SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 12, 1996
HARCOURT GENERAL, INC.
(Exact of name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-4925 04-1619609
(Commission File Number) (I.R.S. Employer Identification No.)
27 Boylston Street, Chestnut Hill, MA 02167
(Address of principal executive offices) (Zip Code)
(617) 232-8200
(Registrant's Telephone Number, Including Area Code)
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Item 2. Acquisition or Disposition of Assets.
On November 12, 1996, subject to the terms of an Exchange and
Repurchase Agreement between Harcourt General, Inc. (the "Registrant") and The
Neiman Marcus Group, Inc. ("NMG") incorporated herein by reference, NMG
acquired from the Registrant (the "Repurchase") all of the issued and
outstanding preferred stock of NMG, consisting of 500,000 shares of 9 1/4%
Cumulative Redeemable Preferred Stock (the "9 1/4% Preferred Stock") and
1,000,000 shares of 6% Cumulative Convertible Preferred Stock (the "6%
Preferred Stock" and, together with the 9 1/4% Preferred Stock, the "Preferred
Stock") in exchange for 3,857,142 shares of NMG Common Stock issued to the
Registrant (the "Stock Payment") and approximately $287 million (including
accrued and unpaid dividends) in cash (the "Cash Payment").
To partially fund the Cash Payment, NMG sold 8,000,000 shares of its
Common Stock in an underwritten public offering (the "Offering") pursuant to a
Registration Statement on Form S-3 (No. 333-11721) filed with the Securities
and Exchange Commission, from which it received (after underwriting discounts,
commissions and estimated expenses of the Offering) approximately $267.3
million. NMG funded the balance of the Cash Payment through bank borrowings.
Immediately prior to the Offering, the Registrant beneficially owned
22,572,360 shares of the Common Stock of NMG, representing approximately 59.4%
of the issued and outstanding Common Stock of NMG, and all of the Preferred
Stock. After giving effect to the Repurchase, the Registrant beneficially
owns 26,429,502 shares of the Common Stock of NMG, representing approximately
53.0% of the issued and outstanding Common Stock of NMG.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
Not Applicable
(b) Pro Forma Financial Information.
See pages F-1 through F-6
(c) Exhibits.
2.1 Exchange and Repurchase Agreement, incorporated herein by
reference to Exhibit 10.1 to Registration Statement on Form S-3 of
The Neiman Marcus Group, Inc. dated October 10, 1996 (Registration
No. 333-11721).
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INDEX
Item 7(b) Pro Forma Financial Information Page Number
Introduction to Pro Forma Financial Information F-2
Condensed Consolidated Balance Sheets as
of July 31, 1996 F-3
Condensed Consolidated Statements of Earnings
for the nine months ended July 31, 1996 F-4
Consolidated Statements of Earnings for the
year ended October 31, 1995 F-5
Notes to Pro Forma Financial Information F-6
F-1<PAGE>
Introduction to Pro Forma Financial Information
Harcourt General, Inc. and Subsidiaries
The historical consolidated financial statements presented below have been
derived from the unaudited Condensed Consolidated Financial Statements for the
nine months ended July 31, 1996 and the audited Consolidated Financial
Statements for the year ended October 31, 1995, and are qualified by reference
to, and should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations," the Condensed
Consolidated Financial Statements and Notes thereto and the Consolidated
Financial Statements and Notes thereto previously filed on Forms 10-Q and 10-
K, respectively. The pro forma condensed consolidated balance sheet as of
July 31, 1996, the pro forma condensed consolidated statement of earnings for
the nine months ended July 31, 1996 and the pro forma consolidated statement
of earnings for the year ended October 31, 1995 presented below give effect to
the Repurchase as if it had occurred as of July 31, 1996, November 1, 1995 and
November 1, 1994, respectively. The pro forma information does not purport to
represent what the Company's results of operations would have been if the
Repurchase had occurred as of the date indicated or what such results will be
for any future periods. The pro forma information should be read in
conjunction with the financial statements and accompanying notes thereto
referred to above which have been previously filed on Forms 10-Q and 10-K.
F-2
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<TABLE>
Condensed Consolidated Balance Sheets
Harcourt General, Inc. and Subsidiaries
(In thousands)
<CAPTION>
July 31, 1996
Historical Adjustments Pro Forma
Assets
<S> <C> <C> <C>
Current assets
Cash and equivalents $ 315,909 $ 224,645 (1) $ 540,554
Short-term investments 124,745 124,745
Accounts receivable, net 477,495 477,495
Inventories 573,852 573,852
Deferred income taxes 79,083 79,083
Other current assets 71,967 71,967
Total current assets 1,643,051 224,645 1,867,696
Property and equipment, net 571,883 (2,035) (2) 569,848
Other assets
Prepublication costs, net 202,763 202,763
Intangible assets, net 469,542 (8,786) (2) 460,756
Other 147,179 147,179
Total other assets 819,484 (8,786) 810,698
Total assets $3,034,418 $ 213,824 $3,248,242
Liabilities
Current liabilities
Notes payable and current
maturities of long-term
liabilities $ 159,942 $ $ 159,942
Accounts payable 280,969 280,969
Accrued liabilities 324,220 324,220
Taxes payable 62,579 62,579
Other current liabilities 79,814 79,814
Total current liabilities 907,524 907,524
Long-term liabilities
Notes and debentures 739,253 14,145 (3) 753,398
Other long-term liabilities 218,649 218,649
Total long-term liabilities 957,902 14,145 972,047
Deferred income taxes 198,398 (33,127) (4) 165,271
Minority interest - 217,653 (5) 217,653
Shareholders' equity
Preferred stock 1,162 1,162
Common stocks 71,108 71,108
Paid-in capital 728,795 15,153 (6) 743,948
Cumulative translation adjustments (6,458) (6,458)
Retained earnings 175,987 175,987
Total shareholders' equity 970,594 15,153 985,747
Total liabilities and
shareholders' equity $3,034,418 $ 213,824 $3,248,242
</TABLE>
See Notes to Pro Forma Financial Information.
F-3<PAGE>
<TABLE>
Condensed Consolidated Statements of Earnings
Harcourt General, Inc. and Subsidiaries
(In thousands except for per share amounts)
<CAPTION>
Nine months ended July 31,1996
Historical Adjustments Pro Forma
<S> <C> <C> <C>
Revenues $2,421,996 $ $2,421,996
Costs applicable to revenues 1,421,773 (100) (7) 1,421,673
Selling, general and
administrative expenses 735,140 735,140
Corporate expenses 23,627 (320) (7) 23,307
Operating earnings 241,456 420 241,876
Investment income 20,957 10,739 (8) 31,696
Interest expense (61,876) (897) (9) (62,773)
Earnings from continuing
operations before income taxes 200,537 10,262 210,799
Income tax expense (68,183) (3,489)(10) (71,672)
Net earnings $ 132,354 $ 6,773 $ 139,127
Weighted average number of common
and common equivalent
shares outstanding 72,832 72,832 72,832
Amounts per share of common stock:
Net earnings $ 1.82 $ .09 $ 1.91
</TABLE>
See Notes to Pro Forma Financial Information.
F-4<PAGE>
<TABLE>
Consolidated Statements of Earnings
Harcourt General, Inc. and Subsidiaries
(In thousands except for per share amounts)
<CAPTION>
Year ended October 31, 1995
Historical Adjustments Pro Forma
<S> <C> <C> <C>
Revenues $3,034,736 $ $3,034,736
Costs applicable to revenues 1,765,090 (130) (7) 1,764,960
Selling, general and
administrative expenses 917,355 917,355
Corporate expenses 34,395 (430) (7) 33,965
Operating earnings 317,896 560 318,456
Investment income 39,945 13,862 (8) 53,807
Interest expense (88,735) (1,196) (9) (89,931)
Earnings from continuing
operations before income taxes 269,106 13,226 282,332
Income tax expense (91,496) (4,497)(10) (95,993)
Earnings from continuing operations 177,610 8,729 186,339
Earnings (loss) from discontinued
operations, net (11,727) - (11,727)
Net earnings $ 165,883 $ 8,729 $ 174,612
Weighted average number of
common and common equivalent
shares outstanding 76,764 - 76,764
Amounts per share of common stock:
Earnings from continuing
operations $ 2.31 $ .11 $ 2.42
Earnings (loss) from
discontinued operations (.15) - (.15)
Net earnings $ 2.16 $ .11 $ 2.27
</TABLE>
See Notes to Pro Forma Financial Information.
F-5<PAGE>
HARCOURT GENERAL, INC.
NOTES TO PRO FORMA FINANCIAL INFORMATION
(1) Reflects net proceeds from the Offering and Repurchase
(the Transactions), less estimated taxes payable related
to the Repurchase.
(2) Reflects reduction of tangible and intangible assets recorded
with the Company's purchases of NMG common stock. The
reduction was calculated based on the dilution of the Company's
investment by the Offering.
(3) Reflects the incremental borrowings to complete the Transactions.
(4) Reflects the estimated effect of the Offering and the Repurchase
on deferred taxes.
(5) Reflects minority interest attributable to the Offering.
(6) Reflects the Company's share of NMG's incremental equity as a result
of the Transactions, net of estimated taxes.
(7) Reflects the reduction in depreciation and amortization related to
the reduced goodwill and property described in note (2).
(8) Reflects incremental investment income attributable to the cash
received from the Transactions, calculated at the effective rate
earned by the Company on its cash and short term investments.
(9) Reflects the incremental interest expense attributable to borrowings
made by NMG to fund the Repurchase.
(10) Reflects the incremental income taxes payable attributable to the net
increase in earnings before taxes resulting from pro forma
adjustments, at the Company's effective tax rate.
See Notes to Pro Forma Financial Information.
F-6<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
HARCOURT GENERAL, INC.
Date: November 25, 1996 By: /s/ Eric P. Geller
Eric P. Geller
Senior Vice President, General
Counsel and Secretary
S-1
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