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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended July 30, 1994
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 (IRS Employer
incorporation or organization)Identification No.)
27 Boylston Street, Chestnut Hill, Massachusetts 02167
(Address of principal executive offices) (Zip Code)
Registrant's telephone number and area code: 617-232-0760
Securities registered pursuant to Section 12(b) of the Act:
Title of each Class Name of each Exchange
on which Registered
Common Stock, $.01 par value New York
Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
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
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
The aggregate market value of the voting stock held by
non-affiliates of the registrant as of October 14, 1994 was
$241,124,218.
There were 37,957,053 shares of Common Stock outstanding as
of October 14, 1994.
_______________________________
Documents Incorporated by Reference
Portions of the Registrant's 1994 Annual Report to
Shareholders are incorporated by reference in Parts I, II and IV
of this Report.
THE NEIMAN MARCUS GROUP, INC.
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED JULY 30, 1994
TABLE OF CONTENTS
PART I Page
No.
Item 1. Business 1
Item 2. Properties 3
Item 3. Legal Proceedings 4
Item 4. Submission of Matters to a Vote of Security
Holders 4
PART II
Item 5. Market for the Registrant's Common
Equity and Related Stockholder Matters 4
Item 6. Selected Financial Data 5
Item 7. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 5
Item 8. Financial Statements and Supplementary Data 5
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 5
PART III
Item 10. Directors and Executive Officers
of the Registrant 5
Item 11. Executive Compensation 9
Item 12. Security Ownership of Certain Beneficial
Owners and Management 24
Item 13. Certain Relationships and Related Transactions 26
PART IV
Item 14.
Exhibits, Financial Statement Schedules,
and Reports on Form 8-K 27
Signatures 29
PART I
Item 1. BUSINESS
General
The Neiman Marcus Group, Inc. (together with its operating
divisions and subsidiaries, the "Company") is a Delaware
corporation which commenced operations in August 1987. Harcourt
General, Inc. ("Harcourt General"), a Delaware corporation based
in Chestnut Hill, Massachusetts, owns approximately 65% of the
fully converted equity of the Company; two of its directors and
nearly all of its officers and corporate staff employees occupy
similar positions with the Company. For more information about
the relationship between the Company and Harcourt General, see
Items 12 and 13 below and Notes 5 and 6 to the Company's
Consolidated Financial Statements incorporated herein by
reference. Harcourt General is a public company subject to the
reporting requirements of the Securities Exchange Act of 1934.
For further information about Harcourt General, reference may be
made to the reports filed by Harcourt General from time to time
with the Securities and Exchange Commission.
Description of Operations
Neiman Marcus
Neiman Marcus, based in Dallas, Texas, is a high fashion,
specialty retailer which offers high quality women's and men's
apparel, fashion accessories, precious jewelry, decorative home
accessories, fine china, crystal and silver, and epicurean
products. A relatively small portion of Neiman Marcus' customers
accounts for a significant percentage of its retail sales. In
addition, Neiman Marcus operates a state-of-the-art direct
marketing business, NM Direct, which distributes the catalogues
of Neiman Marcus, Horchow and Pastille.
Neiman Marcus' 27 stores are located in Arizona
(Scottsdale); California (five stores: Beverly Hills, Newport
Beach, Palo Alto, San Diego and San Francisco); Colorado
(Denver); the District of Columbia; Florida (two stores: Fort
Lauderdale and Bal Harbour); Georgia (Atlanta); Illinois (three
stores: Chicago, Northbrook and Oak Brook); Missouri (St. Louis);
Massachusetts (Boston); Minnesota (Minneapolis); Michigan (Troy);
Nevada (Las Vegas); New York (Westchester); Texas (six stores:
three in Dallas, one in Fort Worth and two in Houston); and
Virginia (McLean). The average size of the Neiman Marcus stores
is 142,000 gross square feet, and the stores range in size from
90,000 gross square feet to 269,000 gross square feet. Neiman
Marcus plans to open a new store in Short Hills, New Jersey, in
calendar 1995 and new stores in King of Prussia, Pennsylvania, and
Paramus, New Jersey, in calendar 1996.
Bergdorf Goodman
Bergdorf Goodman is a high fashion, exclusive retailer of
high quality women's and men's apparel, fashion accessories,
precious jewelry, decorative home accessories, fine china,
crystal and silver. It operates two leased stores at Fifth
Avenue and 58th Street in New York City. The original store,
consisting of 250,000 gross square feet, is dedicated to women's
apparel and accessories, home furnishings and gifts. Bergdorf
Goodman Men, which opened in August 1990, consists of 66,000
gross square feet and is dedicated to men's apparel and
accessories. A relatively small portion of Bergdorf Goodman's
customers accounts for a significant percentage of its retail
sales. In addition, Bergdorf Goodman operates an important
direct marketing business. The distribution and fulfillment
operations of the Bergdorf Goodman direct marketing business were
consolidated with those of NM Direct in June 1993.
Contempo Casuals
Contempo Casuals, based in Los Angeles, operates a chain of
retail stores which sells quality fashion apparel and accessories
primarily for young women between the ages of 15 and 21 at
moderate prices. Almost all apparel sold in the Contempo Casuals
stores carries the Contempo Casuals label.
In April 1994, the Company implemented a plan to restructure
the Contempo Casuals division (including its chain of retail stores
operated under the name Pastille) as a result of its continued poor
operating performance. The restructuring included the closing of
40 underperforming Contempo Casuals stores, the closing of the
Hong Kong buying office and the closing of the Pastille chain of
39 stores in 15 states. In June 1994, the Pastille direct
marketing operations were consolidated with NM Direct. For
additional information concerning the restructuring of Contempo
Casuals, see Item 7 below and Note 2 to the Company's
Consolidated Financial Statements incorporated herein by
reference.
The Contempo Casuals chain includes 247 stores in 33 states
and Puerto Rico with an average store size of approximately 4,000
gross square feet. All of the stores are located in leased
facilities, primarily in regional shopping malls.
Competition
The Company's specialty store operations compete with
numerous specialty retail stores and department stores for both
customers and merchandise. The Company believes that the
principal competitive factors for specialty store operations are
customer service, quality of merchandise, merchandise assortment,
store ambience and price. The Company's direct marketing
operations compete with numerous other retail and direct
marketing operations for both customers and merchandise. The
Company believes that the principal competitive factors for its
direct marketing operations are customer service, price,
merchandise quality and assortment and catalogue presentation.
Employees
At July 30, 1994, Neiman Marcus had approximately 11,000
employees, of whom approximately 3,300 were part-time; Bergdorf
Goodman had approximately 1,200 employees, of whom approximately
35 were part-time; and Contempo Casuals had approximately 3,200
employees, of whom approximately 1,750 were part-time. None of
the employees of Neiman Marcus or Contempo Casuals are subject to
collective bargaining agreements. Approximately 12% of the
Bergdorf Goodman employees are subject to collective bargaining
agreements. The Company believes that its relations with its
employees are generally good.
Capital Expenditures; Seasonality; Liquidity
For information on capital expenditures, seasonality,
liquidity and other financial information, reference is made to
the "Management's Discussion and Analysis" section on pages 17
through 20 of the Annual Report to Stockholders for the fiscal
year ended July 30, 1994 (the "1994 Annual Report"), which is
incorporated herein by reference.
Item 2. PROPERTIES
The Company's corporate headquarters are located at Harcourt
General's leased facility in Chestnut Hill, Massachusetts. The
operating headquarters for Neiman Marcus, Bergdorf Goodman and
Contempo Casuals are located in Dallas, New York City and Los
Angeles, respectively.
At July 30, 1994, the square footage used in the Company's
specialty store operations was approximately as follows:
Owned
Subject to
Owned Ground Lease Leased Total
Stores................. 347,000 1,170,300 3,610,800 5,128,100
Distribution centers
and office facilities.. 627,000 -0- 1,425,100 2,052,100
Leases for Neiman Marcus stores, including renewal options,
range from 30 to 99 years. Leases for Contempo Casuals stores
are generally for 10 to 15 years, with no renewal options. The
lease on the Bergdorf Goodman main store expires in 2050, and the
lease on the Bergdorf Goodman Men's store expires in 2010, with
two 10-year renewal options. Leases are generally at fixed
rentals, except that certain leases provide for additional
rentals based on sales in excess of predetermined levels. The
Company also owns approximately 50 acres of land in Las Colinas,
Texas where its direct marketing operations and computer facility
are located. For further information on the Company's
properties, see "Leases" in Note 8 of the Notes to the Company's
Consolidated Financial Statements on page 30 of the Annual
Report.
NM Direct and Bergdorf Goodman's direct marketing operations
are located at Neiman Marcus' 520,000 square foot facility in Las
Colinas, Texas.
Item 3. LEGAL PROCEEDINGS
The Company is involved in various suits and claims in the
ordinary course of business. The Company does not believe that
the disposition of any such suits or claims will have a material
adverse effect upon the continuing operations or financial
condition of the Company.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The following information contained in the 1994 Annual
Report is incorporated herein by reference:
(i) "Stock Information" and "Shares Outstanding" on page 36
of the Annual Report;
(ii) "Dividends" in Note 10 of the Notes to the Consolidated
Financial Statements on page 33 of the Annual Report;
and
(iii) The fourth and fifth sentences of paragraph (a) of
Note 4 of the Notes to the Consolidated Financial
Statements (relating to restrictions on the Company's
ability to pay dividends) on page 27 of the Annual Report.
Item 6. SELECTED FINANCIAL DATA
The response to this Item is contained in the 1994 Annual
Report under the caption "Selected Financial Data" on page 35 of
the Annual Report and is incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The response to this Item is contained in the 1994 Annual
Report under the caption "Management's Discussion and Analysis"
on pages 17 through 20 and is incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements and supplementary data
referred to in Item 14 are incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
A. Directors
Below are the name, age and principal occupations for the
last five years of each director of the Company.
Class I Directors - Terms expire at 1995 Annual Meeting
Richard A. Smith - 69 Director since 1987
Chairman of the Board of the Company and of Harcourt
General; Chairman of the Board, President and Chief
Executive Officer of GC Companies, Inc. since December
1993; Chief Executive Officer of the Company and of
Harcourt General until November 26, 1991; Director of
Harcourt General, GC Companies, Inc., Liberty Mutual
Insurance Company, Liberty Mutual Fire Insurance
Company, Bank of Boston Corporation and its principal
subsidiary, The First National Bank of Boston. Mr.
Smith is the father of Robert A. Smith, an executive
officer of the Company.
Robert J. Tarr, Jr. - 50 Director since 1987
President, Chief Executive Officer (since November 26,
1991) and Chief Operating Officer of the Company and of
Harcourt General; Director of Harcourt General and GC
Companies, Inc.
Class II Directors - Terms expire at 1996 Annual Meeting
Walter J. Salmon - 63 Director since 1987
Stanley Roth, Sr. Professor of Retailing and Senior
Associate Dean, External Relations, Graduate School of
Business Administration, Harvard University; Director
of Hannaford Bros. Co., The Quaker Oats Company,
Circuit City Stores, Inc., Luby's Cafeterias, Inc.,
Promus Companies, Incorporated and Telxon Corporation.
Matina S. Horner - 55 Director since 1993
Executive Vice President of the Teachers Insurance and
Annuity Association-College Retirement Equities Fund
(TIAA-CREF) and President Emerita of Radcliffe College
since 1989; President of Radcliffe College for 17 years
prior thereto. Director of Boston Edison Company.
Class III Directors - Terms expire at 1997 Annual Meeting
Gary L. Countryman - 55 Director since 1987
Chairman (since April 1991) and Chief Executive Officer
of Liberty Mutual Insurance Company and Liberty Mutual
Fire Insurance Company; President of said companies
through March 1992; Director of Boston Edison Company,
Bank of Boston Corporation and its principal
subsidiary, The First National Bank of Boston.
Jean Head Sisco - 69 Director since 1987
Partner in Sisco Associates, international management
consultants; Director of Textron, Inc., Santa Fe
Pacific Corporation, Sante Fe Pacific Gold Corp.,
Washington Mutual Investors Fund, Chiquita Brands
International, Inc., The American Funds Tax-Exempt Series
I, K-Tron International, Inc. and McArthur/Glen Realty Corp.
B. Executive Officers Who Are Not Directors
Below are the name, age and principal occupations for the
last five years of each executive officer of the Company who is
not also a director of the Company. All such persons have been
elected to serve until the next annual election of officers and
their successors are elected or until their earlier resignation
or removal.
John R. Cook - 53
Senior Vice President and Chief Financial Officer of
the Company and of Harcourt General since September
1992; Senior Vice President - Finance and
Administration and Chief Financial Officer of NACCO
Industries prior thereto.
Stephen C. Elkin - 51
Chairman and Chief Executive Officer of Bergdorf
Goodman since May 1994; President and Chief Operating
Officer of Bergdorf Goodman from December 1990 to May
1994; Vice Chairman and Chief Operating Officer of
Bergdorf Goodman prior thereto.
Bernie Feiwus - 46
President and Chief Executive Officer of NM Direct
since October 1991; Executive Vice President of Neiman
Marcus - Horchow Mail Order Division from March 1991 to
October 1991; Senior Vice President - Sales Promotion
Director of Neiman Marcus prior thereto.
Eric P. Geller - 47
Senior Vice President and General Counsel of the
Company and of Harcourt General since May 1992;
Secretary of the Company since January 1992 and of
Harcourt General since December 1991; Vice President,
Associate General Counsel and Assistant Secretary of
the Company and of Harcourt General prior thereto.
Paul F. Gibbons - 43
Vice President and Treasurer of the Company and of
Harcourt General since August 1992; Vice President and
Treasurer of GC Companies, Inc. since March 1994; Vice
President - Taxation of the Company and of Harcourt
General prior to August 1992.
Dawn Mello - 63
President of Bergdorf Goodman since May 1994 and from
1983 to 1989; Executive Vice President and Creative
Director Worldwide of Guccio Gucci SpA from October
1989 to May 1994.
Stephen C. Richards - 39
Vice President and Controller of the Company and of
Harcourt General since June 1993; Vice President and
Controller of GC Companies, Inc. since January 1994;
Partner, Deloitte & Touche from June 1990 to May 1993;
Senior Manager, Deloitte & Touche prior thereto.
Gerald A. Sampson - 53
President and Chief Operating Officer of Neiman Marcus
Stores since April 1993; Chairman of May Company
California, a division of May Department Stores
Company, from 1991 to January 1993; Chairman of
Kaufmann's, a division of May Department Stores
Company, prior thereto.
Craig B. Sawin - 38
Vice President - Planning and Analysis of the Company
and of Harcourt General since 1990; Director of
Planning and Analysis and Director of Administration of
the Company and of Harcourt General prior thereto.
Robert A. Smith - 35
Group Vice President of the Company since January 1992
and of Harcourt General since December 1991; Vice
President - Corporate Development of the Company from
March 1989 to January 1992; Vice President - Corporate
Development of Harcourt General from December 1988 to
December 1991; Director of Harcourt General. Mr. Smith
is the son of Richard A. Smith, the Chairman of the
Company.
Burton M. Tansky - 56
Chairman and Chief Executive Officer of Neiman Marcus
Stores since May 1994; Chairman and Chief Executive
Officer of Bergdorf Goodman from February 1992 to May
1994; Vice Chairman of Bergdorf Goodman from February
1991 to February 1992; President of Saks Fifth Avenue
prior thereto.
C. Section 16 Reports
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Company's directors and executive officers
and persons who own more than 10% of the Company's Common Stock
to file initial reports of ownership and reports of changes in
ownership with the Securities and Exchange Commission and the
New York Stock Exchange. The Company believes that all filing
requirements applicable to its insiders were complied with during
fiscal 1994.
Item 11. EXECUTIVE COMPENSATION
Summary Compensation Table(1)
The following table provides information on the compensation
provided by the Company during fiscal 1994, 1993 and 1992 to the
Company's Chief Executive Officer and the five most highly paid
executive officers of the Company during fiscal 1994.
Long-Term
Compensation
(2)
Awards
Restricted
Annual Compensation Stock All Other
Name and Fiscal Salary Bonus Awards Options Compensation
Principal Year ($) ($)(3) ($) (4) (#) ($)(5)
Position
R. Tarr, Jr.(1) 1994 -- -- -- -- --
President and Chief 1993 -- -- -- -- --
Executive Officer 1992 -- -- -- -- --
B. Tansky(6) 1994 $543,750 $122,640 -- 21,500 $ 10,647
Chairman and Chief 1993 $500,000 $150,000 -- 10,000 $ 3,701
Executive Officer of
Neiman Marcus Stores 1992 $450,000 -- -- 15,000 $147,227
G. Sampson(7) 1994 $431,250 $172,500 -- 10,000 $ 6,421
President and Chief
Operating Officer of 1993 $147,115 -- -- -- $ 1,724
Neiman Marcus Stores
1992 -- -- -- -- --
S. Elkin 1994 $391,875 $65,262 -- 10,000 $ 9,650
Chairman and Chief 1993 $355,000 $84,313 -- 10,000 $ 7,283
Executive Officer of
Bergdorf Goodman
1992 $340,000 -- $58,125 -- $ 22,700
B. Feiwus 1994 $275,000 $88,000 -- 7,500 $ 5,883
President and Chief 1993 $245,000 $87,500 -- 5,000 $ 4,679
Executive Officer of
NM Direct 1992 $216,664 $77,000 $23,250 -- $ 11,043
T. Lundgren(8) 1994 $427,693 -- -- 25,000 $ 6,579
Former Chairman and
Chief Executive 1993 $550,000 $247,500 -- 15,000 $ 3,701
Officer of Neiman
Marcus Stores 1992 $465,000 $83,700 $87,188 -- $ 7,227
(1) Under the Intercompany Services Agreement between the
Company and Harcourt General, Harcourt General provides certain
management, accounting, financial, legal, tax, personnel and
other corporate services to the Company, including the services
of certain senior officers of Harcourt General who are also
senior officers of the Company, in consideration of a fee based
on Harcourt General's direct and indirect costs of providing the
corporate services. The level of services and fees are subject
to the approval of the Special Review Committee of the Board of
Directors of the Company. During fiscal 1994, 1993 and 1992, the
Company paid or accrued approximately $6.9 million, $7.2 million
and $6.4 million, respectively, to Harcourt General for all of
its services under the Intercompany Services Agreement. With the
exception of Mr. Tarr, the senior officers of Harcourt General,
who derive all of their compensation directly from Harcourt
General, are not included in this table. Mr. Tarr is also the
President and Chief Executive Officer of Harcourt General. All
of Mr. Tarr's cash and non-cash compensation is paid by Harcourt
General pursuant to Mr. Tarr's Employment Agreement with Harcourt
General effective November 26, 1991. Of the amounts paid by the
Company to Harcourt General under the Intercompany Services
Agreement for fiscal 1994, 1993 and 1992, approximately $2.3
million, $2.1 million and $1.7 million, respectively, were
attributable to Mr. Tarr's services. These amounts include costs
related to Mr. Tarr's base compensation, bonuses, benefits and
amounts necessary to fund his retirement benefits, all of which
are direct obligations of Harcourt General.
(2) The Company does not have a long-term compensation program
that includes long-term incentive payouts. No stock appreciation
rights were granted to any of the named executive officers during
the years reported in the table.
(3) Bonus payments are reported with respect to the year in
which the related services were performed.
(4) Calculated by multiplying the closing price of the Company's
Common Stock on the New York Stock Exchange on the date of grant
by the number of shares awarded. Twenty percent of an award of
restricted Common Stock are freed from the restrictions on
transfer each year, commencing one year after the date of grant,
provided that the recipient continues to be employed by the
Company on the anniversary date of the grant. Dividends are paid
to holders of restricted stock, who are also entitled to vote
their restricted shares. In the event of termination of
employment for any reason, other than death or permanent
disability, restricted shares are forfeited by the holder and
revert to the Company. At the end of fiscal 1994, the named
executive officers' restricted stock holdings and market values
(based on the New York Stock Exchange closing price of $15.25 for
the Company's Common Stock at fiscal year end) were as follows:
Mr. Elkin - 3,000 shares ($45,750) and Mr. Feiwus - 1,200 shares
($18,300). The closing price of the Company's Common Stock on
the New York Stock Exchange on October 14, 1994 was $14.625.
All of the restricted shares reported in this column were granted
to the executive officers in fiscal 1992. Mr. Lundgren forfeited
his 4,500 shares of restricted stock upon his resignation from
the Company in April 1994.
(5) The items accounted for in this column include the cost to
the Company of matching contributions under (a) the Company's Key
Employee Deferred Compensation Plan or the Savings and Investment
Plan (401(k) Plan) and (b) group life insurance premiums. For
fiscal 1994, such amounts for each of the named executive
officers were, respectively, as follows: Mr. Tansky - $4,875 and
$5,772; Mr. Sampson - $2,110 and $4,311; Mr. Elkin - $3,550 and
$6,100; Mr. Feiwus - $2,310 and $3,573 and Mr. Lundgren -
$2,250 and $4,329. See Note 6 below for information regarding
additional compensation of Mr. Tansky reported in this column.
(6) Mr. Tansky received a $140,000 bonus in fiscal 1992 pursuant
to his employment agreement with the Company, which is included
under "All Other Compensation." Prior to becoming the Chairman
and Chief Executive Officer of Neiman Marcus Stores in May 1994,
Mr. Tansky was the Chairman and Chief Executive Officer of
Bergdorf Goodman. Pursuant to his employment agreement, Mr.
Tansky's fiscal 1994 bonus was determined based on the
performance of Bergdorf Goodman during fiscal 1994.
(7) Mr. Sampson's employment with the Company commenced on April
1, 1993.
(8) Mr. Lundgren resigned from the Company effective April 12,
1994.
11
Option Grants in Last Fiscal Year(1)
The following table provides information regarding options
granted under the Company's 1987 Stock Incentive Plan during the
fiscal year ended July 30, 1994 to the executive officers named
in the Summary Compensation Table.
Individual Grants
% of
Number of Total Potential Realizable
Securities Options Value at Assumed
Underlying Granted to Exercise Annual Rates of Stock
Options Employees or Base Expira- Price Appreciation
Granted in Fiscal Price tion for Option Term (2)
Name (#) (3) Year ($/Sh) Date 5% ($) 10% ($)
R. Tarr, Jr.(4) ---- ---- ---- ---- ----- ----
B. Tansky 21,500 10.04% $14.50 09/18/03 $185,114 $479,423
G. Sampson 10,000 4.67% $14.50 09/18/03 $ 86,099 $222,987
S. Elkin 10,000 4.67% $14.50 09/18/03 $ 86,099 $222,987
B. Feiwus 7,500 3.50% $14.50 09/18/03 $ 64,575 $167,240
T. Lundgren 25,000(5) 11.68% $14.50 --(5) --(5) --(5)
(1) No stock appreciation rights were granted to any named
executive officer during fiscal 1994.
(2) These potential realizable values are based on assumed rates
of appreciation required by applicable regulations of the
Securities and Exchange Commission.
(3) All option grants are non-qualified stock options having a
term of 10 years and one day. They become exercisable at the
rate of 20% on each of the first five anniversary dates of the
grant.
(4) None of the executive officers of Harcourt General who are
also officers of the Company, including Mr. Tarr, participate in
the Company's 1987 Stock Incentive Plan.
(5) All of these options terminated upon Mr. Lundgren's
resignation from the Company effective April 12, 1994.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
The following table provides information regarding stock
options exercised during fiscal 1994 and the number and value of
stock options held at July 30, 1994 by the executive officers
named in the Summary Compensation Table.
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Options at Options at
Acquired July 30, 1994(#) July 30, 1994 ($)
on Exercise Value Exercisable/ Exercisable/
Name (#) Realized($) Unexercisable Unexercisable (1)
R. Tarr, Jr.(2) -- -- -- --
B. Tansky -- -- 17,000/ $ 23,750/
44,500 66,125
G. Sampson -- -- 0/ $ 0/
10,000 7,500
S. Elkin -- -- 35,516/ $ 21,708/
23,900 41,750
B. Feiwus -- -- 8,311/ $ 6,063/
12,900 20,500
T. Lundgren(3) --(3) $54,000(3) --(3) --(3)
(1) The value of unexercised in-the-money options is calculated
by multiplying the number of underlying shares by the difference
between the closing price of the Company's Common Stock on the
New York Stock Exchange at fiscal year end ($15.25) and the
option exercise price for those shares. These values have not
been realized. The closing price of the Company's Common Stock
on the New York Stock Exchange on October 14, 1994 was $14.625.
(2) None of the executive officers of Harcourt General who are
also officers of the Company, including Mr. Tarr, participate in
the Company's 1987 Stock Incentive Plan.
(3) Mr. Lundgren resigned from the Company effective April 12,
1994. The Company paid Mr. Lundgren $54,000 with respect to
options held by him to purchase an aggregate of 22,750 shares of
Common Stock of the Company at various exercise prices. The
$54,000 payment was calculated based on the difference between
the closing price of the Company's Common Stock on the New York
Stock Exchange on the date Mr. Lundgren elected to receive this
payment (February 25, 1994) and the option exercise prices. All
unexercisable options held by Mr. Lundgren terminated upon his
resignation from the Company.
Directors Compensation
Directors who are not affiliated with the Company or
Harcourt General each receive an annual retainer of $20,000 and a
fee of $1,500 per Board of Directors meeting attended, plus
travel and incidental expenses (an aggregate of $4,134 in fiscal
1994) incurred in attending meetings and carrying out their
duties as directors. They also receive a fee of $500 (the
Chairmen receive $1,000) for each committee meeting attended. If
a director is unable to attend a meeting in person but
participates by telephone, he or she receives one-half of the fee
that would otherwise be payable.
Mr. Countryman receives his director fees on a deferred
basis. The Company maintains an account to record the accrual of
Mr. Countryman's deferred fees and accrued interest, which
accrues at a rate equal to that paid on 90-day certificates of
deposit issued by The First National Bank of Boston from time to
time.
Pension Plans
The Company maintains a funded, qualified pension plan
known as The Neiman Marcus Group, Inc. Retirement Plan (the
"Retirement Plan"). Most non-union employees who have completed
one year of service with 1,000 or more hours participate in the
Retirement Plan, which pays benefits upon retirement or
termination of employment by reason of disability. The
Retirement Plan is a "career-average" plan, under which a
participant earns each year a retirement annuity equal to 1% of
his or her compensation for the year up to the Social Security
wage base and 1.5% of his or her compensation for the year in
excess of such wage base. Benefits under the Retirement Plan
become fully vested after five years of service with the Company.
The Company also maintains a Supplemental Executive
Retirement Plan (the "SERP"). The SERP is an unfunded, non-
qualified plan under which benefits are paid from the Company's
general assets to supplement Retirement Plan benefits and Social
Security. Executive, administrative and professional employees
(other than those employed as salespersons) with an annual base
salary at least equal to a self-adjusting minimum ($99,000 as of
December 31, 1993) are eligible to participate. At normal
retirement age (age 65), a participant with 25 or more years of
service is entitled to payments under the SERP sufficient to
bring his or her combined annual benefit from the Retirement Plan
and SERP, computed as a straight life annuity, up to 50% of the
participant's highest consecutive 60 month average of pensionable
earnings, less 60% of his or her estimated primary Social
Security benefit. If the participant has fewer than 25 years of
service, the combined benefit is proportionately reduced. In
computing the combined benefit, "pensionable earnings" means base
salary, including any salary which may have been deferred.
Benefits under the SERP become fully vested after five years of
service with the Company.
The following table shows the estimated annual pension
benefits payable to employees in various compensation and years
of service categories. The estimated benefits apply to an
employee retiring at age 65 in 1994 who elects to receive his or
her benefit in the form of a straight life annuity. These
benefits include amounts attributable to both the Retirement Plan
and the SERP and are in addition to any retirement benefits that
might be received from Social Security.
Estimated Annual Retirement Benefits
Under Retirement Plan and SERP(1)
Average
Pensionable
Earnings Total Years of Service
25
5 10 15 20 or more
$200,000........... $20,000 $ 40,000 $ 60,000 $ 80,000 $100,000
300,000........... 30,000 60,000 90,000 120,000 150,000
400,000........... 40,000 80,000 120,000 160,000 200,000
500,000........... 50,000 100,000 150,000 200,000 250,000
600,000........... 60,000 120,000 180,000 240,000 300,000
700,000........... 70,000 140,000 210,000 280,000 350,000
_________________
(1) The amounts actually payable will be somewhat lower than
the amounts shown above, since the above amounts will be reduced
by 60% of the participant's estimated primary Social Security
benefit.
The following table shows the pensionable earnings and
credited years of service for the executive officers named in the
Summary Compensation Table as of July 30, 1994 and years of
service creditable at age 65. Credited service may not exceed 25
years for purpose of calculating retirement benefits under any of
the Company's retirement plans.
Pensionable Earnings Years of Service
for Year Ended at July at
Name July 30, 1994 30, 1994 Age 65
R. Tarr, Jr.(1) . . . . . . . . --- -- --
B. Tansky . . . . . . . . . . . $543,750 --(2) 20(2)
G. Sampson(3) . . . . . . . . . 431,250 --(3) 20(3)
S. Elkin . . . . . . . . . . . 391,875 16 25
B. Feiwus . . . . . . . . . . 275,000 14.5 25
T. Lundgren(4) . . . . . . . . 427,693 --(4) --(4)
___________________________
(1) Mr. Tarr does not participate in the Company's Retirement
Plan or SERP.
(2) Under Mr. Tansky's employment agreement with the Company,
for purposes of determining his retirement benefits under the
SERP, Mr. Tansky will be credited with 5/3 times his years of
service with the Company provided he remains continuously
employed by the Company until his 65th birthday; otherwise, Mr.
Tansky's accrued service at age 65 under the SERP will be
calculated in the normal manner. Mr. Tansky is 56 years old.
(3) For purposes of determining Mr. Sampson's retirement
benefits under the SERP, Mr. Sampson will be credited with 20/13
times his years of service with the Company provided he remains
continuously employed by the Company until his 65th birthday;
otherwise, Mr. Sampson's accrued service at age 65 under the SERP
will be calculated in the normal manner. Mr. Sampson is 53 years
old.
(4) Mr. Lundgren resigned from the Company effective April 12,
1994.
Employment and Severance Agreements
Burton Tansky
In connection with Mr. Tansky's appointment as Chairman and
Chief Executive Officer of Neiman Marcus Stores in May 1994, the
Company and Mr. Tansky entered into a new employment agreement
which provides for Mr. Tansky's employment as Chairman and Chief
Executive Officer of Neiman Marcus Stores through January 31,
1997. Pursuant to the agreement, Mr. Tansky will receive an
annual base salary of $600,000, subject to adjustment by the
Compensation Committee. In the event Mr. Tansky is terminated
without cause within 24 months of a change of control of the
Company, or if within 24 months of such a change of control Mr.
Tansky resigns because he is not permitted to continue in a
position comparable in duties and responsibilities to that which
he held prior to the change of control, Mr. Tansky will be
entitled to receive his then-current base compensation through
July 31, 1998, which amount will be reduced by any amounts earned
by him between August 1, 1997 and July 31, 1998 from other
employment. If the Company terminates Mr. Tansky's employment
during the term of the Employment Agreement for any reason other
than for cause or other than because of his total disability or
death, Mr. Tansky will continue to receive his base compensation
and benefits until January 31, 1997 or for 18 months following
termination, whichever is greater. If the Company determines not
to extend Mr. Tansky's employment beyond January 31, 1997, the
Company will pay to Mr. Tansky his then-current base compensation
through July 31, 1998, which amount will be reduced by any
amounts earned by him between August 1, 1997 and July 31, 1998
from other employment.
Gerald A. Sampson
Pursuant to an agreement between Mr. Sampson and the
Company, effective April 1, 1993, Mr. Sampson is entitled to
receive severance payments in the event the Company terminates
his employment other than for cause or other than due to his
total disability or death prior to March 31, 1995. In such event
he will receive an amount equal to his then-current base salary,
which amount will be paid to him in 12 monthly installments
following such termination but will be reduced by any amounts
received by him from other employment during the payment period.
Stephen C. Elkin
Pursuant to an agreement between Mr. Elkin and Bergdorf
Goodman, effective September 1993, Mr. Elkin is entitled to
receive severance payments in the event his employment with
Bergdorf Goodman is terminated in certain situations. If the
Company terminates Mr. Elkin's employment other than for cause or
other than due to his total disability or death, he will receive
an amount equal to one and one half times his then-current base
salary, which amount will be paid to him in 18 monthly
installments following such termination but will be reduced by
any amounts received by him from other employment during the
period beginning six months following his termination and ending
at the end of the 18 month period. Mr. Elkin will also be
entitled to receive such payments in the event his employment is
terminated without cause within 24 months of a change of control
of either Bergdorf Goodman or the Company, or in the event he
resigns within 24 months of a change of control because he is not
permitted to continue in a position comparable in duties and
responsibilities to that which he held before the change of
control.
Dawn Mello
Pursuant to an agreement between Ms. Mello and Bergdorf
Goodman, effective May 1994, Ms. Mello is entitled to receive
severance payments in the event her employment with Bergdorf
Goodman is terminated in certain situations. If the Company
terminates Ms. Mello's employment other than for cause or other
than due to her total disability or death, she will receive an
amount equal to her then-current annual salary, which amount will
be paid in 12 monthly installments following such termination but
will be reduced by any amounts received by her from other
employment during the period beginning six months following such
termination. Ms. Mello will also be entitled to receive such
payments in the event her employment is terminated without cause
before November 1, 1996 and within 24 months of a change of
control of either Bergdorf Goodman or the Company, or in the
event she resigns before November 1, 1996 and within 24 months of
a change of control because she is not permitted to continue in a
position comparable in duties and responsibilities to that which
she held before the change of control.
Compensation Committee Interlocks and Insider Participation
During fiscal 1994, Richard A. Smith, Chairman of the Board
of Directors of the Company, served on the Boards of Directors of
Liberty Mutual Insurance Company and Liberty Mutual Fire
Insurance Company (collectively, "Liberty Mutual"). Gary L.
Countryman, a director of the Company and the Chairman of the
Company's Compensation Committee, is the Chairman and Chief
Executive Officer of Liberty Mutual. Liberty Mutual underwrites
most of the Company's insurance policies. These insurance
policies contain terms which, in the judgment of management, are
no less favorable than could be obtained from other insurance
companies. During fiscal 1994, the Company paid to Liberty
Mutual an aggregate of $3.3 million in premiums and
administrative fees.
_________________
Notwithstanding anything to the contrary set forth in any of
the Company's previous filings under the Securities Act of 1933
or the Securities Exchange Act of 1934, each as amended, that
might incorporate future filings, including this Form 10-K, in
whole or in part, the following Compensation Committee Report on
Executive Compensation and Stock Performance Graph shall not be
deemed to be incorporated by reference into any such filings, nor
shall such sections of this Report be deemed to be incorporated
into any future filings made by the Company under the Securities
Act of 1933 or the Securities Exchange Act of 1934.
Compensation Committee Report on Executive Compensation
The Compensation Committee is composed of Gary L. Countryman
(Chairman), Matina S. Horner, Walter J. Salmon and Jean Head
Sisco. The members of the Compensation Committee are all
independent directors.
The principal responsibility of the Committee is to review
the performance of, and determine the compensation for, the
executive officers of the Company who are not also executive
officers of Harcourt General. The individuals in this group
include Messrs. Tansky, Sampson, Elkin and Feiwus, all of whom
are named executive officers in the Summary Compensation Table,
as well as Dawn Mello, President of Bergdorf Goodman, and Robert
Kelleher, President and Chief Operating Officer of Contempo
Casuals. The compensation of Harcourt General's executive
officers, most of whom are also executive officers of the
Company, is determined by Harcourt General's Compensation
Committee.
Compensation Policies
The principal objectives of the Company's executive
compensation program are to reward competitively its executive
officers in order to attract and retain excellent management and
to provide incentives that will most sharply focus the attention
of those individuals on the goal of increasing the profitability
of the Company and its operating divisions over both the short
and long terms.
Early in each fiscal year, the Committee considers the
recommendations of the Chief Executive Officer, which are
supported by data generated by the Company's Human Resources
Department, for each component of compensation of the Company's
executive officers. The Committee approves those recommendations
with such modifications as it deems appropriate.
The principal components of the Company's compensation
program are:
Base Salary:
This is determined with reference both to salary survey
information from recognized compensation consulting firms
and to each executive officer's level of responsibility,
experience and performance. The salary survey data is used
to establish benchmark amounts for both base salary and
total cash compensation for each executive position.
Comparisons are made to a range of retail companies or to
divisions within such companies, with the principal
selection criteria for comparisons being similar revenues
to the division within the Company. While there are no
hard and fast rules which bind the Committee, the Company
generally sets its salary and total cash compensation
benchmarks (assuming that maximum bonuses are achieved) for
executive officers at the 75th percentile of the comparison
group of companies in order to compete for and retain the
best management talent available. Because the Company
competes for executive talent with a broad range of U.S.
retail companies, the Committee does not limit its
comparison information for compensation purposes to the
three companies included in the peer group in the Stock
Performance Graph.
The Committee reviews in detail the base salary levels for
each of the principal executive officers of the Company.
While the Committee uses the benchmarks as a reference point,
a particular individual's base salary may vary from the
benchmark depending upon his or her salary history,
experience, individual performance and contractual obligations
of the Company.
Annual Incentive Plan:
The determination of annual bonuses is based principally on
the achievement of performance objectives by the operating
division for which the executive is responsible and the
individual executive's own performance. For some executive
officers, a small component of their bonus eligibility depends
on the Company's overall performance.
Shortly after the beginning of each fiscal year, the
Compensation Committee considers the recommendations of the
Chief Executive Officer for the Company's and each division's
performance goals for the current year, the executive officers
who should participate in the annual incentive plan for that
year, and the maximum bonus values attainable by them. The
Committee approves those recommendations with such
modifications as it deems appropriate.
In addition, each of the Company's executive officers prepares
and reaches agreement with the Chief Executive Officer on
individual performance goals which must be achieved in
addition to the performance targets in order for an executive
to receive his or her full bonus. Individual performance
goals typically include achievement of specific tasks.
For fiscal 1994, the plan provided for maximum bonuses ranging
from 35% to 45% of base salary. Eligibility for the
divisional performance component of the bonus was determined
based on a weighting of several factors, the most important of
which was operating earnings before corporate expenses. Other
factors included return on net assets and working capital as a
percentage of sales. Similar factors will be used by the
Committee in determining bonuses for fiscal 1995. The bonuses
actually awarded to the executive officers for fiscal 1994
were determined by an assessment of all of these factors, as
well as certain subjective factors.
Absent extraordinary circumstances, if the financial
performance targets are exceeded, bonus awards are not
increased over the maximum bonus values established by the
Committee. If the performance targets are not met, bonus
awards are generally reduced at the discretion of the
Committee. If the Company and/or the relevant division falls
sufficiently short of its performance target, there is a
presumption that bonuses would not be paid absent special
circumstances. For example, no bonuses were awarded to
executives at Contempo Casuals for fiscal 1994. If corporate
and/or division performance targets are met, but an individual
falls short of his or her performance goals, the individual's
bonus could be reduced or eliminated in the discretion of the
Committee.
The bonus program is intended to put substantial amounts of
total cash compensation at risk with the intent of focusing
the attention of the executives on achieving both the
Company's and their division's performance goals and their
individual goals, thereby contributing to profitability and
building shareholder value.
Stock Incentives:
The Committee's purpose in awarding equity based incentives,
principally in the form of stock options which vest over a
five year period and terminate ten years from the date of
grant, is to achieve as much as possible an identity of
interest between the executives and the long term interest of
the stockholders. The principal factors considered in
determining which executive officers (including the named
executive officers) were awarded equity based compensation in
the 1994 fiscal year, and in determining the types and amounts
of such awards, were salary levels, equity awards granted to
executives at competing retail companies, special
circumstances such as promotions as well as the performance,
experience and level of responsibility of each executive.
Compensation of the Chief Executive Officer
Mr. Tarr is also the Chief Executive Officer of Harcourt
General, which owns approximately 65% of the fully converted
equity of the Company. All of Mr. Tarr's cash and non-cash
compensation is paid directly by Harcourt General to Mr. Tarr
pursuant to an employment agreement between Mr. Tarr and Harcourt
General which was approved by the Harcourt General Compensation
Committee and became effective in November, 1991. Mr. Tarr
receives no compensation directly from the Company. However,
pursuant to the Intercompany Services Agreement between the
Company and Harcourt General, Harcourt General provides certain
management and other corporate services to the Company, including
Mr. Tarr's services as Chief Executive Officer. During fiscal
1994, the Company paid or accrued approximately $6.9 million to
Harcourt General for all of its services under the Intercompany
Services Agreement, of which approximately $2.3 million was
attributable to Mr. Tarr's services. While the Special Review
Committee of the Company reviews each year the appropriateness of
the charges by Harcourt General to the Company under the
Intercompany Services Agreement, neither this Committee nor the
Special Review Committee plays any role in determining the
compensation that Mr. Tarr, or any other executive officer of
Harcourt General, receives from Harcourt General.
Compliance with Internal Revenue Code Section 162(m)
Amendments to Section 162(m) of the Internal Revenue Code
which were enacted in 1993 generally disallow a tax deduction to
public companies for compensation in excess of $1 million per
year paid to each of the executive officers named in the Summary
Compensation Table. The Company does not anticipate that any of
its executive officers will receive cash compensation in excess
of this deductibility limit in fiscal 1995. Under transition
provisions in the regulations under Section 162(m), compensation
resulting from awards under the Company's Incentive Stock Option
Plan is not subject to the deductibility limit at this time. The
Committee will continue to monitor the requirements of Section
162(m) and to determine what actions should be taken by the
Company in order to preserve the tax deduction for executive
compensation to the maximum extent, consistent with the Company's
continuing goals of providing the executives of the Company with
appropriate incentives and rewards for their performance.
COMPENSATION COMMITTEE
Gary L. Countryman, Chairman
Matina S. Horner
Walter J. Salmon
Jean Head Sisco
Stock Performance Graph
The graph below compares the cumulative total shareholder
return on the Common Stock of the Company against the cumulative
total return of the Standard & Poor's 500 Stock Index and a Peer
Index during the five fiscal years ended July 30, 1994. The
graph assumes a $100 investment in the Company's Common Stock and
in each index at July 29, 1989 and that all dividends were
reinvested.
The Company's Peer Index is made up of three companies in
the specialty retail industry: The Limited, Inc., Nordstrom, Inc.
and Tiffany & Co. The common stocks of the companies in the Peer
Index have been weighted annually to reflect relative stock
market capitalization. The comparisons provided in this graph
are not intended to be indicative of possible future performance
of the Company's Common Stock.
[STOCK PERFORMANCE GRAPH
TO BE INSERTED HERE]
1989 1990 1991 1992 1993 1994
Company $100 82.14 84.50 70.70 76.93 81.94
S&P 500
Index $100 103.16 123.39 140.09 152.00 159.18
Peer Index $100 96.27 157.06 113.58 107.63 119.00
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth information, as of October 14,
1994, with respect to the beneficial ownership of the Common
Stock of the Company by (i) each person known to the Company to
own beneficially more than 5% of the outstanding shares of
Common Stock; (ii) each executive officer named in the Summary
Compensation Table, (iii) each director of the Company; and (iv)
all directors and current executive officers of the Company as a
group. Harcourt General beneficially owns all of the
outstanding shares of the 6% Cumulative Convertible Preferred
Stock, $1.00 par value (the "Preferred Stock"), of the Company.
Number Percent
Name and Address of Shares of Common
of Beneficial Owner Owned(1) Stock
Harcourt General, Inc.(2) 21,440,960 56.5%
27 Boylston Street
Chestnut Hill, MA 02167
Gabelli Funds, Inc.(3) 4,951,700 13.0%
655 Third Avenue
New York, NY 10017
FMR Corp.(4) 3,000,000 7.9%
88 Devonshire Street
Boston, MA 02109
Burton M. Tansky(5) 23,300 *
Gerald A. Sampson(6) 3,000 *
Stephen Elkin(7)(8) 57,759 *
Bernie Feiwus(8)(9) 14,156 *
Terry Lundgren(10) - *
Gary L. Countryman - *
Matina S. Horner - *
Walter J. Salmon 8,942 *
Jean Head Sisco 1,126 *
Richard A. Smith(11) - *
Robert J. Tarr, Jr.(11) - *
All current executive officers
and directors as a group
(17 persons)(12) 108,283 *
_____________________
* Less than 1%.
(1) Unless otherwise indicated in the following footnotes,
each stockholder referred to above has sole voting and investment
power with respect to the shares listed.
(2) Harcourt General's holdings of Common Stock and Preferred
Stock comprise approximately 65% of the fully converted equity
and voting power of the Company. Each share of Preferred Stock
is convertible into 8.99 shares of Common Stock at a price of
$41.70 per share of Common Stock. The closing price of the
Common Stock on the New York Stock Exchange on October 14, 1994
was $14.625 per share.
Richard A. Smith, Chairman of the Board of Directors of
the Company and of Harcourt General, his sister, Nancy L. Marks,
and certain members of their families may be regarded as
controlling persons of Harcourt General, and therefore of the
Company. The shares of Harcourt General Class B Stock and
Harcourt General Common Stock beneficially owned by or for the
benefit of the Smith family constitute approximately 28% of the
aggregate number of outstanding equity securities of Harcourt
General. Each share of Harcourt General voting stock entitles
the holder thereof to one vote on all matters submitted to
Harcourt General's stockholders, except that each share of
Harcourt General Class B Stock (virtually all of which is owned
by the Smith family) entitles the holder thereof to ten votes on
the election of directors at any Harcourt General stockholders'
meeting under certain circumstances. Accordingly, as to any
elections in which the Harcourt General Class B Stock would carry
ten votes per share at a Harcourt General stockholders' meeting,
the Smith family would have approximately 80% of the combined
voting power of the Harcourt General voting securities.
Under the definition of "beneficial ownership" in Rule
13d-3 of the Rules and Regulations promulgated under the
Securities Exchange Act of 1934, as amended, the Smith family and
the members of Harcourt General's Board of Directors may be
deemed to be the beneficial owners of the securities of the
Company beneficially owned by Harcourt General in that they may
be deemed to share with Harcourt General the power to direct the
voting and/or disposition of such securities. However, this
information should not be deemed to constitute an admission that
any such person or group of persons is the beneficial owner of
such securities.
(3) The information reported is based on information provided
to the Company by Gabelli Funds, Inc. in October 1994. The
Gabelli Funds have sole voting power with respect to 4,711,300
shares and sole dispositive power with respect to all of the
shares shown in the table.
(4) The information reported is based on information provided
to the Company by FMR Corp., an affiliate of Fidelity Management
& Research Company, in October 1994. FMR Corp. has no voting
power but has sole dispositive power with respect to all of the
shares shown in the table.
(5) Represents 23,300 shares of Common Stock which are
subject to outstanding options exercisable within 60 days of
October 14, 1994.
(6) Includes 2,000 shares of Common Stock which are subject
to outstanding options exercisable within 60 days of October 14,
1994.
(7) Includes 42,305 shares of Common Stock which are subject
to outstanding options exercisable within 60 days of October 14,
1994.
(8) Includes shares of restricted stock over which the
individual has voting but not dispositive power. For the number
of shares of restricted stock owned, see Note 4 to the Summary
Compensation Table.
(9) Includes 11,711 shares of Common Stock which are subject
to outstanding options exercisable within 60 days of October 14,
1994.
(10) Mr. Lundgren was the Chairman and Chief Executive
Officer of Neiman Marcus Stores until his resignation in April
1994.
(11) The members of the Board of Directors of Harcourt
General, including Messrs. Smith and Tarr, may be deemed to be
the beneficial owners of the securities of the Company owned by
Harcourt General. However, this information should not be deemed
to be an admission that any such person or group is the
beneficial owner of such securities.
(12) Excludes the beneficial ownership of securities of the
Company which may be deemed to be attributed to Messrs. Smith and
Tarr (see Note 11 above). Includes 79,316 shares of Common Stock
which are subject to outstanding options exercisable within 60
days of October 14, 1994.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Principal Stockholder - Intercompany Services
Agreement
See Note 1 to the Summary Compensation Table in Item 11
above.
Transactions with Directors
See "Compensation Committee Interlocks and Insider
Participation" in Item 11 above.
Transactions with Officers
In July 1994, the Company made an interest free bridge loan
in the amount of $240,000 to Mr. Tansky to assist him in
purchasing a new home in the Dallas area in connection with his
new position as Chairman and Chief Executive Officer of Neiman
Marcus Stores. Mr. Tansky repaid the loan in August 1994.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
14(a)(1) Financial Statements
The documents listed below are incorporated by reference to
the Company's 1994 Annual Report to Shareholders and are
incorporated by reference into Item 8 hereof:
Consolidated Balance Sheets at July 30, 1994 and July 31,
1993.
Consolidated Statements of Operations for the fiscal years
ended July 30, 1994, July 31, 1993 and August 1, 1992.
Consolidated Statements of Cash Flows for the fiscal years
ended July 30, 1994, July 31, 1993 and August 1, 1992.
Consolidated Statements of Common Shareholders' Equity for
the fiscal years ended July 30, 1994, July 31, 1993 and August
1, 1992.
Notes to Consolidated Financial Statements.
Independent Auditors' Report.
14(a)(2) Consolidated Financial Statement Schedules
The documents and schedules listed below are filed as part of
this Form 10-K:
Page in
Form 10-K
Independent Auditors' Report on Consolidated Financial
Statement Schedules F-1
Schedule II - Accounts Receivable from Related Parties and
Underwriters, Promoters and Employees other
than Related Parties F-2
Schedule V - Property, Plant and Equipment F-3
Schedule VI - Accumulated Depreciation and Amortization of
Property, Plant and Equipment F-4
Schedule VIII - Valuation and Qualifying Accounts and Reserves F-5
Schedule IX - Short-Term Borrowings F-6
Schedule X - Supplementary Income Statement Information F-7
All other schedules for which provision is made in the
applicable regulations of the Securities and Exchange Commission
have been omitted because the information is disclosed in the
Consolidated Financial Statements or because such schedules are
not required or are not applicable.
14(a)(3) Exhibits
The exhibits filed as part of this Annual Report are listed
in the Exhibit Index immediately preceding the exhibits. The
Registrant has identified with an asterisk in the Exhibit Index
each management contract and compensation plan filed as an
exhibit to this Form 10-K in response to Item 14(c) of Form 10-K.
14(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the
quarter ended July 30, 1994.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
THE NEIMAN MARCUS GROUP, INC.
BY: s/Robert J. Tarr, Jr.
Robert J. Tarr, Jr., President,
Chief Executive Officer and
Chief Operating Officer
Dated: October 26, 1994
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the following
capacities and on the dates indicated.
Signature Title Date
Principal Executive
Officer:
s/Robert J. Tarr, Jr. President, Chief Executive October 26, 1994
Robert J. Tarr, Jr. Officer, Chief Operating
Officer and Director
Principal Financial
Officer:
s/John R. Cook Senior Vice President and October 26, 1994
John R. Cook Chief Financial Officer
Principal Accounting
Officer:
s/Stephen C. Richards Vice President and Controller October 26, 1994
Stephen C. Richards
Directors: Date
s/Richard A. Smith October 24, 1994
Richard A. Smith
s/Gary L. Countryman October 27, 1994
Gary L. Countryman
s/Matina S. Horner October 21, 1994
Matina S. Horner
s/Walter J. Salmon October 21, 1994
Walter J. Salmon
s/Jean Head Sisco October 13, 1994
Jean Head Sisco
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
of The Neiman Marcus Group, Inc. and Subsidiaries
We have audited the consolidated financial statements of The Neiman Marcus
Group, Inc. and subsidiaries as of July 30, 1994 and July 31, 1993, and for
each of the three years in the peirod ended July 30, 1994, and have issued
our report thereon dated September 19, 1994; such financial statements and
report are included in your 1994 Annual Report to Stockholders and are
incorporated herein by reference. Our audits also included the financial
statement schedules of The Neiman Marcus Group, Inc. and subsidiaries,
listed in Item 14. These financial statement schedules are the responsibility
of the Company's management. Our responsibility is to express an opinion
based on our audits. In our opinion, such financial statement schedules,
when considered in relation to the basic financial statements taken as a
whole, present fairly in all material respects the information set
forth therein.
Deloitte & Touche LLP
Boston, Massachusetts
September 19, 1994
F-1
SCHEDULE II
THE NEIMAN MARCUS GROUP, INC.
ACCOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES
THREE YEARS ENDED JULY 30, 1994
(Dollar amounts in thousands)
Column A Column B Column C Column D Column E
Balance at Deductions Balance at end of period
beginning Amounts Amounts
Name of Debtor of period Additions collected written off Current Not current
Year ended July 30, 1994
Bernard Zeichner (A) $37 $0 $37 $0 $0 $0
Burton Tansky (B) 0 240 0 0 240 0
Total $37 $240 $37 $0 $240 $0
Year ended July 31, 1993
Bernard Zeichner (A) $0 $101 $64 $0 $37 $0
Year ended August 1, 1992 $0 $0 $0 $0 $0 $0
(A) Loan represents notes receivable under The Neiman Marcus Group, Inc. Key
Executive Stock Purchase Loan Plan. Interest payable quarterly at 6%
per annum; the balance was paid in full on August 31, 1993.
(B) Loan represents an interest free bridge loan secured by a mortgage.
The loan was paid in full during August, 1994.
F-2
SCHEDULE V
THE NEIMAN MARCUS GROUP, INC.
PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED JULY 30, 1994, JULY 31, 1993 AND AUGUST 1, 1992
(Dollar amounts in thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Balance at Balance at
beginning Retirements Other end
Classification of period Additions or sales (A) changes (B) of period
YEAR ENDED JULY 30, 1994
Land, buildings and improvements $383,760 $8,722 ($18,290) $5,064 $379,256
Fixtures and equipment 220,733 23,012 (36,204) 3,162 210,703
Construction in progress 25,343 33,339 0 (8,226) 50,456
Total $629,836 $65,073 ($54,494) $0 $640,415
YEAR ENDED JULY 31, 1993
Land, buildings and improvements $366,468 $6,596 ($12,060) $22,756 $383,760
Fixtures and equipment 263,735 3,849 (86,211) 39,360 220,733
Construction in progress 41,579 45,880 0 (62,116) 25,343
Total $671,782 $56,325 ($98,271) $0 $629,836
YEAR ENDED AUGUST 1, 1992
Land, buildings and improvements $338,229 $9,249 ($13,381) $32,371 $366,468
Fixtures and equipment 300,202 5,524 (86,564) 44,573 263,735
Construction in progress 56,481 62,042 0 (76,944) 41,579
Total $694,912 $76,815 ($99,945) $0 $671,782
(A) Represents primarily fully depreciated assets and write-downs
associated with the Contempo Causals restructuring in 1994.
(B) Represents asset reclassifications.
Estimated useful lives used by the Company at
July 30, 1994 for computing depreciation
(straight-line method) are as follows:
Classification Years
Buildings and improvements 15 - 30
Fixtures and equipment 3 - 15
Leasehold improvements Lesser of the estimated
useful life of the asset
or the lease term.
F-3
SCHEDULE VI
THE NEIMAN MARCUS GROUP, INC.
ACCUMULATED DEPRECIATION AND AMORTIZATION OF
PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED JULY 30, 1994, JULY 31, 1993 AND AUGUST 1, 1992
(Dollar amounts in thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Balance at Balance at
beginning Retirements Other end
Classification of period Additions or sales (A) changes of period
YEAR ENDED JULY 30, 1994
Buildings and improvements $121,874 $18,638 ($8,062) $0 $132,450
Fixtures and equipment 91,443 37,947 (32,338) 0 97,052
Total $213,317 $56,585 ($40,400) $0 $229,502
YEAR ENDED JULY 31, 1993
Buildings and improvements $110,111 $19,609 ($7,846) $0 $121,874
Fixtures and equipment 139,428 35,368 (83,353) 0 91,443
Total $249,539 $54,977 ($91,199) $0 $213,317
YEAR ENDED AUGUST 1, 1992
Buildings and improvements $ 95,714 $17,977 ($3,580) $0 $110,111
Fixtures and equipment 200,222 32,690 (93,484) 0 139,428
Total $295,936 $50,667 ($97,064) $0 $249,539
(A) Represents primarily fully depreciated assets.
F-4
SCHEDULE VIII
THE NEIMAN MARCUS GROUP, INC.
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEARS ENDED JULY 30, 1994, JULY 31, 1993 AND AUGUST 1, 1992
(Dollar amounts in thousands)
Column A Column B Column C Column D Column E
Balance at Charged to Charged to Balance at
beginning costs and other end of
Description of period expenses accounts Deductions (A) period
YEAR ENDED JULY 30, 1994
Allowance for doubtful accounts
(deducted from accounts receivable) $9,500 $24,716 $0 $20,516 $13,700
YEAR ENDED JULY 31, 1993
Allowance for doubtful accounts
(deducted from accounts receivable) $3,592 $21,794 $0 $15,886 $ 9,500
YEAR ENDED AUGUST 1, 1992
Allowance for doubtful accounts
(deducted from accounts receivable) $3,290 $13,206 $0 $12,904 $ 3,592
(A) Write-off of uncollectible accounts net of recoveries.
F-5
SCHEDULE IX
THE NEIMAN MARCUS GROUP, INC.
SHORT-TERM BORROWINGS
YEARS ENDED JULY 30, 1994, JULY 31, 1993 AND AUGUST 1, 1992
(Dollar amounts in thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Maximum Average Weighted
Weighted amount amount average
Balance at average outstanding outstanding interest Rate
Category of Aggregate end of interest during the during the during the
Short-term Borrowings period rate period (B) period (B) period (C)
YEAR ENDED JULY 30, 1994
Payable to banks (A) $109,333 4.98% $119,633 $55,808 4.39%
YEAR ENDED JULY 31, 1993
Payable to banks (A) $27,200 3.47% $41,500 $11,500 3.38%
YEAR ENDED AUGUST 1, 1992
Payable to banks (A) $0 0.00% $74,000 $20,333 5.59%
(A) Interest and principal are payable in full at the due date
(see Note 4 to the Consolidated Financial Statements).
(B) Based on amounts outstanding at month-end.
(C) Based on daily averages.
F-6
SCHEDULE X
THE NEIMAN MARCUS GROUP, INC.
SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED JULY 30, 1994, JULY 31, 1993 AND AUGUST 1, 1992
(Dollar amounts in thousands)
COLUMN A COLUMN B
Charged to costs and expenses
Year ended Year ended Year ended
July 30, July 31, August 1,
Item 1994 1993 1992
Advertising $26,489 $26,130 $17,334
Taxes other than payroll
and income $19,705 $21,134 $18,281
F-7
EXHIBIT INDEX
Page No.
3.1(a) Restated Certificate of Incorporation of the Company,
incorporated herein by reference to the Company's Report
on Form 10-K for the twenty-six week period ended August
1, 1987.
3.1(b) Certificate of Designation and Terms of 9-1/4% Cumulative
Redeemable Preferred Stock, incorporated herein by reference
to the Company's Report on Form 10-K for the fiscal year
ended August 3, 1991.
3.2 By-Laws of the Company, as amended, incorporated herein by
reference to the Company's Annual Report on Form 10-K for
the fiscal year ended August 1, 1992.
*10.1 Intercompany Services Agreement, dated as of July 24,
1987, between Harcourt General and the Company, incorporated
herein by reference to the Company's Report on Form 10-K for
the twenty-six week period ended August 1, 1987.
*10.2 1987 Stock Incentive Plan, incorporated herein by reference
to the Company's Report on Form 10-K for the twenty-six week
period ended August 1, 1987.
*10.3 Key Executive Stock Purchase Loan Plan, as amended.
*10.4 Supplemental Executive Retirement Plan, incorporated
herein by reference to the Company's Report on Form 10-K
for the fiscal year ended July 30, 1988.
*10.5 Employment Agreement between the Company and Burton M.
Tansky dated May 1, 1994.
10.6 Stock Purchase Agreement between the Company and Harcourt
General, dated October 14, 1991 and effective as of August
2, 1991, incorporated herein by reference to the Company's
Report on Form 10-K for the fiscal year ended August 3, 1991.
*10.7 Description of the Company's Executive Life Insurance
Plan, incorporated herein by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended August 1, 1992.
*10.8 Supplementary Executive Medical Plan, incorporated herein by
reference to the Company's Annual Report on Form 10-K for the
fiscal year ended July 31, 1993.
*10.9 Termination Agreement between Bergdorf Goodman, Inc. and
Stephen C. Elkin, effective September 1993, incorporated
herein by reference to the Company's Annual Report on Form
10-K for the fiscal year ended July 31, 1993.
*10.10 Termination Agreement between the Company and Gerald Sampson,
effective April 1, 1993.
*10.11 Termination Agreement between Bergdorf Goodman, Inc. and
Dawn Mello, effective May 1994.
*10.12 Key Employee Deferred Compensation Plan, as amended.
*10.13 Deferred Compensation Agreement between the Company and
Gary L. Countryman, dated August 27, 1987.
11.1 Computation of Average Number of Shares Outstanding Used
in Determining Primary and Fully-Diluted Earnings Per
Share.
13.1 1994 Annual Report to Stockholders (which is not deemed to
be filed except to the extent that portions thereof are
expressly incorporated by reference in this Annual Report
on Form 10-K).
22.1 Subsidiaries of the Company.
24.1 Consent of Deloitte & Touche LLP.
27.1 Financial Data Schedule.
28.1 Dividend Reinvestment and Common Stock Purchase Plan,
incorporated herein by reference to the Company's
Registration Statement on Form S-3 dated September 17,
1990 (File No. 33-36419).
________________
*Exhibits filed pursuant to Item 14(c) of Form 10-K