-----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, EaMjO3VgXDbGxPxsXl/RrMKI8F0mGfUr+Ys7800SdLrpzW4B1QDJahUB/pFwgPaj bsrPMm+40WvbsVEDq6SW7Q== 0000819539-95-000002.txt : 19950615 0000819539-95-000002.hdr.sgml : 19950615 ACCESSION NUMBER: 0000819539-95-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950128 FILED AS OF DATE: 19950313 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEIMAN MARCUS GROUP INC CENTRAL INDEX KEY: 0000819539 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DEPARTMENT STORES [5311] IRS NUMBER: 954119509 STATE OF INCORPORATION: DE FISCAL YEAR END: 0801 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09659 FILM NUMBER: 95520398 BUSINESS ADDRESS: STREET 1: 27 BOYLSTON ST STREET 2: P O BOX 9187 CITY: CHESTNUT HILL STATE: MA ZIP: 02167 BUSINESS PHONE: 6172320760 MAIL ADDRESS: STREET 1: 27 BOYLSTON ST STREET 2: P O BOX 9187 CITY: CHESTNUT HILL STATE: MA ZIP: 02167 10-Q 1 NMG 10Q FOR QTR ENDED 01/28/95 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 28, 1995 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 6, 1995, there were outstanding 37,959,012 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 28, l995, July 30, l994 and January 29, 1994 1 Condensed Consolidated Statements of Earnings for the Twenty-Six and Thirteen Weeks ended January 28, l995 and January 29, l994 2 Condensed Consolidated Statements of Cash Flows for the Twenty-Six Weeks ended January 28, l995 and January 29, l994 3 Notes to Condensed Consolidated Financial Statements 4-5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operatio 6-8 Part II. Other Information Item 4. Submission of Matters to a Vote of Security Holders 9 Item 6. Exhibits and Reports on Form 8-K 9 Signatures 10 Exhibit 11.1 11 Exhibit 27.1 12 THE NEIMAN MARCUS GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
January 28, July 30, January 29, (In thousands) 1995 1994 1994 Assets Current assets: Cash and equivalents $ 24,681 $ 16,600 $ 18,598 Accounts receivable, net 448,935 362,236 394,661 Merchandise inventories 314,679 345,145 323,051 Deferred income taxes 24,317 24,317 16,903 Other current assets 48,994 51,741 43,074 Total current assets 861,606 800,039 796,287 Property and equipment, net 424,306 410,913 413,410 Intangibles and other assets 109,025 112,176 112,374 Total assets $ 1,394,937 $1,323,128 $ 1,322,071 Liabilities and Shareholders' Equity Current liabilities: Notes payable and current maturities of long-term liabilities $ 159,815 $ 116,619 $ 58,535 Accounts payable 161,560 164,281 145,370 Accrued liabilities 167,213 153,625 154,048 Total current liabilities 488,588 434,525 357,953 Long-term liabilities: Notes and debentures 358,667 368,667 407,000 Other long-term liabilities 73,659 74,982 74,096 Total long-term liabilities 432,326 443,649 481,096 Deferred income taxes 37,768 37,768 37,582 Redeemable preferred stocks 404,456 403,470 402,490 Common stock 380 380 380 Additional paid-in capital 82,346 82,254 82,355 Accumulated deficit (50,927) (78,918) (39,785) Total liabilities and shareholders' equity $ 1,394,937 $1,323,128 $ 1,322,071
See Notes to Condensed Consolidated Financial Statements. 1 THE NEIMAN MARCUS GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) (Caption> (In thousands except for Twenty-Six Weeks Ended Thirteen Weeks Ended per share amounts) January 28, January 29, January 28, January 29, 1995 1994 1995 1994 Revenues $ 1,178,263 $ 1,158,324 $ 658,594 $ 650,690 Cost of goods sold including buying and occupancy costs 799,251 801,478 456,416 458,913 Selling, general and administrative expenses 273,451 271,247 143,248 143,424 Corporate expenses 6,185 6,608 3,031 3,197 Operating earnings 99,376 78,991 55,899 45,156 Interest expense (19,506) (15,689) (10,190) (8,051) Earnings before income taxes 79,870 63,302 45,709 37,105 Income taxes 33,545 26,587 19,197 15,584 Net earnings 46,325 36,715 26,512 21,521 Dividends and accretion on redeemable preferred stocks 14,546 14,540 7,276 7,270 Net earnings applicable to common shareholders $ 31,779 $ 22,175 $ 19,236 $ 14,251 Weighted average number of common and common equiva- lent shares outstanding 37,991 38,061 37,989 38,105 Amounts per common share: Net earnings $ .84 $ .58 $ .51 $ .37 Dividends $ .10 $ .10 $ .05 $ .05
See Notes to Condensed Consolidated Financial Statements. 2 THE NEIMAN MARCUS GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands) Twenty-Six Weeks Ended January 28, January 29, 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 46,325 $ 36,715 Adjustments to reconcile net earnings to net cash provided (used) by operations: Depreciation and amortization 29,996 31,459 Other items, net 445 1,287 Changes in assets and liabilities: Accounts receivable (86,699) (85,088) Merchandise inventories 30,466 39,516 Other current assets 2,747 (4,537) Accounts payable and accrued liabilities 10,867 (20,462) Net cash provided (used) by operating activities 34,147 (1,110) CASH FLOWS USED BY INVESTING ACTIVITIES Capital expenditures (41,109) (26,074) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings, net 43,000 43,410 Repayment of debt (10,701) (636) Issuance of common stock 92 150 Dividends paid (17,348) (17,346) Net cash provided by financing activities 15,043 25,578 CASH AND EQUIVALENTS Increase (decrease) during the period 8,081 (1,606) Beginning balance 16,600 20,204 Ending balance $ 24,681 $ 18,598
See Notes to Condensed Consolidated Financial Statements. 3 THE NEIMAN MARCUS GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Basis of presentation 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 historically the results of operations for these periods have not been indicative of the results for a full year. Certain prior year amounts have been reclassified to conform to the current year presentation. 2. Merchandise inventories Inventories are stated at the lower of cost or market. Approximately eighty-seven 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 comparative purposes. If the FIFO method of inventory valuation had been used to value all inventories, merchandise inventories would have been higher than reported by $30.9 million at January 28, 1995, $24.6 million at July 30, l994 and $27.5 million at January 29, l994. The FIFO valuation method would have increased net earnings by $3.6 million during the twenty-six weeks ended January 28, 1995 and $3.0 million during the twenty-six weeks ended January 29, 1994. 3. Debt and credit agreements The Company has a revolving credit agreement with nine banks pursuant to which the Company may borrow up to $300.0 million, of which $100.0 million expires on March 31, 1995, $175.0 million expires during fiscal 1996 and $25.0 million may be terminated on not less than three years' notice. Borrowings under this agreement were $280.0 million at January 28, 1995, $295.0 million at July 30, 1994 and $235.0 million at January 29, 1994. The Company also has credit agreements with six banks, pursuant to which the Company may borrow up to $25.0 million from each bank, and uncommitted credit lines totaling $100.0 million. The six $25.0 million credit agreements expire on March 31, 1995. At January 28, 1995, borrowings under these credit agreements and the uncommitted credit lines were $24.0 million and $35.0 million, respectively. At July 30, 1994, borrowings under these credit agreements were $11.0 million, and there were no borrowings under the uncommitted lines. 4 THE NEIMAN MARCUS GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 4. Securitization of credit card receivables On or about March 15, 1995, the Company expects to sell all of its Neiman Marcus credit card receivables through a subsidiary to a trust in exchange for certificates representing undivided interests in such receivables. Certificates representing an undivided interest in $246.0 million of these receivables will be sold to third parties in a public offering of $225.0 million 7.60% Class A certificates and $21.0 million 7.75% Class B certificates. The Company anticipates using the proceeds from this offering to pay down existing debt. The Company's subsidiary will retain the remaining undivided interest in the receivables not represented by the Class A and Class B certificates. A portion of that interest will be subordinated to the Class A and Class B certificates. The Company will continue to service all receivables for the trust. 5. Interest rate lock agreements In anticipation of the $246.0 million securitization of its credit card receivables, the Company entered into several forward interest rate lock agreements. The agreements allowed the Company to establish a weighted average effective rate of approximately 8.0% on the certificates to be issued as part of the securitization. In March 1995, the Company paid $5.4 million to settle all of its interest rate lock agreements. 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 28, l995 Compared with the Twenty-six Weeks Ended January 29, l994 Revenues in the twenty-six weeks ended January 28, 1995 increased $19.9 million or 1.7% over revenues in the twenty-six weeks ended January 29, l994. Higher revenues at the Neiman Marcus Division and Bergdorf Goodman were partially offset by lower revenues at Contempo Casuals. Comparable store sales increased 9.3% at Neiman Marcus stores and 4.8% at Bergdorf Goodman over the previous year. Lower revenues at Contempo Casuals resulted primarily from the closing of 40 Contempo Casuals retail stores and all of the Pastille retail stores as part of a restructuring in fiscal 1994. A decline in comparable store sales also contributed to the decrease in revenues at Contempo Casuals. Cost of goods sold was essentially unchanged at $799.3 million on slightly higher revenues as compared to the previous year. As a percentage of revenues, cost of goods sold was 67.8% in l995 compared to 69.2% in l994. The improvement was principally due to lower buying and occupancy costs at Bergdorf Goodman and lower markdowns at Contempo Casuals. Selling, general and administrative expenses decreased $2.2 million primarily due to higher finance charge income partially offset by higher sales and promotion costs at the Neiman Marcus Division. Interest expense increased $3.8 million in the 1995 period due to higher interest rates and higher outstanding balances on bank borrowings. The Company's effective income tax rate is estimated to be 42% in fiscal 1995, unchanged from fiscal 1994. Results of Operations for the Thirteen Weeks Ended January 28, l995 Compared with the Thirteen Weeks Ended January 29, 1994 Revenues in the thirteen weeks ended January 28, 1995 increased $7.9 million or 1.2% over revenues in the thirteen weeks ended January 29, 1994. Higher revenues at the Neiman Marcus Division and Bergdorf Goodman were partially offset by lower revenues at Contempo Casuals. Cost of goods sold was $456.4 million on slightly higher revenues in 1995 compared to $458.9 million in 1994. As a percentage of revenues, cost of goods sold was 69.3% in 1995 and 70.5% in 1994. Selling, general and administrative expenses were essentially unchanged at $143.2 million in 1995 compared to 1994. Slightly higher finance charge income and lower selling costs at Contempo were offset by higher selling and promotion costs at the Neiman Marcus Division. Interest expense increased $2.1 million from the 1994 period reflecting higher interest rates and higher outstanding balances on bank borrowings. 6 THE NEIMAN MARCUS GROUP, INC MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources During the first six months of fiscal 1995, the Company financed its working capital needs, expenditures for store renovations and dividend requirements primarily with cash provided by operations and short-term borrowings. The following discussion analyzes liquidity and capital resources by operating, investing and financing activities as presented in the Company's condensed consolidated statement of cash flows. Operating activities - Net cash provided by operating activities was $34.1 million during the twenty-six weeks ended January 28, l995. Net earnings for the six month period were $46.3 million, depreciation and amortization was $30.0 million and items affecting working capital used $42.7 million. The primary items affecting working capital were an increase in accounts receivable ($86.7 million) partially offset by an increase in accounts payable and accrued liabilities ($10.9 million) and a decrease in merchandise inventories ($30.5 million). The increase in accounts receivable was due to the seasonal increase in revenues. Investing activities - The Company's investing activities consisted principally of capital expenditures for the remodeling of existing stores and the construction of new stores. Capital expenditures relating to these activities were $41.1 million during the twenty-six weeks ended January 28, l995. The Company's store renovation and expansion plans include the opening of three new Neiman Marcus stores by the end of calendar 1996 and the renovation of three existing Neiman Marcus stores during fiscal 1995. Capital expenditures are expected to approximate $100.0 million during the current fiscal year. Financing activities - The Company increased its net borrowings by $33.0 million since July 30, 1994. These borrowings were used to partially fund expenditures for store renovations, the construction of three new stores, the expansion of the mail order facility, 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 28, l995. The Company has decided to eliminate its quarterly cash dividend on common stock beginning in the third quarter of fiscal 1995. Elimination of this dividend will conserve approximately $7.6 million of cash annually. On or about March 15, 1995, the Company expects to sell all of its Neiman Marcus credit card receivables through a subsidiary to a trust in exchange for certificates representing undivided interests in such receivables. Certificates representing an undivided interest in $246.0 million of these receivables will be sold to third parties in a public offering of $225.0 million 7.60% Class A certificates and $21.0 million 7.75% Class B certificates. The Company anticipates using the proceeds from this offering to pay down existing debt. The Company's subsidiary will retain the remaining undivided interest in the receivables not represented by the Class A and Class B certificates. A portion of that interest will be subordinated to the Class A and Class B certificates. The Company will continue to service all receivables for the trust. In anticipation of the $246.0 million securitization of its credit card 7 receivables, the Company entered into several forward interest rate lock agreements. The agreements allowed the Company to establish a weighted average effective rate of approximately 8.0% on the certificates to be issued as part of the securitization. In March 1995, the Company paid $5.4 million to settle all of its interest rate lock agreements. THE NEIMAN MARCUS GROUP, INC MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources At January 28, l995, the Company had $146.0 million available under its committed credit facilities, $250.0 million of which expires at the end of March 1995. The Company expects to replace its existing committed credit facilities with a five year $500.0 million revolving credit facility in April 1995. The Company believes that internally generated funds along with the securitization and the anticipated new revolving credit agreement will be sufficient to fund its planned capital growth as well as operating and preferred dividend requirements. 8 PART II Item 4. Submission of Matters to a Vote of Security Holders. The Annual Meeting of Stockholders was held on January 20, l995. The following matters were voted upon at the meeting: 1. Election of Richard A. Smith as a Class I Director for a term of three years. For 42,882,070 Withheld 181,576 Election of Robert J. Tarr, Jr. as a Class I Director for a term of three years. For 42,887,493 Withheld 176,153 2. Ratification of the appointment by the Board of Directors of Deloitte & Touche LLP as the Company's independent auditors for the 1995 fiscal year. For 42,967,491 Against 42,946 Abstain 53,209 3. Stockholder proposal to elect all directors of the Company annually. For 6,431,543 Against 35,162,027 Abstain 168,557 Non-voting 1,301,519 Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. 11.1 Computation of weighted average number of shares outstanding used in determining primary and fully diluted earnings per share. 27.1 Financial data schedule. (b) Reports on Form 8-K. The Company did not file any reports on Form 8-K during the quarter ended January 28, l995. 9 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 13, l995 Officer: Chief Financial Officer /s/ John R. Cook John R. Cook Principal Accounting Vice President and Controller March 13, l995 Officer: /s/ Stephen C. Richards Stephen C. Richards 11 EX-11.1 2 EXHIBIT 11.1 THE NEIMAN MARCUS GROUP, INC.
Computation of weighted average number of shares outstanding used in determining primary and fully diluted earnings per share: (In thousands) Twenty-Six Weeks Ended Thirteen Weeks Ended January 28, January 29, January 28, January 29, 1995 1994 1995 1994 Primary 1. Weighted average number of common shares outstanding 37,957 37,937 37,959 37,948 2. Assumed exercise of certain stock options based on average market value 34 124 30 157 3. Weighted average number of shares used in primary per share computations 37,991 38,061 37,989 38,105 Fully diluted (A) 1. Weighted average number of common shares outstanding 37,957 37,937 37,959 37,948 2. Assumed exercise of all dilutive options based on higher of average or closing market value 34 124 30 157 3. Weighted average number of shares used in fully diluted per share computations 37,991 38,061 37,989 38,105 (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%.
EX-27.1 3
5 This schedule contains a summary of financial information extracted from teh Condensed Consolidated Balance Sheet and Condensed Consolidated Statement of Operations and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS JUL-29-1995 JAN-28-1995 24,681 0 465,613 16,678 314,679 861,606 667,129 242,823 1,394,937 488,588 358,667 380 0 404,456 31,419 1,394,937 1,178,263 1,178,263 799,251 1,078,887 0 13,709 19,506 79,870 33,545 46,325 0 0 0 46,325 .84 .84
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