Court for the Central District of California. After dismissing Ms. Rubenstein’s original and first amended complaint, the court dismissed her second amended complaint in its entirety in May 2015, without leave to amend, and Ms. Rubenstein appealed. In April 2017, the Court of Appeal reversed, holding that Ms. Rubenstein’s allegations were sufficient to proceed past the pleadings stage of litigation. The case has been transferred back to the district court and has a trial date of July 24, 2018. On September 7, 2017, the district court issued an order permitting Ms. Rubenstein to file a proposed Third Amended Complaint, which modifies the putative class period. Additionally, Ms. Rubenstein filed a motion for class certification, which is currently set for hearing on December 18, 2017. The Company has several wage and hour putative class action matters pending in California. The earliest, filed in December 2015 and amended in February 2016, was filed against The Neiman Marcus Group, Inc. by Holly Attia and seven other named plaintiffs, seeking to certify a class of nonexempt employees for alleged violations for failure to pay overtime wages, failure to provide meal and rest breaks, failure to reimburse business expenses, failure to timely pay wages due at termination and failure to provide accurate itemized wage statements. Plaintiffs also allege derivative claims for restitution under California unfair competition law and a representative claim for penalties under PAGA, and all related damages for alleged violations (restitution, statutory penalties under PAGA, and attorneys' fees, interest and costs of suit). The case was removed to the U.S. District Court for the Central District of California in March 2016, and the Company filed a motion to compel arbitration and requested to stay the PAGA claim. In June 2016, the court granted the motion and compelled arbitration of the individual claims. The court retained jurisdiction of the PAGA claim and stayed that claim pending the outcome of arbitration. In October 2016, the court granted the plaintiffs' motion for reconsideration of the arbitration decision based on a recent decision by the Ninth Circuit Court of Appeals in Morris v. Ernst & Young, LLP, and reversed its order compelling arbitration. The Company appealed. The U.S. Supreme Court granted certiorari of the Morris decision, and the Ninth Circuit appeal is currently stayed pending the Supreme Court's decision. In June 2017, the district court stayed the entire case pending the Supreme Court’s decision in Morris. On June 1, 2016, a PAGA representative action was filed against The Neiman Marcus Group, Inc. in the same court as Attia by Xuan Hien Nguyen pleading only PAGA claims and asserting the same factual allegations as the plaintiffs in Attia. The Company filed a motion to dismiss or to stay the case. In September 2016, the court granted the Company's motion and stayed the Nguyen case in light of Attia. At a status conference on September 5, 2017, the court maintained the stay and set a further status conference for November 8, 2017. On July 28, 2016, former employee Milca Connolly also filed a representative action alleging only PAGA claims against The Neiman Marcus Group raising substantially identical claims to those raised in both Attia and Nguyen. The Company filed a motion to dismiss or stay the case in light of Attia and Nguyen. In November 2016, the court granted the Company's motion to stay the case. At a status conference on September 5, 2017, the court maintained the stay and set a further status conference for November 8, 2017. On September 27, 2016, a dormant Illinois putative class action lawsuit, Catherine Ohle v. Neiman Marcus Group, originally filed in the Circuit Court of Cook County, was revived by an Illinois appeals court when it reversed a June 2014 trial court's order granting summary judgment to the Company and dismissing the matter in its entirety. In Ohle, the plaintiff alleged that the Company’s prior practice of conducting pre-employment credit checks of sales associates and considering credit history as a factor in its hiring decisions violated the Illinois Employee Credit Privacy Act. The appellate court reversed, holding that no exemption applied. The Company appealed the decision to the Illinois Supreme Court, and review was denied on January 25, 2017. The case was returned to the trial court for further proceedings. On September 19, 2017, the court granted final approval of a class settlement. In addition, we are currently involved in various other legal actions and proceedings that arose in the ordinary course of business. With respect to the matters described above as well as all other current outstanding litigation involving us, we believe that any liability arising as a result of such litigation will not have a material adverse effect on our financial condition, results of operations or cash flows. Cyber-Attack Class Actions Litigation. In January 2014, three class actions relating to a cyber-attack on our computer systems in 2013 (the "Cyber-Attack") were filed and later voluntarily dismissed by the plaintiffs between February and April 2014. The plaintiffs had alleged negligence and other claims in connection with their purchases by payment cards and sought monetary and injunctive relief. Three additional putative class actions relating to the Cyber-Attack were filed in March and April 2014, also alleging negligence and other claims in connection with plaintiffs’ purchases by payment cards. Two of the cases were voluntarily dismissed. The third case, Hilary Remijas v. The Neiman Marcus Group, LLC, was filed on March 12, 2014 in the U.S. District Court for the Northern District of Illinois. On June 2, 2014, an amended complaint in the Remijas case was filed, which added three plaintiffs (Debbie Farnoush and Joanne Kao, California residents; and Melissa Frank, a New York resident) and asserted claims for negligence, implied contract, unjust enrichment, violation of various consumer protection statutes, invasion of privacy and violation of state data breach laws. The Company moved to dismiss the Remijas amended complaint, and the court granted the Company's motion on the grounds that the plaintiffs lacked standing due to their failure to demonstrate an actionable injury. Plaintiffs appealed the district court's order dismissing the case to the Seventh Circuit Court of Appeals, and the Seventh Circuit Court of Appeals reversed the district court's ruling, remanding the case back to the district court. The Company filed a petition for rehearing en banc, which the Seventh Circuit Court of Appeals denied. The Company filed a motion for dismissal on other grounds, which the court denied. The parties jointly requested, and the court granted, an extension of time for filing a responsive pleading, which was due on December 28, 2016. On February 9, 2017, the court denied the parties' request for another extension of time, dismissed the case without prejudice, and stated that plaintiffs could file a motion to reinstate. On March 8, 2017, plaintiffs filed a motion to reinstate, which the court granted on March 16, 2017. On March 17, 2017, plaintiffs filed a motion seeking preliminary approval of a class action settlement resolving this action, which the court granted on June 21, 2017. The court set for October 26, 2017 as the date for a fairness hearing and consideration of final approval of the class action settlement. In September 2017, purported settlement class members filed two objections asking the court to deny final approval of the proposed settlement. The plaintiffs’ and the Company’s responses to the objections are due on October 19, 2017. In addition to class actions litigation, payment card companies and associations may require us to reimburse them for unauthorized card charges and costs to replace cards and may also impose fines or penalties in connection with the security incident, and enforcement authorities may also impose fines or other remedies against us. We have also incurred other costs associated with this security incident, including legal fees, investigative fees, costs of communications with customers and credit monitoring services provided to our customers. At this point, we are unable to predict the developments in, outcome of, and economic and other consequences of pending or future litigation or regulatory investigations related to, and other costs associated with, this matter. We will continue to evaluate these matters based on subsequent events, new information and future circumstances. Other. We had $1.8 million of irrevocable letters of credit and $3.4 million in surety bonds outstanding at July 29, 2017, relating primarily to merchandise imports and state sales tax and utility requirements. |
ACCUMULATED OTHER COMPREHENSIVE LOSS |
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Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | ACCUMULATED OTHER COMPREHENSIVE LOSS The following table summarizes the changes in accumulated other comprehensive loss by component (amounts are recorded net of related income taxes):
The amounts reclassified from accumulated other comprehensive loss are recorded within interest expense on the Consolidated Statements of Operations. |
STOCK-BASED AWARDS |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based Awards | STOCK-BASED AWARDS Incentive Plans. Parent established various incentive plans pursuant to which eligible employees, consultants and non-employee directors are eligible to receive stock-based awards. Under the incentive plans, Parent is authorized to grant stock options, restricted stock and other types of awards that are valued in whole or in part by reference to, or are payable or otherwise based on, the shares of common stock of Parent. Charges with respect to options issued by Parent pursuant to the incentive plans are reflected by the Company in the preparation of our Consolidated Financial Statements. Co-Invest Options. In connection with the Acquisition, certain executive officers of the Company rolled over a portion of the amounts otherwise payable in settlement of their pre-Acquisition stock options into stock options of Parent representing options to purchase a total of 56,979 shares of common stock of Parent (the "Co-Invest Options"). The number of Co-Invest Options issued upon conversion of pre-Acquisition stock options was equal to the product of (a) the number of shares subject to the applicable pre-Acquisition stock options multiplied by (b) the ratio of the per share merger consideration over the fair market value of a share of Parent, which was approximately 3.1x (the "Exchange Ratio"). The exercise price of each pre-Acquisition stock option was adjusted by dividing the original exercise price of the pre-Acquisition stock option by the Exchange Ratio. Following the conversion, the exercise prices of the Co-Invest Options range from $180 to $644 per share. As of the date of the Acquisition, the aggregate intrinsic value of the Co-Invest Options equaled the aggregate intrinsic value of the rolled over pre-Acquisition stock options. The Co-Invest Options are fully vested and are exercisable at any time prior to the applicable expiration dates related to the original grant of the pre-Acquisition options. The Co-Invest Options contain sale and repurchase provisions. On September 8, 2017, the Compensation Committee approved grants of non-qualified Co-Invest Options (the “New Co-Invest Options”) to certain continuing employees who previously held Co-Invest Options. The New Co-Invest Options have the effect of replacing the previous Co-Invest Options held by those employees, which were cancelled, and extending the expiration date to the tenth anniversary of the grant date. All other terms of the New Co-Invest Options remain unchanged from the terms of the cancelled Co-Invest Options. Non-Qualified Stock Options. Pursuant to the terms of the incentive plans, Parent granted time-vested and performance-vested non-qualified stock options to certain executive officers, employees and non-employee directors of the Company. These non-qualified stock options will expire no later than the tenth anniversary of the grant date. Accounting for Stock Options. Prior to an initial public offering ("IPO"), in the event the optionee ceases to be an employee of the Company, Parent generally has the right to repurchase shares issued upon exercise of vested stock options at fair market value and shares underlying vested unexercised stock options for the difference between the fair market value of the underlying share on the date of such optionee's termination of employment and the exercise price. However, other than with respect to the Co-Invest Options, if the optionee voluntarily leaves the Company without good reason (as defined in the incentive plans) or is terminated for cause, the repurchase price is the lesser of the exercise price of such options or the fair value of such awards at the employee termination date. For certain optionees, in the event of the retirement of the optionee, the repurchase price is the fair value at the retirement date. Parent's repurchase rights expire upon completion of an IPO, including with respect to the Co-Invest Options. We currently account for stock options issued to certain optionees who will become retirement eligible prior to the expiration of their stock options ("Retirement Eligible Optionees") as variable awards using the liability method as these optionees could receive a cash settlement of their awards at the time of retirement should Parent exercise its repurchase rights with respect to such shares. Under the liability method, we recognize the estimated liability for option awards held by Retirement Eligible Optionees over the vesting periods of such awards. In periods in which the estimated fair value of our equity increases, we increase our stock compensation liability. Conversely, in periods in which the estimated fair value of our equity decreases, we reduce our stock compensation liability. These increases/decreases are recorded as stock compensation expense and are included in selling, general and administrative expenses. With respect to time-vested options held by non-Retirement Eligible Optionees, such options are effectively forfeited should the optionee voluntarily leave the Company without good reason or be terminated for cause prior to an IPO. As a result, we currently record no expense or liability with respect to such options. With respect to performance-vested options, such options are effectively forfeited should the optionee voluntarily leave the Company without good reason or be terminated for cause prior to achievement of the performance condition. As a result, we currently record no expense or liability with respect to such options. A summary of our liabilities for our variable stock option awards is as follows:
Outstanding Stock Options. A summary of stock option activity is as follows:
Grant Date Fair Value of Stock Options. At the date of grant, the stock option exercise price equals or exceeds the fair market value of Parent's common stock. Because Parent is privately held and there is no public market for its common stock, the fair market value of Parent's common stock is determined by the Parent Board or the Compensation Committee, as applicable, at the time option grants are awarded (Level 3 determination of fair value). In determining the fair market value of Parent's common stock, the Parent Board or the Compensation Committee, as applicable, considers such factors as any recent transactions involving Parent's common stock, the Company’s actual and projected financial results, the principal amount of the Company’s indebtedness, valuations of the Company performed by third parties and other factors it believes are material to the valuation process. We use the Black-Scholes option-pricing model to determine the fair value of our options as of the date of grant. We used the following assumptions to estimate the fair value for stock options at the grant date:
Expected volatility is based on estimates of implied volatility of our peer group. In September 2016, the Compensation Committee determined that the exercise prices of certain time-vested and performance-vested stock options were higher than the current fair market value of Parent's common stock. In order to enhance the retentive value of these options, the Compensation Committee approved (1) a repricing of 18,225 time-vested and performance-vested stock options to an exercise price of $1,000 per share and (2) modifications to the performance metrics applicable to all performance-vested stock options. Restricted Stock. On October 27, 2016, Parent approved grants of 26,954 restricted shares of common stock of Parent to certain executive officers and management employees. Subject to continued employment, shares of restricted stock will vest over three or four years in equal increments on each anniversary of December 1, 2016. Each year beginning in calendar 2017, subject to certain limitations, each recipient will have the ability to require Parent to acquire his or her vested shares (the "put right") during the 14-day period following the release of the Company's earnings in respect of its first fiscal quarter (such period, the "put period") for a purchase price equal to the fair market value of Parent's common stock at the beginning of the put period. Except as described below with respect to our Chief Executive Officer, a recipient will forfeit all unvested shares of restricted stock and may not exercise the put right with respect to any vested shares following the termination of his or her employment for any reason. Following a voluntary departure without good reason or a termination for cause, we have the right to repurchase any vested shares of restricted stock at par value ($0.001 per share). If our Chief Executive Officer's employment is terminated by Parent without cause, by her for good reason (as defined in her employment agreement) or by reason of the non-renewal of her employment agreement, (i) prior to a change in control of Parent, all unvested shares of restricted stock that would have vested in the 12-month period following the date of such termination of employment will accelerate and vest, and (ii) following a change in control but before an IPO, all unvested shares of restricted stock will accelerate and vest. Upon such termination, our Chief Executive Officer will have the ability to exercise the put right with respect to vested shares in the first put period following termination of employment. At July 29, 2017, the recorded liability with respect to unvested restricted shares was $1.2 million at July 29, 2017. Outstanding Restricted Shares. A summary of restricted share activity is as follows:
Stock Compensation Expense (Benefit). The following table summarizes our stock-based compensation expense (benefit):
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues | REVENUES The following table represents our revenues by merchandise category as a percentage of revenues:
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OTHER EXPENSES |
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Other Expenses | OTHER EXPENSES Other expenses consists of the following components:
We incurred professional fees and other costs aggregating $21.3 million in fiscal year 2017, $24.3 million in fiscal year 2016 and $11.6 million in fiscal year 2015 in connection with review of our resources and organizational processes ("Organizing for Growth"), implementation of our integrated merchandising and distribution system ("NMG One") and the evaluation of potential strategic alternatives. In connection with Organizing for Growth, we eliminated approximately 315 positions in fiscal year 2017 and approximately 500 positions in fiscal year 2016 across our stores, divisions and facilities. We incurred severance costs of $7.2 million in fiscal year 2017 and $10.2 million in fiscal year 2016. In October 2014, we acquired MyTheresa, a luxury retailer headquartered in Munich, Germany. Acquisition costs consisted primarily of professional fees as well as adjustments of our earn-out obligations to estimated fair value at each reporting date. The final earn-out obligation was paid in March 2017. We discovered in January 2014 that malicious software was clandestinely installed on our computer systems. In fiscal years 2017, 2016 and 2015, we incurred investigative, legal and other expenses in connection with the Cyber-Attack. We expect to incur ongoing costs related to the Cyber-Attack for the foreseeable future. Such expenses are not currently estimable but could be material to our future results of operations. In the third quarter of fiscal year 2016, we recorded a $5.6 million net gain related to the closure and relocation of our regional service center in New York. |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION (with respect to NMG's obligations under the Senior Secured Credit Facilities, Cash Pay Notes and PIK Toggle Notes) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATING FINANCIAL INFORMATION (with respect to NMG's obligations under the Senior Secured Term Loan Facility and Asset-Based Revolving Credit Facility) | CONDENSED CONSOLIDATING FINANCIAL INFORMATION (with respect to NMG's obligations under the Senior Secured Credit Facilities, Cash Pay Notes and PIK Toggle Notes) All of NMG’s obligations under the Senior Secured Credit Facilities are guaranteed by Holdings and our current and future direct and indirect wholly owned subsidiaries, subject to exceptions as more fully described in Note 8. All of NMG's obligations under the Cash Pay Notes and the PIK Toggle Notes are guaranteed by the same entities that guarantee the Senior Secured Credit Facilities, other than Holdings. Currently, the Company’s non-guarantor subsidiaries under the Senior Secured Credit Facilities, Cash Pay Notes and PIK Toggle Notes consist principally of (i) NMG Germany GmbH, through which we conduct the operations of MyTheresa, (ii) NMG International LLC, a holding company with respect to our foreign operations and (iii) Nancy Holdings LLC, which holds legal title to certain real property used by us in conducting our operations and described below under "— Results of Operations and Financial Condition of Unrestricted Subsidiaries". The non-guarantor subsidiary Nancy Holdings LLC had no assets or operations prior to March 10, 2017. The following condensed consolidating financial information represents the financial information of the Company and its non-guarantor subsidiaries under the Senior Secured Credit Facilities, Cash Pay Notes and PIK Toggle Notes prepared on the equity basis of accounting. The information is presented in accordance with the requirements of Rule 3-10 under the SEC’s Regulation S-X. The financial information may not necessarily be indicative of results of operations, cash flows or financial position had the non-guarantor subsidiaries operated as independent entities.
Results of Operations and Financial Condition of Unrestricted Subsidiaries. On March 10, 2017, the Board of Directors of Parent designated certain of our subsidiaries as “unrestricted subsidiaries” for purposes of the indenture governing the Cash Pay Notes and the indenture governing the PIK Toggle Notes. These subsidiaries were previously or simultaneously designated as "unrestricted subsidiaries" under the Asset-Based Revolving Credit Facility and the Senior Secured Term Loan Facility. At July 29, 2017, the unrestricted subsidiaries consisted primarily of (i) NMG Germany GmbH, through which we conduct the operations of MyTheresa and (ii) Nancy Holdings LLC, which holds legal title to certain real property located in McLean, Virginia, San Antonio, Texas and Longview, Texas used by us in conducting our operations. Pursuant to the terms of the indentures governing the Cash Pay Notes and the PIK Toggle Notes, we are presenting the following financial information with respect to the unrestricted subsidiaries separate from the Company and its restricted subsidiaries. The unrestricted subsidiary Nancy Holdings LLC had no assets or operations prior to March 10, 2017. The financial information of NMG Germany GmbH as of July 30, 2016 and as of August 1, 2015 was substantially the same as the financial information presented for “Non-Guarantor Subsidiaries” for such periods included in the tables above in this Note 17. The difference in net earnings of the unrestricted subsidiaries for the fiscal year ended July 29, 2017 compared to the net earnings of the non-guarantor subsidiaries for such periods, as presented in the tables above in this Note 17, consisted primarily of a net interest income of approximately $1.4 million per fiscal quarter associated with an intercompany note payable by the MyTheresa unrestricted subsidiaries and held by NMG International LLC, which is a non-guarantor restricted subsidiary. This information may not necessarily be indicative of the financial condition and results of operations of the unrestricted subsidiaries had they operated as independent entities during the periods presented. Information with respect to the unrestricted subsidiaries with respect to the Cash Pay Notes and PIK Toggle Notes is as follows:
CONDENSED CONSOLIDATING FINANCIAL INFORMATION (with respect to NMG's obligations under the 2028 Debentures) All of NMG’s obligations under the 2028 Debentures are guaranteed by the Company. The guarantee by the Company is full and unconditional and is subject to automatic release if the requirements for legal defeasance or covenant defeasance of the 2028 Debentures are satisfied, or if NMG’s obligations under the indenture governing the 2028 Debentures are discharged. Currently, the Company’s non-guarantor subsidiaries under the 2028 Debentures consist principally of (i) Bergdorf Goodman, Inc., through which we conduct the operations of our Bergdorf Goodman stores; (ii) NM Nevada Trust, which holds legal title to certain real property and intangible assets used by NMG in conducting its operations; (iii) NMG Germany GmbH, through which we conduct the operations of MyTheresa; (iv) NMG International LLC, a holding company with respect to our foreign operations; and (v) Nancy Holdings LLC, which holds legal title to certain real property used by NMG in conducting its operations and described in Note 17 under "— Results of Operations and Financial Condition of Unrestricted Subsidiaries". The non-guarantor subsidiary Nancy Holdings LLC had no assets or operations prior to March 10, 2017. The following condensed consolidating financial information represents the financial information of the Company and its non-guarantor subsidiaries under the 2028 Debentures, prepared on the equity basis of accounting. The information is presented in accordance with the requirements of Rule 3-10 under the SEC’s Regulation S-X. The financial information may not necessarily be indicative of results of operations, cash flows or financial position had the non-guarantor subsidiaries operated as independent entities.
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CONDENSED CONSOLIDATING FINANCIAL INFORMATION (with respect to NMG's obligations under the 2028 Debentures) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidating Financial Information (with respect to NMG's obligations under the 2028 Debentures) | CONDENSED CONSOLIDATING FINANCIAL INFORMATION (with respect to NMG's obligations under the Senior Secured Credit Facilities, Cash Pay Notes and PIK Toggle Notes) All of NMG’s obligations under the Senior Secured Credit Facilities are guaranteed by Holdings and our current and future direct and indirect wholly owned subsidiaries, subject to exceptions as more fully described in Note 8. All of NMG's obligations under the Cash Pay Notes and the PIK Toggle Notes are guaranteed by the same entities that guarantee the Senior Secured Credit Facilities, other than Holdings. Currently, the Company’s non-guarantor subsidiaries under the Senior Secured Credit Facilities, Cash Pay Notes and PIK Toggle Notes consist principally of (i) NMG Germany GmbH, through which we conduct the operations of MyTheresa, (ii) NMG International LLC, a holding company with respect to our foreign operations and (iii) Nancy Holdings LLC, which holds legal title to certain real property used by us in conducting our operations and described below under "— Results of Operations and Financial Condition of Unrestricted Subsidiaries". The non-guarantor subsidiary Nancy Holdings LLC had no assets or operations prior to March 10, 2017. The following condensed consolidating financial information represents the financial information of the Company and its non-guarantor subsidiaries under the Senior Secured Credit Facilities, Cash Pay Notes and PIK Toggle Notes prepared on the equity basis of accounting. The information is presented in accordance with the requirements of Rule 3-10 under the SEC’s Regulation S-X. The financial information may not necessarily be indicative of results of operations, cash flows or financial position had the non-guarantor subsidiaries operated as independent entities.
Results of Operations and Financial Condition of Unrestricted Subsidiaries. On March 10, 2017, the Board of Directors of Parent designated certain of our subsidiaries as “unrestricted subsidiaries” for purposes of the indenture governing the Cash Pay Notes and the indenture governing the PIK Toggle Notes. These subsidiaries were previously or simultaneously designated as "unrestricted subsidiaries" under the Asset-Based Revolving Credit Facility and the Senior Secured Term Loan Facility. At July 29, 2017, the unrestricted subsidiaries consisted primarily of (i) NMG Germany GmbH, through which we conduct the operations of MyTheresa and (ii) Nancy Holdings LLC, which holds legal title to certain real property located in McLean, Virginia, San Antonio, Texas and Longview, Texas used by us in conducting our operations. Pursuant to the terms of the indentures governing the Cash Pay Notes and the PIK Toggle Notes, we are presenting the following financial information with respect to the unrestricted subsidiaries separate from the Company and its restricted subsidiaries. The unrestricted subsidiary Nancy Holdings LLC had no assets or operations prior to March 10, 2017. The financial information of NMG Germany GmbH as of July 30, 2016 and as of August 1, 2015 was substantially the same as the financial information presented for “Non-Guarantor Subsidiaries” for such periods included in the tables above in this Note 17. The difference in net earnings of the unrestricted subsidiaries for the fiscal year ended July 29, 2017 compared to the net earnings of the non-guarantor subsidiaries for such periods, as presented in the tables above in this Note 17, consisted primarily of a net interest income of approximately $1.4 million per fiscal quarter associated with an intercompany note payable by the MyTheresa unrestricted subsidiaries and held by NMG International LLC, which is a non-guarantor restricted subsidiary. This information may not necessarily be indicative of the financial condition and results of operations of the unrestricted subsidiaries had they operated as independent entities during the periods presented. Information with respect to the unrestricted subsidiaries with respect to the Cash Pay Notes and PIK Toggle Notes is as follows:
CONDENSED CONSOLIDATING FINANCIAL INFORMATION (with respect to NMG's obligations under the 2028 Debentures) All of NMG’s obligations under the 2028 Debentures are guaranteed by the Company. The guarantee by the Company is full and unconditional and is subject to automatic release if the requirements for legal defeasance or covenant defeasance of the 2028 Debentures are satisfied, or if NMG’s obligations under the indenture governing the 2028 Debentures are discharged. Currently, the Company’s non-guarantor subsidiaries under the 2028 Debentures consist principally of (i) Bergdorf Goodman, Inc., through which we conduct the operations of our Bergdorf Goodman stores; (ii) NM Nevada Trust, which holds legal title to certain real property and intangible assets used by NMG in conducting its operations; (iii) NMG Germany GmbH, through which we conduct the operations of MyTheresa; (iv) NMG International LLC, a holding company with respect to our foreign operations; and (v) Nancy Holdings LLC, which holds legal title to certain real property used by NMG in conducting its operations and described in Note 17 under "— Results of Operations and Financial Condition of Unrestricted Subsidiaries". The non-guarantor subsidiary Nancy Holdings LLC had no assets or operations prior to March 10, 2017. The following condensed consolidating financial information represents the financial information of the Company and its non-guarantor subsidiaries under the 2028 Debentures, prepared on the equity basis of accounting. The information is presented in accordance with the requirements of Rule 3-10 under the SEC’s Regulation S-X. The financial information may not necessarily be indicative of results of operations, cash flows or financial position had the non-guarantor subsidiaries operated as independent entities.
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QUARTERLY FINANCIAL INFORMATION (UNAUDITED) |
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Quarterly Financial Information Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information (Unaudited) | QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
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SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS AND RESERVES |
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Valuation and Qualifying Accounts [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule II Valuation and Qualifying Accounts and Reserves | NEIMAN MARCUS GROUP LTD LLC VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (in thousands) Three years ended July 29, 2017
(A) Reserves for self-insurance relate to our medical, dental, worker's compensation and general liability plans. (B) Gross margin on actual sales returns, net of commissions. (C) Claims and expenses paid, net of employee contributions. |
Subsequent Events |
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Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS In September 2017, the Compensation Committee determined that the exercise prices of certain time-vested non-qualified stock options were higher than the current fair market value of Parent's common stock. Additionally, the Compensation Committee determined that the remaining contractual life of certain Co-Invest Options was not sufficient to adequately incentivize the option holders. On September 8, 2017, the Compensation Committee approved modifications to certain of these stock-based awards in order to enhance the retentive value of these options. [TO BE CONFORMED TO CD&A ONCE UPDATED THERE] During fiscal year 2017, we began a process to assess our Last Call footprint and closed four of our Last Call stores. On September 12, 2017, we announced that we will be closing ten additional Last Call stores in fiscal year 2018 in order to optimize our Last Call store portfolio. In connection with the store closings, we expect to incur charges primarily related to lease termination obligation expenses, severance and transition costs as the store closings are executed in fiscal year 2018. These store closings will eliminate approximately 240 positions. We will continue to evaluate our off-price business and optimize the operations of Last Call in the future. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||
Basis of Presentation | BASIS OF PRESENTATION Neiman Marcus Group LTD LLC (the "Company") is a luxury omni-channel retailer conducting store and online operations principally under the Neiman Marcus, Bergdorf Goodman, Last Call and MyTheresa brand names. References to “we,” “our” and “us” are used to refer to the Company or collectively to the Company and its subsidiaries, as appropriate to the context. The Company is a subsidiary of Mariposa Intermediate Holdings LLC ("Holdings"), which in turn is a subsidiary of Neiman Marcus Group, Inc., a Delaware corporation ("Parent"). Parent is owned by entities affiliated with Ares Management, L.P. and Canada Pension Plan Investment Board (together, the "Sponsors") and certain co-investors. The Sponsors acquired the Company on October 25, 2013 (the "Acquisition"). The Company’s operations are conducted through its direct wholly owned subsidiary, The Neiman Marcus Group LLC ("NMG"). In October 2014, we acquired MyTheresa, a luxury retailer headquartered in Munich, Germany. The operations of MyTheresa are conducted primarily through the mytheresa.com website. The accompanying Consolidated Financial Statements set forth financial information of the Company and its subsidiaries on a consolidated basis. All significant intercompany accounts and transactions have been eliminated. Our fiscal year ends on the Saturday closest to July 31. Like many other retailers, we follow a 4-5-4 reporting calendar, which means that each fiscal quarter consists of thirteen weeks divided into periods of four weeks, five weeks and four weeks. All references to (i) fiscal year 2017 relate to the fifty-two weeks ended July 29, 2017, (ii) fiscal year 2016 relate to the fifty-two weeks ended July 30, 2016 and (iii) fiscal year 2015 relate to the fifty-two weeks ended August 1, 2015. |
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Estimates and Critical Accounting Policies | ESTIMATES AND CRITICAL ACCOUNTING POLICIES We are required to make estimates and assumptions about future events in preparing our financial statements in conformity with generally accepted accounting principles ("GAAP"). These estimates and assumptions affect the amounts of assets, liabilities, revenues and expenses and the disclosure of gain and loss contingencies at the date of the accompanying Consolidated Financial Statements. While we believe that our past estimates and assumptions have been materially accurate, the amounts currently estimated are subject to change if different assumptions as to the outcome of future events were made. We evaluate our estimates and assumptions on an ongoing basis and predicate those estimates and assumptions on historical experience and on various other factors that we believe are reasonable under the circumstances. We make adjustments to our estimates and assumptions when facts and circumstances dictate. Since future events and their effects cannot be determined with absolute certainty, actual results may differ from the estimates and assumptions used in preparing the accompanying Consolidated Financial Statements. |
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Purchase Accounting | Purchase Accounting. We account for acquisitions in accordance with the provisions of Accounting Standards Codification ("ASC") Topic 805, Business Combinations, whereby the purchase price paid to effect the acquisitions was allocated to state the acquired assets and liabilities at fair value. The Acquisition and the allocation of the purchase price were recorded for accounting purposes as of November 2, 2013, the end of our first quarter of fiscal year 2014. The MyTheresa acquisition and the allocation of the purchase price were recorded for accounting purposes as of November 1, 2014, the end of our first quarter of fiscal year 2015. In connection with the allocations of the purchase price, we made estimates of the fair values of our long-lived and intangible assets based upon assumptions related to the future cash flows, discount rates and asset lives utilizing currently available information, and in some cases, valuation results from independent valuation specialists, which resulted in increases in the carrying value of our property and equipment and inventory, the revaluation of intangible assets for our tradenames, customer lists and favorable lease commitments, the revaluation of our long-term benefit plan obligations and, with respect to the MyTheresa acquisition, the recording of our contingent earn-out obligation at estimated fair value, among other things. |
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Fair Value Measurements | Fair Value Measurements. Certain of our assets and liabilities are required to be measured at fair value on a recurring basis. Fair value is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. Assets and liabilities are classified using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value as follows:
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Cash and Cash Equivalents | Cash and Cash Equivalents. Cash and cash equivalents primarily consist of cash on hand in our stores, deposits with banks and overnight investments with banks and financial institutions. Cash equivalents are stated at cost, which approximates fair value. Our cash management system provides for the reimbursement of all major bank disbursement accounts on a daily basis. |
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Merchandise Inventories and Cost of Goods Sold | Merchandise Inventories and Cost of Goods Sold. We utilize the retail inventory method of accounting. Under the retail inventory method, the valuation of inventories at cost and the resulting gross margins are determined by applying a calculated cost-to-retail ratio, for various groupings of similar items, to the retail value of our inventories. The cost of the inventory reflected in the Consolidated Financial Statements is decreased by charges to cost of goods sold at average cost and the retail value of the inventory is lowered through the use of markdowns. Earnings are negatively impacted when merchandise is marked down. As we adjust the retail value of our inventories through the use of markdowns to reflect market conditions, our merchandise inventories are stated at the lower of cost or market. The areas requiring significant management judgment related to the valuation of our inventories include (i) setting the original retail value for the merchandise held for sale, (ii) recognizing merchandise for which the customer’s perception of value has declined and appropriately marking the retail value of the merchandise down to the perceived value and (iii) estimating the shrinkage that has occurred between physical inventory counts. These judgments and estimates, coupled with the averaging processes within the retail method, can, under certain circumstances, produce varying financial results. Factors that can lead to different financial results include (i) determination of original retail values for merchandise held for sale, (ii) identification of declines in perceived value of inventories and processing the appropriate retail value markdowns and (iii) overly optimistic or conservative estimation of shrinkage. In prior years, we have not made material changes to our estimates of shrinkage or markdown requirements on inventories held as of the end of our fiscal years. Consistent with industry business practice, we receive allowances from certain of our vendors in support of the merchandise we purchase for resale. Certain allowances are received to reimburse us for markdowns taken or to support the gross margins that we earn in connection with the sales of the vendor’s merchandise. These allowances result in an increase to gross margin when we earn the allowances and they are approved by the vendor. Other allowances we receive represent reductions to the amounts we pay to acquire the merchandise. These allowances reduce the cost of the acquired merchandise and are recognized at the time the goods are sold. The amounts of vendor allowances we receive fluctuate based partially on the level of markdowns taken and did not have a significant impact on the year-over-year change in gross margin during fiscal years 2017, 2016 or 2015. We received vendor allowances of $83.6 million, or 1.8% of revenues, in fiscal year 2017, $100.8 million, or 2.0% of revenues, in fiscal year 2016 and $94.8 million, or 1.9% of revenues, in fiscal year 2015. We obtain certain merchandise, primarily precious jewelry, on a consignment basis to expand our product assortment. Consignment merchandise held by us with a cost basis of $393.1 million at July 29, 2017 and $416.5 million at July 30, 2016 is not reflected in our Consolidated Balance Sheets. Cost of goods sold also includes delivery charges we pay to third party carriers and other costs related to the fulfillment of customer orders not delivered at the point-of-sale. |
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Long-lived Assets | Long-lived Assets. Property and equipment are stated at cost less accumulated depreciation. In connection with the Acquisition, the cost basis of the acquired property and equipment was adjusted to its estimated fair value. For financial reporting purposes, we compute depreciation principally using the straight-line method over the estimated useful lives of the assets. Buildings and improvements are depreciated over five to 30 years while fixtures and equipment are depreciated over three to 15 years. Leasehold improvements are amortized over the shorter of the asset life or the lease term (which may include renewal periods when exercise of the renewal option is at our discretion and exercise of the renewal option is considered reasonably assured). Costs incurred for the development of internal computer software are capitalized and amortized using the straight-line method over three to ten years. We assess the recoverability of the carrying values of our store assets, consisting of property and equipment, customer lists and favorable lease commitments, annually and upon the occurrence of certain events. The recoverability assessment with respect to our long-lived assets is performed at the store level. This assessment is based upon the comparison of the undiscounted cash flows anticipated to be generated from the store to the net carrying value of the store assets. To the extent the undiscounted store-level cash flows are not sufficient to recover the net carrying value of the store assets, the assets are impaired and written down to their estimated fair value based upon discounted future cash flows. Based upon the review of our store-level assets, we identified certain property and equipment, other definite-lived intangible assets and favorable lease commitments to be impaired by $4.8 million in fiscal year 2017 and $38.1 million in fiscal year 2016. The recoverability assessment related to store-level assets requires judgments and estimates of future revenues, gross margin rates and store expenses. We base these estimates upon our past and expected future performance. We believe our estimates are appropriate in light of current and future market conditions and the best information available at the assessment date. However, future impairment charges could be required if we do not achieve our current revenue or cash flow projections. |
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Intangible Assets Subject to Amortization | Intangible Assets Subject to Amortization. Favorable lease commitments are amortized straight-line over the remaining lives of the leases, ranging from four to 55 years (weighted average life of 30 years) from the Acquisition date. Our definite-lived intangible assets, which primarily consist of customer lists, are amortized using accelerated methods which reflect the pattern in which we receive the economic benefit of the asset, currently estimated at six to 16 years (weighted average life of 13 years) from the respective acquisition dates. |
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Indefinite-lived Intangible Assets and Goodwill | Indefinite-lived Intangible Assets and Goodwill. Indefinite-lived intangible assets, such as our Neiman Marcus, Bergdorf Goodman and MyTheresa tradenames and goodwill, are not subject to amortization. Rather, we assess the recoverability of indefinite-lived intangible assets and goodwill in the fourth quarter of each fiscal year and upon the occurrence of certain events. The recoverability assessment with respect to each of the tradenames used in our operations requires us to estimate the fair value of the asset as of the assessment date. Such determination is made using discounted cash flow techniques (Level 3 determination of fair value). Significant inputs to the valuation model include:
If the recorded carrying value of the tradename exceeds its estimated fair value, an impairment charge is recorded to write the tradename down to its estimated fair value. Based upon the review of our tradenames in fiscal years 2017 and 2016, we determined certain of our tradenames were impaired and recorded impairment charges aggregating $309.7 million in fiscal year 2017 and $228.9 million in fiscal year 2016. Pursuant to current accounting guidance related to the testing of goodwill for impairment adopted in the fourth quarter of fiscal year 2017, the assessment of the recoverability of the goodwill associated with our Neiman Marcus, Bergdorf Goodman and MyTheresa reporting units involves the comparison of the estimated enterprise fair value of each of our reporting units to its recorded carrying value. We estimate the enterprise fair value based on discounted cash flow techniques (Level 3 determination of fair value). Significant inputs to the valuation model include:
If the recorded carrying value of a reporting unit exceeds its estimated enterprise fair value, an impairment charge is recorded to goodwill for the amount by which the carrying amount exceeds the reporting unit's fair value. Based upon the review of our recorded goodwill balances, we determined that certain of our goodwill balances were impaired and recorded impairment charges aggregating $196.2 million in fiscal year 2017. Prior to the adoption of the new accounting guidance, our assessment process involved a second step in which we allocated the enterprise fair value to the fair value of the reporting unit's net assets. Any enterprise value in excess of amounts allocated to such net assets represented the implied fair value of goodwill for that reporting unit. If the carrying value of goodwill for a reporting unit exceeded the implied fair value of goodwill, an impairment charge was recorded to write goodwill down to its fair value. The assessment performed in the fourth quarter of fiscal year 2016 was performed utilizing the two-step process. Based on this process, we determined that certain of our goodwill balances were impaired and recorded impairment charges aggregating $199.2 million in fiscal year 2016. The impairment testing process related to our indefinite-lived intangible assets is subject to inherent uncertainties and subjectivity. The use of different assumptions, estimates or judgments with respect to the estimation of the projected future cash flows and the determination of the discount rate used to reduce such projected future cash flows to their net present value could materially increase or decrease any related impairment charge. We believe our estimates are appropriate based upon current and future market conditions and the best information available at the assessment date. However, future impairment charges could be required if we do not achieve our current cash flow, revenue and profitability projections, market royalty rates decrease or the weighted average cost of capital increases. |
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Leases | Leases. We lease a significant portion of our retail stores and office facilities. Stores we own are often subject to ground leases. The terms of our real estate leases, including renewal options, range from ten to 130 years. Most leases provide for fixed monthly minimum rentals or contingent rentals based upon sales in excess of stated amounts and normally require us to pay real estate taxes, insurance, common area maintenance costs and other occupancy costs. For leases that contain predetermined, fixed calculations of minimum rentals, we recognize rent expense on a straight-line basis over the lease term. We recognize contingent rent expenses when it is probable that the sales thresholds will be reached during the year. We typically receive cash allowances from developers related to the construction of our stores. We record these allowances as deferred real estate credits, which we recognize as a reduction of rent expense on a straight-line basis over the lease term beginning with the date we take possession of the leased asset. We received construction allowances aggregating $37.4 million in fiscal year 2017, $38.3 million in fiscal year 2016 and $34.7 million in fiscal year 2015. In some cases, a developer will construct a retail store to our requirements pursuant to a lease agreement between the developer and the Company. Typically, the lease agreement provides for the construction and financing of the store shell by the developer and our subsequent construction and financing of the interior finish-out of the store. Since we are involved in the construction of the leased store in these types of arrangements, we must consider the nature and extent of our involvement during the construction period which, in some cases, may result in us being deemed the accounting owner of the construction project. In such cases, ASC Topic 840, Leases, ("ASC Topic 840") requires that we record an asset for the developer's construction costs related to the store shell (included in construction in progress) and recognize an offsetting deferred financing obligation. Upon completion of the project, we perform a sale-leaseback analysis to determine if these assets and the related financing obligation can be derecognized from our Consolidated Balance Sheets. Capitalized costs incurred by a developer aggregated $96.9 million at July 29, 2017 and $46.1 million at July 30, 2016 related to a retail store under construction. |
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Benefit Plans | Benefit Plans. We sponsor a defined benefit pension plan ("Pension Plan"), an unfunded supplemental executive retirement plan ("SERP Plan") which provides certain employees additional pension benefits and a postretirement plan providing eligible employees limited postretirement health care benefits ("Postretirement Plan"). In calculating our obligations and related expense, we make various assumptions and estimates, after consulting with outside actuaries and advisors. The annual determination of expense involves calculating the estimated total benefits ultimately payable to plan participants. We utilize a spot rate methodology in the estimation of the interest cost component of net periodic benefit cost, which uses the individual spot rates along the yield curve corresponding to benefit payments. The Pension Plan, SERP Plan and Postretirement Plan are valued as of the end of each fiscal year. As of the third quarter of fiscal year 2010, benefits offered to all employees under our Pension Plan and SERP Plan were frozen. Significant assumptions related to the calculation of our obligations include the discount rates used to calculate the present value of benefit obligations to be paid in the future, the expected long-term rate of return on assets held by the Pension Plan and the health care cost trend rate for the Postretirement Plan, as more fully described in Note 11. We review these assumptions annually based upon currently available information, including information provided by our actuaries. Our obligations related to our employee benefit plans are included in other long-term liabilities. |
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Self-insurance and Other Employee Benefit Reserves | Self-insurance and Other Employee Benefit Reserves. We use estimates in the determination of the required accruals for general liability, workers’ compensation and health insurance. We base these estimates upon an examination of historical trends, industry claims experience and independent actuarial estimates. Although we do not expect that we will ultimately pay claims significantly different from our estimates, self-insurance reserves could be affected if future claims experience differs significantly from our historical trends and assumptions. |
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Derivative Financial Instruments | Derivative Financial Instruments. We enter into derivative financial instruments, primarily interest rate swap and cap agreements, to hedge the variability of our cash flows related to a portion of our floating rate indebtedness. The derivative financial instruments are recorded at estimated fair value at each balance sheet date and included in assets or liabilities in our Consolidated Balance Sheets. |
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Revenues | Revenues. Revenues include sales of merchandise and services and delivery and processing revenues related to merchandise sold. Revenues are recognized at the later of the point of sale or the delivery of goods to the customer. Revenues associated with gift cards are recognized at the time of redemption by the customer. Revenues exclude sales taxes collected from our customers. Delivery and processing revenues were $58.7 million in fiscal year 2017, $50.6 million in fiscal year 2016 and $50.1 million in fiscal year 2015. Revenues are reduced when customers return goods previously purchased. We maintain reserves for anticipated sales returns primarily based on our historical trends related to returns by our customers. Our reserves for anticipated sales returns were $47.0 million at July 29, 2017 and $45.3 million at July 30, 2016. |
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Buying and Occupancy Costs | Buying and Occupancy Costs. Our buying costs consist primarily of salaries and expenses incurred by our merchandising and buying operations. Occupancy costs primarily include rent, property taxes and operating costs of our retail, distribution and support facilities and exclude depreciation expense. |
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Selling, General and Administrative Expenses (Excluding Depreciation) | Selling, General and Administrative Expenses (Excluding Depreciation). Selling, general and administrative expenses consist principally of costs related to employee compensation and benefits in the selling and administrative support areas and advertising and marketing costs. We receive allowances from certain merchandise vendors in connection with compensation programs for employees who sell the vendors’ merchandise. These allowances are netted against the related compensation expenses that we incur. Amounts received from vendors related to compensation programs were $62.4 million, or 1.3% of revenues, in fiscal year 2017, $70.3 million, or 1.4% of revenues, in fiscal year 2016 and $76.4 million, or 1.5% of revenues, in fiscal year 2015. Consistent with industry practice, we receive advertising allowances from certain of our merchandise vendors. Substantially all the advertising allowances we receive represent reimbursements of direct, specific and incremental costs that we incur to promote the vendor’s merchandise in connection with our various advertising programs, primarily catalogs and other print media and digital media. Advertising allowances fluctuate based on the level of advertising expenses incurred and are recorded as a reduction of our advertising costs when earned. Advertising allowances were approximately $50.1 million, or 1.1% of revenues, in fiscal year 2017, $54.8 million, or 1.1% of revenues, in fiscal year 2016 and $55.0 million, or 1.1% of revenues, in fiscal year 2015. We incur costs to advertise and promote the merchandise assortment offered through our store and online operations. We expense advertising costs for print media costs and promotional materials mailed to our customers at the time of mailing to the customer. We amortize the costs of print catalogs during the periods we expect to generate revenues from such catalogs, generally three months. We expense the costs incurred to produce the photographic content on our websites, as well as website design and web marketing costs, as incurred. |
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Stock Compensation | Stock Compensation. At the date of grant, the stock option exercise price equals or exceeds the fair market value of Parent's common stock. Because Parent is privately held and there is no public market for its common stock, the fair market value of Parent's common stock is determined by the Board of Directors of Parent (the "Parent Board") or the Compensation Committee, as applicable, at the time option grants are awarded. The estimate of the fair market value of Parent's common stock utilizes both discounted cash flow techniques and the review of market data and involves assumptions regarding a number of complex and subjective variables. Significant inputs to the common stock valuation model include:
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Income from Credit Card Program | Income from Credit Card Program. We maintain a proprietary credit card program through which credit is extended to customers and have a related marketing and servicing alliance with affiliates of Capital One Financial Corporation ("Capital One"). Pursuant to our agreement with Capital One (the "Program Agreement"), Capital One currently offers credit cards and non-card payment plans under both the "Neiman Marcus" and "Bergdorf Goodman" brand names. Effective July 1, 2013, we amended and extended the Program Agreement to July 2020 (renewable thereafter for three-year terms), subject to early termination provisions. We receive payments from Capital One based on sales transacted on our proprietary credit cards. These payments are based on the profitability of the credit card portfolio as determined under the Program Agreement and are impacted by a number of factors including credit losses incurred and our allocable share of the profits generated by the credit card portfolio, which in turn may be impacted by credit ratings as determined by various rating agencies. In addition, we receive payments from Capital One for marketing and servicing activities we provide to Capital One. We recognize income from our credit card program when earned. |
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Gift Cards | Gift Cards. The gift cards sold to our customers have no stated expiration dates and, in some cases, are subject to actual and/or potential escheatment rights in various of the jurisdictions in which we operate. |
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Loyalty Programs | Loyalty Program. We maintain a customer loyalty program in which customers earn points for qualifying purchases. Upon reaching specified levels, points are redeemed for awards, primarily gift cards. The estimates of the costs associated with the loyalty program require us to make assumptions related to customer purchasing levels and redemption rates. At the time the qualifying sales giving rise to the loyalty program points are made, we defer the portion of the revenues on the qualifying sales transactions equal to the estimated retail value of the gift cards to be redeemed upon conversion of the earned points to gift cards. We record the deferral of revenues related to gift card awards under our loyalty program as a reduction of revenues. |
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Income Taxes | Income Taxes. We use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. We are routinely under audit by federal, state or local authorities in the area of income taxes. We regularly evaluate the likelihood of realization of tax benefits derived from positions we have taken in various federal and state filings after consideration of all relevant facts, circumstances and available information. If we believe it is more likely than not that our position will be sustained, we recognize the benefit we believe is cumulatively greater than 50% likely to be realized. |
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Foreign Currency | Foreign Currency. We translate the assets and liabilities denominated in a foreign currency into U.S. dollars using the exchange rate in effect at the balance sheet date. Revenues and expenses are translated into U.S. dollars using weighted average exchange rates during the year. We record these translation adjustments as a component of accumulated other comprehensive loss on the Consolidated Balance Sheets. |
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Segments | Segments. We conduct our specialty retail store and online operations on an omni-channel basis. As our store and online operations have similar economic characteristics, products, services and customers, our operations constitute a single omni-channel reportable segment. |
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Newly Adopted and Recent Accounting Pronouncements | Newly Adopted Accounting Pronouncements. In April 2015, the Financial Accounting Standards Board (the "FASB") issued guidance related to the accounting for cloud computing arrangements. Under this guidance, if a cloud computing arrangement includes a software license, the software license element should be accounted for in a manner consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the arrangement should be accounted for as a service contract. We adopted this guidance in the first quarter of fiscal year 2017 on a prospective basis. The adoption of this guidance did not have a material impact on our Consolidated Financial Statements. In January 2017, the FASB issued guidance to simplify how an entity is required to test goodwill for impairment. The new standard allows (i) entities to perform annual, or interim, goodwill impairment testing by comparing the reporting unit's fair value with its carrying amount and (ii) recognize impairment charges for the amount by which the carrying amount exceeds the reporting unit’s fair value. Pursuant to prior guidance, a goodwill impairment loss was determined by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill. In computing the implied fair value of goodwill, an entity had to perform procedures to determine the fair value of its assets and liabilities at the impairment testing date consistent with procedures that are required in determining the fair value of assets acquired and liabilities assumed in a business combination. We adopted this guidance in fiscal year 2017 on a prospective basis in connection with our assessment of the recoverability of the carrying values of our indefinite-lived intangible assets and goodwill. Prior to adopting this guidance, our assessment process involved a second step in which we allocated the enterprise fair value to the fair value of the reporting unit's net assets. Any enterprise value in excess of amounts allocated to such net assets represented the implied fair value of goodwill for that reporting unit. If the carrying value of goodwill for a reporting unit exceeded the implied fair value of goodwill, an impairment charge was recorded to write goodwill down to its fair value. The assessment performed in the fourth quarter of fiscal year 2016 was performed utilizing the two-step process. Recent Accounting Pronouncements. In March 2016, the FASB issued guidance to simplify how share-based payments are accounted for and presented in the financial statements, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The standard allows (i) entities to withhold an amount up to the employees' maximum individual tax rate in the relevant jurisdiction without resulting in liability classification of the award and (ii) forfeitures to be either estimated, as required currently, or recognized when they occur. This new guidance is effective for us as of the first quarter of fiscal year 2018. In May 2014, the FASB issued guidance to clarify the principles for revenue recognition. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes previous revenue recognition guidance. While our evaluation of the impact of adopting this standard is ongoing, we believe the new guidance will impact our accounting for sales returns, our loyalty program and certain promotional programs. This new guidance is effective for us no earlier than the first quarter of fiscal year 2019. In May 2017, the FASB issued guidance to clarify which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The standard requires modification accounting only if changes in the terms or conditions results in changes of the fair value, the vesting conditions or the classification of the award as an equity instrument or a liability. This new guidance is effective for us as of the first quarter of fiscal year 2019. In February 2016, the FASB issued guidance that requires a lessee to recognize assets and liabilities arising from leases on the balance sheet. Previous GAAP did not require lease assets and liabilities to be recognized for most leases. Additionally, companies are permitted to make an accounting policy election not to recognize lease assets and liabilities for leases with a term of 12 months or less. For both finance leases and operating leases, the lease liability should be initially measured at the present value of the remaining contractual lease payments. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee will not significantly change under this new guidance. This new guidance is effective for us as of the first quarter of fiscal year 2020. In August 2017, the FASB issued guidance to simplify how hedge accounting arrangements are accounted for and presented in the financial statements, including the assessment of hedge effectiveness. Under the new standard, all changes in the value of the hedging instrument included in the assessment of effectiveness will be recorded in other comprehensive income and reclassified to earnings in the same income statement line item when the hedged item affects earnings. This new guidance is effective for us as of the first quarter of fiscal year 2020. With respect to each of the recent accounting pronouncements described above, we are currently evaluating which application methods to adopt and the impact of adopting these new accounting standards on our Consolidated Financial Statements. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Total estimated amortization of all acquisition-related intangible assets for the next five fiscal years | Total amortization of all intangible assets recorded in connection with acquisitions for the next five fiscal years is currently estimated as follows (in thousands):
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FAIR VALUE MEASUREMENTS (Tables) |
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Schedule of the Company's financial assets that are required to be measured at fair value on a recurring basis | The following table shows the Company’s financial assets and liabilities that are required to be measured at fair value on a recurring basis in our Consolidated Balance Sheets:
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Schedule of fair value of long-term debt determined on a non-recurring basis | We determine the fair value of our long-term debt on a non-recurring basis, which results are summarized as follows:
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PROPERTY AND EQUIPMENT, NET (Tables) |
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Significant components of property and equipment, net | The significant components of our net property and equipment are as follows:
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INTANGIBLE ASSETS, NET AND GOODWILL (Tables) |
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Significant components of intangible assets and goodwill, by reportable operating segments | The significant components of our intangible assets and goodwill are as follows:
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IMPAIRMENT CHARGES (Tables) |
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Schedule of Asset Impairment Charges | Based upon our assessment of current economic conditions, our expectations of future business conditions and trends, our projected revenues, earnings, and cash flows as well as other market factors such as the weighted average cost of capital and valuation multiples, we determined that impairment charges were required to state certain of our intangible and long-lived assets to their estimated fair value as follows:
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ACCRUED LIABILITIES (Tables) |
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Jul. 29, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of significant components of accrued liabilities | The significant components of accrued liabilities are as follows:
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LONG-TERM DEBT (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 29, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of significant components of long-term debt | The significant components of our long-term debt are as follows:
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Schedule of annual maturities of long-term debt during the next five fiscal years and thereafter | At July 29, 2017, annual maturities of long-term debt during the next five fiscal years and thereafter are as follows (in millions):
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Schedule of significant components of interest expense | The significant components of interest expense are as follows:
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DERIVATIVE FINANCIAL INSTRUMENTS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 29, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Interest Rate Derivatives | A summary of the recorded amounts related to our interest rate swaps and interest rate caps reflected in our Consolidated Statements of Operations is as follows:
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INCOME TAXES (Tables) |
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Jul. 29, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of significant components of income tax expense | The significant components of income tax expense (benefit) are as follows:
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Schedule of income before income tax, domestic and foreign | The significant components of earnings (loss) before income taxes are as follows:
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Schedule of reconciliation of income tax expense to the amount calculated based on federal and state statutory rates | A reconciliation of income tax expense (benefit) to the amount calculated based on the federal and state statutory rates is as follows:
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Schedule of significant components of net deferred income tax asset (liability) | Significant components of our net deferred income tax asset (liability) are as follows:
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Schedule of reconciliation of the beginning and ending amounts of unrecognized tax benefits | A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
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EMPLOYEE BENEFIT PLANS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 29, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of obligations for employee benefit plans included in other long-term liabilities | Our obligations for employee benefit plans, included in other long-term liabilities, are as follows:
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Schedule of changes in obligations | Changes in our obligations pursuant to our Pension Plan, SERP Plan and Postretirement Plan during fiscal years 2017 and 2016 are as follows:
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Schedule of components of the expenses incurred | The components of the expenses (income) we incurred under our Pension Plan, SERP Plan and Postretirement Plan are as follows:
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Summary of expected benefit payments | A summary of expected benefit payments related to our Pension Plan, SERP Plan and Postretirement Plan is as follows:
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Schedule of changes in assets held | Changes in the assets held by our Pension Plan in fiscal years 2017 and 2016 are as follows:
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Schedule of asset allocation by asset category | The asset allocation for our Pension Plan at the end of fiscal years 2017 and 2016 and the target allocation for fiscal year 2018, by asset category, are as follows:
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Schedule of fair value of plan assets by level within the fair value hierarchy | The following tables set forth by level, within the fair value hierarchy, the Pension Plan’s assets at fair value as of July 29, 2017 and July 30, 2016.
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Schedule of assumptions utilized in calculating projected benefit obligations and periodic expense of the entity's Pension Plan, SERP Plan and Postretirement Plan | The assumptions we utilized in calculating the projected benefit obligations and periodic expense of our Pension Plan, SERP Plan and Postretirement Plan are as follows:
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COMMITMENTS AND CONTINGENCIES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 29, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of rent expense and related occupancy costs under operating leases | Rent expense and related occupancy costs under operating leases is as follows:
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Schedule of Future Minimum Rental Payments for Operating Leases | Future minimum rental commitments (excluding renewal options) under non-cancelable leases for the next five fiscal years and thereafter are as follows (in thousands):
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ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 29, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of accumulated other comprehensive loss | The following table summarizes the changes in accumulated other comprehensive loss by component (amounts are recorded net of related income taxes):
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STOCK-BASED AWARDS (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 29, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock option liability | A summary of our liabilities for our variable stock option awards is as follows:
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Summary of stock option activity | A summary of stock option activity is as follows:
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Schedule of assumptions used to estimate fair value for stock options at grant date | We used the following assumptions to estimate the fair value for stock options at the grant date:
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Schedule of restricted stock outstanding | A summary of restricted share activity is as follows:
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Schedule of compensation expense (benefit) | The following table summarizes our stock-based compensation expense (benefit):
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REVENUES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of revenues by merchandise category as a percentage of net sales | The following table represents our revenues by merchandise category as a percentage of revenues:
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OTHER EXPENSES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Other Income and Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Operating Cost and Expense, by Component | Other expenses consists of the following components:
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CONDENSED CONSOLIDATING FINANCIAL INFORMATION (with respect to NMG's obligations under the Senior Secured Credit Facilities, Cash Pay Notes and PIK Toggle Notes) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 29, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of condensed balance sheets |
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Schedule of condensed statements of operations |
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Schedule of condensed statements of cash flows |
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CONDENSED CONSOLIDATING FINANCIAL INFORMATION (with respect to NMG's obligations under the 2028 Debentures) (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of condensed balance sheets |
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Schedule of condensed statements of operations |
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Schedule of condensed statements of cash flows |
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QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Quarterly Financial Information Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of quarterly financial information |
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jul. 29, 2017 |
Jul. 30, 2016 |
Aug. 01, 2015 |
|
Cash and Cash Equivalents | |||
Accounts payable related to outstanding checks not yet presented for payment | $ 39.6 | $ 47.4 | |
Merchandise Inventories and Cost of Goods Sold | |||
Vendor allowances received | $ 83.6 | $ 100.8 | $ 94.8 |
Vendor allowances received, percent of revenue | 1.80% | 2.00% | 1.90% |
Consignment merchandise held with a cost basis | $ 393.1 | $ 416.5 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) |
12 Months Ended |
---|---|
Jul. 29, 2017 | |
Buildings and improvements | Minimum | |
Long-lived Assets | |
Estimated useful lives used to depreciate long-lived assets | 5 years |
Buildings and improvements | Maximum | |
Long-lived Assets | |
Estimated useful lives used to depreciate long-lived assets | 30 years |
Fixtures and equipment | Minimum | |
Long-lived Assets | |
Estimated useful lives used to depreciate long-lived assets | 3 years |
Fixtures and equipment | Maximum | |
Long-lived Assets | |
Estimated useful lives used to depreciate long-lived assets | 15 years |
Leasehold Improvements | |
Long-lived Assets | |
Estimated useful life | shorter of the asset life or the lease term |
Internal computer software | Minimum | |
Long-lived Assets | |
Estimated useful lives used to depreciate long-lived assets | 3 years |
Internal computer software | Maximum | |
Long-lived Assets | |
Estimated useful lives used to depreciate long-lived assets | 10 years |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Jul. 29, 2017 |
Jan. 28, 2017 |
Jul. 30, 2016 |
Jul. 29, 2017 |
Jul. 30, 2016 |
|
Indefinite-lived Intangible Assets [Line Items] | |||||
Writedown of goodwill | $ 196,200 | $ 0 | $ 199,200 | $ 196,164 | $ 199,218 |
Tradenames | |||||
Indefinite-lived Intangible Assets [Line Items] | |||||
Writedown of indefinite-lived intangible assets | $ 159,600 | $ 150,100 | $ 228,900 | $ 309,744 | $ 228,877 |
MYTHERESA ACQUISITION (Details) $ in Thousands, € in Millions |
1 Months Ended | 12 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017
EUR (€)
|
Mar. 31, 2017
USD ($)
|
Apr. 30, 2016
EUR (€)
|
Apr. 30, 2016
USD ($)
|
Oct. 31, 2014
USD ($)
|
Jul. 29, 2017
USD ($)
|
Jul. 30, 2016
USD ($)
|
Aug. 01, 2015
USD ($)
|
Oct. 31, 2014
EUR (€)
|
|
Business Acquisition | |||||||||
Total consideration paid to effect the acquisition | $ 0 | $ 896 | $ 181,727 | ||||||
Portion of payment which represents the acquisition date fair value obligation | $ 22,857 | $ 27,185 | $ 0 | ||||||
MyTheresa | |||||||||
Business Acquisition | |||||||||
Total consideration paid to effect the acquisition | $ 181,700 | ||||||||
Business combination, contingent consideration | € | € 55.0 | ||||||||
Payments to acquire business | € 25.5 | $ 26,900 | € 26.5 | $ 29,800 | |||||
Portion of payment which represents the acquisition date fair value obligation | € 18.1 | $ 22,900 | € 21.6 | $ 27,200 |
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands |
Jul. 29, 2017 |
Jul. 30, 2016 |
---|---|---|
PROPERTY AND EQUIPMENT, NET | ||
Property, plant and equipment, gross | $ 2,339,811 | $ 2,138,940 |
Less: accumulated depreciation | 752,850 | 550,819 |
Property and equipment, net | 1,586,961 | 1,588,121 |
Property and equipment acquired through developer financing obligations | 96,900 | 46,100 |
Land, buildings and improvements | ||
PROPERTY AND EQUIPMENT, NET | ||
Property, plant and equipment, gross | 1,280,214 | 1,237,568 |
Fixtures and equipment | ||
PROPERTY AND EQUIPMENT, NET | ||
Property, plant and equipment, gross | 914,489 | 699,469 |
Construction in progress | ||
PROPERTY AND EQUIPMENT, NET | ||
Property, plant and equipment, gross | $ 145,108 | $ 201,903 |
IMPAIRMENT CHARGES (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|
Jul. 29, 2017 |
Jan. 28, 2017 |
Jul. 30, 2016 |
Jul. 29, 2017 |
Jul. 30, 2016 |
Aug. 01, 2015 |
|
Finite-Lived Intangible Assets [Line Items] | ||||||
Goodwill | $ 196,200 | $ 0 | $ 199,200 | $ 196,164 | $ 199,218 | |
Impairment charges | 357,000 | 153,800 | 466,200 | 510,736 | 466,155 | $ 0 |
Property and equipment | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Property and equipment | 3,141 | 25,426 | ||||
Other definite-lived intangible assets | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Definite-lived intangible assets | 1,687 | 12,634 | ||||
Tradenames | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Tradenames | $ 159,600 | $ 150,100 | $ 228,900 | $ 309,744 | $ 228,877 |
ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands |
Jul. 29, 2017 |
Jul. 30, 2016 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accrued salaries and related liabilities | $ 64,293 | $ 66,009 |
Amounts due customers | 140,330 | 132,805 |
Self-insurance reserves | 36,545 | 36,197 |
Interest payable | 31,935 | 59,781 |
Sales returns reserves | 47,006 | 45,336 |
Sales taxes payable | 28,811 | 26,688 |
Contingent earn-out obligation | 0 | 26,264 |
Other | 108,017 | 99,566 |
Total | $ 456,937 | $ 492,646 |
LONG-TERM DEBT Maturities of Long-Term Debt (Details) $ in Millions |
Jul. 29, 2017
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
2018 | $ 29.4 |
2019 | 29.4 |
2020 | 29.4 |
2021 | 3,014.4 |
2022 | 1,560.0 |
Thereafter | $ 122.7 |
LONG-TERM DEBT Interest Expense (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jul. 29, 2017 |
Jul. 30, 2016 |
Aug. 01, 2015 |
|
Interest expense | |||
Amortization of debt issue costs | $ 24,510 | $ 24,572 | $ 24,560 |
Capitalized interest | (6,270) | (7,298) | (2,361) |
Other, net | 703 | 2,214 | 2,489 |
Interest expense, net | 295,668 | 285,596 | 289,923 |
Asset-Based Revolving Credit Facility | |||
Interest expense | |||
Interest expense | 7,022 | 3,104 | 1,463 |
Senior Secured Term Loan Facility | |||
Interest expense | |||
Interest expense | 130,129 | 124,775 | 125,558 |
mytheresa.com Credit Facilities | |||
Interest expense | |||
Interest expense | 58 | 23 | 8 |
Cash Pay Notes | |||
Interest expense | |||
Interest expense | 76,800 | 76,800 | 76,800 |
PIK Toggle Notes | |||
Interest expense | |||
Interest expense | 53,810 | 52,500 | 52,500 |
2028 Debentures | |||
Interest expense | |||
Interest expense | $ 8,906 | $ 8,906 | $ 8,906 |
DERIVATIVE FINANCIAL INSTRUMENTS Schedule of derivatives (Details) - Interest Expense - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jul. 29, 2017 |
Jul. 30, 2016 |
Aug. 01, 2015 |
|
Derivative Financial Instruments | |||
Interest rate cash flow hedge gains (losses) reclassified to earnings, net | $ 6,615 | $ 576 | $ 0 |
Interest Rate Swaps | |||
Derivative Financial Instruments | |||
Interest rate cash flow hedge gains (losses) reclassified to earnings, net | 5,191 | 0 | 0 |
Interest Rate Caps | |||
Derivative Financial Instruments | |||
Interest rate cash flow hedge gains (losses) reclassified to earnings, net | $ 1,424 | $ 576 | $ 0 |
INCOME TAXES (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jul. 29, 2017 |
Jul. 30, 2016 |
Aug. 01, 2015 |
|
Current: | |||
Federal | $ (38,337) | $ (36,557) | $ 73,928 |
State | (8,567) | (7,691) | 7,955 |
Foreign | 926 | 5,948 | 980 |
Current income tax expense | (45,978) | (38,300) | 82,863 |
Deferred: | |||
Federal | (148,359) | (78,804) | (60,780) |
State | (22,357) | (18,189) | (6,080) |
Foreign | (436) | (5,848) | (2,876) |
Deferred income tax expense | (171,152) | (102,841) | (69,736) |
Income tax expense (benefit) | $ (217,130) | $ (141,141) | $ 13,127 |
INCOME TAXES (Details 2) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jul. 29, 2017 |
Jul. 30, 2016 |
Aug. 01, 2015 |
|
Income Tax Disclosure [Abstract] | |||
United States | $ (752,705) | $ (542,310) | $ 38,399 |
Foreign | 3,816 | (4,941) | (10,323) |
Earnings (loss) before income taxes | $ (748,889) | $ (547,251) | $ 28,076 |
INCOME TAXES (Details 4) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Jul. 29, 2017 |
Jul. 30, 2016 |
|
Deferred income tax assets: | ||
Accruals and reserves | $ 34,727 | $ 31,628 |
Employee benefits | 179,565 | 202,778 |
Other | 72,882 | 36,406 |
Total deferred tax assets | 287,174 | 270,812 |
Deferred income tax liabilities: | ||
Inventory | (13,264) | (10,125) |
Depreciation and amortization | (322,184) | (285,563) |
Intangible assets | (1,083,459) | (1,241,497) |
Other | (25,100) | (30,420) |
Total deferred tax liabilities | (1,444,007) | (1,567,605) |
Net deferred income tax liability | (1,156,833) | $ (1,296,793) |
Decrease in deferred tax liabilities | 140,000 | |
Decrease in deferred tax liabilities, related to intangible assets | 117,400 | |
Increase in deferred tax assets, related to NOL carryforward | $ 38,300 |
INCOME TAXES (Details 5) $ in Millions |
Jul. 29, 2017
USD ($)
|
---|---|
Federal | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforward | $ 97.7 |
Tax credit carryforward, amount | 2.0 |
State | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforward | 28.5 |
Tax credit carryforward, amount | 1.7 |
Luxembourg | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforward | 8.5 |
Valuation allowance, net operating loss carryforward | $ 8.5 |
INCOME TAXES (Details 6) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Jul. 29, 2017 |
Jul. 30, 2016 |
|
Income Tax Disclosure [Abstract] | ||
Portion of unrecognized tax benefits which would impact effective tax rate, if recognized | $ 1,400 | |
Liability for accrued interest and penalties | 400 | $ 400 |
Reconciliation of the beginning and ending amounts of unrecognized tax benefits | ||
Balance at beginning of fiscal year | 3,661 | 1,854 |
Gross amount of decreases for prior year tax positions | (3,005) | (1,290) |
Gross amount of increases for current year tax positions | 1,533 | 3,097 |
Balance at end of fiscal year | $ 2,189 | $ 3,661 |
EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ in Millions |
12 Months Ended | |||
---|---|---|---|---|
Jan. 01, 2011 |
Jul. 29, 2017 |
Jul. 30, 2016 |
Aug. 01, 2015 |
|
Defined contribution plans | ||||
Aggregate expense related to plans | $ 27.7 | $ 28.0 | $ 30.5 | |
Maximum | RSP | ||||
Defined contribution plans | ||||
Employee's contribution eligible for employer match (as a percent) | 6.00% | |||
Employer matching contribution, percent of employees' contribution | 75.00% |
EMPLOYEE BENEFIT PLANS (Details 2) - USD ($) $ in Thousands |
Jul. 29, 2017 |
Jul. 30, 2016 |
Aug. 01, 2015 |
---|---|---|---|
Obligations for employee benefit plans, included in other long-term liabilities | |||
Pension Plan, net | $ 360,392 | $ 426,760 | |
Less: current portion | (7,803) | (7,345) | |
Long-term portion of benefit obligations | 352,589 | 419,415 | |
Pension Plan | |||
Obligations for employee benefit plans, included in other long-term liabilities | |||
Projected benefit obligation | 620,900 | 683,493 | $ 612,762 |
Less: Plan assets | (380,163) | (383,817) | (394,150) |
Pension Plan, net | 240,737 | 299,676 | |
SERP Plan | |||
Obligations for employee benefit plans, included in other long-term liabilities | |||
Projected benefit obligation | 112,739 | 118,484 | 111,157 |
Pension Plan, net | 112,739 | 118,484 | |
Postretirement Plan | |||
Obligations for employee benefit plans, included in other long-term liabilities | |||
Projected benefit obligation | 6,916 | 8,600 | $ 9,121 |
Pension Plan, net | $ 6,916 | $ 8,600 |
EMPLOYEE BENEFIT PLANS (Details 4) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jul. 29, 2017 |
Jul. 30, 2016 |
Aug. 01, 2015 |
|
Employee Benefit Plans | |||
Amortization period for deferred realized gains and losses on plan assets | 3 years | ||
Excess of market related value over fair value of plan assets | $ 12,400 | ||
Pension Plan | |||
Employee Benefit Plans | |||
Service cost | 0 | $ 0 | |
Interest cost | 19,479 | 21,716 | $ 25,527 |
Expected return on plan assets | (21,323) | (23,229) | (24,935) |
Net amortization of (gains) losses | 2,653 | 0 | 0 |
Expense (income) under plan | 809 | (1,513) | 592 |
SERP Plan | |||
Employee Benefit Plans | |||
Service cost | 0 | 0 | |
Interest cost | 3,134 | 3,569 | 4,505 |
Net amortization of (gains) losses | 93 | 0 | 0 |
Expense (income) under plan | 3,227 | 3,569 | 4,505 |
Postretirement Plan | |||
Employee Benefit Plans | |||
Service cost | 1 | 3 | 11 |
Interest cost | 219 | 285 | 451 |
Net amortization of (gains) losses | (585) | (582) | (372) |
Expense (income) under plan | $ (365) | $ (294) | $ 90 |
OTHER EXPENSES (Details) $ in Thousands |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2016
USD ($)
|
Jul. 29, 2017
USD ($)
position
|
Jul. 30, 2016
USD ($)
position
|
Aug. 01, 2015
USD ($)
|
|
Other Income and Expenses [Abstract] | ||||
Expenses incurred in connection with strategic initiatives | $ 21,347 | $ 24,318 | $ 11,644 | |
MyTheresa acquisition costs | 3,286 | 4,443 | 19,414 | |
Expenses related to Cyber-Attack, net of insurance recoveries | 1,500 | 1,032 | 4,078 | |
Net gain from facility closure | $ (5,600) | 0 | (5,577) | 0 |
Other expenses | 3,597 | 2,911 | 4,338 | |
Total | $ 29,730 | $ 27,127 | $ 39,474 | |
Number of positions eliminated | position | 315 | 500 | ||
Severance costs | $ 7,200 | $ 10,200 |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION (with respect to NMG's obligations under the Senior Secured Credit Facilities, Cash Pay Notes and PIK Toggle Notes) - Unrestricted Subsidiaries (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 29, 2017 |
Apr. 29, 2017 |
Jan. 28, 2017 |
Oct. 29, 2016 |
Jul. 30, 2016 |
Apr. 30, 2016 |
Jan. 30, 2016 |
Oct. 31, 2015 |
Jul. 29, 2017 |
Jul. 30, 2016 |
Aug. 01, 2015 |
|
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |||||||||||
Total assets | $ 7,703,516 | $ 8,256,888 | $ 7,703,516 | $ 8,256,888 | |||||||
Revenues | 1,119,900 | $ 1,111,400 | $ 1,395,600 | $ 1,079,100 | 1,128,300 | $ 1,169,300 | $ 1,487,000 | $ 1,164,900 | 4,705,993 | 4,949,472 | $ 5,095,087 |
Net earnings (loss) | (366,300) | $ (24,900) | $ (117,100) | $ (23,500) | $ (407,300) | $ 3,800 | $ 7,900 | $ (10,500) | (531,759) | $ (406,110) | $ 14,949 |
Reportable Legal Entities | Intercompany Note Payable | Non- Guarantor Subsidiaries | |||||||||||
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |||||||||||
Net interest income | 1,400 | ||||||||||
Reportable Legal Entities | Cash Pay Notes and PIK Toggle Notes | Unrestricted Subsidiary | |||||||||||
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |||||||||||
Total assets | 415,974 | 415,974 | |||||||||
Net assets | $ 137,661 | 137,661 | |||||||||
Revenues | 265,608 | ||||||||||
Net earnings (loss) | $ 3,700 |
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 29, 2017 |
Apr. 29, 2017 |
Jan. 28, 2017 |
Oct. 29, 2016 |
Jul. 30, 2016 |
Apr. 30, 2016 |
Jan. 30, 2016 |
Oct. 31, 2015 |
Jul. 29, 2017 |
Jul. 30, 2016 |
Aug. 01, 2015 |
|
Quarterly financial information | |||||||||||
Revenues | $ 1,119,900 | $ 1,111,400 | $ 1,395,600 | $ 1,079,100 | $ 1,128,300 | $ 1,169,300 | $ 1,487,000 | $ 1,164,900 | $ 4,705,993 | $ 4,949,472 | $ 5,095,087 |
Gross profit | 312,800 | 380,900 | 413,100 | 379,200 | 311,700 | 425,800 | 460,700 | 428,800 | 1,486,000 | 1,627,000 | |
Net earnings (loss) | (366,300) | $ (24,900) | (117,100) | $ (23,500) | (407,300) | $ 3,800 | $ 7,900 | $ (10,500) | (531,759) | (406,110) | 14,949 |
Goodwill | 196,200 | 0 | 199,200 | 196,164 | 199,218 | ||||||
Long-lived assets | 1,200 | 3,700 | 38,100 | 4,800 | 38,100 | ||||||
Impairment charges | 357,000 | 153,800 | 466,200 | 510,736 | 466,155 | $ 0 | |||||
Tradenames | |||||||||||
Quarterly financial information | |||||||||||
Tradenames | $ 159,600 | $ 150,100 | $ 228,900 | $ 309,744 | $ 228,877 |
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jul. 29, 2017 |
Jul. 30, 2016 |
Aug. 01, 2015 |
|
Reserve for estimated sales returns | |||
Changes in valuation and qualifying accounts and reserves | |||
Balance at Beginning of Period | $ 45,336 | $ 44,046 | $ 38,869 |
Additions, charged to costs and expenses | 944,682 | 977,811 | 953,238 |
Additions, charged to other accounts | 0 | 0 | 0 |
Deductions | (943,012) | (976,521) | (948,061) |
Balance at End of Period | 47,006 | 45,336 | 44,046 |
Reserves for self-insurance | |||
Changes in valuation and qualifying accounts and reserves | |||
Balance at Beginning of Period | 36,197 | 37,943 | 38,732 |
Additions, charged to costs and expenses | 69,095 | 75,821 | 76,306 |
Additions, charged to other accounts | 0 | 0 | 0 |
Deductions | (68,747) | (77,567) | (77,095) |
Balance at End of Period | $ 36,545 | $ 36,197 | $ 37,943 |
SUBSEQUENT EVENTS - Narrative (Details) |
12 Months Ended | |
---|---|---|
Sep. 12, 2017
position
|
Jul. 29, 2017
store
|
|
Subsequent Event [Line Items] | ||
Number of stores closed | store | 4 | |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Number of positions eliminated | position | 240 |
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