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Previous: HAROLDS STORES INC, 10-Q, 2000-06-13 |
Next: NEIMAN MARCUS GROUP INC, 10-Q, EX-27.1, 2000-06-13 |
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SECURITIES AND EXCHANGE COMMISSION |
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THE NEIMAN MARCUS GROUP, INC. |
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I N D E X |
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Signatures 11 |
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THE NEIMAN MARCUS GROUP, INC. |
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(In thousands) Undivided interests in NMG Credit Card Master Trust 333,823 133,151 185,268 Accounts receivable, net 72,944 59,317 63,535 Merchandise inventories 622,871 545,252 587,629 Deferred income taxes 15,255 15,255 24,058 Other current assets 36,404 53,102 43,887 Total current assets 1,135,322 835,268 943,969 Property and equipment, net 524,291 513,439 506,409 Other assets: Goodwill and other intangible assets, net 130,223 134,853 136,225 Other 23,898 28,730 17,021 Total other assets 154,121 163,583 153,246 Total assets $ 1,813,734 $ 1,512,290 $1,603,624 Liabilities and Shareholders' Equity Current liabilities: Notes payable and current maturities of long-term liabilities $ 3,120 $ 921 $ 13,132 Accounts payable 260,605 203,071 176,378 Accrued liabilities 228,328 176,188 239,446 Total current liabilities 492,053 380,180 428,956 Long-term liabilities: Notes and debentures 379,657 274,640 319,634 Other long-term liabilities 72,642 74,664 70,854 Deferred income taxes 32,038 32,038 37,139 Total long-term liabilities 484,337 381,342 427,627 Minority interest 8,326 4,485 3,578 Shareholders' equity: Common stock 480 490 491 Additional paid-in capital 426,149 467,283 466,697 Retained earnings 402,389 278,510 276,275 Total shareholders' equity 829,018 746,283 743,46 3 Total liabilities and shareholders' equity $ 1,813,734 $ 1,512,290 $1,603,624 See Notes to Condensed Consolidated Financial Statements. |
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(In thousands except for Thirty-Nine Weeks Ended Thirteen Weeks Ended Cost of goods sold including buying and occupancy costs 1,464,862 1,327,058 437,582 396,416 Selling, general and administrative expenses 561,302 478,174 172,545 145,193 Corporate expenses 12,169 10,538 4,402 3,565 Operating earnings 223,907 172,256 79,762 66,585 Interest expense (17,827) (19,185) (5,038) (6,050) Earnings before income taxes and minority interest 206,080 153,071 74,724 60,535 Income taxes (78,310) (59,698) (28,395) (23,609) Earnings before minority interest 127,770 93,373 46,329 36,926 Minority interest in net earnings of subsidiaries (3,891) (756) (1,149) ; (1,088) Net earnings $ 123,879 $ 92,617 $ 45,180 ;$ 35,838 Weighted average number of common and common equivalent shares outstanding: Basic 48,695 49,159 47,908 49,012 Diluted 48,907 49,263 48,130 49,117 Earnings per share: Basic $ 2.54 $ 1.88 $ .94 $ .73 Diluted $ 2.53 $ 1.88 $ .94 $ .73 |
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See Notes to Condensed Consolidated Financial Statements. |
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THE NEIMAN MARCUS GROUP, INC. |
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(In thousands)
Thirty-Nine Weeks Ended 2000 1999 (Restated) CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 123,879 $ 92,617 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 54,142 49,955 Minority interest 3,891 756 Other 7,056 5,405 Changes in current assets and liabilities: Accounts receivable (13,627) (6,217) Merchandise inventories (77,619) (70,219) Other current assets 16,698 17,366 Accounts payable 57,534 (28,811) Accrued liabilities 52,569 47,434 Net cash provided by operating activities 224,523 108,286 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (60,364) (69,778) Acquisitions, net of cash acquired - (36,754) Purchases of held-to-maturity securities (709,170) (540,889) Maturities of held-to-maturity securities 658,498 494,488 Net cash used for investing activities (111,036) (152,933) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings 107,150 42,200 Repurchase of common stock (44,611) (15,356) Distributions paid (2,435) - Repayment of receivables securitization (150,000) - Other financing activities 1,243 ; 751 Net cash (used for) provided by financing activities (88,653) 27,595 CASH AND EQUIVALENTS Increase (decrease) during the period 24,834 (17,052) Beginning balance 29,191 56,644 Ending balance $ 54,025 $ 39,592 See Notes to Condensed Consolidated Financial Statements. |
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THE NEIMAN MARCUS GROUP, INC. |
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1. Basis of presentation |
The Condensed Consolidated Financial Statements of The Neiman Marcus Group, Inc. (the Company) are submitted in response to the requirements of Form 10-Q and should be read in conjunction with the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K. In the opinion of management, these statements contain all adjustments, consisting only of normal recurring accruals, necessary for a fair presentation of the results for the interim periods |
Certain reclassifications and restatements have been made to the fiscal 1999 financial statements to conform to the fiscal 2000 presentation. |
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2. Merchandise inventories |
During the thirteen weeks ended October 30, 1999, the Company changed its method of determining the cost of inventories from the last-in, first-out (LIFO) method to the first-in, first-out (FIFO) method. Management believes that the FIFO method better measures the current value of such inventories and provides a more appropriate matching of revenues and expenses. Under the current low-inflationary environment, the use of the FIFO method more accurately reflects the Compa |
The change to the FIFO method has been applied by retroactively restating the accompanying condensed consolidated financial statements. The effect of this change was to increase merchandise inventories, accrued liabilities and retained earnings by $17.6 million, $7.0 million and $10.6 million, respectively, as of May 1, 1999, and to increase merchandise inventories and retained earnings by $16.8 million and $10.1 million, respectively, and to decrease the deferred tax ass |
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3. 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 presented in the table below. No adjustments were made to net earnings for the computations of basic and diluted EPS during the periods presented. |
Options to purchase 971,850 shares of common stock were not included in the computation of diluted EPS for both the thirty-nine and thirteen weeks ended April 29, 2000, because the exercise price of those options was greater than the average market price of the common shares. Options to purchase 844,960 shares and 404,960 shares of common stock were not included in the computation of diluted EPS for the thirty-nine and thirteen weeks ended May 1, 1999, respectively, becau |
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Thirty-Nine Weeks Ended
Thirteen Weeks Ended |
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THE NEIMAN MARCUS GROUP, INC. |
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4. Authorized Capital |
On September 15, 1999, shareholders of the Company approved a proposal |
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5. Spin-off from Harcourt General, Inc. |
On October 22, 1999, Harcourt General, Inc. (Harcourt General) Each common shareholder of Harcourt General received .3013 of a share |
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6. Operating Segments |
The Company has two reportable business segments: specialty retail The Company's senior management evaluates the performance of the The following tables set forth the information for the Company's |
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(In thousands) Thirty-Nine Weeks Thirty-Nine Weeks Thirteen Weeks Thirteen Weeks |
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THE NEIMAN MARCUS GROUP, INC. |
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7. Stockholder Rights Plan |
On October 6, 1999, the Company's Board of Directors adopted a stockholder rights plan. The rights plan is designed to improve the ability of the Company's board to protect and advance the interests of the Company's stockholders in the event of an unsolicited proposal to acquire a significant interest in the Company. |
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8. Stock Repurchase Program |
In October 1999, the Company's Board of Directors authorized an increase in the stock repurchase program to two million shares. On April 11, 2000, the Company's Board of Directors authorized the repurchase of an additional two million shares. During the thirty-nine weeks ended April 29, 2000, the Company repurchased 1,858,600 shares at an average price of $24.00 per share; 2,141,400 shares were remaining under the stock repurchase program. |
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9. Recent Accounting Developments |
In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101 (SAB 101), "Revenue Recognition in Financial Statements," to clarify the revenue recognition rules for certain types of
transactions. The Company is currently evaluating the effect of implementing SAB 101, which is required to be adopted in the first quarter of fiscal 2001. |
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THE NEIMAN MARCUS GROUP, INC. |
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Results of Operations for the Thirty-Nine Weeks Ended April 29, 2000 Compared with the Thirty-Nine Weeks Ended May 1, 1999 |
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Revenues in the thirty-nine weeks ended April 29, 2000 increased $274.2 million or 13.8% over revenues in the thirty-nine weeks ended May 1, 1999. The increase in revenues was primarily attributable to comparable sales growth in both the specialty retail store and direct marketing segments. Specialty retail stores revenues in the thirty-nine weeks ended April 29, 2000 increased $204.3 million or 11.9% over the prior year. Direct marketing revenues in th e ed April 29, 2000 increased $33.4 million or 13.2% over the prior year. Total comparable sales for the Company increased 11.5%. Comparable sales increased 10.9% in the specialty retail store segment and 13.2% in the direct marketing segment. |
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Cost of goods sold including buying and occupancy costs increased $137.8 million or 10.4% to $1.46 billion compared to the same period last year, primarily due to increased sales. As a percentage of revenues, cost of goods sold decreased to 64.8% from 66.8% in the prior year, due primarily to higher comparable sales, lower markdowns, higher markups on goods sold and, to a lesser extent, proportionately lower buying and occupancy costs. |
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Selling, general and administrative expenses increased $83.1 million or 17.4% to $561.3 million. As a percentage of revenues, selling, general and administrative expenses increased to 24.8% from 24.1% in the prior year, primarily attributable to expenses incurred to launch the Company's new e-commerce business. |
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Interest expense decreased 7.1% to $17.8 million in the thirty-nine weeks ended April 29, 2000 from $19.2 million in the prior year. The decrease resulted primarily from lower average outstanding borrowings during the period, offset in part by a higher effective interest rate. |
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The Company's effective income tax rate was 38% in the thirty-nine weeks ended April 29, 2000, as compared to 39% in the thirty-nine weeks ended May 1, 1999. |
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Results of Operations for the Thirteen Weeks Ended April 29, 2000 Compared with the Thirteen Weeks Ended May 1, 1999 |
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Revenues in the thirteen weeks ended April 29, 2000 increased $82.5 million or 13.5% over revenues in the thirteen weeks ended May 1, 1999. The increase in revenues was primarily attributable to comparable sales growth in both the specialty retail store and direct marketing segments. Specialty retail store revenues in the thirteen weeks ended April 29, 2000 increased $66.4 million or 12.6% over the prior year. Direct marketing revenues in the thirteen we |
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Costs of goods sold including buying and occupancy costs increased 10.4% to $437.6 million in the thirteen week period ended April 29, 2000 compared to the same period last year, primarily due to increased sales and lower markdowns. As a percentage of revenues, cost of goods sold decreased to 63.0% from 64.8% in the prior year, primarily due to lower markdowns. |
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Selling, general and administrative expenses increased 18.8% to $172.5 million from $145.2 million in the prior year, primarily due to higher sales volume. As a percentage of revenues, selling, general and administrative expenses increased to 24.9% from 23.7% from the prior year, principally reflecting expenses incurred to launch the Company's new e-commerce business. |
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Interest expense decreased 16.7% to $5.0 million in the thirteen weeks ended April 29, 2000. The decrease resulted primarily from lower average outstanding borrowings during the period, offset in part by a higher effective interest rate. |
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The Company's effective income tax rate was 38% in the thirteen weeks ended April 29, 2000, as compared to 39% in the thirteen weeks ended May 1, 1999. |
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THE NEIMAN MARCUS GROUP, INC. |
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Changes in Financial Condition and Liquidity Since July 31, 1999 |
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During the thirty-nine weeks ended April 29, 2000, the Company financed its working capital needs and capital expenditures primarily with cash from operations and borrowings under its revolving credit facility. The following discussion analyzes liquidity and capital resources by operating, investing and financing activities as presented in the Company's Condensed Consolidated Statements of Cash Flows. |
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Net cash provided by operating activities was $224.5 million during the first thirty-nine weeks of fiscal 2000 as compared to $108.3 million in the prior year period. The most significant item affecting working capital in the current period was an increase in merchandise inventories of $77.6 million offset in part by an increase in accounts payable of $57.5 million and accrued liabilities of $52.6 million. |
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Capital expenditures were $60.4 million during the thirty-nine week period ended April 29, 2000 as compared to $69.8 million in the prior year period. Capital expenditures were primarily related to existing store renovations, including remodeling at Bergdorf Goodman's main store. Capital expenditures are expected to approximate $100.0 million during fiscal 2000. |
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The Company has increased its bank borrowings by $107.2 million since July 31, 1999. At April 29, 2000 the Company had $320 million available under its revolving credit facility. In September 1999 the Company reduced the revolving credit facility from $650 million to $450 million to reflect its current and anticipated cash flow requirements. |
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The Company's five year revolving securitization of its accounts receivable matures in fiscal 2000. In the thirty-nine weeks ended April 29, 2000, the Company used proceeds from its credit facility to repay $150.0 million of the $246 million of certificates sold to third parties under the securitization. The Company will repay $37.5 million to third parties each month for two successive months with a final payment of $21.0 million in July 2000. The Compa |
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In October 1999, the Company's Board of Directors authorized an increase in the stock repurchase program to two million shares. On April 11, 2000, the Company's Board of Directors authorized the repurchase of an additional two million shares. In the thirty-nine weeks ended April 29, 2000, the Company repurchased 1,858,600 shares at an average price of $24.00 per share; 2,141,400 shares were remaining under this program. |
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Kate Spade LLC, a majority owned subsidiary of the Company, distributed $2.4 million to its minority shareholders in the current period. |
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The Company believes that it will have sufficient resources to fund its planned capital growth, operating requirements and the maturities of the securitization certificates.
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THE NEIMAN MARCUS GROUP, INC. |
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Forward-looking Statements |
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Statements in this report 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 du |
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THE NEIMAN MARCUS GROUP, INC. |
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Item 6. Exhibits and Reports on Form 8-K. |
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(a) Exhibits. |
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27.1 Financial data schedules. |
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(b) Reports on Form 8-K. |
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. |
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THE NEIMAN MARCUS GROUP, INC. |
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Date: June 12, 2000 |
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