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) | 75201 (Zip code) |
Large accelerated filer ¨ | Accelerated filer ¨ | |
Non-accelerated filer ý | Smaller reporting company ¨ | |
Emerging growth company ¨ |
Page No. | ||
• | our ability to maintain a relevant, enjoyable and reliable omni-channel experience and to anticipate and meet our customers' evolving shopping preferences, the failure of which could adversely affect our financial performance and brand image; |
• | the highly competitive nature of the luxury retail industry; |
• | economic conditions that negatively impact consumer spending and demand for our merchandise; |
• | our ability to anticipate, identify and respond effectively to changing fashion trends and to accurately forecast merchandise demand, the failure of which could adversely affect our business, financial condition and results of operations; |
• | our ability to anticipate, identify and address risks related to the complexity of our omni‑channel plans, the failure of which could adversely affect our revenues or margins as well as damage our reputation, brands and competitive position; |
• | the success of our advertising and marketing programs; |
• | costs associated with our expansion and growth strategies, which could adversely affect our performance and results of operations; |
• | our ability to drive customer traffic to our retail stores, including through new types of product and service offerings, and the success of the expansion, growth and remodel of our retail stores, which are subject to numerous risks, some of which are beyond our control; |
• | the significance of the portion of our revenues from our stores in four states, which exposes us to economic circumstances and catastrophic occurrences unique to those states, such as the impact of fluctuations in the global price of crude oil in our Texas markets; |
• | our dependence on our relationships with certain designers, brand partners and other sources of merchandise as they relate to, among other things: (i) the manner in which goods are available to us, (ii) the levels of merchandise made available to us and (iii) the pricing and payment terms with respect to our purchases; |
• | a material disruption in our information systems, delays or difficulties in implementing or integrating new systems or enhancing or expanding current systems, or our failure to achieve the anticipated benefits of any new or updated information systems, which could adversely affect our business or results of operations; |
• | our dependence on positive perceptions of our company, which, if eroded, could adversely affect our customer, employee and brand partner relationships; |
• | our ability to meet data protection requirements and prevent or identify a breach in information privacy in a timely manner, which could negatively impact our operations; |
• | inflation and foreign currency fluctuations, primarily fluctuations in the U.S. dollar against the Euro and British pound, which could adversely affect our results of operations; |
• | our failure to comply with, or developments in, laws, rules or regulations, which could affect our business or results of operations; |
• | the loss of, or disruption in, one or more of our distribution facilities, which could adversely affect our business and operations; |
• | our substantial indebtedness, which could adversely affect our business, financial condition, results of operations, credit ratings and ability to obtain additional debt financing, and our ability to fulfill our obligations with respect to such indebtedness; |
• | the restrictions in our debt agreements that may limit our flexibility in operating our business and our ability to pursue future strategic investments and initiatives; and |
• | other risks, uncertainties and factors set forth in this Annual Report on Form 10-K, including those set forth under “Risk Factors” in Item 1A. |
• | omni-channel marketing programs designed to promote customer awareness of our offerings of the latest fashion trends and services; |
• | our InCircle loyalty program designed to cultivate long-term relationships with our customers; |
• | our proprietary credit card program facilitating the extension of credit to our customers; |
• | knowledgeable, professional and well-trained sales associates; and |
• | customer-friendly websites. |
Fiscal year ended | |||||||||
July 28, 2018 | July 29, 2017 | July 30, 2016 | |||||||
Women’s Apparel | 31 | % | 32 | % | 32 | % | |||
Women’s Shoes, Handbags and Accessories | 30 | 29 | 28 | ||||||
Men’s Apparel and Shoes | 12 | 12 | 12 | ||||||
Cosmetics and Fragrances | 12 | 12 | 11 | ||||||
Designer and Precious Jewelry | 9 | 9 | 10 | ||||||
Home Furnishings and Decor | 5 | 5 | 5 | ||||||
Other | 1 | 1 | 2 | ||||||
100 | % | 100 | % | 100 | % |
• | Oak Brook, Illinois; |
• | Beverly Hills, California; |
• | Palo Alto, California; |
• | Coral Gables, Florida; and |
• | Denver, Colorado. |
• | Roosevelt Field: We opened a 111,000 square‑foot full‑line Neiman Marcus store in Garden City, New York in February of fiscal year 2016. |
• | Hudson Yards: We signed a lease to open a flagship full‑line Neiman Marcus store on Manhattan’s flourishing west side at Hudson Yards, a new $25 billion, 28‑acre mixed‑use development project. The approximately 190,000 square‑foot, multi‑level store, which we currently expect to open in fiscal year 2019, marks the first full‑line Neiman Marcus store in New York City and will anchor the one‑million square‑foot Shops at Hudson Yards. This new store will offer Neiman Marcus’s signature mix of the world’s most exclusive luxury designers and superior customer service to New York residents and visitors. |
• | our approach to omni-channel retailing; |
• | distinctive merchandise assortments, which we believe are more upscale than other luxury and premium multi-branded retailers, and exclusive merchandise offerings that are only available in our stores; |
• | excellent customer service; |
• | prime real estate locations; |
• | premier online websites; and |
• | elegant shopping environments. |
• | our omni-channel approach to business; |
• | strong national brands; |
• | diverse product selection; |
• | loyalty program; |
• | customer service; |
• | prime shopping locations; and |
• | strong designer relationships that allow us to offer the top merchandise from each designer. |
• | expansion of product or service offerings by existing competitors; |
• | entry by new competitors into markets and channels in which we currently operate; |
• | alteration of the distribution channels used by designers for the sale of their goods to consumers; and |
• | adoption by existing competitors of innovative retail sales methods. |
• | general economic and industry conditions, including inflation, deflation, changes related to interest rates and foreign currency exchange rates, rates of economic growth, current and expected unemployment levels and government fiscal and monetary policies; |
• | the performance of the financial, equity and credit markets; |
• | consumer disposable income levels, consumer confidence levels, the availability, cost and level of consumer debt and consumer behaviors towards incurring and paying debt; |
• | national and global geo-political uncertainty; |
• | the strength of the U.S. dollar against international currencies, most notably the Euro and British pound, and a resulting impact on tourism and spending by international customers in the U.S.; |
• | a significant and sustained decline in the global price of crude oil and the resulting impact on stakeholders in the oil and gas industries, particularly in the Texas markets in which we have a significant presence; |
• | changes in prices for commodities and energy, including fuel; and |
• | current and expected tax rates and policies. |
• | making it more difficult for us to satisfy our obligations with respect to our indebtedness; |
• | limiting our ability to incur, or guarantee, additional indebtedness or obtain additional financing to fund future working capital, capital expenditures, acquisitions, execution of our business and growth strategies or other general corporate requirements; |
• | requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other general corporate purposes and future growth; |
• | limiting our ability to pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock; |
• | increasing our vulnerability to general adverse economic, industry and competitive conditions and government regulations; |
• | exposing us to the risk of increased interest rates as certain of our borrowings, including borrowings under our credit facilities, are at variable rates of interest; |
• | limiting our flexibility in planning for and reacting to changes in the industry in which we compete and our ability to take advantage of new business opportunities; |
• | placing us at a competitive disadvantage compared to other, less leveraged competitors; |
• | increasing our cost of borrowing; and |
• | causing our suppliers or other parties with which we maintain business relationships to experience uncertainty about our future and seek alternative relationships with third parties or seek to alter their business relationships with us. |
• | incur additional indebtedness and guarantee indebtedness; |
• | create liens; |
• | make investments, loans or advances; |
• | merge or consolidate; |
• | sell assets, including capital stock of subsidiaries or make acquisitions; |
• | pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock; |
• | prepay, redeem or repurchase certain indebtedness; |
• | enter into transactions with affiliates; and |
• | alter our lines of business. |
Owned | Owned Subject to Ground Lease | Leased | Total | ||||||||
Neiman Marcus Stores | 856,000 | 2,329,000 | 2,411,000 | 5,596,000 | |||||||
Bergdorf Goodman Stores | — | — | 316,000 | 316,000 | |||||||
Last Call Stores and Other | — | — | 646,000 | 646,000 | |||||||
Distribution, Support and Office Facilities | 1,330,000 | 150,000 | 1,622,000 | 3,102,000 |
Locations | Fiscal Year Operations Began | Gross Store Sq. Feet | Locations | Fiscal Year Operations Began | Gross Store Sq. Feet | |||||||
Dallas, Texas (Downtown)(1)* | 1908 | 129,000 | Denver, Colorado(3) | 1991 | 90,000 | |||||||
Dallas, Texas (NorthPark)(2) | 1965 | 218,000 | Scottsdale, Arizona(2) | 1992 | 114,000 | |||||||
Houston, Texas (Galleria)(3) | 1969 | 224,000 | Troy, Michigan(3) | 1993 | 157,000 | |||||||
Bal Harbour, Florida(2) | 1971 | 97,000 | Short Hills, New Jersey(3) | 1996 | 137,000 | |||||||
Atlanta, Georgia(2) | 1973 | 206,000 | King of Prussia, Pennsylvania(3) | 1996 | 145,000 | |||||||
St. Louis, Missouri(2) | 1975 | 145,000 | Paramus, New Jersey(3) | 1997 | 141,000 | |||||||
Northbrook, Illinois(2) | 1976 | 144,000 | Honolulu, Hawaii(3) | 1999 | 181,000 | |||||||
Fort Worth, Texas(2) | 1977 | 92,000 | Palm Beach, Florida(2) | 2001 | 53,000 | |||||||
Washington, D.C.(2) | 1978 | 130,000 | Plano, Texas (Willow Bend)(4)* | 2002 | 156,000 | |||||||
Newport Beach, California(3) | 1978 | 153,000 | Tampa, Florida(3) | 2002 | 96,000 | |||||||
Beverly Hills, California(1)* | 1979 | 185,000 | Coral Gables, Florida(2) | 2003 | 136,000 | |||||||
Westchester, New York(2) | 1981 | 138,000 | Orlando, Florida(4)* | 2003 | 95,000 | |||||||
Las Vegas, Nevada(2) | 1981 | 174,000 | San Antonio, Texas(4) | 2006 | 120,000 | |||||||
Oak Brook, Illinois(2) | 1982 | 98,000 | Boca Raton, Florida(2) | 2006 | 136,000 | |||||||
San Diego, California(2) | 1982 | 106,000 | Charlotte, North Carolina(3) | 2007 | 80,000 | |||||||
Fort Lauderdale, Florida(3) | 1983 | 92,000 | Austin, Texas(3) | 2007 | 80,000 | |||||||
San Francisco, California(4)* | 1983 | 252,000 | Natick, Massachusetts(4)* | 2008 | 103,000 | |||||||
Chicago, Illinois (Michigan Ave.)(2) | 1984 | 188,000 | Woodland Hills, California(3) | 2009 | 120,000 | |||||||
Boston, Massachusetts(2) | 1984 | 111,000 | Bellevue, Washington(2) | 2010 | 125,000 | |||||||
Palo Alto, California(3) | 1986 | 120,000 | Walnut Creek, California(3) | 2012 | 88,000 | |||||||
McLean, Virginia(4) | 1990 | 130,000 | Garden City, New York(3) | 2016 | 111,000 |
Locations | Fiscal Year Operations Began | Gross Store Sq. Feet | |||
New York City (Main)(1) | 1901 | 250,000 | |||
New York City (Men’s)(1) | 1991 | 66,000 |
Fiscal year ended | Thirty-nine weeks ended | Thirteen weeks ended | ||||||||||||||||||||||
July 28, 2018 | July 29, 2017 | July 30, 2016 | August 1, 2015 | August 2, 2014 | November 2, 2013 | |||||||||||||||||||
(in millions, except per share data) | (Successor) | (Successor) | (Successor) | (Successor) | (Successor) | (Predecessor) | ||||||||||||||||||
OPERATING RESULTS DATA | ||||||||||||||||||||||||
Revenues | $ | 4,900.4 | $ | 4,706.0 | $ | 4,949.5 | $ | 5,095.1 | $ | 3,710.2 | $ | 1,129.1 | ||||||||||||
Cost of goods sold including buying and occupancy costs (excluding depreciation) | 3,320.8 | 3,220.0 | 3,322.5 | 3,305.5 | 2,563.0 | 685.4 | ||||||||||||||||||
Selling, general and administrative expenses (excluding depreciation) | 1,179.6 | 1,129.3 | 1,117.9 | 1,162.1 | 835.0 | 266.4 | ||||||||||||||||||
Income from credit card program | (46.4 | ) | (60.1 | ) | (60.6 | ) | (52.8 | ) | (40.7 | ) | (14.7 | ) | ||||||||||||
Depreciation and amortization (1) | 312.2 | 329.5 | 338.1 | 322.8 | 262.0 | 46.0 | ||||||||||||||||||
Impairment charges (2) | — | 510.7 | 466.2 | — | — | — | ||||||||||||||||||
Operating earnings (loss) | 96.5 | (453.2 | ) | (261.7 | ) | 318.0 | 8.8 | 32.1 | ||||||||||||||||
Net earnings (loss) | $ | 251.1 | $ | (531.8 | ) | $ | (406.1 | ) | $ | 14.9 | $ | (134.1 | ) | $ | (13.1 | ) |
BALANCE SHEET DATA (at period end) | ||||||||||||||||||||||
Total assets | $ | 7,545.9 | $ | 7,703.5 | $ | 8,256.9 | $ | 8,719.8 | $ | 8,574.9 | ||||||||||||
Total liabilities | 6,786.7 | 7,236.9 | 7,313.8 | 7,306.0 | 7,142.3 | |||||||||||||||||
Long-term debt, net of debt issuance costs (excluding current maturities) | $ | 4,623.2 | $ | 4,675.5 | $ | 4,584.3 | $ | 4,556.0 | $ | 4,432.8 |
Fiscal year ended | Thirty-nine weeks ended | Thirteen weeks ended | ||||||||||||||||||||||
July 28, 2018 | July 29, 2017 | July 30, 2016 | August 1, 2015 | August 2, 2014 | November 2, 2013 | |||||||||||||||||||
(dollars in millions, except sales per square foot) | (Successor) | (Successor) | (Successor) | (Successor) | (Successor) | (Predecessor) | ||||||||||||||||||
OTHER DATA | ||||||||||||||||||||||||
Change in comparable revenues (3) | 4.9 | % | (5.2 | )% | (4.1 | )% | 3.9 | % | 5.4 | % | 5.7 | % | ||||||||||||
Percentage of revenues transacted online | 34.5 | % | 31.3 | % | 29.0 | % | 26.3 | % | 24.6 | % | 21.4 | % | ||||||||||||
Number of full-line stores open at period end | 44 | 44 | 44 | 43 | 43 | 43 | ||||||||||||||||||
Sales per square foot (4) | $ | 510 | $ | 505 | $ | 548 | $ | 590 | $ | 440 | $ | 138 | ||||||||||||
Adjusted EBITDA (5) | $ | 477.1 | $ | 433.8 | $ | 584.9 | $ | 710.6 | $ | 501.3 | $ | 197.2 | ||||||||||||
Adjusted EBITDA as a percentage of revenues | 9.7 | % | 9.2 | % | 11.8 | % | 13.9 | % | 13.5 | % | 17.5 | % | ||||||||||||
Capital expenditures (6) | 174.6 | $ | 204.6 | $ | 301.4 | $ | 270.5 | $ | 138.0 | $ | 36.0 | |||||||||||||
Depreciation expense | 214.5 | 225.5 | 226.9 | 185.6 | 113.3 | 34.2 | ||||||||||||||||||
Rent expense and related occupancy costs | 122.5 | 116.1 | 119.4 | 117.1 | 79.6 | 24.1 |
(1) | Amounts include incremental depreciation expense arising from fair value adjustments recorded in connection with purchase accounting. |
(2) | Based upon our assessment of economic conditions in fiscal years 2017 and 2016, our expectations of future business conditions and trends, our projected revenues, earnings and cash flows as well as other market factors such as the weighted average cost of capital and valuation multiples, we determined certain of our tradenames, goodwill and long-lived assets to be impaired and recorded impairment charges aggregating $510.7 million in fiscal year 2017 and aggregating $466.2 million in fiscal year 2016. |
(3) | Comparable revenues include (i) revenues derived from our retail stores open for more than fifty-two weeks, including stores that have been relocated or expanded, and (ii) revenues from our online operations. Comparable revenues exclude revenues of (i) closed stores and (ii) designer websites created and operated pursuant to contractual arrangements with certain designer brands that had expired by the first quarter of fiscal year 2015. As MyTheresa was acquired in October 2014, comparable revenues for fiscal year 2015 exclude revenues from MyTheresa. Comparable revenues for fiscal year 2016 include revenues from MyTheresa beginning in the second quarter of fiscal year 2016. |
(4) | Sales per square foot are calculated as revenues of our Neiman Marcus and Bergdorf Goodman full-line stores for the applicable period divided by weighted average square footage. Weighted average square footage includes a percentage of period-end square footage for new and closed stores equal to the percentage of the period during which they were open. |
(5) | For an explanation of Adjusted EBITDA as a measure of our operating performance and a reconciliation to net earnings (loss), see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Non-GAAP Financial Measures.” |
(6) | Amounts represent gross capital expenditures and exclude developer contributions of $50.3 million, $37.4 million, $38.3 million, $34.7 million, $5.7 million and $0.0 million, respectively, for the periods presented. |
• | We are investing in technology to enhance the customer shopping experiences in both our online and store operations, including: |
• | our digital strategies, which advance our ability to leverage data and analytics to deliver more insight into customer preferences and behaviors. We believe these strategies will strengthen our position as a leader in luxury retail by improving our ability to anticipate and address our customers' evolving shopping behaviors; and |
• | the launch of an integrated merchandising and distribution system in fiscal year 2017 that enables us to purchase, share, manage and sell our inventories across our omni-channel operations and brands more efficiently; |
• | We have assessed and will continue to assess our Last Call operations. During fiscal year 2017, we began a process to assess our Last Call footprint and closed four of our Last Call stores. In fiscal year 2018, we closed 14 additional Last Call stores in order to optimize our Last Call store portfolio. We will continue to evaluate our off-price business and seek to optimize the operations of Last Call in the future; |
• | We have re-engineered and will continue to re-engineer our costs to optimize our resources and organizational processes. In connection with these efforts, we eliminated a total of approximately 800 positions during fiscal years 2017 and 2016 across our stores, divisions and facilities; and |
• | We are making capital investments to remodel our existing stores as well as to open new stores in select markets such as New York City (currently scheduled to open in March 2019) and Fort Worth, Texas (opened in February 2017). |
• | Revenues — Our revenues for fiscal year 2018 were $4,900.4 million, an increase of 4.1% from $4,706.0 million in fiscal year 2017. Comparable revenues for fiscal year 2018 increased 4.9% compared to fiscal year 2017. In fiscal year 2018, revenues generated by our online operations were $1,692.1 million, or 34.5% of consolidated revenues. Comparable revenues from our online operations in fiscal year 2018 increased 15.0% from fiscal year 2017. |
• | Cost of Goods Sold Including Buying and Occupancy Costs (Excluding Depreciation) ("COGS") — Compared to fiscal year 2017, COGS as a percentage of revenues decreased 60 basis points in fiscal year 2018. The decrease in COGS, as a percentage of revenues, was primarily attributable to: |
• | higher net product margins due primarily to lower markdowns and promotional costs driven by a higher level of customer demand, a higher level of full-price sales and improved inventory productivity driven by the reduction in on-hand inventories; partially offset by |
• | unfavorable shrink adjustments as a result of physical inventory counts in the fourth quarter of fiscal year 2018; and |
• | closed store liquidation markdown requirements related to the closing of 14 Last Call stores in fiscal year 2018. |
• | Selling, General and Administrative Expenses (Excluding Depreciation) ("SG&A") — Compared to fiscal year 2017, SG&A expenses excluding net incentive compensation costs and other benefits decreased, as a percentage of revenues, 60 basis points in fiscal year 2018. The lower levels of SG&A expenses excluding net incentive compensation costs, as a percentage of revenues, were primarily attributable to: |
• | favorable payroll and related costs driven by (i) our ongoing strategic initiatives, (ii) lower benefits costs incurred and (iii) the leveraging of these expenses on higher revenues; partially offset by |
• | higher marketing expenses, related primarily to the growth in our online operations. |
Fiscal year ended | |||||||||
July 28, 2018 | July 29, 2017 | July 30, 2016 | |||||||
Revenues | 100.0 | % | 100.0 | % | 100.0 | % | |||
Cost of goods sold including buying and occupancy costs (excluding depreciation) | 67.8 | 68.4 | 67.1 | ||||||
Selling, general and administrative expenses (excluding depreciation) | 24.1 | 24.0 | 22.6 | ||||||
Income from credit card program | (0.9 | ) | (1.3 | ) | (1.2 | ) | |||
Depreciation expense | 4.4 | 4.8 | 4.6 | ||||||
Amortization of intangible assets | 1.0 | 1.1 | 1.2 | ||||||
Amortization of favorable lease commitments | 1.0 | 1.1 | 1.1 | ||||||
Other expenses | 0.8 | 0.6 | 0.5 | ||||||
Impairment charges | — | 10.9 | 9.4 | ||||||
Operating earnings (loss) | 2.0 | (9.6 | ) | (5.3 | ) | ||||
Interest expense, net | 6.3 | 6.3 | 5.8 | ||||||
Earnings (loss) before income taxes | (4.3 | ) | (15.9 | ) | (11.1 | ) | |||
Income tax expense (benefit) | (9.4 | ) | (4.6 | ) | (2.9 | ) | |||
Net earnings (loss) | 5.1 | % | (11.3 | )% | (8.2 | )% |
Fiscal year ended | ||||||||||||
July 28, 2018 | July 29, 2017 | July 30, 2016 | ||||||||||
Change in comparable revenues (1) | ||||||||||||
Total revenues | 4.9 | % | (5.2 | )% | (4.1 | )% | ||||||
Online revenues | 15.0 | % | 2.5 | % | 4.4 | % | ||||||
Percentage of revenues transacted online | 34.5 | % | 31.3 | % | 29.0 | % | ||||||
Store count | ||||||||||||
Neiman Marcus and Bergdorf Goodman full-line stores open at end of period | 44 | 44 | 44 | |||||||||
Last Call stores open at end of period | 24 | 38 | 42 | |||||||||
Sales per square foot (2) | $ | 510 | $ | 505 | $ | 548 | ||||||
Capital expenditures (3) | 174.6 | 204.6 | 301.4 | |||||||||
Depreciation expense | 214.5 | 225.5 | 226.9 | |||||||||
Rent expense and related occupancy costs | 122.5 | 116.1 | 119.4 | |||||||||
Non-GAAP financial measures | ||||||||||||
EBITDA (4) | $ | 408.7 | $ | (123.7 | ) | $ | 76.4 | |||||
Adjusted EBITDA (4) | $ | 477.1 | $ | 433.8 | $ | 584.9 |
(1) | Comparable revenues include (i) revenues derived from our retail stores open for more than fifty-two weeks, including stores that have been relocated or expanded, and (ii) revenues from our online operations. Comparable revenues exclude revenues of closed stores. |
(2) | Sales per square foot are calculated as revenues of our Neiman Marcus and Bergdorf Goodman full-line stores for the applicable period divided by weighted average square footage. Weighted average square footage includes a percentage of period-end square footage for new and closed stores equal to the percentage of the period during which they were open. |
(3) | Amounts represent gross capital expenditures and exclude developer contributions of $50.3 million, $37.4 million and $38.3 million, respectively, for the periods presented. |
(4) | For an explanation of EBITDA and Adjusted EBITDA as measures of our operating performance and a reconciliation to net earnings (loss), see “—Non-GAAP Financial Measures.” |
• | 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 our customers return goods previously purchased. We maintain reserves for anticipated sales returns based primarily on our historical trends. Revenues exclude sales taxes collected from our customers. |
• | Delivery and processing — We generate revenues from delivery and processing charges related to certain merchandise deliveries to our customers. |
• | general domestic and global economic and industry conditions, including inflation, deflation, changes related to interest rates and foreign currency exchange rates, rates of economic growth, current and expected unemployment levels and government fiscal and monetary policies; |
• | the performance of the financial, equity and credit markets; |
• | our ability to anticipate, identify and respond effectively to changing consumer demands, fashion trends and consumer shopping preferences and acquire goods meeting customers’ tastes and preferences; |
• | consumer disposable income levels, consumer confidence levels, the availability, cost and level of consumer debt and consumer behaviors towards incurring and paying debt; |
• | national and global geo-political uncertainty; |
• | changes in the level of consumer spending generally and, specifically, on luxury goods; |
• | the strength of the U.S. dollar against international currencies, most notably the Euro and British pound, and a resulting impact on tourism and spending by international customers in the U.S.; |
• | a significant and sustained decline in the global price for crude oil and the resulting impact on stakeholders in the oil and gas industries, particularly in the Texas markets in which we have a significant presence; |
• | changes in prices for commodities and energy, including fuel; |
• | current and expected tax rates and policies; |
• | a material disruption in our information systems, or delays or difficulties in implementing or integrating new systems or enhancing or expanding current systems, or our failure to achieve the anticipated benefits of any new or updated information systems; |
• | changes in the level of full-price sales; |
• | changes in the level and timing of promotional events conducted; |
• | changes in the level of delivery and processing revenues collected from our customers; and |
• | changes in the composition and the rate of growth of our sales transacted in store and online. |
• | Inventory costs — We utilize the retail inventory method of accounting. Under the retail inventory method, the valuation of inventories at cost and the resulting gross margins are determined by applying a calculated cost-to-retail ratio, for various groupings of similar items, to the retail value of our inventories. The cost of the inventory reflected in the Consolidated Financial Statements is decreased by charges to cost of goods sold at average cost and the retail value of the inventory is lowered through the use of markdowns. Earnings are negatively impacted when merchandise is marked down. With the introduction of new fashions in the first and third fiscal quarters of each fiscal year and our emphasis on full-price selling in these quarters, a lower level of markdowns and higher margins are characteristic of these quarters. |
• | Buying costs — Buying costs consist primarily of salaries and expenses incurred by our merchandising and buying operations. |
• | Occupancy costs — Occupancy costs consist primarily of rent, property taxes and operating costs of our retail, distribution and support facilities. A significant portion of our buying and occupancy costs are fixed in nature and are not dependent on the revenues we generate. |
• | Delivery and processing costs — Delivery and processing costs consist primarily of 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. |
• | 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 costs incurred; |
• | customer acceptance of and demand for the merchandise we offer in a given season and the related impact of such factors on the level of full-price sales; |
• | factors affecting revenues generally, including pricing and promotional strategies, product offerings and actions taken by competitors; |
• | changes in delivery and processing costs and our ability to pass such costs on to our customers; |
• | changes in occupancy costs associated primarily with the opening of new stores or distribution facilities; and |
• | the amount of vendor reimbursements we receive during the reporting period. |
• | changes in the level of our revenues; |
• | changes in the number of sales associates, which are due primarily to new store openings and closings and expansion of existing stores, and the health care and related benefits expenses incurred as a result of such changes; |
• | changes in expenses incurred in connection with our advertising and marketing programs; and |
• | changes in expenses related to employee benefits due to general economic conditions such as rising health care costs. |
• | increase or decrease based upon the level of utilization of our proprietary credit cards by our customers; |
• | increase or decrease based upon the overall profitability and performance of the credit card portfolio due to the level of bad debts incurred or changes in interest rates, among other factors; |
• | increase or decrease based upon future changes to our credit card program in response to changes in regulatory requirements or other changes related to, among other things, the interest rates applied to unpaid balances and the assessment of late fees; and |
• | decrease based upon the level of future marketing and other services we provide to Capital One. |
Fiscal year ended | ||||||||||||||
July 28, 2018 | July 29, 2017 | |||||||||||||
(in millions, except percentages) | $ | % of revenues | $ | % of revenues | ||||||||||
COGS excluding closed store liquidation markdowns | $ | 3,308.4 | 67.5 | % | $ | 3,220.0 | 68.4 | % | ||||||
Closed store liquidation markdowns | 12.4 | 0.3 | % | — | — | % | ||||||||
Total COGS | $ | 3,320.8 | 67.8 | % | $ | 3,220.0 | 68.4 | % |
• | lower markdowns and promotional costs of approximately 130 basis points driven by (i) a higher level of customer demand, (ii) a higher level of full-price sales and (iii) improved inventory productivity driven by the reduction in on-hand inventories; partially offset by |
• | unfavorable shrink adjustments of approximately 30 basis points as a result of physical inventory counts in the fourth quarter of fiscal year 2018. |
Fiscal year ended | ||||||||||||||
July 28, 2018 | July 29, 2017 | |||||||||||||
(in millions, except percentages) | $ | % of revenues | $ | % of revenues | ||||||||||
SG&A excluding net incentive compensation costs and other benefits | $ | 1,142.3 | 23.3 | % | $ | 1,125.6 | 23.9 | % | ||||||
Net incentive compensation costs and other benefits | 37.3 | 0.8 | % | 3.7 | 0.1 | % | ||||||||
Total SG&A | $ | 1,179.6 | 24.1 | % | $ | 1,129.3 | 24.0 | % |
• | favorable payroll and related costs of approximately 90 basis points driven by (i) our ongoing strategic initiatives, (ii) lower benefits costs incurred and (iii) the leveraging of these expenses on higher revenues; partially offset by |
• | higher marketing expenses of approximately 30 basis points related primarily to the growth in our online operations. |
Fiscal year ended | ||||||||
(in millions) | July 28, 2018 | July 29, 2017 | ||||||
Expenses incurred in connection with strategic initiatives | $ | 23.3 | $ | 21.3 | ||||
Expenses related to store closures | 8.0 | 2.6 | ||||||
Expenses related to Cyber-Attack, net of insurance recoveries | 1.1 | 1.5 | ||||||
MyTheresa acquisition costs | — | 3.3 | ||||||
Other expenses | 5.3 | 1.0 | ||||||
Total | $ | 37.7 | $ | 29.7 |
Fiscal year ended | ||||||||
(in millions) | July 28, 2018 | July 29, 2017 | ||||||
Asset-Based Revolving Credit Facility | $ | 6.4 | $ | 7.0 | ||||
mytheresa.com Credit Facilities | 0.1 | 0.1 | ||||||
Senior Secured Term Loan Facility | 138.0 | 130.1 | ||||||
Cash Pay Notes | 76.8 | 76.8 | ||||||
PIK Toggle Notes | 58.5 | 53.8 | ||||||
2028 Debentures | 8.9 | 8.9 | ||||||
Amortization of debt issue costs | 24.5 | 24.5 | ||||||
Capitalized interest | (8.1 | ) | (6.3 | ) | ||||
Other, net | 2.3 | 0.7 | ||||||
Interest expense, net | $ | 307.4 | $ | 295.7 |
Fiscal year ended | ||||||||||||||
July 28, 2018 | July 29, 2017 | |||||||||||||
(in millions, except percentages) | $ | % | $ | % | ||||||||||
Income tax benefit excluding impact of Tax Reform | $ | (70.5 | ) | 33.4 | % | $ | (217.1 | ) | 29.0 | % | ||||
Impact of Tax Reform | (391.6 | ) | 185.6 | % | — | — | % | |||||||
Total income tax benefit | $ | (462.1 | ) | 219.1 | % | $ | (217.1 | ) | 29.0 | % |
• | the volatility and uncertainty in domestic and global economic conditions and the resulting impact on the market for luxury merchandise; |
• | the strength of the U.S. dollar against international currencies, most notably the Euro and British pound, and a resulting impact on tourism and spending by international customers in the U.S.; |
• | a significant and sustained decline in the global price for crude oil and the resulting impact on stakeholders in the oil and gas industries, particularly in the Texas markets in which we have a significant presence; and |
• | the implementation and conversion issues related to NMG One, which prevented us from fulfilling certain customer demand both in our stores and websites. |
• | decreased product margins of approximately 100 basis points due primarily to: |
• | higher markdowns and promotional costs of approximately 70 basis points incurred on lower than expected revenues; and |
• | higher delivery and processing costs of approximately 20 basis points; and |
• | the deleveraging of buying and occupancy costs of approximately 30 basis points. |
• | the deleveraging of a significant portion of our SG&A expenses, primarily payroll and benefits, of approximately 50 basis points on the lower level of revenues; |
• | higher levels of expenses and other costs of approximately 45 basis points incurred in connection with: |
• | (i) investments in technology, (ii) the growth of our international footprint through MyTheresa and (iii) costs related to the opening of new stores and the remodeling of existing stores; and |
• | certain corporate expenses, primarily professional fees; |
• | lower favorable non-cash adjustments to the required liability for stock option awards requiring variable accounting of approximately 20 basis points; and |
• | higher credit card chargebacks and other fees of approximately 15 basis points. |
Fiscal year ended | ||||||||
(in millions) | July 29, 2017 | July 30, 2016 | ||||||
Expenses incurred in connection with strategic initiatives | $ | 21.3 | $ | 24.3 | ||||
MyTheresa acquisition costs | 3.3 | 4.4 | ||||||
Expenses related to store closures | 2.6 | — | ||||||
Expenses related to Cyber-Attack, net of insurance recoveries | 1.5 | 1.0 | ||||||
Net gain from facility closure | — | (5.6 | ) | |||||
Other expenses | 1.0 | 2.9 | ||||||
Total | $ | 29.7 | $ | 27.1 |
Fiscal year ended | ||||||||
(in millions) | July 29, 2017 | July 30, 2016 | ||||||
Asset-Based Revolving Credit Facility | $ | 7.0 | $ | 3.1 | ||||
mytheresa.com Credit Facilities | 0.1 | — | ||||||
Senior Secured Term Loan Facility | 130.1 | 124.8 | ||||||
Cash Pay Notes | 76.8 | 76.8 | ||||||
PIK Toggle Notes | 53.8 | 52.5 | ||||||
2028 Debentures | 8.9 | 8.9 | ||||||
Amortization of debt issue costs | 24.5 | 24.6 | ||||||
Capitalized interest | (6.3 | ) | (7.3 | ) | ||||
Other, net | 0.7 | 2.2 | ||||||
Interest expense, net | $ | 295.7 | $ | 285.6 |
• | the funding of our merchandise purchases; |
• | operating expense requirements; |
• | debt service requirements; |
• | capital expenditures for expansion and growth strategies, including new store construction, store remodels and upgrades of our management information systems; |
• | income tax payments; and |
• | obligations related to our defined benefit pension plan ("Pension Plan"). |
• | EBITDA and Adjusted EBITDA: |
• | exclude certain tax payments that may represent a reduction in cash available to us; |
• | in the case of Adjusted EBITDA, exclude certain adjustments for purchase accounting; |
• | do not reflect changes in, or cash requirements for, our working capital needs, capital expenditures or contractual commitments; |
• | do not reflect our significant interest expense; and |
• | do not reflect the cash requirements necessary to service interest or principal payments on our debt. |
• | although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements; and |
• | other companies in our industry may calculate Adjusted EBITDA or free cash flow differently than we do, limiting their usefulness as comparative measures. |
Fiscal year ended | Thirty-nine weeks ended | Thirteen weeks ended | ||||||||||||||||||||||
July 28, 2018 | July 29, 2017 | July 30, 2016 | August 1, 2015 | August 2, 2014 | November 2, 2013 | |||||||||||||||||||
(dollars in millions) | (Successor) | (Successor) | (Successor) | (Successor) | (Successor) | (Predecessor) | ||||||||||||||||||
Net earnings (loss) | $ | 251.1 | $ | (531.8 | ) | $ | (406.1 | ) | $ | 14.9 | $ | (134.1 | ) | $ | (13.1 | ) | ||||||||
Income tax expense (benefit) | (462.1 | ) | (217.1 | ) | (141.1 | ) | 13.1 | (89.8 | ) | 7.9 | ||||||||||||||
Interest expense, net | 307.4 | 295.7 | 285.6 | 289.9 | 232.7 | 37.3 | ||||||||||||||||||
Depreciation expense | 214.5 | 225.5 | 226.9 | 185.6 | 113.3 | 34.2 | ||||||||||||||||||
Amortization of intangible assets and favorable lease commitments | 97.7 | 104.0 | 111.2 | 137.3 | 148.6 | 11.7 | ||||||||||||||||||
EBITDA | $ | 408.7 | $ | (123.7 | ) | $ | 76.4 | $ | 640.8 | $ | 270.8 | $ | 78.1 | |||||||||||
EBITDA as a percentage of revenues | 8.3 | % | (2.6 | )% | 1.5 | % | 12.6 | % | 7.3 | % | 6.9 | % | ||||||||||||
Impairment charges (1) | — | 510.7 | 466.2 | — | — | — | ||||||||||||||||||
Amortization of inventory step-up (2) | — | — | — | 6.8 | 129.6 | — | ||||||||||||||||||
Non-cash rent expense (3) | 14.7 | 9.7 | 10.5 | 11.0 | 8.5 | 0.8 | ||||||||||||||||||
Transaction and other costs (4) | — | 3.3 | 4.4 | 19.4 | 55.4 | 109.4 | ||||||||||||||||||
Non-cash stock compensation and other long-term cash incentives (5) | 17.1 | (1.2 | ) | (10.4 | ) | 0.1 | 6.2 | 2.5 | ||||||||||||||||
Expenses incurred in connection with strategic initiatives (6) | 23.3 | 21.3 | 24.3 | 11.6 | 5.7 | 0.2 | ||||||||||||||||||
Liquidation markdowns and expenses related to store closures (7) | 20.4 | 2.6 | — | — | — | — | ||||||||||||||||||
Expenses incurred in connection with openings of new stores / remodels of existing stores (8) | 5.9 | 8.6 | 15.1 | 12.3 | 4.0 | 1.8 | ||||||||||||||||||
Non-cash gain related to change in vacation policy (9) | (19.5 | ) | — | — | — | — | — | |||||||||||||||||
Expenses related to Cyber-Attack, net of insurance recoveries (10) | 1.1 | 1.5 | 1.0 | 4.1 | 12.6 | — | ||||||||||||||||||
Net gain from facility closure (11) | — | — | (5.6 | ) | — | — | — | |||||||||||||||||
Equity in loss of Asian e-commerce retailer / professional fees (12) | — | — | — | — | 3.6 | 1.5 | ||||||||||||||||||
Management fee due to Former Sponsors (13) | — | — | — | — | — | 2.8 | ||||||||||||||||||
Other expenses | 5.3 | 1.0 | 2.9 | 4.3 | 4.8 | — | ||||||||||||||||||
Adjusted EBITDA (14) | $ | 477.1 | $ | 433.8 | $ | 584.9 | $ | 710.6 | $ | 501.3 | $ | 197.2 | ||||||||||||
Adjusted EBITDA as a percentage of revenues | 9.7 | % | 9.2 | % | 11.8 | % | 13.9 | % | 13.5 | % | 17.5 | % |
Fiscal year ended | Thirty-nine weeks ended | Thirteen weeks ended | ||||||||||||||||||||||
(in millions) | July 28, 2018 | July 29, 2017 | July 30, 2016 | August 1, 2015 | August 2, 2014 | November 2, 2013 | ||||||||||||||||||
(Successor) | (Successor) | (Successor) | (Successor) | (Successor) | (Predecessor) | |||||||||||||||||||
Net cash provided by operating activities | $ | 297.2 | $ | 147.0 | $ | 310.6 | $ | 229.3 | $ | 283.4 | $ | 12.3 | ||||||||||||
Capital expenditures | (174.6 | ) | (204.6 | ) | (301.4 | ) | (270.5 | ) | (138.0 | ) | (36.0 | ) | ||||||||||||
Free cash flow | $ | 122.6 | $ | (57.7 | ) | $ | 9.1 | $ | (41.2 | ) | $ | 145.4 | $ | (23.6 | ) |
(1) | In fiscal year 2017, we recorded pretax impairment charges related to (i) $309.7 million for the writedown to fair value of the net carrying value of tradenames, (ii) $196.2 million for the writedown to fair value of goodwill and (iii) $4.8 million for the writedown to fair value of the net carrying value of certain long-lived assets. |
(2) | The carrying values of inventories acquired in connection with the Acquisition and the acquisition of MyTheresa were stepped up to estimated fair value as of the respective acquisition dates and amortized into cost of goods sold as the acquired inventories were sold. |
(3) | Rental obligations and deferred real estate credits were revalued at fair value in connection with the Acquisition. These fair value adjustments increase post‑acquisition rent expense. |
(4) | Amounts relate to costs and expenses incurred in connection with the Acquisition and the acquisition of MyTheresa and are not expected to recur subsequent to fiscal year 2017. |
(5) | Non-cash stock-based compensation and other long-term cash incentives include: |
• | non-cash stock-based compensation charges related to the modifications of certain stock options; |
• | non-cash stock-based compensation adjustments to record our liability awards to estimated fair value; and |
• | other long-term cash incentives related to the Mid-Term Cash Incentive plan (as defined below). |
(6) | Amounts represent direct expenses incurred in connection with the review of our resources and organizational processes, implementation of our integrated merchandising and distribution system and the evaluation of potential strategic alternatives. |
(7) | Amount represents liquidation markdowns and expenses related to the closure of 14 Last Call stores in fiscal year 2018 and four Last Call stores in fiscal year 2017. |
(8) | Amounts represent direct and incremental expenses incurred in connection with the openings of new stores as well as remodels to our existing stores. |
(9) | Amount represents the non-cash gain related to the change in our vacation policy effective in fiscal year 2019. |
(10) | For a further description of the Cyber‑Attack, see Item 1A, “Risk Factors—Risks Related to Our Business and Industry—Data protection requirements increase our operating costs and requirements and a breach in information privacy or other related risks could negatively impact our operations” and Note 11 of the Notes to Consolidated Financial Statements. |
(11) | Amount represents a net gain related to the closure and relocation of our regional service center in New York. |
(12) | Amounts relate to our equity in losses and professional fees incurred in connection with our prior non‑controlling investment in an Asian e‑commerce retailer. |
(13) | Amounts represent management fees paid to the Former Sponsors prior to the Acquisition. |
(14) | Includes adjusted EBITDA related to our MyTheresa operations of $19.0 million in fiscal year 2018, $15.6 million in fiscal year 2017, $14.2 million in fiscal year 2016 and $11.3 million in fiscal year 2015. MyTheresa was acquired in October 2014. |
Payments Due by Period | ||||||||||||||||||||
(in millions) | Total | Fiscal Year 2019 | Fiscal Years 2020-2021 | Fiscal Years 2022-2023 | Fiscal Year 2024 and Beyond | |||||||||||||||
Contractual obligations: | ||||||||||||||||||||
Asset-Based Revolving Credit Facility | $ | 159.0 | $ | — | $ | 159.0 | $ | — | $ | — | ||||||||||
mytheresa.com Credit Facilities (1) | — | — | — | — | — | |||||||||||||||
Senior Secured Term Loan Facility (2) | 2,810.2 | 29.4 | 2,780.8 | — | — | |||||||||||||||
Cash Pay Notes | 960.0 | — | — | 960.0 | — | |||||||||||||||
PIK Toggle Notes | 658.4 | — | — | 658.4 | — | |||||||||||||||
2028 Debentures | 125.0 | — | — | — | 125.0 | |||||||||||||||
Interest requirements (3) | 883.5 | 300.1 | 494.6 | 45.8 | 43.0 | |||||||||||||||
Lease obligations | 1,785.2 | 93.2 | 156.7 | 136.9 | 1,398.4 | |||||||||||||||
Minimum pension funding obligation (4) | 223.5 | 27.6 | 67.3 | 59.9 | 68.7 | |||||||||||||||
Other long-term liabilities (5) | 67.6 | 6.4 | 13.1 | 13.7 | 34.4 | |||||||||||||||
Inventory purchase and construction commitments (6) | 1,377.7 | 1,340.7 | 37.0 | — | — | |||||||||||||||
$ | 9,050.1 | $ | 1,797.4 | $ | 3,708.5 | $ | 1,874.7 | $ | 1,669.5 |
(1) | At July 28, 2018, there were no outstanding borrowings under the mytheresa.com Credit Facilities. |
(2) | The above table does not reflect future excess cash flow prepayments, if any, that may be required under the Senior Secured Term Loan Facility. |
(3) | The cash obligations for interest requirements assume (a) interest requirements on our fixed-rate debt obligations at their contractual rates, (b) interest requirements on floating rate debt obligations not subject to interest rate swaps at rates in effect at July 28, 2018 and (c) interest requirements on floating rate debt obligations subject to interest rate swaps at the fixed rates provided through the swap agreements. Borrowings pursuant to the Senior Secured Term Loan Facility bear interest at floating rates, primarily based on LIBOR, but in no event less than a floor rate of 1.00%, plus applicable margins. A 1% increase in the rates relating to the portion of our floating rate debt obligations that is not hedged would increase annual interest requirements by approximately $16 million during fiscal year 2018. |
(4) | At July 28, 2018 (the most recent measurement date), our actuarially calculated projected benefit obligation for our Pension Plan was $584.8 million and the fair value of the assets was $381.9 million, resulting in a net liability of $202.8 million, which is included in other long-term liabilities at July 28, 2018. Our policy is to fund our Pension Plan at or above the minimum amount required by law. We made contributions to the Pension Plan of $25.2 million in fiscal year 2018 and $10.7 million in fiscal year 2017. As of July 28, 2018, we believe we will be required to contribute $27.6 million to the Pension Plan in fiscal year 2019. The amounts and timing of our contributions to our Pension Plan are subject to a number of uncertainties, including interest rate fluctuations and the investment performance of the assets held by the Pension Plan. We do not believe these uncertainties will have a material impact on our future liquidity. See Note 10 of the Notes to Consolidated Financial Statements in Item 15, which contains a further description of our Pension Plan. |
(5) | Included in other long-term liabilities at July 28, 2018 are our liabilities for our SERP and Postretirement Plans aggregating $95.3 million. Our scheduled obligations with respect to our SERP Plan and Postretirement Plan liabilities consist of expected benefit payments through 2028, as currently estimated using information provided by our actuaries. In addition, other long-term liabilities at July 28, 2018 included our liabilities related to (i) uncertain tax positions (including related accruals for interest and penalties) of $1.6 million and (ii) other obligations aggregating $42.0 million, primarily for employee benefits. Future cash obligations related to these liabilities are not currently estimable. |
(6) | Construction commitments relate primarily to obligations pursuant to contracts for the construction of new stores and the remodels of existing stores expected as of July 28, 2018. These amounts represent the gross construction costs and |
Amount of Commitment by Expiration Period | ||||||||||||||||||||
(in millions) | Total | Fiscal Year 2019 | Fiscal Years 2020-2021 | Fiscal Years 2022-2023 | Fiscal Year 2024 and Beyond | |||||||||||||||
Other commercial commitments: | ||||||||||||||||||||
Asset-Based Revolving Credit Facility (1) | $ | 900.0 | $ | — | $ | 900.0 | $ | — | $ | — | ||||||||||
mytheresa.com Credit Facilities | 27.4 | — | — | — | 27.4 | |||||||||||||||
Surety bonds | 3.4 | 3.2 | 0.2 | — | — | |||||||||||||||
$ | 930.8 | $ | 3.2 | $ | 900.2 | $ | — | $ | 27.4 |
(1) | As of July 28, 2018, we had outstanding borrowings of $159.0 million under the Asset-Based Revolving Credit Facility, outstanding letters of credit of $1.8 million and unused commitments of $700.6 million, subject to a borrowing base, of which $90.0 million of such capacity is available to us subject to certain restrictions as more fully described in Note 7 of the Notes to Consolidated Financial Statements in Item 15. Our working capital requirements are greatest in the first and second fiscal quarters as a result of higher seasonal requirements. See “—Financing Structure at July 28, 2018—Asset-Based Revolving Credit Facility” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Seasonality.” |
• | Level 1 — Unadjusted quoted prices for identical instruments traded in active markets. |
• | Level 2 — Observable market-based inputs or unobservable inputs corroborated by market data. |
• | Level 3 — Unobservable inputs reflecting management’s estimates and assumptions. |
• | future revenue and profitability projections associated with the tradename; |
• | estimated market royalty rates that could be derived from the licensing of our tradenames to third parties in order to establish the cash flows accruing to the benefit of the Company as a result of our ownership of our tradenames; and |
• | rate used to discount the estimated royalty cash flow projections to their present value (or estimated fair value). |
• | estimated future cash flows; |
• | growth assumptions for future revenues as well as future gross margin rates, expense rates, capital expenditures and other estimates; and |
• | rate used to discount our estimated future cash flow projections to their present value (or estimated fair value) based on our estimated weighted average cost of capital. |
Using Sensitivity Rate | ||||||||||||||
Actual Rate | Sensitivity Rate Increase/(Decrease) | (Decrease)/ Increase in Liability (in millions) | Increase in Expense (in millions) | |||||||||||
Pension Plan: | ||||||||||||||
Discount rate | 4.19 | % | 0.25 | % | $ | (16.7 | ) | $ | 0.7 | |||||
Expected long-term rate of return on plan assets | 5.50 | % | (0.50 | )% | N/A | $ | 2.0 | |||||||
SERP Plan: | ||||||||||||||
Discount rate | 4.16 | % | 0.25 | % | $ | (2.5 | ) | $ | 0.1 | |||||
Postretirement Plan: | ||||||||||||||
Discount rate | 4.03 | % | 0.25 | % | $ | — | $ | — | ||||||
Ultimate health care cost trend rate | 5.00 | % | 1.00 | % | $ | 0.2 | $ | — |
• | future revenue, cash flow and/or profitability projections; |
• | growth assumptions for future revenues as well as future gross margin rates, expense rates, capital expenditures and other estimates; |
• | rate used to discount our estimated future cash flow projections to their present value (or estimated fair value) based on our estimated weighted average cost of capital; |
• | recent transactions and valuation multiples for publicly held companies deemed similar to Parent; |
• | economic conditions and other factors deemed material to the valuation process; and |
• | valuations of Parent performed by third parties. |
Index | Page Number | |
a. | Disclosure Controls and Procedures |
b. | Internal Control Over Financial Reporting |
c. | Changes in Internal Control Over Financial Reporting |
Name | Age | Position with Company | ||
Geoffroy van Raemdonck | 46 | Director and Chief Executive Officer | ||
Adam M. Orvos | 53 | Executive Vice President, Chief Financial Officer and Chief Operating Officer | ||
James J. Gold | 54 | President, Chief Merchandising Officer | ||
Darcy E. Penick | 40 | President, Bergdorf Goodman | ||
Carrie M. Tharp | 38 | Executive Vice President, Chief Digital Officer | ||
Sarah W. Miller | 49 | Senior Vice President and Chief Information Officer | ||
Tracy M. Preston | 52 | Senior Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer | ||
T. Dale Stapleton | 60 | Senior Vice President and Chief Accounting Officer | ||
Joseph N. Weber | 51 | Senior Vice President and Chief Human Resources Officer | ||
David B. Kaplan | 51 | Chairman of the Board | ||
Nora A. Aufreiter | 58 | Director | ||
Norman H. Axelrod | 66 | Director | ||
Philippe E. Bourguignon | 70 | Director | ||
Graeme M. Eadie | 65 | Director | ||
Dennis T. Gies | 39 | Director | ||
Alan J. Herrick | 52 | Director | ||
Karen W. Katz | 61 | Director | ||
Cesare J. Ruggiero | 42 | Director |
• | Base salaries are determined by an industry peer group analysis and on the overall experience of each individual. Merit increases are based on financial as well as individual performance and are generally kept within a specified percentage range for all employees, including the named executive officers. |
• | Annual incentive bonus awards are based on our Plan Earnings (as defined below under the heading "Executive Compensation — Fiscal Year 2018 Named Executive Officer Compensation Program and Decisions — Annual Incentive Bonus") and sales. For Bergdorf Goodman, annual incentive bonus awards are based on Plan Earnings and sales of both the Company as a whole and Bergdorf Goodman specifically. The annual incentive bonus awards are all set at the beginning of each fiscal year based on the achievement of goals that the Compensation Committee believes will be challenging yet attainable. Maximum target payouts are capped at a pre-established percentage of base salary. |
• | Awards under the Neiman Marcus Group, Inc. FY18 Mid-Term Cash Incentive Plan (the "Mid-Term Cash Incentive Plan") are based on Adjusted EBITDA Before Bonus and subject to Free Cash Flow (each as defined under the Mid-Term Cash Incentive Plan) requirements. Mid-Term Cash Incentive Plan awards and the associated performance goals were determined in January 2018 with the adoption of that plan, based on challenging yet attainable financial performance goals and informed by the Company's mid-term strategic plan. |
• | Geoffroy van Raemdonck, who serves as Chief Executive Officer and a member of the Parent Board and is our principal executive officer; |
• | Adam M. Orvos, who served as Executive Vice President and Chief Financial Officer during fiscal year 2018, whose role was expanded to include Chief Operating Officer in September 2018, and is our principal financial officer; |
• | James J. Gold, who serves as President, Chief Merchandising Officer; |
• | Carrie M. Tharp, who served as Senior Vice President and Chief Marketing Officer during fiscal year 2018 and was elevated to Executive Vice President, Chief Digital Officer in September 2018; |
• | T. Dale Stapleton, who serves as Senior Vice President and Chief Accounting Officer and who served as Interim Chief Financial Officer and our principal financial officer from June 2017 through April 2018; |
• | Joseph N. Weber, who serves as Senior Vice President and Chief Human Resources Officer; and |
• | Karen W. Katz, who served as our President and Chief Executive Officer until her retirement in February 2018. |
• | Recruit and retain executives who possess exceptional ability, experience and vision to sustain and promote our preeminence in the marketplace. |
• | Motivate and reward the achievement of our short- and long-term goals and operating plans. |
• | Align the interests of our executives with the financial and strategic objectives of our stockholders. |
• | Provide total compensation opportunities that meet the expectations of a highly skilled executive team, are aligned and consistent with our underlying performance, and are competitive with the compensation practices and levels offered by companies with whom we compete for executive talent. |
Abercrombie & Fitch | Nordstrom |
The Gap | Ralph Lauren |
Hudson's Bay | RH (formerly Restoration Hardware) |
J.C. Penney | Tapestry (formerly Coach) |
Kohl’s | Tiffany & Co. |
L Brands | Urban Outfitters |
Macy's | Williams-Sonoma |
Michael Kors |
Fiscal Year 2018 Annualized Base Salary ($) | |||
Geoffroy van Raemdonck (1) | $ | 1,000,000 | |
Adam M. Orvos (1) | 750,000 | ||
James J. Gold | 820,000 | ||
Carrie M. Tharp | 430,000 | ||
T. Dale Stapleton | 397,000 | ||
Joseph N. Weber | 425,000 | ||
Karen W. Katz (2) | 1,100,000 |
(1) | Mr. van Raemdonck joined the Company in February 2018 and Mr. Orvos joined in April 2018. |
(2) | Ms. Katz retired effective February 12, 2018. |
Name | Target Bonus As Percent of Base Salary | Plan Earnings | Sales | ||||||
Geoffroy van Raemdonck (1) | 100 | % | 70 | % | 30 | % | |||
Adam M. Orvos (1) | 75 | % | 70 | % | 30 | % | |||
James J. Gold | 75 | % | 70 | % | 30 | % | |||
Carrie M. Tharp | 40 | % | 70 | % | 30 | % | |||
T. Dale Stapleton | 40 | % | 70 | % | 30 | % | |||
Joseph N. Weber | 40 | % | 70 | % | 30 | % | |||
Karen W. Katz (2) | 125 | % | 70 | % | 30 | % |
(1) | Mr. van Raemdonck joined the Company in February 2018 and Mr. Orvos joined in April 2018. Pursuant to the terms of their respective employment agreements, each was guaranteed to receive an annual bonus for fiscal year 2018 of at least the target level, prorated for the number of days each was employed during fiscal year 2018. |
(2) | Ms. Katz retired effective February 12, 2018. Amount shown above reflects her annual bonus in effect during the term of her employment. In connection with her retirement, the Company and Ms. Katz entered into a retirement agreement, pursuant to which Ms. Katz is entitled to receive a pro-rata portion of her annual bonus in respect of fiscal year 2018, determined based on actual performance and payable at the same time that annual incentive bonuses are |
Payout As Percent of Target | |||
Neiman Marcus Group | |||
Plan Earnings | 173.9 | % | |
Sales | 216.1 | % | |
Total | 186.5 | % |
Name | Annual Incentive Bonus as % of Target | Annual Incentive Bonus Paid | |||||
Geoffroy van Raemdonck (1) | 186.5 | % | $ | 955,433 | |||
Adam M. Orvos (1) | 186.5 | % | 279,627 | ||||
James J. Gold | 186.5 | % | 1,147,257 | ||||
Carrie M. Tharp | 186.5 | % | 320,859 | ||||
T. Dale Stapleton | 186.5 | % | 296,235 | ||||
Joseph N. Weber | 186.5 | % | 317,128 | ||||
Karen W. Katz (2) | 186.5 | % | 1,388,204 |
(1) | Mr. van Raemdonck joined the Company in February 2018 and Mr. Orvos joined in April 2018. Pursuant to the terms of their respective employment agreements, each was guaranteed to receive an annual bonus for fiscal year 2018 of at least the target level, prorated for the number of days each was employed during fiscal year 2018. |
(2) | Amount shown above reflects the pro-rata portion of Ms. Katz’s annual bonus in respect of fiscal year 2018, determined based on actual performance, to which Ms. Katz is entitled pursuant to her retirement agreement with the Company. For a detailed description of the terms of Ms. Katz’s retirement agreement, see “Employment and Other Compensation Agreements” below. |
Name | Target Bonus for Fiscal Year 2018 | Target Bonus for Fiscal Year 2019 | Target Bonus for Fiscal Year 2020 | |||||||||
Geoffroy van Raemdonck | $ | 750,000 | $ | 1,500,000 | $ | 1,750,000 | ||||||
Adam M. Orvos (1) | 400,000 | 900,000 | 1,000,000 | |||||||||
James J. Gold | 500,000 | 1,200,000 | 1,500,000 | |||||||||
Carrie M. Tharp | 300,000 | 800,000 | 900,000 | |||||||||
T. Dale Stapleton | 200,000 | 400,000 | 500,000 | |||||||||
Joseph N. Weber | 300,000 | 500,000 | 600,000 |
(1) | Mr. Orvos's payment under the Mid-Term Cash Incentive Plan for fiscal year 2018 is guaranteed under his employment agreement. |
COMPENSATION COMMITTEE | |
David Kaplan | |
Graeme Eadie |
Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Option Awards ($)(3) | Non-Equity Incentive Plan Compen-sation ($)(4) | Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($)(5) | All Other Compensation ($)(6) | Total ($) | |||||||||||||||||||||||||
Geoffroy van Raemdonck Chief Executive Officer | 2018 | $ | 461,539 | $ | 230,769 | $ | 2,144,000 | $ | 6,126,750 | $ | 1,705,433 | $ | — | $ | 438,203 | $ | 11,106,694 | |||||||||||||||||
Adam M. Orvos Executive Vice President, Chief Financial Officer and Chief Operating Officer | 2018 | 201,923 | 100,000 | 670,000 | 1,259,900 | 679,627 | — | 40,971 | 2,952,421 | |||||||||||||||||||||||||
James J. Gold President, Chief Merchandising Officer | 2018 | 820,000 | — | — | 1,145,238 | 1,647,257 | — | 174,286 | 3,786,781 | |||||||||||||||||||||||||
2017 | 820,000 | 75,000 | 1,999,872 | — | — | — | 144,265 | 3,039,137 | ||||||||||||||||||||||||||
2016 | 820,000 | 50,000 | — | — | — | 219,000 | 157,101 | 1,246,101 | ||||||||||||||||||||||||||
Carrie M. Tharp Executive Vice President, Chief Digital Officer | 2018 | 430,000 | 172,000 | — | 41,228 | 620,859 | — | 36,929 | 1,301,016 | |||||||||||||||||||||||||
2017 | 355,577 | — | 300,288 | 347,644 | — | — | 16,034 | 1,019,543 | ||||||||||||||||||||||||||
T. Dale Stapleton Senior Vice President and Chief Accounting Officer | 2018 | 397,000 | 225,000 | — | 123,635 | 496,235 | — | 93,382 | 1,335,252 | |||||||||||||||||||||||||
2017 | 397,000 | — | 400,128 | — | — | — | 54,249 | 851,377 | ||||||||||||||||||||||||||
Joseph N. Weber Senior Vice President and Chief Human Resources Officer | 2018 | 425,000 | 170,000 | — | 151,900 | 617,128 | — | 63,939 | 1,427,967 | |||||||||||||||||||||||||
Karen W. Katz Former President and Chief Executive Officer | 2018 | 589,283 | — | — | 2,296,515 | — | 52,656 | 4,206,839 | 7,145,293 | |||||||||||||||||||||||||
2017 | 1,100,000 | — | 3,499,776 | — | — | 4,363 | 254,823 | 4,858,962 | ||||||||||||||||||||||||||
2016 | 1,100,000 | — | — | — | — | 905,001 | 274,866 | 2,279,867 |
(1) | The amount for Mr. van Raemdonck for fiscal year 2018 represents the portion of Mr. van Raemdonck’s one-time signing bonus paid in fiscal year 2018. Pursuant to his employment agreement, Mr. van Raemdonck is entitled to a one-time signing bonus of $1,000,000 in the aggregate, payable over 24 months following his commencement of employment, in equal installments in accordance with the general payroll practices of the Company but no less frequently than monthly, and subject to Mr. van Raemdonck’s continued employment with the Company through the applicable payment dates. |
(2) | The amounts listed in this column reflect the aggregate grant date fair value for the applicable awards computed in accordance with ASC Topic 718. The assumptions used in calculating these amounts are described under the caption Stock-Based Awards in Note 13 of the Notes to Consolidated Financial Statements. These amounts reflect the grant date fair value and do not represent the actual value that may be realized by the named executive officers. |
(3) | The amounts listed in this column reflect the aggregate grant date fair value for the applicable awards computed in accordance with ASC Topic 718. The assumptions used in calculating these amounts are described under the caption Stock-Based Awards in Note 13 of the Notes to Consolidated Financial Statements. These amounts reflect the grant date fair value and do not represent the actual value that may be realized by the named executive officers. |
(4) | The amounts reported in the "Non‑Equity Incentive Plan Compensation" column reflect the actual amounts earned under the performance‑based annual cash incentive compensation plans described under “Compensation Discussion and Analysis — Fiscal Year 2018 Named Executive Officer Compensation Program and Decisions — Annual Incentive Bonus” and “Compensation Discussion and Analysis — Fiscal Year 2018 Named Executive Officer Compensation Program and Decisions — Mid-Term Cash Incentive Plan." |
(5) | The amounts in this column represent the change in the actuarial value of the named executive officers’ benefits under our Pension Plan and SERP Plan from July 29, 2017 to July 28, 2018. This “change in the actuarial value” is the difference between the fiscal year 2017 and fiscal year 2018 present value of the pension benefits accumulated as of year-end by the named executive officers, assuming that the benefit is not paid until age 65 in the case of the Pension Plan and age 62 in the case of the SERP Plan. These amounts were computed using the same assumptions used for financial statement reporting purposes under ASC Subtopic 715-30, “Defined Benefit Plans - Pension” as described in Note 10 of the Notes to Consolidated Financial Statements. |
(6) | Includes all items listed in the following table entitled “All Other Compensation.” The value of perquisites and other personal benefits is provided in this column and in the footnotes below even if the amount is less than the reporting threshold established by the SEC. |
All Other Compensation for Fiscal Year 2018 | Geoffroy van Raemdonck ($) | Adam M. Orvos ($) | James J. Gold ($) | Carrie M. Tharp ($) | T. Dale Stapleton ($) | Joseph N. Weber ($) | Karen W. Katz ($) | |||||||||||||||||||||
401(k) plan contributions paid by us | $ | — | $ | — | $ | 20,060 | $ | 13,198 | $ | 12,150 | $ | 12,729 | $ | 8,922 | ||||||||||||||
Deferred compensation plan match | — | — | — | — | — | — | 13,750 | |||||||||||||||||||||
DC SERP contributions paid by us | — | — | 98,042 | — | 54,560 | 34,125 | 75,624 | |||||||||||||||||||||
Group term life insurance | 549 | 722 | 2,351 | 645 | 4,291 | 1,786 | 2,725 | |||||||||||||||||||||
Supplemental executive medical insurance | 6,950 | 4,633 | 13,899 | 13,899 | 13,899 | 13,899 | 8,108 | |||||||||||||||||||||
Financial counseling/tax preparation | — | — | — | 1,965 | 1,794 | — | 3,920 | |||||||||||||||||||||
Long-term disability | 592 | 323 | 1,400 | 1,400 | 1,392 | 1,400 | 817 | |||||||||||||||||||||
New York travel reimbursement (1) | — | — | 7,500 | — | — | — | 15,000 | |||||||||||||||||||||
Tax gross-ups for New York travel (2) | — | — | 5,031 | — | — | — | 11,351 | |||||||||||||||||||||
Tax gross-ups for New York non-resident taxes (3) | — | — | 26,003 | 5,822 | 5,296 | — | 48,853 | |||||||||||||||||||||
Executive coaching services (4) | 30,000 | — | — | — | — | — | — | |||||||||||||||||||||
Relocation expenses (5) | 212,348 | 22,330 | — | — | — | — | — | |||||||||||||||||||||
Tax gross-up for relocation expenses (6) | 135,764 | 12,963 | — | — | — | — | — | |||||||||||||||||||||
Legal fee reimbursement (7) | 52,000 | — | — | — | — | — | — | |||||||||||||||||||||
Payments due upon retirement (8) | — | — | — | — | — | — | 3,907,304 | |||||||||||||||||||||
Director fees (9) | — | — | — | — | — | — | 22,940 | |||||||||||||||||||||
Director option grant (10) | — | — | — | — | — | — | 87,525 | |||||||||||||||||||||
Totals | $ | 438,203 | $ | 40,971 | $ | 174,286 | $ | 36,929 | $ | 93,382 | $ | 63,939 | $ | 4,206,839 |
(1) | The amount for Mr. Gold reflects an annual payment of $7,500 in lieu of reimbursement for New York accommodations pursuant to an arrangement with Mr. Gold. The amounts for Ms. Katz reflects annual payments of $15,000 in lieu of reimbursement for New York accommodations paid pursuant to her employment agreement. |
(2) | The amounts represent the tax gross-ups for income taxes associated with the annual payments to Mr. Gold and Ms. Katz described in the preceding footnote. |
(3) | The amounts shown represent tax gross-up payments made in connection with New York non-resident taxes. |
(4) | The amount represents the cost to the Company of executive coaching services provided to Mr. van Raemdonck pursuant to his employment agreement. |
(5) | The amount represents relocation and temporary living expenses for Mr. van Raemdonck's and Mr. Orvos's moves to Dallas. |
(6) | The amounts shown represent tax gross-up payments made in connection with relocation and temporary living expenses for Mr. van Raemdonck's and Mr. Orvos's moves to Dallas. |
(7) | Represents reimbursement of legal fees incurred by Mr. van Raemdonck in negotiating the terms of his employment agreement. |
(8) | The amount represents amounts payable to Ms. Katz pursuant to her retirement agreement consisting of (i) a lump sum of $2,475,000, (ii) a lump sum amount of 18 times her monthly COBRA premium then in effect and (iii) her prorated annual incentive bonus for fiscal year 2018. Ms. Katz's retirement agreement provides for an additional payment of $1,000,000 to be paid on or before March 14, 2019. |
(9) | The amount represents a prorated portion of Ms. Katz's annual $50,000 retainer in connection with her continued service on the Parent Board following her retirement. |
(10) | The amount represents the aggregate grant date fair value of a grant of 500 time-vested stock options to Ms. Katz in connection her appointment to the Parent Board following her retirement, computed in accordance with ASC Topic 718. The assumptions used in calculating these amounts are described under the caption Stock-Based Awards in Note 13 of the Notes to Consolidated Financial Statements. |
Stock Awards: Number of Shares of Stock (#)(3) | All Other Option Awards | Grant Date Fair Value of Stock and Option Awards ($)(12) | |||||||||||||||||||||||||||||||||||||||||
Estimated Possible Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Possible Future Payouts Under Equity Incentive Plan Awards | Number of Securities Underlying Options (#) | Exercise Or Base Price of Option Awards ($)(11) | ||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold ($) | Target ($) | Maximum ($) | ||||||||||||||||||||||||||||||||||||
Geoffroy van Raemdonck | 2/12/2018 | $ | 461,539 | $ | 461,539 | $ | 1,153,848 | (1 | ) | $ | — | $ | — | $ | — | — | — | $ | — | $ | — | ||||||||||||||||||||||
2/12/2018 | — | 750,000 | — | (2 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
2/12/2018 | 75,000 | 1,500,000 | 3,300,000 | (3 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
2/12/2018 | 87,500 | 1,750,000 | 3,850,000 | (4 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
2/15/2018 | — | — | — | — | — | — | — | 17,500 | (5) | 500.00 | 3,063,375 | ||||||||||||||||||||||||||||||||
2/15/2018 | — | — | — | — | 17,500 | (6 | ) | — | — | — | 500.00 | 3,063,375 | |||||||||||||||||||||||||||||||
2/15/2018 | — | — | — | — | — | — | 8,000 | (7 | ) | — | — | 2,144,000 | |||||||||||||||||||||||||||||||
Adam M. Orvos | 4/23/2018 | 151,442 | 151,442 | 302,885 | (1 | ) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
4/23/2018 | 400,000 | 400,000 | — | (2 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
4/23/2018 | 45,000 | 900,000 | 1,980,000 | (3 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
4/23/2018 | 50,000 | 1,000,000 | 2,200,000 | (4 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
5/3/2018 | — | — | — | — | — | — | — | 5,000 | (5) | 500.00 | 897,250 | ||||||||||||||||||||||||||||||||
5/3/2018 | — | — | — | — | 5,000 | (6 | ) | — | — | — | 1,000.00 | 362,650 | |||||||||||||||||||||||||||||||
5/3/2018 | — | — | — | — | — | — | 2,500 | (7 | ) | — | — | 670,000 | |||||||||||||||||||||||||||||||
James J. Gold | 9/8/2017 | 205,000 | 615,000 | 1,230,000 | (1 | ) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
9/8/2017 | — | — | — | — | — | — | — | 1,375 | (8) | 363.08 | 172,260 | ||||||||||||||||||||||||||||||||
9/8/2017 | — | — | — | — | — | — | — | 4,979 | (8) | 450.26 | 525,683 | ||||||||||||||||||||||||||||||||
9/8/2017 | — | — | — | — | — | — | — | 2,671 | (8) | 644.37 | 218,648 | ||||||||||||||||||||||||||||||||
1/4/2018 | — | 500,000 | — | (2 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
1/4/2018 | 60,000 | 1,200,000 | 2,640,000 | (3 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
1/4/2018 | 75,000 | 1,500,000 | 3,300,000 | (4 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
1/4/2018 | — | — | — | — | — | — | — | 8,068 | (9) | 500.00 | 228,647 | ||||||||||||||||||||||||||||||||
Carrie M. Tharp | 9/8/2017 | 43,000 | 172,000 | 344,000 | (1 | ) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
1/4/2018 | — | 300,000 | — | (2 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
1/4/2018 | 40,000 | 800,000 | 1,760,000 | (3 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
1/4/2018 | 45,000 | 900,000 | 1,980,000 | (4 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
1/4/2018 | — | — | — | — | — | — | — | 1,100 | (9) | 500.00 | 41,228 | ||||||||||||||||||||||||||||||||
T. Dale Stapleton | 9/8/2017 | 39,700 | 158,800 | 317,600 | (1 | ) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
9/8/2017 | — | — | — | — | — | — | — | 428 | (8) | 271.27 | 53,992 | ||||||||||||||||||||||||||||||||
9/8/2017 | — | — | — | — | — | — | — | 287 | (8) | 347.40 | 36,182 | ||||||||||||||||||||||||||||||||
1/4/2018 | — | 200,000 | — | (2 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
1/4/2018 | 20,000 | 400,000 | 880,000 | (3 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
1/4/2018 | 25,000 | 500,000 | 1,100,000 | (4 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
1/4/2018 | — | — | — | — | — | — | — | 1,120 | (9) | 500.00 | 33,461 | ||||||||||||||||||||||||||||||||
Joseph N. Weber | 9/8/2017 | 42,500 | 170,000 | 340,000 | (1 | ) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
9/8/2017 | — | — | — | — | — | — | — | 1,298 | (8) | 576.59 | 113,783 | ||||||||||||||||||||||||||||||||
1/4/2018 | — | 300,000 | — | (2 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
1/4/2018 | 25,000 | 500,000 | 1,100,000 | (3 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
1/4/2018 | 30,000 | 600,000 | 1,320,000 | (4 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
1/4/2018 | — | — | — | — | — | — | — | 1,345 | (9) | 500.00 | 38,117 | ||||||||||||||||||||||||||||||||
Karen W. Katz | 9/8/2017 | 550,000 | 1,375,000 | 2,750,000 | (1 | ) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
9/8/2017 | — | — | — | — | — | — | — | 5,699 | (8) | 363.08 | 713,971 | ||||||||||||||||||||||||||||||||
9/8/2017 | — | — | — | — | — | — | — | 9,211 | (8) | 450.26 | 972,497 | ||||||||||||||||||||||||||||||||
9/8/2017 | — | — | — | — | — | — | — | 4,556 | (8) | 644.37 | 372,954 | ||||||||||||||||||||||||||||||||
3/7/2018 | — | — | — | — | — | — | — | 8,366 | (9) | 500.00 | 237,092 | ||||||||||||||||||||||||||||||||
3/7/2018 | — | — | — | — | — | — | — | 500 | (10) | 500.00 | 87,525 |
(1) | Awards represent the threshold, target and maximum opportunities under our performance‑based annual incentive bonus program for fiscal year 2018. The actual amounts earned under this program are disclosed in the Summary Compensation Table. For a detailed discussion of the annual incentive awards for fiscal year 2018, see “Compensation Discussion and Analysis — Fiscal Year 2018 Named Executive Officer Compensation Program and Decisions — Annual Incentive Bonus.” Mr. van Raemdonck’s and Mr. Orvos’s respective employment agreements provide a guarantee for fiscal year 2018 pursuant to which each would receive the greater of (i) the target bonus amount or (ii) the actual earned amount, in each case prorated for the number of days of their employment during fiscal year 2018. A pro-rata portion of Ms. Katz’s target bonus amount was paid to her in connection with her retirement pursuant to the terms of her retirement agreement. The material terms of the annual incentive bonus program are described in greater detail below. |
(2) | Awards represent the target payments under the Mid-Term Cash Incentive Plan for fiscal year 2018. The actual amounts earned under this plan for fiscal 2018 are disclosed in the Summary Compensation Table. For a detailed discussion of these awards, see “Compensation Discussion and Analysis — Fiscal Year 2018 Named Executive Officer Compensation Program and Decisions — Mid-Term Cash Incentive Plan." |
(3) | Awards represent the threshold, target and maximum payments under the Mid-Term Cash Incentive Plan for fiscal year 2019. For a detailed discussion of these awards, see “Compensation Discussion and Analysis — Fiscal Year 2018 Named Executive Officer Compensation Program and Decisions — Mid-Term Cash Incentive Plan." |
(4) | Awards represent the threshold, target and maximum payments under the Mid-Term Cash Incentive Plan for fiscal year 2020. For a detailed discussion of these awards, see “Compensation Discussion and Analysis — Fiscal Year 2018 Named Executive Officer Compensation Program and Decisions — Mid-Term Cash Incentive Plan." |
(5) | Represents time‑vested stock options granted to Messrs. van Raemdonck and Orvos upon their commencement of employment. The time‑vested stock options vest 25% on each of the first four anniversaries of the recipient’s start date, resulting in the stock options becoming fully vested on the fourth anniversary date of the start date, and expire on the tenth anniversary of the grant date, as described in greater detail below. |
(6) | Represents performance‑vested stock options granted to Messrs. van Raemdonck and Orvos upon their commencement of employment. The performance‑vested stock options expire on the tenth anniversary of the grant date. The performance‑vested stock options vest on the achievement of certain performance hurdles, which are described in greater detail below. |
(7) | Represents the number of restricted shares granted to Messrs. van Raemdonck and Orvos upon their commencement of employment. The vesting and other material terms applicable to such restricted shares are described in greater detail below. |
(8) | In September 2017, the Compensation Committee approved stock option grants of New Co-Invest Options to Mr. Gold, Mr. Stapleton, Mr. Weber and Ms. Katz, the named executive officers who previously held Co-Invest Options in respect of Parent common stock. The New Co-Invest Options replaced the Co-Invest Options previously held by Mr. Gold, Mr. Stapleton, Mr. Weber and Ms. Katz, which were cancelled upon the grant of the New Co-Invest Options. The term of the New Co-Invest Options expire on the tenth anniversary of their grant date. Amounts reported for these individuals for fiscal year 2018 include the incremental fair value of the New Co-Invest Options. |
(9) | Represents time‑vested stock options initially granted at exercise prices of $1,000 under the Management Equity Incentive Plan and amended in January 2018 as described in greater detail below. |
(10) | Represents a grant of time-vested stock options granted under the Management Equity Incentive Plan in connection with Ms. Katz’s continued service on the Parent Board following her retirement as our Chief Executive Officer in fiscal year 2018. The stock options will vest in five equal installments on the first five anniversaries of the grant date, subject to Ms. Katz’s continued service on the Parent Board. |
(11) | Because we were privately held and there was no public market for Parent common stock, the exercise price of the stock options was determined by the Parent Board or Compensation Committee, as applicable, at the time stock option grants are awarded and was determined to be in excess of the fair market value of Parent common stock as of the grant date. In determining the fair market value of Parent common stock, the Parent Board or the Compensation Committee, as applicable, considered such factors as any recent transactions involving Parent common stock, our actual and projected financial results, the principal amount of our indebtedness, valuations of us performed by third parties and other factors it believes are material to the valuation process. |
(12) | For stock option and restricted share awards or modifications in fiscal year 2018, these amounts reflect the aggregate grant date or incremental fair value for the awards computed in accordance with ASC Topic 718. The assumptions |
Option Awards | Stock Awards | |||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Awards (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares of Stock that Have Not Vested (#) | Fair Market Value of Shares of Stock that Have Not Vested ($) | |||||||||||||||||||
Geoffroy van Raemdonck | — | 17,500 | (1) | — | 500.00 | (1) | 2/12/2028 | — | — | |||||||||||||||||
— | — | 17,500 | (2) | 500.00 | (2) | 2/12/2028 | — | — | ||||||||||||||||||
— | — | — | — | — | 8,000 | (3) | 3,200,000 | (4 | ) | |||||||||||||||||
Adam M. Orvos | — | 5,000 | (1) | — | 500.00 | (1) | 4/25/2028 | — | — | |||||||||||||||||
— | — | 5,000 | (2) | 1,000.00 | (2) | 4/25/2028 | — | — | ||||||||||||||||||
— | — | — | — | — | 2,500 | (3) | 1,000,000 | (4 | ) | |||||||||||||||||
James J. Gold | 1,375 | — | (5) | — | 363.08 | (5) | 9/8/2027 | — | — | |||||||||||||||||
4,979 | — | (5) | — | 450.26 | (5) | 9/8/2027 | — | — | ||||||||||||||||||
2,671 | — | (5) | — | 644.37 | (5) | 9/8/2027 | — | — | ||||||||||||||||||
6,454 | 1,614 | (1) | — | 500.00 | (1) | 11/5/2023 | — | — | ||||||||||||||||||
— | — | 8,067 | (2) | 1,000.00 | (2) | 11/5/2023 | — | — | ||||||||||||||||||
— | — | — | — | — | 1,953 | (6) | 781,200 | (4 | ) | |||||||||||||||||
Carrie M. Tharp | — | 1,100 | (1) | — | 500.00 | (1) | 10/27/2026 | — | — | |||||||||||||||||
— | — | 1,100 | (2) | 1,000.00 | 10/27/2026 | — | — | |||||||||||||||||||
— | — | — | — | — | 261 | (6) | 104,400 | (4 | ) | |||||||||||||||||
T. Dale Stapleton | 428 | — | (5) | — | 271.27 | (5) | 9/8/2027 | — | — | |||||||||||||||||
287 | — | (5) | — | 347.40 | (5) | 9/8/2027 | — | — | ||||||||||||||||||
896 | 224 | (1) | 500.00 | (1) | 11/5/2023 | — | — | |||||||||||||||||||
— | — | 1,120 | (2) | 1,000.00 | (2) | 11/5/2023 | — | — | ||||||||||||||||||
— | — | — | — | — | 348 | (6) | 139,200 | (4 | ) | |||||||||||||||||
Joseph N. Weber | 1,298 | — | (5) | — | 576.59 | (5) | 9/8/2027 | — | — | |||||||||||||||||
1,076 | 269 | (1) | 500.00 | (1) | 11/5/2023 | — | — | |||||||||||||||||||
— | — | 1,344 | (2) | 1,000.00 | (2) | 11/5/2023 | — | — | ||||||||||||||||||
— | — | — | — | — | 434 | (6) | 173,600 | (4 | ) | |||||||||||||||||
Karen W. Katz | 5,699 | — | (5) | — | 363.08 | (5) | 9/8/2027 | — | — | |||||||||||||||||
9,211 | — | (5) | — | 450.26 | (5) | 9/8/2027 | — | — | ||||||||||||||||||
4,556 | — | (5) | — | 644.37 | (5) | 9/8/2027 | — | — | ||||||||||||||||||
8,366 | — | (1) | — | 500.00 | (1) | 11/5/2023 | — | — | ||||||||||||||||||
— | 500 | (7) | — | 500.00 | (7) | 2/12/2028 | — | — |
(1) | Non‑qualified stock options designated as time‑vested stock options granted pursuant to the Management Equity Incentive Plan. Each grant of time‑vested stock options consists of options to purchase an equal number of shares of Class A Common Stock and Class B Common Stock. Subject to continued employment, the time-vested stock options vest and become exercisable in annual installments on each of the first five anniversaries of the vesting commencement date, or first four anniversaries in the case of Messrs. van Raemdonck and Orvos. For Messrs. van Raemdonck and Orvos and Ms. Tharp, the vesting commencement date is their respective start dates and for the other named executive officers, who were employed with us at the time of the Acquisition, the Acquisition closing date of October 28, 2013. |
(2) | Stock options designated as performance‑vested stock options granted pursuant to the Management Equity Incentive Plan. The performance‑vested stock options vest on the achievement of certain performance hurdles. The performance‑vested stock options held by named executive officers other than Mr. van Raemdonck vest when the amount of capital returned to the Sponsors (at least 50% of which is in cash) exceeds the applicable multiple of the capital invested by the Sponsors, and the internal rate of return exceeds ten percent (except that Mr. van Raemdonck’s stock options are not subject to the internal rate of return metric). The applicable multiple with respect to 40% of the performance‑vested stock options is 1.5x, with respect to 30% of the performance‑vested stock options is 1.75x and with respect to 30% of the performance‑vested stock options is 2.25x. For Mr. van Raemdonck, the applicable multiple with respect to 40% of the performance-vested stock options is 1.0x; with respect to 30% of the performance-vested stock options is 1.5x; and with respect to 30% of the performance-vested stock options is 2.0x. If the named executive officer’s employment is terminated by us without cause or by the named executive officer for good reason, the performance-vested stock options will be eligible to vest in connection with a change in control or initial public offering for (i) 180 days following termination in the case of Messrs. van Raemdonck and Gold and (ii) 30 days following such termination for the other named executive officers. Each grant of performance‑vested stock options consists of options to purchase an equal number of shares of Class A Common Stock and Class B Common Stock. |
(3) | Restricted shares granted at the respective named executive officer's commencement of employment. These restricted shares vest, subject to continued employment, in equal annual installments on the first four anniversaries of the commencement of employment. |
(4) | There is no public market for Parent's common stock. Amounts reported in this column are based on the fair market value of Class A Common Stock and Class B Common Stock as of July 28, 2018. |
(5) | In September 2017, the Compensation Committee approved stock option grants of New Co-Invest Options to Mr. Gold, Mr. Stapleton, Mr. Weber and Ms. Katz, the named executive officers who previously held Co-Invest Options in respect of Parent common stock. The New Co-Invest Options replaced the Co-Invest Options previously held by Mr. Gold, Mr. Stapleton, Mr. Weber and Ms. Katz, which were cancelled upon the grant of the New Co-Invest Options. The term of the New Co-Invest Options expire on the tenth anniversary of their grant date. The New Co-Invest Options are fully vested and exercisable at any time prior to the expiration date. |
(6) | Restricted shares held by Messrs. van Raemdonck and Orvos vest in four equal annual installments on each of the first four anniversaries of their respective hire dates. Restricted shares held by Mr. Gold vest in four equal annual installments on each of the first four anniversaries of December 1, 2016. Restricted shares held by Ms. Tharp, Mr. Weber and Mr. Stapleton vest in three equal annual installments on each of the first three anniversaries of December 1, 2016. |
(7) | Upon her retirement, Ms. Katz was granted 500 time-vested stock options at an exercise price of $500 in connection with her continued service on the Parent Board. |
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||||||||||
Geoffroy van Raemdonck | — | $ | — | — | $ | — | ||||||||||
Adam M. Orvos | — | — | — | — | ||||||||||||
James J. Gold | — | — | 651 | (1) | 174,468 | (2) | ||||||||||
Carrie M. Tharp | — | — | 130 | (1) | 34,840 | (2) | ||||||||||
T. Dale Stapleton | — | — | 173 | (1) | 46,364 | (2) | ||||||||||
Joseph N. Weber | — | — | 217 | (1) | 58,156 | (2) | ||||||||||
Karen W. Katz | — | — | 2,278 | (3) | 610,504 | (2) |
(1) | Represents proportionate time-based vesting on December 1, 2017 in accordance with the terms of restricted share awards granted on October 27, 2016. |
(2) | There is no public market for our common stock. Amounts reported in this column are based on the fair market value of our Class A Common Stock and Class B Common Stock as of the vesting date of December 1, 2017 and Ms. Katz's retirement date of February 12, 2018, as applicable. |
(3) | 1,139 restricted shares held by Ms. Katz, which represents 25% of her award, vested on December 1, 2017 in accordance with the terms of her restricted share award granted October 27, 2016. Pursuant to her retirement agreement, the vesting of an additional 1,139 restricted shares was accelerated on February 12, 2018, the effective date of her retirement. The remaining 2,279 unvested restricted shares were forfeited. |
Name | Plan Name | Number of Years Credited Service (#)(1) | Normal Retirement Present Value of Accumulated Benefit ($)(2) | Early Retirement Present Value of Accumulated Benefit under SERP Plan (Age 62 Retirement) ($)(3) | Payments During Last Fiscal Year ($) | ||||||||||||||
Geoffroy van Raemdonck | Pension Plan | — | $ | — | $ | — | $ | — | |||||||||||
SERP Plan | — | — | — | — | |||||||||||||||
Adam M. Orvos | Pension Plan | — | — | — | — | ||||||||||||||
SERP Plan | — | — | — | — | |||||||||||||||
James J. Gold | Pension Plan | 17 | (4) | 256,000 | N/A | — | |||||||||||||
SERP Plan | 17 | (4) | 739,000 | 889,000 | — | ||||||||||||||
Carrie M. Tharp | Pension Plan | — | — | — | — | ||||||||||||||
SERP Plan | — | — | — | — | |||||||||||||||
T. Dale Stapleton | Pension Plan | 6 | (4) | 183,000 | N/A | — | |||||||||||||
SERP Plan | 6 | (4) | 130,000 | 156,000 | — | ||||||||||||||
Joseph N. Weber | Pension Plan | — | — | — | — | ||||||||||||||
SERP Plan | — | — | — | — | |||||||||||||||
Karen W. Katz | Pension Plan | 25 | (5) | 595,000 | N/A | — | |||||||||||||
SERP Plan | 26 | (5) | 5,039,000 | 6,230,000 | — |
(1) | Computed as of July 28, 2018, which is the same pension measurement date used for financial statement reporting purposes with respect to our Consolidated Financial Statements and notes thereto. |
(2) | For purposes of calculating the amounts in this column, retirement age was assumed to be (i) with respect to the Pension Plan, the normal retirement age of the later of age 65 or the fifth anniversary of the individual’s "date of hire," as defined in the Pension Plan and (ii) with respect to the SERP Plan, age 65, the normal retirement age with respect to the SERP Plan. A description of the valuation method and all material assumptions applied in quantifying the present value of accumulated benefit is set forth in Note 10 of the Notes to Consolidated Financial Statements. |
(3) | For purposes of calculating the amounts in this column for the SERP Plan, retirement age was assumed to be age 62, at which age a participant may retire and receive an unreduced benefit. A description of the valuation method and all material assumptions applied in quantifying the present value of accumulated benefit is set forth in Note 10 of the Notes to Consolidated Financial Statements. |
(4) | Effective December 31, 2007, benefit accruals for Mr. Gold and Mr. Stapleton under the Pension Plan and the SERP Plan were frozen, as further described below. |
(5) | Ms. Katz’s service credit exceeds the 25-year maximum set forth in the SERP Plan. Pursuant to an agreement with us, Ms. Katz was entitled to an additional year of credit for each full year of service after she reached the 25-year maximum until December 31, 2010, with all service frozen as of such date. In addition, pursuant to her retirement agreement and the SERP Plan, Ms. Katz's SERP Plan benefit was not reduced, notwithstanding Ms. Katz not having reached the normal retirement age under the SERP Plan (age 65) on the date of her retirement. Ms. Katz’s employment agreement also provided that the amount credited to her under the DC SERP shall not be less than the present value of the additional benefits she would have accrued under the SERP Plan after December 31, 2010 had the SERP Plan remained in effect through the end of her employment term. The value of Ms. Katz’s benefit with all service is $6,230,000. The value with 25 years of service under the SERP Plan is $5,961,000; therefore, the value of the additional year of service in excess of her actual service is $269,000. |
Name | Executive Contributions in Last Fiscal Year ($)(1) | Registrant Contributions in Last Fiscal Year ($) | Aggregate Earnings in Last Fiscal Year ($) | Aggregate Withdrawals / Distributions ($) | Aggregate Balance at Last Fiscal Year- End ($) | ||||||||||||||||
Geoffroy van Raemdonck | KEDC | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
DC SERP (2) | — | — | — | — | — | ||||||||||||||||
Adam M. Orvos | KEDC | — | — | — | — | — | |||||||||||||||
DC SERP (2) | — | — | — | — | — | ||||||||||||||||
James J. Gold | KEDC | — | — | — | — | — | |||||||||||||||
DC SERP | — | 98,042 | 20,826 | — | 531,579 | ||||||||||||||||
Carrie M. Tharp | KEDC | — | — | — | — | — | |||||||||||||||
DC SERP | — | — | — | — | — | ||||||||||||||||
T. Dale Stapleton | KEDC | — | — | — | — | — | |||||||||||||||
DC SERP | — | 54,560 | 5,399 | — | 147,874 | ||||||||||||||||
Joseph N. Weber | KEDC | — | — | — | — | — | |||||||||||||||
DC SERP | — | 34,125 | 4,004 | — | 106,071 | ||||||||||||||||
Karen W. Katz | KEDC (3) | 69,010 | 13,750 | 30,825 | 835,055 | — | |||||||||||||||
DC SERP (4) | — | 75,624 | 35,663 | 179,134 | 730,785 |
(1) | The amounts reported as Executive Contributions in Last Fiscal Year are also included as Salary in the Summary Compensation Table. |
(2) | Mr. van Raemdonck and Mr. Orvos will become eligible to participate in the DC SERP in January 2020, the first January after the one-year anniversary of their respective start dates. |
(3) | Ms. Katz's entire balance under the KEDC Plan was paid to her in a lump sum distribution in May 2018 pursuant her election in accordance with the plan's terms. |
(4) | Pursuant to Ms. Katz’s election in accordance with the plan’s terms, her DC SERP balance will be paid in five equal annual installments, with the first installment paid in February 2018 and the remaining installments paid in February of each of the four subsequent calendar years. |
Executive Benefits and Payments Upon Separation | Retirement ($) | Termination due to death ($)(1) | Termination due to disability ($)(2) | Termination without cause or for good reason ($)(3) | Change in Control ($)(4) | |||||||||||||||
Compensation: | ||||||||||||||||||||
Severance | $ | — | $ | — | $ | — | $ | 2,000,000 | $ | — | ||||||||||
Bonus | — | 461,539 | 461,539 | 461,539 | — | |||||||||||||||
Option Acceleration(5) | — | — | — | — | — | |||||||||||||||
Restricted Stock Acceleration(6) | — | — | — | — | 3,200,000 | |||||||||||||||
Benefits & Perquisites: | ||||||||||||||||||||
DC SERP | — | — | — | — | — | |||||||||||||||
Long-Term Disability | — | — | 240,000 | — | — | |||||||||||||||
Health and Welfare Benefits | — | — | — | 59,607 | — | |||||||||||||||
Life Insurance Benefits | — | 1,000,000 | — | 2,418 | — | |||||||||||||||
Total | $ | — | $ | 1,461,539 | $ | 701,539 | $ | 2,523,564 | $ | 3,200,000 |
(1) | Represents Mr. van Raemdonck's target bonus (prorated for the number of days employed in fiscal year 2018 and payable in a lump sum) and a lump sum basic life insurance benefit payment of $1,000,000 payable by the Company’s life insurance provider to Mr. van Raemdonck's beneficiaries upon his death. |
(2) | Represents Mr. van Raemdonck's target bonus (prorated for the number of days employed in fiscal year 2018 and payable in a lump sum) and long-term disability payments of $20,000 per month for 12 months payable from the Company’s long-term disability insurance provider. |
(3) | Represents a lump sum payment of (i) one times target bonus, prorated for the number of days employed in fiscal year 2018, and (ii) one times base salary plus an additional one times target bonus (payable in a lump sum). The amount included for health and welfare benefits represents a lump-sum payment equal to the value of 18 months of COBRA premiums. Calculations were based on COBRA rates currently in effect. The amount included for life insurance represents coverage for a period of two years at the same benefit level in effect at the time of termination. Also see “Employment and Other Compensation Agreements” in this section. |
(4) | Represents full acceleration of Mr. van Raemdonck's time-vested stock options and restricted shares (applicable only in connection with a termination by the Company without cause or by Mr. van Raemdonck for good reason within 24 months following a change in control). In connection with such a termination, Mr. van Raemdonck would also receive (without duplication) the amounts described in the column under the heading "Termination without cause or for good reason". |
(5) | As of July 28, 2018, the fair market value of Parent common stock underlying Mr. van Raemdonck's options was lower than the exercise price of such options. |
(6) | Amounts reported are based on the fair market value of Class A Common Stock and Class B Common Stock as of July 28, 2018. |
Executive Benefits and Payments Upon Separation | Retirement ($) | Termination due to death ($)(1) | Termination due to disability ($)(2) | Termination without cause or for good reason ($)(3) | Change in Control ($) | |||||||||||||||
Compensation: | ||||||||||||||||||||
Severance | $ | — | $ | — | $ | — | $ | 750,000 | $ | — | ||||||||||
Bonus | — | — | — | 279,627 | — | |||||||||||||||
Benefits & Perquisites: | ||||||||||||||||||||
Long-Term Disability | — | — | 240,000 | — | — | |||||||||||||||
Health and Welfare Benefits | — | — | — | 59,603 | — | |||||||||||||||
Life Insurance Benefits | — | 1,000,000 | — | — | — | |||||||||||||||
Total | $ | — | $ | 1,000,000 | $ | 240,000 | $ | 1,089,230 | $ | — |
(1) | Represents a lump sum basic life insurance benefit payment of $1,000,000 payable by the Company’s life insurance provider to Mr. Orvos's beneficiaries upon his death. |
(2) | Represents long‑term disability payments of $20,000 per month for 12 months payable from the Company’s long‑term disability insurance provider. |
(3) | Represents 1 times Mr. Orvos's base salary and a prorated annual incentive bonus for the year of termination. Mr. Orvos is also entitled to the value of 18 months of COBRA premiums. Calculations were based on COBRA rates currently in effect. See “Employment and Other Compensation Agreements” in this section. |
Executive Benefits and Payments Upon Separation | Retirement ($)(1) | Termination due to death ($)(2) | Termination due to disability ($)(3) | Termination without cause or for good reason ($)(4) | Change in Control ($)(5) | |||||||||||||||
Compensation: | ||||||||||||||||||||
Severance | $ | — | $ | — | $ | — | $ | 2,152,500 | $ | — | ||||||||||
Bonus | — | 615,000 | 615,000 | 615,000 | — | |||||||||||||||
Benefits & Perquisites: | ||||||||||||||||||||
DC SERP | 531,579 | 531,579 | 531,579 | 531,579 | 531,579 | |||||||||||||||
Long-Term Disability | — | — | 240,000 | — | — | |||||||||||||||
Health and Welfare Benefits | — | — | — | 59,607 | — | |||||||||||||||
Life Insurance Benefits | — | 1,000,000 | — | — | — | |||||||||||||||
Total | $ | 531,579 | $ | 2,146,579 | $ | 1,386,579 | $ | 3,358,686 | $ | 531,579 |
(1) | Represents a lump sum payout under the deferred compensation plan. See “Non-qualified Deferred Compensation” for a more detailed discussion. |
(2) | Represents Mr. Gold’s target bonus, a lump sum payout under the defined contribution plan and a lump sum basic life insurance benefit payment of $1,000,000 payable by the Company’s life insurance provider to Mr. Gold’s beneficiaries upon his death. |
(3) | Represents Mr. Gold’s target bonus, lump sum payout under the defined contribution plan, and long‑term disability payments of $20,000 per month for 12 months payable from the Company’s long‑term disability insurance provider. |
(4) | Represents 1.5 times Mr. Gold’s base salary and target bonus, an additional one times target bonus, a payout under the defined contribution plan, and 18 months of COBRA premiums. Calculations were based on COBRA rates currently in effect. All these amounts are payable in a lump sum except for the salary payment to the extent that it is not subject to a particular exemption from Section 409A of the Code, in which case the non‑exempt portion will be paid in installments. See “Employment and Other Compensation Agreements” in this section. |
(5) | Represents a lump sum payout under the defined contribution plan. |
Executive Benefits and Payments Upon Separation | Retirement ($)(1) | Termination due to death ($)(1)(2) | Termination due to disability ($)(1)(3) | Termination without cause or for good reason ($)(1)(4) | Change in Control ($)(1)(5) | |||||||||||||||
Carrie M. Tharp | ||||||||||||||||||||
Compensation: | ||||||||||||||||||||
Severance | $ | — | $ | — | $ | — | $ | 430,000 | $ | — | ||||||||||
Benefits & Perquisites: | ||||||||||||||||||||
DC SERP | — | — | — | — | — | |||||||||||||||
Long-Term Disability | — | — | 240,000 | — | — | |||||||||||||||
Health and Welfare Benefits | — | — | — | 30,843 | — | |||||||||||||||
Life Insurance Benefits | — | 860,000 | — | — | — | |||||||||||||||
Total | $ | — | $ | 860,000 | $ | 240,000 | $ | 460,843 | $ | — | ||||||||||
T. Dale Stapleton | ||||||||||||||||||||
Compensation: | ||||||||||||||||||||
Severance | $ | — | $ | — | $ | — | $ | 595,500 | $ | — | ||||||||||
Benefits & Perquisites: | ||||||||||||||||||||
DC SERP | 147,874 | 147,874 | 147,874 | 147,874 | 147,874 | |||||||||||||||
Long-Term Disability | — | — | 240,000 | — | — | |||||||||||||||
Health and Welfare Benefits | — | — | — | 32,963 | — | |||||||||||||||
Life Insurance Benefits | — | 1,000,000 | — | — | — | |||||||||||||||
Total | $ | 147,874 | $ | 1,147,874 | $ | 387,874 | $ | 776,337 | $ | 147,874 | ||||||||||
Joseph N. Weber | ||||||||||||||||||||
Compensation: | ||||||||||||||||||||
Severance | $ | — | $ | — | $ | — | $ | 637,500 | $ | — | ||||||||||
Benefits & Perquisites: | ||||||||||||||||||||
DC SERP | 106,071 | 106,071 | 106,071 | 106,071 | 106,071 | |||||||||||||||
Long-Term Disability | — | — | 240,000 | — | — | |||||||||||||||
Health and Welfare Benefits | — | — | — | 46,265 | — | |||||||||||||||
Life Insurance Benefits | — | 1,000,000 | — | — | — | |||||||||||||||
Total | $ | 106,071 | $ | 1,106,071 | $ | 346,071 | $ | 789,836 | $ | 106,071 |
(1) | Represents a lump sum payout under the defined contribution plan. See “Non-qualified Deferred Compensation” for a detailed discussion. |
(2) | Represents a lump sum basic life insurance benefit payment of $860,000 to Ms. Tharp and $1,000,000 to Mr. Stapleton and Mr. Weber payable by the Company’s life insurance provider upon their death and a lump sum payout under the defined contribution plan. |
(3) | Represents long-term disability payments of $20,000 per month for 12 months payable from the Company’s long-term disability insurance provider and a lump sum payout under the defined contribution plan. |
(4) | Represents a lump sum payment of 1 times base salary for Ms. Tharp and 1.5 times base salary for Mr. Stapleton and Mr. Weber. The amount included for health and welfare benefits represents a continuation of COBRA benefits for a period of 12 months for Ms. Tharp and 18 months for Mr. Stapleton and Mr. Weber. Calculations were based on COBRA rates currently in effect. See “Employment and Other Compensation Agreements” in this section. |
(5) | Represents a lump sum payout under the DC SERP. |
Executive Benefits and Payments Upon Separation | Retirement ($)(1) | |||
Compensation: | ||||
Retirement Payment | $ | 2,100,000 | ||
Bonus | 1,375,000 | |||
Prorated Bonus | 1,388,204 | |||
Restricted Stock Acceleration(2) | 305,252 | |||
Benefits & Perquisites: | ||||
SERP Enhancement | 183,000 | |||
DC SERP | 909,919 | |||
Deferred Compensation Plan | 835,055 | |||
Long-Term Disability | — | |||
Health and Welfare Benefits | 60,448 | |||
Life Insurance Benefits | — | |||
Total | $ | 7,156,878 |
(1) | Pursuant to Ms. Katz's retirement agreement, amount represents (i) a lump sum payment of one times the sum of base salary and target bonus payable, (ii) an additional $1,000,000 payable on or before March 14, 2019, (iii) prorated bonus for fiscal year 2018, (iv) 12 months acceleration of Ms. Katz's restricted shares, (v) the SERP benefit level enhancement provided in Ms. Katz's employment agreement, (vi) a lump sum payout under the deferred compensation plans and (vii) a lump sum cash payment representing 18 months of COBRA reimbursement. See “Non-qualified Deferred Compensation” for a more detailed discussion of the deferred compensation plans. In addition, pursuant to her retirement agreement and the SERP Plan, Ms. Katz’s SERP Plan benefit will not be reduced solely by reason of her failure to reach age 65 on the date of her retirement. |
(2) | Amount reported is based on the fair market value of Class A Common Stock and Class B Common Stock as of Ms. Katz's retirement date of February 12, 2018. |
Name | Fees Earned or Paid in Cash ($) (1) | Option Awards ($)(2) | Restricted Stock Awards ($) (3) | Total ($) | |||||||||||
Nora A. Aufreiter | $ | 54,670 | $ | 11,507 | $ | 53,600 | $ | 119,777 | |||||||
Norman H. Axelrod | 54,670 | 11,507 | 53,600 | 119,777 | |||||||||||
Philippe E. Bourguignon | 54,670 | 11,892 | 53,600 | 120,162 | |||||||||||
Graeme M. Eadie | 49,038 | — | — | 49,038 | |||||||||||
Alan J. Herrick | 14,011 | 251,230 | 67,000 | 332,241 | |||||||||||
Karen W. Katz (4) | 22,940 | 87,525 | — | 110,465 |
(1) | For Ms. Aufreiter, Mr. Axelrod and Mr. Bourguignon, amount reflects a $50,000 annual retainer through May 22, 2018, at which time the annual retainer was increased to $75,000. For Mr. Eadie, reflects the prorated portion of a $150,000 annual retainer from April 1, 2018, which is the effective date of his retirement from CPPIB, one of our Sponsors, and at which time he began receiving a board service retainer from us. For Ms. Katz, amount reflects a prorated portion of a $50,000 annual retainer from February 12, 2018, the effective date of her retirement as CEO. |
(2) | As of the end of fiscal year 2018, each of Ms. Aufreiter, Mr. Axelrod and Mr. Bourguignon holds 393 time‑vested stock options with an exercise price of $500, of which 314 of which are vested, and 393 performance‑vested stock options, none of which are vested at an exercise price of $1,000, to purchase Parent common stock. Amounts in this column for these individuals reflect the incremental fair value of the repricing of their time-vested stock options to $500 per share on January 4, 2018, computed in accordance with ASC Topic 718. The assumptions used in calculating these amounts are described under the caption Stock-Based Awards in Note 13 of the Notes to Consolidated Financial Statements. |
(3) | On May 22, 2018, Ms. Aufreiter, Mr. Axelrod and Mr. Bourguignon were each granted 200 restricted shares and Mr. Herrick was granted 250 restricted shares. These restricted shares vest in four equal annual installments beginning on May 22, 2019. The terms are substantially similar to the terms of our other restricted share awards except that the director share awards do not have a put right. As of the end of fiscal year 2018, each of Ms. Aufreiter, Mr. Axelrod, Mr. Bourguignon and Mr. Herrick holds 200, 200, 200, and 250 restricted shares, respectively. Amounts in this column reflect the grant date fair value computed in accordance with ASC Topic 718. The assumptions used in calculating these amounts are described under the caption Stock-Based Awards in Note 13 of the Notes to Consolidated Financial Statements. |
(4) | Board retainer fees and the grant date fair value of option awards received by Ms. Katz are also reported in “All Other Compensation” column of the Summary Compensation Table. Pursuant to her board service agreement with the Company, during the term of her service as a director, Ms. Katz is entitled to participate in either the Company’s medical and executive medical plans or under separate arrangements that provide her with comparable benefits. The Company did not incur any expenses in fiscal year 2018 with respect to such entitlement. |
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | ||||||||
(a) | (b) | (c) | |||||||||
Equity compensation plans approved by stockholders | 183,506 | (1) | $ | 597.43 | 58,119 | (1) | |||||
Equity compensation plans not approved by stockholders | — | — | — | ||||||||
Total | 183,506 | $ | 597.43 | 58,119 |
(1) | This number represents shares of Class A Common Stock and Class B Common Stock issuable under the Management Equity Incentive Plan that was approved by holders of a majority of the shares of Parent common stock on October 25, 2013 and the NM Mariposa Holdings, Inc. Vice President Long Term Incentive Plan (the "VP Long Term Incentive Plan") that was approved by a majority of the shares of Parent common stock on February 25, 2014. The Management Incentive Plan became effective on October 25, 2013 and will expire on October 25, 2023 and the VP Long Term Incentive Plan became effective on February 25, 2014 and will expire on February 25, 2024. |
Name of Beneficial Owner (1)(2) | Number of Shares of Class A Common Stock Beneficially Owned | Percent of Class A Common Stock Beneficially Owned | Number of Shares of Class B Common Stock Beneficially Owned | Percent of Class B Common Stock Beneficially Owned | ||||||||
Affiliates of Ares Management, L.P. (3) | 929,454 | 58.74 | % | 1,152,504 | (4) | 72.83 | % | |||||
CPP Investment Board (USRE) Inc. (5) | 929,454 | 58.74 | % | 706,404 | 44.64 | % | ||||||
Norman Axelrod (6) | 514 | 0.03 | % | 514 | 0.03 | % | ||||||
Nora Aufreiter (6) | 514 | 0.03 | % | 514 | 0.03 | % | ||||||
Phillip Bourguignon (6) | 514 | 0.03 | % | 514 | 0.03 | % | ||||||
Alan J. Herrick (6) | 250 | 0.02 | % | 250 | 0.02 | % | ||||||
Karen W. Katz (6) | 29,798 | 1.87 | % | 29,798 | 1.87 | % | ||||||
David Kaplan (7) | — | — | — | — | ||||||||
Dennis Gies (7) | — | — | — | — | ||||||||
Graeme Eadie (8) | — | — | — | — | ||||||||
Cesare Ruggiero (8) | — | — | — | — | ||||||||
Geoffroy van Raemdonck (6) | 8,000 | 0.51 | % | 8,000 | 0.51 | % | ||||||
Adam M. Orvos (6) | 2,500 | 0.16 | % | 2,500 | 0.16 | % | ||||||
James J. Gold (6) | 19,518 | 1.22 | % | 19,518 | 1.22 | % | ||||||
Carrie M. Tharp (6) | 701 | 0.04 | % | 701 | 0.04 | % | ||||||
Tracy M. Preston (6) | 3,139 | 0.20 | % | 3,139 | 0.20 | % | ||||||
T. Dale Stapleton (6) | 2,356 | 0.15 | % | 2,356 | 0.15 | % | ||||||
Joseph N. Weber (6) | 3,294 | 0.21 | % | 3,294 | 0.21 | % | ||||||
All current executive officers and directors as a group (18 persons) (9) | — | — | — | — |
(1) | Except as otherwise noted, the address of each beneficial owner is c/o Neiman Marcus, 1618 Main Street, Dallas, Texas 75201. |
(2) | Pursuant to the terms of the Stockholders Agreement, each of our Sponsors has the right to designate three members of the Parent Board and to jointly designate two independent members of the Parent Board, in each case for so long as they or their respective affiliates own at least 25% of the shares of Class A Common Stock that they owned as of the closing of the Acquisition. Each stockholder that is a party to the Stockholders Agreement has agreed to vote their shares of Parent common stock in favor of such designees. The Stockholders Agreement also contains significant transfer restrictions and certain rights of first offer, tag-along rights, and drag-along rights. As a result, each of our Sponsors may be deemed to be the beneficial owner of the Class A Common Stock and Class B Common Stock |
(3) | Represents shares of Parent common stock held directly by Ares Corporate Opportunities Fund III, L.P. ("ACOF III"), Ares Corporate Opportunities Fund IV, L.P. ("ACOF IV") and ACOF Mariposa Holdings LLC ("ACOF Mariposa"). The manager of ACOF III is ACOF Operating Manager III, LLC ("ACOF Operating Manager III"), and the sole member of ACOF Operating Manager III is Ares Management LLC. The manager of ACOF IV is ACOF Operating Manager IV, LLC ("ACOF Operating Manager IV"), and the sole member of ACOF Operating Manager IV is Ares Management LLC. The manager of ACOF Mariposa is ACOF IV. |
(4) | 223,050 of these shares of Class B Common Stock are subject to (i) a call right that allows CPP Investment Board (USRE) Inc. to repurchase such shares at any time for de minimis consideration and (ii) a proxy set forth in the Stockholders Agreement which may be exercised if ACOF Mariposa fails to take certain actions requested by CPP Investment Board (USRE) Inc. to elect or remove the directors of Parent or certain other matters. |
(5) | CPP Investment Board (USRE) Inc. is a wholly owned subsidiary of Canada Pension Plan Investment Board ("CPPIB"). CPPIB is managed by a board of directors. Because the board of directors acts by consensus/majority approval, none of the directors of the board of directors has sole voting or dispositive power with respect to the shares of common stock of Parent owned by CPP Investment Board (USRE) Inc. The address of each of CPP Investment Board (USRE) Inc. and CPPIB is c/o Canada Pension Plan Investment Board, One Queen Street East, Suite 2500, Toronto, ON, M5C 2W5. |
(6) | Consists of (i) shares of Class A Common Stock and Class B Common Stock issuable upon the exercise of options which are currently exercisable or which will become exercisable within 60 days of September 15, 2018 and (ii) outstanding restricted shares of Class A Common Stock and Class B Common Stock, all of which shares are subject to the provisions of the Stockholders Agreement. In the case of Ms. Aufreiter and Messrs. Axelrod and Bourguignon, excludes shares of Class A Common Stock and Class B Common Stock held directly by such persons and in which such persons have a pecuniary interest but that are deemed to be beneficially owned by our Sponsors by virtue of the Stockholders Agreement. |
(7) | The address of Messrs. Kaplan and Gies is c/o Ares Management LLC, 2000 Avenue of the Stars, 12th Floor, Los Angeles, California 90067. Mr. Kaplan is a Senior Partner of Ares Management GP and a Senior Partner of Ares Management, Co-Head of its Private Equity Group and a member of its board of managers. Mr. Gies is a Principal in the Private Equity Group of Ares Management. Messrs. Kaplan and Gies each expressly disclaim beneficial ownership of the shares of Parent common stock owned by the Ares Entities. |
(8) | The address of Messrs. Eadie and Ruggiero is c/o Canada Pension Plan Investment Board, One Queen Street East, Suite 2600, Toronto, ON, M5C 2W5. Mr. Eadie is Senior Managing Director at CPPIB Equity. Mr. Nishi is a Principal at CPPIB Equity. Messrs. Eadie and Nishi each expressly disclaim beneficial ownership of the shares of Parent common stock owned by CPP Investment Board (USRE) Inc. |
(9) | Excludes shares of Class A Common Stock and Class B Common Stock in which such persons have a pecuniary interest but that are deemed to be beneficially owned by our Sponsors by virtue of the Stockholders Agreement. |
1. | Financial Statements |
2. | Index to Financial Statement Schedule |
Page Number | |
Report of Independent Registered Public Accounting Firm | F-3 |
Schedule II—Valuation and Qualifying Accounts and Reserves |
• | Newton Acquisition, Inc. was renamed Neiman Marcus, Inc. in February 2006; |
• | Newton Acquisition Merger Sub, Inc. merged with and into The Neiman Marcus Group, Inc. in October 2005, with The Neiman Marcus Group, Inc. continuing as the surviving corporation; |
• | Neiman Marcus, Inc. was renamed Neiman Marcus Group LTD Inc. on August 28, 2013; |
• | Neiman Marcus Group LTD Inc. was renamed Neiman Marcus Group LTD LLC on October 28, 2013; |
• | The Neiman Marcus Group, Inc. was renamed The Neiman Marcus Group LLC on October 28, 2013; and |
• | NM Mariposa Holdings, Inc. was renamed Neiman Marcus Group, Inc. on May 29, 2015. |
Exhibit | Method of Filing | ||
3.1 | Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended November 2, 2013. | ||
3.2 | Incorporated herein by reference to the Company’s Current Report on Form 8-K filed on October 29, 2013. | ||
4.1 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on October 29, 2013. | ||
4.2 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on October 29, 2013. | ||
4.3 | Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended August 1, 2009. | ||
4.4 | Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended August 1, 2009. | ||
4.5 | Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended July 30, 2011. | ||
4.6 | Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended July 30, 2011. | ||
4.7 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on October 29, 2013. | ||
4.8 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on October 29, 2013. | ||
10.1 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on October 29, 2013. | ||
10.2 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on March 13, 2014. | ||
10.3 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on October 29, 2013. | ||
10.4 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on October 16, 2014. | ||
10.5 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on October 27, 2016. | ||
10.6 | Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q filed on March 9, 2018. | ||
10.7 | Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q filed on June 6, 2018. | ||
10.8 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on October 29, 2013. | ||
10.9 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on October 29, 2013. | ||
10.10 | Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q filed on March 9, 2018. | ||
10.11 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on October 29, 2013. | ||
10.12 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on November 2, 2016. | ||
10.13 | Incorporated herein by reference to the Company's Annual Report on Form 10-K filed on October 10, 2017. | ||
10.14 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on October 29, 2013. | ||
10.15 | Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q filed on March 9, 2018. | ||
10.16 | Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q filed on March 9, 2018. | ||
10.17 | Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q filed on March 9, 2018. | ||
10.18 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on October 29, 2013. | ||
10.19 | Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q filed on March 9, 2018. | ||
10.20 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on November 2, 2016. | ||
10.21 | Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q filed on March 9, 2018. | ||
10.22 | Incorporated herein by reference to the Company's Current Report on Form 8-K filed on November 2, 2016. | ||
10.23 | Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q filed on March 9, 2018 (1). | ||
10.24 | Incorporated herein by reference to the Company’s Amendment No. 1 to the Form S-1 Registration Statement dated August 7, 2013. | ||
10.25 | Incorporated herein by reference to the Company’s Amendment No. 1 to the Form S-1 Registration Statement dated August 7, 2013. | ||
10.26 | Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended July 30, 2011. | ||
10.27 | Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2009. | ||
10.28 | Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended April 26, 2008. | ||
10.29 | Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2009. | ||
10.30 | Incorporated herein by reference to the Company's Annual Report on Form 10-K filed on October 10, 2017. | ||
10.31 | Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2009. | ||
10.32 | Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2010. | ||
10.33 | Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended August 2, 2008. | ||
10.34 | Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2009. | ||
10.35 | Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2010. | ||
10.36 | Incorporated herein by reference to the Company's Annual Report on Form 10-K filed on October 10, 2017. | ||
10.37 | Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended August 2, 2014. | ||
10.38 | Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended August 2, 2014. | ||
10.39 | Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended August 2, 2014. | ||
10.40 | Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended February 1, 2014. | ||
10.41 | Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended August 2, 2014. | ||
10.42 | Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q filed on June 6, 2018. | ||
10.43 | Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q filed on June 6, 2018. | ||
10.44 | Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q filed on March 9, 2018. | ||
12.1 | Filed herewith. | ||
14.1 | Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended August 3, 2013. | ||
14.2 | Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2010. | ||
21.1 | Filed herewith. | ||
31.1 | Filed herewith. | ||
31.2 | Filed herewith. | ||
32.1 | Furnished herewith. | ||
101.INS | XBRL Instance Document | Filed herewith electronically. | |
101.SCH | XBRL Taxonomy Extension Schema Document | Filed herewith electronically. | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | Filed herewith electronically. | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | Filed herewith electronically. | |
101.LAB | XBRL Taxonomy Extension Labels Linkbase Document | Filed herewith electronically. | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | Filed herewith electronically. |
Page | |
/s/ Ernst & Young LLP | |
We have served as the Company's auditor since 2007. | |
Dallas, Texas | |
September 18, 2018 |
(in thousands, except units) | July 28, 2018 | July 29, 2017 | ||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 38,510 | $ | 49,239 | ||||
Credit card receivables | 33,689 | 38,836 | ||||||
Merchandise inventories | 1,115,839 | 1,153,657 | ||||||
Other current assets | 123,822 | 146,439 | ||||||
Total current assets | 1,311,860 | 1,388,171 | ||||||
Property and equipment, net | 1,569,904 | 1,586,961 | ||||||
Favorable lease commitments, net | 879,434 | 930,585 | ||||||
Other definite-lived intangible assets, net | 354,542 | 401,081 | ||||||
Tradenames | 1,501,327 | 1,499,750 | ||||||
Goodwill | 1,883,869 | 1,880,894 | ||||||
Other long-term assets | 44,967 | 16,074 | ||||||
Total assets | $ | 7,545,903 | $ | 7,703,516 | ||||
LIABILITIES AND MEMBER EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 318,969 | $ | 316,830 | ||||
Accrued liabilities | 511,289 | 456,937 | ||||||
Current portion of long-term debt | 29,426 | 29,426 | ||||||
Total current liabilities | 859,684 | 803,193 | ||||||
Long-term liabilities: | ||||||||
Long-term debt, net of debt issuance costs | 4,623,152 | 4,675,540 | ||||||
Deferred income taxes | 707,554 | 1,156,833 | ||||||
Deferred real estate credits and deferred financing obligations | 254,555 | 201,892 | ||||||
Other long-term liabilities | 341,777 | 399,406 | ||||||
Total long-term liabilities | 5,927,038 | 6,433,671 | ||||||
Membership unit (1 unit issued and outstanding at July 28, 2018 and July 29, 2017) | — | — | ||||||
Member capital | 1,587,350 | 1,587,086 | ||||||
Accumulated other comprehensive loss | (22,297 | ) | (63,431 | ) | ||||
Accumulated deficit | (805,872 | ) | (1,057,003 | ) | ||||
Total member equity | 759,181 | 466,652 | ||||||
Total liabilities and member equity | $ | 7,545,903 | $ | 7,703,516 |
Fiscal year ended | ||||||||||||
(in thousands) | July 28, 2018 | July 29, 2017 | July 30, 2016 | |||||||||
Revenues | $ | 4,900,444 | $ | 4,705,993 | $ | 4,949,472 | ||||||
Cost of goods sold including buying and occupancy costs (excluding depreciation) | 3,320,753 | 3,220,027 | 3,322,508 | |||||||||
Selling, general and administrative expenses (excluding depreciation) | 1,179,641 | 1,129,309 | 1,117,928 | |||||||||
Income from credit card program | (46,361 | ) | (60,082 | ) | (60,648 | ) | ||||||
Depreciation expense | 214,452 | 225,463 | 226,868 | |||||||||
Amortization of intangible assets | 46,685 | 50,769 | 57,011 | |||||||||
Amortization of favorable lease commitments | 51,046 | 53,262 | 54,178 | |||||||||
Other expenses | 37,721 | 29,730 | 27,127 | |||||||||
Impairment charges | — | 510,736 | 466,155 | |||||||||
Operating earnings (loss) | 96,507 | (453,221 | ) | (261,655 | ) | |||||||
Interest expense, net | 307,441 | 295,668 | 285,596 | |||||||||
Loss before income taxes | (210,934 | ) | (748,889 | ) | (547,251 | ) | ||||||
Income tax benefit | (462,065 | ) | (217,130 | ) | (141,141 | ) | ||||||
Net earnings (loss) | $ | 251,131 | $ | (531,759 | ) | $ | (406,110 | ) |
Fiscal year ended | ||||||||||||
(in thousands) | July 28, 2018 | July 29, 2017 | July 30, 2016 | |||||||||
Net earnings (loss) | $ | 251,131 | $ | (531,759 | ) | $ | (406,110 | ) | ||||
Other comprehensive earnings (loss): | ||||||||||||
Foreign currency translation adjustments, before tax | 5,488 | 9,297 | (2,663 | ) | ||||||||
Change in unrealized gain on financial instruments, before tax | 27,481 | 14,851 | (11,266 | ) | ||||||||
Reclassification of realized loss on financial instruments to earnings, before tax | 860 | 6,070 | 576 | |||||||||
Change in unrealized loss on unfunded benefit obligations, before tax | 26,223 | 52,832 | (91,828 | ) | ||||||||
Tax effect related to items of other comprehensive earnings (loss) | (18,918 | ) | (30,640 | ) | 40,568 | |||||||
Total other comprehensive earnings (loss) | 41,134 | 52,410 | (64,613 | ) | ||||||||
Total comprehensive earnings (loss) | $ | 292,265 | $ | (479,349 | ) | $ | (470,723 | ) |
Fiscal year ended | ||||||||||||
(in thousands) | July 28, 2018 | July 29, 2017 | July 30, 2016 | |||||||||
CASH FLOWS - OPERATING ACTIVITIES | ||||||||||||
Net earnings (loss) | $ | 251,131 | $ | (531,759 | ) | $ | (406,110 | ) | ||||
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization expense | 336,663 | 354,004 | 362,629 | |||||||||
Impairment charges | — | 510,736 | 466,155 | |||||||||
Deferred income taxes | (468,583 | ) | (171,152 | ) | (102,841 | ) | ||||||
Payment-in-kind interest | 41,755 | 16,599 | — | |||||||||
Other | 7,323 | (3,244 | ) | (11,945 | ) | |||||||
168,289 | 175,184 | 307,888 | ||||||||||
Changes in operating assets and liabilities: | ||||||||||||
Merchandise inventories | 39,880 | (25,852 | ) | 29,046 | ||||||||
Other current assets | 17,680 | (30,357 | ) | (20,758 | ) | |||||||
Accounts payable and accrued liabilities | 46,299 | 1,268 | (43,877 | ) | ||||||||
Deferred real estate credits | 50,264 | 37,431 | 38,293 | |||||||||
Funding of defined benefit pension plan | (25,200 | ) | (10,700 | ) | — | |||||||
Net cash provided by operating activities | 297,212 | 146,974 | 310,592 | |||||||||
CASH FLOWS - INVESTING ACTIVITIES | ||||||||||||
Capital expenditures | (174,596 | ) | (204,636 | ) | (301,445 | ) | ||||||
Acquisition of MyTheresa | — | — | (896 | ) | ||||||||
Net cash used for investing activities | (174,596 | ) | (204,636 | ) | (302,341 | ) | ||||||
CASH FLOWS - FINANCING ACTIVITIES | ||||||||||||
Borrowings under revolving credit facilities | 1,087,915 | 889,000 | 555,000 | |||||||||
Repayment of borrowings under revolving credit facilities | (1,191,915 | ) | (791,000 | ) | (520,000 | ) | ||||||
Repayment of borrowings under senior secured term loan facility | (29,426 | ) | (29,426 | ) | (29,426 | ) | ||||||
Payment of contingent earn-out obligation | — | (22,857 | ) | (27,185 | ) | |||||||
Debt issuance costs paid | — | (5,359 | ) | — | ||||||||
Repurchase of stock | (266 | ) | — | — | ||||||||
Shares withheld for remittance of employee taxes | (332 | ) | — | — | ||||||||
Net cash provided by (used for) financing activities | (134,024 | ) | 40,358 | (21,611 | ) | |||||||
Effect of exchange rate changes on cash and cash equivalents | 679 | 4,700 | 2,229 | |||||||||
CASH AND CASH EQUIVALENTS | ||||||||||||
Decrease during the period | (10,729 | ) | (12,604 | ) | (11,131 | ) | ||||||
Beginning balance | 49,239 | 61,843 | 72,974 | |||||||||
Ending balance | $ | 38,510 | $ | 49,239 | $ | 61,843 | ||||||
Supplemental Schedule of Cash Flow Information | ||||||||||||
Cash paid (received) during the period for: | ||||||||||||
Interest | $ | 231,181 | $ | 286,746 | $ | 268,657 | ||||||
Income taxes | $ | 263 | $ | (42,264 | ) | $ | (19,207 | ) | ||||
Non-cash - investing and financing activities: | ||||||||||||
Property and equipment acquired through developer financing obligations | $ | 13,077 | $ | 50,799 | $ | 46,124 | ||||||
Issuance of PIK Toggle Notes | $ | 58,354 | $ | — | $ | — |
(in thousands) | Member capital | Accumulated other comprehensive earnings (loss) | Retained earnings (deficit) | Total member equity | ||||||||||||
Balance at August 1, 2015 | $ | 1,584,106 | $ | (51,228 | ) | $ | (119,134 | ) | $ | 1,413,744 | ||||||
Stock option exercises and other | 110 | — | — | 110 | ||||||||||||
Comprehensive loss: | ||||||||||||||||
Net loss | — | — | (406,110 | ) | (406,110 | ) | ||||||||||
Foreign currency translation adjustments, net of tax of ($381) | — | (2,282 | ) | — | (2,282 | ) | ||||||||||
Adjustments for fluctuations in fair market value of financial instruments, net of tax of ($4,416) | — | (6,850 | ) | — | (6,850 | ) | ||||||||||
Reclassification to earnings, net of tax of $226 | — | 350 | — | 350 | ||||||||||||
Change in unfunded benefit obligations, net of tax of ($35,997) | — | (55,831 | ) | — | (55,831 | ) | ||||||||||
Total comprehensive loss | (470,723 | ) | ||||||||||||||
Balance at July 30, 2016 | 1,584,216 | (115,841 | ) | (525,244 | ) | 943,131 | ||||||||||
Stock option exercises and other | 2,870 | — | — | 2,870 | ||||||||||||
Comprehensive loss: | ||||||||||||||||
Net loss | — | — | (531,759 | ) | (531,759 | ) | ||||||||||
Foreign currency translation adjustments, net of tax of $1,729 | — | 7,568 | — | 7,568 | ||||||||||||
Adjustments for fluctuations in fair market value of financial instruments, net of tax of $5,822 | — | 9,029 | — | 9,029 | ||||||||||||
Reclassification to earnings, net of tax of $2,379 | — | 3,691 | — | 3,691 | ||||||||||||
Change in unfunded benefit obligations, net of tax of $20,710 | — | 32,122 | — | 32,122 | ||||||||||||
Total comprehensive loss | (479,349 | ) | ||||||||||||||
Balance at July 29, 2017 | 1,587,086 | (63,431 | ) | (1,057,003 | ) | 466,652 | ||||||||||
Stock option exercises and other | 264 | — | — | 264 | ||||||||||||
Comprehensive earnings: | ||||||||||||||||
Net earnings | — | — | 251,131 | 251,131 | ||||||||||||
Foreign currency translation adjustments, net of tax of $1,044 | — | 4,444 | — | 4,444 | ||||||||||||
Adjustments for fluctuations in fair market value of financial instruments, net of tax of $9,058 | — | 18,423 | — | 18,423 | ||||||||||||
Reclassification to earnings, net of tax of $424 | — | 436 | — | 436 | ||||||||||||
Change in unfunded benefit obligations, net of tax of $8,392 | — | 17,831 | — | 17,831 | ||||||||||||
Total comprehensive earnings | 292,265 | |||||||||||||||
Balance at July 28, 2018 | $ | 1,587,350 | $ | (22,297 | ) | $ | (805,872 | ) | $ | 759,181 |
• | Level 1 — Unadjusted quoted prices for identical instruments traded in active markets. |
• | Level 2 — Observable market-based inputs or unobservable inputs corroborated by market data. |
• | Level 3 — Unobservable inputs reflecting management’s estimates and assumptions. |
2019 | $ | 94,958 | |
2020 | 88,258 | ||
2021 | 82,285 | ||
2022 | 82,450 | ||
2023 | 81,295 |
• | future revenue and profitability projections associated with the tradename; |
• | estimated market royalty rates that could be derived from the licensing of our tradenames to third parties in order to establish the cash flows accruing to the benefit of the Company as a result of our ownership of our tradenames; and |
• | rate used to discount the estimated royalty cash flow projections to their present value (or estimated fair value). |
• | estimated future cash flows; |
• | growth assumptions for future revenues as well as future gross margin rates, expense rates, capital expenditures and other estimates; and |
• | rate used to discount our estimated future cash flow projections to their present value (or estimated fair value) based on our estimated weighted average cost of capital. |
• | future revenue, cash flow and/or profitability projections; |
• | growth assumptions for future revenues as well as future gross margin rates, expense rates, capital expenditures and other estimates; |
• | rates used to discount the estimated cash flow projections to their present value (or estimated fair value) based on our estimated weighted average cost of capital; |
• | recent transactions and valuation multiples for publicly held companies deemed similar to Parent; |
• | economic conditions and other factors deemed material to the valuation process; and |
• | valuations of Parent performed by third parties. |
(in thousands) | Fair Value Hierarchy | July 28, 2018 | July 29, 2017 | |||||||
Asset: | ||||||||||
Interest rate swaps (included in other long-term assets) | Level 2 | $ | 35,649 | $ | 3,628 | |||||
Liability: | ||||||||||
Stock-based award liability (included in other long-term liabilities) | Level 3 | 8,807 | 1,344 |
July 28, 2018 | July 29, 2017 | |||||||||||||||||
(in thousands) | Fair Value Hierarchy | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||
Long-term debt: | ||||||||||||||||||
Asset-Based Revolving Credit Facility | Level 2 | $ | 159,000 | $ | 159,000 | $ | 263,000 | $ | 263,000 | |||||||||
mytheresa.com Credit Facilities | Level 2 | — | — | — | — | |||||||||||||
Senior Secured Term Loan Facility | Level 2 | 2,810,207 | 2,492,316 | 2,839,633 | 2,113,766 | |||||||||||||
Cash Pay Notes | Level 2 | 960,000 | 609,302 | 960,000 | 532,253 | |||||||||||||
PIK Toggle Notes | Level 2 | 658,354 | 420,997 | 600,000 | 297,000 | |||||||||||||
2028 Debentures | Level 2 | 122,890 | 103,570 | 122,677 | 87,490 |
(in thousands) | July 28, 2018 | July 29, 2017 | |||||
Land, buildings and improvements | $ | 1,274,399 | $ | 1,280,214 | |||
Fixtures and equipment | 960,094 | 914,489 | |||||
Construction in progress | 264,821 | 145,108 | |||||
2,499,314 | 2,339,811 | ||||||
Less: accumulated depreciation | 929,410 | 752,850 | |||||
Property and equipment, net | $ | 1,569,904 | $ | 1,586,961 |
(in thousands) | Favorable Lease Commitments | Other Definite-lived Intangible Assets | Tradenames | Goodwill | |||||||||||
Balance at July 30, 2016 | $ | 985,534 | $ | 451,722 | $ | 1,807,246 | $ | 2,072,818 | |||||||
Amortization | (53,262 | ) | (50,769 | ) | — | — | |||||||||
Impairment of goodwill and intangible assets | (1,687 | ) | — | (309,744 | ) | (196,164 | ) | ||||||||
Foreign currency translation adjustment | — | 128 | 2,248 | 4,240 | |||||||||||
Balance at July 29, 2017 | $ | 930,585 | $ | 401,081 | $ | 1,499,750 | $ | 1,880,894 | |||||||
Amortization | (51,046 | ) | (46,685 | ) | — | — | |||||||||
Write-offs related to store closures and other | (105 | ) | — | — | — | ||||||||||
Foreign currency translation adjustment | — | 146 | 1,577 | 2,975 | |||||||||||
Balance at July 28, 2018 | $ | 879,434 | $ | 354,542 | $ | 1,501,327 | $ | 1,883,869 | |||||||
Total accumulated amortization at July 28, 2018 | $ | 248,846 | $ | 346,387 |
Fiscal year ended | |||||||
(in thousands) | July 29, 2017 | July 30, 2016 | |||||
Tradenames | $ | 309,744 | $ | 228,877 | |||
Goodwill | 196,164 | 199,218 | |||||
Property and equipment | 3,141 | 25,426 | |||||
Other definite-lived intangible assets | 1,687 | 12,634 | |||||
Total | $ | 510,736 | $ | 466,155 |
(in thousands) | July 28, 2018 | July 29, 2017 | |||||
Accrued salaries and related liabilities | $ | 84,347 | $ | 64,508 | |||
Amounts due customers | 137,918 | 141,590 | |||||
Self-insurance reserves | 39,506 | 36,545 | |||||
Interest payable | 50,848 | 31,935 | |||||
Sales returns reserves | 44,674 | 47,006 | |||||
Sales taxes payable | 30,671 | 28,811 | |||||
Other | 123,325 | 106,542 | |||||
Total | $ | 511,289 | $ | 456,937 |
(in thousands) | Interest Rate | July 28, 2018 | July 29, 2017 | |||||||
Asset-Based Revolving Credit Facility | variable | $ | 159,000 | $ | 263,000 | |||||
mytheresa.com Credit Facilities | variable | — | — | |||||||
Senior Secured Term Loan Facility | variable | 2,810,207 | 2,839,633 | |||||||
Cash Pay Notes | 8.00% | 960,000 | 960,000 | |||||||
PIK Toggle Notes | 8.75%/9.50% | 658,354 | 600,000 | |||||||
2028 Debentures | 7.125% | 122,890 | 122,677 | |||||||
Total debt | 4,710,451 | 4,785,310 | ||||||||
Less: current portion of Senior Secured Term Loan Facility | (29,426 | ) | (29,426 | ) | ||||||
Less: unamortized debt issuance costs | (57,873 | ) | (80,344 | ) | ||||||
Long-term debt, net of debt issuance costs | $ | 4,623,152 | $ | 4,675,540 |
• | a first-priority security interest in personal property consisting of inventory and related accounts, cash, deposit accounts, all payments received by the Company or the subsidiary guarantors from credit card clearinghouses and processors or otherwise in respect of all credit card charges for sales of inventory by the Company and the subsidiary guarantors, certain related assets and proceeds of the foregoing; |
• | a second-priority pledge of 100% of the Company’s capital stock and certain of the capital stock held by Holdings, the Company or any subsidiary guarantor (which pledge, in the case of any foreign subsidiary is limited to 100% of the non-voting stock (if any) and 65% of the voting stock of such foreign subsidiary); and |
• | a second-priority security interest in, and mortgages on, a significant portion of the Company's owned real property and equipment and substantially all other tangible and intangible assets of Holdings, the Company and each subsidiary guarantor, but excluding, among other things, leasehold interests. |
• | a first-priority pledge of 100% of the Company's capital stock and certain of the capital stock held by the Company, Holdings or any subsidiary guarantor (which pledge, in the case of any foreign subsidiary is limited to 100% of the non-voting stock (if any) and 65% of the voting stock of such foreign subsidiary); |
• | a first-priority security interest in, and mortgages on, a significant portion of the Company's owned real property and equipment and substantially all other tangible and intangible assets of the Company, Holdings and each subsidiary guarantor, but excluding, among other things, leasehold interests and the collateral described below; and |
• | a second-priority security interest in personal property consisting of inventory and related accounts, cash, deposit accounts, all payments received by the Company or the subsidiary guarantors from credit card clearinghouses and processors or otherwise in respect of all credit card charges for sales of inventory by the Company and the subsidiary guarantors, certain related assets and proceeds of the foregoing. |
2019 | $ | 29.4 | |
2020 | 29.4 | ||
2021 | 2,910.4 | ||
2022 | 1,618.4 | ||
2023 | — | ||
Thereafter | 122.9 |
Fiscal year ended | ||||||||||||
(in thousands) | July 28, 2018 | July 29, 2017 | July 30, 2016 | |||||||||
Asset-Based Revolving Credit Facility | $ | 6,395 | $ | 7,022 | $ | 3,104 | ||||||
mytheresa.com Credit Facilities | 105 | 58 | 23 | |||||||||
Senior Secured Term Loan Facility | 138,030 | 130,129 | 124,775 | |||||||||
Cash Pay Notes | 76,800 | 76,800 | 76,800 | |||||||||
PIK Toggle Notes | 58,536 | 53,810 | 52,500 | |||||||||
2028 Debentures | 8,906 | 8,906 | 8,906 | |||||||||
Amortization of debt issue costs | 24,480 | 24,510 | 24,572 | |||||||||
Capitalized interest | (8,067 | ) | (6,270 | ) | (7,298 | ) | ||||||
Other, net | 2,256 | 703 | 2,214 | |||||||||
Interest expense, net | $ | 307,441 | $ | 295,668 | $ | 285,596 |
Fiscal year ended | ||||||||||||
(in thousands) | July 28, 2018 | July 29, 2017 | July 30, 2016 | |||||||||
Realized hedging losses related to interest rate swaps – included in net interest expense | $ | 860 | $ | 4,646 | $ | — | ||||||
Realized hedging losses related to interest rate caps – included in net interest expense | — | 1,424 | 576 | |||||||||
Total | $ | 860 | $ | 6,070 | $ | 576 |
Fiscal year ended | ||||||||||||
(in thousands) | July 28, 2018 | July 29, 2017 | July 30, 2016 | |||||||||
Current: | ||||||||||||
Federal | $ | (2,664 | ) | $ | (38,337 | ) | $ | (36,557 | ) | |||
State | 6,346 | (8,567 | ) | (7,691 | ) | |||||||
Foreign | 2,836 | 926 | 5,948 | |||||||||
6,518 | (45,978 | ) | (38,300 | ) | ||||||||
Deferred: | ||||||||||||
Federal | (441,782 | ) | (148,359 | ) | (78,804 | ) | ||||||
State | (25,265 | ) | (22,357 | ) | (18,189 | ) | ||||||
Foreign | (1,536 | ) | (436 | ) | (5,848 | ) | ||||||
(468,583 | ) | (171,152 | ) | (102,841 | ) | |||||||
Income tax benefit | $ | (462,065 | ) | $ | (217,130 | ) | $ | (141,141 | ) |
Fiscal year ended | ||||||||||||
(in thousands) | July 28, 2018 | July 29, 2017 | July 30, 2016 | |||||||||
United States | $ | (220,014 | ) | $ | (752,705 | ) | $ | (542,310 | ) | |||
Foreign | 9,080 | 3,816 | (4,941 | ) | ||||||||
Loss before income taxes | $ | (210,934 | ) | $ | (748,889 | ) | $ | (547,251 | ) |
Fiscal year ended | ||||||||||||
(in thousands) | July 28, 2018 | July 29, 2017 | July 30, 2016 | |||||||||
Income tax benefit at statutory rate | $ | (56,741 | ) | $ | (262,111 | ) | $ | (191,538 | ) | |||
Impact of Tax Reform | (391,558 | ) | — | — | ||||||||
State income taxes, net of federal income tax benefit | (9,752 | ) | (21,132 | ) | (15,480 | ) | ||||||
Impact of non-deductible expenses, including goodwill impairment | (1,765 | ) | 64,875 | 64,372 | ||||||||
Tax benefit related to tax settlements and other changes in tax liabilities | (130 | ) | (2,022 | ) | (554 | ) | ||||||
Other | (2,119 | ) | 3,260 | 2,059 | ||||||||
Total | $ | (462,065 | ) | $ | (217,130 | ) | $ | (141,141 | ) | |||
Effective tax rate | 219.1 | % | 29.0 | % | 25.8 | % |
(in thousands) | July 28, 2018 | July 29, 2017 | ||||||
Deferred income tax assets: | ||||||||
Accruals and reserves | $ | 28,415 | $ | 34,727 | ||||
Employee benefits | 111,312 | 179,565 | ||||||
Inventory | 4,929 | — | ||||||
Other | 69,397 | 72,882 | ||||||
Total deferred tax assets | $ | 214,053 | $ | 287,174 | ||||
Deferred income tax liabilities: | ||||||||
Inventory | $ | — | $ | (13,264 | ) | |||
Depreciation and amortization | (204,524 | ) | (322,184 | ) | ||||
Intangible assets | (694,483 | ) | (1,083,459 | ) | ||||
Other | (22,600 | ) | (25,100 | ) | ||||
Total deferred tax liabilities | (921,607 | ) | (1,444,007 | ) | ||||
Net deferred income tax liability | $ | (707,554 | ) | $ | (1,156,833 | ) |
(in thousands) | July 28, 2018 | July 29, 2017 | ||||||
Balance at beginning of fiscal year | $ | 2,189 | $ | 3,661 | ||||
Gross amount of decreases for prior year tax positions | (879 | ) | (3,005 | ) | ||||
Gross amount of increases for current year tax positions | — | 1,533 | ||||||
Balance at end of fiscal year | $ | 1,310 | $ | 2,189 |
(in thousands) | July 28, 2018 | July 29, 2017 | ||||||
Pension Plan: | ||||||||
Projected benefit obligation | $ | 584,769 | $ | 620,900 | ||||
Less: Plan assets | (381,949 | ) | (380,163 | ) | ||||
Pension Plan, net | 202,820 | 240,737 | ||||||
SERP Plan | 98,814 | 112,739 | ||||||
Postretirement Plan | 2,935 | 6,916 | ||||||
304,569 | 360,392 | |||||||
Less: current portion | (6,441 | ) | (7,803 | ) | ||||
Long-term portion of benefit obligations | $ | 298,128 | $ | 352,589 |
Pension Plan | SERP Plan | Postretirement Plan | ||||||||||||||||||||||
Fiscal years | Fiscal years | Fiscal years | ||||||||||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||
Projected benefit obligations: | ||||||||||||||||||||||||
Beginning of year | $ | 620,900 | $ | 683,493 | $ | 112,739 | $ | 118,484 | $ | 6,916 | $ | 8,600 | ||||||||||||
Service cost | — | — | — | — | 1 | 1 | ||||||||||||||||||
Interest cost | 19,894 | 19,479 | 3,377 | 3,134 | 204 | 219 | ||||||||||||||||||
Actuarial gain | (28,657 | ) | (56,329 | ) | (11,778 | ) | (3,270 | ) | (3,459 | ) | (1,006 | ) | ||||||||||||
Benefits paid, net | (27,368 | ) | (25,743 | ) | (5,524 | ) | (5,609 | ) | (727 | ) | (898 | ) | ||||||||||||
End of year | $ | 584,769 | $ | 620,900 | $ | 98,814 | $ | 112,739 | $ | 2,935 | $ | 6,916 |
Fiscal year ended | ||||||||||||
(in thousands) | July 28, 2018 | July 29, 2017 | July 30, 2016 | |||||||||
Pension Plan: | ||||||||||||
Interest cost | $ | 19,894 | $ | 19,479 | $ | 21,716 | ||||||
Expected return on plan assets | (21,585 | ) | (21,323 | ) | (23,229 | ) | ||||||
Net amortization of losses | 680 | 2,653 | — | |||||||||
Pension Plan (income) expense | $ | (1,011 | ) | $ | 809 | $ | (1,513 | ) | ||||
SERP Plan: | ||||||||||||
Interest cost | $ | 3,377 | $ | 3,134 | $ | 3,569 | ||||||
Net amortization of losses | — | 93 | — | |||||||||
SERP Plan expense | $ | 3,377 | $ | 3,227 | $ | 3,569 | ||||||
Postretirement Plan: | ||||||||||||
Service cost | $ | 1 | $ | 1 | $ | 3 | ||||||
Interest cost | 204 | 219 | 285 | |||||||||
Net amortization of gains | (720 | ) | (585 | ) | (582 | ) | ||||||
Postretirement Plan income | $ | (515 | ) | $ | (365 | ) | $ | (294 | ) |
Pension | SERP | Postretirement | ||||||||||
(in thousands) | Plan | Plan | Plan | |||||||||
Fiscal year 2019 | $ | 30,023 | $ | 6,088 | $ | 353 | ||||||
Fiscal year 2020 | 31,203 | 6,196 | 302 | |||||||||
Fiscal year 2021 | 32,355 | 6,298 | 308 | |||||||||
Fiscal year 2022 | 33,382 | 6,516 | 274 | |||||||||
Fiscal year 2023 | 34,279 | 6,669 | 267 | |||||||||
Fiscal years 2024-2028 | 181,570 | 33,346 | 1,027 |
Fiscal years | ||||||||
(in thousands) | 2018 | 2017 | ||||||
Fair value of assets at beginning of year | $ | 380,163 | $ | 383,817 | ||||
Actual return on assets | 3,954 | 11,389 | ||||||
Benefits paid | (27,368 | ) | (25,743 | ) | ||||
Contributions | 25,200 | 10,700 | ||||||
Fair value of assets at end of year | $ | 381,949 | $ | 380,163 |
Pension Plan | |||||||||
Allocation at | Allocation at | ||||||||
Target Allocation | July 31, 2018 | July 31, 2017 | |||||||
Equity securities | 60 | % | 60 | % | 60 | % | |||
Fixed income securities | 40 | % | 40 | % | 40 | % | |||
Total | 100 | % | 100 | % | 100 | % |
July 28, 2018 | ||||||||||||||||
(in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Corporate debt securities | $ | — | $ | 70,940 | $ | — | $ | 70,940 | ||||||||
Mutual funds | 9,640 | — | — | 9,640 | ||||||||||||
U.S. government securities | 69,966 | — | — | 69,966 | ||||||||||||
Other | — | 1,310 | — | 1,310 | ||||||||||||
$ | 79,606 | $ | 72,250 | $ | — | |||||||||||
Investments measured at net asset value: | ||||||||||||||||
Common/collective trusts | 137,324 | |||||||||||||||
Hedge funds | 90,282 | |||||||||||||||
Limited partnership interests | 2,487 | |||||||||||||||
Total investments at fair value | $ | 381,949 |
July 29, 2017 | ||||||||||||||||
(in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Corporate debt securities | $ | — | $ | 102,013 | $ | — | $ | 102,013 | ||||||||
Mutual funds | 22,096 | — | — | 22,096 | ||||||||||||
U.S. government securities | 26,041 | — | — | 26,041 | ||||||||||||
Other | — | 2,679 | — | 2,679 | ||||||||||||
$ | 48,137 | $ | 104,692 | $ | — | |||||||||||
Investments measured at net asset value: | ||||||||||||||||
Common/collective trusts | 66,156 | |||||||||||||||
Hedge funds | 157,486 | |||||||||||||||
Limited partnership interests | 3,692 | |||||||||||||||
Total investments at fair value | $ | 380,163 |
July 31, 2018 | July 31, 2017 | July 31, 2016 | |||||||
Pension Plan: | |||||||||
Discount rate | 4.19 | % | 3.80 | % | 3.44 | % | |||
Expected long-term rate of return on plan assets | 5.50 | % | 5.50 | % | 5.50 | % | |||
SERP Plan: | |||||||||
Discount rate | 4.16 | % | 3.69 | % | 3.30 | % | |||
Postretirement Plan: | |||||||||
Discount rate | 4.03 | % | 3.71 | % | 3.33 | % | |||
Initial health care cost trend rate | 8.00 | % | 8.50 | % | 7.50 | % | |||
Ultimate health care cost trend rate | 5.00 | % | 5.00 | % | 5.00 | % |
Fiscal year ended | ||||||||||||
(in thousands) | July 28, 2018 | July 29, 2017 | July 30, 2016 | |||||||||
Minimum rent | $ | 88,700 | $ | 81,700 | $ | 81,300 | ||||||
Contingent rent | 20,800 | 20,400 | 21,900 | |||||||||
Other occupancy costs | 18,000 | 18,200 | 18,300 | |||||||||
Amortization of deferred real estate credits | (5,000 | ) | (4,200 | ) | (2,100 | ) | ||||||
Total rent expense | $ | 122,500 | $ | 116,100 | $ | 119,400 |
2019 | $ | 93,200 | |
2020 | 81,100 | ||
2021 | 75,600 | ||
2022 | 71,800 | ||
2023 | 65,100 | ||
Thereafter | 1,398,400 |
(in thousands) | Foreign Currency Translation Adjustments | Unrealized Gains on Financial Instruments | Unfunded Benefit Obligations | Total | ||||||||||||
Balance, July 29, 2017 | $ | (11,600 | ) | $ | 3,394 | $ | (55,225 | ) | $ | (63,431 | ) | |||||
Other comprehensive earnings | 4,444 | 18,423 | 17,831 | 40,698 | ||||||||||||
Amounts reclassified from accumulated other comprehensive loss | — | 436 | — | 436 | ||||||||||||
Balance, July 28, 2018 | $ | (7,156 | ) | $ | 22,253 | $ | (37,394 | ) | $ | (22,297 | ) |
Fiscal year ended | ||||||||
(in thousands) | July 28, 2018 | July 29, 2017 | ||||||
Balance at beginning of fiscal year | $ | 168 | $ | 5,500 | ||||
Stock option expense (benefit) | 6,434 | (2,337 | ) | |||||
Reclassifications from (to) equity | 1,160 | (2,995 | ) | |||||
Balance at end of fiscal year | $ | 7,762 | $ | 168 |
Fiscal year ended July 28. 2018 | |||||||||
Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (years) | |||||||
Outstanding at July 29, 2017 | 196,416 | $ | 854 | ||||||
Granted | 91,106 | 522 | |||||||
Exercised | (974 | ) | 180 | ||||||
Cancelled | (40,406 | ) | 467 | ||||||
Forfeited | (60,362 | ) | 983 | ||||||
Expired | (2,274 | ) | 346 | ||||||
Outstanding at July 28, 2018 | 183,506 | $ | 597 | 6.6 | |||||
Options exercisable at end of fiscal year | 87,983 | $ | 490 | 5.2 |
Fiscal year ended | ||||||||||||
July 28, 2018 | July 29, 2017 | July 30, 2016 | ||||||||||
Weighted average exercise price | $ | 566 | $ | 1,000 | $ | 1,205 | ||||||
Weighted term in years | 5 | 5 | 5 | |||||||||
Weighted average volatility | 35.37 | % | 31.43 | % | 29.43 | % | ||||||
Risk-free interest rate | 2.47% - 2.80% | 1.27% - 1.88% | 1.33 | % | ||||||||
Dividend yield | — | — | — | |||||||||
Weighted average fair value | $ | 154 | $ | 149 | $ | 341 |
Fiscal year ended July 28, 2018 | |||||||
Unvested Shares | Weighted Average Grant Date Fair Value | ||||||
Outstanding at July 29, 2017 | 21,355 | $ | 768 | ||||
Granted | 11,350 | 268 | |||||
Vested | (6,349 | ) | 768 | ||||
Forfeited | (6,533 | ) | 768 | ||||
Outstanding at July 28, 2018 | 19,823 | $ | 482 |
Fiscal year ended | ||||||||||||
(in thousands) | July 28, 2018 | July 29, 2017 | July 30, 2016 | |||||||||
Stock compensation expense (benefit): | ||||||||||||
Stock options | $ | 6,434 | $ | (2,337 | ) | $ | (10,373 | ) | ||||
Restricted stock | 1,891 | 1,177 | — | |||||||||
Total | $ | 8,325 | $ | (1,160 | ) | $ | (10,373 | ) |
Fiscal year ended | |||||||||
July 28, 2018 | July 29, 2017 | July 30, 2016 | |||||||
Women’s Apparel | 31 | % | 32 | % | 32 | % | |||
Women’s Shoes, Handbags and Accessories | 30 | 29 | 28 | ||||||
Men’s Apparel and Shoes | 12 | 12 | 12 | ||||||
Cosmetics and Fragrances | 12 | 12 | 11 | ||||||
Designer and Precious Jewelry | 9 | 9 | 10 | ||||||
Home Furnishings and Decor | 5 | 5 | 5 | ||||||
Other | 1 | 1 | 2 | ||||||
100 | % | 100 | % | 100 | % |
Fiscal year ended | ||||||||||||
(in thousands) | July 28, 2018 | July 29, 2017 | July 30, 2016 | |||||||||
Expenses incurred in connection with strategic initiatives | $ | 23,303 | $ | 21,347 | $ | 24,318 | ||||||
Expenses related to store closures | 7,996 | 2,585 | — | |||||||||
Expenses related to Cyber-Attack, net of insurance recoveries | 1,100 | 1,500 | 1,032 | |||||||||
MyTheresa acquisition costs | — | 3,286 | 4,443 | |||||||||
Net gain from facility closure | — | — | (5,577 | ) | ||||||||
Other expenses | 5,322 | 1,012 | 2,911 | |||||||||
Total | $ | 37,721 | $ | 29,730 | $ | 27,127 |
July 28, 2018 | ||||||||||||||||||||||||
(in thousands) | Company | NMG | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 33,121 | $ | 683 | $ | 4,706 | $ | — | $ | 38,510 | ||||||||||||
Credit card receivables | — | 30,551 | — | 3,138 | — | 33,689 | ||||||||||||||||||
Merchandise inventories | — | 844,429 | 145,967 | 125,443 | — | 1,115,839 | ||||||||||||||||||
Other current assets | — | 111,279 | 10,348 | 2,781 | (586 | ) | 123,822 | |||||||||||||||||
Total current assets | — | 1,019,380 | 156,998 | 136,068 | (586 | ) | 1,311,860 | |||||||||||||||||
Property and equipment, net | — | 1,327,509 | 138,740 | 103,655 | — | 1,569,904 | ||||||||||||||||||
Intangible assets, net | — | 459,512 | 2,203,322 | 72,469 | — | 2,735,303 | ||||||||||||||||||
Goodwill | — | 1,338,843 | 414,402 | 130,624 | — | 1,883,869 | ||||||||||||||||||
Other long-term assets | — | 43,863 | 1,104 | — | — | 44,967 | ||||||||||||||||||
Investments in subsidiaries | 759,181 | 3,194,802 | — | — | (3,953,983 | ) | — | |||||||||||||||||
Total assets | $ | 759,181 | $ | 7,383,909 | $ | 2,914,566 | $ | 442,816 | $ | (3,954,569 | ) | $ | 7,545,903 | |||||||||||
LIABILITIES AND MEMBER EQUITY | ||||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||
Accounts payable | $ | — | $ | 281,488 | $ | — | $ | 37,481 | $ | — | $ | 318,969 | ||||||||||||
Accrued liabilities | — | 406,072 | 69,979 | 35,824 | (586 | ) | 511,289 | |||||||||||||||||
Current portion of long-term debt | — | 29,426 | — | — | — | 29,426 | ||||||||||||||||||
Total current liabilities | — | 716,986 | 69,979 | 73,305 | (586 | ) | 859,684 | |||||||||||||||||
Long-term liabilities: | ||||||||||||||||||||||||
Long-term debt, net of debt issuance costs | — | 4,623,152 | — | — | — | 4,623,152 | ||||||||||||||||||
Deferred income taxes | — | 694,848 | — | 12,706 | — | 707,554 | ||||||||||||||||||
Other long-term liabilities | — | 589,742 | 7,390 | (800 | ) | — | 596,332 | |||||||||||||||||
Total long-term liabilities | — | 5,907,742 | 7,390 | 11,906 | — | 5,927,038 | ||||||||||||||||||
Total member equity | 759,181 | 759,181 | 2,837,197 | 357,605 | (3,953,983 | ) | 759,181 | |||||||||||||||||
Total liabilities and member equity | $ | 759,181 | $ | 7,383,909 | $ | 2,914,566 | $ | 442,816 | $ | (3,954,569 | ) | $ | 7,545,903 |
July 29, 2017 | ||||||||||||||||||||||||
(in thousands) | Company | NMG | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 28,301 | $ | 649 | $ | 20,289 | $ | — | $ | 49,239 | ||||||||||||
Credit card receivables | — | 35,091 | — | 3,745 | — | 38,836 | ||||||||||||||||||
Merchandise inventories | — | 915,910 | 151,193 | 86,554 | — | 1,153,657 | ||||||||||||||||||
Other current assets | — | 135,174 | 9,956 | 1,896 | (587 | ) | 146,439 | |||||||||||||||||
Total current assets | — | 1,114,476 | 161,798 | 112,484 | (587 | ) | 1,388,171 | |||||||||||||||||
Property and equipment, net | — | 1,333,487 | 149,932 | 103,542 | — | 1,586,961 | ||||||||||||||||||
Intangible assets, net | — | 509,757 | 2,249,290 | 72,369 | — | 2,831,416 | ||||||||||||||||||
Goodwill | — | 1,338,844 | 414,402 | 127,648 | — | 1,880,894 | ||||||||||||||||||
Other long-term assets | — | 14,384 | 1,690 | — | — | 16,074 | ||||||||||||||||||
Investments in subsidiaries | 466,652 | 3,239,816 | — | — | (3,706,468 | ) | — | |||||||||||||||||
Total assets | $ | 466,652 | $ | 7,550,764 | $ | 2,977,112 | $ | 416,043 | $ | (3,707,055 | ) | $ | 7,703,516 | |||||||||||
LIABILITIES AND MEMBER EQUITY | ||||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||
Accounts payable | $ | — | $ | 288,079 | $ | — | $ | 28,751 | $ | — | $ | 316,830 | ||||||||||||
Accrued liabilities | — | 350,773 | 74,832 | 31,919 | (587 | ) | 456,937 | |||||||||||||||||
Current portion of long-term debt | — | 29,426 | — | — | — | 29,426 | ||||||||||||||||||
Total current liabilities | — | 668,278 | 74,832 | 60,670 | (587 | ) | 803,193 | |||||||||||||||||
Long-term liabilities: | ||||||||||||||||||||||||
Long-term debt, net of debt issuance costs | — | 4,675,540 | — | — | — | 4,675,540 | ||||||||||||||||||
Deferred income taxes | — | 1,144,022 | — | 12,811 | — | 1,156,833 | ||||||||||||||||||
Other long-term liabilities | — | 596,272 | 5,379 | (353 | ) | — | 601,298 | |||||||||||||||||
Total long-term liabilities | — | 6,415,834 | 5,379 | 12,458 | — | 6,433,671 | ||||||||||||||||||
Total member equity | 466,652 | 466,652 | 2,896,901 | 342,915 | (3,706,468 | ) | 466,652 | |||||||||||||||||
Total liabilities and member equity | $ | 466,652 | $ | 7,550,764 | $ | 2,977,112 | $ | 416,043 | $ | (3,707,055 | ) | $ | 7,703,516 |
Fiscal year ended July 28, 2018 | ||||||||||||||||||||||||
(in thousands) | Company | NMG | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
Revenues | $ | — | $ | 3,770,909 | $ | 765,401 | $ | 364,134 | $ | — | $ | 4,900,444 | ||||||||||||
Cost of goods sold including buying and occupancy costs (excluding depreciation) | — | 2,559,212 | 523,251 | 238,290 | — | 3,320,753 | ||||||||||||||||||
Selling, general and administrative expenses (excluding depreciation) | — | 941,192 | 137,133 | 101,316 | — | 1,179,641 | ||||||||||||||||||
Income from credit card program | — | (41,256 | ) | (5,105 | ) | — | — | (46,361 | ) | |||||||||||||||
Depreciation expense | — | 190,138 | 16,311 | 8,003 | — | 214,452 | ||||||||||||||||||
Amortization of intangible assets and favorable lease commitments | — | 50,140 | 45,969 | 1,622 | — | 97,731 | ||||||||||||||||||
Other expenses (income) | — | 37,721 | — | — | — | 37,721 | ||||||||||||||||||
Operating earnings (loss) | — | 33,762 | 47,842 | 14,903 | — | 96,507 | ||||||||||||||||||
Interest expense (income), net | — | 307,379 | — | 62 | — | 307,441 | ||||||||||||||||||
Intercompany royalty charges (income) | — | 178,229 | (178,229 | ) | — | — | — | |||||||||||||||||
Equity in loss (earnings) of subsidiaries | (251,131 | ) | (239,613 | ) | — | — | 490,744 | — | ||||||||||||||||
Earnings (loss) before income taxes | 251,131 | (212,233 | ) | 226,071 | 14,841 | (490,744 | ) | (210,934 | ) | |||||||||||||||
Income tax expense (benefit) | — | (463,364 | ) | — | 1,299 | — | (462,065 | ) | ||||||||||||||||
Net earnings (loss) | $ | 251,131 | $ | 251,131 | $ | 226,071 | $ | 13,542 | $ | (490,744 | ) | $ | 251,131 | |||||||||||
Total other comprehensive earnings (loss), net of tax | 41,134 | 36,690 | — | 4,444 | (41,134 | ) | 41,134 | |||||||||||||||||
Total comprehensive earnings (loss) | $ | 292,265 | $ | 287,821 | $ | 226,071 | $ | 17,986 | $ | (531,878 | ) | $ | 292,265 |
Fiscal year ended July 29, 2017 | ||||||||||||||||||||||||
(in thousands) | Company | NMG | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
Revenues | $ | — | $ | 3,708,882 | $ | 731,503 | $ | 265,608 | $ | — | $ | 4,705,993 | ||||||||||||
Cost of goods sold including buying and occupancy costs (excluding depreciation) | — | 2,534,910 | 512,362 | 172,755 | — | 3,220,027 | ||||||||||||||||||
Selling, general and administrative expenses (excluding depreciation) | — | 921,195 | 133,108 | 75,006 | — | 1,129,309 | ||||||||||||||||||
Income from credit card program | — | (54,623 | ) | (5,459 | ) | — | — | (60,082 | ) | |||||||||||||||
Depreciation expense | — | 205,993 | 16,214 | 3,256 | — | 225,463 | ||||||||||||||||||
Amortization of intangible assets and favorable lease commitments | — | 54,640 | 46,379 | 3,012 | — | 104,031 | ||||||||||||||||||
Other expenses (income) | — | 28,015 | — | 1,715 | — | 29,730 | ||||||||||||||||||
Impairment charges | — | 510,736 | — | — | — | 510,736 | ||||||||||||||||||
Operating earnings (loss) | — | (491,984 | ) | 28,899 | 9,864 | — | (453,221 | ) | ||||||||||||||||
Interest expense (income), net | — | 295,717 | — | (49 | ) | — | 295,668 | |||||||||||||||||
Intercompany royalty charges (income) | — | 150,719 | (150,719 | ) | — | — | — | |||||||||||||||||
Equity in loss (earnings) of subsidiaries | 531,759 | (189,041 | ) | — | — | (342,718 | ) | — | ||||||||||||||||
Earnings (loss) before income taxes | (531,759 | ) | (749,379 | ) | 179,618 | 9,913 | 342,718 | (748,889 | ) | |||||||||||||||
Income tax expense (benefit) | — | (217,620 | ) | — | 490 | — | (217,130 | ) | ||||||||||||||||
Net earnings (loss) | $ | (531,759 | ) | $ | (531,759 | ) | $ | 179,618 | $ | 9,423 | $ | 342,718 | $ | (531,759 | ) | |||||||||
Total other comprehensive earnings (loss), net of tax | 52,410 | 44,842 | — | 7,568 | (52,410 | ) | 52,410 | |||||||||||||||||
Total comprehensive earnings (loss) | $ | (479,349 | ) | $ | (486,917 | ) | $ | 179,618 | $ | 16,991 | $ | 290,308 | $ | (479,349 | ) |
Fiscal year ended July 30, 2016 | ||||||||||||||||||||||||
(in thousands) | Company | NMG | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
Revenues | $ | — | $ | 3,963,977 | $ | 783,689 | $ | 201,806 | $ | — | $ | 4,949,472 | ||||||||||||
Cost of goods sold including buying and occupancy costs (excluding depreciation) | — | 2,660,197 | 532,796 | 129,515 | — | 3,322,508 | ||||||||||||||||||
Selling, general and administrative expenses (excluding depreciation) | — | 923,379 | 135,741 | 58,808 | — | 1,117,928 | ||||||||||||||||||
Income from credit card program | — | (55,070 | ) | (5,578 | ) | — | — | (60,648 | ) | |||||||||||||||
Depreciation expense | — | 205,011 | 20,858 | 999 | — | 226,868 | ||||||||||||||||||
Amortization of intangible assets and favorable lease commitments | — | 58,347 | 47,983 | 4,859 | — | 111,189 | ||||||||||||||||||
Other expenses (income) | — | 22,283 | — | 4,844 | — | 27,127 | ||||||||||||||||||
Impairment charges | — | 466,155 | — | — | — | 466,155 | ||||||||||||||||||
Operating earnings (loss) | — | (316,325 | ) | 51,889 | 2,781 | — | (261,655 | ) | ||||||||||||||||
Interest expense (income), net | — | 285,381 | (8,080 | ) | 8,295 | — | 285,596 | |||||||||||||||||
Intercompany royalty charges (income) | — | 150,285 | (150,285 | ) | — | — | — | |||||||||||||||||
Equity in loss (earnings) of subsidiaries | 406,110 | (204,639 | ) | — | — | (201,471 | ) | — | ||||||||||||||||
Earnings (loss) before income taxes | (406,110 | ) | (547,352 | ) | 210,254 | (5,514 | ) | 201,471 | (547,251 | ) | ||||||||||||||
Income tax expense (benefit) | — | (141,242 | ) | — | 101 | — | (141,141 | ) | ||||||||||||||||
Net earnings (loss) | $ | (406,110 | ) | $ | (406,110 | ) | $ | 210,254 | $ | (5,615 | ) | $ | 201,471 | $ | (406,110 | ) | ||||||||
Total other comprehensive earnings (loss), net of tax | (64,613 | ) | (62,331 | ) | — | (2,282 | ) | 64,613 | (64,613 | ) | ||||||||||||||
Total comprehensive earnings (loss) | $ | (470,723 | ) | $ | (468,441 | ) | $ | 210,254 | $ | (7,897 | ) | $ | 266,084 | $ | (470,723 | ) |
Fiscal year ended July 28, 2018 | ||||||||||||||||||||||||
(in thousands) | Company | NMG | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
CASH FLOWS - OPERATING ACTIVITIES | ||||||||||||||||||||||||
Net earnings (loss) | $ | 251,131 | $ | 251,131 | $ | 226,071 | $ | 13,542 | $ | (490,744 | ) | $ | 251,131 | |||||||||||
Adjustments to reconcile net earnings (loss) to net cash provided by (used for) operating activities: | ||||||||||||||||||||||||
Depreciation and amortization expense | — | 264,758 | 62,280 | 9,625 | — | 336,663 | ||||||||||||||||||
Deferred income taxes | — | (466,925 | ) | — | (1,658 | ) | — | (468,583 | ) | |||||||||||||||
Payment-in-kind interest | — | 41,755 | — | — | — | 41,755 | ||||||||||||||||||
Other | — | 4,959 | 2,597 | (233 | ) | — | 7,323 | |||||||||||||||||
Intercompany royalty income payable (receivable) | — | 178,229 | (178,229 | ) | — | — | — | |||||||||||||||||
Equity in loss (earnings) of subsidiaries | (251,131 | ) | (239,613 | ) | — | — | 490,744 | — | ||||||||||||||||
Changes in operating assets and liabilities, net | — | 265,324 | (106,897 | ) | (29,504 | ) | — | 128,923 | ||||||||||||||||
Net cash provided by (used for) operating activities | — | 299,618 | 5,822 | (8,228 | ) | — | 297,212 | |||||||||||||||||
CASH FLOWS - INVESTING ACTIVITIES | ||||||||||||||||||||||||
Capital expenditures | — | (160,774 | ) | (5,788 | ) | (8,034 | ) | — | (174,596 | ) | ||||||||||||||
Net cash provided by (used for) investing activities | — | (160,774 | ) | (5,788 | ) | (8,034 | ) | — | (174,596 | ) | ||||||||||||||
CASH FLOWS - FINANCING ACTIVITIES | ||||||||||||||||||||||||
Borrowings under revolving credit facilities | — | 1,041,000 | — | 46,915 | — | 1,087,915 | ||||||||||||||||||
Repayment of borrowings | — | (1,174,426 | ) | — | (46,915 | ) | — | (1,221,341 | ) | |||||||||||||||
Repurchase of stock | — | (266 | ) | — | — | — | (266 | ) | ||||||||||||||||
Shares withheld for remittance of employee taxes | — | (332 | ) | — | — | — | (332 | ) | ||||||||||||||||
Net cash provided by (used for) financing activities | — | (134,024 | ) | — | — | — | (134,024 | ) | ||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | — | 679 | — | 679 | ||||||||||||||||||
CASH AND CASH EQUIVALENTS | ||||||||||||||||||||||||
Increase (decrease) during the period | — | 4,820 | 34 | (15,583 | ) | — | (10,729 | ) | ||||||||||||||||
Beginning balance | — | 28,301 | 649 | 20,289 | — | 49,239 | ||||||||||||||||||
Ending balance | $ | — | $ | 33,121 | $ | 683 | $ | 4,706 | $ | — | $ | 38,510 |
Fiscal year ended July 29, 2017 | ||||||||||||||||||||||||
(in thousands) | Company | NMG | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
CASH FLOWS—OPERATING ACTIVITIES | ||||||||||||||||||||||||
Net earnings (loss) | $ | (531,759 | ) | $ | (531,759 | ) | $ | 179,618 | $ | 9,423 | $ | 342,718 | $ | (531,759 | ) | |||||||||
Adjustments to reconcile net earnings (loss) to net cash provided by (used for) operating activities: | ||||||||||||||||||||||||
Depreciation and amortization expense | — | 285,143 | 62,593 | 6,268 | — | 354,004 | ||||||||||||||||||
Impairment charges | — | 510,736 | — | — | — | 510,736 | ||||||||||||||||||
Deferred income taxes | — | (172,611 | ) | — | 1,459 | — | (171,152 | ) | ||||||||||||||||
Payment-in-kind interest | — | 16,599 | — | — | — | 16,599 | ||||||||||||||||||
Other | — | (5,172 | ) | 2,400 | (472 | ) | — | (3,244 | ) | |||||||||||||||
Intercompany royalty income payable (receivable) | — | 150,719 | (150,719 | ) | — | — | — | |||||||||||||||||
Equity in loss (earnings) of subsidiaries | 531,759 | (189,041 | ) | — | — | (342,718 | ) | — | ||||||||||||||||
Changes in operating assets and liabilities, net | — | 59,095 | (67,800 | ) | (19,505 | ) | — | (28,210 | ) | |||||||||||||||
Net cash provided by (used for) operating activities | — | 123,709 | 26,092 | (2,827 | ) | — | 146,974 | |||||||||||||||||
CASH FLOWS—INVESTING ACTIVITIES | ||||||||||||||||||||||||
Capital expenditures | — | (171,372 | ) | (26,379 | ) | (6,885 | ) | — | (204,636 | ) | ||||||||||||||
Investment in subsidiaries | — | (27,042 | ) | — | 27,042 | — | — | |||||||||||||||||
Net cash provided by (used for) investing activities | — | (198,414 | ) | (26,379 | ) | 20,157 | — | (204,636 | ) | |||||||||||||||
CASH FLOWS—FINANCING ACTIVITIES | ||||||||||||||||||||||||
Borrowings under revolving credit facilities | — | 889,000 | — | — | — | 889,000 | ||||||||||||||||||
Repayment of borrowings | — | (820,426 | ) | — | — | — | (820,426 | ) | ||||||||||||||||
Payment of contingent earn-out obligation | — | — | — | (22,857 | ) | — | (22,857 | ) | ||||||||||||||||
Debt issuance costs paid | — | (5,359 | ) | — | — | — | (5,359 | ) | ||||||||||||||||
Net cash provided by (used for) financing activities | — | 63,215 | — | (22,857 | ) | — | 40,358 | |||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | — | 4,700 | — | 4,700 | ||||||||||||||||||
CASH AND CASH EQUIVALENTS | ||||||||||||||||||||||||
Increase (decrease) during the period | — | (11,490 | ) | (287 | ) | (827 | ) | — | (12,604 | ) | ||||||||||||||
Beginning balance | — | 39,791 | 936 | 21,116 | — | 61,843 | ||||||||||||||||||
Ending balance | $ | — | $ | 28,301 | $ | 649 | $ | 20,289 | $ | — | $ | 49,239 |
Fiscal year ended July 30, 2016 | ||||||||||||||||||||||||
(in thousands) | Company | NMG | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
CASH FLOWS—OPERATING ACTIVITIES | ||||||||||||||||||||||||
Net earnings (loss) | $ | (406,110 | ) | $ | (406,110 | ) | $ | 210,254 | $ | (5,615 | ) | $ | 201,471 | $ | (406,110 | ) | ||||||||
Adjustments to reconcile net earnings (loss) to net cash provided by (used for) operating activities: | ||||||||||||||||||||||||
Depreciation and amortization expense | — | 287,930 | 68,841 | 5,858 | — | 362,629 | ||||||||||||||||||
Impairment charges | — | 466,155 | — | — | — | 466,155 | ||||||||||||||||||
Deferred income taxes | — | (97,167 | ) | — | (5,674 | ) | — | (102,841 | ) | |||||||||||||||
Other | — | (18,505 | ) | (8,663 | ) | 15,223 | — | (11,945 | ) | |||||||||||||||
Intercompany royalty income payable (receivable) | — | 150,285 | (150,285 | ) | — | — | — | |||||||||||||||||
Equity in loss (earnings) of subsidiaries | 406,110 | (204,639 | ) | — | — | (201,471 | ) | — | ||||||||||||||||
Changes in operating assets and liabilities, net | — | 126,863 | (74,438 | ) | (49,721 | ) | — | 2,704 | ||||||||||||||||
Net cash provided by (used for) operating activities | — | 304,812 | 45,709 | (39,929 | ) | — | 310,592 | |||||||||||||||||
CASH FLOWS—INVESTING ACTIVITIES | ||||||||||||||||||||||||
Capital expenditures | — | (254,094 | ) | (45,479 | ) | (1,872 | ) | — | (301,445 | ) | ||||||||||||||
Acquisition of MyTheresa | — | — | — | (896 | ) | — | (896 | ) | ||||||||||||||||
Investment in subsidiaries | — | (30,204 | ) | — | 30,204 | — | — | |||||||||||||||||
Net cash provided by (used for) investing activities | — | (284,298 | ) | (45,479 | ) | 27,436 | — | (302,341 | ) | |||||||||||||||
CASH FLOWS—FINANCING ACTIVITIES | ||||||||||||||||||||||||
Borrowings under revolving credit facilities | — | 555,000 | — | — | — | 555,000 | ||||||||||||||||||
Repayment of borrowings | — | (549,426 | ) | — | — | — | (549,426 | ) | ||||||||||||||||
Payment of contingent earn-out obligation | — | — | — | (27,185 | ) | — | (27,185 | ) | ||||||||||||||||
Intercompany notes payable (receivable) | — | (39,459 | ) | — | 39,459 | — | — | |||||||||||||||||
Net cash provided by (used for) financing activities | — | (33,885 | ) | — | 12,274 | — | (21,611 | ) | ||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | — | 2,229 | — | 2,229 | ||||||||||||||||||
CASH AND CASH EQUIVALENTS | ||||||||||||||||||||||||
Increase (decrease) during the period | — | (13,371 | ) | 230 | 2,010 | — | (11,131 | ) | ||||||||||||||||
Beginning balance | — | 53,162 | 706 | 19,106 | — | 72,974 | ||||||||||||||||||
Ending balance | $ | — | $ | 39,791 | $ | 936 | $ | 21,116 | $ | — | $ | 61,843 |
(in thousands) | July 28, 2018 | July 29, 2017 | |||||
Total assets | $ | 442,748 | $ | 415,974 | |||
Net assets | 146,300 | 137,661 |
Fiscal year ended | |||||||
(in thousands) | July 28, 2018 | July 29, 2017 | |||||
Revenues | $ | 364,134 | $ | 265,608 | |||
Net earnings | 7,490 | 3,700 |
July 28, 2018 | ||||||||||||||||||||
(in thousands) | Company | NMG | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
ASSETS | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 33,121 | $ | 5,389 | $ | — | $ | 38,510 | ||||||||||
Credit card receivables | — | 30,551 | 3,138 | — | 33,689 | |||||||||||||||
Merchandise inventories | — | 844,429 | 271,410 | — | 1,115,839 | |||||||||||||||
Other current assets | — | 111,279 | 13,129 | (586 | ) | 123,822 | ||||||||||||||
Total current assets | — | 1,019,380 | 293,066 | (586 | ) | 1,311,860 | ||||||||||||||
Property and equipment, net | — | 1,327,509 | 242,395 | — | 1,569,904 | |||||||||||||||
Intangible assets, net | — | 459,512 | 2,275,791 | — | 2,735,303 | |||||||||||||||
Goodwill | — | 1,338,843 | 545,026 | — | 1,883,869 | |||||||||||||||
Other long-term assets | — | 43,863 | 1,104 | — | 44,967 | |||||||||||||||
Investments in subsidiaries | 759,181 | 3,194,802 | — | (3,953,983 | ) | — | ||||||||||||||
Total assets | $ | 759,181 | $ | 7,383,909 | $ | 3,357,382 | $ | (3,954,569 | ) | $ | 7,545,903 | |||||||||
LIABILITIES AND MEMBER EQUITY | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Accounts payable | $ | — | $ | 281,488 | $ | 37,481 | $ | — | $ | 318,969 | ||||||||||
Accrued liabilities | — | 406,072 | 105,803 | (586 | ) | 511,289 | ||||||||||||||
Current portion of long-term debt | — | 29,426 | — | — | 29,426 | |||||||||||||||
Total current liabilities | — | 716,986 | 143,284 | (586 | ) | 859,684 | ||||||||||||||
Long-term liabilities: | ||||||||||||||||||||
Long-term debt, net of debt issuance costs | — | 4,623,152 | — | — | 4,623,152 | |||||||||||||||
Deferred income taxes | — | 694,848 | 12,706 | — | 707,554 | |||||||||||||||
Other long-term liabilities | — | 589,742 | 6,590 | — | 596,332 | |||||||||||||||
Total long-term liabilities | — | 5,907,742 | 19,296 | — | 5,927,038 | |||||||||||||||
Total member equity | 759,181 | 759,181 | 3,194,802 | (3,953,983 | ) | 759,181 | ||||||||||||||
Total liabilities and member equity | $ | 759,181 | $ | 7,383,909 | $ | 3,357,382 | $ | (3,954,569 | ) | $ | 7,545,903 |
July 29, 2017 | ||||||||||||||||||||
(in thousands) | Company | NMG | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
ASSETS | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 28,301 | $ | 20,938 | $ | — | $ | 49,239 | ||||||||||
Credit card receivables | — | 35,091 | 3,745 | — | 38,836 | |||||||||||||||
Merchandise inventories | — | 915,910 | 237,747 | — | 1,153,657 | |||||||||||||||
Other current assets | — | 135,174 | 11,852 | (587 | ) | 146,439 | ||||||||||||||
Total current assets | — | 1,114,476 | 274,282 | (587 | ) | 1,388,171 | ||||||||||||||
Property and equipment, net | — | 1,333,487 | 253,474 | — | 1,586,961 | |||||||||||||||
Intangible assets, net | — | 509,757 | 2,321,659 | — | 2,831,416 | |||||||||||||||
Goodwill | — | 1,338,844 | 542,050 | — | 1,880,894 | |||||||||||||||
Other long-term assets | — | 14,384 | 1,690 | — | 16,074 | |||||||||||||||
Investments in subsidiaries | 466,652 | 3,239,816 | — | (3,706,468 | ) | — | ||||||||||||||
Total assets | $ | 466,652 | $ | 7,550,764 | $ | 3,393,155 | $ | (3,707,055 | ) | $ | 7,703,516 | |||||||||
LIABILITIES AND MEMBER EQUITY | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Accounts payable | $ | — | $ | 288,079 | $ | 28,751 | $ | — | $ | 316,830 | ||||||||||
Accrued liabilities | — | 350,773 | 106,751 | (587 | ) | 456,937 | ||||||||||||||
Current portion of long-term debt | — | 29,426 | — | — | 29,426 | |||||||||||||||
Total current liabilities | — | 668,278 | 135,502 | (587 | ) | 803,193 | ||||||||||||||
Long-term liabilities: | ||||||||||||||||||||
Long-term debt, net of debt issuance costs | — | 4,675,540 | — | — | 4,675,540 | |||||||||||||||
Deferred income taxes | — | 1,144,022 | 12,811 | — | 1,156,833 | |||||||||||||||
Other long-term liabilities | — | 596,272 | 5,026 | — | 601,298 | |||||||||||||||
Total long-term liabilities | — | 6,415,834 | 17,837 | — | 6,433,671 | |||||||||||||||
Total member equity | 466,652 | 466,652 | 3,239,816 | (3,706,468 | ) | 466,652 | ||||||||||||||
Total liabilities and member equity | $ | 466,652 | $ | 7,550,764 | $ | 3,393,155 | $ | (3,707,055 | ) | $ | 7,703,516 |
Fiscal year ended July 28, 2018 | ||||||||||||||||||||
(in thousands) | Company | NMG | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Revenues | $ | — | $ | 3,770,909 | $ | 1,129,535 | $ | — | $ | 4,900,444 | ||||||||||
Cost of goods sold including buying and occupancy costs (excluding depreciation) | — | 2,559,212 | 761,541 | — | 3,320,753 | |||||||||||||||
Selling, general and administrative expenses (excluding depreciation) | — | 941,192 | 238,449 | — | 1,179,641 | |||||||||||||||
Income from credit card program | — | (41,256 | ) | (5,105 | ) | — | (46,361 | ) | ||||||||||||
Depreciation expense | — | 190,138 | 24,314 | — | 214,452 | |||||||||||||||
Amortization of intangible assets and favorable lease commitments | — | 50,140 | 47,591 | — | 97,731 | |||||||||||||||
Other expenses (income) | — | 37,721 | — | — | 37,721 | |||||||||||||||
Operating earnings (loss) | — | 33,762 | 62,745 | — | 96,507 | |||||||||||||||
Interest expense (income), net | — | 307,379 | 62 | — | 307,441 | |||||||||||||||
Intercompany royalty charges (income) | — | 178,229 | (178,229 | ) | — | — | ||||||||||||||
Equity in loss (earnings) of subsidiaries | (251,131 | ) | (239,613 | ) | — | 490,744 | — | |||||||||||||
Earnings (loss) before income taxes | 251,131 | (212,233 | ) | 240,912 | (490,744 | ) | (210,934 | ) | ||||||||||||
Income tax expense (benefit) | — | (463,364 | ) | 1,299 | — | (462,065 | ) | |||||||||||||
Net earnings (loss) | $ | 251,131 | $ | 251,131 | $ | 239,613 | $ | (490,744 | ) | $ | 251,131 | |||||||||
Total other comprehensive earnings (loss), net of tax | 41,134 | 36,690 | 4,444 | (41,134 | ) | 41,134 | ||||||||||||||
Total comprehensive earnings (loss) | $ | 292,265 | $ | 287,821 | $ | 244,057 | $ | (531,878 | ) | $ | 292,265 |
Fiscal year ended July 29, 2017 | ||||||||||||||||||||
(in thousands) | Company | NMG | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Revenues | $ | — | $ | 3,708,882 | $ | 997,111 | $ | — | $ | 4,705,993 | ||||||||||
Cost of goods sold including buying and occupancy costs (excluding depreciation) | — | 2,534,910 | 685,117 | — | 3,220,027 | |||||||||||||||
Selling, general and administrative expenses (excluding depreciation) | — | 921,195 | 208,114 | — | 1,129,309 | |||||||||||||||
Income from credit card program | — | (54,623 | ) | (5,459 | ) | — | (60,082 | ) | ||||||||||||
Depreciation expense | — | 205,993 | 19,470 | — | 225,463 | |||||||||||||||
Amortization of intangible assets and favorable lease commitments | — | 54,640 | 49,391 | — | 104,031 | |||||||||||||||
Other expenses (income) | — | 28,015 | 1,715 | — | 29,730 | |||||||||||||||
Impairment charges | — | 510,736 | — | — | 510,736 | |||||||||||||||
Operating earnings (loss) | — | (491,984 | ) | 38,763 | — | (453,221 | ) | |||||||||||||
Interest expense (income), net | — | 295,717 | (49 | ) | — | 295,668 | ||||||||||||||
Intercompany royalty charges (income) | — | 150,719 | (150,719 | ) | — | — | ||||||||||||||
Equity in loss (earnings) of subsidiaries | 531,759 | (189,041 | ) | — | (342,718 | ) | — | |||||||||||||
Earnings (loss) before income taxes | (531,759 | ) | (749,379 | ) | 189,531 | 342,718 | (748,889 | ) | ||||||||||||
Income tax expense (benefit) | — | (217,620 | ) | 490 | — | (217,130 | ) | |||||||||||||
Net earnings (loss) | $ | (531,759 | ) | $ | (531,759 | ) | $ | 189,041 | $ | 342,718 | $ | (531,759 | ) | |||||||
Total other comprehensive earnings (loss), net of tax | 52,410 | 44,842 | 7,568 | (52,410 | ) | 52,410 | ||||||||||||||
Total comprehensive earnings (loss) | $ | (479,349 | ) | $ | (486,917 | ) | $ | 196,609 | $ | 290,308 | $ | (479,349 | ) |
Fiscal year ended July 30, 2016 | ||||||||||||||||||||
(in thousands) | Company | NMG | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Revenues | $ | — | $ | 3,963,977 | $ | 985,495 | $ | — | $ | 4,949,472 | ||||||||||
Cost of goods sold including buying and occupancy costs (excluding depreciation) | — | 2,660,197 | 662,311 | — | 3,322,508 | |||||||||||||||
Selling, general and administrative expenses (excluding depreciation) | — | 923,379 | 194,549 | — | 1,117,928 | |||||||||||||||
Income from credit card program | — | (55,070 | ) | (5,578 | ) | — | (60,648 | ) | ||||||||||||
Depreciation expense | — | 205,011 | 21,857 | — | 226,868 | |||||||||||||||
Amortization of intangible assets and favorable lease commitments | — | 58,347 | 52,842 | — | 111,189 | |||||||||||||||
Other expenses (income) | — | 22,283 | 4,844 | — | 27,127 | |||||||||||||||
Impairment charges | — | 466,155 | — | — | 466,155 | |||||||||||||||
Operating earnings (loss) | — | (316,325 | ) | 54,670 | — | (261,655 | ) | |||||||||||||
Interest expense (income), net | — | 285,381 | 215 | — | 285,596 | |||||||||||||||
Intercompany royalty charges (income) | — | 150,285 | (150,285 | ) | — | — | ||||||||||||||
Equity in loss (earnings) of subsidiaries | 406,110 | (204,639 | ) | — | (201,471 | ) | — | |||||||||||||
Earnings (loss) before income taxes | (406,110 | ) | (547,352 | ) | 204,740 | 201,471 | (547,251 | ) | ||||||||||||
Income tax expense (benefit) | — | (141,242 | ) | 101 | — | (141,141 | ) | |||||||||||||
Net earnings (loss) | $ | (406,110 | ) | $ | (406,110 | ) | $ | 204,639 | $ | 201,471 | $ | (406,110 | ) | |||||||
Total other comprehensive earnings (loss), net of tax | (64,613 | ) | (62,331 | ) | (2,282 | ) | 64,613 | (64,613 | ) | |||||||||||
Total comprehensive earnings (loss) | $ | (470,723 | ) | $ | (468,441 | ) | $ | 202,357 | $ | 266,084 | $ | (470,723 | ) |
Fiscal year ended July 28, 2018 | ||||||||||||||||||||
(in thousands) | Company | NMG | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
CASH FLOWS - OPERATING ACTIVITIES | ||||||||||||||||||||
Net earnings (loss) | $ | 251,131 | $ | 251,131 | $ | 239,613 | $ | (490,744 | ) | $ | 251,131 | |||||||||
Adjustments to reconcile net earnings (loss) to net cash provided by (used for) operating activities: | ||||||||||||||||||||
Depreciation and amortization expense | — | 264,758 | 71,905 | — | 336,663 | |||||||||||||||
Deferred income taxes | — | (466,925 | ) | (1,658 | ) | — | (468,583 | ) | ||||||||||||
Payment-in-kind interest | — | 41,755 | — | — | 41,755 | |||||||||||||||
Other | — | 4,959 | 2,364 | — | 7,323 | |||||||||||||||
Intercompany royalty income payable (receivable) | — | 178,229 | (178,229 | ) | — | — | ||||||||||||||
Equity in loss (earnings) of subsidiaries | (251,131 | ) | (239,613 | ) | — | 490,744 | — | |||||||||||||
Changes in operating assets and liabilities, net | — | 265,324 | (136,401 | ) | — | 128,923 | ||||||||||||||
Net cash provided by (used for) operating activities | — | 299,618 | (2,406 | ) | — | 297,212 | ||||||||||||||
CASH FLOWS - INVESTING ACTIVITIES | ||||||||||||||||||||
Capital expenditures | — | (160,774 | ) | (13,822 | ) | — | (174,596 | ) | ||||||||||||
Net cash provided by (used for) investing activities | — | (160,774 | ) | (13,822 | ) | — | (174,596 | ) | ||||||||||||
CASH FLOWS - FINANCING ACTIVITIES | ||||||||||||||||||||
Borrowings under revolving credit facilities | — | 1,041,000 | 46,915 | — | 1,087,915 | |||||||||||||||
Repayment of borrowings | — | (1,174,426 | ) | (46,915 | ) | — | (1,221,341 | ) | ||||||||||||
Repurchase of stock | — | (266 | ) | — | — | (266 | ) | |||||||||||||
Shares withheld for remittance of employee taxes | — | (332 | ) | — | — | (332 | ) | |||||||||||||
Net cash provided by (used for) financing activities | — | (134,024 | ) | — | — | (134,024 | ) | |||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | 679 | — | 679 | |||||||||||||||
CASH AND CASH EQUIVALENTS | ||||||||||||||||||||
Increase (decrease) during the period | — | 4,820 | (15,549 | ) | — | (10,729 | ) | |||||||||||||
Beginning balance | — | 28,301 | 20,938 | — | 49,239 | |||||||||||||||
Ending balance | $ | — | $ | 33,121 | $ | 5,389 | $ | — | $ | 38,510 |
Fiscal year ended July 29, 2017 | ||||||||||||||||||||
(in thousands) | Company | NMG | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
CASH FLOWS—OPERATING ACTIVITIES | ||||||||||||||||||||
Net earnings (loss) | $ | (531,759 | ) | $ | (531,759 | ) | $ | 189,041 | $ | 342,718 | $ | (531,759 | ) | |||||||
Adjustments to reconcile net earnings (loss) to net cash provided by (used for) operating activities: | ||||||||||||||||||||
Depreciation and amortization expense | — | 285,143 | 68,861 | — | 354,004 | |||||||||||||||
Impairment charges | — | 510,736 | — | — | 510,736 | |||||||||||||||
Deferred income taxes | — | (172,611 | ) | 1,459 | — | (171,152 | ) | |||||||||||||
Payment-in-kind interest | — | 16,599 | — | 16,599 | ||||||||||||||||
Other | — | (5,172 | ) | 1,928 | — | (3,244 | ) | |||||||||||||
Intercompany royalty income payable (receivable) | — | 150,719 | (150,719 | ) | — | — | ||||||||||||||
Equity in loss (earnings) of subsidiaries | 531,759 | (189,041 | ) | — | (342,718 | ) | — | |||||||||||||
Changes in operating assets and liabilities, net | — | 59,095 | (87,305 | ) | — | (28,210 | ) | |||||||||||||
Net cash provided by (used for) operating activities | — | 123,709 | 23,265 | — | 146,974 | |||||||||||||||
CASH FLOWS—INVESTING ACTIVITIES | ||||||||||||||||||||
Capital expenditures | — | (171,372 | ) | (33,264 | ) | — | (204,636 | ) | ||||||||||||
Investment in subsidiaries | — | (27,042 | ) | 27,042 | — | — | ||||||||||||||
Net cash provided by (used for) investing activities | — | (198,414 | ) | (6,222 | ) | — | (204,636 | ) | ||||||||||||
CASH FLOWS—FINANCING ACTIVITIES | ||||||||||||||||||||
Borrowings under revolving credit facilities | — | 889,000 | — | — | 889,000 | |||||||||||||||
Repayment of borrowings | — | (820,426 | ) | — | — | (820,426 | ) | |||||||||||||
Payment of contingent earn-out obligation | — | — | (22,857 | ) | — | (22,857 | ) | |||||||||||||
Debt issuance costs paid | — | (5,359 | ) | — | — | (5,359 | ) | |||||||||||||
Net cash provided by (used for) financing activities | — | 63,215 | (22,857 | ) | — | 40,358 | ||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | 4,700 | — | 4,700 | |||||||||||||||
CASH AND CASH EQUIVALENTS | ||||||||||||||||||||
Increase (decrease) during the period | — | (11,490 | ) | (1,114 | ) | — | (12,604 | ) | ||||||||||||
Beginning balance | — | 39,791 | 22,052 | — | 61,843 | |||||||||||||||
Ending balance | $ | — | $ | 28,301 | $ | 20,938 | $ | — | $ | 49,239 |
Fiscal year ended July 30, 2016 | ||||||||||||||||||||
(in thousands) | Company | NMG | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
CASH FLOWS—OPERATING ACTIVITIES | ||||||||||||||||||||
Net earnings (loss) | $ | (406,110 | ) | $ | (406,110 | ) | $ | 204,639 | $ | 201,471 | $ | (406,110 | ) | |||||||
Adjustments to reconcile net earnings (loss) to net cash provided by (used for) operating activities: | ||||||||||||||||||||
Depreciation and amortization expense | — | 287,930 | 74,699 | — | 362,629 | |||||||||||||||
Impairment charges | — | 466,155 | — | — | 466,155 | |||||||||||||||
Deferred income taxes | — | (97,167 | ) | (5,674 | ) | — | (102,841 | ) | ||||||||||||
Other | — | (18,505 | ) | 6,560 | — | (11,945 | ) | |||||||||||||
Intercompany royalty income payable (receivable) | — | 150,285 | (150,285 | ) | — | — | ||||||||||||||
Equity in loss (earnings) of subsidiaries | 406,110 | (204,639 | ) | — | (201,471 | ) | — | |||||||||||||
Changes in operating assets and liabilities, net | — | 126,863 | (124,159 | ) | — | 2,704 | ||||||||||||||
Net cash provided by (used for) operating activities | — | 304,812 | 5,780 | — | 310,592 | |||||||||||||||
CASH FLOWS—INVESTING ACTIVITIES | ||||||||||||||||||||
Capital expenditures | — | (254,094 | ) | (47,351 | ) | — | (301,445 | ) | ||||||||||||
Acquisition of MyTheresa | — | — | (896 | ) | — | (896 | ) | |||||||||||||
Investment in subsidiaries | — | (30,204 | ) | 30,204 | — | — | ||||||||||||||
Net cash provided by (used for) investing activities | — | (284,298 | ) | (18,043 | ) | — | (302,341 | ) | ||||||||||||
CASH FLOWS—FINANCING ACTIVITIES | ||||||||||||||||||||
Borrowings under revolving credit facilities | — | 555,000 | — | — | 555,000 | |||||||||||||||
Repayment of borrowings | — | (549,426 | ) | — | — | (549,426 | ) | |||||||||||||
Payment of contingent earn-out obligation | — | — | (27,185 | ) | — | (27,185 | ) | |||||||||||||
Intercompany notes payable (receivable) | — | (39,459 | ) | 39,459 | — | — | ||||||||||||||
Net cash provided by (used for) financing activities | — | (33,885 | ) | 12,274 | — | (21,611 | ) | |||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | 2,229 | — | 2,229 | |||||||||||||||
CASH AND CASH EQUIVALENTS | ||||||||||||||||||||
Increase (decrease) during the period | — | (13,371 | ) | 2,240 | — | (11,131 | ) | |||||||||||||
Beginning balance | — | 53,162 | 19,812 | — | 72,974 | |||||||||||||||
Ending balance | $ | — | $ | 39,791 | $ | 22,052 | $ | — | $ | 61,843 |
Fiscal year 2018 | ||||||||||||||||||||
(in millions) | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Total | |||||||||||||||
Revenues | $ | 1,120.3 | $ | 1,482.1 | $ | 1,165.1 | $ | 1,132.9 | $ | 4,900.4 | ||||||||||
Gross profit (1) | 397.4 | 458.1 | 408.7 | 315.5 | 1,579.7 | |||||||||||||||
Net earnings (loss) (2) | (26.2 | ) | 372.5 | (19.9 | ) | (75.3 | ) | 251.1 |
Fiscal year 2017 | ||||||||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Total | ||||||||||||||||
Revenues | $ | 1,079.1 | $ | 1,395.6 | $ | 1,111.4 | $ | 1,119.9 | $ | 4,706.0 | ||||||||||
Gross profit (1) | 379.2 | 413.1 | 380.9 | 312.8 | 1,486.0 | |||||||||||||||
Net loss (3) | (23.5 | ) | (117.1 | ) | (24.9 | ) | (366.3 | ) | (531.8 | ) |
(1) | Gross profit includes revenues less cost of goods sold including buying and occupancy costs (excluding depreciation). |
(2) | For fiscal year 2018, net earnings (loss) includes the income tax effects of the Tax Reform, which were as follows: |
Fiscal year 2018 | ||||||||||||||||
(in thousands) | Second Quarter | Third Quarter | Fourth Quarter | Total | ||||||||||||
Income tax loss (benefit) from the Tax Reform | $ | (387.8 | ) | $ | 1.5 | $ | (5.3 | ) | $ | (391.6 | ) |
(3) | For fiscal year 2017, net loss includes pretax impairment charges to writedown the net carrying value of certain tradenames, goodwill and long-lived assets to fair value, which were as follows: |
Fiscal year 2017 | ||||||||||||
(in thousands) | Second Quarter | Fourth Quarter | Total | |||||||||
Tradenames | $ | 150.1 | $ | 159.6 | $ | 309.7 | ||||||
Goodwill | — | 196.2 | 196.2 | |||||||||
Long-lived assets | 3.7 | 1.2 | 4.8 | |||||||||
Total | $ | 153.8 | $ | 357.0 | $ | 510.7 |
(in thousands) | July 28, 2018 | July 29, 2017 | |||||
Total assets | $ | 351,982 | $ | 320,876 | |||
Net assets | 266,784 | 248,228 |
Fiscal year ended | |||||||||||
(in thousands) | July 28, 2018 | July 29, 2017 | July 30, 2016 | ||||||||
Revenues | $ | 364,134 | $ | 265,608 | $ | 201,806 | |||||
Net earnings | 13,833 | 9,052 | 3,039 |
NEIMAN MARCUS GROUP LTD LLC | |||
By: | /s/ ADAM ORVOS | ||
Adam Orvos Executive Vice President, Chief Financial Officer and Chief Operating Officer | |||
Dated: | September 18, 2018 |
Signature | Title | Date | ||
/s/ GEOFFROY VAN RAEMDONCK | Chief Executive Officer | September 18, 2018 | ||
Geoffroy van Raemdonck | (principal executive officer) | |||
/s/ ADAM ORVOS | Executive Vice President, Chief Financial Officer and Chief Operating Officer (principal financial officer) | September 18, 2018 | ||
Adam Orvos | ||||
/s/ T. DALE STAPLETON | Senior Vice President and Chief Accounting Officer (principal accounting officer) | September 18, 2018 | ||
T. Dale Stapleton | ||||
/s/ DAVID KAPLAN | Chairman of the Board | September 18, 2018 | ||
David Kaplan | ||||
/s/ NORA AUFREITER | Director | September 18, 2018 | ||
Nora Aufreiter | ||||
/s/ NORMAN AXELROD | Director | September 18, 2018 | ||
Norman Axelrod | ||||
/s/ PHILIPPE BOURGUIGNON | Director | September 18, 2018 | ||
Philippe Bourguignon | ||||
/s/ GRAEME EADIE | Director | September 18, 2018 | ||
Graeme Eadie | ||||
/s/ DENNIS GIES | Director | September 18, 2018 | ||
Dennis Gies | ||||
/s/ ALAN HERRICK | Director | September 18, 2018 | ||
Alan Herrick | ||||
/s/ KAREN KATZ | Director | September 18, 2018 | ||
Karen Katz | ||||
/s/ CESARE RUGGIERO | Director | September 18, 2018 | ||
Cesare Ruggiero |
Column A | Column B | Column C | Column D | Column E | ||||||||||||||||||
Additions | ||||||||||||||||||||||
Description | Balance at Beginning of Period | Charged to Costs and Expenses | Charged to Other Accounts | Deductions | Balance at End of Period | |||||||||||||||||
Reserve for estimated sales returns | ||||||||||||||||||||||
Year ended July 28, 2018 | $ | 47,006 | $ | 1,018,617 | $ | — | $ | (1,020,949 | ) | (B) | $ | 44,674 | ||||||||||
Year ended July 29, 2017 | $ | 45,336 | $ | 944,682 | $ | — | $ | (943,012 | ) | (B) | $ | 47,006 | ||||||||||
Year ended July 30, 2016 | $ | 44,046 | $ | 977,811 | $ | — | $ | (976,521 | ) | (B) | $ | 45,336 | ||||||||||
Reserves for self-insurance (A) | ||||||||||||||||||||||
Year ended July 28, 2018 | $ | 36,545 | $ | 62,963 | $ | — | $ | (60,002 | ) | (C) | $ | 39,506 | ||||||||||
Year ended July 29, 2017 | $ | 36,197 | $ | 69,095 | $ | — | $ | (68,747 | ) | (C) | $ | 36,545 | ||||||||||
Year ended July 30, 2016 | $ | 37,943 | $ | 75,821 | $ | — | $ | (77,567 | ) | (C) | $ | 36,197 |
Fiscal year ended | Thirty-nine weeks ended | Thirteen weeks ended | |||||||||||||||||||||||
(in thousands, except ratios) | July 28, 2018 | July 29, 2017 | July 30, 2016 | August 1, 2015 | August 2, 2014 | November 2, 2013 | |||||||||||||||||||
(Successor) | (Successor) | (Successor) | (Successor) | (Successor) | (Predecessor) | ||||||||||||||||||||
Fixed charges: | |||||||||||||||||||||||||
Interest on debt | $ | 291,328 | $ | 277,642 | $ | 268,395 | $ | 267,752 | $ | 216,281 | $ | 34,998 | |||||||||||||
Amortization of debt discount and expense | 24,480 | 24,510 | 24,572 | 24,560 | 17,117 | 2,466 | |||||||||||||||||||
Interest element of rentals | 34,056 | 33,693 | 34,320 | 33,462 | 23,232 | 7,293 | |||||||||||||||||||
Total fixed charges | $ | 349,864 | $ | 335,845 | $ | 327,287 | $ | 325,774 | $ | 256,630 | $ | 44,757 | |||||||||||||
Earnings (loss): | |||||||||||||||||||||||||
Earnings (loss) from continuing operations before income taxes | $ | (210,934 | ) | $ | (748,889 | ) | $ | (547,251 | ) | $ | 28,076 | $ | (223,908 | ) | $ | (5,179 | ) | ||||||||
Add back: | |||||||||||||||||||||||||
Fixed charges | 349,864 | 335,845 | 327,287 | 325,774 | 256,630 | 44,757 | |||||||||||||||||||
Amortization of capitalized interest | 1,670 | 1,540 | 2,180 | 1,208 | 886 | 295 | |||||||||||||||||||
Less: | |||||||||||||||||||||||||
Capitalized interest | (8,067 | ) | (6,270 | ) | (7,298 | ) | (2,361 | ) | (630 | ) | (140 | ) | |||||||||||||
Total earnings (loss) | $ | 132,533 | $ | (417,774 | ) | $ | (225,082 | ) | $ | 352,697 | $ | 32,978 | $ | 39,733 | |||||||||||
Ratio of earnings to fixed charges (a) | (b) | (c) | (d) | 1.1 | (e) | (f) |
(a) | Interest associated with income tax liabilities is excluded from our calculation. |
(b) | For the fiscal year ended July 28, 2018, the aggregate amount of fixed charges exceeded our earnings by approximately $217.3 million, which is the amount of additional earnings that would have been required to achieve a ratio of earnings to fixed charges of 1.0x for such period. |
(c) | For the fiscal year ended July 29, 2017, the aggregate amount of fixed charges exceeded our earnings by approximately $753.6 million, which is the amount of additional earnings that would have been required to achieve a ratio of earnings to fixed charges of 1.0x for such period. The deficiency of the ratio of earnings to fixed charges for fiscal year 2017 is due primarily to (1) pretax impairment charges related to (i) $309.7 million for the writedown to fair value of the net carrying value of tradenames, (ii) $196.2 million for the writedown to fair value of goodwill and (iii) $4.8 million for the writedown to fair value of the net carrying value of certain long-lived assets and (2) the continuation of adverse economic and business trends resulting in lower than expected revenues. |
(d) | For the fiscal year ended July 30, 2016, the aggregate amount of fixed charges exceeded our earnings by approximately $552.4 million, which is the amount of additional earnings that would have been required to achieve a ratio of earnings to fixed charges of 1.0x for such period. The deficiency of the ratio of earnings to fixed charges for fiscal year 2016 is due primarily to the pretax impairment charges related to (i) $228.9 million for the writedown to fair value of the net carrying value of tradenames, (ii) $199.2 million for the writedown to fair value of goodwill and (iii) $38.1 million for the writedown to fair value of the net carrying value of certain long-lived assets. |
(e) | For the thirty-nine weeks ended August 2, 2014, the aggregate amount of fixed charges exceeded our earnings by approximately $223.7 million, which is the amount of additional earnings that would have been required to achieve a ratio of earnings to fixed charges of 1.0x for such period. |
(f) | For the thirteen weeks ended November 2, 2013, the aggregate amount of fixed charges exceeded our earnings by approximately $5.0 million, which is the amount of additional earnings that would have been required to achieve a ratio of earnings to fixed charges of 1.0x for such period. |
JURISDICTION OF SUBSIDIARY/AFFILIATE | INCORPORATION OR FORMATION | STOCKHOLDER OR MEMBER | ||
Bergdorf Goodman, Inc. | New York | The Neiman Marcus Group LLC | ||
Bergdorf Graphics, Inc. | New York | Bergdorf Goodman, Inc. | ||
BG Productions, Inc. | Delaware | The Neiman Marcus Group LLC | ||
Mariposa Borrower, Inc. | Delaware | Neiman Marcus Group LTD LLC | ||
NEMA Beverage Corporation | Texas | NEMA Beverage Holding Corporation | ||
NEMA Beverage Holding Corporation | Texas | NEMA Beverage Parent Corporation | ||
NEMA Beverage Parent Corporation | Texas | The Neiman Marcus Group LLC | ||
NM Financial Services, Inc. | Delaware | The Neiman Marcus Group LLC | ||
NMG International LLC | Delaware | The Neiman Marcus Group LLC | ||
NMG Global Mobility, Inc. | Delaware | The Neiman Marcus Group LLC | ||
NMGP, LLC | Virginia | The Neiman Marcus Group LLC | ||
NM Nevada Trust | Massachusetts | The Neiman Marcus Group LLC (90%) Bergdorf Goodman, Inc. (10%) | ||
The Neiman Marcus Group LLC | Delaware | Neiman Marcus Group LTD LLC | ||
Worth Avenue Leasing Company | Florida | The Neiman Marcus Group LLC | ||
NM Bermuda, LLC | Delaware | The Neiman Marcus Group LLC | ||
Neiman Marcus Bermuda, L.P. | Bermuda | The Neiman Marcus Group LLC (99%) NM Bermuda, LLC (1%) | ||
NMG Asia Holdings Limited | Hong Kong | Neiman Marcus Bermuda, L.P. | ||
NMG Asia Limited | Hong Kong | NMG Asia Holdings Limited | ||
Nancy Holdings LLC | Delaware | The Neiman Marcus Group LLC | ||
NMG Salon Holdings LLC | Delaware | The Neiman Marcus Group LLC | ||
NMG Salons LLC | Delaware | NMG Salon Holdings LLC | ||
NMG California Salon LLC | California | NMG Salon Holdings LLC | ||
NMG Florida Salon LLC | Florida | NMG Salon Holdings LLC | ||
NMG Texas Salon LLC | Texas | NMG Salon Holdings LLC |
1. | I have reviewed this annual report on Form 10-K of Neiman Marcus Group LTD LLC; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’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, summarize and report 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, 2018 | /s/ GEOFFROY VAN RAEMDONCK |
Geoffroy van Raemdonck | ||
Chief Executive Officer |
1. | I have reviewed this annual report on Form 10-K of Neiman Marcus Group LTD LLC; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’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, summarize and report 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, 2018 | /s/ ADAM ORVOS |
Adam Orvos | ||
Executive Vice President, Chief Financial Officer and Chief Operating Officer |
Dated: | September 18, 2018 | /s/ GEOFFROY VAN RAEMDONCK |
Geoffroy van Raemdonck | ||
Chief Executive Officer |
Dated: | September 18, 2018 | /s/ ADAM ORVOS |
Adam Orvos | ||
Executive Vice President, Chief Financial Officer and Chief Operating Officer |
Document and Entity Information - USD ($) |
12 Months Ended | |
---|---|---|
Jul. 28, 2018 |
Sep. 18, 2018 |
|
Document and Entity Information | ||
Entity Registrant Name | Neiman Marcus Group LTD LLC | |
Entity Central Index Key | 0001358651 | |
Current Fiscal Year End Date | --07-28 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-K | |
Document Period End Date | Jul. 28, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | FY | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 0 | |
Membership Interest Description | The registrant is privately held. There is no trading in the registrant's membership units and therefore an aggregate market value based on the registrant's membership units is not determinable. | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | Yes | |
Entity Current Reporting Status | No | |
Entity Public Float | $ 0 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares |
Jul. 28, 2018 |
Jul. 29, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Membership units issued (in shares) | 1 | 1 |
Membership units outstanding (in shares) | 1 | 1 |
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jul. 28, 2018 |
Jul. 29, 2017 |
Jul. 30, 2016 |
|
Income Statement [Abstract] | |||
Revenues | $ 4,900,444 | $ 4,705,993 | $ 4,949,472 |
Cost of goods sold including buying and occupancy costs (excluding depreciation) | 3,320,753 | 3,220,027 | 3,322,508 |
Selling, general and administrative expenses (excluding depreciation) | 1,179,641 | 1,129,309 | 1,117,928 |
Income from credit card program | (46,361) | (60,082) | (60,648) |
Depreciation expense | 214,452 | 225,463 | 226,868 |
Amortization of intangible assets | 46,685 | 50,769 | 57,011 |
Amortization of favorable lease commitments | 51,046 | 53,262 | 54,178 |
Other expenses | 37,721 | 29,730 | 27,127 |
Impairment charges | 0 | 510,736 | 466,155 |
Operating earnings (loss) | 96,507 | (453,221) | (261,655) |
Interest expense, net | 307,441 | 295,668 | 285,596 |
Loss before income taxes | (210,934) | (748,889) | (547,251) |
Income tax benefit | (462,065) | (217,130) | (141,141) |
Net earnings (loss) | $ 251,131 | $ (531,759) | $ (406,110) |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (LOSS) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jul. 28, 2018 |
Jul. 29, 2017 |
Jul. 30, 2016 |
|
Statement of Comprehensive Income [Abstract] | |||
Net earnings (loss) | $ 251,131 | $ (531,759) | $ (406,110) |
Other comprehensive earnings (loss): | |||
Foreign currency translation adjustments, before tax | 5,488 | 9,297 | (2,663) |
Change in unrealized gain on financial instruments, before tax | 27,481 | 14,851 | (11,266) |
Reclassification of realized loss on financial instruments to earnings, before tax | 860 | 6,070 | 576 |
Change in unrealized loss on unfunded benefit obligations, before tax | 26,223 | 52,832 | (91,828) |
Tax effect related to items of other comprehensive earnings (loss) | (18,918) | (30,640) | 40,568 |
Total other comprehensive earnings (loss), net of tax | 41,134 | 52,410 | (64,613) |
Total comprehensive earnings (loss) | $ 292,265 | $ (479,349) | $ (470,723) |
CONSOLIDATED STATEMENTS OF MEMBER EQUITY (Parenthetical) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jul. 28, 2018 |
Jul. 29, 2017 |
Jul. 30, 2016 |
|
Statement of Stockholders' Equity [Abstract] | |||
Foreign currency translation adjustments, tax | $ 1,044 | $ 1,729 | $ (381) |
Adjustments for fluctuations in fair market value of financial instruments, tax | 9,058 | 5,822 | (4,416) |
Reclassification to earnings, tax | 424 | 2,379 | 226 |
Change in unfunded benefit obligations, tax | $ 8,392 | $ 20,710 | $ (35,997) |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION Neiman Marcus Group LTD LLC (the "Company") is a luxury omni-channel retailer conducting store and online operations principally under the Neiman Marcus, Bergdorf Goodman, Last Call and MyTheresa brand names. References to “we,” “our” and “us” are used to refer to the Company or collectively to the Company and its subsidiaries, as appropriate to the context. The Company is a subsidiary of Mariposa Intermediate Holdings LLC ("Holdings"), which in turn is a subsidiary of Neiman Marcus Group, Inc., a Delaware corporation ("Parent"). Parent is owned by entities affiliated with Ares Management, L.P. and Canada Pension Plan Investment Board (together, the "Sponsors") and certain co-investors. The Sponsors acquired the Company on October 25, 2013 (the "Acquisition"). The Company’s operations are conducted through its direct wholly owned subsidiary, The Neiman Marcus Group LLC ("NMG"). In October 2014, we acquired MyTheresa, a luxury retailer headquartered in Munich, Germany. The operations of MyTheresa are conducted primarily through the mytheresa.com website. The accompanying Consolidated Financial Statements set forth financial information of the Company and its subsidiaries on a consolidated basis. All significant intercompany accounts and transactions have been eliminated. Our fiscal year ends on the Saturday closest to July 31. Like many other retailers, we follow a 4-5-4 reporting calendar, which means that each fiscal quarter consists of thirteen weeks divided into periods of four weeks, five weeks and four weeks. All references to (i) fiscal year 2018 relate to the fifty-two weeks ended July 28, 2018, (ii) fiscal year 2017 relate to the fifty-two weeks ended July 29, 2017 and (iii) fiscal year 2016 relate to the fifty-two weeks ended July 30, 2016. ESTIMATES AND CRITICAL ACCOUNTING POLICIES We are required to make estimates and assumptions about future events in preparing our financial statements in conformity with generally accepted accounting principles ("GAAP"). These estimates and assumptions affect the amounts of assets, liabilities, revenues and expenses and the disclosure of gain and loss contingencies at the date of the accompanying Consolidated Financial Statements. While we believe that our past estimates and assumptions have been materially accurate, the amounts currently estimated are subject to change if different assumptions as to the outcome of future events were made. We evaluate our estimates and assumptions on an ongoing basis and predicate those estimates and assumptions on historical experience and on various other factors that we believe are reasonable under the circumstances. We make adjustments to our estimates and assumptions when facts and circumstances dictate. Since future events and their effects cannot be determined with absolute certainty, actual results may differ from the estimates and assumptions used in preparing the accompanying Consolidated Financial Statements. Fair Value Measurements. Certain of our assets and liabilities are required to be measured at fair value on a recurring basis. Fair value is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. Assets and liabilities are classified using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value as follows:
Cash and Cash Equivalents. Cash and cash equivalents primarily consist of cash on hand in our stores, deposits with banks and overnight investments with banks and financial institutions. Cash equivalents are stated at cost, which approximates fair value. Our cash management system provides for the reimbursement of all major bank disbursement accounts on a daily basis. Accounts payable includes outstanding checks not yet presented for payment of $39.0 million at July 28, 2018 and $39.6 million at July 29, 2017. Merchandise Inventories and Cost of Goods Sold. We utilize the retail inventory method of accounting. Under the retail inventory method, the valuation of inventories at cost and the resulting gross margins are determined by applying a calculated cost-to-retail ratio, for various groupings of similar items, to the retail value of our inventories. The cost of the inventory reflected in the Consolidated Financial Statements is decreased by charges to cost of goods sold at average cost and the retail value of the inventory is lowered through the use of markdowns. Earnings are negatively impacted when merchandise is marked down. As we adjust the retail value of our inventories through the use of markdowns to reflect market conditions, our merchandise inventories are stated at the lower of cost or market. The areas requiring significant management judgment related to the valuation of our inventories include (i) setting the original retail value for the merchandise held for sale, (ii) recognizing merchandise for which the customer’s perception of value has declined and appropriately marking the retail value of the merchandise down to the perceived value and (iii) estimating the shrinkage that has occurred between physical inventory counts. These judgments and estimates, coupled with the averaging processes within the retail method, can, under certain circumstances, produce varying financial results. Factors that can lead to different financial results include (i) determination of original retail values for merchandise held for sale, (ii) identification of declines in perceived value of inventories and processing the appropriate retail value markdowns and (iii) overly optimistic or conservative estimation of shrinkage. In prior years, we have not made material changes to our estimates of shrinkage or markdown requirements on inventories held as of the end of our fiscal years. Consistent with industry business practice, we receive allowances from certain of our vendors in support of the merchandise we purchase for resale. Certain allowances are received to reimburse us for markdowns taken or to support the gross margins that we earn in connection with the sales of the vendor’s merchandise. These allowances result in an increase to gross margin when we earn the allowances and they are approved by the vendor. Other allowances we receive represent reductions to the amounts we pay to acquire the merchandise. These allowances reduce the cost of the acquired merchandise and are recognized at the time the goods are sold. The amounts of vendor allowances we receive fluctuate based partially on the level of markdowns taken and did not have a significant impact on the year-over-year change in gross margin during fiscal years 2018, 2017 or 2016. We received vendor allowances of $79.1 million, or 1.6% of revenues, in fiscal year 2018, $83.6 million, or 1.8% of revenues, in fiscal year 2017 and $100.8 million, or 2.0% of revenues, in fiscal year 2016. We obtain certain merchandise, primarily precious jewelry, on a consignment basis to expand our product assortment. Consignment merchandise held by us with a cost basis of $370.2 million at July 28, 2018 and $393.1 million at July 29, 2017 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 Assets. Property and equipment are stated at cost less accumulated depreciation. In connection with the Acquisition, the cost basis of the acquired property and equipment was adjusted to its estimated fair value. For financial reporting purposes, we compute depreciation principally using the straight-line method over the estimated useful lives of the assets. Buildings and improvements are depreciated over five to 30 years while fixtures and equipment are depreciated over three to 15 years. Leasehold improvements are amortized over the shorter of the asset life or the lease term (which may include renewal periods when exercise of the renewal option is at our discretion and exercise of the renewal option is considered reasonably assured). Costs incurred for the development of internal computer software are capitalized and amortized using the straight-line method over three to ten years. We assess the recoverability of the carrying values of our store assets, consisting of property and equipment, customer lists and favorable lease commitments, annually and upon the occurrence of certain events. The recoverability assessment with respect to our long-lived assets is performed at the store level. This assessment is based upon the comparison of the undiscounted cash flows anticipated to be generated from the store to the net carrying value of the store assets. To the extent the undiscounted store-level cash flows are not sufficient to recover the net carrying value of the store assets, the assets are impaired and written down to their estimated fair value based upon discounted future cash flows. Based upon the review of our store-level assets, we identified certain property and equipment, other definite-lived intangible assets and favorable lease commitments to be impaired by $4.8 million in fiscal year 2017 and $38.1 million in fiscal year 2016. The recoverability assessment related to store-level assets requires judgments and estimates of future revenues, gross margin rates and store expenses. We base these estimates upon our past and expected future performance. We believe our estimates are appropriate in light of current and future market conditions and the best information available at the assessment date. However, future impairment charges could be required if we do not achieve our current revenue or cash flow projections. Intangible Assets Subject to Amortization. Favorable lease commitments are amortized straight-line over the remaining lives of the leases, ranging from five to 55 years (weighted average life of 30 years) from the Acquisition date. Our definite-lived intangible assets, which primarily consist of customer lists, are amortized using accelerated methods which reflect the pattern in which we receive the economic benefit of the asset, currently estimated at six to 16 years (weighted average life of 13 years) from the respective acquisition dates. Total amortization of all intangible assets recorded in connection with acquisitions for the next five fiscal years is currently estimated as follows (in thousands):
Indefinite-lived Intangible Assets and Goodwill. Indefinite-lived intangible assets, such as our Neiman Marcus, Bergdorf Goodman and MyTheresa tradenames and goodwill, are not subject to amortization. Rather, we assess the recoverability of indefinite-lived intangible assets and goodwill in the fourth quarter of each fiscal year and upon the occurrence of certain events. The recoverability assessment with respect to each of the tradenames used in our operations requires us to estimate the fair value of the asset as of the assessment date. Such determination is made using discounted cash flow techniques (Level 3 determination of fair value). Significant inputs to the valuation model include:
If the recorded carrying value of the tradename exceeds its estimated fair value, an impairment charge is recorded to write the tradename down to its estimated fair value. Based upon the review of our tradenames, we determined certain of our tradenames were impaired and recorded impairment charges aggregating $309.7 million in fiscal year 2017 and $228.9 million in fiscal year 2016. The assessment of the recoverability of the goodwill associated with our Neiman Marcus, Bergdorf Goodman and MyTheresa reporting units involves the comparison of the estimated enterprise fair value of each of our reporting units to its recorded carrying value. We estimate the enterprise fair value based on discounted cash flow techniques (Level 3 determination of fair value). Significant inputs to the valuation model include:
If the recorded carrying value of a reporting unit exceeds its estimated enterprise fair value, an impairment charge is recorded to goodwill for the amount by which the carrying amount exceeds the reporting unit's fair value. Based upon the review of our recorded goodwill balances, we determined that certain of our goodwill balances were impaired and recorded impairment charges aggregating $196.2 million in fiscal year 2017. Prior to the adoption of new accounting guidance in the fourth quarter of fiscal year 2017, our assessment process involved a second step in which we allocated the enterprise fair value to the fair value of the reporting unit's net assets. Any enterprise value in excess of amounts allocated to such net assets represented the implied fair value of goodwill for that reporting unit. If the carrying value of goodwill for a reporting unit exceeded the implied fair value of goodwill, an impairment charge was recorded to write goodwill down to its fair value. The assessment performed in the fourth quarter of fiscal year 2016 was performed utilizing the two-step process. Based on this process, we determined that certain of our goodwill balances were impaired and recorded impairment charges aggregating $199.2 million in fiscal year 2016. The impairment testing process related to our indefinite-lived intangible assets is subject to inherent uncertainties and subjectivity. The use of different assumptions, estimates or judgments with respect to the estimation of the projected future cash flows and the determination of the discount rate used to reduce such projected future cash flows to their net present value could materially increase or decrease any related impairment charge. We believe our estimates are appropriate based upon current and future market conditions and the best information available at the assessment date. However, future impairment charges could be required if we do not achieve our current cash flow, revenue and profitability projections, market royalty rates decrease or the weighted average cost of capital increases. Leases. We lease a significant portion of our retail stores and office facilities. Stores we own are often subject to ground leases. The terms of our real estate leases, including renewal options, range from one to 130 years. Most leases provide for fixed monthly minimum rentals or contingent rentals based upon sales in excess of stated amounts and normally require us to pay real estate taxes, insurance, common area maintenance costs and other occupancy costs. For operating leases that contain predetermined, fixed calculations of minimum rentals, we recognize rent expense on a straight-line basis over the lease term. We recognize contingent rent expenses when it is probable that the sales thresholds will be reached during the year. We typically receive cash allowances from developers related to the construction of our stores. We record these allowances as deferred real estate credits, which we recognize as a reduction of rent expense on a straight-line basis over the lease term beginning with the date we take possession of the leased asset. We received construction allowances aggregating $50.3 million in fiscal year 2018, $37.4 million in fiscal year 2017 and $38.3 million in fiscal year 2016. In some cases, a developer will construct a retail store to our requirements pursuant to a lease agreement between the developer and the Company. Typically, the lease agreement provides for the construction and financing of the store shell by the developer and our subsequent construction and financing of the interior finish-out of the store. Since we are involved in the construction of the leased store in these types of arrangements, we must consider the nature and extent of our involvement during the construction period which, in some cases, may result in us being deemed the accounting owner of the construction project. In such cases, ASC Topic 840, Leases, ("ASC Topic 840") requires that we record an asset for the developer's construction costs related to the store shell (included in construction in progress) and recognize an offsetting deferred financing obligation. Upon completion of the project, we perform a sale-leaseback analysis to determine if these assets and the related financing obligation can be derecognized from our Consolidated Balance Sheets. Included in construction-in-progress are capitalized costs incurred by a developer to construct the shell of a building that we will lease and operate as a retail store upon completion of construction of $110.0 million at July 28, 2018 and $96.9 million at July 29, 2017. Benefit Plans. We sponsor a defined benefit pension plan ("Pension Plan"), an unfunded supplemental executive retirement plan ("SERP Plan") which provides certain employees additional pension benefits and a postretirement plan providing eligible employees limited postretirement health care benefits ("Postretirement Plan"). In calculating our obligations and related expense, we make various assumptions and estimates, after consulting with outside actuaries and advisors. The annual determination of expense involves calculating the estimated total benefits ultimately payable to plan participants. We utilize a spot rate methodology in the estimation of the interest cost component of net periodic benefit cost, which uses the individual spot rates along the yield curve corresponding to benefit payments. The Pension Plan, SERP Plan and Postretirement Plan are valued as of the end of each fiscal year. As of the third quarter of fiscal year 2010, benefits offered to all employees under our Pension Plan and SERP Plan were frozen. Significant assumptions related to the calculation of our obligations include the discount rates used to calculate the present value of benefit obligations to be paid in the future, the expected long-term rate of return on assets held by the Pension Plan and the health care cost trend rate for the Postretirement Plan, as more fully described in Note 10. We review these assumptions annually based upon currently available information, including information provided by our actuaries. Our obligations related to our employee benefit plans are included in other long-term liabilities. Self-insurance and Other Employee Benefit Reserves. We use estimates in the determination of the required accruals for general liability, workers’ compensation and health insurance. We base these estimates upon an examination of historical trends, industry claims experience and independent actuarial estimates. Although we do not expect that we will ultimately pay claims significantly different from our estimates, self-insurance reserves could be affected if future claims experience differs significantly from our historical trends and assumptions. Derivative Financial Instruments. We enter into derivative financial instruments, primarily interest rate swap and cap agreements, to hedge the variability of our cash flows related to a portion of our floating rate indebtedness. The derivative financial instruments are recorded at estimated fair value at each balance sheet date and included in assets or liabilities in our Consolidated Balance Sheets. Revenues. Revenues include sales of merchandise and services and delivery and processing revenues related to merchandise sold. Revenues are recognized at the later 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. Delivery and processing revenues were $62.0 million in fiscal year 2018, $58.7 million in fiscal year 2017 and $50.6 million in fiscal year 2016. Revenues are reduced when customers return goods previously purchased. We maintain reserves for anticipated sales returns primarily based on our historical trends related to returns by our customers. Our reserves for anticipated sales returns were $44.7 million at July 28, 2018 and $47.0 million at July 29, 2017. Buying and Occupancy Costs. Our buying costs consist primarily of salaries and expenses incurred by our merchandising and buying operations. Occupancy costs primarily include rent, property taxes and operating costs of our retail, distribution and support facilities and exclude depreciation expense. Selling, General and Administrative Expenses (Excluding Depreciation). Selling, general and administrative expenses consist principally of costs related to employee compensation and benefits in the selling and administrative support areas and advertising and marketing costs. We receive allowances from certain merchandise vendors in connection with compensation programs for employees who sell the vendors’ merchandise. These allowances are netted against the related compensation expenses that we incur. Amounts received from vendors related to compensation programs were $58.6 million, or 1.2% of revenues, in fiscal year 2018, $62.4 million, or 1.3% of revenues, in fiscal year 2017 and $70.3 million, or 1.4% of revenues, in fiscal year 2016. Consistent with industry practice, we receive advertising allowances from certain of our merchandise vendors. Substantially all the advertising allowances we receive represent reimbursements of direct, specific and incremental costs that we incur to promote the vendor’s merchandise in connection with our various advertising programs, primarily catalogs and other print media and digital media. Advertising allowances fluctuate based on the level of advertising expenses incurred and are recorded as a reduction of our advertising costs when earned. Advertising allowances collected were approximately $45.6 million, or 0.9% of revenues, in fiscal year 2018, $50.1 million, or 1.1% of revenues, in fiscal year 2017 and $54.8 million, or 1.1% of revenues, in fiscal year 2016. We incur costs to advertise and promote the merchandise assortment offered through our store and online operations. We expense advertising costs for print media costs and promotional materials mailed to our customers at the time of mailing to the customer. We amortize the costs of print catalogs during the periods we expect to generate revenues from such catalogs, generally three months. We expense the costs incurred to produce the photographic content on our websites, as well as website design and web marketing costs, as incurred. Net marketing and advertising expenses were $225.3 million, or 4.6% of revenues, in fiscal year 2018, $200.3 million, or 4.3% of revenues, in fiscal year 2017 and $195.9 million, or 4.0% of revenues, in fiscal year 2016. Stock Compensation. At the date of grant, the stock option exercise price equals or exceeds the fair market value of Parent's common stock. Because Parent is privately held and there is no public market for its common stock, the fair market value of Parent's common stock is determined by the Board of Directors of Parent (the "Parent Board") or the Compensation Committee, as applicable, at the time option grants are awarded. The estimate of the fair market value of Parent's common stock utilizes both discounted cash flow techniques and the review of market data and involves assumptions regarding a number of complex and subjective variables. Significant inputs to the common stock valuation model include:
Income from Credit Card Program. We maintain a proprietary credit card program through which credit is extended to customers and have a related marketing and servicing alliance with affiliates of Capital One Financial Corporation ("Capital One"). Pursuant to our agreement with Capital One (the "Program Agreement"), Capital One currently offers credit cards and non-card payment plans under both the "Neiman Marcus" and "Bergdorf Goodman" brand names. Effective July 1, 2013, we amended and extended the Program Agreement to July 2020 (renewable thereafter for three-year terms), subject to early termination provisions. We receive payments from Capital One based on sales transacted on our proprietary credit cards. These payments are based on the profitability of the credit card portfolio as determined under the Program Agreement and are impacted by a number of factors including credit losses incurred and our allocable share of the profits generated by the credit card portfolio, which in turn may be impacted by credit ratings as determined by various rating agencies. In addition, we receive payments from Capital One for marketing and servicing activities we provide to Capital One. We recognize income from our credit card program when earned. Gift Cards. The gift cards sold to our customers have no stated expiration dates and, in some cases, are subject to actual and/or potential escheatment rights in various of the jurisdictions in which we operate. Unredeemed gift cards were $43.0 million at July 28, 2018 and $45.5 million at July 29, 2017. We recognized gift card breakage of $1.5 million in fiscal year 2018, $1.7 million in fiscal year 2017 and $1.3 million in fiscal year 2016 as a component of revenues. Loyalty Program. We maintain a customer loyalty program in which customers earn points for qualifying purchases. Upon reaching specified levels, points are redeemed for awards, primarily gift cards. The estimates of the costs associated with the loyalty program 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 cards to be redeemed upon conversion of the earned points to gift cards. We record the deferral of revenues related to gift card awards under our loyalty program as a reduction of revenues. Income Taxes. We use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. We are routinely under audit by federal, state or local authorities in the area of income taxes. We regularly evaluate the likelihood of realization of tax benefits derived from positions we have taken in various federal and state filings after consideration of all relevant facts, circumstances and available information. If we believe it is more likely than not that our position will be sustained, we recognize the benefit we believe is cumulatively greater than 50% likely to be realized. In December 2017, the Tax Cuts and Jobs Act ("Tax Reform") was signed into law. Among numerous provisions included in the Tax Reform was the reduction of the corporate federal income tax rate from 35% to 21% effective January 1, 2018. As the effective date of the Tax Reform falls five months into our fiscal year, we are subject to a blended federal statutory rate of 26.9% in fiscal year 2018. In connection with our application of the new federal statutory rate, we have measured our long-term deferred income taxes at the new lower rate, which resulted in non-cash benefits aggregating $391.6 million in fiscal year 2018, as more fully described in Note 9. Foreign Currency. We translate the assets and liabilities denominated in a foreign currency into U.S. dollars using the exchange rate in effect at the balance sheet date. Revenues and expenses are translated into U.S. dollars using weighted average exchange rates during the year. We record these translation adjustments as a component of accumulated other comprehensive loss on the Consolidated Balance Sheets. Segments. We conduct our specialty retail store and online operations on an omni-channel basis. As our store and online operations have similar economic characteristics, products, services and customers, our operations constitute a single omni-channel reportable segment. Newly Adopted Accounting Pronouncements. In March 2016, the Financial Accounting Standards Board ("the FASB") issued guidance to simplify how share-based payments are accounted for and presented in the financial statements, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The standard allows (i) entities to withhold an amount up to the employees' maximum individual tax rate in the relevant jurisdiction without resulting in liability classification of the award and (ii) forfeitures to be either estimated, as required currently, or recognized when they occur. We adopted this guidance in the first quarter of fiscal year 2018. The adoption of this guidance did not have a material impact on our Consolidated Financial Statements. Recent Accounting Pronouncements. In May 2014, the FASB issued guidance to clarify the principles for revenue recognition. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes previous revenue recognition guidance. While our evaluation of the impact of adopting this standard is ongoing, we believe the new guidance will impact (i) the income statement presentation related to sales returns, certain promotional programs and income from our credit card program and (ii) accelerate the recognition of online sales to the time of shipment versus delivery. We intend to adopt the revenue recognition requirements of this new guidance in the first quarter of fiscal year 2019 using the modified retrospective adoption method. In May 2017, the FASB issued guidance to clarify which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The standard requires modification accounting only if changes in the terms or conditions result in changes of the fair value, the vesting conditions or the classification of the award as an equity instrument or a liability. This new guidance is effective for us as of the first quarter of fiscal year 2019 and will be applicable to any modification transactions subsequent to the effective date. We are currently evaluating the impact of adopting this new accounting guidance on our Consolidated Financial Statements. In February 2016, the FASB issued guidance that requires a lessee to recognize assets and liabilities arising from leases on the balance sheet. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. Previous GAAP did not require lease assets and liabilities to be recognized for operating leases. Additionally, companies are permitted to make an accounting policy election not to recognize lease assets and liabilities for leases with a term of 12 months or less. For both finance leases and operating leases, the lease liability should be initially measured at the present value of the remaining contractual lease payments. In July 2018, the FASB amended the new leases standard to provide entities with an additional and optional transition method and to provide lessors with a practical expedient, whereby lessors may elect not to separate lease and non-lease components when certain conditions are met. We do not expect the recognition, measurement and presentation of expenses and cash flows arising from our operating leases to significantly change under this new guidance. However, we expect this adoption to lead to a material increase in the assets and liabilities recorded on our Consolidated Balance Sheets and an increase to our footnote disclosures related to leases. We are still evaluating the impact on our Consolidated Financial Statements. This new guidance is effective for us as of the first quarter of fiscal year 2020. In August 2017, the FASB issued guidance to simplify how hedge accounting arrangements are accounted for and presented in the financial statements, including the assessment of hedge effectiveness. Under the new standard, all changes in the fair value of cash flow hedges included in the assessment of effectiveness will be recorded in other comprehensive earnings (loss) and reclassified to earnings in the same income statement line item when the hedged item affects earnings. This new guidance is effective for us as of the first quarter of fiscal year 2020. We are currently evaluating the impact of adopting this new accounting guidance on our Consolidated Financial Statements. In February 2018, the FASB issued guidance which allows a reclassification from accumulated other comprehensive loss to retained earnings for certain stranded tax effects resulting from the Tax Reform. The new guidance may be applied either in the period of adoption or retrospectively to each period in which the effect of the Tax Reform is recognized. Upon adoption, the standard requires disclosures regarding the company's accounting policy for releasing the tax effects in accumulated other comprehensive loss. This new guidance is effective for us as of the first quarter of fiscal year 2020. Early adoption is permitted. We are currently evaluating the impact of adopting this new accounting guidance on our Consolidated Financial Statements. In June 2018, the FASB issued guidance to align accounting for non-employee share-based payment transactions with the guidance for share-based payments to employees. Under the new standard, the measurement of equity-classified non-employee awards will be fixed at the grant date. Additionally, non-public entities can account for non-employee awards using certain practical expedients that are already available for employee awards. This new guidance is effective for us as of the first quarter of fiscal year 2020. Early adoption is permitted. We are currently evaluating the impact of adopting this new accounting guidance on our Consolidated Financial Statements. |
FAIR VALUE MEASUREMENTS |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | FAIR VALUE MEASUREMENTS The following table shows the Company’s financial asset and liability that are required to be measured at fair value on a recurring basis in our Consolidated Balance Sheets:
The fair value of the interest rate swaps is estimated using industry standard valuation models using market-based observable inputs, including interest rate curves. Because Parent is privately held and there is no public market for its common stock, the fair market value of Parent's common stock is determined by the Parent Board or the Compensation Committee, as applicable. In determining the fair market value of Parent's common stock, the Parent Board or the Compensation Committee, as applicable, considers such factors as any recent transactions involving Parent's common stock, the Company’s actual and projected financial results, the principal amount of the Company’s indebtedness, valuations of the Company performed by third parties and other factors it believes are material to the valuation process. Significant inputs to the common stock valuation model are updated as applicable and the carrying value of the obligation is adjusted to its estimated fair value at each reporting date. The carrying values of cash and cash equivalents, credit card receivables and accounts payable approximate fair value due to their short-term nature. We determine the fair value of our long-term debt on a non-recurring basis, which results are summarized as follows:
We estimated the fair value of long-term debt using (i) prevailing market rates for debt of similar remaining maturities and credit risk for the senior secured asset-based revolving credit facility (as amended, the "Asset-Based Revolving Credit Facility") and the senior secured term loan facility (as amended, the "Senior Secured Term Loan Facility" and, together with the Asset-Based Revolving Credit Facility, the "Senior Secured Credit Facilities") and (ii) quoted market prices of the same or similar issues for the $960.0 million aggregate principal amount of 8.00% Senior Cash Pay Notes due 2021 (the "Cash Pay Notes"), the $658.4 million aggregate principal amount of 8.75%/9.50% Senior PIK Toggle Notes due 2021 (the "PIK Toggle Notes") and the $125.0 million aggregate principal amount of 7.125% Debentures due 2028 (the "2028 Debentures" and, together with the Cash Pay Notes and the PIK Toggle Notes, the "Notes"). In connection with purchase accounting, we adjusted the carrying values of our long-lived and intangible assets to their estimated fair values at the acquisition date. The fair value estimates were based upon assumptions related to the future cash flows, discount rates and asset lives utilizing currently available information, and in some cases, valuation results from independent valuation specialists (Level 3 determination of fair value). Subsequent to the Acquisition, we determine the fair value of our long-lived and intangible assets on a non-recurring basis in connection with our periodic evaluations of such assets for potential impairment and record impairment charges when such fair value estimates are lower than the carrying values of the assets. |
PROPERTY AND EQUIPMENT, NET |
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Property and Equipment, Net | PROPERTY AND EQUIPMENT, NET The significant components of our net property and equipment are as follows:
Included in construction in progress are $110.0 million at July 28, 2018 and $96.9 million at July 29, 2017 of capitalized costs incurred by a developer to construct the shell of a building that we will lease and operate as a retail store upon completion of construction. We are deemed to be the owner of the building shell for accounting purposes and are therefore required to recognize as asset for a developer's construction costs related to the store shell and an offsetting deferred financing obligation. |
INTANGIBLE ASSETS, NET AND GOODWILL |
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Intangible Assets, Net and Goodwill | INTANGIBLE ASSETS, NET AND GOODWILL The significant components of our intangible assets and goodwill are as follows:
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IMPAIRMENT CHARGES |
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Impairment Charges | IMPAIRMENT CHARGES Based upon our assessment of economic conditions, our expectations of future business conditions and trends, our projected revenues, earnings, and cash flows as well as other market factors such as the weighted average cost of capital and valuation multiples, we determined that impairment charges were required to state certain of our intangible and long-lived assets to their estimated fair value in fiscal years 2017 and 2016 as follows:
We recorded impairment charges aggregating $466.2 million in fiscal year 2016. These impairment charges were driven primarily by (i) revisions to our anticipated future operating trends in light of adverse economic and business trends existing as of the end of fiscal year 2016 and (ii) to a lesser extent, increases in the weighted average cost of capital used in estimating the fair value of our tradenames and reporting units under a discounted cash flow model. These impairments related to certain of our tradenames, goodwill and long-lived assets primarily associated with our Neiman Marcus brand. Our assessment in fiscal year 2016 was performed prior to the adoption of new accounting guidance issued in January 2017 related to the testing of goodwill for impairment and utilized a second step wherein we allocated the enterprise fair value to the fair value of the reporting unit's net assets to determine the writedown of goodwill. We recorded impairment charges aggregating $510.7 million in fiscal year 2017. These impairment charges were driven both by (i) changes in market conditions related to increases in the weighted average cost of capital and valuation multiples and (ii) further deterioration of operating trends during such periods. In fiscal year 2017, we recorded impairment charges of $153.8 million in the second quarter and $357.0 million in the fourth quarter. These impairment charges related to certain of our tradenames, goodwill and long-lived assets primarily associated with our Neiman Marcus and Bergdorf Goodman brands. Our assessment in fiscal year 2017 was performed subsequent to the adoption of the new accounting guidance issued in January 2017 related to the testing of goodwill for impairment. We continue to undertake initiatives to help drive revenues and streamline business activities and will continue to closely monitor our financial condition and results of operations. However, there is a risk that future economic conditions and operating pressures could increase the risk of additional impairment charges in future periods. |
ACCRUED LIABILITIES |
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Accrued Liabilities | ACCRUED LIABILITIES The significant components of accrued liabilities are as follows:
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LONG-TERM DEBT |
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Long-Term Debt | LONG-TERM DEBT The significant components of our long-term debt are as follows:
Asset-Based Revolving Credit Facility. At July 28, 2018, we have an Asset-Based Revolving Credit Facility with a maximum committed borrowing capacity of $900.0 million. The Asset-Based Revolving Credit Facility matures on July 25, 2021 (or July 25, 2020 if our obligations under our Senior Secured Term Loan Facility or any permitted refinancing thereof have not been repaid or the maturity date thereof has not been extended to October 25, 2021 or later). At July 28, 2018, we had outstanding borrowings of $159.0 million under this facility, outstanding letters of credit of $1.8 million and unused commitments of $700.6 million, subject to a borrowing base, of which $90.0 million of such capacity is available to us subject to certain restrictions as more fully described below. Availability under the Asset-Based Revolving Credit Facility is subject to a borrowing base. The Asset-Based Revolving Credit Facility includes borrowing capacity available for letters of credit (up to $150.0 million, with any such issuance of letters of credit reducing the amount available under the Asset-Based Revolving Credit Facility on a dollar-for-dollar basis) and for borrowings on same-day notice. The borrowing base is equal to at any time the sum of (a) 90% of the net orderly liquidation value of eligible inventory, net of certain reserves, plus (b) 90% 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, plus (c) 100% of segregated cash held in a restricted deposit account. To the extent that excess availability is not equal to or greater than the greater of (a) 10% of the lesser of (1) the aggregate revolving commitments and (2) the borrowing base and (b) $50.0 million, we will be required to maintain a minimum fixed charge coverage ratio. Additional restrictions will apply if this condition is not met for five consecutive business days, including increased reporting requirements and additional administrative agent control rights over certain of our accounts. These restrictions will continue until the condition is satisfied and their imposition may limit our operational flexibility. The Asset-Based Revolving Credit Facility permits us to increase commitments under the Asset-Based Revolving Credit Facility or add one or more incremental term loans to the Asset-Based Revolving Credit Facility by an amount not to exceed $200.0 million. However, the lenders are under no obligation to provide any such additional commitments or loans, and any increase in commitments or incremental term loans will be subject to customary conditions precedent. If we were to request any such additional commitments and the existing lenders or new lenders were to agree to provide such commitments, the size of the Asset-Based Revolving Credit Facility could be increased to $1,100.0 million, but our ability to borrow would still be limited by the amount of the borrowing base. The cash proceeds of any incremental term loans may be used for working capital and general corporate purposes. At July 28, 2018, borrowings under the Asset-Based Revolving Credit Facility bore interest at a rate per annum equal to, at our option, either (a) a base rate determined by reference to the highest of (1) the prime rate of Deutsche Bank AG New York Branch (the administrative agent), (2) the federal funds effective rate plus ½ of 1.00% and (3) the adjusted one-month LIBOR plus 1.00% or (b) LIBOR, subject to certain adjustments, in each case plus an applicable margin of 0.75% with respect to base rate borrowings and 1.75% with respect to LIBOR borrowings at July 28, 2018. The applicable margin is based on the average historical excess availability under the Asset-Based Revolving Credit Facility, and is up to 1.00% with respect to base rate borrowings and up to 2.00% with respect to LIBOR borrowings, in each case with one 0.25% step down based on achievement and maintenance of a certain senior secured first lien net leverage ratio (as defined in the credit agreement governing the Asset-Based Revolving Credit Facility). The weighted average interest rate on the outstanding borrowings pursuant to the Asset-Based Revolving Credit Facility was 4.06% at July 28, 2018. In addition, we are required to pay a commitment fee in respect of unused commitments at a rate of up to 0.375% per annum. We must also pay customary letter of credit fees and agency fees. If at any time the aggregate amount of outstanding revolving loans, unreimbursed letter of credit drawings and undrawn letters of credit under the Asset-Based Revolving Credit Facility exceeds the lesser of (a) the aggregate revolving commitments and (b) the borrowing base, we will be required to repay outstanding loans or cash collateralize letters of credit in an aggregate amount equal to such excess, with no reduction of the commitment amount. If the excess availability under the Asset-Based Revolving Credit Facility is less than the greater of (a) 10% of the lesser of (1) the aggregate revolving commitments and (2) the borrowing base and (b) $50.0 million for a period of five or more consecutive business days, funds held in a collection account maintained with the agent would be applied to repay the loans and other obligations and cash collateralize letters of credit. We would then be required to make daily deposits in the collection account maintained with the agent under the Asset-Based Revolving Credit Facility. We may voluntarily reduce the unutilized portion of the commitment amount and repay outstanding loans at any time without premium or penalty other than customary breakage costs with respect to LIBOR loans. There is no scheduled amortization under the Asset-Based Revolving Credit Facility. The principal amount of the revolving loans outstanding thereunder will be due and payable in full on July 25, 2021 (or July 25, 2020 if our obligations under our Senior Secured Term Loan Facility or any permitted refinancing thereof have not been repaid or the maturity date thereof has not been extended to October 25, 2021 or later). The Asset-Based Revolving Credit Facility is guaranteed by Holdings and each of our current and future direct and indirect wholly owned subsidiaries (subsidiary guarantors) other than (a) unrestricted subsidiaries, (b) certain immaterial subsidiaries, (c) foreign subsidiaries and any domestic subsidiary of a foreign subsidiary, (d) certain holding companies of foreign subsidiaries, (e) captive insurance subsidiaries, not for profit subsidiaries, or a subsidiary which is a special purpose entity for securitization transactions or like special purposes and (f) any subsidiary that is prohibited by applicable law or contractual obligation from acting as a guarantor or which would require governmental approval to provide a guarantee. At July 28, 2018, the assets of non-guarantor subsidiaries, primarily (i) NMG Germany GmbH, through which we conduct the operations of MyTheresa, (ii) NMG International LLC, a holding company with respect to our foreign operations and (iii) Nancy Holdings LLC, which holds legal title to certain real property used by us in conducting our operations, aggregated $442.8 million, or 5.9% of consolidated total assets. All obligations under the Asset-Based Revolving Credit Facility, and the guarantees of those obligations, are secured, subject to certain significant exceptions described below, by substantially all of the assets of Holdings, the Company and the subsidiary guarantors, including:
Capital stock and other securities of a subsidiary of the Company that are owned by the Company or any subsidiary guarantor will not constitute collateral under the Asset-Based Revolving Credit Facility to the extent that such securities cannot secure the 2028 Debentures or other secured public debt obligations without requiring the preparation and filing of separate financial statements of such subsidiary in accordance with applicable SEC rules. As a result, the collateral under the Asset-Based Revolving Credit Facility will include shares of capital stock or other securities of subsidiaries of the Company or any subsidiary guarantor only to the extent that the applicable value of such securities (on a subsidiary-by-subsidiary basis) is less than 20% of the aggregate principal amount of the 2028 Debentures or other secured public debt obligations of the Company. The Asset-Based Revolving Credit Facility contains covenants limiting, among other things, dividends and other restricted payments, investments, loans, advances and acquisitions, and prepayments or redemptions of other indebtedness. These covenants permit such restricted actions in an unlimited amount, subject to the satisfaction of certain payment conditions, principally that we must have (x) pro forma excess availability under the Asset-Based Revolving Credit Facility for each day of the 30-day period prior to such actions, which exceeds the greater of $90.0 million or 15% of the lesser of (a) the revolving commitments under the Asset-Based Revolving Credit Facility and (b) the borrowing base and (y) a pro forma fixed charge coverage ratio of at least 1.0 to 1.0, unless pro forma excess availability for each day of the 30-day period prior to such actions under the Asset-Based Revolving Credit Facility would exceed the greater of (1) $200.0 million and (2) 25% of the lesser of (i) the aggregate revolving commitments under the Asset-Based Revolving Credit Facility and (ii) the borrowing base. The Asset-Based Revolving Credit Facility also contains customary affirmative covenants and events of default, including a cross-default provision in respect of any other indebtedness that has an aggregate principal amount exceeding $50.0 million. Mytheresa.com Credit Facilities. Our subsidiary mytheresa.com GmbH, through which we operate mytheresa.com, is party to two credit facility agreements (the "mytheresa.com Credit Facilities"). The first facility, as amended on July 24, 2018, is a revolving credit line for up to €15.0 million in availability and bears interest at a fixed rate of 2.39% (until further notice) for any loan drawn under the overdraft facility and at rates to be agreed on a case-by-case basis for money market loans and guarantees. The second facility, as amended on July 23, 2018, is a revolving credit line for up to €8.5 million in availability and bears interest at a fixed rate of 2.25% (until further notice) for any loan drawn under the overdraft facility and at rates to be agreed on a case-by-case basis for any other loans. Both facilities are secured by certain inventory held by mytheresa.com GmbH and certain contractual claims. The facilities are not guaranteed by and are non-recourse to us or any of our U.S. subsidiaries or affiliates. Each facility contains restrictive covenants prohibiting mytheresa.com GmbH from distributing or making available loan proceeds to any affiliates including us or any of our other subsidiaries and requiring mytheresa.com GmbH to maintain a minimum economic equity ratio. The agreements also contain usual and customary events of default, the occurrence of which may result in all outstanding amounts under the facility agreements becoming due and payable immediately. There is no scheduled amortization under either facility and neither facility has a specified maturity date. However, each lender may terminate its respective facility at any time provided that mytheresa.com GmbH is given a customary reasonable opportunity to secure alternative financing. As of July 28, 2018, mytheresa.com GmbH had no outstanding borrowings, guarantees of $1.4 million, or €1.2 million, and unused commitments of $26.0 million, or €22.3 million. Senior Secured Term Loan Facility. We have a credit agreement and related security and other agreements for the $2,950.0 million Senior Secured Term Loan Facility. At July 28, 2018, the outstanding balance under the Senior Secured Term Loan Facility was $2,810.2 million. The principal amount of the loans outstanding is due and payable in full on October 25, 2020. The Senior Secured Term Loan Facility permits us to increase the term loans or add a separate tranche of term loans by an amount not to exceed $650.0 million plus an unlimited amount that would result (a) in the case of any incremental term loan facility to be secured equally and ratably with the term loans, a senior secured first lien net leverage ratio equal to or less than 4.25 to 1.00, and (b) in the case of any incremental term loan facility to be secured on a junior basis to the term loans, to be subordinated in right of payment to the term loans or unsecured and pari passu in right of payment with the term loans, a total net leverage ratio equal to or less than the total net leverage ratio as of October 25, 2013. At July 28, 2018, borrowings under the Senior Secured Term Loan Facility bore interest at a rate per annum equal to, at our option, either (a) a base rate determined by reference to the highest of (1) the prime rate of Credit Suisse AG (the administrative agent), (2) the federal funds effective rate plus ½ of 1.00% and (3) the adjusted one-month LIBOR plus 1.00%, or (b) an adjusted LIBOR (for a period equal to the relevant interest period, and in any event, never less than 1.00%), subject to certain adjustments, in each case plus an applicable margin. The applicable margin is up to 2.25% with respect to base rate borrowings and up to 3.25% with respect to LIBOR borrowings. The applicable margin is subject to adjustment based on our senior secured first lien net leverage ratio. The applicable margin with respect to outstanding LIBOR borrowings was 3.25% at July 28, 2018. The interest rate on the outstanding borrowings pursuant to the Senior Secured Term Loan Facility was 5.34% at July 28, 2018. Subject to certain exceptions and reinvestment rights, the Senior Secured Term Loan Facility requires that 100% of the net cash proceeds from certain asset sales and debt issuances and 50% (which percentage will be reduced to 25% if our senior secured first lien net leverage ratio, as defined in the credit agreement governing the Senior Secured Term Loan Facility, is equal to or less than 4.0 to 1.0 but greater than 3.5 to 1.0 and will be reduced to 0% if our senior secured first lien net leverage ratio is equal to or less than 3.5 to 1.0) from excess cash flow, as defined in the credit agreement governing the Senior Secured Term Loan Facility, for each of our fiscal years (commencing with the period ended July 26, 2015) must be used to prepay outstanding term loans under the Senior Secured Term Loan Facility at 100% of the principal amount to be prepaid, plus accrued and unpaid interest. We were not required to prepay any outstanding term loans pursuant to the annual excess cash flow requirements for fiscal years 2018 and 2017. We may repay all or any portion of the Senior Secured Term Loan Facility at any time, subject to redeployment costs in the case of prepayment of LIBOR borrowings other than the last day of the relevant interest period. The Senior Secured Term Loan Facility amortizes in equal quarterly installments of $7.4 million, less certain voluntary and mandatory prepayments, with the remaining balance due at final maturity. The Senior Secured Term Loan Facility is guaranteed by Holdings and each of our current and future subsidiary guarantors other than (a) unrestricted subsidiaries, (b) certain immaterial subsidiaries, (c) foreign subsidiaries and any domestic subsidiary of a foreign subsidiary, (d) certain holding companies of foreign subsidiaries, (e) captive insurance subsidiaries, not for profit subsidiaries, or a subsidiary which is a special purpose entity for securitization transactions or like special purposes and (f) any subsidiary that is prohibited by applicable law or contractual obligation from acting as a guarantor or which would require governmental approval to provide a guarantee. At July 28, 2018, the assets of non-guarantor subsidiaries, primarily (i) NMG Germany GmbH, through which we conduct the operations of MyTheresa, (ii) NMG International LLC, a holding company with respect to our foreign operations and (iii) Nancy Holdings LLC, which holds legal title to certain real property used by us in conducting our operations, aggregated $442.8 million, or 5.9% of consolidated total assets. All obligations under the Senior Secured Term Loan Facility, and the guarantees of those obligations, are secured, subject to certain significant exceptions described below, by substantially all of the assets of Holdings, the Company and the subsidiary guarantors, including:
Capital stock and other securities of a subsidiary of the Company that are owned by the Company or any subsidiary guarantor will not constitute collateral under the Senior Secured Term Loan Facility to the extent that such securities cannot secure the 2028 Debentures or other secured public debt obligations without requiring the preparation and filing of separate financial statements of such subsidiary in accordance with applicable SEC rules. As a result, the collateral under the Senior Secured Term Loan Facility will include shares of capital stock or other securities of subsidiaries of the Company or any subsidiary guarantor only to the extent that the applicable value of such securities (on a subsidiary-by-subsidiary basis) is less than 20% of the aggregate principal amount of the 2028 Debentures or other secured public debt obligations of the Company. The credit agreement governing the Senior Secured Term Loan Facility contains a number of negative covenants and covenants related to the security arrangements for the Senior Secured Term Loan Facility. The credit agreement also contains customary affirmative covenants and events of default, including a cross-default provision in respect of any other indebtedness that has an aggregate principal amount exceeding $50.0 million. Cash Pay Notes. The Company, along with Mariposa Borrower, Inc. as co-issuer, incurred indebtedness in the form of $960.0 million aggregate principal amount of 8.00% Senior Cash Pay Notes due 2021. Interest on the Cash Pay Notes is payable semi-annually in arrears on each April 15 and October 15. The Cash Pay Notes are guaranteed by the same entities that guarantee the Senior Secured Term Loan Facility, other than Holdings. The Cash Pay Notes are unsecured and the guarantees are full and unconditional. At July 28, 2018, the redemption price at which we may redeem the Cash Pay Notes, in whole or in part, as set forth in the indenture governing the Cash Pay Notes, was 104.000%. The Cash Pay Notes mature on October 15, 2021. The Cash Pay Notes include certain restrictive covenants that limit our ability to, among other things: (i) incur additional debt or issue certain preferred stock, (ii) pay dividends, redeem stock or make other distributions, (iii) make other restricted payments or investments, (iv) create liens on assets, (v) transfer or sell assets, (vi) create restrictions on payment of dividends or other amounts by us to our restricted subsidiaries, (vii) engage in mergers or consolidations, (viii) engage in certain transactions with affiliates and (ix) designate our subsidiaries as unrestricted subsidiaries. The Cash Pay Notes also contain a cross-acceleration provision in respect of other indebtedness that has an aggregate principal amount exceeding $50.0 million. PIK Toggle Notes. The Company, along with Mariposa Borrower, Inc. as co-issuer, incurred indebtedness in the form of $600.0 million aggregate principal amount of 8.75%/9.50% Senior PIK Toggle Notes due 2021. At July 28, 2018, the outstanding balance under the PIK Toggle Notes was $658.4 million. The PIK Toggle Notes are guaranteed by the same entities that guarantee the Senior Secured Term Loan Facility, other than Holdings. The PIK Toggle Notes are unsecured and the guarantees are full and unconditional. At July 28, 2018, the redemption price at which we may redeem the PIK Toggle Notes, in whole or in part, as set forth in the indenture governing the PIK Toggle Notes, was 104.375%. The PIK Toggle Notes mature on October 15, 2021. Interest on the PIK Toggle Notes is payable semi-annually in arrears on each April 15 and October 15. Prior to October 2018, interest on the PIK Toggle Notes, subject to certain restrictions, was payable (i) entirely in cash ("Cash Interest"), (ii) entirely by increasing the principal amount of the PIK Toggle Notes by the relevant interest payment amount ("PIK Interest"), or (iii) 50% in Cash Interest and 50% in PIK Interest. Cash Interest on the PIK Toggle Notes accrues at a rate of 8.75% per annum. PIK Interest on the PIK Toggle Notes accrued at a rate of 9.50% per annum. Interest on the PIK Toggle Notes was paid entirely in cash for the first seven interest payments. We elected to pay the October 2017 and April 2018 interest payments in the form of PIK Interest, which resulted in the issuance of additional PIK Toggle Notes of $28.5 million in October 2017 and $29.9 million in April 2018. We did not elect to pay interest in the form of PIK Interest or partial PIK Interest with respect to the interest payment due in October 2018. All future interest payments are required to be paid in Cash Interest. The PIK Toggle Notes include certain restrictive covenants that limit our ability to, among other things: (i) incur additional debt or issue certain preferred stock, (ii) pay dividends, redeem stock or make other distributions, (iii) make other restricted payments or investments, (iv) create liens on assets, (v) transfer or sell assets, (vi) create restrictions on payment of dividends or other amounts by us to our restricted subsidiaries, (vii) engage in mergers or consolidations, (viii) engage in certain transactions with affiliates and (ix) designate our subsidiaries as unrestricted subsidiaries. The PIK Toggle Notes also contain a cross-acceleration provision in respect of other indebtedness that has an aggregate principal amount exceeding $50.0 million. 2028 Debentures. NMG has outstanding $125.0 million aggregate principal amount of our 7.125% Senior Debentures due 2028. The 2028 Debentures are secured by a first lien security interest on certain collateral subject to liens granted under the Senior Secured Credit Facilities constituting (a) (1) 100% of the capital stock of certain of NMG’s existing and future domestic subsidiaries, and (2) 100% of the non-voting stock and 65% of the voting stock of certain of NMG’s existing and future foreign subsidiaries and (b) the real property that constitutes collateral under the Senior Secured Credit Facilities, in each case, pursuant to the terms of the indenture governing the 2028 Debentures. The 2028 Debentures contain covenants that restrict NMG’s ability to create liens and enter into sale and lease back transactions. The collateral securing the 2028 Debentures will be released upon the release of liens on such collateral under the Senior Secured Credit Facilities and any other debt (other than the 2028 Debentures) secured by such collateral. Capital stock and other securities of a subsidiary of NMG that are owned by NMG or any subsidiary will not constitute collateral under the 2028 Debentures to the extent such property does not constitute collateral under the Senior Secured Credit Facilities as described above. The 2028 Debentures are guaranteed on an unsecured, senior basis by the Company. The guarantee is full and unconditional. The guarantee of the 2028 Debentures is subject to automatic release if the requirements for legal defeasance or covenant defeasance of the 2028 Debentures are satisfied, or if NMG’s obligations under the indenture governing the 2028 Debentures are discharged. The 2028 Debentures are not guaranteed by any of NMG's subsidiaries. At July 28, 2018, our subsidiaries consisted principally of (i) Bergdorf Goodman, Inc., through which we conduct the operations of our Bergdorf Goodman stores, (ii) NM Nevada Trust, which holds legal title to certain real property and intangible assets used by us in conducting our operations, (iii) NMG Germany GmbH, through which we conduct the operations of MyTheresa, (iv) NMG International LLC, a holding company with respect to our foreign operations and (v) Nancy Holdings LLC, which holds legal title to certain real property used by us in conducting our operations. The 2028 Debentures include certain restrictive covenants and a cross-acceleration provision in respect of any other indebtedness that has an aggregate principal amount exceeding $15.0 million. The 2028 Debentures mature on June 1, 2028. Maturities of Long-term Debt. At July 28, 2018, annual maturities of long-term debt during the next five fiscal years and thereafter are as follows (in millions):
The previous table does not reflect future excess cash flow prepayments, if any, that may be required under the Senior Secured Term Loan Facility. Interest Expense, net. The significant components of interest expense are as follows:
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DERIVATIVE FINANCIAL INSTRUMENTS |
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Derivative Financial Instruments | DERIVATIVE FINANCIAL INSTRUMENTS Interest Rate Swaps. At July 28, 2018, we had outstanding floating rate debt obligations of $2,969.2 million. In April and June of 2016, we entered into floating to fixed interest rate swap agreements for an aggregate notional amount of $1,400.0 million to limit our exposure to interest rate increases related to a portion of our floating rate indebtedness. These swap agreements hedge a portion of our contractual floating rate interest commitments related to our Senior Secured Term Loan Facility from December 2016 to October 2020. As a result of the April 2016 swap agreements, our effective interest rate as to $700.0 million of floating rate indebtedness will be fixed at 4.9120% from December 2016 through October 2020. As a result of the June 2016 swap agreements, our effective interest rate as to an additional $700.0 million of floating rate indebtedness will be fixed at 4.7395% from December 2016 to October 2020. The fair value of our interest rate swap agreements was a gain of $35.6 million at July 28, 2018 and $3.6 million at July 29, 2017, which amounts were included in other long-term assets. The interest rate swap agreements expire in October 2020. We designated the interest rate swaps as cash flow hedges. As cash flow hedges, unrealized gains on our outstanding interest rate swaps are recognized as assets while unrealized losses are recognized as liabilities. Our interest rate swap agreements are highly, but not perfectly, correlated to the changes in interest rates to which we are exposed. As a result, unrealized gains and losses on our interest rate swap agreements are designated as effective or ineffective. The effective portion of such gains or losses will be recorded as a component of other comprehensive earnings (loss) while the ineffective portion of such gains or losses will be recorded as a component of interest expense. In addition, we realize a gain or loss on our interest rate swap agreements in connection with each required interest payment on our floating rate indebtedness. The realized gains or losses effectively adjust the contractual interest requirements pursuant to the terms of our floating rate indebtedness to the interest requirements at the fixed rates established in the interest rate swap agreements. These realized gains or losses are reclassified to interest expense from accumulated other comprehensive loss. Interest Rate Caps. In April 2014, we entered into interest rate cap agreements (at a cost of $2.0 million) for an aggregate notional amount of $1,400.0 million to hedge the variability of our cash flows related to a portion of our floating rate indebtedness. The interest rate cap agreements effectively capped LIBOR related to our Senior Secured Term Loan Facility at 3.00% from December 2014 through December 2016 with respect to the $1,400.0 million notional amount of such agreements. The interest rate cap agreements expired in December 2016. Gains and losses realized due to the expiration of applicable portions of the interest rate caps were reclassified to interest expense at the time our quarterly interest payments were made. A summary of the recorded amounts related to our interest rate swaps and interest rate caps reflected in our Consolidated Statements of Operations is as follows:
The amount of net gains recorded in accumulated other comprehensive loss at July 28, 2018 that is expected to be reclassified into interest expense in the next 12 months, if interest rates remain unchanged, is approximately $12.1 million. |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | INCOME TAXES The significant components of income tax benefit are as follows:
The significant components of earnings (loss) before income taxes are as follows:
A reconciliation of income tax expense (benefit) to the amount calculated based on the federal and state statutory rates is as follows:
Included in the income tax benefit recognized in fiscal year 2018 is the impact of the Tax Cuts and Jobs Act ("Tax Reform"), which was signed into law on December 22, 2017. Among numerous provisions included in the Tax Reform was the reduction of the corporate federal income tax rate from 35% to 21% effective January 1, 2018. As the effective date of the Tax Reform falls five months into our fiscal year, we are subject to a blended federal statutory rate of 26.9% in fiscal year 2018. In connection with our application of the new federal statutory rate, we have measured our long-term deferred income taxes at the new lower rate, which resulted in non-cash benefits aggregating $391.6 million in fiscal year 2018. We have and intend to continue to reinvest all earnings generated by our foreign operations outside of the U.S. As such, no provision for federal or state income taxes is required as of July 28, 2018. If our intentions change or if these funds are needed for our U.S. operations, we would be required to accrue or pay U.S. taxes on some or all of these undistributed earnings and our effective tax rate would increase. Determination of the unrecognized deferred tax liability that would be incurred if such amounts were repatriated, if any, is not practicable because the calculation is complex and subject to significant volatility. Excluding the impact of the Tax Reform, our effective income tax rate of 33.4% on the loss for fiscal year 2018 exceeded the blended federal statutory rate of 26.9% due primarily to state and foreign income taxes. Our effective income tax rates of 29.0% and 25.8% on the losses for fiscal years 2017 and 2016 were less than the federal statutory tax rate of 35%. No income tax benefits exist related to the goodwill impairment charges of $196.2 million recorded in fiscal year 2017 and $199.2 million recorded in fiscal year 2016. Excluding the impact of the goodwill impairment charges, our effective income tax rates were 39.3% for fiscal year 2017 and 40.6% for fiscal year 2016, which exceeded the federal statutory tax rate due primarily to state income taxes. Significant components of our net deferred income tax asset (liability) are as follows:
The net deferred tax liability of $707.6 million at July 28, 2018 decreased from $1,156.8 million at July 29, 2017. This decrease of $449.2 million was comprised primarily of (i) $391.6 million decrease due to remeasurement of deferred income taxes at the new lower federal statutory rate enacted as a result of Tax Reform and (ii) $43.1 million decrease in deferred tax liabilities related to intangible assets and depreciation and amortization. At July 28, 2018, the Company has gross U.S. federal net operating loss ("NOL") carryforwards of $85.0 million and credit carryforwards of $7.8 million. Gross state NOLs are $32.8 million and state credit carryforwards are $1.6 million. The federal NOLs and credit carryforwards will expire in 2037 while the state NOLs and credit carryforwards will expire beginning in 2021 through 2038, if not utilized. Subsequent to the enactment of Tax Reform, carryovers for losses generated after fiscal year 2017 are not subject to expiration. All NOLs are expected to be used prior to the end of the carryforward period. A gross net operating loss of $11.1 million exists in the foreign jurisdiction of Luxembourg. A full valuation allowance has been set up against the Luxembourg NOL. The Company assesses whether deferred tax assets should be recognized based upon the consideration of both positive and negative evidence. Although realization is not assured, the Company believes that the realization of the recognized deferred tax assets is more likely than not based on expectations of future taxable income. At July 28, 2018, the gross amount of unrecognized tax benefits was $1.3 million ($1.0 million of which would impact our effective tax rate, if recognized). We classify interest and penalties as a component of income tax expense (benefit) and our liability for accrued interest and penalties was $0.3 million at July 28, 2018 and $0.4 million at July 29, 2017. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
We file income tax returns in the U.S. federal jurisdiction and various state, local and foreign jurisdictions. The Internal Revenue Service ("IRS") finalized its audits of our fiscal year 2012 and short-year 2013 (prior to the Acquisition) federal income tax returns and is conducting an audit of our short-year 2014 (subsequent to the Acquisition) and fiscal year 2015 returns. With respect to state, local and foreign jurisdictions, with limited exceptions, we are no longer subject to income tax audits for fiscal years before 2014. We believe our recorded tax liabilities as of July 28, 2018 are sufficient to cover any potential assessments made by the IRS or other taxing authorities and we will continue to review our recorded tax liabilities for potential audit assessments based upon subsequent events, new information and future circumstances. We believe it is reasonably possible that adjustments to the amounts of our unrecognized tax benefits could occur within the next 12 months as a result of settlements with tax authorities or expiration of statutes of limitations. At this time, we do not believe such adjustments will have a material impact on our Consolidated Financial Statements. Subsequent to the Acquisition, Parent and its subsidiaries, including the Company, file U.S. federal income taxes as a consolidated group. The Company has elected to be treated as a corporation for U.S. federal income tax purposes and all operations of Parent are conducted through Holdings and its subsidiaries, including the Company. Income taxes incurred by Parent are reflected by the Company and its subsidiaries in the preparation of our Consolidated Financial Statements. There are no differences in current and deferred income taxes between the Company and Parent. |
EMPLOYEE BENEFIT PLANS |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans | EMPLOYEE BENEFIT PLANS Description of Benefit Plans. We currently maintain defined contribution plans consisting of a retirement savings plan ("RSP") and a defined contribution supplemental executive retirement plan ("Defined Contribution SERP Plan"). As of January 1, 2011, employees may make pretax contributions to the RSP and we match an employee’s contribution up to a maximum of 6% of the employee’s compensation subject to statutory limitations for a potential maximum match of 75% of employee contributions. We also sponsor an unfunded key employee deferred compensation plan, which provides certain employees with additional benefits. Our aggregate expense related to these plans was approximately $27.9 million in fiscal year 2018, $27.7 million in fiscal year 2017 and $28.0 million in fiscal year 2016. In addition, we sponsor a defined benefit pension plan ("Pension Plan") and an unfunded supplemental executive retirement plan ("SERP Plan") that provides certain employees additional pension benefits. As of the third quarter of fiscal year 2010, benefits offered to all participants in our Pension Plan and SERP Plan were frozen. Retirees and active employees hired prior to March 1, 1989 are eligible for certain limited postretirement health care benefits ("Postretirement Plan") if they meet certain service and minimum age requirements. Our obligations for employee benefit plans, included in other long-term liabilities, are as follows:
Benefit Obligations. Our obligations for the Pension Plan, SERP Plan and Postretirement Plan are valued as of the end of each fiscal year. Changes in our obligations pursuant to our Pension Plan, SERP Plan and Postretirement Plan during fiscal years 2018 and 2017 are as follows:
Cost of Benefits. The components of the expenses (income) we incurred under our Pension Plan, SERP Plan and Postretirement Plan are as follows:
For purposes of determining pension expense, the expected return on plan assets is calculated using the market related value of plan assets. The market related value of plan assets does not immediately recognize realized gains and losses. Rather, these effects of realized gains and losses are deferred initially and amortized over three years in the determination of the market related value of plan assets. At July 28, 2018, the market related value of plan assets exceeded the fair value by $17.4 million. Actuarial Loss (Gain). Our projected benefit obligation is adjusted at the end of each fiscal year based upon updated assumptions as to discount rates (as further described below), differences between the actual and expected earnings on our Pension Plan assets, mortality assumptions and other factors. In fiscal year 2018, we decreased our obligations for our employee benefit plans for actuarial gains of $43.9 million ($29.4 million net of taxes) primarily as a result of increases in applicable discount rates. Expected Benefit Payments. A summary of expected benefit payments related to our Pension Plan, SERP Plan and Postretirement Plan is as follows:
Pension Plan Assets and Investment Valuations. Changes in the assets held by our Pension Plan in fiscal years 2018 and 2017 are as follows:
The Pension Plan’s investments are stated at fair value or estimated fair value, as more fully described below. Purchases and sales of securities are recorded on the trade date. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Assets held by our Pension Plan are invested in accordance with the provisions of our approved investment policy. The Pension Plan’s strategic asset allocation 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 2018 and 2017 and the target allocation for fiscal year 2019, by asset category, are as follows:
Pension Plan investments in mutual funds and U.S. government securities are classified as Level 1 investments within the fair value hierarchy. Investments in mutual funds and U.S. government securities are valued at fair value based on quoted market prices at year-end. Pension Plan investments in corporate debt securities and certain other investments are classified as Level 2 investments within the fair value hierarchy. Other Level 2 investments are valued using updated quotes from market makers or broker-dealers recognized as market participants, information from market sources integrating relative credit information, observed market movements and sector news, all of which are applied to pricing applications and models. Pension Plan investments in common/collective trusts, hedge funds and limited partnership interests are not classified within the fair value hierarchy. Investments in common/collective trusts are valued based on net asset values on the last business day of the Pension Plan's year end as determined by the sponsors of such trusts and can be redeemed daily. Hedge funds are valued at estimated fair value based on net asset value as determined by the respective fund manager based on the valuation of the underlying securities. Limited partnership interests in venture capital investments are valued at estimated fair value based on net asset value as determined by the respective fund investment manager. The hedge funds and limited partnerships allocate gains, losses and expenses to the Pension Plan as described in the agreements. Hedge funds and limited partnership interests are redeemable at net asset value to the extent provided in the documentation governing the investments. Redemption of these investments may be subject to restrictions including lock-up periods where no redemptions are allowed, restrictions on redemption frequency and advance notice periods for redemptions. As of July 28, 2018, certain of these investments were subject to restrictions on redemption frequency, ranging from daily to every three years and certain of these investments are subject to advance notice requirements, ranging from three-day notification to 180-day notification. Investment securities, in general, are exposed to various risks such as interest rate, credit and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statements of net assets available for benefits. The valuation methods previously described above may produce a fair value calculation that may not be indicative of net realized value or reflective of future fair values. The following tables set forth by level, within the fair value hierarchy, the Pension Plan’s assets at fair value as of July 28, 2018 and July 29, 2017.
Funding Policy and Status. Our policy is to fund the Pension Plan at or above the minimum level required by law. We were required to make contributions to the Pension Plan of $25.2 million in fiscal year 2018 and $10.7 million in fiscal year 2017. As of July 28, 2018, we believe we will be required to contribute $27.6 million to the Pension Plan in fiscal year 2019. Assumptions. Significant assumptions related to the calculation of our obligations pursuant to our employee benefit plans include the discount rates used to 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 assumptions we utilized in calculating the projected benefit obligations and periodic expense of our Pension Plan, SERP Plan and Postretirement Plan are as follows:
Discount Rate. The assumed discount rate utilized is based on a spot rate methodology in the estimation of the interest cost component of net periodic benefit cost, which uses the individual spot rates along the yield curve corresponding to benefit payments. The discount rate is utilized principally in calculating the present values of our benefit obligations and related expenses. Expected Long-Term Rate of Return on Plan Assets. The assumed expected long-term rate of return on assets is the weighted average rate of earnings, net of investment and administrative expenses, expected on the funds invested or to be invested by the Pension Plan to provide for the plan’s obligations. At July 28, 2018, the expected long-term rate of return on plan assets was 5.50%. We estimate the expected average long-term rate of return on assets based on historical returns, our future asset performance expectations using currently available market and other data and the advice of our outside actuaries and advisors. To the extent the actual rate of return on assets realized over the course of a year is greater than the assumed rate, that year’s annual pension expense is not affected. Rather, this gain reduces future pension expense over a period of approximately 21 years. To the extent the actual rate of return on assets is less than the assumed rate, that year’s annual pension expense is likewise not affected. Rather, this loss increases pension expense over approximately 21 years. Health Care Cost Trend Rate. The assumed health care cost trend rate represents our estimate of the annual rates of change in the costs of the health care benefits currently provided by the Postretirement Plan. The health care cost trend rate implicitly considers estimates of health care inflation, changes in health care utilization and delivery patterns, technological advances and changes in the health status of the plan participants. Employee Vacation Benefit Liability. Effective in fiscal year 2019, we changed our vacation policy. Pursuant to the provisions of our new vacation policy, vacation hours earned during each fiscal year must be taken during that fiscal year. Any accrued but unused vacation is forfeited at the end of the fiscal year subject to statutory requirements in certain states precluding such forfeitures. As a result of this policy change, our liability for unused vacation was reduced by $19.5 million, which benefit was recorded as a non-cash gain in fiscal year 2018 within selling, general and administrative expenses. |
COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Leases. We lease certain property and equipment under various operating leases. The leases provide for fixed monthly rentals and/or contingent rentals based upon sales in excess of stated amounts and normally require us to pay real estate taxes, insurance, common area maintenance costs and other occupancy costs. Generally, the leases have primary terms ranging from one to 99 years and include renewal options ranging from five to 80 years. Rent expense and related occupancy costs under operating leases is as follows:
Future minimum rental commitments (excluding renewal options) under non-cancelable leases for the next five fiscal years and thereafter are as follows (in thousands):
Employment, Benefits, and Consumer Class Actions Litigation. In August 2015, the National Labor Relations Board ("NLRB") affirmed an administrative law judge's recommended decision and order finding that the Company's Arbitration Agreement and class action waiver violated the National Labor Relations Act ("NLRA"). We filed our petition for review of the NLRB's order with the U.S. Court of Appeals for the Fifth Circuit. This case has been stayed while another similar case has been pending before the U.S. Supreme Court, which was decided on May 21, 2018 and held that class action waivers in arbitration agreements are lawful under the NLRA and must be enforced under the Federal Arbitration Act. On June 1, 2018, the NLRB filed a motion to remove this case from abeyance, grant our petition for review regarding the class action waiver issue consistent with the U.S. Supreme Court’s decision, and remand the remainder of the case to the NLRB. On June 11, 2018, the U.S. Court of Appeals for the Fifth Circuit granted the NLRB’s motion, and the remanded portion of the case is pending before the NLRB. The Company has several wage and hour putative class action matters pending in California. The earliest, filed in December 2015 and amended in February 2016, was filed against The Neiman Marcus Group, Inc. by Holly Attia and seven other named plaintiffs, seeking to certify a class of non-exempt employees for alleged violations for failure to pay overtime wages, failure to provide meal and rest breaks, failure to reimburse business expenses, failure to timely pay wages due at termination and failure to provide accurate itemized wage statements. Plaintiffs also allege derivative claims for restitution under California unfair competition law and a representative claim for penalties under the California Labor Code Private Attorneys General Act ("PAGA"), and all related damages for alleged violations (restitution, statutory penalties under PAGA, and attorneys' fees, interest and costs of suit). The case was removed to the U.S. District Court for the Central District of California in March 2016, and the Company filed a motion to compel arbitration and requested to stay the PAGA claim. In June 2016, the court granted the motion and compelled arbitration of the individual claims. The court retained jurisdiction of the PAGA claim and stayed that claim pending the outcome of arbitration. In October 2016, the court granted the plaintiffs' motion for reconsideration of the arbitration decision based on a recent decision by the Ninth Circuit Court of Appeals in Morris v. Ernst & Young, LLP, and reversed its order compelling arbitration. The Company appealed. The U.S. Supreme Court granted certiorari of the Morris decision, and the Ninth Circuit appeal is currently stayed pending the Supreme Court's decision. In June 2017, the district court stayed the entire case pending the Supreme Court’s decision in Morris. The parties reached an agreement in principle to settle this case, subject to court approval. The motion for preliminary approval of the settlement was filed with the court on July 24, 2018. On September 5, 2018, the district court preliminarily approved the settlement. The PAGA representative action filed by Xuan Hien Nguyen will be resolved in connection with the Attia settlement, as Nguyen and her claims have been amended into Attia. The PAGA representative action filed by Milca Connolly and the putative class and representative action filed by Ondrea Roces and Sophia Ahmed have been stayed pending the settlement approval process in Attia. On October 24, 2017, a putative class action complaint was filed against The Neiman Marcus Group LLC and the Company’s Health and Welfare Benefit Plan in the U.S. District Court for the Western District of Washington by a plan beneficiary alleging violations of the Federal Mental Health Parity Act and the Affordable Care Act through the Employment Retirement Income Security Act of 1974 (“ERISA”) in connection with the alleged failure to cover particular treatments for developmental health conditions. Plaintiffs have agreed not to pursue their class claims and the parties have agreed to a tentative settlement with the named plaintiff. On October 27, 2017, a putative class action complaint was filed against Neiman Marcus Group, Inc., The Neiman Marcus Group LLC, and Bergdorf Goodman, Inc. in the U.S. District Court for the Southern District of New York by Victor Lopez, an allegedly visually-impaired and legally blind individual, in connection with his visits to Bergdorf Goodman, Inc.’s website. Mr. Lopez alleges, on behalf of himself and those similarly situated, that Bergdorf Goodman, Inc.’s website is not fully and equally accessible to legally blind individuals, resulting in denial of access to the equal enjoyment of goods and services, in violation of the Americans with Disabilities Act and the New York State and City Human Rights Laws. The defendant Companies have filed a joint answer denying the claims. On August 7, 2014, a putative class action complaint was filed against The Neiman Marcus Group LLC in Los Angeles County Superior Court by a customer, Linda Rubenstein, in connection with the Company's Last Call stores in California. Ms. Rubenstein alleges that the Company has violated various California consumer protection statutes by implementing a marketing and pricing strategy that suggests that clothing sold at Last Call stores in California was originally offered for sale at full-line Neiman Marcus stores when allegedly, it was not, and that the Company lacks adequate information to support its comparative pricing labels. In September 2014, we removed the case to the U.S. District Court for the Central District of California. After dismissing Ms. Rubenstein’s original and first amended complaint, the court dismissed her second amended complaint in its entirety in May 2015, without leave to amend, and Ms. Rubenstein appealed. In April 2017, the Court of Appeal reversed, holding that Ms. Rubenstein’s allegations were sufficient to proceed past the pleadings stage of litigation. The case was transferred back to the district court. On September 7, 2017, the district court issued an order permitting Ms. Rubenstein to file a proposed Third Amended Complaint, which modifies the putative class period. Additionally, Ms. Rubenstein filed a motion for class certification, which was fully briefed by both parties. The parties reached an agreement in principle to settle the case, subject to court approval. A notice of settlement was filed, and the hearing on Ms. Rubenstein’s motion for class certification was vacated. On May 21, 2018, the court granted the motion for preliminary approval of the settlement and scheduled a final approval hearing for October 1, 2018. In addition, we are currently involved in various other legal actions and proceedings that arose in the ordinary course of business. With respect to the matters described above as well as all other current outstanding litigation involving us, we believe that any liability arising as a result of such litigation will not have a material adverse effect on our financial condition, results of operations or cash flows. Cyber-Attack Class Actions Litigation. In January 2014, three class actions relating to a cyber-attack on our computer systems in 2013 (the "Cyber-Attack") were filed and later voluntarily dismissed by the plaintiffs between February and April 2014. The plaintiffs had alleged negligence and other claims in connection with their purchases by payment cards and sought monetary and injunctive relief. Three additional putative class actions relating to the Cyber-Attack were filed in March and April 2014, also alleging negligence and other claims in connection with plaintiffs’ purchases by payment cards. Two of the cases were voluntarily dismissed. The third case, Hilary Remijas v. The Neiman Marcus Group, LLC, was filed on March 12, 2014 in the U.S. District Court for the Northern District of Illinois. On June 2, 2014, an amended complaint in the Remijas case was filed, which added three plaintiffs (Debbie Farnoush and Joanne Kao, California residents; and Melissa Frank, a New York resident) and asserted claims for negligence, implied contract, unjust enrichment, violation of various consumer protection statutes, invasion of privacy and violation of state data breach laws. The Company moved to dismiss the Remijas amended complaint, and the court granted the Company's motion on the grounds that the plaintiffs lacked standing due to their failure to demonstrate an actionable injury. Plaintiffs appealed the district court's order dismissing the case to the Seventh Circuit Court of Appeals, and the Seventh Circuit Court of Appeals reversed the district court's ruling, remanding the case back to the district court. The Company filed a petition for rehearing en banc, which the Seventh Circuit Court of Appeals denied. The Company filed a motion for dismissal on other grounds, which the court denied. The parties jointly requested, and the court granted, an extension of time for filing a responsive pleading, which was due on December 28, 2016. On February 9, 2017, the court denied the parties' request for another extension of time, dismissed the case without prejudice, and stated that plaintiffs could file a motion to reinstate. On March 8, 2017, plaintiffs filed a motion to reinstate, which the court granted on March 16, 2017. On March 17, 2017, plaintiffs filed a motion seeking preliminary approval of a class action settlement resolving this action, which the court granted on June 21, 2017. On August 21, 2017, plaintiffs moved for final approval of the proposed settlement. In September 2017, purported settlement class members filed two objections to the settlement, and plaintiffs and the Company filed responses to the objections on October 19, 2017. At the fairness hearing on October 26, 2017, the Court ordered supplemental briefing on the objections. Objectors filed a supplemental brief in support of their objections on November 9, 2017, and plaintiffs and the Company filed their supplemental responses to the objections on November 21, 2017. On January 16, 2018, an order was issued by the District Court reassigning the case to Judge Sharon Johnson Coleman due to the prior judge’s retirement. The motion for final approval of the settlement remains pending. In addition to class actions litigation, payment card companies and associations may require us to reimburse them for unauthorized card charges and costs to replace cards and may also impose fines or penalties in connection with the security incident, and enforcement authorities may also impose fines or other remedies against us. We have also incurred other costs associated with this security incident, including legal fees, investigative fees, costs of communications with customers and credit monitoring services provided to our customers. At this point, we are unable to predict the developments in, outcome of, and economic and other consequences of pending or future litigation or regulatory investigations related to, and other costs associated with, this matter. We will continue to evaluate these matters based on subsequent events, new information and future circumstances. Other. We had $1.8 million of irrevocable letters of credit and $3.4 million in surety bonds outstanding at July 28, 2018, relating primarily to merchandise imports and state sales tax and utility requirements. |
ACCUMULATED OTHER COMPREHENSIVE LOSS |
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Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | ACCUMULATED OTHER COMPREHENSIVE LOSS The following table summarizes the changes in accumulated other comprehensive loss by component (amounts are recorded net of related income taxes):
The amounts reclassified from accumulated other comprehensive loss are recorded within interest expense on the Consolidated Statements of Operations. |
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Stock-based Awards | STOCK-BASED AWARDS Incentive Plans. Parent established various incentive plans pursuant to which eligible employees, consultants and non-employee directors are eligible to receive stock-based awards. Under the incentive plans, Parent is authorized to grant stock options, restricted stock and other types of awards that are valued in whole or in part by reference to, or are payable or otherwise based on, the shares of common stock of Parent. Charges with respect to options issued by Parent pursuant to the incentive plans are reflected by the Company in the preparation of our Consolidated Financial Statements. Co-Invest Options. In connection with the Acquisition, certain executive officers of the Company rolled over a portion of the amounts otherwise payable in settlement of their pre-Acquisition stock options into stock options of Parent representing options to purchase a total of 56,979 shares of common stock of Parent (the "Co-Invest Options"). The number of Co-Invest Options issued upon conversion of pre-Acquisition stock options was equal to the product of (a) the number of shares subject to the applicable pre-Acquisition stock options multiplied by (b) the ratio of the per share merger consideration over the fair market value of a share of Parent, which was approximately 3.1x (the "Exchange Ratio"). The exercise price of each pre-Acquisition stock option was adjusted by dividing the original exercise price of the pre-Acquisition stock option by the Exchange Ratio. Following the conversion, the exercise prices of the Co-Invest Options range from $180 to $644 per share. As of the date of the Acquisition, the aggregate intrinsic value of the Co-Invest Options equaled the aggregate intrinsic value of the rolled over pre-Acquisition stock options. The Co-Invest Options are fully vested and are exercisable at any time prior to the applicable expiration dates related to the original grant of the pre-Acquisition options. The Co-Invest Options contain sale and repurchase provisions. In September 2017, the Compensation Committee approved grants of non-qualified Co-Invest Options (the “New Co-Invest Options”) to certain continuing employees who previously held Co-Invest Options. The New Co-Invest Options have the effect of replacing the previous Co-Invest Options held by those employees, which were cancelled, and extending the expiration date to the tenth anniversary of the grant date. All other terms of the New Co-Invest Options remain unchanged from the terms of the cancelled Co-Invest Options. In the first quarter of fiscal year 2018, we recorded non-cash stock compensation expense aggregating $4.2 million related to the cancellation and replacement of the previous Co-Invest Options with the New Co-Invest Options. Non-Qualified Stock Options. Pursuant to the terms of the incentive plans, Parent granted time-vested and performance-vested non-qualified stock options to certain executive officers, employees and non-employee directors of the Company. These non-qualified stock options will expire no later than the tenth anniversary of the grant date. In January 2018, the Compensation Committee determined that the exercise prices of certain time-vested stock options were higher than the current fair market value of Parent's common stock. In order to enhance the retentive value of these options, the Compensation Committee approved a repricing of 43,261 time-vested stock options to an exercise price of $500 per share. In the second quarter of fiscal year 2018, we recorded non-cash stock compensation expense aggregating $0.5 million related to the repricing of the time-vested stock options. In September 2016, the Compensation Committee determined that the exercise prices of certain time-vested and performance-vested stock options were higher than the current fair market value of Parent's common stock. In order to enhance the retentive value of these options, the Compensation Committee approved (1) a repricing of 18,225 time-vested and performance-vested stock options to an exercise price of $1,000 per share and (2) modifications to the performance metrics applicable to all performance-vested stock options. Accounting for Stock Options. Prior to an initial public offering ("IPO"), in the event the optionee ceases to be an employee of the Company, Parent generally has the right to repurchase shares issued upon exercise of vested stock options at fair market value and shares underlying vested unexercised stock options for the difference between the fair market value of the underlying share on the date of such optionee's termination of employment and the exercise price. However, other than with respect to the Co-Invest Options and options held by our current and former Chief Executive Officers, if the optionee voluntarily leaves the Company without good reason (as defined in the incentive plans) or is terminated for cause, the repurchase price is the lesser of the exercise price of such options or the fair value of such awards at the employee termination date. For certain optionees, in the event of the retirement of the optionee, the repurchase price is the fair value at the retirement date. Parent's repurchase rights expire upon completion of an IPO, including with respect to the Co-Invest Options. We currently account for stock options issued to certain optionees who will become retirement eligible prior to the expiration of their stock options and certain options held by our former Chief Executive Officer ("Eligible Optionees") as variable awards using the liability method as these optionees could receive a cash settlement of their awards should Parent exercise its repurchase rights with respect to such shares. Under the liability method, we recognize the estimated liability for option awards held by Eligible Optionees over the vesting periods of such awards. In periods in which the estimated fair value of our equity increases, we increase our stock compensation liability. Conversely, in periods in which the estimated fair value of our equity decreases, we reduce our stock compensation liability. These increases/decreases are recorded as stock compensation expense and are included in selling, general and administrative expenses. With respect to time-vested options held by non-Eligible Optionees, such options are effectively forfeited should the optionee voluntarily leave the Company without good reason or be terminated for cause prior to an IPO. As a result, we currently record no expense or liability with respect to such options. With respect to performance-vested options, such options are effectively forfeited should the optionee voluntarily leave the Company without good reason or be terminated for cause prior to achievement of the performance condition. As a result, we currently record no expense or liability with respect to such options. A summary of our liabilities for our variable stock option awards is as follows:
Outstanding Stock Options. A summary of stock option activity is as follows:
Grant Date Fair Value of Stock Options. At the date of grant, the stock option exercise price equals or exceeds the fair market value of Parent's common stock. Because Parent is privately held and there is no public market for its common stock, the fair market value of Parent's common stock is determined by the Parent Board or the Compensation Committee, as applicable, at the time option grants are awarded (Level 3 determination of fair value). In determining the fair market value of Parent's common stock, the Parent Board or the Compensation Committee, as applicable, considers such factors as any recent transactions involving Parent's common stock, the Company’s actual and projected financial results, the principal amount of the Company’s indebtedness, valuations of the Company performed by third parties and other factors it believes are material to the valuation process. We use the Black-Scholes option-pricing model to determine the fair value of our options as of the date of grant. We used the following assumptions to estimate the fair value for stock options at the grant date:
Expected volatility is based on estimates of implied volatility of our peer group. Restricted Stock. In October 2016, Parent approved grants of 26,954 restricted shares of common stock of Parent to certain executive officers and management employees. Subject to continued employment, shares of restricted stock will vest over three or four years in equal increments on each anniversary of December 1, 2016. Each year beginning in calendar 2017, subject to certain limitations, each recipient will have the ability to require Parent to acquire his or her vested shares (the "put right") during the 14-day period following the release of the Company's earnings in respect of its first fiscal quarter (such period, the "put period") for a purchase price equal to the fair market value of Parent's common stock at the beginning of the put period. Except as described below with respect to our current and former Chief Executive Officers, a recipient will forfeit all unvested shares of restricted stock and may not exercise the put right with respect to any vested shares following the termination of his or her employment for any reason. Following a voluntary departure without good reason or a termination for cause, we have the right to repurchase any vested shares of restricted stock at par value ($0.001 per share). In connection with the hire of our Chief Executive Officer, Parent approved a grant of 8,000 restricted shares of common stock of Parent. Subject to his continued employment, shares of restricted stock will vest over four years in equal increments on each anniversary of February 12, 2018. If Parent’s majority stockholders sell a percentage of their stock in Parent, subject to certain limitations, our Chief Executive Officer will have a put right with respect to an equal percentage of his total shares (or, if less, the number of his vested shares) during the put period for a purchase price equal to the fair market value of Parent's common stock at the beginning of the put period. Our Chief Executive Officer will forfeit all unvested shares of restricted stock upon his termination of employment. Our Chief Executive Officer will have the ability to exercise the put right with respect to vested shares in the first put period following his termination by the Company without cause, his voluntary termination for good reason or his termination due to the Company not renewing his employment agreement. Following a termination for cause, we have the right to repurchase any vested shares of restricted stock at par value ($0.001 per share). In connection with the retirement of our former Chief Executive Officer, effective in February 2018, all unvested shares of restricted stock that would have vested in the 12-month period following the date of such termination of employment were accelerated and vested. Our former Chief Executive Officer will have the ability to exercise the put right with respect to vested shares in the first put period following her retirement. In connection with the hire of our Chief Financial Officer, Parent approved a grant of 2,500 restricted shares of common stock of Parent. Subject to his continued employment, shares of restricted stock will vest over four years in equal increments on each anniversary of April 23, 2018. If Parent’s majority stockholders sell a percentage of their stock in Parent, subject to certain limitations, our Chief Financial Officer will have a put right with respect to an equal percentage of 750 of his total shares (or, if less, the number of his vested shares) during the put period for a purchase price equal to the fair market value of Parent's common stock at the beginning of the put period. Additionally, in May 2018, Parent approved a grant of 850 restricted shares of common stock of Parent to certain members of the Parent Board. Subject to their continued board service, shares of restricted stock will vest over four years in equal increments on each anniversary of May 22, 2018. No put right has been provided related to the restricted shares awarded to members of the Parent Board. The recorded liability with respect to unvested restricted shares was $1.0 million at July 28, 2018 and $1.2 million at July 29, 2017. Outstanding Restricted Shares. A summary of restricted share activity is as follows:
Stock Compensation Expense (Benefit). The following table summarizes our stock-based compensation expense (benefit):
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REVENUES |
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Revenues | REVENUES The following table represents our revenues by merchandise category as a percentage of revenues:
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OTHER EXPENSES |
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Other Expenses | OTHER EXPENSES Other expenses consists of the following components:
We incurred professional fees and other costs aggregating $23.3 million in fiscal year 2018, $21.3 million in fiscal year 2017 and $24.3 million in fiscal year 2016 in connection with the review of our resources and organizational processes, implementation of our integrated merchandising and distribution system and the evaluation of potential strategic alternatives. In connection with the review of our resources and organizational processes, we eliminated approximately 315 positions in fiscal year 2017 and approximately 500 positions in fiscal year 2016 across our stores, divisions and facilities. During fiscal year 2017, we began a process to assess our Last Call footprint and closed four of our Last Call stores. In fiscal year 2018, we closed 14 additional Last Call stores in order to optimize our Last Call store portfolio. We incurred expenses related to these store closures, which primarily consisted of severance and store closing costs, of $8.0 million in fiscal year 2018 and $2.6 million in fiscal year 2017. We discovered in January 2014 that malicious software was clandestinely installed on our computer systems ("the Cyber-Attack"). We incurred legal and other expenses in connection with the Cyber-Attack of $1.1 million in fiscal year 2018, $1.5 million in fiscal year 2017 and $1.0 million in fiscal year 2016. In October 2014, we acquired MyTheresa, a luxury retailer headquartered in Munich, Germany. Acquisition costs consisted primarily of professional fees as well as adjustments of our earn-out obligations to estimated fair value at each reporting date. In connection with the retirement of our former Chief Executive Officer and President, we incurred expenses of approximately $5.3 million in fiscal year 2018. In the third quarter of fiscal year 2016, we recorded a $5.6 million net gain related to the closure and relocation of our regional service center in New York. |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION (with respect to NMG's obligations under the Senior Secured Credit Facilities, Cash Pay Notes and PIK Toggle Notes) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATING FINANCIAL INFORMATION (with respect to NMG's obligations under the Senior Secured Term Loan Facility and Asset-Based Revolving Credit Facility) | CONDENSED CONSOLIDATING FINANCIAL INFORMATION (with respect to NMG's obligations under the Senior Secured Credit Facilities, Cash Pay Notes and PIK Toggle Notes) All of NMG’s obligations under the Senior Secured Credit Facilities are guaranteed by Holdings and our current and future direct and indirect wholly owned subsidiaries, subject to exceptions as more fully described in Note 7. All of NMG's obligations under the Cash Pay Notes and the PIK Toggle Notes are guaranteed by the same entities that guarantee the Senior Secured Credit Facilities, other than Holdings. At July 28, 2018, the Company’s non-guarantor subsidiaries under the Senior Secured Credit Facilities, Cash Pay Notes and PIK Toggle Notes consisted principally of (i) NMG Germany GmbH, through which we conduct the operations of MyTheresa, (ii) NMG International LLC, a holding company with respect to our foreign operations and (iii) Nancy Holdings LLC, which holds legal title to certain real property used by us in conducting our operations and described below under "— Results of Operations and Financial Condition of Unrestricted Subsidiaries". The non-guarantor subsidiary Nancy Holdings LLC had no assets or operations prior to March 10, 2017. The following condensed consolidating financial information represents the financial information of the Company and its non-guarantor subsidiaries under the Senior Secured Credit Facilities, Cash Pay Notes and PIK Toggle Notes, prepared on the equity basis of accounting. The information is presented in accordance with the requirements of Rule 3-10 under the SEC’s Regulation S-X. The financial information may not necessarily be indicative of results of operations, cash flows or financial position had the non-guarantor subsidiaries operated as independent entities.
Results of Operations and Financial Condition of Unrestricted Subsidiaries. On March 10, 2017, the Board of Directors of Parent designated certain of our subsidiaries as “unrestricted subsidiaries” for purposes of the indenture governing the Cash Pay Notes and the indenture governing the PIK Toggle Notes. These subsidiaries were previously or simultaneously designated as "unrestricted subsidiaries" under the Asset-Based Revolving Credit Facility and the Senior Secured Term Loan Facility. At July 28, 2018, the unrestricted subsidiaries consisted primarily of (i) NMG Germany GmbH, through which we conduct the operations of MyTheresa and (ii) Nancy Holdings LLC, which holds legal title to certain real property located in McLean, Virginia, San Antonio, Texas and Longview, Texas used by us in conducting our operations. Pursuant to the terms of the indentures governing the Cash Pay Notes and the PIK Toggle Notes, we are presenting the following financial information with respect to the unrestricted subsidiaries separate from the Company and its restricted subsidiaries. The unrestricted subsidiary Nancy Holdings LLC had no assets or operations prior to March 10, 2017. The financial information of NMG Germany GmbH as of July 29, 2017 and as of July 30, 2016 was substantially the same as the financial information presented for “Non-Guarantor Subsidiaries” for such periods included in the tables above in this Note 16. The difference in net earnings (loss) of the unrestricted subsidiaries for the fiscal year ended July 28, 2018 compared to the net earnings (loss) of the non-guarantor subsidiaries for such periods, as presented in the tables above in this Note 16, consisted primarily of a net interest income of approximately $1.5 million per fiscal quarter associated with an intercompany note payable by the MyTheresa unrestricted subsidiaries and held by NMG International LLC, which is a non-guarantor restricted subsidiary. This information may not necessarily be indicative of the financial condition and results of operations of the unrestricted subsidiaries had they operated as independent entities during the periods presented. Information with respect to the unrestricted subsidiaries with respect to the Cash Pay Notes and PIK Toggle Notes is as follows:
CONDENSED CONSOLIDATING FINANCIAL INFORMATION (with respect to NMG's obligations under the 2028 Debentures) All of NMG’s obligations under the 2028 Debentures are guaranteed by the Company. The guarantee by the Company is full and unconditional and is subject to automatic release if the requirements for legal defeasance or covenant defeasance of the 2028 Debentures are satisfied, or if NMG’s obligations under the indenture governing the 2028 Debentures are discharged. The 2028 Debentures are not guaranteed by any of NMG's subsidiaries. At July 28, 2018, NMG’s subsidiaries consisted principally of (i) Bergdorf Goodman, Inc., through which we conduct the operations of our Bergdorf Goodman stores; (ii) NM Nevada Trust, which holds legal title to certain real property and intangible assets used by NMG in conducting its operations; (iii) NMG Germany GmbH, through which we conduct the operations of MyTheresa; (iv) NMG International LLC, a holding company with respect to our foreign operations; and (v) Nancy Holdings LLC, which holds legal title to certain real property used by NMG in conducting its operations and described in Note 16 under "— Results of Operations and Financial Condition of Unrestricted Subsidiaries". The non-guarantor subsidiary Nancy Holdings LLC had no assets or operations prior to March 10, 2017. The following condensed consolidating financial information represents the financial information of the Company, NMG and NMG's subsidiaries (none of which are guarantors under the 2028 Debentures) prepared on the equity basis of accounting. The information is presented in accordance with the requirements of Rule 3-10 under the SEC’s Regulation S-X. The financial information may not necessarily be indicative of results of operations, cash flows or financial position had the non-guarantor subsidiaries operated as independent entities.
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CONDENSED CONSOLIDATING FINANCIAL INFORMATION (with respect to NMG's obligations under the 2028 Debentures) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidating Financial Information (with respect to NMG's obligations under the 2028 Debentures) | CONDENSED CONSOLIDATING FINANCIAL INFORMATION (with respect to NMG's obligations under the Senior Secured Credit Facilities, Cash Pay Notes and PIK Toggle Notes) All of NMG’s obligations under the Senior Secured Credit Facilities are guaranteed by Holdings and our current and future direct and indirect wholly owned subsidiaries, subject to exceptions as more fully described in Note 7. All of NMG's obligations under the Cash Pay Notes and the PIK Toggle Notes are guaranteed by the same entities that guarantee the Senior Secured Credit Facilities, other than Holdings. At July 28, 2018, the Company’s non-guarantor subsidiaries under the Senior Secured Credit Facilities, Cash Pay Notes and PIK Toggle Notes consisted principally of (i) NMG Germany GmbH, through which we conduct the operations of MyTheresa, (ii) NMG International LLC, a holding company with respect to our foreign operations and (iii) Nancy Holdings LLC, which holds legal title to certain real property used by us in conducting our operations and described below under "— Results of Operations and Financial Condition of Unrestricted Subsidiaries". The non-guarantor subsidiary Nancy Holdings LLC had no assets or operations prior to March 10, 2017. The following condensed consolidating financial information represents the financial information of the Company and its non-guarantor subsidiaries under the Senior Secured Credit Facilities, Cash Pay Notes and PIK Toggle Notes, prepared on the equity basis of accounting. The information is presented in accordance with the requirements of Rule 3-10 under the SEC’s Regulation S-X. The financial information may not necessarily be indicative of results of operations, cash flows or financial position had the non-guarantor subsidiaries operated as independent entities.
Results of Operations and Financial Condition of Unrestricted Subsidiaries. On March 10, 2017, the Board of Directors of Parent designated certain of our subsidiaries as “unrestricted subsidiaries” for purposes of the indenture governing the Cash Pay Notes and the indenture governing the PIK Toggle Notes. These subsidiaries were previously or simultaneously designated as "unrestricted subsidiaries" under the Asset-Based Revolving Credit Facility and the Senior Secured Term Loan Facility. At July 28, 2018, the unrestricted subsidiaries consisted primarily of (i) NMG Germany GmbH, through which we conduct the operations of MyTheresa and (ii) Nancy Holdings LLC, which holds legal title to certain real property located in McLean, Virginia, San Antonio, Texas and Longview, Texas used by us in conducting our operations. Pursuant to the terms of the indentures governing the Cash Pay Notes and the PIK Toggle Notes, we are presenting the following financial information with respect to the unrestricted subsidiaries separate from the Company and its restricted subsidiaries. The unrestricted subsidiary Nancy Holdings LLC had no assets or operations prior to March 10, 2017. The financial information of NMG Germany GmbH as of July 29, 2017 and as of July 30, 2016 was substantially the same as the financial information presented for “Non-Guarantor Subsidiaries” for such periods included in the tables above in this Note 16. The difference in net earnings (loss) of the unrestricted subsidiaries for the fiscal year ended July 28, 2018 compared to the net earnings (loss) of the non-guarantor subsidiaries for such periods, as presented in the tables above in this Note 16, consisted primarily of a net interest income of approximately $1.5 million per fiscal quarter associated with an intercompany note payable by the MyTheresa unrestricted subsidiaries and held by NMG International LLC, which is a non-guarantor restricted subsidiary. This information may not necessarily be indicative of the financial condition and results of operations of the unrestricted subsidiaries had they operated as independent entities during the periods presented. Information with respect to the unrestricted subsidiaries with respect to the Cash Pay Notes and PIK Toggle Notes is as follows:
CONDENSED CONSOLIDATING FINANCIAL INFORMATION (with respect to NMG's obligations under the 2028 Debentures) All of NMG’s obligations under the 2028 Debentures are guaranteed by the Company. The guarantee by the Company is full and unconditional and is subject to automatic release if the requirements for legal defeasance or covenant defeasance of the 2028 Debentures are satisfied, or if NMG’s obligations under the indenture governing the 2028 Debentures are discharged. The 2028 Debentures are not guaranteed by any of NMG's subsidiaries. At July 28, 2018, NMG’s subsidiaries consisted principally of (i) Bergdorf Goodman, Inc., through which we conduct the operations of our Bergdorf Goodman stores; (ii) NM Nevada Trust, which holds legal title to certain real property and intangible assets used by NMG in conducting its operations; (iii) NMG Germany GmbH, through which we conduct the operations of MyTheresa; (iv) NMG International LLC, a holding company with respect to our foreign operations; and (v) Nancy Holdings LLC, which holds legal title to certain real property used by NMG in conducting its operations and described in Note 16 under "— Results of Operations and Financial Condition of Unrestricted Subsidiaries". The non-guarantor subsidiary Nancy Holdings LLC had no assets or operations prior to March 10, 2017. The following condensed consolidating financial information represents the financial information of the Company, NMG and NMG's subsidiaries (none of which are guarantors under the 2028 Debentures) prepared on the equity basis of accounting. The information is presented in accordance with the requirements of Rule 3-10 under the SEC’s Regulation S-X. The financial information may not necessarily be indicative of results of operations, cash flows or financial position had the non-guarantor subsidiaries operated as independent entities.
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QUARTERLY FINANCIAL INFORMATION (UNAUDITED) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information (Unaudited) | QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Unfavorable shrink adjustments of $12.5 million were recorded as a result of physical inventory counts in the fourth quarter of fiscal year 2018.
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SUBSEQUENT EVENTS |
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Subsequent Events [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Subsequent Events | SUBSEQUENT EVENTS In September 2018, substantially all of the holdings of NMG International LLC were distributed to NMG, to the Company, to Holdings and, ultimately, to Parent (the "Distribution"). These holdings consisted principally of the entities through which we conduct the operations of MyTheresa. NMG International LLC is a non-guarantor with respect to the Senior Secured Credit Facilities, Cash Pay Notes and PIK Toggle Notes and the financial results of NMG International LLC and its consolidated holdings are included in the presentation of results for "Non-Guarantor Subsidiaries" in Note 16 of the Notes to the Consolidated Financial Statements. In addition, the MyTheresa entities were previously designated as "Unrestricted Subsidiaries" for purposes of the Senior Secured Credit Facilities and the indentures governing the Cash Pay Notes and PIK Toggle Notes. Summarized financial information for NMG International LLC and its subsidiaries prior to the Distribution is as follows:
The financial results of the subsidiaries held by NMG International LLC may not necessarily be indicative of the financial condition and results of operations of these subsidiaries had they operated as independent entities during the periods presented. As a consequence of the Distribution, the MyTheresa entities are no longer subsidiaries of the Company but rather of our Parent. As a result, the MyTheresa entities will no longer be included in the Company's Consolidated Financial Statements subsequent to September 2018. |
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS AND RESERVES |
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SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule II Valuation and Qualifying Accounts and Reserves | NEIMAN MARCUS GROUP LTD LLC VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (in thousands) Three years ended July 28, 2018
(A) Reserves for self-insurance relate to our medical, dental, worker's compensation and general liability plans. (B) Gross margin on actual sales returns, net of commissions. (C) Claims and expenses paid, net of employee contributions. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||
Basis of Presentation | BASIS OF PRESENTATION Neiman Marcus Group LTD LLC (the "Company") is a luxury omni-channel retailer conducting store and online operations principally under the Neiman Marcus, Bergdorf Goodman, Last Call and MyTheresa brand names. References to “we,” “our” and “us” are used to refer to the Company or collectively to the Company and its subsidiaries, as appropriate to the context. The Company is a subsidiary of Mariposa Intermediate Holdings LLC ("Holdings"), which in turn is a subsidiary of Neiman Marcus Group, Inc., a Delaware corporation ("Parent"). Parent is owned by entities affiliated with Ares Management, L.P. and Canada Pension Plan Investment Board (together, the "Sponsors") and certain co-investors. The Sponsors acquired the Company on October 25, 2013 (the "Acquisition"). The Company’s operations are conducted through its direct wholly owned subsidiary, The Neiman Marcus Group LLC ("NMG"). In October 2014, we acquired MyTheresa, a luxury retailer headquartered in Munich, Germany. The operations of MyTheresa are conducted primarily through the mytheresa.com website. The accompanying Consolidated Financial Statements set forth financial information of the Company and its subsidiaries on a consolidated basis. All significant intercompany accounts and transactions have been eliminated. Our fiscal year ends on the Saturday closest to July 31. Like many other retailers, we follow a 4-5-4 reporting calendar, which means that each fiscal quarter consists of thirteen weeks divided into periods of four weeks, five weeks and four weeks. All references to (i) fiscal year 2018 relate to the fifty-two weeks ended July 28, 2018, (ii) fiscal year 2017 relate to the fifty-two weeks ended July 29, 2017 and (iii) fiscal year 2016 relate to the fifty-two weeks ended July 30, 2016. |
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Estimates and Critical Accounting Policies | ESTIMATES AND CRITICAL ACCOUNTING POLICIES We are required to make estimates and assumptions about future events in preparing our financial statements in conformity with generally accepted accounting principles ("GAAP"). These estimates and assumptions affect the amounts of assets, liabilities, revenues and expenses and the disclosure of gain and loss contingencies at the date of the accompanying Consolidated Financial Statements. While we believe that our past estimates and assumptions have been materially accurate, the amounts currently estimated are subject to change if different assumptions as to the outcome of future events were made. We evaluate our estimates and assumptions on an ongoing basis and predicate those estimates and assumptions on historical experience and on various other factors that we believe are reasonable under the circumstances. We make adjustments to our estimates and assumptions when facts and circumstances dictate. Since future events and their effects cannot be determined with absolute certainty, actual results may differ from the estimates and assumptions used in preparing the accompanying Consolidated Financial Statements. |
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Fair Value Measurements | Fair Value Measurements. Certain of our assets and liabilities are required to be measured at fair value on a recurring basis. Fair value is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. Assets and liabilities are classified using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value as follows:
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Cash and Cash Equivalents | Cash and Cash Equivalents. Cash and cash equivalents primarily consist of cash on hand in our stores, deposits with banks and overnight investments with banks and financial institutions. Cash equivalents are stated at cost, which approximates fair value. Our cash management system provides for the reimbursement of all major bank disbursement accounts on a daily basis. |
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Merchandise Inventories and Cost of Goods Sold | Merchandise Inventories and Cost of Goods Sold. We utilize the retail inventory method of accounting. Under the retail inventory method, the valuation of inventories at cost and the resulting gross margins are determined by applying a calculated cost-to-retail ratio, for various groupings of similar items, to the retail value of our inventories. The cost of the inventory reflected in the Consolidated Financial Statements is decreased by charges to cost of goods sold at average cost and the retail value of the inventory is lowered through the use of markdowns. Earnings are negatively impacted when merchandise is marked down. As we adjust the retail value of our inventories through the use of markdowns to reflect market conditions, our merchandise inventories are stated at the lower of cost or market. The areas requiring significant management judgment related to the valuation of our inventories include (i) setting the original retail value for the merchandise held for sale, (ii) recognizing merchandise for which the customer’s perception of value has declined and appropriately marking the retail value of the merchandise down to the perceived value and (iii) estimating the shrinkage that has occurred between physical inventory counts. These judgments and estimates, coupled with the averaging processes within the retail method, can, under certain circumstances, produce varying financial results. Factors that can lead to different financial results include (i) determination of original retail values for merchandise held for sale, (ii) identification of declines in perceived value of inventories and processing the appropriate retail value markdowns and (iii) overly optimistic or conservative estimation of shrinkage. In prior years, we have not made material changes to our estimates of shrinkage or markdown requirements on inventories held as of the end of our fiscal years. Consistent with industry business practice, we receive allowances from certain of our vendors in support of the merchandise we purchase for resale. Certain allowances are received to reimburse us for markdowns taken or to support the gross margins that we earn in connection with the sales of the vendor’s merchandise. These allowances result in an increase to gross margin when we earn the allowances and they are approved by the vendor. Other allowances we receive represent reductions to the amounts we pay to acquire the merchandise. These allowances reduce the cost of the acquired merchandise and are recognized at the time the goods are sold. The amounts of vendor allowances we receive fluctuate based partially on the level of markdowns taken and did not have a significant impact on the year-over-year change in gross margin during fiscal years 2018, 2017 or 2016. We received vendor allowances of $79.1 million, or 1.6% of revenues, in fiscal year 2018, $83.6 million, or 1.8% of revenues, in fiscal year 2017 and $100.8 million, or 2.0% of revenues, in fiscal year 2016. We obtain certain merchandise, primarily precious jewelry, on a consignment basis to expand our product assortment. Consignment merchandise held by us with a cost basis of $370.2 million at July 28, 2018 and $393.1 million at July 29, 2017 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. |
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Long-lived Assets | Long-lived Assets. Property and equipment are stated at cost less accumulated depreciation. In connection with the Acquisition, the cost basis of the acquired property and equipment was adjusted to its estimated fair value. For financial reporting purposes, we compute depreciation principally using the straight-line method over the estimated useful lives of the assets. Buildings and improvements are depreciated over five to 30 years while fixtures and equipment are depreciated over three to 15 years. Leasehold improvements are amortized over the shorter of the asset life or the lease term (which may include renewal periods when exercise of the renewal option is at our discretion and exercise of the renewal option is considered reasonably assured). Costs incurred for the development of internal computer software are capitalized and amortized using the straight-line method over three to ten years. We assess the recoverability of the carrying values of our store assets, consisting of property and equipment, customer lists and favorable lease commitments, annually and upon the occurrence of certain events. The recoverability assessment with respect to our long-lived assets is performed at the store level. This assessment is based upon the comparison of the undiscounted cash flows anticipated to be generated from the store to the net carrying value of the store assets. To the extent the undiscounted store-level cash flows are not sufficient to recover the net carrying value of the store assets, the assets are impaired and written down to their estimated fair value based upon discounted future cash flows. Based upon the review of our store-level assets, we identified certain property and equipment, other definite-lived intangible assets and favorable lease commitments to be impaired by $4.8 million in fiscal year 2017 and $38.1 million in fiscal year 2016. The recoverability assessment related to store-level assets requires judgments and estimates of future revenues, gross margin rates and store expenses. We base these estimates upon our past and expected future performance. We believe our estimates are appropriate in light of current and future market conditions and the best information available at the assessment date. However, future impairment charges could be required if we do not achieve our current revenue or cash flow projections. |
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Intangible Assets Subject to Amortization | Intangible Assets Subject to Amortization. Favorable lease commitments are amortized straight-line over the remaining lives of the leases, ranging from five to 55 years (weighted average life of 30 years) from the Acquisition date. Our definite-lived intangible assets, which primarily consist of customer lists, are amortized using accelerated methods which reflect the pattern in which we receive the economic benefit of the asset, currently estimated at six to 16 years (weighted average life of 13 years) from the respective acquisition dates. |
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Indefinite-lived Intangible Assets and Goodwill | Indefinite-lived Intangible Assets and Goodwill. Indefinite-lived intangible assets, such as our Neiman Marcus, Bergdorf Goodman and MyTheresa tradenames and goodwill, are not subject to amortization. Rather, we assess the recoverability of indefinite-lived intangible assets and goodwill in the fourth quarter of each fiscal year and upon the occurrence of certain events. The recoverability assessment with respect to each of the tradenames used in our operations requires us to estimate the fair value of the asset as of the assessment date. Such determination is made using discounted cash flow techniques (Level 3 determination of fair value). Significant inputs to the valuation model include:
If the recorded carrying value of the tradename exceeds its estimated fair value, an impairment charge is recorded to write the tradename down to its estimated fair value. Based upon the review of our tradenames, we determined certain of our tradenames were impaired and recorded impairment charges aggregating $309.7 million in fiscal year 2017 and $228.9 million in fiscal year 2016. The assessment of the recoverability of the goodwill associated with our Neiman Marcus, Bergdorf Goodman and MyTheresa reporting units involves the comparison of the estimated enterprise fair value of each of our reporting units to its recorded carrying value. We estimate the enterprise fair value based on discounted cash flow techniques (Level 3 determination of fair value). Significant inputs to the valuation model include:
If the recorded carrying value of a reporting unit exceeds its estimated enterprise fair value, an impairment charge is recorded to goodwill for the amount by which the carrying amount exceeds the reporting unit's fair value. Based upon the review of our recorded goodwill balances, we determined that certain of our goodwill balances were impaired and recorded impairment charges aggregating $196.2 million in fiscal year 2017. Prior to the adoption of new accounting guidance in the fourth quarter of fiscal year 2017, our assessment process involved a second step in which we allocated the enterprise fair value to the fair value of the reporting unit's net assets. Any enterprise value in excess of amounts allocated to such net assets represented the implied fair value of goodwill for that reporting unit. If the carrying value of goodwill for a reporting unit exceeded the implied fair value of goodwill, an impairment charge was recorded to write goodwill down to its fair value. The assessment performed in the fourth quarter of fiscal year 2016 was performed utilizing the two-step process. Based on this process, we determined that certain of our goodwill balances were impaired and recorded impairment charges aggregating $199.2 million in fiscal year 2016. The impairment testing process related to our indefinite-lived intangible assets is subject to inherent uncertainties and subjectivity. The use of different assumptions, estimates or judgments with respect to the estimation of the projected future cash flows and the determination of the discount rate used to reduce such projected future cash flows to their net present value could materially increase or decrease any related impairment charge. We believe our estimates are appropriate based upon current and future market conditions and the best information available at the assessment date. However, future impairment charges could be required if we do not achieve our current cash flow, revenue and profitability projections, market royalty rates decrease or the weighted average cost of capital increases. |
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Leases | Leases. We lease a significant portion of our retail stores and office facilities. Stores we own are often subject to ground leases. The terms of our real estate leases, including renewal options, range from one to 130 years. Most leases provide for fixed monthly minimum rentals or contingent rentals based upon sales in excess of stated amounts and normally require us to pay real estate taxes, insurance, common area maintenance costs and other occupancy costs. For operating leases that contain predetermined, fixed calculations of minimum rentals, we recognize rent expense on a straight-line basis over the lease term. We recognize contingent rent expenses when it is probable that the sales thresholds will be reached during the year. We typically receive cash allowances from developers related to the construction of our stores. We record these allowances as deferred real estate credits, which we recognize as a reduction of rent expense on a straight-line basis over the lease term beginning with the date we take possession of the leased asset. We received construction allowances aggregating $50.3 million in fiscal year 2018, $37.4 million in fiscal year 2017 and $38.3 million in fiscal year 2016. In some cases, a developer will construct a retail store to our requirements pursuant to a lease agreement between the developer and the Company. Typically, the lease agreement provides for the construction and financing of the store shell by the developer and our subsequent construction and financing of the interior finish-out of the store. Since we are involved in the construction of the leased store in these types of arrangements, we must consider the nature and extent of our involvement during the construction period which, in some cases, may result in us being deemed the accounting owner of the construction project. In such cases, ASC Topic 840, Leases, ("ASC Topic 840") requires that we record an asset for the developer's construction costs related to the store shell (included in construction in progress) and recognize an offsetting deferred financing obligation. Upon completion of the project, we perform a sale-leaseback analysis to determine if these assets and the related financing obligation can be derecognized from our Consolidated Balance Sheets. |
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Benefit Plans | Benefit Plans. We sponsor a defined benefit pension plan ("Pension Plan"), an unfunded supplemental executive retirement plan ("SERP Plan") which provides certain employees additional pension benefits and a postretirement plan providing eligible employees limited postretirement health care benefits ("Postretirement Plan"). In calculating our obligations and related expense, we make various assumptions and estimates, after consulting with outside actuaries and advisors. The annual determination of expense involves calculating the estimated total benefits ultimately payable to plan participants. We utilize a spot rate methodology in the estimation of the interest cost component of net periodic benefit cost, which uses the individual spot rates along the yield curve corresponding to benefit payments. The Pension Plan, SERP Plan and Postretirement Plan are valued as of the end of each fiscal year. As of the third quarter of fiscal year 2010, benefits offered to all employees under our Pension Plan and SERP Plan were frozen. Significant assumptions related to the calculation of our obligations include the discount rates used to calculate the present value of benefit obligations to be paid in the future, the expected long-term rate of return on assets held by the Pension Plan and the health care cost trend rate for the Postretirement Plan, as more fully described in Note 10. We review these assumptions annually based upon currently available information, including information provided by our actuaries. Our obligations related to our employee benefit plans are included in other long-term liabilities. |
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Self-insurance and Other Employee Benefit Reserves | Self-insurance and Other Employee Benefit Reserves. We use estimates in the determination of the required accruals for general liability, workers’ compensation and health insurance. We base these estimates upon an examination of historical trends, industry claims experience and independent actuarial estimates. Although we do not expect that we will ultimately pay claims significantly different from our estimates, self-insurance reserves could be affected if future claims experience differs significantly from our historical trends and assumptions. |
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Derivative Financial Instruments | Derivative Financial Instruments. We enter into derivative financial instruments, primarily interest rate swap and cap agreements, to hedge the variability of our cash flows related to a portion of our floating rate indebtedness. The derivative financial instruments are recorded at estimated fair value at each balance sheet date and included in assets or liabilities in our Consolidated Balance Sheets. |
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Revenues | Revenues. Revenues include sales of merchandise and services and delivery and processing revenues related to merchandise sold. Revenues are recognized at the later 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. Delivery and processing revenues were $62.0 million in fiscal year 2018, $58.7 million in fiscal year 2017 and $50.6 million in fiscal year 2016. Revenues are reduced when customers return goods previously purchased. We maintain reserves for anticipated sales returns primarily based on our historical trends related to returns by our customers. |
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Buying and Occupancy Costs | Buying and Occupancy Costs. Our buying costs consist primarily of salaries and expenses incurred by our merchandising and buying operations. Occupancy costs primarily include rent, property taxes and operating costs of our retail, distribution and support facilities and exclude depreciation expense. |
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Selling, General and Administrative Expenses (Excluding Depreciation) | Selling, General and Administrative Expenses (Excluding Depreciation). Selling, general and administrative expenses consist principally of costs related to employee compensation and benefits in the selling and administrative support areas and advertising and marketing costs. We receive allowances from certain merchandise vendors in connection with compensation programs for employees who sell the vendors’ merchandise. These allowances are netted against the related compensation expenses that we incur. Amounts received from vendors related to compensation programs were $58.6 million, or 1.2% of revenues, in fiscal year 2018, $62.4 million, or 1.3% of revenues, in fiscal year 2017 and $70.3 million, or 1.4% of revenues, in fiscal year 2016. Consistent with industry practice, we receive advertising allowances from certain of our merchandise vendors. Substantially all the advertising allowances we receive represent reimbursements of direct, specific and incremental costs that we incur to promote the vendor’s merchandise in connection with our various advertising programs, primarily catalogs and other print media and digital media. Advertising allowances fluctuate based on the level of advertising expenses incurred and are recorded as a reduction of our advertising costs when earned. Advertising allowances collected were approximately $45.6 million, or 0.9% of revenues, in fiscal year 2018, $50.1 million, or 1.1% of revenues, in fiscal year 2017 and $54.8 million, or 1.1% of revenues, in fiscal year 2016. We incur costs to advertise and promote the merchandise assortment offered through our store and online operations. We expense advertising costs for print media costs and promotional materials mailed to our customers at the time of mailing to the customer. We amortize the costs of print catalogs during the periods we expect to generate revenues from such catalogs, generally three months. We expense the costs incurred to produce the photographic content on our websites, as well as website design and web marketing costs, as incurred. |
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Stock Compensation | Stock Compensation. At the date of grant, the stock option exercise price equals or exceeds the fair market value of Parent's common stock. Because Parent is privately held and there is no public market for its common stock, the fair market value of Parent's common stock is determined by the Board of Directors of Parent (the "Parent Board") or the Compensation Committee, as applicable, at the time option grants are awarded. The estimate of the fair market value of Parent's common stock utilizes both discounted cash flow techniques and the review of market data and involves assumptions regarding a number of complex and subjective variables. Significant inputs to the common stock valuation model include:
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Income from Credit Card Program | Income from Credit Card Program. We maintain a proprietary credit card program through which credit is extended to customers and have a related marketing and servicing alliance with affiliates of Capital One Financial Corporation ("Capital One"). Pursuant to our agreement with Capital One (the "Program Agreement"), Capital One currently offers credit cards and non-card payment plans under both the "Neiman Marcus" and "Bergdorf Goodman" brand names. Effective July 1, 2013, we amended and extended the Program Agreement to July 2020 (renewable thereafter for three-year terms), subject to early termination provisions. We receive payments from Capital One based on sales transacted on our proprietary credit cards. These payments are based on the profitability of the credit card portfolio as determined under the Program Agreement and are impacted by a number of factors including credit losses incurred and our allocable share of the profits generated by the credit card portfolio, which in turn may be impacted by credit ratings as determined by various rating agencies. In addition, we receive payments from Capital One for marketing and servicing activities we provide to Capital One. We recognize income from our credit card program when earned. |
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Gift Cards | Gift Cards. The gift cards sold to our customers have no stated expiration dates and, in some cases, are subject to actual and/or potential escheatment rights in various of the jurisdictions in which we operate. |
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Loyalty Programs | Loyalty Program. We maintain a customer loyalty program in which customers earn points for qualifying purchases. Upon reaching specified levels, points are redeemed for awards, primarily gift cards. The estimates of the costs associated with the loyalty program 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 cards to be redeemed upon conversion of the earned points to gift cards. We record the deferral of revenues related to gift card awards under our loyalty program as a reduction of revenues. |
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Income Taxes | Income Taxes. We use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. We are routinely under audit by federal, state or local authorities in the area of income taxes. We regularly evaluate the likelihood of realization of tax benefits derived from positions we have taken in various federal and state filings after consideration of all relevant facts, circumstances and available information. If we believe it is more likely than not that our position will be sustained, we recognize the benefit we believe is cumulatively greater than 50% likely to be realized. |
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Foreign Currency | Foreign Currency. We translate the assets and liabilities denominated in a foreign currency into U.S. dollars using the exchange rate in effect at the balance sheet date. Revenues and expenses are translated into U.S. dollars using weighted average exchange rates during the year. We record these translation adjustments as a component of accumulated other comprehensive loss on the Consolidated Balance Sheets. |
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Segments | Segments. We conduct our specialty retail store and online operations on an omni-channel basis. As our store and online operations have similar economic characteristics, products, services and customers, our operations constitute a single omni-channel reportable segment. |
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Newly Adopted and Recent Accounting Pronouncements | Newly Adopted Accounting Pronouncements. In March 2016, the Financial Accounting Standards Board ("the FASB") issued guidance to simplify how share-based payments are accounted for and presented in the financial statements, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The standard allows (i) entities to withhold an amount up to the employees' maximum individual tax rate in the relevant jurisdiction without resulting in liability classification of the award and (ii) forfeitures to be either estimated, as required currently, or recognized when they occur. We adopted this guidance in the first quarter of fiscal year 2018. The adoption of this guidance did not have a material impact on our Consolidated Financial Statements. Recent Accounting Pronouncements. In May 2014, the FASB issued guidance to clarify the principles for revenue recognition. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes previous revenue recognition guidance. While our evaluation of the impact of adopting this standard is ongoing, we believe the new guidance will impact (i) the income statement presentation related to sales returns, certain promotional programs and income from our credit card program and (ii) accelerate the recognition of online sales to the time of shipment versus delivery. We intend to adopt the revenue recognition requirements of this new guidance in the first quarter of fiscal year 2019 using the modified retrospective adoption method. In May 2017, the FASB issued guidance to clarify which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The standard requires modification accounting only if changes in the terms or conditions result in changes of the fair value, the vesting conditions or the classification of the award as an equity instrument or a liability. This new guidance is effective for us as of the first quarter of fiscal year 2019 and will be applicable to any modification transactions subsequent to the effective date. We are currently evaluating the impact of adopting this new accounting guidance on our Consolidated Financial Statements. In February 2016, the FASB issued guidance that requires a lessee to recognize assets and liabilities arising from leases on the balance sheet. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. Previous GAAP did not require lease assets and liabilities to be recognized for operating leases. Additionally, companies are permitted to make an accounting policy election not to recognize lease assets and liabilities for leases with a term of 12 months or less. For both finance leases and operating leases, the lease liability should be initially measured at the present value of the remaining contractual lease payments. In July 2018, the FASB amended the new leases standard to provide entities with an additional and optional transition method and to provide lessors with a practical expedient, whereby lessors may elect not to separate lease and non-lease components when certain conditions are met. We do not expect the recognition, measurement and presentation of expenses and cash flows arising from our operating leases to significantly change under this new guidance. However, we expect this adoption to lead to a material increase in the assets and liabilities recorded on our Consolidated Balance Sheets and an increase to our footnote disclosures related to leases. We are still evaluating the impact on our Consolidated Financial Statements. This new guidance is effective for us as of the first quarter of fiscal year 2020. In August 2017, the FASB issued guidance to simplify how hedge accounting arrangements are accounted for and presented in the financial statements, including the assessment of hedge effectiveness. Under the new standard, all changes in the fair value of cash flow hedges included in the assessment of effectiveness will be recorded in other comprehensive earnings (loss) and reclassified to earnings in the same income statement line item when the hedged item affects earnings. This new guidance is effective for us as of the first quarter of fiscal year 2020. We are currently evaluating the impact of adopting this new accounting guidance on our Consolidated Financial Statements. In February 2018, the FASB issued guidance which allows a reclassification from accumulated other comprehensive loss to retained earnings for certain stranded tax effects resulting from the Tax Reform. The new guidance may be applied either in the period of adoption or retrospectively to each period in which the effect of the Tax Reform is recognized. Upon adoption, the standard requires disclosures regarding the company's accounting policy for releasing the tax effects in accumulated other comprehensive loss. This new guidance is effective for us as of the first quarter of fiscal year 2020. Early adoption is permitted. We are currently evaluating the impact of adopting this new accounting guidance on our Consolidated Financial Statements. In June 2018, the FASB issued guidance to align accounting for non-employee share-based payment transactions with the guidance for share-based payments to employees. Under the new standard, the measurement of equity-classified non-employee awards will be fixed at the grant date. Additionally, non-public entities can account for non-employee awards using certain practical expedients that are already available for employee awards. This new guidance is effective for us as of the first quarter of fiscal year 2020. Early adoption is permitted. We are currently evaluating the impact of adopting this new accounting guidance on our Consolidated Financial Statements. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||
Total estimated amortization of all acquisition-related intangible assets for the next five fiscal years | Total amortization of all intangible assets recorded in connection with acquisitions for the next five fiscal years is currently estimated as follows (in thousands):
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FAIR VALUE MEASUREMENTS (Tables) |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of the Company's financial assets that are required to be measured at fair value on a recurring basis | The following table shows the Company’s financial asset and liability that are required to be measured at fair value on a recurring basis in our Consolidated Balance Sheets:
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Schedule of fair value of long-term debt determined on a non-recurring basis | We determine the fair value of our long-term debt on a non-recurring basis, which results are summarized as follows:
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PROPERTY AND EQUIPMENT, NET (Tables) |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant components of property and equipment, net | The significant components of our net property and equipment are as follows:
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INTANGIBLE ASSETS, NET AND GOODWILL (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant components of intangible assets and goodwill, by reportable operating segments | The significant components of our intangible assets and goodwill are as follows:
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IMPAIRMENT CHARGES (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Asset Impairment Charges | Based upon our assessment of economic conditions, our expectations of future business conditions and trends, our projected revenues, earnings, and cash flows as well as other market factors such as the weighted average cost of capital and valuation multiples, we determined that impairment charges were required to state certain of our intangible and long-lived assets to their estimated fair value in fiscal years 2017 and 2016 as follows:
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ACCRUED LIABILITIES (Tables) |
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Schedule of significant components of accrued liabilities | The significant components of accrued liabilities are as follows:
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LONG-TERM DEBT (Tables) |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of significant components of long-term debt | The significant components of our long-term debt are as follows:
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Schedule of annual maturities of long-term debt during the next five fiscal years and thereafter | At July 28, 2018, annual maturities of long-term debt during the next five fiscal years and thereafter are as follows (in millions):
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Schedule of significant components of interest expense | The significant components of interest expense are as follows:
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DERIVATIVE FINANCIAL INSTRUMENTS (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Interest Rate Derivatives | A summary of the recorded amounts related to our interest rate swaps and interest rate caps reflected in our Consolidated Statements of Operations is as follows:
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INCOME TAXES (Tables) |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of significant components of income tax expense | The significant components of income tax benefit are as follows:
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Schedule of income before income tax, domestic and foreign | The significant components of earnings (loss) before income taxes are as follows:
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Schedule of reconciliation of income tax expense to the amount calculated based on federal and state statutory rates | A reconciliation of income tax expense (benefit) to the amount calculated based on the federal and state statutory rates is as follows:
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Schedule of significant components of net deferred income tax asset (liability) | Significant components of our net deferred income tax asset (liability) are as follows:
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Schedule of reconciliation of the beginning and ending amounts of unrecognized tax benefits | A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
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EMPLOYEE BENEFIT PLANS (Tables) |
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Jul. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of obligations for employee benefit plans included in other long-term liabilities | Our obligations for employee benefit plans, included in other long-term liabilities, are as follows:
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Schedule of changes in obligations | Changes in our obligations pursuant to our Pension Plan, SERP Plan and Postretirement Plan during fiscal years 2018 and 2017 are as follows:
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Schedule of components of the expenses incurred | The components of the expenses (income) we incurred under our Pension Plan, SERP Plan and Postretirement Plan are as follows:
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Summary of expected benefit payments | A summary of expected benefit payments related to our Pension Plan, SERP Plan and Postretirement Plan is as follows:
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Schedule of changes in assets held | Changes in the assets held by our Pension Plan in fiscal years 2018 and 2017 are as follows:
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Schedule of asset allocation by asset category | The asset allocation for our Pension Plan at the end of fiscal years 2018 and 2017 and the target allocation for fiscal year 2019, by asset category, are as follows:
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Schedule of fair value of plan assets by level within the fair value hierarchy | The following tables set forth by level, within the fair value hierarchy, the Pension Plan’s assets at fair value as of July 28, 2018 and July 29, 2017.
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Schedule of assumptions utilized in calculating projected benefit obligations and periodic expense of the entity's Pension Plan, SERP Plan and Postretirement Plan | The assumptions we utilized in calculating the projected benefit obligations and periodic expense of our Pension Plan, SERP Plan and Postretirement Plan are as follows:
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COMMITMENTS AND CONTINGENCIES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of rent expense and related occupancy costs under operating leases | Rent expense and related occupancy costs under operating leases is as follows:
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Schedule of Future Minimum Rental Payments for Operating Leases | Future minimum rental commitments (excluding renewal options) under non-cancelable leases for the next five fiscal years and thereafter are as follows (in thousands):
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ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of accumulated other comprehensive loss | The following table summarizes the changes in accumulated other comprehensive loss by component (amounts are recorded net of related income taxes):
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STOCK-BASED AWARDS (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 28, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock option liability | A summary of our liabilities for our variable stock option awards is as follows:
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Summary of stock option activity | A summary of stock option activity is as follows:
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Schedule of assumptions used to estimate fair value for stock options at grant date | We used the following assumptions to estimate the fair value for stock options at the grant date:
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Schedule of restricted stock outstanding | A summary of restricted share activity is as follows:
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Schedule of compensation expense (benefit) | The following table summarizes our stock-based compensation expense (benefit):
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REVENUES (Tables) |
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Jul. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of revenues by merchandise category as a percentage of net sales | The following table represents our revenues by merchandise category as a percentage of revenues:
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OTHER EXPENSES (Tables) |
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Jul. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Operating Cost and Expense, by Component | Other expenses consists of the following components:
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CONDENSED CONSOLIDATING FINANCIAL INFORMATION (with respect to NMG's obligations under the Senior Secured Credit Facilities, Cash Pay Notes and PIK Toggle Notes) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of condensed balance sheets |
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Schedule of condensed statements of operations |
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Schedule of condensed statements of cash flows |
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CONDENSED CONSOLIDATING FINANCIAL INFORMATION (with respect to NMG's obligations under the 2028 Debentures) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of condensed balance sheets |
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Schedule of condensed statements of operations |
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Schedule of condensed statements of cash flows |
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QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of quarterly financial information |
Unfavorable shrink adjustments of $12.5 million were recorded as a result of physical inventory counts in the fourth quarter of fiscal year 2018.
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SUBSEQUENT EVENTS SUBSEQUENT EVENTS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Subsequent Events [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Summarized Financial Information | Summarized financial information for NMG International LLC and its subsidiaries prior to the Distribution is as follows:
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jul. 28, 2018 |
Jul. 29, 2017 |
Jul. 30, 2016 |
|
Cash and Cash Equivalents | |||
Accounts payable related to outstanding checks not yet presented for payment | $ 39.0 | $ 39.6 | |
Merchandise Inventories and Cost of Goods Sold | |||
Vendor allowances received | $ 79.1 | $ 83.6 | $ 100.8 |
Vendor allowances received, percent of revenue | 1.60% | 1.80% | 2.00% |
Consignment merchandise held with a cost basis | $ 370.2 | $ 393.1 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Jul. 29, 2017 |
Jan. 28, 2017 |
Jul. 29, 2017 |
Jul. 30, 2016 |
|
Indefinite-lived Intangible Assets [Line Items] | ||||
Writedown of goodwill | $ 196,200 | $ 0 | $ 196,164 | $ 199,218 |
Tradenames | ||||
Indefinite-lived Intangible Assets [Line Items] | ||||
Writedown of indefinite-lived intangible assets | $ 159,600 | $ 150,100 | $ 309,744 | $ 228,877 |
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands |
Jul. 28, 2018 |
Jul. 29, 2017 |
---|---|---|
PROPERTY AND EQUIPMENT, NET | ||
Property, plant and equipment, gross | $ 2,499,314 | $ 2,339,811 |
Less: accumulated depreciation | 929,410 | 752,850 |
Property and equipment, net | 1,569,904 | 1,586,961 |
Property and equipment acquired through developer financing obligations | 110,000 | 96,900 |
Land, buildings and improvements | ||
PROPERTY AND EQUIPMENT, NET | ||
Property, plant and equipment, gross | 1,274,399 | 1,280,214 |
Fixtures and equipment | ||
PROPERTY AND EQUIPMENT, NET | ||
Property, plant and equipment, gross | 960,094 | 914,489 |
Construction in progress | ||
PROPERTY AND EQUIPMENT, NET | ||
Property, plant and equipment, gross | $ 264,821 | $ 145,108 |
IMPAIRMENT CHARGES (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Jul. 29, 2017 |
Jan. 28, 2017 |
Jul. 28, 2018 |
Jul. 29, 2017 |
Jul. 30, 2016 |
|
Finite-Lived Intangible Assets [Line Items] | |||||
Goodwill | $ 196,200 | $ 0 | $ 196,164 | $ 199,218 | |
Impairment charges | 357,000 | 153,800 | $ 0 | 510,736 | 466,155 |
Property and equipment | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Property and equipment | 3,141 | 25,426 | |||
Other definite-lived intangible assets | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Definite-lived intangible assets | 1,687 | 12,634 | |||
Tradenames | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Tradenames | $ 159,600 | $ 150,100 | $ 309,744 | $ 228,877 |
ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands |
Jul. 28, 2018 |
Jul. 29, 2017 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accrued salaries and related liabilities | $ 84,347 | $ 64,508 |
Amounts due customers | 137,918 | 141,590 |
Self-insurance reserves | 39,506 | 36,545 |
Interest payable | 50,848 | 31,935 |
Sales returns reserves | 44,674 | 47,006 |
Sales taxes payable | 30,671 | 28,811 |
Other | 123,325 | 106,542 |
Total | $ 511,289 | $ 456,937 |
LONG-TERM DEBT - Maturities of Long-Term Debt (Details) $ in Millions |
Jul. 28, 2018
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
2019 | $ 29.4 |
2020 | 29.4 |
2021 | 2,910.4 |
2022 | 1,618.4 |
2023 | 0.0 |
Thereafter | $ 122.9 |
LONG-TERM DEBT - Interest Expense (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jul. 28, 2018 |
Jul. 29, 2017 |
Jul. 30, 2016 |
|
Interest expense | |||
Amortization of debt issue costs | $ 24,480 | $ 24,510 | $ 24,572 |
Capitalized interest | (8,067) | (6,270) | (7,298) |
Other, net | 2,256 | 703 | 2,214 |
Interest expense, net | 307,441 | 295,668 | 285,596 |
Asset-Based Revolving Credit Facility | |||
Interest expense | |||
Interest expense | 6,395 | 7,022 | 3,104 |
mytheresa.com Credit Facilities | |||
Interest expense | |||
Interest expense | 105 | 58 | 23 |
Senior Secured Term Loan Facility | |||
Interest expense | |||
Interest expense | 138,030 | 130,129 | 124,775 |
Cash Pay Notes | |||
Interest expense | |||
Interest expense | 76,800 | 76,800 | 76,800 |
PIK Toggle Notes | |||
Interest expense | |||
Interest expense | 58,536 | 53,810 | 52,500 |
2028 Debentures | |||
Interest expense | |||
Interest expense | $ 8,906 | $ 8,906 | $ 8,906 |
DERIVATIVE FINANCIAL INSTRUMENTS - Schedule of derivatives (Details) - Interest Expense - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jul. 28, 2018 |
Jul. 29, 2017 |
Jul. 30, 2016 |
|
Derivative Financial Instruments | |||
Interest rate cash flow hedge gains (losses) reclassified to earnings, net | $ 860 | $ 6,070 | $ 576 |
Interest Rate Swaps | |||
Derivative Financial Instruments | |||
Interest rate cash flow hedge gains (losses) reclassified to earnings, net | 860 | 4,646 | 0 |
Interest Rate Caps | |||
Derivative Financial Instruments | |||
Interest rate cash flow hedge gains (losses) reclassified to earnings, net | $ 0 | $ 1,424 | $ 576 |
INCOME TAXES - Schedule of significant components of income tax expense (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jul. 28, 2018 |
Jul. 29, 2017 |
Jul. 30, 2016 |
|
Current: | |||
Federal | $ (2,664) | $ (38,337) | $ (36,557) |
State | 6,346 | (8,567) | (7,691) |
Foreign | 2,836 | 926 | 5,948 |
Current income tax expense | 6,518 | (45,978) | (38,300) |
Deferred: | |||
Federal | (441,782) | (148,359) | (78,804) |
State | (25,265) | (22,357) | (18,189) |
Foreign | (1,536) | (436) | (5,848) |
Deferred income tax expense | (468,583) | (171,152) | (102,841) |
Income tax benefit | $ (462,065) | $ (217,130) | $ (141,141) |
INCOME TAXES - Schedule of income before income tax, domestic and foreign (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jul. 28, 2018 |
Jul. 29, 2017 |
Jul. 30, 2016 |
|
Income Tax Disclosure [Abstract] | |||
United States | $ (220,014) | $ (752,705) | $ (542,310) |
Foreign | 9,080 | 3,816 | (4,941) |
Loss before income taxes | $ (210,934) | $ (748,889) | $ (547,251) |
INCOME TAXES - Schedule of reconciliation of income tax expense to the amount calculated based on federal and state statutory rates (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|
Jul. 28, 2018 |
Apr. 28, 2018 |
Jan. 27, 2018 |
Jul. 28, 2018 |
Jul. 29, 2017 |
Jul. 30, 2016 |
|
Reconciliation of income tax (benefit) expense to the amount calculated based on the federal and state statutory rates | ||||||
Income tax benefit at statutory rate | $ (56,741) | $ (262,111) | $ (191,538) | |||
Impact of Tax Reform | $ (5,300) | $ 1,500 | $ (387,800) | (391,558) | 0 | 0 |
State income taxes, net of federal income tax benefit | (9,752) | (21,132) | (15,480) | |||
Impact of non-deductible expenses, including goodwill impairment | (1,765) | 64,875 | 64,372 | |||
Tax benefit related to tax settlements and other changes in tax liabilities | (130) | (2,022) | (554) | |||
Other | (2,119) | 3,260 | 2,059 | |||
Income tax benefit | $ (462,065) | $ (217,130) | $ (141,141) | |||
Effective tax rate | 219.10% | 29.00% | 25.80% |
INCOME TAXES - Schedule of significant components of net deferred income tax asset (liability) (Details) - USD ($) $ in Thousands |
Jul. 28, 2018 |
Jul. 29, 2017 |
---|---|---|
Deferred income tax assets: | ||
Accruals and reserves | $ 28,415 | $ 34,727 |
Employee benefits | 111,312 | 179,565 |
Inventory | 4,929 | 0 |
Other | 69,397 | 72,882 |
Total deferred tax assets | 214,053 | 287,174 |
Deferred income tax liabilities: | ||
Inventory | 0 | (13,264) |
Depreciation and amortization | (204,524) | (322,184) |
Intangible assets | (694,483) | (1,083,459) |
Other | (22,600) | (25,100) |
Total deferred tax liabilities | (921,607) | (1,444,007) |
Net deferred income tax liability | $ (707,554) | $ (1,156,833) |
INCOME TAXES - Schedule of reconciliation of the beginning and ending amounts of unrecognized tax benefits (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Jul. 28, 2018 |
Jul. 29, 2017 |
|
Reconciliation of the beginning and ending amounts of unrecognized tax benefits | ||
Balance at beginning of fiscal year | $ 2,189 | $ 3,661 |
Gross amount of decreases for prior year tax positions | (879) | (3,005) |
Gross amount of increases for current year tax positions | 0 | 1,533 |
Balance at end of fiscal year | $ 1,310 | $ 2,189 |
EMPLOYEE BENEFIT PLANS - Schedule of obligations for employee benefit plans included in other long-term liabilities (Details) - USD ($) $ in Thousands |
Jul. 28, 2018 |
Jul. 29, 2017 |
Jul. 30, 2016 |
---|---|---|---|
Obligations for employee benefit plans, included in other long-term liabilities | |||
Pension Plan, net | $ 304,569 | $ 360,392 | |
Less: current portion | (6,441) | (7,803) | |
Long-term portion of benefit obligations | 298,128 | 352,589 | |
Pension Plan | |||
Obligations for employee benefit plans, included in other long-term liabilities | |||
Projected benefit obligation | 584,769 | 620,900 | $ 683,493 |
Less: Plan assets | (381,949) | (380,163) | (383,817) |
Pension Plan, net | 202,820 | 240,737 | |
SERP Plan | |||
Obligations for employee benefit plans, included in other long-term liabilities | |||
Projected benefit obligation | 98,814 | 112,739 | 118,484 |
Pension Plan, net | 98,814 | 112,739 | |
Postretirement Plan | |||
Obligations for employee benefit plans, included in other long-term liabilities | |||
Projected benefit obligation | 2,935 | 6,916 | $ 8,600 |
Pension Plan, net | $ 2,935 | $ 6,916 |
EMPLOYEE BENEFIT PLANS - Schedule of changes in obligations (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jul. 28, 2018 |
Jul. 29, 2017 |
Jul. 30, 2016 |
|
Pension Plan | |||
Projected benefit obligations: | |||
Beginning of year | $ 620,900 | $ 683,493 | |
Service cost | 0 | 0 | |
Interest cost | 19,894 | 19,479 | $ 21,716 |
Actuarial gain | (28,657) | (56,329) | |
Benefits paid, net | (27,368) | (25,743) | |
End of year | 584,769 | 620,900 | 683,493 |
SERP Plan | |||
Projected benefit obligations: | |||
Beginning of year | 112,739 | 118,484 | |
Service cost | 0 | 0 | |
Interest cost | 3,377 | 3,134 | 3,569 |
Actuarial gain | (11,778) | (3,270) | |
Benefits paid, net | (5,524) | (5,609) | |
End of year | 98,814 | 112,739 | 118,484 |
Postretirement Plan | |||
Projected benefit obligations: | |||
Beginning of year | 6,916 | 8,600 | |
Service cost | 1 | 1 | 3 |
Interest cost | 204 | 219 | 285 |
Actuarial gain | (3,459) | (1,006) | |
Benefits paid, net | (727) | (898) | |
End of year | $ 2,935 | $ 6,916 | $ 8,600 |
EMPLOYEE BENEFIT PLANS - Schedule of components of the expenses incurred (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jul. 28, 2018 |
Jul. 29, 2017 |
Jul. 30, 2016 |
|
Pension Plan | |||
Employee Benefit Plans | |||
Interest cost | $ 19,894 | $ 19,479 | $ 21,716 |
Expected return on plan assets | (21,585) | (21,323) | (23,229) |
Net amortization of (gains) losses | 680 | 2,653 | 0 |
Service cost | 0 | 0 | |
(Income) expense under plan | (1,011) | 809 | (1,513) |
SERP Plan | |||
Employee Benefit Plans | |||
Interest cost | 3,377 | 3,134 | 3,569 |
Net amortization of (gains) losses | 0 | 93 | 0 |
Service cost | 0 | 0 | |
(Income) expense under plan | 3,377 | 3,227 | 3,569 |
Postretirement Plan | |||
Employee Benefit Plans | |||
Interest cost | 204 | 219 | 285 |
Net amortization of (gains) losses | (720) | (585) | (582) |
Service cost | 1 | 1 | 3 |
(Income) expense under plan | $ (515) | $ (365) | $ (294) |
EMPLOYEE BENEFIT PLANS - Summary of expected benefit payments (Details) $ in Thousands |
Jul. 28, 2018
USD ($)
|
---|---|
Pension Plan | |
Employee Benefit Plans | |
Fiscal year 2019 | $ 30,023 |
Fiscal year 2020 | 31,203 |
Fiscal year 2021 | 32,355 |
Fiscal year 2022 | 33,382 |
Fiscal year 2023 | 34,279 |
Fiscal years 2024-2028 | 181,570 |
SERP Plan | |
Employee Benefit Plans | |
Fiscal year 2019 | 6,088 |
Fiscal year 2020 | 6,196 |
Fiscal year 2021 | 6,298 |
Fiscal year 2022 | 6,516 |
Fiscal year 2023 | 6,669 |
Fiscal years 2024-2028 | 33,346 |
Postretirement Plan | |
Employee Benefit Plans | |
Fiscal year 2019 | 353 |
Fiscal year 2020 | 302 |
Fiscal year 2021 | 308 |
Fiscal year 2022 | 274 |
Fiscal year 2023 | 267 |
Fiscal years 2024-2028 | $ 1,027 |
EMPLOYEE BENEFIT PLANS - Schedule of changes in assets held (Details) - Pension Plan - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Jul. 28, 2018 |
Jul. 29, 2017 |
|
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||
Fair value of assets at beginning of year | $ 380,163 | $ 383,817 |
Actual return on assets | 3,954 | 11,389 |
Benefits paid | (27,368) | (25,743) |
Contributions | 25,200 | 10,700 |
Fair value of assets at end of year | $ 381,949 | $ 380,163 |
EMPLOYEE BENEFIT PLANS - Schedule of asset allocation by asset category (Details) - Pension Plan |
Jul. 31, 2018 |
Jul. 28, 2018 |
Jul. 31, 2017 |
---|---|---|---|
Employee Benefit Plans | |||
Target allocation for the next fiscal year (as a percent) | 100.00% | ||
Asset allocation (as a percent) | 100.00% | ||
Equity securities | |||
Employee Benefit Plans | |||
Target allocation for the next fiscal year (as a percent) | 60.00% | ||
Asset allocation (as a percent) | 60.00% | ||
Fixed income securities | |||
Employee Benefit Plans | |||
Target allocation for the next fiscal year (as a percent) | 40.00% | ||
Asset allocation (as a percent) | 40.00% | ||
Subsequent Event | |||
Employee Benefit Plans | |||
Asset allocation (as a percent) | 100.00% | ||
Subsequent Event | Equity securities | |||
Employee Benefit Plans | |||
Asset allocation (as a percent) | 60.00% | ||
Subsequent Event | Fixed income securities | |||
Employee Benefit Plans | |||
Asset allocation (as a percent) | 40.00% |
STOCK-BASED AWARDS - Stock option liability (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jul. 28, 2018 |
Jul. 29, 2017 |
Jul. 30, 2016 |
|
Deferred Compensation Share-based Arrangements, Liability, Current And Noncurrent [Roll Forward] | |||
Stock option expense (benefit) | $ 8,325 | $ (1,160) | $ (10,373) |
Equity Option | |||
Deferred Compensation Share-based Arrangements, Liability, Current And Noncurrent [Roll Forward] | |||
Balance at beginning of fiscal year | 168 | 5,500 | |
Stock option expense (benefit) | 6,434 | (2,337) | (10,373) |
Reclassifications from (to) equity | 1,160 | (2,995) | |
Balance at end of fiscal year | $ 7,762 | $ 168 | $ 5,500 |
STOCK-BASED AWARDS - Schedule of assumptions used to estimate fair value for stock options at grant date (Details) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Jul. 28, 2018 |
Jul. 29, 2017 |
Jul. 30, 2016 |
|
STOCK-BASED COMPENSATION | |||
Weighted average exercise price (in dollars per share) | $ 566 | $ 1,000 | $ 1,205 |
Weighted term in years | 5 years | 5 years | 5 years |
Weighted average volatility (as a percent) | 35.37% | 31.43% | 29.43% |
Risk-free interest rate (as a percent) | 1.33% | ||
Dividend yield (as a percent) | 0.00% | 0.00% | 0.00% |
Weighted average grant date fair value (in dollars per share) | $ 154 | $ 149 | $ 341 |
Minimum | |||
STOCK-BASED COMPENSATION | |||
Risk-free interest rate (as a percent) | 2.47% | 1.27% | |
Maximum | |||
STOCK-BASED COMPENSATION | |||
Risk-free interest rate (as a percent) | 2.80% | 1.88% |
STOCK-BASED AWARDS - Schedule of restricted stock outstanding (Details) - Restricted Stock - $ / shares |
1 Months Ended | 12 Months Ended |
---|---|---|
Oct. 31, 2016 |
Jul. 28, 2018 |
|
Restricted stock outstanding | ||
Beginning of period (in shares) | 21,355 | |
Granted (in shares) | 26,954 | 11,350 |
Vested (in shares) | (6,349) | |
Forfeited (in shares) | (6,533) | |
End of period (in shares) | 19,823 | |
Restricted stock weighted average grant date fair value | ||
Beginning of period (in dollars per share) | $ 768 | |
Granted (in dollars per share) | 268 | |
Vested (in dollars per share) | 768 | |
Forfeited (in dollars per share) | 768 | |
Ending of period (in dollars per share) | $ 482 |
STOCK-BASED AWARDS - Schedule of compensation expense (benefit) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jul. 28, 2018 |
Jul. 29, 2017 |
Jul. 30, 2016 |
|
STOCK-BASED COMPENSATION | |||
Stock compensation expense (benefit) | $ 8,325 | $ (1,160) | $ (10,373) |
Equity Option | |||
STOCK-BASED COMPENSATION | |||
Stock compensation expense (benefit) | 6,434 | (2,337) | (10,373) |
Restricted Stock | |||
STOCK-BASED COMPENSATION | |||
Stock compensation expense (benefit) | $ 1,891 | $ 1,177 | $ 0 |
OTHER EXPENSES - Schedule of Other Operating Cost and Expense, by Component (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2016 |
Jul. 28, 2018 |
Jul. 29, 2017 |
Jul. 30, 2016 |
|
Other Income and Expenses [Abstract] | ||||
Expenses incurred in connection with strategic initiatives | $ 23,303 | $ 21,347 | $ 24,318 | |
Expenses related to store closures | 7,996 | 2,585 | 0 | |
Expenses related to Cyber-Attack, net of insurance recoveries | 1,100 | 1,500 | 1,032 | |
MyTheresa acquisition costs | 0 | 3,286 | 4,443 | |
Net gain from facility closure | $ (5,600) | 0 | 0 | (5,577) |
Other expenses | 5,322 | 1,012 | 2,911 | |
Total | $ 37,721 | $ 29,730 | $ 27,127 |
OTHER EXPENSES - Narrative (Details) $ in Thousands |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2016
USD ($)
|
Jul. 28, 2018
USD ($)
store
|
Jul. 29, 2017
USD ($)
store
position
|
Jul. 30, 2016
USD ($)
position
|
|
Other Income and Expenses [Abstract] | ||||
Expenses incurred in connection with strategic initiatives | $ 23,303 | $ 21,347 | $ 24,318 | |
Number of positions eliminated | position | 315 | 500 | ||
Number of stores closed | store | 14 | 4 | ||
Expenses related to store closures | $ 7,996 | $ 2,585 | $ 0 | |
Expenses related to Cyber-Attack, net of insurance recoveries | 1,100 | 1,500 | 1,032 | |
CEO transition costs | 5,322 | 1,012 | 2,911 | |
Net gain from facility closure | $ 5,600 | $ 0 | $ 0 | $ 5,577 |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION (with respect to NMG's obligations under the Senior Secured Credit Facilities, Cash Pay Notes and PIK Toggle Notes) - Unrestricted Subsidiaries (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 28, 2018 |
Apr. 28, 2018 |
Jan. 27, 2018 |
Oct. 28, 2017 |
Jul. 29, 2017 |
Apr. 29, 2017 |
Jan. 28, 2017 |
Oct. 29, 2016 |
Jul. 28, 2018 |
Jul. 29, 2017 |
Jul. 30, 2016 |
|
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |||||||||||
Total assets | $ 7,545,903 | $ 7,703,516 | $ 7,545,903 | $ 7,703,516 | |||||||
Revenues | 1,132,900 | $ 1,165,100 | $ 1,482,100 | $ 1,120,300 | 1,119,900 | $ 1,111,400 | $ 1,395,600 | $ 1,079,100 | 4,900,444 | 4,705,993 | $ 4,949,472 |
Net earnings (loss) | (75,300) | $ (19,900) | $ 372,500 | $ (26,200) | (366,300) | $ (24,900) | $ (117,100) | $ (23,500) | 251,131 | (531,759) | $ (406,110) |
Reportable Legal Entities | Intercompany Note Payable | Non- Guarantor Subsidiaries | |||||||||||
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |||||||||||
Net interest income | 1,500 | ||||||||||
Reportable Legal Entities | Cash Pay Notes and PIK Toggle Notes | Unrestricted Subsidiary | |||||||||||
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |||||||||||
Total assets | 442,748 | 415,974 | 442,748 | 415,974 | |||||||
Net assets | $ 146,300 | $ 137,661 | 146,300 | 137,661 | |||||||
Revenues | 364,134 | 265,608 | |||||||||
Net earnings (loss) | $ 7,490 | $ 3,700 |
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 28, 2018 |
Apr. 28, 2018 |
Jan. 27, 2018 |
Oct. 28, 2017 |
Jul. 29, 2017 |
Apr. 29, 2017 |
Jan. 28, 2017 |
Oct. 29, 2016 |
Jul. 28, 2018 |
Jul. 29, 2017 |
Jul. 30, 2016 |
|
Quarterly financial information | |||||||||||
Revenues | $ 1,132,900 | $ 1,165,100 | $ 1,482,100 | $ 1,120,300 | $ 1,119,900 | $ 1,111,400 | $ 1,395,600 | $ 1,079,100 | $ 4,900,444 | $ 4,705,993 | $ 4,949,472 |
Gross profit | 315,500 | 408,700 | 458,100 | 397,400 | 312,800 | 380,900 | 413,100 | 379,200 | 1,579,700 | 1,486,000 | |
Net earnings (loss) | (75,300) | (19,900) | 372,500 | $ (26,200) | (366,300) | $ (24,900) | (117,100) | $ (23,500) | 251,131 | (531,759) | (406,110) |
Income tax loss (benefit) from the Tax Reform | (5,300) | $ 1,500 | $ (387,800) | (391,558) | 0 | 0 | |||||
Goodwill | 196,200 | 0 | 196,164 | 199,218 | |||||||
Long-lived assets | 1,200 | 3,700 | 4,800 | 38,100 | |||||||
Impairment charges | 357,000 | 153,800 | $ 0 | 510,736 | 466,155 | ||||||
Tradenames | |||||||||||
Quarterly financial information | |||||||||||
Tradenames | $ 159,600 | $ 150,100 | $ 309,744 | $ 228,877 | |||||||
Year-End Adjustment | |||||||||||
Quarterly financial information | |||||||||||
Unfavorable shrink adjustments | $ 12,500 |
SUBSEQUENT EVENTS - Schedule of Summarized Financial Infomation (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 28, 2018 |
Apr. 28, 2018 |
Jan. 27, 2018 |
Oct. 28, 2017 |
Jul. 29, 2017 |
Apr. 29, 2017 |
Jan. 28, 2017 |
Oct. 29, 2016 |
Jul. 28, 2018 |
Jul. 29, 2017 |
Jul. 30, 2016 |
|
Subsequent Event [Line Items] | |||||||||||
Total assets | $ 7,545,903 | $ 7,703,516 | $ 7,545,903 | $ 7,703,516 | |||||||
Revenues | 1,132,900 | $ 1,165,100 | $ 1,482,100 | $ 1,120,300 | 1,119,900 | $ 1,111,400 | $ 1,395,600 | $ 1,079,100 | 4,900,444 | 4,705,993 | $ 4,949,472 |
Net earnings (loss) | (75,300) | $ (19,900) | $ 372,500 | $ (26,200) | (366,300) | $ (24,900) | $ (117,100) | $ (23,500) | 251,131 | (531,759) | (406,110) |
NMG International LLC | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Total assets | 351,982 | 320,876 | 351,982 | 320,876 | |||||||
Net assets | $ 266,784 | $ 248,228 | 266,784 | 248,228 | |||||||
Revenues | 364,134 | 265,608 | 201,806 | ||||||||
Net earnings (loss) | $ 13,833 | $ 9,052 | $ 3,039 |
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jul. 28, 2018 |
Jul. 29, 2017 |
Jul. 30, 2016 |
|
Reserve for estimated sales returns | |||
Changes in valuation and qualifying accounts and reserves | |||
Balance at Beginning of Period | $ 47,006 | $ 45,336 | $ 44,046 |
Additions, charged to costs and expenses | 1,018,617 | 944,682 | 977,811 |
Additions, charged to other accounts | 0 | 0 | 0 |
Deductions | (1,020,949) | (943,012) | (976,521) |
Balance at End of Period | 44,674 | 47,006 | 45,336 |
Reserves for self-insurance | |||
Changes in valuation and qualifying accounts and reserves | |||
Balance at Beginning of Period | 36,545 | 36,197 | 37,943 |
Additions, charged to costs and expenses | 62,963 | 69,095 | 75,821 |
Additions, charged to other accounts | 0 | 0 | 0 |
Deductions | (60,002) | (68,747) | (77,567) |
Balance at End of Period | $ 39,506 | $ 36,545 | $ 36,197 |
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