-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Cn9k0SJMjZVoGcCBPut/FlhNADFNN3ddP8h6w29EmOjXNw06jJNWFLfJ2XiIJseP X+bpV7FoeCm95JTj8/OjdQ== 0000819539-94-000003.txt : 19940315 0000819539-94-000003.hdr.sgml : 19940315 ACCESSION NUMBER: 0000819539-94-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940129 FILED AS OF DATE: 19940314 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEIMAN MARCUS GROUP INC CENTRAL INDEX KEY: 0000819539 STANDARD INDUSTRIAL CLASSIFICATION: 5311 IRS NUMBER: 954119509 STATE OF INCORPORATION: DE FISCAL YEAR END: 0801 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 34 SEC FILE NUMBER: 001-09659 FILM NUMBER: 94515839 BUSINESS ADDRESS: STREET 1: 27 BOYLSTON ST STREET 2: P O BOX 9187 CITY: CHESTNUT HILL STATE: MA ZIP: 02167 BUSINESS PHONE: 6172320760 10-Q 1 NMG FORM 10Q - 1/29/94 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended January 29, 1994 Commission File Number 1-9659 THE NEIMAN MARCUS GROUP, INC. (Exact name of registrant as specified in its charter) Delaware 95-4119509 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 27 Boylston Street, Chestnut Hill, MA 02167 (Address of principal executive offices) (Zip Code) (617) 232-0760 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO As of March 7, 1994, there were outstanding 37,956,039 shares of the issuer's common stock, $.01 par value. THE NEIMAN MARCUS GROUP, INC. I N D E X Part I. Financial Information Page Number Item 1. Condensed Consolidated Balance Sheets as of January 29, l994, July 31, l993 and January 30, 1993 1 Condensed Consolidated Statements of Earnings for the Twenty-Six and Thirteen Weeks ended January 29, l994 and January 30, l993 2 Condensed Consolidated Statements of Cash Flows for the Twenty-Six Weeks ended January 29, l994 and January 30, l993 3 Notes to Condensed Consolidated Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 5-7 Part II. Other Information Item 4. Submission of Matters to a Vote of Security Holders 7 Item 6. Exhibits and Reports on Form 8-K 7 Signatures 8 Exhibit 11.1 9 1 THE NEIMAN MARCUS GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
January 29, July 31, January 30, (In thousands) 1994 1993 1993 Assets Current assets: Cash and equivalents $ 18,598 $ 20,204 $ 21,745 Accounts receivable, net 407,807 319,018 301,690 Merchandise inventories 323,051 362,567 302,832 Deferred income taxes 16,903 16,918 17,313 Other current assets 29,928 29,091 24,257 Total current assets 796,287 747,798 667,837 Property and equipment, net 413,410 416,519 417,557 Intangibles and other assets 112,374 114,257 113,635 Total assets $ 1,322,071 $1,278,574 $ 1,199,029 Liabilities and Shareholders' Equity Current liabilities: Notes payable and current maturities of long-term liabilities 58,535 45,877 $ 16,930 Accounts payable 145,370 171,348 133,745 Accrued liabilities 154,048 148,533 152,294 Total current liabilities 357,953 365,758 302,969 Long-term liabilities: Notes and debentures 407,000 377,000 361,929 Other long-term liabilities 74,096 72,448 71,448 Total long-term liabilities 481,096 449,448 433,377 Deferred income taxes 37,582 37,500 33,152 Redeemable preferred stocks 402,490 401,510 400,536 Common stock 380 379 379 Additional paid-in capital 82,355 82,154 82,174 Accumulated deficit (39,785) (58,175) (53,558) Total liabilities and share- holders' equity $ 1,322,071 $1,278,574 $ 1,199,029
See Notes to condensed consolidated financial statements. 2 THE NEIMAN MARCUS GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(In thousands except for For the Twenty-Six Weeks Ended For the Thirteen Weeks Ended per share amounts) January 29, January 30, January 29, January 30, 1994 1993 1994 1993 Revenues $ 1,158,324 $ 1,096,239 $ 650,690 $ 617,236 Cost of goods sold including buying and occupancy costs 801,478 758,963 458,913 437,573 Selling, general and administrative expenses 271,247 261,461 143,424 139,197 Corporate expenses 6,608 6,370 3,197 3,202 Operating earnings 78,991 69,445 45,156 37,264 Interest expense, net (15,689) (14,683) (8,051) (7,432) Other income - 21,275 - - Earnings before income taxes and cumulative effect of accounting change 63,302 76,037 37,105 29,832 Income taxes 26,587 31,175 15,584 12,231 Earnings before cumulative effect of accounting change 36,715 44,862 21,521 17,601 Cumulative effect of change in accounting for postretirement health care benefits, net - 11,199 - - Net earnings 36,715 33,663 21,521 17,601 Dividends and accretion on redeemable preferred stocks 14,540 14,534 7,270 7,267 Net earnings applicable to common shareholders $ 22,175 $ 19,129 $ 14,251 $ 10,334 Weighted average number of common and common equiva- lent shares outstanding 38,061 37,380 38,105 37,718 Amounts per common share: Earnings before cumulative effect of accounting change$ .58 $ .81 $ .37 $ .27 Charge for cumulative effect of accounting change, net - (.30) - - Net earnings $ .58 $ .51 $ .37 $ .27 Dividends $ .10 $ .10 $ .05 $ .05
See Notes to consensed consolidated financial statements. 3 THE NEIMAN MARCUS GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands) For the Twenty-Six Weeks Ended January 29, January 30, 1994 1993 CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 36,715 $ 33,663 Adjustments to reconcile net earnings to net cash used by operations: Depreciation and amortization 31,459 28,821 Other income - (20,755) Cumulative effect of accounting change, net - 11,199 Other items, net 1,288 2,510 Changes in assets and liabilities: Accounts receivable (88,789) (73,429) Merchandise inventories 39,516 4,268 Other current assets (837) (1,830) Accounts payable and accrued liabilities (20,462) 418 Net cash used by operating activities (1,110) (15,135) CASH FLOWS USED BY INVESTING ACTIVITIES Capital expenditures (26,074) (23,184) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings, net 43,410 33,628 Repayment of debt (636) (209) Issuance of common stock 150 16,504 Dividends paid (17,346) (17,279) Net cash provided by financing activities 25,578 32,644 CASH AND EQUIVALENTS Decrease during the period (1,606) (5,675) Beginning balance 20,204 27,420 Ending balance $ 18,598 $ 21,745
See Notes to condensed consolidated financial statements. 4 THE NEIMAN MARCUS GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. The condensed consolidated financial statements of The Neiman Marcus Group, Inc. (the Company) are submitted in response to the requirements of Form 10-Q and should be read in conjunction with the consolidated financial statements in the Company's Annual Report on Form l0-K. In the opinion of management, these statements contain all adjustments, consisting only of normal recurring accruals, necessary for a fair presentation of the results for the interim periods presented. The retail industry is seasonal in nature, and the results of operations for these periods have historically not been indicative of the results for a full year. 2. MERCHANDISE INVENTORIES Inventories are stated at the lower of cost or market. Approximately seventy-five percent of the Company's inventories are valued using the retail method on the last-in-first-out (LIFO) basis. While the Company believes that the LIFO method provides a better matching of costs and revenues, some specialty retailers use the first-in-first-out (FIFO) method and, accordingly, the Company has provided the following data for comparison purposes as if the Company were utilizing the FIFO methodology. If the FIFO method of inventory valuation had been used to value all inventories, merchandise inventories would have been higher than reported by $27.5 million at January 29, 1994, by $22.2 million at July 31, l993 and by $31.9 million at January 30, l993. The FIFO valuation method would have increased net earnings by $3.0 million during the twenty-six weeks ended January 29, 1994 and by $3.8 million during the twenty-six weeks ended January 30, 1993. 3. LONG-TERM LIABILITIES The Company has revolving credit agreements with nine banks pursuant to which the Company may borrow up to $300.0 million of which $100.0 million expires during fiscal 1995, $175.0 million expires during fiscal 1996 and $25.0 million may be terminated on not less than three years' notice. Amounts outstanding under these agreements were $235.0 million at January 29, l994, $205.0 million at July 31, l993, and $180.0 million at January 30, l993. In addition to its revolving credit agreements, the Company borrows from other banks on a short-term committed and uncommitted basis. The committed credit agreements expire in July 1994. Committed borrowings amounted to $40.7 million at January 29, l994, and uncommitted borrowings amounted to $27.2 million at July 31, l993 and $8.5 million at January 30, l993. 5 THE NEIMAN MARCUS GROUP, INC MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations for the Twenty-six Weeks Ended January 29, l994 Compared with the Twenty-six Weeks Ended January 30, l993 Revenues in the twenty-six weeks ended January 29, 1994 increased 5.7% over revenues in the twenty-six weeks ended January 30, l993. Higher revenues at Neiman Marcus, Bergdorf Goodman and Pastille were partially offset by lower revenues at Contempo Casuals. The number of stores was substantially unchanged in the current period. Cost of goods sold increased 5.6% primarily due to the cost of incremental merchandise sold and higher volume-related occupancy costs. As a percentage of revenues, cost of goods sold was 69.2% in both the l994 and l993 periods. Selling, general and administrative expenses increased 3.7%, primarily because of increased selling and volume-related costs partially offset by higher finance charge income. Corporate expenses increased 3.7% in the l994 period as a result of higher professional service fees associated with corporate activities in 1994. Interest expense increased 6.9% in the 1994 period reflecting higher outstanding balances on bank borrowings during the period. Other income in the 1993 period represents a gain from a reduction in the level of the Company's estimated liabilities due to the settlement of various disputes with Carter Hawley Hale Stores, Inc. The cumulative effect of the change in accounting principle in 1993 represents the adoption by the Company of Statement of Financial Accounting Standards No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions." The Company's effective income tax rate is estimated to be 42% in fiscal 1994 and was 42% in fiscal 1993. During the first quarter of 1994, the Company adopted the provisions of State- ment of Financial Accounting Standards No. 109 (SFAS No. 109) "Accounting for Income Taxes." SFAS No. 109 requires the asset and liability method of accounting for income taxes. The effect of adopting this standard was not material to the Company's financial position or results of operations. Results of Operations for the Thirteen Weeks Ended January 29, l994 Compared with the Thirteen Weeks ended January 30, l993 Revenues in the thirteen weeks ended January 29, 1994 increased 5.4% over revenues in the thirteen weeks ended January 30, l993. Higher revenues at Neiman Marcus, Bergdorf Goodman and Pastille were offset by lower revenues at Contempo Casuals. The number of stores was substantially unchanged from the thirteen weeks ended January 30, l993. Cost of goods sold increased 4.9% primarily due to the cost of incremental merchandise sold and higher volume-related occupancy costs. As a percentage of revenues, cost of goods sold was 70.5% in 1994 and 70.9% in 1993. 6 THE NEIMAN MARCUS GROUP, INC MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Selling, general and administrative expenses increased 3.0% in 1994 when compared to 1993 because of increased selling and volume-related costs partially offset by higher finance charge income. Interest expense increased 8.3% from the 1993 period reflecting higher outstanding balances on bank borrowings during the current period. Liquidity and Capital Resources During the first six months of fiscal 1994, the Company financed its working capital needs, expenditures for store renovations and dividend requirements primarily with cash provided by operations as well as short-term and long- term borrowings. The following discussion analyzes liquidity and capital resources by operating, investing and financing activities as presented in the Company's condensed consolidated statements of cash flows. OPERATING ACTIVITIES - Net cash used in operating activities was $1.1 million during the twenty-six weeks ended January 29, l994. The primary items affecting working capital were an increase in accounts receivable ($88.8 million) and a decrease in accounts payable and accrued liabilities ($20.5 million) which were partially offset by a decrease in merchandise inventories ($39.5 million). The increase in accounts receivable was due to seasonality, the increase in revenues, and, to a lesser extent, the modification in January 1993 of the credit terms offered to Neiman Marcus cardholders. The Company's actuarial assumptions for determining the present value of its pension liability assume a discount rate of 8.5%, projected salary increases of 6% and an investment return of 9%. If the discount rate used were to decrease by 1%, the projected benefit obligation, which includes future salary increases, would have increased by $11.9 million and the accumulated benefit obligation would have increased by $6.3 million at July 31, l993. INVESTING ACTIVITIES - The Company's investing activities consist principally of capital expenditures for remodeling existing stores and expanding the Company's mail order facility. Capital expenditures were $26.1 million during the twenty-six weeks ended January 29, l994. The Company's store renovation and expansion plans include the opening of four new Neiman Marcus stores, three of which are expected to be opened by 1996, and the renovation of five Neiman Marcus stores during 1994. Also in 1994, a major expansion of the Company's mail order facility is expected to be completed. Capital expenditures are expected to approximate $70.0 million during fiscal 1994. 7 FINANCING ACTIVITIES - The Company increased its borrowings by $43.4 million since July 31, 1993. These borrowings were used to fund expenditures for store renovations, the expansion of the mail order facility, working capital and dividend requirements. The Company paid aggregate quarterly dividends on its Common and Preferred Stocks of $17.3 million during the twenty-six weeks ended January 29, l994. At January 29, l994, the Company had available $65.0 million under its revolving credit agreements and $59.3 million under committed credit lines. The Company is evaluating its financing needs and believes that internally generated funds along with unused debt capacity will be sufficient to finance current and expected operating and capital requirements. PART II Item 4. Submission of Matters to a Vote of Security Holders. The Annual Meeting of Stockholders was held on January 19, l994. The following matters were voted upon at the meeting: 1. Election of Gary L. Countryman as a Class III Director for a term of three years. For 43,220,030 Withheld 98,164 Election of Jean Head Sisco as a Class III Director for a term of three years. For 43,228,083 Withheld 90,111 2. Ratification of the appointment by the Board of Directors of Deloitte & Touche as the Company's independent auditors for the 1994 fiscal year. For 43,248,994 Against 32,094 Abstain 37,106 3. Stockholder proposal to elect all directors of the Company annually. For 4,389,972 Against 37,744,057 Abstain 183,638 Non-voting 1,000,527 Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. 11.1 Computation of average number of shares outstanding used in determining primary and fully diluted earnings per share. (b) Reports on Form 8-K. The Company did not file any reports on Form 8-K during the quarter ended January 29, l994. 8 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. THE NEIMAN MARCUS GROUP, INC. Signature Title Date Principal Financial Senior Vice President and March 11, l994 Officer: Chief Financial Officer s/John R. Cook John R. Cook Principal Accounting Vice President and Controller March 11, l994 Officer: s/Stephen C. Richards Stephen C. Richards EX-11.1 2 NMG 10Q - EXHIBIT 11.1 9 EXHIBIT 11.1 THE NEIMAN MARCUS GROUP, INC. Computation of average number of shares outstanding used in determining primary and fully diluted earnings per share:
(Shares in 000's) For the Twenty-Six Weeks Ended For the Thirteen Weeks Ended January 29, January 30, January 29, January 30, 1994 1993 1994 1993 Primary 1. Weighted average number of common shares outstanding 37,937 37,288 37,948 37,543 2. Assumed exercise of certain stock options based on average market value 124 92 157 175 3. Weighted average number of shares used in primary per share computations 38,061 37,380 38,105 37,718 Fully diluted (A) 1. Weighted average number of common shares outstanding 37,937 37,288 37,948 37,543 2. Assumed exercise of all dilutive options based on higher of average or closing market value 124 134 157 241 3. Weighted average number of shares used in fully diluted per share computations 38,061 37,422 38,105 37,784
(A) This calculation is submitted in accordance with Securities Exchange Act of l934 Release No. 9083 although not required by Footnote 2 to Paragraph l4 of APB Opinion No. l5 because it results in dilution of less than 3%. -----END PRIVACY-ENHANCED MESSAGE-----