-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Bl40HmTssuEDU2/7U3NhZzHbQaN8O7VQEgGUwm75cBD19N3ju6ht8NekmNbrVnJj 6CkMq66lg3bmZm8Xg2jsZA== 0000819539-96-000004.txt : 19960312 0000819539-96-000004.hdr.sgml : 19960312 ACCESSION NUMBER: 0000819539-96-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960127 FILED AS OF DATE: 19960311 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: 96533535 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 NEIMAN MARCUS GROUP 10K FOR Q2 96 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 27, 1996 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 07, 1996, there were outstanding 38,003,487 shares of the issuer's common stock, $.01 par value. [Page] 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 27, 1996, July 29, 1995 and January 28, 1995 1 Condensed Consolidated Statements of Earnings for the Twenty-Six and Thirteen Weeks ended January 27, 1996 and January 28, 1995 2 Condensed Consolidated Statements of Cash Flows for the Twenty-Six Weeks ended January 27, 1996 and January 28, 1995 3 Notes to Condensed Consolidated Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 5-6 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 Exhibit 27.1 10 [Page] THE NEIMAN MARCUS GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
January 27, July 29, January 28, (In thousands) 1996 1995 1995 Assets Current assets: Cash and equivalents $ 38,239 $ 13,695 $ 24,681 Accounts receivable, net 224,014 150,110 448,935 Merchandise inventories 348,733 359,092 314,679 Deferred income taxes 17,102 17,102 24,317 Other current assets 47,959 38,410 48,994 Total current assets 676,047 578,409 861,606 Property and equipment, net 451,974 423,583 424,306 Intangibles and other assets 105,340 106,445 109,025 Total assets $1,233,361 $1,108,437 $ 1,394,937 Liabilities and Shareholders' Equity Current liabilities: Notes payable and current maturities of long-term liabilities $ 193,167 $ 51,859 $ 159,815 Accounts payable 148,549 170,672 161,560 Accrued liabilities 155,714 152,049 167,213 Total current liabilities 497,430 374,580 488,588 Long-term liabilities: Notes and debentures 170,000 202,000 358,667 Other long-term liabilities 68,031 69,056 73,659 Total long-term liabilities 238,031 271,056 432,326 Deferred income taxes 30,812 30,812 37,768 Redeemable preferred stocks 406,434 405,442 404,456 Common stock 380 380 380 Additional paid-in capital 83,151 82,366 82,346 Accumulated deficit (22,877) (56,199) (50,927) Total liabilities and shareholders' equity $1,233,361 $1,108,437 $ 1,394,937 See Notes to Condensed Consolidated Financial Statements.
[Page 1] 1 THE NEIMAN MARCUS GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(In thousands except for Twenty-Six Weeks Ended Thirteen Weeks Ended per share amounts) January 27, January 28, January 27, January 28, 1996 1995 1996 1995 Revenues $1,115,322 $1,051,858 $ 625,424 $ 589,536 Cost of goods sold, including buying and occupancy costs 757,025 702,696 438,942 405,336 Selling, general and administrative expenses 256,562 243,262 137,694 127,947 Corporate expenses 6,335 5,997 3,403 2,937 Operating earnings 95,400 99,903 45,385 53,316 Interest expense (14,257) (19,506) (7,425) (10,190) Earnings from continuing operations before income taxes 81,143 80,397 37,960 43,126 Income taxes (33,269) (33,766) (15,132) (18,112) Earnings from continuing operations 47,874 46,631 22,828 25,014 Earnings (loss) from discontinued operations, net - (306) - 1,498 Net earnings 47,874 46,325 22,828 26,512 Dividends and accretion on redeemable preferred stocks (14,552) (14,546) (7,276) (7,276) Net earnings applicable to common shareholders $ 33,322 $ 31,779 $ 15,552 $ 19,236 Weighted average number of common and common equiva- lent shares outstanding 38,163 37,991 38,238 37,989 Amounts per share applicable to common shareholders: Earnings from continuing operations $ .87 $ .85 $ .41 $ .47 Earnings (loss) from discontinued operations - (.01) - .04 Net earnings $ .87 $ .84 $ .41 $ .51 Dividends paid $ - $ .10 $ - $ .05 See Notes to Condensed Consolidated Financial Statements.
[Page 2] 2 THE NEIMAN MARCUS GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands) Twenty-Six Weeks Ended January 27, January 28, 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 47,874 $ 46,325 Adjustments to reconcile net earnings to net cash provided (used) by operations: Depreciation and amortization 26,844 29,996 Other items 727 445 Changes in current assets and liabilities: Accounts receivable (73,904) (86,699) Merchandise inventories 10,359 30,466 Other current assets (9,549) 2,747 Accounts payable and accrued liabilities (18,458) 10,867 Net cash provided (used) by operating activities (16,107) 34,147 CASH FLOWS USED BY INVESTING ACTIVITIES Capital expenditures (52,986) (41,109) CASH FLOWS FROM FINANCING ACTIVITIES Borrowings of debt 107,900 43,000 Repayment of debt (731) (10,701) Common stock issued 28 92 Dividends paid (13,560) (17,348) Net cash provided by financing activities 93,637 15,043 CASH AND EQUIVALENTS Increase during the period 24,544 8,081 Beginning balance 13,695 16,600 Ending balance $ 38,239 $ 24,681 See Notes to Condensed Consolidated Financial Statements.
[Page 3] 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. Fiscal 1996 will have 53 weeks, while fiscal 1995 had 52 weeks. The 53rd week will be included in the 1996 fourth quarter operating results. The discontinued operations in the accompanying financial statements represent the Contempo Casuals subsidiary, which the Company sold in June 1995. 2. Merchandise inventories Inventories are stated at the lower of cost or market. Substantially all 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; 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 $18.2 million at January 27, 1996, $14.2 million at July 29, 1995 and $30.9 million at January 28, 1995. The FIFO method would have increased net earnings by $2.4 million during the twenty-six weeks ended January 27, 1996 and $3.6 million during the twenty-six weeks ended January 28, 1995. 3. Discontinued operations On June 30 1995, the Company sold its Contempo Casuals subsidiary to The Wet Seal, Inc. (Wet Seal) for approximately 250,000 shares of Wet Seal Class A common stock and $100,000 in cash. The earnings from discontinued operations recorded in the thirteen week period ended January 28, 1995 are net of applicable income taxes of $1.1 million. The loss from discontinued operations recorded in the twenty-six week period ended January 28, 1995 is net of applicable income tax benefits of $0.2 million. Revenues related to discontinued Contempo Casuals operations for the thirteen and twenty-six week periods ended January 28, 1995 were $69.1 million and $126.4 million, respectively. [Page 4] 4 THE NEIMAN MARCUS GROUP, INC MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Continuing Operations for the Twenty-six Weeks Ended January 27,1996 Compared with the Twenty-six Weeks Ended January 28, 1995 Revenues in the twenty-six weeks ended January 27, 1996 increased $63.5 million or 6.0% over revenues in the twenty-six weeks ended January 28, 1995. A 3.8% comparable sales increase and the opening of a new Neiman Marcus store in Short Hills, New Jersey in August 1995 contributed to the improvement. Cost of goods sold, including buying and occupancy costs, increased $54.3 million or 7.7% compared to the same period last year. The increase was primarily due to the higher sales volume. As a percentage of revenues, cost of goods sold, including buying and occupancy costs, increased to 67.9% in the first half of fiscal 1996 compared to 66.8% in the first half of fiscal 1995. The higher percentage was principally due to higher markdowns during the holiday season. Selling, general and administrative expenses increased 5.5% to $256.6 million from $243.3 million in 1995 primarily due to both higher sales volume related costs and lower finance charge income for the six month period. The Company s securitization of its credit card receivables, which was completed in March, 1995, reduced finance charge income by approximately $9.6 million for the twenty six weeks ended January 27, 1996. As a percentage of revenues, selling, general and administrative expenses were essentially unchanged at 23.0% in 1996 compared to 23.1% in 1995. Interest expense decreased 26.9% to $14.3 million in the 1996 period mainly due to the use of the securitization proceeds to pay down outstanding debt. The Company's effective income tax rate is expected to be 41% in fiscal 1996 compared to 42% in fiscal 1995. Results of Continuing Operations for the Thirteen Weeks Ended January 27, 1996 Compared with the Thirteen Weeks Ended January 28, 1995 Revenues in the thirteen weeks ended January 27, 1996 increased $35.9 million or 6.1% over revenues in the thirteen weeks ended January 28, 1995. A 3.8% comparable sales increase, in addition to the opening of the Neiman Marcus store in Short Hills, New Jersey, contributed to the improvement. Cost of goods sold, including buying and occupancy costs, increased $33.6 million or 8.3% during the quarter ended January 27, 1996 compared to the same period in 1995. As a percentage of revenues, cost of goods sold, including buying and occupancy costs, was 70.2% in 1996 compared to 68.8% in 1995. The increase in the 1996 quarter was principally due to higher markdowns during the holiday season. [Page 5] 5 THE NEIMAN MARCUS GROUP, INC MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Selling, general and administrative expenses increased by $9.7 million or 7.6% to $137.7 million in the thirteen weeks ended January 27, 1996 compared to the thirteen weeks ended January 28, 1995 primarily due to both higher sales volume related costs and lower finance charge income. The reduction in finance charge income resulting from the securitization of the Company s credit card receivables was $4.8 million for the thirteen week period. As a percentage of revenues, selling, general and administrative expenses were up slightly to 22.0% in the 1996 quarter compared to 21.7% in the 1995 quarter due to the decrease in finance charge income. Interest expense decreased 27.1% to $7.4 million in the thirteen weeks ended January 27, 1996 compared to the 1995 quarter, primarily due to the securitization of the Company s credit card receivables. Changes in Financial Condition and Liquidity since July 29, 1995 During the first six months of fiscal 1996, the Company financed its working capital needs, capital expenditures and preferred dividend requirements primarily with cash provided from its revolving credit agreement. 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. Net cash used in operating activities was $16.1 million during the twenty-six weeks ended January 27, 1996. The primary items affecting working capital were a seasonal increase in accounts receivable ($73.9 million) and a decrease in accounts payable and accrued liabilities ($18.5 million), partially offset by a seasonal decrease in merchandise inventories ($10.4 million). Capital expenditures were $53.0 million during the first half of fiscal 1996 as compared to $41.1 million in the first half of fiscal 1995. The Company s capital expenditures consisted principally of construction of new stores and a new distribution center. The Company opened a new Neiman Marcus store in Short Hills, New Jersey in August 1995, and a new Neiman Marcus store in King of Prussia, Pennsylvania in February 1996. The Company expects to open a new Neiman Marcus store in Paramus, New Jersey by the fall of 1996. The Company completed the construction of a national distribution center in Longview, Texas during the second quarter of fiscal 1996. Capital expenditures are expected to approximate $100.0 million during the current fiscal year. The Company increased its bank borrowings by $107.9 million since July 29, 1995. At January 27, 1996, the Company had $330.0 million available under its revolving credit facility. That availability will be sufficient to fund the Company s planned capital growth, operating and preferred dividend requirements, as well as the retirement of the Company s senior notes, of which $40.0 million become due in May 1996, $52.0 million become due in August 1996 and $80.0 million become due in December 1996. The Company paid aggregate quarterly dividends of $13.6 million on its Preferred Stocks in the first half of fiscal 1996 and $17.3 million on its Common and Preferred Stocks during the first half of fiscal 1995. Beginning with the third quarter of fiscal 1995, the Company eliminated its quarterly cash dividend on its Common Stock (previously $.05 per share per quarter). Elimination of this dividend conserves approximately $7.6 million of cash annually. [Page 6] 6 PART II Item 4. Submission of Matters to a Vote of Security Holders. The Annual Meeting of Stockholders was held on January 19, 1996. The following matters were voted upon at the meeting: 1. Election of Walter J. Salmon as a Class II Director for a term of three years. For 46,328,845 Withheld 89,946 Election of Matina S. Horner, Ph.D. as a Class II Director for a term of three years. For 46,327,363 Withheld 91,428 2. Ratification of the appointment by the Board of Directors of Deloitte & Touche LLP as the Company's independent auditors for the 1996 fiscal year. For 46,344,154 Against 28,236 Abstain 46,402 3. Stockholder proposal to elect all directors of the Company annually. For 3,780,013 Against 39,983,488 Abstain 981,706 Non-voting 1,673,585 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 27, 1996. [Page 7] 7 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 07, l996 Officer: Chief Financial Officer s/John R. Cook John R. Cook Principal Accounting Vice President and March 07, l996 Officer: Controller s/Stephen C. Richards Stephen C. Richards [Page 8] 8 EX-11.1 2 EXHIBIT 11.1/COMPUTATION OF WEIGHTED AVGS. 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 27, January 28, January 27, January 28, 1996 1995 1996 1995 Primary 1. Weighted average number of common shares outstanding 37,996 37,957 38,007 37,959 2. Assumed exercise of certain stock options based on average market value 167 34 231 30 3. Weighted average number of shares used in primary per share computations 38,163 37,991 38,238 37,989 Fully diluted (A) 1. Weighted average number of common shares outstanding 37,996 37,957 38,007 37,959 2. Assumed exercise of all dilutive options based on higher of average or closing market value 184 34 233 30 3. Weighted average number of shares used in fully diluted per share computations 38,180 37,991 38,240 37,989 (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%. [Page 9]
EX-27.1 3 EXHIBIT 27.1/ARTICLE 5
5 This schedule contains a summary of financial information extracted from the Condensed Consolidated Balance Sheet and Condensed Consolidated Statement of Operations and is qualified in its entirety by reference to such financial statements. 1000 6-MOS AUG-3-1996 JAN-27-1996 38239 0 232570 8556 348733 676047 677332 225358 1233361 497430 170000 406434 0 380 60274 1233361 1115322 1115322 757025 1019922 0 11965 14257 81143 33269 47874 0 0 0 47874 .87 .87
-----END PRIVACY-ENHANCED MESSAGE-----