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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
xx ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended July 28, 2012
OR
¨¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
Commission file no. 333-133184-12
Neiman Marcus, Inc.
Delaware
20-3509435
1618 Main Street
Dallas, Texas
75201
(214) 743-7600
None
None
ox
ox
xo
xo
x
¨¨
x
¨
¨x
Table of contents
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Page 1
...Neiman Marcus, Inc. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 20-3509435 (I.R.S. Employer Identification No.) 1618 Main Street Dallas, Texas (Address of principal executive offices) Registrant's telephone number... -
Page 2
As of September 10, 2012, the registrant had outstanding 1,018,846 shares of its common stock, par value $0.01 per share. -
Page 3
... Data Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Controls and Procedures Nther Information Directors, Executive Nfficers and Corporate Governance Executive Compensation Security Nwnership of Certain Beneficial Nwners and Management and Related Stockholder... -
Page 4
... 2012, $329.7 million in fiscal year 2011 and $231.8 million in fiscal year 2010. We currently operate 42 Neiman Marcus full-line stores at prime retail locations in major U.S. markets and two Bergdorf Goodman stores on Fifth Avenue in New York City. In addition, we operate 39 smaller format stores... -
Page 5
...retailer in New York City well known for its high luxury merchandise, opulent shopping environment and landmark Fifth Avenue locations. Like Neiman Marcus, Bergdorf Goodman features high-end apparel, fashion accessories, shoes, precious and designer jewelry, cosmetics, gift items and decorative home... -
Page 6
.... Neiman Marcus and Bergdorf Goodman's social media platforms include blogs, Twitter feeds and facebook pages. Social content includes insider fashion news, designer profiles, product promotion, customer service and event support. Posts and replies to customers are updated multiple times per... -
Page 7
... our customers. In our Nn-line operations, customers may interact with knowledgeable sales associates using on-line chat capabilities offered on our websites or by dialing a toll-free telephone number. Customer-friendly Websites. We believe that we offer a high level of service to customers shopping... -
Page 8
... credit card program in connection with promotional events and customer relationship programs to target specific customers based upon their past spending patterns for certain brands, merchandise categories and store locations. Merchandise We carry luxury merchandise from well-recognized designers... -
Page 9
... To support our Specialty Retail Stores, we utilize a primary distribution facility in Longview, Texas, a regional distribution facility in Dayton, New Jersey and four regional service centers. We also operate two distribution facilities in the Dallas-Fort Worth area to support our Nn-line operation... -
Page 10
... Bellevue, Washington (suburban Seattle) and Walnut Creek, California; e-commerce and technology investments; enhancements to merchandising and store systems; and the renovation and expansion of our main Bergdorf Goodman store in New York City and Neiman Marcus store in Bal Harbour. Currently, we... -
Page 11
... stores and direct marketing firms. We compete for customers principally on the basis of quality and fashion, customer service, value, assortment and presentation of merchandise, marketing and customer loyalty programs and, in the case of Neiman Marcus and Bergdorf Goodman, store ambiance. Retailers... -
Page 12
... in future economic conditions; the performance of the financial, equity and credit markets; the level of consumer debt; the level of consumer savings; current and expected interest rates; current and expected tax rates and policies; current and expected unemployment levels; and crude oil prices... -
Page 13
..., acquisitions, debt service requirements, execution of its business strategy or other purposes; and limiting NMG's ability to obtain credit from our vendors and other financing sources on acceptable terms or at all. · NMG's interest expense could increase if interest rates increase because the... -
Page 14
... its future business, financial condition and results of operations. Agreements governing NMG's indebtedness restrict NMG's current and future operations and restrict its ability to take certain actions. The credit agreements governing NMG's Asset-Based Revolving Credit Facility and Senior Secured... -
Page 15
... fashion, customer service, value, assortment and presentation of merchandise, marketing and customer loyalty programs and store ambiance. Nur failure to successfully compete based on these and other factors may have a material adverse effect on our revenues and results of operations. A number of... -
Page 16
... their levels of spending in response to increases in retail prices and/or we are unable to pass cost increases to our customers, our revenues and our profit margins may decrease. Accordingly, foreign currency fluctuations and inflation could have a material adverse effect on our business, financial... -
Page 17
... we fail to identify appropriate business goals and objectives or if we fail to execute the actions required to accomplish these goals and objectives, our revenues, customer base and results of operations could be materially adversely affected. New store openings involve certain risks, including... -
Page 18
...profitability and performance of the proprietary credit card portfolio. In addition, we receive payments from Capital Nne for marketing and servicing activities we provide to Capital Nne. In connection with the Program Agreement, we have changed and may continue to change the terms of credit offered... -
Page 19
... some technology-related business processes to third parties. These include credit card authorization and processing, insurance claims processing, payroll processing, record keeping for retirement and benefit plans and certain information technology functions. In addition, we review outsourcing... -
Page 20
... Neiman Marcus Last Call Nn-line Dallas, Texas New York, New York Dallas, Texas Irving, Texas Properties that we use in our operations include Neiman Marcus stores, Bergdorf Goodman stores, Neiman Marcus Last Call stores and distribution, support and office facilities. As of September 10, 2012... -
Page 21
... these stores: Bergdorf Goodman Stores Fiscal Year Operations Locations Began Gross Store Sq. Feet New York City (Main)(1) New York City (Men's)(1)* 1901 1991 250,000 66,000 (1) * Leased. Mortgaged to secure our senior secured credit facilities and the 2028 Debentures. Neiman Marcus Last... -
Page 22
... close of business on March 28, 2012. We did not declare or pay any dividends on our common stock in fiscal year 2011. Issuer Purchases of Equity Securities. There were no unregistered sales of our equity securities during the quarterly period ended July 28, 2012. ITEM 6. SELECTED FINANCIAL DATA... -
Page 23
... as Neiman Marcus stores and Bergdorf Goodman stores net sales divided by weighted average square footage. Weighted average square footage includes a percentage of year-end square footage for new stores equal to the percentage of the year during which they were open. (7) (8) Sales per square foot... -
Page 24
... relating to these statements. Overview The Company is a luxury retailer conducting integrated store and on-line operations principally under the Neiman Marcus and Bergdorf Goodman brand names. We report our store operations as our Specialty Retail Stores segment and our on-line operations... -
Page 25
... in our Neiman Marcus stores; higher levels of customer service and satisfaction; and investment in a foreign e-commerce retailer. Operating earnings - Total operating earnings in fiscal year 2012 were $403.6 million, or 9.3% of revenues. Total operating earnings in fiscal year 2011 were $329... -
Page 26
... from credit card program Depreciation expense Amortization of intangible assets Amortization of favorable lease commitments Equity in loss of foreign e-commerce retailer Nperating earnings Interest expense, net Earnings (loss) before income taxes Income tax expense (benefit) Net earnings (loss... -
Page 27
... revenues exclude revenues of closed stores. (3) Sales per square foot are calculated as Neiman Marcus stores and Bergdorf Goodman stores net sales divided by weighted average square footage. Weighted average square footage includes a percentage of year-end square footage for new stores equal... -
Page 28
...the sale of high-end merchandise through our Specialty Retail Stores and our Nn-line operation. Components of our revenues include: · Sales of merchandise-Revenues are recognized at the later of the point-of-sale or the delivery of goods to the customer. Revenues are reduced when customers return... -
Page 29
... gross margin during fiscal years 2012, 2011 or 2010. Changes in our CNGS as a percentage of revenues can be affected by the following factors: · our ability to order an appropriate amount of merchandise to match customer demand and the related impact on the level of net markdowns and promotions... -
Page 30
... of the Program Agreement, the Credit Provider offers credit cards and non-card payment plans bearing our brands and we receive income from the Credit Provider (Program Income) consisting of 1) ongoing payments based on net credit card sales and 2) compensation for marketing and servicing activities... -
Page 31
... web marketing expenditures at our Nn-line operation. · Income from credit card program. We earned Program Income of $51.6 million, or 1.2% of revenues, in fiscal year 2012 compared to $46.0 million, or 1.1% of revenues, in fiscal year 2011. The increase in income from credit card program is... -
Page 32
... levels of full-price sales and lower net markdowns and promotions costs. Nperating earnings for our Nn-line segment were $132.4 million, or 15.1% of Nn-line revenues, in fiscal year 2012 compared to $113.0 million, or 14.9% of Nn-line revenues, for the prior fiscal year. The increase in operating... -
Page 33
...level of customer demand. New stores generated revenues of $9.7 million in fiscal year 2011. Comparable revenues for fiscal year 2011 were $3,992.6 million compared to $3,692.8 million in fiscal year 2010, representing an increase of 8.1%. Changes in comparable revenues, by quarter and by reportable... -
Page 34
... of revenues for Nn-line was primarily the result of: · · · decreased product margins primarily due to higher net markdowns and lower delivery and processing net revenues; higher marketing and selling costs; and a lower level of income from our credit card program. Interest expense, net . Net... -
Page 35
... - 2012 Executive Nfficer Compensation." The non-GAAP measures of EBITDA and Adjusted EBITDA contain some, but not all, adjustments that are taken into account in the calculation of the components of various covenants in the agreements governing NMG's Senior Secured Asset-Based Revolving Credit... -
Page 36
... retail prices and/or we are unable to pass such cost increases to our customers, our revenues, gross margins, and ultimately our earnings, could decrease. Foreign currency fluctuations could have a material adverse effect on our business, financial condition and results of operations in the future... -
Page 37
... of our new store in Walnut Creek, California, which opened in March 2012. During fiscal year 2012, we also incurred capital expenditures for the renovation of portions of our Bergdorf Goodman store in New York City, our Bal Harbour Neiman Marcus store and information technology enhancements... -
Page 38
... value of eligible inventory, net of certain reserves, plus (b) 85% of the amounts owed by credit card processors in respect of eligible credit card accounts constituting proceeds from the sale or disposition of inventory, less certain reserves. NMG must at all times maintain excess availability... -
Page 39
... was 4.75% at July 28, 2012. The applicable margin with respect to base rate borrowings was 2.50% and the applicable margin with respect to LIBNR borrowings was 3.50% at July 28, 2012. The credit agreement governing the Senior Secured Term Loan Facility requires NMG to prepay outstanding term loans... -
Page 40
...interest rate cap agreements). Borrowings pursuant to the Senior Secured Term Loan Facility bear interest at floating rates, primarily based on LIBNR, but in no event less than a floor rate of 1.25%, plus applicable margins. As a consequence of the LIBNR floor rate, we estimate that a 1% increase in... -
Page 41
... insurance obligations and contingent rent payments. We had no off-balance sheet arrangements, other than operating leases entered into in the normal course of business, during fiscal year 2012. OTHER MATTERS Factors That May Affect Future Results Matters discussed in this Annual Report on Form... -
Page 42
... to respond to changes in our business or to take certain actions; Industry and Competitive Factors · competitive responses to our loyalty programs, marketing, merchandising and promotional efforts or inventory liquidations by vendors or other retailers; changes in the financial viability of our... -
Page 43
... of the point of sale or the delivery of goods to the customer. Revenues associated with gift cards are recognized at the time of redemption by the customer. Revenues exclude sales taxes collected from our customers. Revenues are reduced when customers return goods previously purchased. We maintain... -
Page 44
..., customer lists and favorable lease commitments, annually and upon the occurrence of certain events. The recoverability assessment requires judgment and estimates of future store generated cash flows. The underlying estimates of cash flows include estimates for future revenues, gross margin rates... -
Page 45
... of the goodwill associated with our Neiman Marcus stores, Bergdorf Goodman stores and Nn-line reporting units involves a two-step process. The first step requires the comparison of the estimated enterprise fair value of each of our reporting units to its recorded carrying value. We estimate the... -
Page 46
... 3.60% 3.80% 8.00% (0.7) 3.8 In May 2011, the Financial Accounting Standards Board (FASB) issued guidance related to certain fair value measurements and disclosures. We adopted this guidance during the third quarter of fiscal year 2012. The adoption of this guidance did not have a material impact... -
Page 47
... of the Company and supplementary data are included as pages F-1 through F-40 at the end of this Annual Report on Form 10-K: Page Number Index Management's Report on Internal Control Nver Financial Reporting Reports of Independent Registered Public Accounting Firm Consolidated Balance Sheets... -
Page 48
... information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, accumulated, processed, summarized, reported and communicated on a timely basis within the time periods specified in the SEC's rules and forms. b. Internal Control Over Financial Reporting... -
Page 49
...of Caesars Entertainment Corporation and J. Crew Group, Inc. Mr. Coslet is Chairman of our Compensation Committee and a member of the Executive Committee. Mr. Coslet's executive leadership, knowledge of capital markets, and financial expertise are valuable assets to our Board of Directors. 47 2005... -
Page 50
...John G. Danhakl Managing Partner of Leonard Green & Partners, L.P., a private equity firm specializing in leveraged buyout transactions, with which he has been a partner since 1995. He serves on the board of directors of Air Lease Corp., Animal Health International, Inc., Arden Group, Inc., J. Crew... -
Page 51
... a member of our Executive and Compensation Committees. 47 2005 Mr. Lee's qualifications to serve on our Board of Directors include his broad-based knowledge in the areas of management, corporate strategy development, and finance. Susan C. Schnabel Managing Director of Credit Suisse, a leading... -
Page 52
... of Bergdorf Goodman on May 7, 2012. From 2007 until February 2012, Mr. Schulman was Chief Executive Nfficer of Jimmy Choo, Ltd, a fashion designer and retailer. From 2005 until 2007, he served as President of Kenneth Cole New York and in senior executive roles at Gap, Inc. as Managing Director... -
Page 53
.... 43 T. Dale Stapleton 54 CORPORATE GOVERNANCE Code of Ethics The Board of Directors has adopted The Neiman Marcus Group, Inc. Code of Ethics and Conduct, which is applicable to all our directors, officers and employees. A Code of Ethics for Financial Professionals has also been adopted that... -
Page 54
... solid financial performance, providing outstanding service to our customers, and managing the Company's assets wisely. Nur compensation program is designed to meet the following objectives in order to retain and adequately incentivize our executive team: ï,- ï,- Recruit and retain executives who... -
Page 55
... and compensation review process as well as at other times to recognize a promotion or change in job responsibilities. Merit increases are usually awarded to the named executive officers in the same percentage range as all employees and are based on overall performance and competitive market data... -
Page 56
... employed by the Company at such time. Nn Nctober 1, 2011, stock options were awarded pursuant to the Management Incentive Plan to each of the named executive officers, except Mr. Maxwell, and to 24 other senior officers. The number of stock options awarded to each individual was based on the job... -
Page 57
... business risk associated with such plan payouts and stock option grants. The Compensation Committee also monitors compensation policies and programs to determine whether risk management objectives are being met. Executive Officer Compensation Process for Evaluating Executive Officer Performance... -
Page 58
... performance contribution required from each of our executive officers. We generally target our direct compensation to be positioned between the 50 th and 75th percentile levels of the compensation packages received by executives in our peer group of industry related companies. In the fourth quarter... -
Page 59
...For fiscal year 2012, the annual financial goals were based on EBITDA and Adjusted EBITDA, sales, RNIC, gross margin, inventory turnover, and for Mr. Koryl, certain other metrics related to the on-line business, as described more fully below. The Compensation Committee set the threshold, target, and... -
Page 60
... the heading "Non-Equity Incentive Plan Compensation" on page 62. Stock Options . Nn Nctober 1, 2011, stock options were awarded to each of the named executive officers, except Mr. Maxwell, and to 24 other senior officers. The options granted to each individual were 65% Fixed Price Nptions and 35... -
Page 61
... be competitive with benefits offered in the retail industry. Retirement Plan. Prior to 2008, most non-union employees over age 21 who had completed one year of service with 1,000 or more hours participated in The Neiman Marcus Group, Inc. Retirement Plan (referred to as the Retirement Plan), which... -
Page 62
... responsibilities in order to provide a competitive level of total compensation to our executives. We believe the level of perquisites is within an acceptable range of what is offered by a group of industry related companies. The Compensation Committee believes that these benefits are aligned... -
Page 63
... apply equally to all participants in the plans, including the named executive officers, except to the extent an executive is party to an individual agreement that provides otherwise. Consideration of Tax and Accounting Treatment of Compensation Internal Revenue Code §409A The American Jobs... -
Page 64
... Non-Equity Incentive Plan Compensation ($)(4) Option Name and Principal Position Fiscal Salary ($)(1) Bonus ($)(2) Awards ($)(3) Nonqualified Deferred Compensation Earnings ($)(5) All Other Compensation ($)(6) Total ($) Year Karen W. Katz President and Chief Executive Nfficer 2012 2011... -
Page 65
... contributions paid by us Deferred compensation plan match Group term life insurance Financial counseling/tax preparation Long-term disability Moving expenses Transition benefit(1) Dividend bonus(2) New York travel reimbursement(3) Gross ups for New York non-resident taxes(4) $ 11,250 66,227 2,547... -
Page 66
... Grant Date Fair Name Grant Date Estimated Possible Future Payouts Under Non-Equity Incentive Plan Awards (1) Threshold Target Maximum ($) ($) ($) Number of Securities Underlying Options (#) Exercise Or Base Price of Option Awards ($)(4) Value of Stock and Option Awards ($)(5) Katz, Karen... -
Page 67
64 -
Page 68
Table of Contents OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END The following table sets forth certain information regarding the total number and aggregate value of stock options held by each of our named executive officers at July 28, 2012. Option Awards Number of Securities Underlying Unexercised... -
Page 69
65 -
Page 70
... of the equity investor's equity sold. Nn Nctober 1, 2012, the option price of the Accreting Nptions will increase to $1,556.50 per share per 10% compound rate annual increase as described above in this footnote. (4) (5) (6) Nonqualified stock options designated as Fixed Price Nptions granted on... -
Page 71
...forth certain information with respect to retirement payments and benefits under the Retirement Plan and the SERP for each of our named executive officers. Present Value of Accumulated Benefit ($)(2) Number of Years Credited Service Name Plan Name (#)(1) Payments During Last Fiscal Year ($) Karen... -
Page 72
... of service is entitled to full benefits in the form of monthly payments under the SERP computed as a straight life annuity, equal to 50 percent of the participant's average monthly compensation for the highest consecutive 60 months preceding retirement less 60 percent of his or her estimated annual... -
Page 73
... of her new duties and the grant of a non-qualified stock option under the Company's Management Equity Incentive Plan with respect to 4,300 shares of common stock of the Company with an exercise price equal to the fair market value of the common stock at the time of grant. The stock option will... -
Page 74
... bonus of 150% of annual base salary. In addition, as part of the agreement, effective September 30, 2010, he received a nonqualified stock option grant under the Management Equity Incentive Plan with respect to 2,200 shares of common stock of the Company with an exercise price equal to the fair 70 -
Page 75
...% of annual base salary. In addition, as part of the agreement, effective September 30, 2010, he received a non-qualified stock option grant under the Management Equity Incentive Plan with respect to 2,200 shares of common stock of the Company with an exercise price equal to the fair market value of... -
Page 76
...retirement plans. He is entitled to receive $304,176 remaining in the DC SERP and amounts earned under the RSP. The balance in his RSP account at the end of fiscal year 2012 was $278,461. The tables below show certain potential payments that would have been made to the other named executive officers... -
Page 77
... the Company's long-term disability insurance provider. Represents a lump sum payment of the target bonus and two times base salary, two times target bonus and a lump sum payout under the deferred compensation plan and defined contribution plan. The amount included for health and welfare benefits... -
Page 78
..., 1.5 times target bonus, the portion of the salary payment that is exempt from 409A of the Code, a lump sum payout under the deferred compensation and defined contribution plans, and eighteen months of CNBRA premiums. Calculations were based on CNBRA rates currently in effect. See "Employment and... -
Page 79
... 1.5 times target bonus, the portion of the salary payment that is exempt from 409A of the Code, a lump sum payout under the defined contribution plan, and eighteen months of CNBRA premiums. Calculations were based on CNBRA rates currently in effect. See "Employment and Nther Compensation Agreements... -
Page 80
...-half times base salary for each of Messrs. Koryl and Lind. The amount included for health and welfare benefits represents a continuation of CNBRA benefits for a period of eighteen months. Calculations were based on CNBRA rates currently in effect. See "Employment and Nther Compensation Agreements... -
Page 81
.... Tansky will be provided with office space and appropriate staff assistance at Bergdorf Goodman in New York and reimbursement for travel and other expenses incurred in the fulfillment of his responsibilities as nonexecutive Chairman of the Board of Directors. The agreement provides that Mr. Tansky... -
Page 82
...28, 2012. Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) Number of securities to be issued upon exercise of outstanding options, warrants and Plan Category rights (a) Weighted-average exercise price of... -
Page 83
... directors and executive officers as a group. Amount and Nature of Beneficial Ownership Name of Beneficial Owner (Common Stock) Options Currently Exercisable or Exercisable within 60 days Total Stock and Stock Based Holdings Percent of Class (1) Newton Holding, LLC 301 Commerce Street Fort Worth... -
Page 84
...11111 Santa Monica Boulevard Los Angeles, CA 90025 Carrie Wheeler (7) c/o TPG Global, LLC 301 Commerce Street Suite 3300 - - - * - - - * Fort Worth, TX 76102 Susan C. Schnabel 2121 Avenue of the Stars Los Angeles, CA 90067 All current executive officers and directors as a group (20 persons... -
Page 85
... therein. The mailing address for each of Group Advisors, Advisors III and Messrs. Bonderman and Coulter is c/o TPG Global, LLC, 301 Commerce Street, Fort Worth, TX 76102. (3) Includes the 1,000,000 shares owned by Newton Holding, LLC over which Warburg Pincus Private Equity VIII, L.P., Warburg... -
Page 86
... comparable services or products and (d) the terms available to or from, as the case may be, unrelated third parties or to or from employees generally. Related Person Transactions Newton Holding, LLC Limited Liability Company Operating Agreement The investment funds associated with or designated by... -
Page 87
... Financial Statements in Item 15 for a further description of the management services agreement. Certain Charter and Bylaws Provisions Nur amended and restated certificate of incorporation and our amended and restated bylaws contain provisions limiting directors' obligations in respect of corporate... -
Page 88
.... Principal Accounting Fees and Services Audit Fees. The aggregate fees billed for the audits of the Company's annual financial statements for the fiscal years ended July 28, 2012 and July 30, 2011 and for the reviews of the financial statements included in our Quarterly Reports on Form 10-Q were... -
Page 89
...reference to the Company's Annual Report on Form 10-K for the fiscal year ended July 31, 2010. 2.2 Purchase, Sale and Servicing Transfer Agreement dated as of June 8, 2005, among The Neiman Marcus Group, Inc., Bergdorf Goodman, Inc., HSBC Bank Nevada, N.A. and HSBC Finance Corporation. Amended and... -
Page 90
... of New York Trust Company, N.A., as successor trustee. Director Services Agreement dated April 26, 2010 by and among Neiman 4.7 Incorporated herein by reference to the Company's Annual Report on Form 10-K for the fiscal year ended July 30, 2011. 10.1* Marcus, Inc., The Neiman Marcus Group, Inc... -
Page 91
... Company's Quarterly Report on Form 10-Q for the quarter ended Nctober 30, 2010. 10.11 Amendment No. 1, dated as of May 16, 2011, to the Lien Subordination and Intercreditor Agreement dated as of Nctober 6, 2005, among the Company, The Neiman Marcus Group, Inc., each subsidiary from time to time... -
Page 92
... Inc. and certain eligible key employees amending stock option grants dated Nctober 1, 2011. 10.23* Employment Agreement dated April 26, 2010 by and between The Neiman Marcus Group, Inc. and Karen Katz. Incorporated herein by reference to the Company's Current Report on Form 8-K dated April 28, 2010... -
Page 93
... Report on Form 10-Q for the quarter ended January 28, 2012. N.A., HSBC Card Services, Inc., HSBC Finance Corporation, The Neiman Marcus Group, Inc., Bergdorf Goodman, Inc., and Capital Nne Financial Corporation. (1) 10.31* Form of Confidentiality, Non-Competition and Termination Benefits Agreement... -
Page 94
... Supplemental Executive Retirement Plan dated July 17, 2010. 10.45 12.1 14.1 Computation of Ratio of Earnings to Fixed Charges. The Neiman Marcus Group, Inc. Code of Ethics and Conduct. Incorporated herein by reference to the Company's Annual Report on Form 10-K for the fiscal year ended July... -
Page 95
... the Company. Consent of Ernst & Young LLP. Certification of Chief Executive Nfficer pursuant to Section 302 of the Sarbanes-Nxley Act of 2002. Certification of Chief Financial Nfficer ...to a request for confidential treatment. * Current management contract or compensatory plan or arrangement. 91 -
Page 96
Table of Contents INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Management's Report on Internal Control Nver Financial Reporting Reports of Independent Registered Public Accounting Firm Consolidated Balance Sheets Consolidated Statements of Nperations Consolidated Statements of Cash Flows ... -
Page 97
... policies and guidelines, which require employees to maintain a high level of ethical standards. In addition, the Audit Committee of the Board of Directors meets periodically with management, the internal auditors and the independent registered public accounting firm to review internal accounting... -
Page 98
...REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of Neiman Marcus, Inc. We have audited the accompanying consolidated balance sheets of Neiman Marcus, Inc. and subsidiaries as of July 28, 2012 and July 30, 2011, and the related consolidated statements of operations, cash... -
Page 99
...financial reporting as of July 28, 2012, based on the CNSN criteria . We also have audited, in accordance with the standards of the Public Company Accounting Nversight Board (United States), the consolidated balance sheets of Neiman Marcus, Inc. and subsidiaries as of July 28, 2012 and July 30, 2011... -
Page 100
... NEIMAN MARCUS, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except shares) July 28, 2012 July 30, 2011 ASSETS Current assets: Cash and cash equivalents Merchandise inventories Deferred income taxes Nther current assets Total current assets Property and equipment, net Customer lists, net... -
Page 101
... from credit card program Depreciation expense Amortization of intangible assets Amortization of favorable lease commitments Equity in loss of foreign e-commerce retailer Nperating earnings Interest expense, net Earnings (loss) before income taxes Income tax expense (benefit) Net earnings (loss... -
Page 102
...year ended (in thousands) July 28, 2012 July 30, 2011 July 31, 2010 CASH FLOWS - OPERATING ACTIVITIES Net earnings (loss) Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: Depreciation and amortization expense Loss on equity in foreign e-commerce retailer... -
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...' equity BALANCE AT AUGUST 1, 2009 Stock based compensation expense Comprehensive loss: Net loss Adjustments for fluctuations in fair market value of financial instruments, net of tax of ($6,074) Reclassification to earnings, net of tax of $17,925 Change in unfunded benefit obligations, net of tax... -
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... Contents NEIMAN MARCUS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The Company is a luxury retailer conducting integrated store and on-line operations principally under the Neiman Marcus and Bergdorf Goodman brand names... -
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... at July 28, 2012 and $287.7 million at July 30, 2011 is not reflected in our Consolidated Balance Sheets. Cost of goods sold also includes delivery charges we pay to third-party carriers and other costs related to the fulfillment of customer orders not delivered at the point-of-sale. Long-lived... -
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... of the goodwill associated with our Neiman Marcus stores, Bergdorf Goodman stores and Nn-line reporting units involves a two-step process. The first step requires the comparison of the estimated enterprise fair value of each of our reporting units to its recorded carrying value. We estimate the... -
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... of the point of sale or the delivery of goods to the customer. Revenues associated with gift cards are recognized at the time of redemption by the customer. Revenues exclude sales taxes collected from our customers. Revenues are reduced when customers return goods previously purchased. We maintain... -
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... require us to make assumptions related to customer purchasing levels and redemption rates. At the time the qualifying sales giving rise to the loyalty program points are made, we defer the portion of the revenues on the qualifying sales transactions equal to the estimated retail value of the gift... -
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... likely to be realized. Recent Accounting Pronouncements. In May 2011, the Financial Accounting Standards Board (FASB) issued guidance related to certain fair value measurements and disclosures. We adopted this guidance during the third quarter of fiscal year 2012. The adoption of this guidance did... -
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... and goodwill, by our reportable operating segments, are as follows: Favorable Lease Commitments (in thousands) Customer Lists Tradenames Goodwill Specialty Retail Stores Balance at July 31, 2010 Amortization Balance at July 30, 2011 Amortization Balance at July 28, 2012 On-line $ 299,518 (30... -
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... value of eligible inventory, net of certain reserves, plus (b) 85% of the amounts owed by credit card processors in respect of eligible credit card accounts constituting proceeds from the sale or disposition of inventory, less certain reserves. NMG must at all times maintain excess availability... -
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... under the Asset-Based Revolving Credit Facility exceeds the reported value of inventory owned by the borrowers and guarantors, NMG will be required to eliminate such excess within a limited period of time. If the amount available under the Asset-Based Revolving Credit Facility is less than the... -
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... Facility at July 28, 2012 approximates fair value based on similar rates offered for debt of similar remaining maturities and credit risk (Level 2 determination of fair value). Senior Secured Term Loan Facility. In Nctober 2005, NMG entered into a credit agreement and related security and other... -
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...half of NMG's full-line retail stores) and equipment, but excluding, among other things, the collateral described in the following bullet point; and a second-priority security interest in personal property consisting of inventory and related accounts, cash, deposit accounts, all payments received by... -
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... plus accrued and unpaid interest, and Additional Interest, if any, to the date of purchase. The fair value of NMG's Senior Subordinated Notes was approximately $516.3 million at July 28, 2012 and $523.8 million at July 30, 2011 based on quoted market prices (Level 2 determination of fair value... -
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... of such agreements. Fair Value. At each balance sheet date, the interest rate caps are recorded at estimated fair value. The fair values of the interest rate caps are estimated using industry standard valuation models using market-based observable inputs, including interest rate curves (Level... -
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... year 2012, we made a $29.4 million strategic investment in Glamour Sales Holding Limited (Glamour Sales), a privately held e-commerce company based in Hong Kong with leading flash sales websites in Asia. Through our investment in Glamour Sales, we intend to launch a full-price e-commerce website in... -
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... year ended (in thousands) July 28, 2012 July 30, 2011 July 31, 2010 Income tax expense (benefit) at statutory rate State income taxes, net of federal income tax benefit Difference between U.S. statutory rate and foreign tax rate Tax (benefit) expense related to tax settlements and other changes... -
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... the next twelve months as a result of settlements with tax authorities or expiration of statutes of limitation. At this time, we do not believe such adjustments will have a material impact on our Consolidated Financial Statements. NOTE 9. EMPLOYEE BENEFIT PLANS Description of Benefit Plans. We... -
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... of Benefits. The components of the expenses we incurred under our Pension Plan, SERP Plan and Postretirement Plan are as follows: Fiscal year ended (in thousands) July 28, 2012 July 30, 2011 July 31, 2010 Pension Plan: Service cost Interest cost Expected return on plan assets Net amortization... -
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... was structured to reduce volatility through diversification and enhance return to approximate the amounts and timing of the expected benefit payments. The asset allocation for our Pension Plan at the end of fiscal years 2012 and 2011 and the target allocation for fiscal year 2013, by asset category... -
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... integrating relative credit information, observed market movements and sector news, all of which is applied to pricing applications and models. Pension Plan investments in hedge funds and limited partnership interests are classified as Level 3 investments within the fair value hierarchy. Hedge... -
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...by level, within the fair value hierarchy, the Pension Plan's assets at fair value as of July 28, 2012 and July 30, 2011. July 28, 2012 (in thousands) Level 1 Level 2 Level 3 Total Equity securities: Corporate stock Mutual funds Common/collective trusts Hedge funds Limited partnership interests... -
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... calculate the present value of benefit obligations to be paid in the future, the expected long-term rate of return on assets held by our Pension Plan and the health care cost trend rate for the Postretirement Plan. We review these assumptions annually based upon currently available information. The... -
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... at the close of business on March 28, 2012. NOTE 11. STOCK-BASED COMPENSATION The Company has approved equity-based management arrangements, which authorize equity awards to be granted to certain management employees for up to 112,992 shares of the common stock of the Company. Nptions generally... -
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... option exercise price equals or exceeds the fair market value of our common stock. Because we are privately held and there is no public market for our common stock, the fair market value of our common stock is determined by our Compensation Committee at the time option grants are awarded (Level... -
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...both increases and decreases, based upon the overall annual profitability and performance of the proprietary credit card portfolio. In addition, we receive payments from Capital Nne for marketing and servicing activities we provide to Capital Nne. The Program Agreement with HSBC included a change of... -
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... conducts on-line and supplemental print catalog operations under the Neiman Marcus, Bergdorf Goodman, Neiman Marcus Last Call and Horchow brand names. Both the Specialty Retail Stores and Nn-line segments derive their revenues from the sales of high-end fashion apparel, accessories, cosmetics and... -
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... policies (except with respect to purchase accounting adjustments not allocated to the operating segments). The following tables set forth the information for our reportable segments: Fiscal year ended July 28, (in thousands) July 30, 2011 July 31, 2010 2012 REVENUES Specialty Retail Stores... -
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... table presents our revenues by merchandise category as a percentage of net sales: Years Ended July 28, 2012 July 30, 2011 July 31, 2010 Women's Apparel Women's Shoes, Handbags and Accessories Men's Apparel and Shoes Designer and Precious Jewelry Cosmetics and Fragrances Home Furnishings and... -
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... July 30, 2011 NonGuarantor Subsidiaries (in thousands) Company NMG Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents Merchandise inventories Nther current assets Total current assets Property and equipment, net Goodwill Intangible assets, net Nther assets Investments... -
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... Equity in (earnings) loss of subsidiaries Earnings (loss) before income taxes Income tax expense Net earnings (loss) $ $ $ $ $ 175,237 - - 228,337 88,251 140,086 Fiscal year ended July 30, 2011 Non- Guarantor (in thousands) Company NMG Subsidiaries Eliminations Consolidated Revenues... -
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...credit card program Depreciation expense Amortization of intangible assets and favorable lease commitments Nperating earnings Interest expense, net...12,900 89,827 3 Equity in loss (earnings) of subsidiaries (Loss) earnings before income taxes Income tax benefit Net (loss) earnings $ $ $ (182,910... -
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... NMG Subsidiaries Eliminations Consolidated CASH FLOWS - OPERATING ACTIVITIES Net earnings (loss) Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: Depreciation and amortization expense Loss on equity in foreign e-commerce retailer Deferred income taxes... -
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... CASH AND CASH EQUIVALENTS Increase during the period Beginning balance Ending balance $ $ $ $ NOTE 18. QUARTERLY FINANCIAL INFORMATION (UNAUDITED) Fiscal year 2012 Third Quarter First (in millions) Quarter Second Quarter Fourth Quarter Total Revenues Gross profit (1) Net earnings (loss... -
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...Executive Vice President, Chief Nperating Nfficer and Chief Financial Nfficer (principal financial officer) September 18, 2012 September 18, 2012 /s/ T. DALE STAPLETNN T. Dale Stapleton Senior Vice President and Chief Accounting Nfficer (principal accounting officer) Director September 18, 2012... -
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... for self-insurance Year ended July 28, 2012 Year ended July 30, 2011 $ $ $ 34,969 36,041 $ $ $ 64,532 60,971 63,391 $ $ $ - - - $ $ $ (63,314)(B) $ (62,043)(B) $ 36,187 34,969 36,041 Year ended July 31, 2010 35,510 (62,860)(B) $ (A) Gross margin on actual sales returns, net of... -
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...day of March, 2012 between WHEREAS, the Company has adopted and maintains the Neiman Marcus, Inc. Management Equity Incentive Plan, as amended (the "Plan"); WHEREAS, the Plan provides for the Grant to Participants in the Plan of Non-Qualified Stock Options to purchase shares of Common Stock of the... -
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... Price of each share of Common Stock underlying the Option is as set forth in the table below. Type Exercise Price Number of Shares Underlying the Option 7,269.3851 472.3333 Fair Value Option Performance Option Performance Option $ $ $ 1,227.50 992.50 775.00 [Shares vested as of March 28, 2012... -
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...through net-physical settlement (to satisfy both the exercise price and applicable withholding taxes (at the minimum statutory withholding rate)), to the extent permitted under Section 409A of the Code; provided that the Company's Chief Financial Officer makes a good faith determination at such time... -
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... representing that he has carefully read and understands this Agreement, the Plan and the Management Stockholders' Agreement as of the day and year first written above. NEIMAN MARCUS, INC. By: /s/ Karen Katz Karen Katz President and Chief Executive Officer /s/ Burton M. Tansky Burton M. Tansky... -
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... employ of and provide services for the Company or its Affiliates and to improve the growth and profitability of the Company; WHEREAS, the Plan provides for the Grant to Participants in the Plan of Non-Qualified Stock Options to purchase shares of Common Stock of the Company; WHEREAS, the Company... -
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... Options convert into options to purchase common stock or other equity interests of the surviving corporation (the "Assumed Options") and (d) the Participant thereafter experiences a Qualifying Termination at any time prior to the occurrence of an Initial Public Offering of the surviving corporation... -
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.../or expire based on the employment and termination of employment of the Participant. All shares of Common Stock obtained pursuant to the Option granted herein shall not be transferred except as provided in the Plan and, where applicable, the Management Stockholders' Agreement. 11. Integration. This... -
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... signed this Agreement on his own behalf, thereby representing that he has carefully read and understands this Agreement, the Plan and the Management Stockholders' Agreement as of the day and year first written above. NEIMAN MARCUS, INC. yy: Title: Karen Katz President and Chief Executive Officer... -
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...day of March, 2012 between WHEREAS, the Company has adopted and maintains the Neiman Marcus, Inc. Management Equity Incentive Plan, as amended (the "Plan"); WHEREAS, the Plan provides for the grant to Participants in the Plan of Non-Qualified Stock Options to purchase shares of Common Stock of the... -
Page 147
...the Grant Date of the Fair Value Option is October 6, 2005. 4. Exercise Price . (a) The Exercise Price of each share of Common Stock underlying the Option is as set forth in the table below. Type Exercise Price Number of Shares Underlying the Option [Shares vested as of March 28, 2012] [Shares... -
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... Options convert into options to purchase common stock or other equity interests of the surviving corporation (the "Assumed Options") and (d) the Participant thereafter experiences a Qualifying Termination at any time prior to the occurrence of an Initial Public Offering of the surviving corporation... -
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...or expire based on the employment and termination of employment of the Participant. All shares of Common Stock obtained pursuant to the Option granted herein shall not be transferred except as provided in the Plan and, where applicable, the Management Stockholders' Agreement. 11. Integration . This... -
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... this Agreement on his own behalf, thereby representing that he has carefully read and understands this Agreement, the Plan and the Management Stockholders' Agreement as of the day and year first written above. NEIMAN MARCUS, INC. By: Karen Katz President and Chief Executive Officer PARTICIPANT... -
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... employ of and provide services for the Company or its Affiliates and to improve the growth and profitability of the Company; WHEREAS, the Plan provides for the Grant to Participants in the Plan of Non-Qualified Stock Options to purchase shares of Common Stock of the Company; WHEREAS, the Company... -
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... to satisfy both the exercise price and applicable withholding taxes (at the minimum statutory withholding rate), Participant shall be allowed to employ such net-physical settlement in all cases and at any time (other than following a termination of the Participant's Employment for Cause) for all or... -
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.../or expire based on the employment and termination of employment of the Participant. All shares of Common Stock obtained pursuant to the Option granted herein shall not be transferred except as provided in the Plan and, where applicable, the Management Stockholders' Agreement. 12. Integration . This... -
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...signed this Agreement on her own behalf, thereby representing that she has carefully read and understands this Agreement, the Plan and the Management Stockholders' Agreement as of the day and year first written above. NEIMAN MARCUS, INC. yy: Title: Karen Katz President and Chief Executive Officer... -
Page 155
... employ of and provide services for the Company or its Affiliates and to improve the growth and profitability of the Company; WHEREAS, the Plan provides for the Grant to Participants in the Plan of Non-Qualified Stock Options to purchase shares of Common Stock of the Company; WHEREAS, the Company... -
Page 156
... Options convert into options to purchase common stock or other equity interests of the surviving corporation (the "Assumed Options") and (d) the Participant thereafter experiences a Qualifying Termination at any time prior to the occurrence of an Initial Public Offering of the surviving corporation... -
Page 157
.../or expire based on the employment and termination of employment of the Participant. All shares of Common Stock obtained pursuant to the Option granted herein shall not be transferred except as provided in the Plan and, where applicable, the Management Stockholders' Agreement. 11. Integration. This... -
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... signed this Agreement on his own behalf, thereby representing that he has carefully read and understands this Agreement, the Plan and the Management Stockholders' Agreement as of the day and year first written above. NEIMAN MARCUS, INC. By: Title: Karen Katz President and Chief Executive Officer... -
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EXHIBIT 12.1 Neiman Marcus, Inc. Computation of Ratio of Earnings to Fixed Charges (Unaudited) Fiscal year ended (in thousands, except ratios) July 28, 2012 July 30, 2011 July 31, 2010 August 1, 2009 August 2, 2008 Fixed Charges: Interest on debt Amortization of debt discount and expense ... -
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...Delaware The Neiman Marcus Greup, Inc. The Neiman Marcus Greup, Inc. The Neiman Marcus Greup, Inc. The Neiman Marcus Greup, Inc. The Neiman Marcus Greup, Inc. The Neiman Marcus Greup, Inc. (90%) Bergderf Geedman, Inc. (10%) Neiman Marcus, Inc. NM Financial Services, Inc. NMG Media, Inc. NMG Glebal... -
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... 2012, with respect to the consolidated financial statements and schedule of Neiman Marcus, Inc. and the effectiveness of internal control over financial reporting of Neiman Marcus, Inc. included in this Annual Report (Form 10-K) for the year ended July 28, 2012. /s/ ERNhT & YOUNG LLP Dallas, Texas... -
Page 162
... financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: September 18, 2012 /s/ KAREN W. KATZ Karen W. Katz President and Chief Executive Officer -
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...'s board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process... -
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... Exchange Act of 1934, as amended; and (ii) the Company. Dated: September 18, 2012 the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of /S/ KAREN W. KATZ Karen W. Katz President and Chief Executive Officer... -
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