<PAGE> 1
Filed pursuant to Rule 424(b)(2)
Registration No. 333-49893
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED APRIL 17, 1998)
$250,000,000
LOGO
$125,000,000 6.65% SENIOR NOTES DUE 2008
$125,000,000 7.125% SENIOR DEBENTURES DUE 2028
------------------
The 6.65% Senior Notes due 2008 (the "2008 Notes") will mature on June 1,
2008, and the 7.125% Senior Debentures due 2028 (the "2028 Debentures" and,
together with the 2008 Notes, the "Securities") will mature on June 1, 2028.
Interest on the Securities will be payable semiannually in arrears on June 1 and
December 1 of each year, commencing December 1, 1998.
The Securities will be redeemable, as a whole or in part, at the option of
The Neiman Marcus Group, Inc. (the "Company") at any time, at a redemption price
equal to the greater of (a) 100% of the principal amount of such Securities and
(b) the sum of the present values of the Remaining Scheduled Payments (as
defined herein) thereon, discounted on a semiannual basis at the Treasury Rate
(as defined herein) plus 15 basis points in the case of the 2008 Notes and the
Treasury Rate plus 20 basis points in the case of the 2028 Debentures, plus in
either case accrued interest to the date of redemption. See "Description of the
Securities -- Optional Redemption."
Each of the Securities will be represented by global securities ("Global
Securities") registered in the name of the nominee of The Depository Trust
Company ("DTC"). Beneficial interests in such certificates will be shown on, and
transfers thereof will be effected only through, records maintained by DTC's
participants. Owners of beneficial interests in the certificates representing
the Securities will be entitled to physical delivery of Securities in
certificated form in the amount of their respective beneficial interests only
under the limited circumstances described herein. See "Description of the
Securities -- Book-Entry System."
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
===================================================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per 2008 Note 99.876% .650% 99.226%
- -------------------------------------------------------------------------------------------------------------------
Total $124,845,000 $812,500 $124,032,500
- -------------------------------------------------------------------------------------------------------------------
Per 2028 Debenture 99.814% .875% 98.939%
- -------------------------------------------------------------------------------------------------------------------
Total $124,767,500 $1,093,750 $123,673,750
===================================================================================================================
</TABLE>
(1) Plus accrued interest, if any, from May 27, 1998 to date of delivery.
(2) For information regarding indemnification of the Underwriters, see
"Underwriting."
(3) Before deducting expenses payable by the Company estimated at $700,000.
------------------
The Securities are offered subject to receipt and acceptance by the
Underwriters, to prior sale and to the Underwriters' right to reject any order
in whole or in part and to withdraw, cancel or modify the offer without notice.
It is expected that delivery of Global Securities representing the Securities
will be made through the facilities of DTC on or about May 27, 1998, against
payment therefor in immediately available funds.
------------------
SALOMON SMITH BARNEY
CHASE SECURITIES INC.
MERRILL LYNCH & CO.
May 21, 1998.
<PAGE> 2
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES,
INCLUDING STABILIZING AND SHORT-COVERING TRANSACTIONS. FOR A DESCRIPTION OF
THESE ACTIVITIES, SEE "UNDERWRITING."
S-2
<PAGE> 3
THE COMPANY
The Company, operating through Neiman Marcus Stores, Bergdorf Goodman and
NM Direct, is the preeminent high-end specialty retailer in the United States.
The Neiman Marcus and Bergdorf Goodman names are renowned for style, quality and
service. The 30 Neiman Marcus stores are located in premier retail locations in
major markets nationwide and the two Bergdorf Goodman stores, the main store and
the Bergdorf Goodman Men store, are located in Manhattan at 58th Street and
Fifth Avenue. Neiman Marcus Stores and Bergdorf Goodman have maintained a
consistent focus on offering high-end fashion apparel and accessories primarily
from leading designers. NM Direct, the Company's direct marketing operation,
offers a mix of apparel and home furnishings which is complementary to the
Neiman Marcus Stores merchandise. NM Direct also publishes the Horchow
catalogues, the world famous Neiman Marcus Christmas Catalogue and the recently
acquired Chef's Catalog, a leading direct marketer of gourmet cookware and
high-end kitchenware.
The Company offers its customers an extensive and carefully edited
assortment of high-end traditional and contemporary designer merchandise which
generally has limited distribution. While the Company serves a wide range of
customers, the Company believes that its core customers are generally 45 years
of age and older with household incomes in excess of $100,000. The Company is
committed to meeting the lifestyle needs and exceeding the expectations of its
customers for both merchandise quality and selection and customer service and
attention. The Company strives to create a unique shopping experience for the
most discerning and fashion conscious individuals. This experience is created by
building personal relationships with customers and working closely with designer
resources to offer exciting and fashionable merchandise in an elegant retail
environment.
Neiman Marcus Stores. Neiman Marcus Stores offers women's and men's
apparel, fashion accessories, shoes, cosmetics, furs, precious and fashion
jewelry, decorative home accessories, fine china, crystal and silver, gourmet
food products, children's apparel and gift items. As of the date of this
Prospectus Supplement, the Company operated 30 Neiman Marcus stores, located in
16 states and the District of Columbia. In fiscal 1997, 29% of Neiman Marcus
Stores sales were generated from the West, 24% from Texas, 20% from the
Northeast, 16% from the Midwest and 11% from the Southeast. The average size of
a Neiman Marcus store is approximately 142,000 gross square feet, and the stores
range in size from 90,000 gross square feet to 269,000 gross square feet.
The Company will continue to evaluate opportunities to expand its store
base in a selective and financially disciplined manner. A new 160,000 gross
square foot store in Honolulu's Ala Moana Center is currently scheduled to open
in September 1998. The Company also has announced plans for five stores which it
currently expects to open in the 1999-2001 time period. Two of these stores will
replace existing locations in the Dallas and Houston markets. The other new
stores are currently planned for Oyster Bay in New York and Coral Gables and
Palm Beach in Florida.
In October 1997, the Company announced plans to test a new retailing
format, called The Galleries of Neiman Marcus, which will offer precious and
fashion jewelry, gifts and home accessories. The Company expects to test this
format by opening three stores of approximately 10,000 to 15,000 gross square
feet each, the first of which is expected to open in Cleveland, Ohio in the fall
of 1998. The Company believes this new concept will allow it to take advantage
of its expertise as one of the country's leading retailers of jewelry, gifts and
home accessories and to extend the Neiman Marcus brand into additional markets.
Bergdorf Goodman. The Company operates two Bergdorf Goodman stores in
Manhattan at 58th Street and Fifth Avenue. The main Bergdorf Goodman store
consists of 250,000 gross square feet. The core of Bergdorf Goodman's offerings
includes high-end women's apparel and unique fashion accessories from leading
designers. Bergdorf Goodman also features traditional and contemporary
decorative home accessories, precious and fashion jewelry, gifts and gourmet
foods. Bergdorf Goodman Men consists of 66,000 gross square feet and is
dedicated to fine men's apparel and accessories. Over the next 18 months, the
Company expects to add approximately 13,000 square feet of selling space to the
main store through renovations and plans to add additional selling space at that
location through further renovations in the next several years.
S-3
<PAGE> 4
NM Direct. NM Direct offers customers the opportunity to purchase upscale
quality designed and crafted merchandise with the convenience of at-home
shopping. NM Direct primarily offers women's apparel under the Neiman Marcus
name and, through its Horchow catalogues, offers quality home furnishings,
tabletop, linens and decorative accessories. NM Direct also offers a broad range
of more moderately priced items through its Trifles and Grand Finale lines and
annually publishes the world famous Neiman Marcus Christmas Catalogue. In
January 1998, NM Direct acquired Chef's Catalog, a leading direct marketer of
gourmet cookware and high-end kitchenware.
The Company also operates six clearance centers which average 19,000 gross
square feet each. These stores provide an efficient and controlled outlet for
the sale of marked down merchandise from Neiman Marcus Stores, Bergdorf Goodman
and NM Direct. The Company expects to open five additional clearance centers
during the next 18 months.
Harcourt General, Inc. ("Harcourt General") currently owns approximately
53% of the common stock of the Company. Four of Harcourt General's senior
officers, including its Chairman and Chief Executive Officer, its Presidents and
Co-Chief Operating Officers and its Senior Vice President and Chief Financial
Officer, are directors of the Company and virtually all of Harcourt General's
officers and corporate staff occupy similar positions with the Company.
The Company frequently evaluates strategic opportunities within its
existing businesses. Although the Company has no pending understandings or
agreements with respect to acquisitions, the Company may from time to time
pursue acquisitions.
The Company's corporate headquarters are located at 27 Boylston Street,
Chestnut Hill, Massachusetts 02167 (telephone: (617) 232-0760). The Company's
Common Stock is traded on the New York Stock Exchange under the symbol "NMG."
USE OF PROCEEDS
The net proceeds from the sale of the Securities are estimated to be
$247,006,250 after deducting underwriting discounts and estimated expenses
payable by the Company. The Company currently intends to use the net proceeds to
repay indebtedness incurred under its revolving credit facility (the "Credit
Facility"). The Credit Facility expires on October 29, 2002 and borrowings
thereunder bear interest at a rate determined in accordance with one of four
pricing options selected by the Company (5.88% at May 11, 1998). The Company's
plans to repay such indebtedness may change as a result of changes in market
conditions and other factors, and there can be no assurance that the Company
will apply the net proceeds to repay such indebtedness. Any net proceeds not
used to repay such indebtedness will be used for general corporate purposes,
which may include capital expenditures, working capital requirements, repayment
or reduction of other indebtedness, acquisitions and other business ventures.
Pending such application, the net proceeds will be invested in short-term
investment grade securities.
S-4
<PAGE> 5
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company as of January 31, 1998 on a historical basis and on an as adjusted basis
giving effect to the sale of the Securities and application of the proceeds
therefrom to repay borrowings under the Credit Facility. See "Use of Proceeds."
This table should be read in conjunction with, and is qualified by reference to,
the Company's consolidated financial statements and related notes contained in
documents incorporated by reference in the accompanying Prospectus.
<TABLE>
<CAPTION>
JANUARY 31, 1998
----------------------------
HISTORICAL AS ADJUSTED(1)
---------- --------------
(IN THOUSANDS)
<S> <C> <C>
Current portion of capital lease obligations................ $ 632 $ 632
======== ========
Long-term debt:
Revolving credit agreement................................ $325,000 $ 75,000
Senior notes and debentures............................... -- 250,000
Capital lease obligations................................. 5,290 5,290
-------- --------
Total long-term debt................................... 330,290 330,290
-------- --------
Shareholders' equity........................................ 616,290 616,290
-------- --------
Total capitalization................................... $946,580 $946,580
======== ========
</TABLE>
- ---------------
(1) The as adjusted information gives effect to the sale of the Securities and
the repayment of borrowings under the Company's Credit Facility as if such
events occurred on January 31, 1998.
S-5
<PAGE> 6
SUMMARY CONSOLIDATED FINANCIAL DATA
The summary historical consolidated financial data presented below for the
three fiscal years in the period ended August 2, 1997 have been derived from the
Company's audited consolidated financial statements for each of the three fiscal
years in the period ended August 2, 1997 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 Company's consolidated
financial statements and notes thereto and the other financial information
incorporated by reference in the accompanying Prospectus. The unaudited
financial data for the twenty-six weeks ended February 1, 1997 and January 31,
1998 have been prepared by management and include all adjustments (consisting
only of normal recurring accruals) which management considers necessary for a
fair presentation of the results of operations and financial position of the
Company for the periods and as of the dates indicated. The Company's businesses
are seasonal in nature and the results of operations for the twenty-six weeks
ended January 31, 1998 are not necessarily indicative of the results for the
full year.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED TWENTY-SIX WEEKS ENDED
-------------------------------------- --------------------------
JULY 29, AUGUST 3, AUGUST 2, FEBRUARY 1, JANUARY 31,
1995 1996(1) 1997 1997(2) 1998(2)
---------- ---------- ---------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues..................... $1,888,249 $2,075,003 $2,209,891 $1,206,050 $1,288,886
Cost of goods sold including
buying and occupancy
costs...................... 1,276,776 1,416,296 1,504,858 811,200 863,160
Selling, general and
administrative
expenses(3)................ 448,956 485,533 509,687 277,910 297,010
Corporate expenses........... 12,465 13,719 14,364 6,796 6,695
---------- ---------- ---------- ---------- ----------
Operating earnings(3)........ 150,052 159,455 180,982 110,144 122,021
Interest expense............. (33,958) (28,228) (26,330) (14,353) (11,816)
---------- ---------- ---------- ---------- ----------
Earnings from continuing
operations before income
taxes...................... 116,094 131,227 154,652 95,791 110,205
Income taxes................. 48,759 53,803 63,407 39,274 44,082
---------- ---------- ---------- ---------- ----------
Earnings from continuing
operations................. 67,335 77,424 91,245 56,517 66,123
Loss from discontinued
operations net of taxes
(including loss on disposal
of $9,873 in 1995)(4)...... (11,727) -- -- -- --
---------- ---------- ---------- ---------- ----------
Net earnings................. 55,608 77,424 91,245 56,517 66,123
Loss on redemption of
redeemable preferred
stocks(5).................. -- -- (22,361) (22,361) --
Dividends and accretion on
redeemable preferred
stocks..................... (29,092) (29,104) (6,201) (6,201) --
---------- ---------- ---------- ---------- ----------
Net earnings applicable to
common shareholders........ $ 26,516 $ 48,320 $ 62,683 $ 27,955 $ 66,123
========== ========== ========== ========== ==========
HISTORICAL BALANCE SHEET
DATA:
Cash and equivalents......... $ 13,695 $ 12,659 $ 16,861 $ 23,780 $ 22,916
Total assets................. 1,108,437 1,252,350 1,287,860 1,309,081 1,403,328
Total current liabilities.... 374,580 374,048 331,492 316,306 359,190
Total debt(6)................ 256,306 325,197 306,143 376,426 330,922
Redeemable preferred
stocks(5).................. 405,442 407,426 -- -- --
Total common shareholders'
equity(5).................. 26,547 75,607 554,728 519,970 616,290
</TABLE>
S-6
<PAGE> 7
<TABLE>
<CAPTION>
FISCAL YEAR ENDED TWENTY-SIX WEEKS ENDED
------------------------------------------- --------------------------------
JULY 29, AUGUST 3, AUGUST 2, FEBRUARY 1, JANUARY 31,
1995 1996(1) 1997 1997(2) 1998(2)
----------- ------------ ------------ -------------- --------------
(IN THOUSANDS, EXCEPT RATIOS, SALES PER SQUARE FOOT DATA AND NUMBER OF STORES)
<S> <C> <C> <C> <C> <C>
OTHER DATA:
Increase in comparable sales:
Neiman Marcus Stores(7).......... 6.7% 6.5% 5.3% 5.4% 7.2%
Total(8)......................... 5.5% 5.4% 4.7% 4.4% 6.5%
Retail store sales per average
square foot(9):
Neiman Marcus Stores............. $ 360 $ 380 $ 392 $ 212 $ 228
Bergdorf Goodman................. $ 764 $ 786 $ 803 $ 433 $ 476
Gross margin(10)................... 32.4% 31.7% 31.9% 32.7% 33.0%
Selling, general and administrative
expenses as a percentage of
revenues(3)...................... 23.8% 23.4% 23.1% 23.0% 23.0%
Operating profit margin(3)(11)..... 7.9% 7.7% 8.2% 9.1% 9.5%
Depreciation and amortization...... $ 48,397 $ 56,305 $ 59,820 $ 30,425 $ 31,404
Capital expenditures............... $ 93,514 $ 85,736 $ 53,037 $ 23,279 $ 36,641
EBITDA(12)......................... $198,449 $215,760 $240,802 $140,569 $153,425
EBITDA as a percentage of total
revenues......................... 10.5% 10.4% 10.9% 11.7% 11.9%
Ratio of earnings to fixed
charges(13)...................... 3.2 3.8 4.5 5.2 6.2
Number of stores at end of period:
Neiman Marcus Stores............. 27 29 30 30 30
Bergdorf Goodman................. 2 2 2 2 2
</TABLE>
- ---------------
(1) Fiscal 1996 was a 53 week year.
(2) The Company's businesses are seasonal in nature, and historically the
results of operations for these periods have not been indicative of the
results for the full year.
(3) In March 1995 the Company sold all of its Neiman Marcus credit card
receivables through a subsidiary to a trust in exchange for certificates
representing undivided interests in such receivables. The securitization
resulted in a decrease in finance charge income (which is recorded as an
offset to selling, general and administrative expenses) and a resulting
decrease in operating earnings in the periods presented. The following
chart shows selling, general and administrative expenses and operating
earnings as if the securitization had not occurred:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED TWENTY-SIX WEEKS ENDED
---------------------------------- --------------------------
JULY 29, AUGUST 3, AUGUST 2, FEBRUARY 1, JANUARY 31,
1995 1996 1997 1997(2) 1998(2)
-------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Selling, general and
administrative
expenses............... $441,856 $466,493 $490,647 $268,390 $287,490
Selling, general and
administrative expenses
as a percentage of
revenues............... 23.4% 22.5% 22.2% 22.3% 22.3%
Operating earnings....... $157,152 $178,495 $200,022 $119,664 $131,541
Operating profit
margin................. 8.3% 8.6% 9.1% 9.9% 10.2%
</TABLE>
The securitization also had the effect of reducing accounts receivable in
fiscal 1995 by approximately $246 million.
(4) Reflects the operations of Contempo Casuals which were sold in June 1995.
S-7
<PAGE> 8
(5) 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 in November
1996, together with 3.9 million shares of the Company's common stock and
borrowings of approximately $20.0 million, to purchase all of its
outstanding redeemable preferred stock from Harcourt General, Inc. and to
pay accrued and unpaid dividends. In connection with this transaction, the
Company incurred a non-recurring charge to net earnings applicable to
common shareholders of $22.4 million.
(6) Includes capital lease obligations.
(7) Comparable sales represents net sales of stores open in both reporting
periods for the portion of such period open. In fiscal 1996, comparable
sales exclude the impact of the 53rd week.
(8) Total comparable sales represents (i) net sales of stores open in both
reporting periods for the portion of such period open and (ii) NM Direct
net sales. In fiscal 1996, comparable sales exclude the impact of the 53rd
week.
(9) Sales per average square foot in each period represent net retail store
sales for such period divided by the average of total gross square feet of
stores. In fiscal 1996, sales per average square foot exclude sales for the
53rd week.
(10) Gross margin represents revenues less cost of goods sold including buying
and occupancy costs as a percentage of revenues.
(11) Operating profit margin represents operating earnings as a percentage of
revenues.
(12) "EBITDA" is defined as earnings from continuing operations before income
taxes plus depreciation and amortization and interest expense. The Company
believes EBITDA is a standard measure commonly reported and widely used by
analysts, investors and other interested parties. EBITDA is presented
solely as a supplement to the other information provided above. EBITDA is
not a substitute for operating and cash flow data as determined in
accordance with generally accepted accounting principles.
(13) Fixed charges consist of interest expense (including amortization of
previously capitalized interest) and approximately 40.0% of rent expense
(estimated by management to be the interest component of such rent
expense).
S-8
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Twenty-Six Weeks Ended January 31, 1998 Compared to Twenty-Six Weeks Ended
February 1, 1997
Revenues. Revenues in the twenty-six weeks ended January 31, 1998
increased $82.8 million or 6.9% over revenues in the twenty-six weeks ended
February 1, 1997. Neiman Marcus Stores and Bergdorf Goodman revenues rose,
reflecting comparable sales increases of 7.2% and 9.9%, respectively, in the
first half of 1998. Revenues at NM Direct increased slightly, due primarily to
sales from Chef's Catalog, a direct-marketer of gourmet cookware and high-end
kitchenware, which was acquired at the beginning of January 1998.
Cost of Goods Sold. Cost of goods sold, including buying and occupancy
costs, increased $52.0 million or 6.4% compared to the same period last year. As
a percentage of revenues, cost of goods sold, including buying and occupancy
costs, decreased to 67.0% in the first half of fiscal 1998 compared to 67.3% in
the first half of fiscal 1997. Margins improved in fiscal 1998 due principally
to proportionately lower buying and occupancy costs.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 6.9% to $297.0 million from $277.9 million in
the first half of fiscal 1997 primarily due to higher sales volume. As a
percentage of revenues, selling, general and administrative expenses were
unchanged at 23.0% in the first half of both fiscal 1998 and 1997.
Interest Expense. Interest expense decreased 17.7% to $11.8 million in the
fiscal 1998 period. The decrease resulted from lower average outstanding
borrowings as well as from a lower effective interest rate on such borrowings.
In fiscal 1997 the Company repaid its fixed rate senior notes upon maturity with
borrowings under its revolving credit agreement.
CHANGES IN FINANCIAL CONDITION AND LIQUIDITY SINCE AUGUST 2, 1997
During the first twenty-six weeks of fiscal 1998, the Company financed its
working capital needs, capital expenditures and the acquisition of Chef's
Catalog primarily with cash borrowings under the Credit Facility and cash
generated from operations. 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 contained in the
Company's quarterly report for the period ended January 31, 1998, incorporated
by reference in the accompanying Prospectus.
Net cash provided by operating activities was $125.2 million during the
twenty-six weeks ended January 31, 1998 as compared to $67.0 million in the
first half of fiscal 1997. The primary items affecting working capital since
August 2, 1997 were an increase in accounts payable and accrued liabilities
($19.6 million), partially offset by a seasonal decrease in merchandise
inventories ($21.7 million).
Capital expenditures were $36.6 million during the first half of fiscal
1998 as compared to $23.3 million in the first half of fiscal 1997. The
Company's capital expenditures consisted principally of the construction of a
new Neiman Marcus store in Honolulu's Ala Moana Center, expected to open in
September, 1998, and existing store renovations. Capital expenditures are
expected to approximate $100.0 million during fiscal 1998.
In January 1998, the Company acquired Chef's Catalog, for approximately
$31.0 million in cash. The acquisition was funded primarily through borrowings
under its Credit Facility.
The Company has increased its bank borrowings by $25.0 million since August
2, 1997. At January 31, 1998, the Company had $325.0 million in borrowings
outstanding and $325.0 million available under its Credit Facility. The Company
believes that it will have sufficient resources to fund its planned capital
growth and operating requirements.
S-9
<PAGE> 10
YEAR 2000 DATE CONVERSION
The Company has evaluated the effect of the year 2000 date on its computer
systems and is implementing plans to ensure its systems and applications will
effectively process information necessary to support ongoing operations of the
Company in the year 2000 and beyond. The Company is engaging both internal and
external resources to reprogram and test its systems for year 2000 compliance.
The Company currently anticipates substantially completing the year 2000 project
by January 1999. Based on management's current estimates, the costs of system
modifications and enhancements, which have been and will be expensed as
incurred, are not expected to be material to the results of operations or the
financial position of the Company. Additionally, the Company continues to invest
in new technology in connection with its ongoing systems development plans.
The Company has initiated formal communications with its significant
vendors to determine the extent to which the Company's interface systems and
operations are vulnerable to those third parties' failure to rectify their own
year 2000 issues. There can be no assurance that the systems of other companies
on which the Company's systems rely will be timely converted and will not have
an adverse effect on the Company's operations.
SEASONALITY
The specialty retail industry is seasonal in nature, and as a result a
higher level of the Company's sales and earnings are generated in the first six
months of the fiscal year. The Company's working capital requirements and
inventories increase substantially in the first quarter in anticipation of the
holiday selling season.
FORWARD-LOOKING STATEMENTS
Statements in this Prospectus Supplement referring to the expected future
plans and performance of the Company are forward-looking statements. Actual
future results may differ materially from such statements. Factors that could
affect future performance include, but are not limited to: changes in economic
conditions or consumer confidence; changes in consumer preferences or fashion
trends; delays in anticipated store openings; adverse weather conditions,
particularly during peak selling seasons; changes in demographic or retail
environments; competitive influences; significant increases in paper, printing
and postage costs; and changes in the Company's relationships with designers and
other resources.
S-10
<PAGE> 11
DESCRIPTION OF THE SECURITIES
The following description of the Securities offered hereby supplements, and
to the extent inconsistent therewith, supersedes, insofar as such description
relates to the Securities, the description of the general terms and provisions
of the Debt Securities set forth in the accompanying Prospectus, to which
description reference is hereby made. Reference should be made to the
accompanying Prospectus for a detailed summary of the provisions of the
Indenture (as defined in the accompanying Prospectus) under which the Securities
are issued.
2008 NOTES
The 2008 Notes are limited to $125,000,000 aggregate principal amount and
will mature on June 1, 2008.
The 2008 Notes will bear interest at the rate per annum set forth on the
cover page of this Prospectus Supplement from May 27, 1998, or from the most
recent Interest Payment Date to which interest has been paid or provided for,
payable semiannually in arrears on June 1 and December 1 of each year, beginning
on December 1, 1998, to the persons in whose names the 2008 Notes are registered
at the close of business on the preceding May 15 or November 15, as the case may
be.
2028 DEBENTURES
The 2028 Debentures are limited to $125,000,000 aggregate principal amount
and will mature on June 1, 2028.
The 2028 Debentures will bear interest at the rate per annum set forth on
the cover page of this Prospectus Supplement from May 27, 1998, or from the most
recent Interest Payment Date to which interest has been paid or provided for,
payable semiannually in arrears on June 1 and December 1 of each year, beginning
on December 1, 1998, to the persons in whose names the 2028 Debentures are
registered at the close of business on the preceding May 15 or November 15, as
the case may be.
OPTIONAL REDEMPTION
The Securities will be redeemable, as a whole or in part, at the option of
the Company at any time, at a redemption price equal to the greater of (a) 100%
of the principal amount of the Securities to be redeemed and (b) the sum of the
present values of the Remaining Scheduled Payments (as hereinafter defined)
thereon discounted to the redemption date on a semiannual basis (assuming a
360-day year consisting of twelve 30-day months) at the Treasury Rate plus 15
basis points in the case of the 2008 Notes and the Treasury Rate plus 20 basis
points in the case of the 2028 Debentures, plus in any case accrued interest on
the principal amount being redeemed to the date of redemption.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Securities to be redeemed that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such Securities. "Independent Investment Banker" means one of
the Reference Treasury Dealers appointed by the Company.
"Comparable Treasury Price" means, with respect to any redemption date, (a)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (b) if such release (or any successor release) is not
S-11
<PAGE> 12
published or does not contain such prices on such business day, (i) the average
of the Reference Treasury Dealer Quotations for such redemption date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations, or
(ii) if the Trustee obtains fewer than four such Reference Treasury Dealer
Quotations, the average of all such Quotations. "Reference Treasury Dealer
Quotations" means, with respect to each Reference Treasury Dealer and any
redemption date, the average, as determined by the Trustee, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a percentage
of its principal amount) quoted in writing to the Trustee by such Reference
Treasury Dealer at 5:00 p.m. New York time on the third business day preceding
such redemption date.
"Reference Treasury Dealer" means each of Salomon Brothers Inc, Chase
Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith, Incorporated, their
respective successors and any such other Primary Treasury Dealer as the Company
designates; provided, however, that if any of the foregoing shall cease to be a
primary U.S. Government securities dealer in New York City (a "Primary Treasury
Dealer"), the Company shall substitute therefor another Primary Treasury Dealer.
"Remaining Scheduled Payments" means, with respect to any Security, the
remaining scheduled payments of the principal thereof to be redeemed and
interest thereon that would be due after the related redemption date but for
such redemption; provided, however, that, if such redemption date is not an
interest payment date with respect to such Securities, the amount of the next
succeeding scheduled interest payment thereon will be reduced by the amount of
interest accrued thereon to such redemption date.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Securities to be redeemed.
Unless the Company defaults in payment of the redemption price, on and
after the applicable redemption date, interest will cease to accrue on the
Securities or portions thereof called for redemption.
BOOK-ENTRY SYSTEM
The Securities initially will be represented by Global Securities deposited
with DTC and registered in the name of a nominee of DTC. Except as set forth
below, the Securities will be available for purchase in denominations of $1,000
and integral multiples thereof in book-entry form only. The term "Depository"
refers to DTC or any successor depository.
DTC has advised the Company and the Underwriters as follows: DTC is a
limited-purpose trust company organized under the laws of the State of New York,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC was created to hold securities of persons who have accounts
with DTC ("participants") and to facilitate the clearance and settlement of
securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. DTC's
participants include securities brokers and dealers (including the
Underwriters), banks, trust companies, clearing corporations and certain other
organizations, some of which (and/or their representatives) own DTC. Access to
DTC's book-entry system is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly.
Upon the issuance by the Company of Securities represented by the Global
Securities, the Depository or its nominee will credit, on its book-entry
registration and transfer system, the respective principal amounts of the
Securities represented by such Global Securities to the accounts of
participants. The accounts to be credited shall be designated by the
Underwriters. Ownership of beneficial interests in Securities represented by the
Global Securities will be limited to participants or persons that hold interest
through participants. Ownership of such beneficial interests in Securities will
be shown on, and the transfer of that ownership will be effected only through,
records maintained by the Depository (with respect to interests of participants
in the Depository), or by participants in the Depository or persons that may
hold interests through such participants (with respect to persons other than
participants in the Depository). The laws of some states require that
S-12
<PAGE> 13
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to transfer
beneficial interests in Securities represented by Global Securities.
So long as the Depository for a Global Security, or its nominee, is the
registered owner of such Global Security, the Depository or its nominee, as the
case may be, will be considered the sole owner or holder of the Securities
represented by such Global Security for all purposes under the Indenture. Unless
the Company elects to issue individual Securities in definitive form in exchange
for Global Securities, as described in the third succeeding paragraph, owners of
beneficial interests in Global Securities will not be entitled to have the
Securities represented by such Global Securities registered in their names, will
not receive or be entitled to receive physical delivery of Securities in
definitive form and will not be considered the owners or holders thereof under
the Indenture. Unless and until the Global Securities are exchanged in whole or
in part for individual certificates evidencing the Securities represented
thereby, such Global Securities may not be transferred except as a whole (i) by
the Depository for such Global Securities to a nominee of such Depository, (ii)
by a nominee of such Depository to such Depository or another nominee of such
Depository or (iii) by the Depository or any nominee of such Depository to a
successor Depository or any nominee of such successor Depository.
Payments of principal of and interest on the Securities represented by
Global Securities registered in the name of the Depository or its nominee will
be made by the Company through the Paying Agent (as defined in the Indenture) to
the Depository or its nominee, as the case may be, as the registered owner of
such Global Securities.
The Company has been advised that the Depository or its nominee, upon
receipt of any payment of principal or interest in respect of the Securities
represented by Global Securities, will credit immediately the accounts of the
related participants with payment in amounts proportionate to their respective
beneficial interest in the Securities represented by the Global Securities as
shown on the records of the Depository. The Company expects that payments by
participants to owners of beneficial interests in the Securities represented by
the Global Securities will be governed by standing customer instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name." Such payments will be
the responsibility of such participants.
If the Depository is at any time unwilling or unable to continue as
Depository and a successor depository is not appointed by the Company within 90
days, the Company will issue individual Securities in definitive form in
exchange for the Global Securities. In addition, the Company may at any time and
in its sole discretion determine not to have the Securities represented by
Global Securities, and, in such event, will issue individual 2008 Notes or 2028
Debentures, as the case may be, in definitive form in exchange for the Global
Securities. Notwithstanding the foregoing sentence, the Company has no present
intention to issue individual 2008 Notes or 2028 Debentures in definitive form
and, except as described in the first sentence of this paragraph, does not
currently anticipate that any circumstances will arise under which it would do
so. In either instance, the Company will issue 2008 Notes or 2028 Debentures in
definitive form equal in aggregate principal amount to the Global Securities, in
such names and in such principal amounts as the Depository shall request. 2008
Notes or 2028 Debentures so issued in definitive form will be issued in
dominations of $1,000 and integral multiples thereof and will be issued in
registered form only, without coupons.
Neither the Company, the Trustee, any Paying Agent (as defined in the
Indenture) nor the registrar for the Securities will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in the Securities represented by such Global
Securities or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
S-13
<PAGE> 14
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company has agreed to sell to each of the Underwriters named
below, and each of the Underwriters has severally agreed to purchase, the amount
of 2008 Notes and 2028 Debentures set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT PRINCIPAL AMOUNT
UNDERWRITERS OF 2008 NOTES OF 2028 DEBENTURES
------------ ---------------- ------------------
<S> <C> <C>
Salomon Brothers Inc........................ $ 41,700,000 $ 41,700,000
Chase Securities Inc. ...................... 41,650,000 41,650,000
Merrill Lynch, Pierce, Fenner & Smith,
Incorporated.............................. 41,650,000 41,650,000
------------ ------------
Total.................................. $125,000,000 $125,000,000
============ ============
</TABLE>
In the Underwriting Agreement, the several Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all the 2008
Notes and 2028 Debentures offered hereby if any 2008 Notes or 2028 Debentures
are purchased. In the event of default by any Underwriter, the Underwriting
Agreement provides that, in certain circumstances, the Underwriting Agreement
may be terminated.
The Company has been advised by the Underwriters that they propose
initially to offer the 2008 Notes to the public at the public offering price set
forth on the cover page of this Prospectus Supplement, and to certain dealers at
such price less a concession of not more than .40% of the principal amount of
the 2008 Notes. The Underwriters may allow and such dealers may reallow a
concession of not more than .25% of the principal amount of the 2008 Notes to
certain other dealers. After the initial public offering, the public offering
price and such concessions may be changed.
The Company has been advised by the Underwriters that they propose
initially to offer the 2028 Debentures to the public at the public offering
price set forth on the cover page of this Prospectus Supplement, and to certain
dealers at such price less a concession of not more than .50% of the principal
amount of the 2028 Debentures. The Underwriters may allow and such dealers may
reallow a concession of not more than .25% of the principal amount of the 2028
Debentures to certain other dealers. After the initial public offering, the
public offering price and such concessions may be changed.
The Company has been advised by the Underwriters that they intend to make a
market in the Securities, but that they are not obligated to do so and may
discontinue making a market at any time without notice. The Company currently
has no intention to list the Securities on any securities exchange, and there
can be no assurance given as to the liquidity of the trading market for the
Securities.
The Underwriting Agreement provides that the Company will indemnify the
several Underwriters against certain civil liabilities, including liabilities
under the Securities Act of 1933, as amended, or contribute to payments which
the Underwriters may be required to make in respect thereof.
Certain of the Underwriters and their affiliates have from time to time
provided, and may in the future provide, investment banking and general
financing and banking services to the Company and its affiliates, for which they
received or will receive customary fees. The Chase Manhattan Bank, an affiliate
of Chase Securities Inc., is the Documentation Agent and a lender under the
Credit Facility and will receive a portion of the amount repaid under such
Credit Facility with the proceeds of the Offering. See "Use of Proceeds."
Salomon Brothers Inc, on behalf of the Underwriters, may engage in
stabilizing and syndicate covering transactions in accordance with Rule 104
under the Securities Exchange Act of 1934, as amended. Rule 104 permits
stabilizing bids to purchase the underlying security so long as the stabilizing
bids do not exceed a specified maximum. Syndicate covering transactions involve
purchases of the Securities in the open market after the distribution has been
completed in order to cover syndicate short positions. Stabilizing and syndicate
covering transactions may cause the prices of the Securities to be higher than
they would otherwise be in the absence of such transactions. These transactions,
if commenced, may be discontinued at any time.
S-14
<PAGE> 15
LEGAL MATTERS
The legality of the Securities offered hereby will be passed upon for the
Company by Ropes & Gray, Boston, Massachusetts. Certain legal matters will be
passed upon for the Underwriters by Cravath, Swaine & Moore, New York, New York.
S-15
<PAGE> 16
[This Page Intentionally Left Blank]
<PAGE> 17
PROSPECTUS
$500,000,000
[NEIMAN MARCUS LOGO]
DEBT SECURITIES
The Neiman Marcus Group, Inc. (the "Company") intends to sell from time to
time its senior debt securities, consisting of notes, debentures or other
evidences of indebtedness (the "Debt Securities"). The Debt Securities offered
by the Company hereby will have an aggregate initial public offering price not
to exceed $500,000,000. The Debt Securities may be offered as separate series in
amounts, at prices and on terms to be determined at the time of sale and to be
set forth in Supplements to this Prospectus. The Company may sell securities to
or through underwriters or dealers, directly to other purchasers or through
agents. See "Plan of Distribution."
The Debt Securities will be unsecured and will rank equally with all other
unsecured and unsubordinated indebtedness of the Company. The terms of the Debt
Securities, including where applicable the specific designation; aggregate
principal amount; denominations; maturity; premium; interest rate (which may be
fixed or variable) and time of payment of interest; terms of redemption at the
option of the Company or the holder; terms for sinking fund payments; the
initial public offering price; terms relating to temporary or permanent global
securities; special provisions and restrictions relating to Debt Securities in
bearer form or in registered form with coupons; provisions regarding
registration of transfer or exchange; special provisions and restrictions
relating to Debt Securities; the principal, premium, if any, and interest of
which is denominated and payable in a foreign currency or currency unit; and
other terms in connection with the offering and sale of the Debt Securities in
respect of which this Prospectus is being delivered, will be set forth in an
accompanying Prospectus Supplement (the "Prospectus Supplement").
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The Debt Securities may be sold directly to purchasers, through agents,
underwriters or dealers as designated from time to time or through a combination
of such methods. See "Plan of Distribution." If agents of the Company or any
dealers or underwriters are involved in the sale of the Debt Securities in
respect of which this Prospectus is being delivered, the names of such agents,
dealers or underwriters and any applicable commission or discounts will be set
forth in the Prospectus Supplement with respect to such Debt Securities.
THE DATE OF THIS PROSPECTUS IS APRIL 17, 1998
<PAGE> 18
No person is authorized in connection with any offering made hereby to give
any information or to make any representation not contained or incorporated by
reference in this Prospectus, and any information or representation not
contained or incorporated herein must not be relied upon as having been
authorized by the Company or the Underwriters. This Prospectus does not
constitute an offer to sell or the solicitation of an offer to buy any security
other than the securities covered by this Prospectus, nor does it constitute an
offer or solicitation by any person in any jurisdiction in which it is unlawful
for such person to make such an offer or solicitation. Neither the delivery of
this Prospectus at any time nor any sale made hereunder shall under any
circumstance imply that the information herein is correct as of any date
subsequent to the date hereof.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Statement of Available Information.......................... 3
Incorporation of Certain Documents by Reference............. 3
The Company................................................. 4
Use of Proceeds............................................. 4
Ratio of Earnings to Fixed Charges.......................... 5
Earnings Per Share Data..................................... 5
Description of Debt Securities.............................. 6
Plan of Distribution........................................ 11
Legal Matters............................................... 11
Experts..................................................... 12
</TABLE>
------------------------
2
<PAGE> 19
STATEMENT OF AVAILABLE INFORMATION
The Company is subject to the requirements of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and in accordance therewith files
reports, proxy and information statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy and
information statements and other information filed by the Company can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
following Regional Offices of the Commission: Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade Center, Suite
1300, New York, New York 10048. Copies of such material may also be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. The Commission maintains a World
Wide Web site (http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants, such as the Company,
that submit electronic filings to the Commission. The Company's Common Stock is
listed on the New York Stock Exchange, and reports, proxy and information
statements and other information concerning the Company may also be inspected at
the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York,
New York 10005.
The Company has filed with the Commission a Registration Statement under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the Debt Securities offered hereby (the "Registration Statement"). This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. Reference is made to the Registration Statement
and to the exhibits relating thereto for further information with respect to the
Company and the Debt Securities offered hereby. Statements made in this
Prospectus as to the contents of any contract, agreement or other document
referred to are not necessarily complete; and with respect to each such
contract, agreement or other document filed, or incorporated by reference, as an
exhibit to the Registration Statement, reference is made to the exhibit for a
more complete description of the matter involved and each such statement shall
be deemed qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
August 2, 1997;
(2) The Company's Quarterly Reports on Form 10-Q for the thirteen weeks
ended November 1, 1997 and January 31, 1998; and
(3) The Company's Current Report on Form 8-K filed March 24, 1998.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the
initial filing of the Registration Statement of which this Prospectus is a part
and prior to the termination of the offering of the Debt Securities shall be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein or in
the Prospectus Supplement modifies or supersedes such statement. Any statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, UPON A WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY
OF ANY OR ALL OF THE FOREGOING DOCUMENTS INCORPORATED BY REFERENCE INTO THIS
PROSPECTUS (WITHOUT EXHIBITS TO SUCH DOCUMENTS OTHER THAN EXHIBITS SPECIFICALLY
INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS). REQUESTS FOR SUCH COPIES SHOULD
BE DIRECTED TO THE CORPORATE RELATIONS DEPARTMENT OF THE COMPANY, 27 BOYLSTON
STREET, CHESTNUT HILL, MASSACHUSETTS 02167 (TELEPHONE: (617) 232-0760).
3
<PAGE> 20
THE COMPANY
The Company, operating through Neiman Marcus Stores, Bergdorf Goodman and
NM Direct, is the preeminent high-end specialty retailer in the United States.
NEIMAN MARCUS STORES. Neiman Marcus Stores offer women's and men's
apparel, fashion accessories, shoes, cosmetics, furs, precious jewelry,
decorative home accessories, fine china, crystal and silver, gourmet food
products, children's apparel and gift items. As of the date of this Prospectus,
the Company operated 30 Neiman Marcus stores in premier retail locations in
major markets nationwide.
BERGDORF GOODMAN. The Company operates two Bergdorf Goodman stores in
Manhattan at 58th Street and Fifth Avenue. The main Bergdorf Goodman store
offers high-end women's apparel and unique fashion accessories from leading
designers. Bergdorf Goodman also features traditional and contemporary
decorative home accessories, precious jewelry, gifts and gourmet foods. Bergdorf
Goodman Men is dedicated to fine men's apparel and accessories.
NM DIRECT. NM Direct, the Company's direct marketing operation, primarily
offers women's apparel under the Neiman Marcus name and, through its Horchow
catalogues, offers hard goods such as quality home furnishings, tabletop, linens
and decorative accessories to its domestic and international customers. NM
Direct annually publishes the world famous Neiman Marcus Christmas Catalogue. In
January 1998, the Company acquired Chef's Catalog, a direct marketer of gourmet
cookware and high-end kitchenware.
Harcourt General, Inc. ("Harcourt General") currently owns approximately
53% of the common stock of the Company. Four of Harcourt General's senior
officers, including its Chairman and Chief Executive Officer, its Presidents and
Co-Chief Operating Officers and its Senior Vice President and Chief Financial
Officer, are directors of the Company and virtually all of Harcourt General's
officers and corporate staff occupy similar positions with the Company.
The Company's corporate headquarters are located at 27 Boylston Street,
Chestnut Hill, Massachusetts 02167 (telephone: (617) 232-0760). The outstanding
shares of the Company are traded on the New York Stock Exchange under the symbol
"NMG."
USE OF PROCEEDS
Unless otherwise indicated in an accompanying Prospectus Supplement, the
Company intends to use the net proceeds from the sale of the Debt Securities for
general corporate purposes, which may include capital expenditures, working
capital requirements, repayment or reduction of indebtedness, acquisitions and
other business ventures. The precise amount and timing of the application of
such proceeds will depend upon the funding requirements of the Company and the
availability and cost of other funds. Pending such application, the net proceeds
will be invested in short-term investment grade securities.
More detailed information concerning the use of the proceeds from any
particular offering of the Debt Securities will be contained in the Prospectus
Supplement relating to such offering.
4
<PAGE> 21
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of earnings to fixed charges for
the Company for the periods indicated. These ratios were computed by dividing
earnings from continuing operations, before income taxes and fixed charges, by
fixed charges. Fixed charges consist of interest expense (including amortization
of previously capitalized interest) and approximately 40% of rent expense
(estimated by management to be the interest component of such rent expense).
<TABLE>
<CAPTION>
FISCAL YEAR ENDED TWENTY-SIX WEEKS ENDED
------------------------------------------------------ -------------------------
JULY 31, JULY 30, JULY 29, AUGUST 3, AUGUST 2, FEBRUARY 1, JANUARY 31,
1993 1994 1995 1996 1997 1997(1) 1998(1)
-------- -------- -------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges........................ 3.6 3.4 3.2 3.8 4.5 5.2 6.2
</TABLE>
- ---------------
(1) The Company's businesses are seasonal in nature, and historically the
results of operations for these periods have not been indicative of the
results for the full year.
EARNINGS PER SHARE DATA
As required, the Company has adopted Statement of Financial Accounting
Standards No. 128, "Earnings Per Share," ("SFAS 128") in the twenty-six weeks
ended January 31, 1998 and has restated prior periods' earnings per share
information to conform to SFAS 128.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED TWENTY-SIX WEEKS ENDED
------------------------------------------------------ -------------------------
JULY 31, JULY 30, JULY 29, AUGUST 3, AUGUST 2, FEBRUARY 1, JANUARY 31,
1993 1994 1995 1996 1997 1997(1) 1998(1)
-------- -------- -------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Amounts per share applicable to
common shareholders:
Basic earnings (loss) per
share:
Earnings from continuing
operations................ $ 1.01 $ 0.96 $ 1.01 $ 1.27 $ 1.33 $ 0.63 $ 1.33
Discontinued operations..... (0.22) (1.31) (0.31)
Accounting change........... (0.30) -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------
Net earnings
(loss) -- basic........... $ 0.49 $(0.35) $ 0.70 $ 1.27 $ 1.33 $ 0.63 $ 1.33
====== ====== ====== ====== ====== ====== ======
Diluted earnings (loss) per
share:
Earnings from continuing
operations................ $ 1.00 $ 0.96 $ 1.01 $ 1.26 $ 1.32 $ 0.63 $ 1.32
Discontinued operations..... (0.22) (1.31) (0.31)
Accounting change........... (0.30) -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------
Net earnings
(loss) -- diluted......... $ 0.48 $(0.35) $ 0.70 $ 1.26 $ 1.32 $ 0.63 $ 1.32
====== ====== ====== ====== ====== ====== ======
Weighted average shares
outstanding (in thousands):
Basic....................... 37,577 37,946 37,958 38,000 47,162 44,452 49,833
------ ------ ------ ------ ------ ------ ------
Diluted..................... 37,697 38,012 37,999 38,218 47,335 44,627 49,995
------ ------ ------ ------ ------ ------ ------
</TABLE>
- ---------------
(1) The Company's businesses are seasonal in nature, and historically the
results of operations for these periods have not been indicative of the
results for the full year.
5
<PAGE> 22
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will constitute senior securities of the Company. The
Debt Securities will be issued under an indenture (the "Indenture"), between the
Company and The Bank of New York, as trustee (the "Trustee").
A copy of the Indenture is incorporated by reference as an exhibit to the
registration statement relating hereto. Certain provisions of the Indenture are
referred to and summarized below. The summaries do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all the
provisions of the Indenture. Capitalized terms not otherwise defined herein
shall have the meanings given to them in the Indenture. All section references
below are to sections of the Indenture.
GENERAL
The aggregate principal amount of Debt Securities which can be issued under
the Indenture is unlimited (Section 301). The Debt Securities to which this
Prospectus relates will be issued from time to time in amounts the proceeds of
which will aggregate up to $500,000,000 and will be offered to the public on
terms determined by market conditions at the time of sale. The Debt Securities
may be issued in one or more series with the same or various maturities and may
be sold at par or at an original issue discount. Debt Securities sold at an
original issue discount may bear no interest or interest at a rate which is
below market rates. The Debt Securities will be unsecured obligations of the
Company issued in fully registered form without coupons or in bearer form with
coupons. The Debt Securities will rank as to priority of payment with all other
outstanding unsubordinated and unsecured indebtedness of the Company.
Reference is made to the Prospectus Supplement for the following terms to
the extent they are applicable to the Debt Securities: (a) designation and
denomination of and any limit upon the aggregate principal amount of such Debt
Securities, (b) the percentage of principal amount at which such Debt Securities
will be issued, (c) the date on which such Debt Securities will mature, (d) the
rate or rates (which may be fixed or floating) per annum at which such Debt
Securities will bear interest, if any, or the method of determining the same,
(e) the times at which interest will be payable, (f) the terms of any redemption
provisions at the option of the Company or any repayment provisions at the
option of the holder, (g) whether such Debt Securities are to be issued in
book-entry form, and if so, the identity of the depository and information with
respect to book-entry procedures, (h) federal income tax consequences and (i)
other terms of such Debt Securities.
The Debt Securities will be effectively subordinated to all liabilities,
including trade payables, of the Company's subsidiaries. Any right of the
Company to receive assets of any of its subsidiaries upon its liquidation or
reorganization (and the consequent right of the holders of the Debt Securities
to participate in those assets) will be effectively subordinated to the claims
of that subsidiary's creditors (including trade creditors), except to the extent
that the Company is itself recognized as a creditor of such subsidiary in which
case the claims of the Company would still be subordinate to any security
interests in the assets of such subsidiary and any indebtedness of such
subsidiary senior to that held by the Company. The Indenture does not limit the
amount of indebtedness that subsidiaries may incur.
MERGERS AND SALES OF ASSETS BY THE COMPANY
The Company may not consolidate with or merge into any other Person or
convey, transfer or lease all or substantially all of its assets to any other
Person, unless, among other things, (i) the resulting, surviving or transferee
Person (if other than the Company) shall be a corporation, partnership or trust
organized and validly existing under the laws of the United States or any State
thereof or the District of Columbia and shall expressly assume the Company's
obligations under the Debt Securities and the Indenture, and (ii) the Company or
such successor Person shall not immediately thereafter be in default under the
Indenture. Upon the assumption of the Company's obligations by such a Person in
such circumstances, subject to certain exceptions, the Company shall be
discharged from all its obligations under the Debt Securities and the Indenture
(Section 801).
Other than the restrictions on liens and sale and leaseback transactions
set forth in the Indenture and described below under "Certain Covenants," the
Indenture and the Debt Securities do not contain any
6
<PAGE> 23
covenants or other provisions designed to afford holders of Debt Securities
protection in the event of a highly leveraged transaction involving the Company
or any of its subsidiaries.
AMENDMENT AND WAIVER
Other than amendments not adverse to holders of the Debt Securities,
amendments of the Indenture or the Debt Securities may be made only with the
consent of the holders of a majority in principal amount of the series of Debt
Securities affected (acting as one class). Waivers of compliance with any
provision of the Indenture or the Debt Securities with respect to any series of
Debt Securities may be made only with the consent of the holders of a majority
in principal amount of the Debt Securities of that series. The consent of all
holders of affected Debt Securities will be required to (a) change the stated
maturity thereof, (b) reduce the principal amount thereof, (c) reduce the rate,
or manner of calculating the same, or change the time or place of payment of
interest thereon, or (d) impair the right to institute suit for the payment of
principal thereof or interest thereon (Section 902). The holders of a majority
in aggregate principal amount of Debt Securities affected may waive any past
default under the applicable Indenture and its consequences, except a default
(1) in the payment of the principal of or interest on such Debt Securities, or
(2) in respect of a provision which cannot be waived or amended without the
consent of all holders of Debt Securities affected (Sections 513 and 902).
GLOBAL SECURITIES
The Debt Securities of a series may be issued in the form of a global
security which is deposited with and registered in the name of the depository
(or a nominee of the depository) specified in the accompanying Prospectus
Supplement. So long as the depository for a global security, or its nominee, is
the registered owner of the global security, the depository or its nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such global security for all purposes under the
Indenture. Except as provided in the Indenture, owners of beneficial interests
in Debt Securities represented by a global security will not (a) be entitled to
have such Debt Securities registered in their names, (b) receive or be entitled
to receive physical delivery of certificates representing such Debt Securities
in definitive form, (c) be considered the owners or holders thereof under the
Indenture or (d) have any rights under the Indenture with respect to such global
security. Unless and until it is exchanged in whole or in part for individual
certificates evidencing the Debt Securities represented thereby, a global
security may not be transferred except as a whole by the depository for such
global security to a nominee of such depository or by a nominee of such
depository to such depository or another nominee of such depository or by the
depository or any nominee to a successor depository or any nominee of such
successor. The Company, in its sole discretion, may at any time determine that
any series of Debt Securities issued or issuable in the form of a global
security shall no longer be represented by such global security and such global
security shall be exchanged for securities in definitive form pursuant to the
Indenture (Section 204).
Upon the issuance of a global security, the depository will credit, on its
book-entry registration and transfer system, the respective principal amounts of
such global security to the accounts of participants. Ownership of beneficial
interests in a global security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the depository
(with respect to interests of participants in the depository), or by
participants in the depository or persons that may hold interests through such
participants (with respect to persons other than participants in the
depository). Ownership of beneficial interests in a global security will be
limited to participants or persons that hold interests through participants. The
specific terms of the depository arrangement with respect to a series of Debt
Securities, including the manner in which principal, premium, if any, and
interest on a global security will be payable and interests in such global
security may be exchanged, will be described in the Prospectus Supplement
relating to such series.
INFORMATION CONCERNING THE TRUSTEE
The Company may have banking relationships in the ordinary course of
business with The Bank of New York.
7
<PAGE> 24
CERTAIN COVENANTS
Unless otherwise provided in the Debt Securities, the Company shall not
create, assume or suffer to exist any lien on any Principal Property (described
below) of the Company or any Restricted Subsidiary (described below) or shares
of capital stock or indebtedness of any Subsidiary, or permit any Restricted
Subsidiary to do so, without securing the Debt Securities of any series having
the benefit of the covenant equally and ratably with such debt for so long as
such debt shall be so secured, subject to certain exceptions specified in the
Indenture. The exceptions are: (a) with respect to any series of securities, any
lien existing on the date of issuance of the series; (b) liens existing on
property owned or leased by, or shares of capital stock or indebtedness of, an
entity at the time it becomes a Restricted Subsidiary; (c) liens existing on
property at the time of the acquisition or lease thereof by the Company or a
Restricted Subsidiary; (d) liens on property of a corporation existing at the
time such corporation is merged or consolidated with the Company or a Restricted
Subsidiary or at the time of a sale, lease or other disposition of the
properties of a corporation as an entirety or substantially as an entirety to
the Company or a Restricted Subsidiary; (e) certain liens incurred on capital
stock, property or assets to finance the purchase price thereof; (f) certain
liens incurred on property or assets to finance the construction, alteration or
improvement thereof; (g) any lien securing debt of a Restricted Subsidiary owing
to the Company or to another Restricted Subsidiary; (h) any lien in favor of any
customer arising in respect of performance deposits and partial, progress,
advance or other payments made by or on behalf of such customer, for goods
produced or to be produced for or services rendered or to be rendered to such
customer in the ordinary course of business, which lien shall not exceed the
amount of such deposits or payments; (i) mechanics', workmen's, repairmen's and
similar liens arising in the ordinary course of business; (j) liens created or
resulting from any litigation or proceedings which are being contested in good
faith; liens arising out of judgments or awards against the Company or any
Restricted Subsidiary with respect to which the Company or such Restricted
Subsidiary is in good faith prosecuting an appeal or proceeding for review; or
liens incurred by the Company or any Restricted Subsidiary for the purpose of
obtaining a stay or discharge in the course of any legal proceeding to which the
Company or such Restricted Subsidiary is a party; (k) any lien for taxes or
assessments or governmental charges or levies not yet due or delinquent or which
can thereafter be paid without penalty or which are being contested in good
faith by appropriate proceedings; any landlord's lien on property held under
lease and tenants' rights under leases; easements and any other liens of a
nature similar to those hereinabove described in this clause (k) which do not,
in the opinion of the Company, materially impair the use of such property in the
operation of the business of the Company or any Restricted Subsidiary or the
value of such property for the purposes of such business; (l) any lien which may
be deemed to result from an agreement or commitment to exchange securities of a
Subsidiary for other securities of the Company, whether or not such securities
of a Subsidiary are placed in escrow for such purpose; (m) certain liens in
favor of or required by contracts with governmental entities; (n) any extension,
renewal or replacement (or successive extensions, renewals or replacements) in
whole or in part of any lien referred to in clauses (a) through (m), so long as
the principal amount of the debt secured thereby does not exceed the principal
amount of debts so secured at the time of the extension, renewal or replacement
(with certain exceptions) and the lien is limited to all or part of the same
property subject to the lien so extended, renewed or replaced (plus improvements
on the property); and (o) any lien otherwise prohibited by such covenant that
secures indebtedness which, together with the aggregate amount of outstanding
indebtedness secured by liens otherwise prohibited by such covenant and the
value of certain sale and leaseback transactions, does not exceed 15% of the
Company's Consolidated Net Assets (Section 1006).
Unless otherwise provided in the Debt Securities, the Company shall not,
and shall not permit any Restricted Subsidiary to, enter into any sale and
leaseback transaction covering any Principal Property of the Company or such
Restricted Subsidiary unless (a) the Company or such Restricted Subsidiary would
be entitled under the provisions described above to incur debt equal to the
value of such sale and leaseback transaction, secured by liens on the facilities
to be leased, without equally and ratably securing the Debt Securities, or (b)
the Company, during the 180 days following the effective date of such sale and
leaseback transaction, applies an amount equal to the value of such sale and
leaseback transaction to the voluntary retirement of long-term indebtedness,
purchases Principal Property having a fair value at least equal to the value of
such sale and leaseback transaction or cancels Debt Securities or Funded Debt
(as defined in the
8
<PAGE> 25
Indenture) in an aggregate principal amount at least equal to the value of such
sale and leaseback transaction (Section 1007).
The Indenture defines Consolidated Net Assets as the total amount of all
assets appearing on the consolidated balance sheet of the Company and its
Restricted Subsidiaries (calculated as described in the Indenture), less total
current liabilities other than long-term liabilities due within one year.
The Indenture defines Restricted Subsidiary as any Subsidiary of the
Company (which term generally includes majority-owned direct and indirect
subsidiaries) that owns or leases a Principal Property, other than a Subsidiary
that is principally engaged in the business of owning or investing in real
estate (a "Real Estate Subsidiary") finance, credit, leasing, financial services
or other similar operations (although the Company has no such subsidiaries as of
the date of this Prospectus). The Indenture provides, however, that any Real
Estate Subsidiary will become a Restricted Subsidiary in the event that a
Restricted Subsidiary merges with, consolidates with or transfers substantially
all of its assets to such Real Estate Subsidiary.
The Indenture defines Principal Property as all land, buildings, machinery
and equipment, and leasehold interests and improvements in respect of the
foregoing, that are located in the United States of America and that would be
reflected on the consolidated balance sheet of a Person; provided that such term
shall not include any property which the Board of Directors of the Company by
resolution determines not to be of material importance to the total business
conducted by the Company and its Subsidiaries as an entirety.
There are no other restrictive covenants contained in the Indenture.
EVENTS OF DEFAULT
Events of Default with respect to any series of Debt Securities under the
Indenture include: (a) default in the payment of any principal of, or any
premium on, such series; (b) default in the payment of any installment of
interest on such series and continuance of such default for a period of 30 days;
(c) default in the performance of any other covenant in the Indenture or in the
Debt Securities and continuance of such default for a period of 90 days after
receipt by the Company of notice of such default from the Trustee or by the
Company and the Trustee from the holders of at least 25% in principal amount of
Debt Securities of such series; (d) a default under any bond, debenture, note or
other evidence of indebtedness for money borrowed by the Company or any
Restricted Subsidiary (other than the Securities), or under any mortgage,
indenture or instrument under which there may be secured or evidenced any
indebtedness for money borrowed by the Company or any Restricted Subsidiary
(other than the Securities), whether such indebtedness now exists or shall
hereafter be created, which default shall have resulted in indebtedness in
excess of $15,000,000 becoming due and payable prior to the date on which it
would otherwise have become due and payable, without such indebtedness having
been discharged or such acceleration having been rescinded or annulled within 30
days after the date on which written notice thereof is given to the Company by
the Trustee or to the Company and the Trustee by Holders of at least 25% in
principal amount of the Securities then outstanding; or (e) certain events of
bankruptcy, insolvency or reorganization in respect of the Company (Section
501). The Trustee may withhold notice to the holders of a series of Debt
Securities of any default (except in the payment of principal of, premium on or
interest on such series of Debt Securities) if it considers such withholding to
be in the interest of Holders of the Debt Securities (Section 602). Not all
Events of Default with respect to a particular series of Debt Securities issued
under the Indenture necessarily constitute Events of Default with respect to any
other series of Debt Securities.
On the occurrence of an Event of Default with respect to a series of Debt
Securities, the Trustee or the holders of at least 25% in principal amount of
Debt Securities of such series then outstanding may declare the principal (or in
the case of Debt Securities sold at an original issue discount, the amount
specified in the terms thereof) and accrued interest thereon to be due and
payable immediately (Section 502).
Within 120 days after the end of each fiscal year, an officer of the
Company must inform the Trustee whether such officer knows of any default,
describing any such default and the status thereof (Section 1004). Subject to
provisions relating to its duties in case of default, the Trustee is under no
obligation to exercise any
9
<PAGE> 26
of its rights or powers under the Indenture at the direction of any holders of
Debt Securities unless the Trustee shall have received a satisfactory indemnity
(Section 601).
DEFEASANCE
The Indenture provides that the Company, at the Company's option, (a) will
be discharged from all obligations in respect of the Debt Securities of a series
(except for certain obligations to register the transfer or exchange of Debt
Securities, replace stolen, lost or destroyed Debt Securities, maintain paying
agencies and hold moneys for payment in trust), or (b) need not comply with the
provisions of one or more of Sections 501(5), 1006 and 1007 of the Indenture
(relating to cross-acceleration, the incurrence of liens and sale and leaseback
transactions, respectively), in each case if the Company irrevocably deposits in
trust with the Trustee money or obligations of or guaranteed by the United
States of America which through the payment of interest thereon and principal
thereof in accordance with their terms will provide money, in an amount
sufficient to pay all the principal of (including any mandatory sinking fund
payments) and interest on the Debt Securities of such series on the dates such
payments are due in accordance with the terms of such Debt Securities. To
exercise either option, the Company is required to deliver to the Trustee an
opinion of counsel to the effect that the deposit and related defeasance would
not cause the holders of the Debt Securities of such series to recognize income,
gain or loss for Federal income tax purposes. To exercise the option described
in clause (a) above, such opinion must be based on a ruling of the Internal
Revenue Service, a regulation of the Treasury Department or a provision of the
Internal Revenue Code (Section 403).
10
<PAGE> 27
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities (a) directly to purchasers, (b)
through agents, (c) to dealers as principals and (d) through underwriters.
Offers to purchase Debt Securities may be solicited directly by the Company
or by agents designated by the Company from time to time. Any such agent, who
may be deemed to be an underwriter, as that term is defined in the Securities
Act, involved in the offer or sale of the Debt Securities is named, and any
commissions payable by the Company to such agent are set forth, in the
Prospectus Supplement.
If a dealer is utilized in the sale of the Debt Securities, the Company
will sell such Debt Securities to the dealer as principal. The dealer may then
resell such Debt Securities to the public at varying prices to be determined by
such dealer at the time of resale.
If an underwriter or underwriters are utilized in the sale of the Debt
Securities, the Company will enter into an underwriting agreement with such
underwriters at the time of sale to them. The names of the underwriters and the
terms of the transaction are set forth in the Prospectus Supplement, which will
be used by the underwriters to make resales of the Debt Securities.
Agents, dealers or underwriters may be entitled under agreements which may
be entered into with the Company to indemnification by the Company against
certain civil liabilities, including liabilities under the Securities Act, and
may be customers of, engage in transactions with or perform services for the
Company in the ordinary course of business.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters or agents to solicit offers by certain institutions to purchase
Debt Securities from the Company at the public offering price set forth in the
Prospectus Supplement pursuant to Delayed Delivery Contracts providing for
amounts, payment and delivery as described in the Prospectus Supplement.
Institutions with whom the contracts may be made include commercial and savings
banks, insurance companies, pension funds, investment companies, educational and
charitable institutions and other institutions, but shall in all cases be
subject to the approval of the Company. A commission described in the Prospectus
Supplement will be paid to underwriters and agents soliciting purchases of Debt
Securities pursuant to contracts accepted by the Company. Such contracts will
not be subject to any conditions except that (a) the purchase by an institution
of the Debt Securities covered by its contract shall not at the time of delivery
be prohibited under the laws of any jurisdiction in the United States to which
such institution is subject and (b) the Company shall have sold and delivered to
any underwriters named in the Prospectus Supplement that portion of the issue of
Debt Securities as is set forth therein. The underwriters and agents will not
have any responsibility in respect of the validity or the performance of the
contracts.
The place and time of delivery for the Debt Securities will be set forth in
the Prospectus Supplement.
Any underwriter may engage in stabilizing and syndicate covering
transactions in accordance with Rule 104 under the Exchange Act. Rule 104
permits stabilizing to purchase the underlying security so long as the
stabilizing bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of the Debt Securities in the open market after
the distribution has been completed in order to cover syndicate short positions.
Stabilizing and syndicate covering transactions may cause the price of the Debt
Securities to be higher than it would otherwise be in the absence of such
transactions. These transactions, if commenced, may be discontinued at any time.
LEGAL MATTERS
The legality of the Debt Securities will be passed upon for the Company by
Ropes & Gray, Boston, Massachusetts. Certain legal matters will be passed upon
for any agents or underwriters by counsel for such agents or underwriters
identified in the applicable Prospectus Supplement.
11
<PAGE> 28
EXPERTS
The consolidated balance sheets of the Company as of August 2, 1997 and
August 3, 1996 and the related consolidated statements of earnings, common
shareholders' equity and cash flows and the related financial statement schedule
for each of the three fiscal years in the period ended August 2, 1997
incorporated in this Prospectus by reference from the Company's Annual Report on
Form 10-K have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their reports, which are incorporated herein by reference, and have
been so incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
12
<PAGE> 29
[This Page Intentionally Left Blank]
<PAGE> 30
[This Page Intentionally Left Blank]
<PAGE> 31
[This Page Intentionally Left Blank]
<PAGE> 32
======================================================
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS, AND, IF GIVEN OR MADE, ANY SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY UNDERWRITER, DEALER OR AGENT. THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
The Company........................... S-3
Use of Proceeds....................... S-4
Capitalization........................ S-5
Summary Consolidated Financial Data... S-6
Management's Discussion and Analysis
of Financial Condition and Results of
Operations........................... S-9
Description of the Securities......... S-11
Underwriting.......................... S-14
Legal Matters......................... S-15
PROSPECTUS
Statement of Available Information.... 3
Incorporation of Certain Documents by
Reference............................ 3
The Company........................... 4
Use of Proceeds....................... 4
Ratio of Earnings to Fixed Charges.... 5
Earnings Per Share Data............... 5
Description of Debt Securities........ 6
Plan of Distribution.................. 11
Legal Matters......................... 11
Experts............................... 12
</TABLE>
======================================================
======================================================
$250,000,000
LOGO
$125,000,000
6.65% SENIOR NOTES
DUE 2008
$125,000,000
7.125% SENIOR DEBENTURES
DUE 2028
------------
PROSPECTUS SUPPLEMENT
MAY 21, 1998
(INCLUDING PROSPECTUS
DATED APRIL 17, 1998)
------------
SALOMON SMITH BARNEY
CHASE SECURITIES INC.
MERRILL LYNCH & CO.
======================================================
