-----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, JO5HvsAe9gj5PJ6tAK5xUGctHhcIO3om53mR57ShPQQzqRt5Fv45dd9E4GQ88/YB hZx3KG663OWvyTlyz+9m1A== 0000819539-96-000011.txt : 19961217 0000819539-96-000011.hdr.sgml : 19961217 ACCESSION NUMBER: 0000819539-96-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961102 FILED AS OF DATE: 19961216 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: 96680969 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, INC. 1ST QUARTER 1997 10Q 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 November 2, 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 December 11, 1996, there were 49,871,309 outstanding 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 November 2, 1996 and August 3, 1996 and Pro Forma Condensed Consolidated Balance Sheet as of November 2, 1996 1 Condensed Consolidated Statements of Earnings for the Thirteen Weeks ended November 2, 1996 and October 28, 1995 2 Condensed Consolidated Statements of Cash Flows for the Thirteen Weeks Ended November 2, 1996 and October 28, 1995 3 Notes to Condensed Consolidated Financial Statements 4-5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6-7 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 8 Signatures 9 Exhibit 11.1 10 Exhibit 27.1 11 THE NEIMAN MARCUS GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands) Pro Forma November 2, November 2, August 3, 1996 1996 1996 (Note 2) Assets Current assets: Cash and equivalents $ 16,819 $ 24,100 $ 12,659 Accounts receivable, net 218,576 218,576 165,442 Merchandise inventories 533,901 533,901 443,948 Deferred income taxes 21,666 21,666 21,666 Other current assets 44,413 44,413 45,368 Total current assets 835,375 842,656 689,083 Advance payment on redemption of preferred stocks - 260,000 - Property and equipment, net 456,148 456,148 457,625 Intangibles and other assets 105,142 105,142 105,642 Total assets $1,396,665 $1,663,946 $ 1,252,350 Liabilities and Shareholders' Equity Current liabilities: Notes payable and current maturities of long-term liabilities $ 34,082 $ 34,082 $ 35,576 Accounts payable 176,725 176,725 192,146 Accrued liabilities 178,518 184,314 146,326 Total current liabilities 389,325 395,121 374,048 Long-term liabilities: Notes and debentures 409,941 390,000 292,000 Other long-term liabilities 69,714 69,714 69,940 Total long-term liabilities 479,655 459,714 361,940 Deferred income taxes 33,329 33,329 33,329 Redeemable preferred stocks - 416,426 407,426 Common stock 499 460 380 Additional paid-in capital 485,631 350,670 83,106 Retained earnings (accumulated deficit) 8,226 8,226 (7,879) Total liabilities and shareholders' equity $1,396,665 $1,663,946 $ 1,252,350 See Notes to Condensed Consolidated Financial Statements.
THE NEIMAN MARCUS GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) (In thousands except for Thirteen Weeks Ended per share data) November 2, October 28, 1996 1995 Revenues $ 544,103 $ 489,898 Cost of goods sold including buying and occupancy costs 350,579 318,083 Selling, general and administrative expenses 131,054 118,868 Corporate expenses 3,245 2,932 Operating earnings 59,225 50,015 Interest expense (6,848) (6,832) Earnings before income taxes 52,377 43,183 Income taxes (21,475) (18,137) Net earnings 30,902 25,046 Dividends and accretion on redeemable preferred stocks (6,201) (7,276) Loss on redemption of redeemable preferred stocks (22,361) - Net earnings applicable to common shareholders $ 2,340 $ 17,770 Weighted average number of common and common equivalent shares outstanding 39,601 38,088 Amounts per share applicable to common shareholders: Net earnings $ .06 $ .47 See Notes to Condensed Consolidated Financial Statements.
2 THE NEIMAN MARCUS GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) Thirteen Weeks Ended November 2, October 28, 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 30,902 $ 25,046 Adjustments to reconcile net earnings to net cash used by operations: Depreciation and amortization 14,966 13,114 Other items (645) 1,811 Changes in current assets and liabilities: Accounts receivable (53,134) (48,569) Merchandise inventories (89,953) (118,040) Other current assets 955 (9,573) Accounts payable and accrued liabilities 15,251 42,657 Net cash used by operating activities (81,658) (93,554) CASH FLOWS USED BY INVESTING ACTIVITIES Capital expenditures (12,570) (24,825) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings 148,506 124,400 Repayment of debt (52,000) (318) Issuance of common stock 269,163 3 Advance payment on redemption of preferred stocks (260,000) - Dividends paid - (6,780) Net cash provided by financing activities 105,669 117,305 CASH AND EQUIVALENTS Increase (decrease) during the period 11,441 (1,074) Beginning balance 12,659 13,695 Ending balance $ 24,100 $ 12,621 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 included in the Company's Annual Report on Form 10-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. Company public offering On October 17, 1996 the Company completed a public offering of 8.0 million shares of its common stock at a price of $35.00 per share. The net proceeds from the offering ($267.3 million) were used by the Company to partially fund the repurchase of all of the Company's issued and outstanding preferred stocks from Harcourt General, Inc., the Company's majority shareholder. The total consideration paid by the Company to Harcourt General in connection with the repurchase was $416.4 million, plus accrued and unpaid dividends through the date of the public offering. Of the total consideration, $260.0 million in cash was advanced during October 1996. In addition to the advance, on November 12, 1996 the Company paid Harcourt General $27.2 million in cash and 3.9 million shares of the Company's common stock (valued at $135.0 million at $35.0 per share) and completed the exchange for all of the Company's issued and outstanding preferred stocks. In connection with the transaction, the Company incurred a non-recurring charge to net earnings applicable to common shareholders of $22.4 million. The effect of the repurchase is shown on the accompanying Pro Forma Condensed Consolidated Balance Sheet. Had the public offering and repurchase of the preferred stocks taken place at the beginning of the thirteen week periods ended November 2, 1996 and October 28, 1995, net earnings per share applicable to common shareholders for those periods would have been $.62 and $.50, respectively. 3. 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 $15.5 million at November 2, 1996, $16.2 million at October 28, 1995 and $13.5 million at August 3, 1996. The FIFO method would have increased net earnings by $1.2 million during each of the thirteen weeks ended November 2, 1996 and the thirteen weeks ended October 28, 1995. 4 THE NEIMAN MARCUS GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 4. Selected balance sheet information The following interim balance sheet information as of October 28, 1995 is presented forcomparative purposes: Accounts receivable, net $198,679 Merchandise inventories 477,132 Total current assets 753,517 Property and equipment, net 436,418 Total assets 1,295,859 Total current liabilities 379,131 Long-term notes and debentures 367,000 Redeemable preferred stocks 405,938 Common shareholders' equity 45,077 5 THE NEIMAN MARCUS GROUP, INC MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations for the Thirteen Weeks Ended November 2, l996 Compared with the Thirteen Weeks Ended October 28, 1995 Revenues in the thirteen weeks ended November 2, 1996 increased $54.2 million or 11.1% over revenues in the thirteen weeks ended October 28, 1995. The revenue growth was primarily attributable to a 6.8% increase in comparable sales and the opening of two new Neiman Marcus stores in King of Prussia, Pennsylvania in February 1996 and Paramus, New Jersey in August 1996. Comparable sales at Neiman Marcus Stores increased 7.7%, while NM Direct revenues increased 8.0% over the prior year and revenues at Bergdorf Goodman increased only slightly. Cost of goods sold including buying and occupancy costs increased $32.5 million or 10.2% to $350.6 million compared to the same period last year, primarily due to revenue growth. As a percentage of revenues, cost of goods sold decreased to 64.4% from 64.9% in the prior year, reflecting improved gross margins at both NM Direct and Bergdorf Goodman. Selling, general and administrative expenses increased 10.3% to $131.1 million from $118.9 million in 1996. The increase is primarily attributable to revenue growth and the two new Neiman Marcus stores. As a percentage of revenues, selling, general and administrative expenses decreased to 24.1% from 24.3% in the prior year. Interest expense remained essentially flat at $6.8 million in the thirteen weeks ended November 2, 1996. The Company's average debt outstanding increased over the prior year, however the repayment of senior notes with borrowings from its revolving credit agreement resulted in a lower effective interest rate. The Company's effective income tax rate is expected to be 41% in fiscal 1997, compared to 42% in the thirteen weeks ended October 28, 1995. 6 THE NEIMAN MARCUS GROUP, INC MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Changes in Financial Condition and Liquidity Since August 3,1996 The Company had sufficient cash flows from operations and its revolving credit agreement to finance its working capital needs, capital expenditures and preferred dividend requirements during the thirteen week period ended November 2, 1996. 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. Net cash used in operating activities was $81.7 million during the first quarter of fiscal 1997. Net earnings before depreciation and amortization for the thirteen week period provided cash of $45.9 million, which was offset by changes in working capital of $126.9 million. The primary items affecting working capital were increases in accounts receivable ($53.1 million), merchandise inventories ($90.0 million) and accounts payable and accrued liabilities ($15.3 million). The increase in accounts receivable was primarily due to the increase in revenues during the period, while the increase in inventories is primarily due to preparation for the holiday selling season and the two new stores in King of Prussia and Paramus. Capital expenditures were $12.6 million during the thirteen week period ended November 2, 1996 as compared to $24.8 million in the prior year period. The Company's capital expenditures consisted principally of existing store renovations. The Company opened a new Neiman Marcus store in Paramus, New Jersey in August 1996. Additional store renovation plans include the remodeling of certain Neiman Marcus stores and both Bergdorf Goodman stores. Capital expenditures are expected to approximate $75.0 million during fiscal 1997. In October 1996, the Company issued 8.0 million shares of common stock to the public at $35.00 per share. The net proceeds were used on November 12, 1996, together with 3.9 million shares of common stock and borrowings of approximately $20.0 million, to purchase all of its outstanding redeemable preferred stocks and pay accrued and unpaid dividends. The repurchase of the preferred stock will result in a reduction of dividend payments of $21.3 million in fiscal 1997 compared to fiscal 1996, and is expected to conserve approximately $27.1 million of cash annually as well as eliminate impending sinking fund requirements. The Company increased its bank borrowings by $148.5 million since August 3, 1996, which included borrowings made in August 1996 to repay $52.0 million of senior notes at maturity. At November 2, 1996 the Company had $190 million available under its revolving credit facility. The Company believes that it will have sufficient resources to fund its planned capital growth, operating requirements and the retirement of its remaining $80.0 million of senior notes which become due in December 1996. The Company declared the final aggregate quarterly dividends on its preferred stocks in the first quarter of fiscal 1997, and paid such dividends of $5.8 million on November 12, 1996 concurrent with the repurchase of these preferred stocks. The Company paid $6.8 million in aggregate quarterly dividends on its preferred stocks during the first quarter of fiscal 1996. 7 PART II 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 November 2, 1996. The Company filed a report on Form 8-K on November 25, 1996 describing in Item 5 (Other Events) of Form 8-K the repurchase of its preferred stocks from Harcourt General and including pro forma financial information. 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 December 13, 1996 Officer: Chief Financial Officer /s/ John R. Cook John R. Cook Principal Accounting Vice President and Controller December 13, 1996 Officer: /s/ Stephen C. Richards Stephen C. Richards 9 EX-11.1 2 COMPUTATION OF WEIGHTED AVERAGES 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: Thirteen Weeks Ended (Shares in 000's) November 2, October 28, 1996 1995 Primary 1. Weighted average number of common shares outstanding 39,413 37,984 2. Assumed exercise of certain stock options based on average market value 188 104 3. Weighted average number of shares used in primary per share computations 39,601 38,088 Fully diluted (A) 1. Weighted average number of common shares outstanding 39,413 37,984 2. Assumed exercise of all dilutive options based on higher of average or closing market value 190 135 3. Weighted average number of shares used in fully diluted per share computations 39,603 38,119 (A) This calculation is submitted in accordance with the Securities Exchange Act of 1934 Release No. 9083 although not required by Footnote 2 to Paragraph 14 of APB Opinion No. 15 because it results in dilution of less than 3%.
EX-27.1 3 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. 1,000 3-MOS AUG-02-1997 NOV-02-1996 24,100 0 225,376 6,800 533,901 842,656 716,664 260,516 1,663,946 395,121 390,000 416,426 0 460 358,896 1,663,946 544,103 544,103 350,579 484,878 0 5,487 6,848 52,377 21,475 30,902 0 0 0 30,902 0.06 0.06
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