SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarter Ended January 31, 1998
Commission File Number 1-9659
THE NEIMAN MARCUS GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-4119509
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
27 Boylston Street, Chestnut Hill, MA 02167
(Address of principal executive offices) (Zip Code)
(617) 232-0760
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
As of March 6, 1998, there were 49,758,981 outstanding shares of the issuer's
common stock, $.01 par value.
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THE NEIMAN MARCUS GROUP, INC.
I N D E X
Part I. Financial Information Page Number
Item 1. Condensed Consolidated Balance Sheets as of
January 31, 1998, August 2, 1997 and
February 1, 1997 1
Condensed Consolidated Statements of Earnings
For the Twenty-Six and Thirteen Weeks ended
January 31, 1998 and February 1, 1997 2
Condensed Consolidated Statements of Cash
Flows for the Twenty-Six Weeks ended
January 31, 1998 and February 1, 1997 3
Notes to Condensed Consolidated Financial
Statements 4-5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6-8
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 6. Exhibits and Reports on Form 8-K 10
Signatures
Exhibit 3.1(a)
Exhibit 27.l
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<TABLE>
THE NEIMAN MARCUS GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
(Unaudited) (Unaudited)
January 31, August 2, February 1,
(In thousands) 1998 1997 1997
----------- ------------ ------------
<S> <C> <C> <C>
Assets
Current assets:
Cash and equivalents $ 22,916 $ 16,861 $ 23,780
Undivided interests in NMG
Credit Card Master Trust 200,159 128,341 180,428
Accounts receivable, net 59,389 55,041 58,097
Merchandise inventories 444,355 460,412 415,927
Deferred income taxes 19,049 19,049 21,666
Other current assets 70,885 54,339 53,511
------- ------- -------
Total current assets 816,753 734,043 753,409
------- -------- -------
Property and equipment, net 461,884 454,133 452,317
Intangibles and other assets 124,691 99,684 103,355
------- -------- -------
Total assets $ 1,403,328 $ 1,287,860 $ 1,309,081
=========== =========== ===========
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable and current
maturities of long-term
liabilities $ 5,874 $ 8,810 $ 8,807
Accounts payable 180,060 174,952 151,814
Accrued liabilities 173,256 147,730 155,685
------- -------- -------
Total current liabilities 359,190 331,492 316,306
------- -------- -------
Long-term liabilities:
Revolving credit agreement 325,000 300,000 370,000
Other long-term liabilities 70,946 69,738 69,476
------- -------- -------
Total long-term liabilities 395,946 369,738 439,476
------- -------- -------
Deferred income taxes 31,902 31,902 33,329
Common stock 498 499 499
Additional paid-in capital 481,098 485,658 485,631
Retained earnings 134,694 68,571 33,840
------- -------- -------
Total liabilities and
shareholders' equity $ 1,403,328 $ 1,287,860 $ 1,309,081
=========== =========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
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<TABLE>
THE NEIMAN MARCUS GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<CAPTION>
(In thousands except for Twenty-Six Weeks Ended Thirteen Weeks Ended
per share amounts) ----------------------------- -------------------------
January 31, February 1, January 31, February 1,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $1,288,886 $1,206,050 $ 708,387 $ 661,947
Cost of goods sold
including buying and
occupancy costs 863,160 811,200 487,033 460,621
Selling, general and
administrative expenses 297,010 277,910 155,827 146,856
Corporate expenses 6,695 6,796 3,557 3,551
---------- ---------- ---------- ----------
Operating earnings 122,021 110,144 61,970 50,919
Interest expense 11,816 14,353 6,087 7,505
---------- ---------- ---------- ----------
Earnings before
income taxes 110,205 95,791 55,883 43,414
Income taxes 44,082 39,274 22,353 17,800
Net earnings 66,123 56,517 33,530 25,614
Dividends and accretion
on redeemable
preferred stocks - (6,201) - -
Loss on redemption
of redeemable
preferred stocks - (22,361) - -
---------- ---------- ---------- ----------
Net earnings applicable
to common shareholders $ 66,123 $ 27,955 $ 33,530 $ 25,614
========== ========== ========== ==========
Weighted average number
of common and common
equivalent shares
outstanding
Basic 49,833 44,452 49,809 49,490
========== ========== ========== =========
Diluted 49,995 44,627 49,963 49,653
========== ========== ========== =========
Amounts per share
applicable to common
shareholders:
Basic $ 1.33 $ .63 $ .67 $ .52
========== ========== ========== =========
Diluted $ 1.32 $ .63 $ .67 $ .52
========== ========== ========== =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
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<TABLE>
THE NEIMAN MARCUS GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
(In thousands) Twenty-Six Weeks Ended
--------------------------
January 31, February 1,
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 66,123 $ 56,517
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation and amortization 31,404 30,425
Other items 3,411 (284)
Changes in current assets and liabilities:
Accounts receivable (3,387) (7,047)
Merchandise inventories 21,707 28,021
Other current assets (13,682) (8,143)
Accounts payable and
accrued liabilities 19,632 (32,494)
-------- --------
Net cash provided by
operating activities 125,208 66,995
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (36,641) (23,279)
Acquisition of Chef's Catalog (31,000) -
Purchases of held-to-maturity securities (272,094) (342,971)
Maturities of held-to-maturity securities 200,276 276,935
-------- --------
Net cash used by
investing activities (139,459) (89,315)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 25,000 183,500
Repayment of debt - (132,000)
Issuance (repurchase) of common stock (4,694) 269,163
Payment on redemption of preferred stocks - (281,426)
Dividends paid - (5,796)
-------- --------
Net cash provided by financing activities 20,306 33,441
-------- --------
CASH AND EQUIVALENTS
Increase during the period 6,055 11,121
Beginning balance 16,861 12,659
-------- --------
Ending balance $ 22,916 $ 23,780
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
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THE NEIMAN MARCUS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Basis of presentation
The Condensed Consolidated Financial Statements of The Neiman Marcus
Group, Inc. (the Company) are submitted in response to the requirements
of Form 10-Q and should be read in conjunction with the Consolidated
Financial Statements in the Company's Annual Report on Form l0-K. In
the opinion of management, these statements contain all adjustments,
consisting only of normal recurring accruals, necessary for a fair
presentation of the results for the interim periods presented. The
retail industry is seasonal in nature, and the results of operations for
these periods historically have not been indicative of the results for a
full year.
Had the Company repurchased its redeemable preferred stocks at the
beginning of the thirteen and twenty-six week periods ended February 1,
1997, basic and diluted earnings per share available to common
shareholders for those periods would have been $.51 and $1.13,
respectively.
Certain reclassifications have been made to the 1997 financial
statements to conform to the 1998 presentation.
2. Merchandise inventories
Inventories are stated at the lower of cost or market. Substantially all
of the Company's inventories are valued using the retail method on the
last-in, first-out (LIFO) basis. While the Company believes that the
LIFO method provides a better matching of costs and revenues, some
specialty retailers use the first-in, first-out (FIFO) method.
Accordingly, the Company has provided the following data for comparative
purposes.
If the FIFO method of inventory valuation had been used to value all
inventories, merchandise inventories would have been higher than
reported by $19.0 million at January 31, 1998, $15.0 million at August
2, 1997 and $17.5 million at February 1, 1997. The FIFO method would
have increased net earnings by $2.4 million during the twenty-six weeks
ended January 31, 1998 and $2.3 million during the twenty-six weeks
ended February 1, 1997.
3. Acquisition of Chef's Catalog
On January 5, 1998 the Company acquired Chef's Catalog for approximately
$31.0 million in cash. Chef's Catalog is a direct-marketer of gourmet
cookware and high-end kitchenware, and its operations will be integrated
with NM Direct. The acquisition has been accounted for by the purchase
method of accounting and, accordingly, the results of operations of Chef's
Catalog for the period from the date of acquisition are included in the
accompanying condensed consolidated financial statements. Intangible
assets, consisting primarily of trademarks, customer lists and goodwill,
will be amortized on a straight-line basis over their estimated useful
lives.
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THE NEIMAN MARCUS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
4. Revolving credit agreement
In October 1997, the Company replaced its existing revolving credit
agreement with a new revolving credit agreement with 20 banks, pursuant
to which the Company may borrow up to $650 million. The new agreement,
which expires in October 2002, may be terminated by the Company at any
time on three business days' notice. The rate of interest payable is
determined according to one of four pricing options. On January 31,
1998, borrowings of $325 million were outstanding at an interest rate of
5.8% and were classified as long-term.
5. Stock repurchase program
In December 1997, the Board of Directors of the Company authorized the
repurchase of up to one million shares of common stock in the open
market. During the twenty-six weeks ended January 31, 1998, the Company
repurchased 160,100 shares at an average price of $29.32 per share under
this stock repurchase program.
6. Earnings per share
Pursuant to the provisions of Statement of Financial Accounting
Standards No. 128, "Earnings per Share," the weighted average shares
used in computing basic and diluted earnings per share (EPS) are as
follows:
<TABLE>
<CAPTION>
Twenty-Six Weeks Ended Thirteen Weeks Ended
------------------------- -------------------------
(in thousands January 31, February 1, January 31, February 1,
of shares) 1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Shares for computation
of basic EPS 49,833 44,452 49,809 49,490
Effect of assumed
option exercises 162 175 154 163
------ ------ ------ ------
Shares for computation
of diluted EPS 49,995 44,627 49,963 49,653
</TABLE>
No adjustments to net earnings applicable to common shareholders were
made for the computations of basic and diluted EPS during the periods
presented. Options to purchase 118,050 shares of common stock were not
included in the computation of diluted EPS because the exercise price of
those options was greater than the average market price of the common
shares.
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THE NEIMAN MARCUS GROUP, INC
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations for the Twenty-six Weeks Ended January 31, 1998
Compared with the Twenty-six Weeks Ended February 1, 1997
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, 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 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 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.
Results of Operations for the Thirteen Weeks Ended January 31, 1998 Compared
with the Thirteen Weeks Ended February 1, 1997
Revenues in the thirteen weeks ended January 31, 1998 increased $46.4 million
or 7.0% over revenues in the thirteen weeks ended February 1, 1997. The
increase in revenues reflected an overall comparable sales increase of 6.3%.
Each of the Company's operating units reported higher comparable revenues.
Revenues for Chef's Catalog were included for the month of January 1998.
Cost of goods sold, including buying and occupancy costs, increased $26.4
million or 5.7% during the quarter ended January 31, 1998 compared to the same
period in fiscal 1997. As a percentage of revenues, cost of goods sold,
including buying and occupancy costs, was 68.8% in the fiscal 1998 quarter
compared to 69.6% in the same period in fiscal 1997. The improved margins in
the fiscal 1998 quarter were principally due to a lower markdown rate.
Selling, general and administrative expenses increased by $9.0 million or 6.1%
to $155.8 million in the thirteen weeks ended January 31, 1998 compared to the
thirteen weeks ended February 1, 1997, primarily due to higher selling costs
associated with increased revenues during the period. As a percentage of
revenues, selling, general and administrative expenses decreased to 22.0% in
the fiscal 1998 quarter compared to 22.2% in the 1997 quarter.
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THE NEIMAN MARCUS GROUP, INC
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Interest expense decreased 18.9% to $6.1 million in the thirteen weeks ended
January 31, 1998 compared to the 1997 quarter. The decrease resulted from
lower average outstanding borrowings as well as a lower effective interest
rate on 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 six months of fiscal 1998, the Company financed its working
capital needs, capital expenditures and the acquisition of Chef's Catalog
primarily with cash borrowings under its revolving credit agreement 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.
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
million in cash. The acquisition was funded primarily through borrowings
under the Company's revolving credit agreement.
The Company increased its bank borrowings by $25.0 million since August 2,
1997. At January 31, 1998, the company had $325.0 million available under
its new revolving credit facility. The Company believes that it will have
sufficient resources to fund its planned capital growth and operating
requirements.
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
process in the year 2000 and beyond. The Company is engaging both internal
and external resources to reprogram and test its systems for the year 2000
compliance. The Company currently anticipates substantially completing the
year 2000 project in 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 guarantee that the systems of other companies on which
the Company's systems rely will be timely converted and would have not adverse
effect on the Company's systems.
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THE NEIMAN MARCUS GROUP, INC
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
Statements in this release 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; changed 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.
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THE NEIMAN MARCUS GROUP, INC
PART II
Item 4. Submission of Matters to a Vote of Security Holders.
The Annual Meeting of Stockholders was held on January 16, 1998.
The following matters were voted upon at the meeting:
1. Election of two Class I directors for terms of three years.
Richard A. Smith: Robert A. Smith:
For 47,313,510 For 47,315,491
Against 75,408 Against 73,427
Election of Brian J. Knez as a Class II Director for a term of
one year.
For 47,312,415
Against 76,503
Election of John R. Cook as a Class III Director for a term of
two years.
For 47,315,195
Against 73,723
2. Approval of changes in authorized stock and certain conforming
amendments.
For 47,078,423
Against 147,042
Abstain 41,603
Non-voting 121,851
3. Approval of other amendments to the Restated Certificate of
Incorporation.
For 47,197,787
Against 27,495
Abstain 41,785
Non-voting 121,851
4. Ratification of the appointment by the Board of Directors of
Deloitte & Touche LLP as the Company's independent auditors for the
1998 fiscal year.
For 47,343,946
Against 18,543
Abstain 26,429
5. Stockholder proposal to increase disclosure on compensation of
executive officers.
For 731,965
Against 43,466,292
Abstain 1,220,360
Non-voting 1,970,301
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THE NEIMAN MARCUS GROUP, INC
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
3.1(a) Restated Certificate of Incorporation.
27.1 Financial data schedule.
(b) Reports on Form 8-K.
The Company did not file any reports on Form 8-K during the thirteen
week period ended January 31, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
THE NEIMAN MARCUS GROUP, INC.
Signature Title Date
Principal Financial Senior Vice President and March 13, 1998
Officer: Chief Financial Officer
/s/ John R. Cook
John R. Cook
Principal Accounting Vice President and Controller March 13, 1998
Officer:
/s/ Catherine N. Janowski
Catherine N. Janowski
<PAGE>
EXHIBIT 3.1a
RESTATED CERTIFICATE OF INCORPORATION
of
THE NEIMAN-MARCUS GROUP, INC.
(originally incorporated as Specialty Store Company, on June 2, 1987)
THE NEIMAN-MARCUS GROUP, INC., a Delaware corporation organized on June 2,
1987 under the name Specialty Store Company (the "Corporation") does hereby
certify that, pursuant to Section 245 of the General Corporation Law of the
State of Delaware, the Corporation's Certificate of Incorporation is hereby
restated to read in its entirety as follows:
First: The name of the Corporation is The Neiman-Marcus Group, Inc.
(hereinafter the "Corporation").
Second: The address of the registered office of the Corporation in the
State of Delaware is 1209 Orange Street, in the City of Wilmington, County of
New Castle. The name of its registered agent at that address is The
Corporation Trust Company.
Third: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General
Corporation Law of the State of Delaware (the "GCL").
Fourth: The total number of shares of stock which the Corporation shall
have authority to issue is 200,000,000 shares, consisting of 150,000,000
shares of Common Stock, par value $.01 per share (the "Common Stock"), and
50,000,000 shares of Preferred Stock, par value $.01 per share (the "Preferred
Stock").
The Board of Directors is hereby authorized from time to time to provide by
resolution for the issuance of shares of Preferred Stock in one or more series
not exceeding the aggregate number of shares of Preferred Stock authorized by
this Certificate of Incorporation, as amended from time to time; and to
determine with respect to each such series the voting powers, if any (which
voting powers if granted may be full or limited), designations, preferences
and relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions relating thereto; including
without limiting the generality of the foregoing, the voting rights relating
to shares of Preferred Stock of any series (which may be one or more votes per
share or a fraction of a vote per share, which may vary over time and which
may be applicable generally or only upon the happening and continuance of
stated events or conditions), the rate of dividend to which holders of
Preferred Stock of any series may be entitled (which may be cumulative or
noncumulative), the rights of holders of Preferred Stock of any series in the
event of liquidation, dissolution or winding up of the affairs of the
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Corporation, the rights, if any, of holders of Preferred Stock of any
series to convert or exchange such shares of Preferred Stock of such
series for shares of any other class or series of capital stock
or for any other securities, property or assets of the Corporation or any
subsidiary (including the determination of the price or prices or the rate or
rates applicable to such rights to convert or exchange and the adjustment
thereof, the time or times during which the right to convert or exchange shall
be applicable and the time or times during which a particular price or rate
shall be applicable), whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such redemption, including
the date or dates upon or after which they shall be redeemable, and the amount
per share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates, and whether any shares of that
series shall be redeemed pursuant to a retirement or sinking fund or otherwise
and the terms and conditions of such obligation.
Before the Corporation shall issue any shares of Preferred Stock of any
series, a certificate setting forth a copy of the resolution or resolutions of
the Board of Directors, fixing the voting powers, designations, preferences,
the relative, participating, optional or other rights, if any, and the
qualifications, limitations and restrictions, if any, relating to the shares
of Preferred Stock of such series, and the number of shares of Preferred Stock
of such series authorized by the Board of Directors to be issued shall be made
under seal of the Corporation and signed by and shall be filed and a copy
thereof recorded in the manner prescribed by the GCL. The Board of Directors
is further authorized to increase or decrease (but not below the number of
such shares of such series then outstanding) the number of shares of any
series subsequent to the issuance of shares of that series.
Fifth: The directors shall have concurrent power with the stockholders to
make, alter, amend, change, add to or repeal the By-Laws of the Corporation.
Sixth: Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under
the provisions of Section 291 of the GCL or on the application of trustees in
dissolution or of any receiver or receivers appointed for the Corporation
under the provisions of Section 279 of the GCL, order a meeting of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of the Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing three-
fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of the
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the Corporation, as the case may be, and also on the
Corporation.
Seventh: Except as otherwise fixed pursuant to the provisions of Article
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Fourth of this Certificate of Incorporation relating to the rights of the
holders of any one or more classes or series of Preferred Stock issued by the
Corporation to call an annual or special meeting of stockholders, special
meetings of the stockholders of the Corporation may not be called by the
stockholders of the Corporation.
Eighth: Notwithstanding the GCL, any action required to be taken or which
may be taken by the holders of the Common Stock must be effected at a duly
called annual or special meeting of such holders and may not be taken by any
consent in writing by such holders.
Ninth: The directors shall be divided into three classes, designated Class
I, Class II and Class III. Each class shall consist, as nearly as may be
possible, of one-third of the total number of directors constituting the
entire Board of Directors. Initially, Class I directors shall be elected for a
one-year term, Class II directors for a two-year term and Class III directors
for a three year-term. At the annual meeting of stockholders beginning in
1988, successors to the class of directors whose term expires at that annual
meeting shall be elected for a three-year term. If the number of directors is
changed, any increase or decrease shall be apportioned among the classes so as
to maintain the number of directors in each class as nearly equal as possible,
and any additional director of any class elected to fill a vacancy resulting
from an increase in such class shall hold office for a term that shall
coincide with the remaining term of that class, but in no case will a decrease
in the number of directors shorten the term of any incumbent director. A
director shall hold office until the annual meeting for the year in which his
term expires and until his successor shall be elected and shall qualify,
subject, however, to prior death, resignation, retirement, disqualification or
removal from office. Any vacancy on the Board of Directors that results from
an increase in the number of directors may be filled by a majority of the
Board of Directors then in office, provided that a quorum is present, and any
other vacancy occurring in the Board of Directors may be filled by a majority
of the directors then in office, even if less than a quorum, or by a sole
remaining director. Any director elected to fill a vacancy not resulting from
an increase in the number of directors shall have the same remaining term as
that of his predecessor.
Notwithstanding the foregoing, whenever pursuant to the provisions of
Article Fourth of this Certificate of Incorporation, the holders of any one or
more classes or series of Preferred Stock issued by the Corporation shall have
the right, voting separately by class or series, to elect directors at an
annual or special meeting of stockholders, the election, term of office,
filling of vacancies and other features of such directorships shall be
governed by the terms of this Certificate of Incorporation applicable thereto,
and such directors so elected shall not be divided into classes pursuant to
this Article Ninth unless expressly provided by such terms.
Tenth: No director shall be personally liable to the Corporation or any of
its stockholders for monetary damages for breach of fiduciary duty as a
director except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) pursuant to Section 174 of the GCL or (iv) for any transaction
from which the director derived an improper personal benefit. Any repeal or
modification of this Article Tenth by the stockholders of the Corporation
shall not adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or modification with respect
<PAGE>
[Page]
to acts or omissions for or with respect to any acts or omissions of such
director occurring prior to such repeal or modification.
Eleventh: Subject to Article Fifth and notwithstanding anything else
contained in this Certificate of Incorporation to the contrary, the
affirmative vote of the holders of at least 66 2/3% percent of the combined
voting power of all of the Voting Stock, voting together as a single class,
shall be required to alter, amend, rescind or repeal (A) Article Seventh,
Article Eighth, Article Ninth or this Article Eleventh or to adopt any
provision inconsistent therewith or (B) Section 3 of Article II, Sections 1, 2
and 10 of Article III, Article VIII or Article IX of the By-Laws of the
Corporation or to adopt any provision inconsistent therewith.
"Voting Stock" shall mean the securities of the Corporation which are
entitled to vote generally for the election of directors of the Corporation.
IN WITNESS WHEREOF, this Restated Certificate of Incorporation, having been
approved by the Board of Directors of the Corporation in accordance with the
provisions of Section 245 of the Delaware General Corporation Law, only
restates and integrates and does not further amend the provisions of the
Corporation's Certificate of Incorporation as heretofore amended or
supplemented with no discrepancy between those provisions and this Restated
Certificate of Incorporation and has been duly executed in its corporate name
this 20th day of January, 1998.
THE NEIMAN MARCUS GROUP, INC.
By: /s/ Richard A. Smith
Richard A. Smith
Chairman of the Board and
Chief Executive Officer
ATTEST:
By: /s/ Eric P. Geller
Eric P. Geller
Secretary
(Corporate Seal)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains a summary of financial information extracted from the
Condensed Consolidated Balance Sheet and Condensed Consolidated Statement of
Operations and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-1-1998
<PERIOD-END> JAN-31-1998
<CASH> 22,916
<SECURITIES> 0
<RECEIVABLES> 59,389
<ALLOWANCES> 1,830
<INVENTORY> 444,355
<CURRENT-ASSETS> 816,753
<PP&E> 778,690
<DEPRECIATION> 316,806
<TOTAL-ASSETS> 1,403,328
<CURRENT-LIABILITIES> 359,190
<BONDS> 325,000
0
0
<COMMON> 498
<OTHER-SE> 615,792
<TOTAL-LIABILITY-AND-EQUITY> 1,403,328
<SALES> 1,288,886
<TOTAL-REVENUES> 1,288,886
<CGS> 863,160
<TOTAL-COSTS> 1,166,865
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,419
<INTEREST-EXPENSE> 11,816
<INCOME-PRETAX> 110,205
<INCOME-TAX> 44,082
<INCOME-CONTINUING> 66,123
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 66,123
<EPS-PRIMARY> 1.33
<EPS-DILUTED> 1.32
</TABLE>
