General Cinema

Prospectus Supplement
(To Prospectus Dated April 23, 1992)
$300,000,000
~
~
General Cinema
Corporation
$150,000,000
.81/40/0 Senior
Notes Due 2002
$150,000,000
8~8% Senior Debentures
Due 2022
The 8%% Senior Notes Due 2002 (the "Notes") will mature on June 1,2002 and the 8"¥s%Senior
Debentures Due 2022 (the "Debentures" and together with the Notes, the "Securities") will mature
on June 1, 2022. Interest on the Securities will be payable semi-annually in arrears on June 1 and
December 1 of each year, commencing December 1, 1992.
Each of the Securities will be represented by global securities ("Global Securities") registered in
the name of the nominee of The Depository Trust Company ("DTC"). Beneficial interests in such
certificates will be shown on, and transfers thereof will be effected only through, records maintained
by DTC's participants. Owners of beneficial interests in the certificates representing the Securities
will be entitled to physical delivery of Securities in certificated form in the amount of their respective
beneficial interests only under the limited circumstances described herein. See "Description of the
Notes and Debentures - Book-EntrySystem."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION O~ ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Price to
Public(1)
PerNote.. . . . . . . . . . . . . . . .. ......................
Total
Per Debenture
Total
......................
...................................
99.428%
$149,142,000
98.605%
. $147,907,500
Underwriting
Discount
Proceeds to
Company(1)(2)
0.650%
$975,000
0.875%
$1,312,500
98.778%
$148,167,000
97.730%
$146,595,000
(1) Plus accrued interest, if any, from May 26, 1992 to date of delivery.
. (2) Beforedeductingexpenses payableby the Companyestimatedat $500,000.
The Securities are offered subject to receipt and acceptance by the Underwriters, to prior sale, and
to the Underwriters' right to reject any order in whole or in part and to withdraw, cancel or modify the
offer without notice. It is expected that delivery of Global Securities representing the Securities will
be made through the facilities of DTC on or about May 26, 1992.
Salomon Brothers Inc
The First Boston Corporation
Lehman Brothers
The date of this Prospectus Supplement is May 18, 1992.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
8-2
THE COMPANY
General Cinema Corporation ("GCC", "General Cinema" or the "Company") is primarily engaged in
the businesses of publishing, specialty retailing, motion picture exhibition and insurance.
Publishing. In November 1991, the Company acquired Harcourt Brace Jovanovich, Inc. ("HBJ"),
which is one of the world's leading publishers. HBJ publishes approximately 2,600 new titles and 390
scholarly journals annually for the educational, scientific, technical, medical, legal and trade markets. In the
educational market, HBJ is one of the largest school and college textbook publishers in the world and is a
leading for-profit publisher of psychological testing materials. Through Academic Press and W.B. Saunders,
HBJ is a leading publisher of scientific and technical books and journals and medical books and periodicals.
In the professional field, HBJ conducts bar review and accounting accreditation review courses and, through
Drake Beam Morin, provides outplacement counseling services for executives. HBJ's trade division publishes
non-fiction, fiction and children's books.
Prior to the acquisition of HBJ by the Company, HBJ's operations were impeded by capital constraints
resulting from its highly leveraged condition. The lack of capital particularly affected the product
development efforts of HBJ's elementary, high school and college textbook publishing businesses. The
Company believes that the removal of HBJ's capital constraints, as a result of the Company's cash purchase of
approximately $1.7 billion in carrying value of HBJ debt securities in connection with the HBJ acquisition in
November 1991, will enable HBJ to make the investments necessary to regain market share in the educational
publishing' business. See "Management's Discussion and Analysis of Financial Condition and Results of
Operations
Liquidity and Capital Resources" for information concerning anticipated capital expenditures
in fiscal 1992 by HBJ Publishing. The Company's Publishing revenues in fiscal 1991 were $911.5 million.
-
Specialty Retailing. The Company has an approximately 63% equity interest, on a fully-converted basis,
in The Neiman Marcus Group, Inc. ("NMG"), which operates Neiman Marcus, Bergdorf Goodman and
Contempo Casuals. Neiman Marcus is a high fashion, specialty retailer which operates 26 stores in 23 cities
throughout the United States. Bergdorf Goodman and Bergdorf Goodman Men, which operate two stores on
Fifth Avenue and 58th Street in New York City, offer high-quality women's and men's apparel, fashion
accessories and other items for up-scale customers. Both Neiman Marcus and Bergdorf Goodman operate
significant mail order businesses, including the Horchow Mail Order catalogues operated by Neiman Marcus.
Contempo Casuals, which operates a chain of approximately 275 stores located in regional shopping malls in
33 states, provides quality private-label apparel targeted for young women between the ages of 17 and 24 at
generally moderate prices. In fiscal 1991, more than 60% of Contempo Casuals' merchandise was designed
and produced exclusively for Contempo Casuals.
Since the Company acquired a majority interest in NMG in 1987, NMG's strategy has been to make the
investments necessary to modernize its stores and support facilities, to further enhance the quality of customer
service, and to add selectively to the number of its stores. From late 1987 to 1991, NMG made capital
expenditures of approximately $300 million to implement this strategy. As a result of NMG's store
remodeling program, approximately one-half of NMG's total retail selling space is new or has been remodeled
since 1987. The Company's Specialty Retail revenues in fiscal 1991 were $1.74 billion.
Motion Picture Exhibition. General Cinema Theatres operates a major circuit of motion picture
theatres, virtually all of which are multi-screen complexes located in or near regional shopping centers. The
theatres, which are located in 30 states, generally exhibit films on a "first run" basis. As of January 31,1992,
the Company operated approximately 1,400 screens at approximately 275 locations. Approximately one-third
of its locations are in.the states of Texas, Florida and California. As a result of a recently completed building
and modernization program, nearly 70% of the Company's screens have been built or renovated since 1985.
The Company's Theatre revenues in fiscal 1991 were $466~8million.
Insurance. HBJ's operations also include a substantial insurance segment, engaged primarily in the
underwriting of individual health, life, accident and credit insurance policies. More than 90% of the assets in
HBJ's insurance portfolio consists of investment grade securities. The Company's Insurance revenues in fiscal
1991 were $464.7 million.
8-3
USE OF PROCEEDS
The net proceeds from the sale of the Securities are estimated to be $294,262,000.
The Company currently intends to use a portion of the net proceeds to purchase or acquire some or all of
the following debt securities that are held by the public: (i) the 10.75% Subordinated Notes due 1995 of the
Company, which are redeemable on or after June I, 1992, and of which $100 million in principal amount was
outstanding as of January 31, 1992; (ii) the 143/4%Subordinated Discount Debentures Due 2002 of HBJ,
which are redeemable at any time, and of which $35.9 million in principal amount was held by the public as of
January 31, 1992; (iii) the 133M'0Senior Subordinated Debentures Due 1999 of HBJ, which are redeemable
on or after September 15, 1992, and of which $35.4 million in principal amount was held by the public as of
January 31, 1992; (iv) the 141/4%Subordinated Debentures Due 2004 of HBJ, which are redeemable on or
after November 15, 1993, and of which $12.4 million in principal amount was held by the public as of
January 31, 1992; and (v) the 13% Senior Notes Due 1997 of HBJ, which are redeemable on or after
November 15, 1993, and of which $6.7 million in principal amount was held by the public as of January 31,
1992. The Company's plans to purchase or acquire some or all of such debt securities may change as a result
of changes in market conditions and other factors, and there can be no assurance that the Company will
purchase or acquire any or all of such debt securities.
Any net proceeds not used for the foregoing p'urposes will be used for general corporate purposes.
Pending their use, the net proceeds will be invested in short-term investment grade securities.
CAPITALIZATION
The following table sets forth the consolidated capitalization of the Company as of January 31, 1992.
This table should be read in conjunction with, and is qualified by reference to, the Company's consolidated
financial statements and related notes contained in documents incorporated by reference in the accompanying
Prospectus and "Management's Discussion and Analysis of Financial Condition and Results of Operations"
included herein.
January
31, 1992
(in tbousands)
Long-term Liabilities:
GCC revolving credit agreements
........................................
GCC subordinated notes ...............................................
GCC other long-term liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
HBJ long-term liabilities ( 1) ............................................
NMG long-term liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total long-term liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shareholders' Equity:
Stock
.....................................................
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.. ... .. ..
Cumulative translation adjustments
Accumulated
30,000
349,077
24,367
142,914
427,319
973,677
.
Preferred Stock:
Series A Cumulative Convertible . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common Stocks:
Class B Stock.. . . . . . . . . . . . . . . . . . . . . . . . . ,. . . . . . . .. . . . . . . . . . . . . . . . . ..
Common
$
deficit
......................................; ............
Total shareholders' equity
Total capitalization
..........................................
................................................
3,795
22,172
53,006
856,048
3,693
(27,881)
910,833
$1,884,510
( I) HBJ has called for redemption on March 12, 1992 all of its 143UYo
Subordinated Pay-in-Kind Debentures
Due 2002, totalling $44.0 million in principal amount.
S-4
SUMMA~Y CONSOliDATED
FINANCIAL DATA
The followin8 table sets forth summary consolidated financial data of the Company for the unaudited
quarters ended January 31, 1992 and 1991 and for the years ended October 31, 1991, 1990 and 1989. The
historical financial data, for periods prior to November 25, 1991, give retroactive effect to General Cinema's
acquisition of HBJ by merger in November 1991, accounted for in accordance with the pooling of interests
method of accounting by combining the historical financial statements of the two companies. This historical
financial data include both the interest income on the $1.1 billion of General Cinema cash used to purchase
approximately $1.7 billion in carrying value of HBJ debt securities on November 23, 1991, the mterest
expense on such HBJ debt securities, and HBJ preferred stock dividends. The results of operations for the
years ended October 31, 1991, 1990 and 1989 each contain significant additional charges, as described in Note
(1) to the following table. For all of the foregoing reasons, the Company believes its historical financial
statements for periods prior to November 25, 1991 are not indicative of the Company's current financial
condition.
The pro forma financial data set forth below give retroactive effect to the purchase by the Company, in
November 1991, of HBJ debt securjties having a carrying value of approximately $1.7 billion for $1.1 billion in
cash and the elimination of HBJ's preferred stock dividends, as if each occurred on October 31, 1990.
The historical financial data should be read in conjunction with, and are qualified by reference to, the
consolidated financial statements and the related notes contained in documents incorporated by reference in
the accompanying Prospectus and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included herein. The historical financial data set forth below for the years ended
October 31, 1991, 1990 and 1989 have been derived from the financial statements of the Company, which
have been audited by Deloitte & Touche, independent auditors, as set forth in their reports with respect
thereto, and from the financial statements of HBJ, which for the years ended December 31, 1990 and 1989
have been audited by Arthur Andersen & Co., independent auditors, as set forth in their report with respect
thereto.
The unaudited quarterly financial data have been prepared by management and include all adjustments
(consisting only of normal recurring accruals) which management considers necessary for a fair presentation
of the results of operations and financial position of the Company for the periods and as of the dates indicated.
The Company's businesses are seasonal in nature and the results of operations for the quarter ended January
31, 1992 are not necessarily indicative of the results for the full year.
$-5
Quarter Ended
January 31,
1991
1992
-
Year Ended October 31,
1989
1991
1990
(dollar amounts in thousands)
-
Historical Statement of Operations Data
Revenue:
Theatre . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
207,290
113,175
128.374
$426,094
203.003
117,456
140.082
$1.744.800
911,484
464,726
466,767
$1.688,611
935,937
476.810
460,919
$1,467,504
885,722
456.298
446.300
Total revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$882,992
$886.635
$3.587.777
$3,562,277
$3,255,824
$ 30.516
5,078
10,051
8,277
(8.028)
$
$
$
Specialty
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $434.153
retail
Publishing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Insurance
.......................................
Operating earnings (loss):
Specialty
retail . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . .
Publishing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 25.551
9,884
Insurance .......................................
10.164
Theatre . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,005
(7.331)
Corporate expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Merger and restructuring charges ...................
- -
.
Total operating earnings (loss) ...............
Interest expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment income .................................
Gain on sale of securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings (loss) from continuing operations before
income taxes and minority interest .... . . . . . . . . . . . . . .
Income tax expense (benefit) ........................
Minority interest ...................................
Earnings (loss) from continuing operations. . . . .. . . . . . . .
Income (expense) from discontinued operations.
extraordinary items and dividends on HBJ
preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nh:hi]).
:i
..
Ratio of earnings to fixed charges(2)
. . . .. . . . . . . . .
..................
- -
44,273
(22.391)
23,480
-
-
(72,777)
45.894
(87,032)
33.293
-
82,277
(48,008)
(45,296)
9.536
(65.532)
83,212
6.145
28,149
9,201
(60.461)
(34,000)
(139.800)( I)
(349.061 )
129,120
-
99.191
138,712
26.118
(11,449)
(43.337)
175.235 (I)
(363.918)
125,266
-
66,246 (I)
(449,095)
185,797
130
129,298
45,362
17,69]
(7,845)
(364)
819
(359.741 )
(69.902)
3.283
65.881
32,220
3.278
( 169.922)
(36.864)
3.269
27.671
(8,300)
(293,122)
30,383
( 136.327)
419.557
(2.832)
(12,684)
(18.242)
1.120.512
$447.228
($11,132)
($305,806 )
12.141
$ 984.185
-
-
2.09x
-
$
-
1.06x
Pro Forma Statement of Operations Data(3)
Total operating
earnings
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 44,273
Interest expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
I nvestment
income
.................................
Nh:ehiaI).
::i
.t .
..............
.... ..
Ratio of earnings to fixed charges(2) ............
Other Historical Data
Capital expenditures:
Specialty
retail
(22,391)
18,436
24.594
1.97x
Depreciation and amortization:
Speciality retail ..................................
Publishing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Insurance .......................................
Theatre
. ... ... . ... . .. ... .. ... ... .. ... .... .. .....
I)
(121,869)
52,154
13,801
1.47x
( 131,087)
$ 21,341
14,986
262
277
28
$
$ 39.381
$ 36,894
$ 172,668
$ 166.281
$ 224.383
$ 14.237
22.062
306
5.469
779
$ 11,947
27,397
776
5,390
140
$
$
$
$ 45,650
$ 317,096
.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total....................................
. $ 42,853
Corporate
($139,800)(
21,791
115
(709)
179
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18.005
Publishing. . . . . . . . . . . . . . . . . . . ... . . . . . . . . . . . . . . . . . .
Insurance .......................................
Theatre . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total....................................
.
$ 45.894
(31.753)
9,827
8-6
96,787
68,070
900
6,851
60
45,500
246,442
1,919
21.401
1,834
$
76.928
59.004
837
29,338
174
41.110
111,505
2,326
20,372
1.063
$ 176,376
$
88,442
86,105
626
48,963
247
39,718
111,525
2.952
18.345
564
$ 173,104
January 31,
1992
(in thousands)
Historical Balance Sheet Data
Cash and short-term investments - - - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . _. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Insuranceassets
Total assets
-. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. .. ... .... ... ... ... .... ... .. .... .... . ... .... . ..... .... .. ... .... .. ....... .... ...
Short-term notes payable and current portion of long-term liabilities .., . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities .............................................................................
Long-term liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . .
Insurance liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total shareholders' equity
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -. -. . . . . . . . . . . . .
Total liabilities
and shareholders'
.. .... ... .. .... ... ... .... .. ...... ... .... ...
equity
$ 362,352
1,021,713
830,113
527,352
2,350,247
$5,091,777
$
55,951
829,044
973,677
238,983
2,083,289
910,833
$5,091,777
(1) In the fourth quarter of 1991, General Cinema and HBJ recorded costs directly and indirectly associated
with the merger together with other charges to current operating results totaling $338.5 million before
taxes. Merger and restructuring charges aggregated $72.8 million and included merger costs of $15.3
million; costs associated with the discontinuance of the HBJ ESOP of $18.9 million; and a provision to
reflect the decision to consolidate certain facilities and to relocate certain functions and businesses of
$38.6 million. Other charges included increased amortization of $129.8 million to reflect the shortened
estimated useful lives of both tangible and intangible assets; recognition of the decline of $35.0 million in
the market value of certain HBJ insurance portfolio holdings; the write-off of deferred policy acquisition
costs of $31.7 million due to the current deterioration of certain blocks of policies; the write-down of
inventory, plate, development costs, and royalty advances associated with reduced expectations of sales
for certain products of $25.8 million; and various other charges of $43.4 million. These amounts were
recorded in the financial statements as follows: $168.5 million was charged to publishing operations;
$89.0 million was charged to insurance operations; $8.2 million was charged to corporat~ expenses; and
$72.8 million was ~harged to merger and restructuring charges. In the third quarter of fiscal 1991, NMG
recorded a charge-of $17.3 million in corporate expenses as a result of its guarantee of certain unfunded
employee benefits of Carter Hawley Hale Stores, Inc., which filed a petition for reorganization under
Chapter 11 of the Bankruptcy Code.
In fiscal 1990, the Company initiated the restructuring of its theatre operations and provided $34.0
million for the estimated costs associated with the disposal of approximately 20 theatre locations, the
closing of administrative field offices and a management reorganization. In fiscal 1990, HBJ Insurance
recorded a $9.5 million portfolio valuation reserve as a reduction of revenues.
In fiscal 1989, HBJ charged to income write-offs of $175.8 million, substantially all of which were noncash items.
(2) Computed by dividing earnings from continuing operations, before income taxes and fixed charges, by
fixed charges. Fixed charges consist of interest expense (including amortization of previously capitalized
interest), approximately 50% of rent expense (estimated by management to be the interest component of
such rent expense) and preferred stock dividend obligations of HBJ. The deficiencies of earnings to cover
fixed charges in the first quarter of fiscal 1991, fiscal 1991 and fiscal 1989 were $11.0 million, $376.2
million and $247.4 million, respectively. The deficiency of earnings to cover fixed charges for fiscal 1991,
on a pro forma basis, was $210.3 million. The Company believes the historical deficiencies of earnings to
cover fixed charges and the ratios of earnings to fixed charges for the periods prior to November 1, 1991
are not indicative of the Company's current financial condition for the reasons set forth in the
introductory paragraphs of "Summary Consolidated Financial Data" and in Note (1) above.
The Company does not currently control the declaration by NMG of dividends on the preferred stock and
common stock of NMG held by the Company. See "Management's Discussion and Analysis of Financial
The Neiman Marcus Group." The earnings of NMG attributable
Condition and Results of Operations
to the minority stockholders of NMG are not available to the Company in any event. The payment of
dividends by HBJ insurance operations to the Company is restricted under insurance regulations and is
subject to other considerations, including maintenance of certain industry ratings.
-
(3) The pro forma data reflect the purchase by the Company, in November 1991, of HBJ debt securities
having a carrying value of approximately $1.7 billion for $1.1 billion in cash, and the elimination of HBJ's
preferred stock dividends,' as if each occurred on October 31, 1990.
S-7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
.
CONDITION AND RESULTS OF OPERATIONS
General
In November 1991, the Company acquired HBJ through a merger in which the Company issued a total
of 5,278,293 shares of its Class B Stock and Common Stock. Prior to the merger, the Company acquired 90%
of the outstanding debt securities of HBJ, having a carrying value of approximately $1.7 billion, for $1.1 billion
in cash. Subsequent to the merger, the Company purchased approximately $43.8 million in carrying value of
HBJ debt securities for approximately $49.0 million in cash. Together, these purchases resulted in a net
extraordinary gain on a consolidated basis of $419.6 million, which was recorded in the first quarter of fiscal
1992.
After considering all acquisition related fees, bank debt, and the assumption of the remaining 10%of the
HBJ debt securities that were not purchased by the Company, the total HBJ transaction cost was
approximately $1.5 billion.
The HBJ merger has been accounted for as a pooling of interests. Although the merger was not effective
until after the close of General Cinema's October 31 year-end, the Company's consolidated financial
statements combine the historical results of the two companies to give retroactive effect to the merger.
Accordingly, all financial data for periods prior to the merger have been combined and restated with respect to
equity ownership. However, retroactive effect is not given to the purchase by General Cinema of the HBJ
debt securities and the subsequent elimination of that debt from the financial statements.
As a result, the historical financial statements of the Company are not indicative of the Company's
current financial condition. The historical income statements include a large amount of interest expense
associated with the high debt levels at HBJ.
This interest expense was only partially offset by the income from General Cinema's investment portfolio
of short-term investment grade securities that earned a significantly lower yield than HBJ paid on its below
investment grade debt. In addition, significant charges associated with write-offs and restructurings were
recorded by HBJ in 1991 and 1989 and by General Cinema in 1990. Before taxes these totaled $338.5 million
in 1991, $34.0 million in 1990, and $175.8 million in 1989.
The fourth quarter of 1991 includes charges related to the HBJ merger, the resulting company
restructuring and other operating matters in the amount of $338.5 million on a pre-tax basis and $268.9
million, or $3.41 per share, after taxes. These adjustments reflect the costs of the merger; decisions to
consolidate facilities and relocate certain functions and operations, increased amortization reflecting changes
in the estimated lives of certain tangible and intangible assets, adjustments to the carrying value of insurance
portfolio assets, write-downs of deferred policy acquisition costs and other items related to the merger, as well
as charges to reflect reduced income potential of some product lines.
Tbe Neiman Marcus Group
As of January 31, 1992, General Cinema held capital stock representing 51% of the total voting power of
the outstanding capital stock of NMG. If General Cinema were to convert or exchange all of its capital stock
into or for NMG common stock pursuant to its terms, it would own 63.4% of the outstanding common stock of
NMG. General Cinema is party to an agreement with NMG, which expires on January 31, 1993 (or upon the
earlier occurrence of certain events), which (i) requires General Cinema to cause at least one-half of the
members of the NMG Board of Directors to be persons not affiliated with General Cinema, (ii) limits
General Cinema's voting power by prohibiting certain capital stock exchanges, and (iii) restricts General
Cinema's ability to effect a merger or business combination with NMG or acquire additional shares of NMG
voting securities, except as permitted by the agreement.
As a majority-owned subsidiary, NMG's financial statements are consolidated with those of General
Cinema, with a lag of one quarter. Therefore, NMG's operating results for its year ended August 3, 1991 have
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been consolidated with the Company's operating results for its year ended October 31, 1991. Fiscal 1991 was
a 52-week year for NMG while fiscal 1990 was a 53-week year.
NMG is a public company whose shares are listed on the New York Stock Exchange. General Cinema is
not responsible for NMG's liabilities. The Company has no access to NMG's earnings or cash flow other than
through the receipt of cash dividends paid by NMG.
In August 1991, General Cinema purchased $50 million of a new 91/4%redeemable preferred stock from
NMG. These funds were used to reduce NMG's bank indebtedness incurred in connection with that
company's continuing store remodeling and expansion programs. General Cinema has also participated in
NMG's dividend reinvestment program. During General Cinema's fiscal year ended October 31, 1991, the
Company reinvested $27.1 million of NMG dividends and received 1.8 million shares of NMG common
stock.
Subsequent to year-end, NMG privately placed $80 million of Senior Notes due 1996. The funds from
this sale were used to reduce NMG's short-term indebtedness.
Operating Results - First Quarter 1992 vs. First Quarter 1991
General Cinema recognized an extraordinary gain of $419.6 million, or $5.31 per share, in the first quarter
of 1992 primarily due to the purchase of HBJ debt at a discount as part of the acquisition of HBJ. Prior to the
extraordinary gain, General Cinema had after-tax earnings in the first quarter of fiscal 1992 of $27.7 million, or
$.35 per share, compared to a net loss of $11.1 million, or $.14 per share, in the first quarter of fiscal 1991.
Specialty Retail
Specialty retail results are reported with a lag of one quarter, so that the NMG operating results for its
quarter ended November 2, 1991 are consolidated with the Company's operating results for the quarter ended
January 31, 1992. Revenues in the 13 weeks ended November 2, 1991 increased 1.9%over revenues in the 13
weeks ended November 3, 1990. Comparative revenues declined 1.9%.The fiscal 1992 results include the new
Neiman Marcus store in Minneapolis, Minnesota, three weeks of revenues of the new Scottsdale, Arizona
store, 23 net additional Contempo Casuals stores and six new Pastille stores.
Operating earnings declined 16.3% principally because of a weak retail environment and increased costs
associated with new stores.
Publishing
Revenues in the quarter ended January 31, 1992 increased 2.1% over revenues in the quarter ended
January 31, 1991. Increased revenues from medical books, educational testing products and services and
outplacement counseling were offset by lower sales of elementary, secondary and college textbooks. Medical
book revenues and educational testing products revenues benefited from the introduction of several new
products. Higher revenues from outplacement counseling resulted primarily from the expansion of service
locations.
Operating earnings increased 94.6% in the first quarter of 1992 compared to the first quarter of 1991. The
1992 operating earnings benefited from a lower level of intangible and plate amortization caused by a
shortening of lives at the end of fiscal 1991. In addition, higher medical book and educational testing products
sales and lower operating losses in the elementary and secondary products caused operating earnings increases.
Partially offsetting such increases were weaker sales of college textbooks and higher promotion expenses of
new technical products.
Insurance
Insurance revenues decreased 3.6% in the quarter ended January 31, 1992 compared to the quarter ended
January 31, 1991. The decreased revenues were caused primarily by the withdrawal from the group insurance
business, a decline in structured annuity sales and the elimination of revenues from HBJ Farm Publications,
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which was sold in May 1991. Partially offsetting these declines were increased revenues attributable to capital
gains from the sale of securities.
Insurance operating earnings improved 1.1% despite lower revenues. The 1991 results included losses
from the farm publications business. The 1992 results reflect increased capital gains and lower loss ratios on
certain lines.
Theatre
Revenues from the Theatre business declined 8.4% in the quarter ended January 3r, 1992 compared to
the same period in 1991. A 10% decline in patronage more than offset a slight increase in pricing. The 1991
period was favorably impacted by the strong performance of the movie, "Home Alone."
Theatre operating earnings declined 27.4% principally because of the decline in patronage.
Corporate
Corporate expenses in the first quarter of 1992 declined 8.7% compared to the first quarter of 1991. The
decline was caused primarily by the elimination of certain HBJ corporate functions following the merger with
General Cinema.
Investment Income
Investment income in 1992 declined 29.5% compared to the first quarter of 1991. On November 23, 1991
$1.1 billion of the portfolio balance was used in connection with the merger and acquisition of HBJ debt.
Partially offsetting the decline in invested funds was an $11.6 million gain on the exchange of Cadbury
Schweppes p.l.c. ("Cadbury") stock for certain subordinated debentures of the Company.
Interest Expense
Interest expense declined 74.3% in the first quarter of 1992 because of the elimination in consolidation of
$1.7 billion of HBJ debt on November 23, 1991.
Income Taxes
The 1992 income tax rate of 39% reflects the effective tax rate expected to be applicable for the full year.
The benefit rate computed in 1991 is lower than that computed at the statutory U.S. income tax rate primarily
because of foreign taxes and other permanent differences.
Extraordinary Item
The extraordinary gain of $419.6 million in 1992 resulted from the elimination in consolidation of the
HBJ debt acquired by GCC.
Operating Results -
1991 vs. 1990
The 1991 net loss includes fourth quarter after-tax charges of $268.9 million related to HBJ and its
publishing and insurance segments. The net loss for 1991 was $293.1 million, and the net loss applicable to
common shareholders was $305.8 million, or $3.88 per share. The net earnings for 1990 were $30.4 million,
and net earnings applicable to common shareholders were $12.1 million, or $.15 per share.
Specialty Retail
The 1991 results are for 52 weeks while the 1990 results are for 53 weeks.
Total revenues of the NMG segment increased 3.3% in 1991 over 1990 as a result of the opening of a new
Neiman Marcus- store in Denver, Bergdorf Goodman Men in New York City, 22 net additional Con tempo
Casuals stores, and six new Pastille stores, partially offset by a .7% comparative sales decline (comparable 52
weeks) .
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)
The operating income from specialty retailing was $82.3 million, a decrease of $16.9 million from the
$99.2 million earned in 1990. This decrease was caused by a higher rate of markdowns needed to maintain
inventory currency in a materially weakened sales environment and higher occupancy costs caused by
increased investment spending on store building and remodeling.
Publishing
Comparisons are made for the year ended October 31 1991 versus the twelve months ended December 31, 1990 (which was the fiscal year-end of HBJ).
Publishing revenues were 2.6% lower in 1991 versus 1990 largely due to lower sales in the elementary and
secondary education operations. No new major programs were published in the elementary market in 1991,
and the revised math and social studies programs did not generate enough revenues to equal the level of the
1990 period. The 1990 revenue benefited from the introduction of language and health programs. Lower
revenues 'in educational publishing in 1991 were partially offset by a stronger performance in testing products
and scoring services; scientific, technical and medical publishing; and outplacement counseling services. In
addition, management believes governmental budgetary constraints and other factors limited the purchase of
educational materials in fiscal 1991.
Publishing had a loss of $48.0 million in 1991 as compared to income of $138.7 million in 1990. The
1991 loss was primarily due to pre-tax charges of $168.5 million related to the merger and subsequent
restructuring of the business. The charges also included changes in the lives of certain tangible and intangible
assets, write-downs of inventory and plate and development costs associated with reduced expectations of sales
for certain products, and the recognition of shorter revision cycles in the college market.
Insurance
Comparisons are made for the year ended October 31, 1991 versus the twelve months ended December 31, 1990.
Insurance revenues declined 2.5% in 1991 as compared to 1990. Of this decline, $32.5 million was
attributable to portfolio valuation reserve adjustments. Prior to these adjustments, revenues from Insurance
increased 4.3% over 1990 levels, primarily due to investment income earned on substantial annuity deposits
received during 1990, revenues associated with immediate annuity contracts, and higher realized capital gains
offset by a net decrease in premiums due to the transfer of group business to other underwriters.
For the 1991 fiscal year, Insurance operating losses were $45.3 million, which includes a charge of $89.0
million incurred in connection with the merger. Included in this charge was an increase in the portfolio
valuation reserve of $35.0 million which reflects, in part, HBJ Insurance's intent to divest itself of a portion of
high-yield debt securities and to adjust certain real estate holdings to current market value. In addition, these
charges included the writing off of deferred policy acquisition costs of $31.7 million as well as the
strengthening of reserves based on post-merger management policies.
Theatre
Theatre division revenues increased 1.3% due to higher prices as compared to 1990, offset by a 3.0%
decrease in patronage, particularly in the second half of the year.
Operating income from the theatre business in 1991 was $9.5 million, compared to a loss of $11.4 million
in 1990 prior to the $34.0 million restructuring charge. The improvement in 1991 was largely due to lower film
costs and reduced operating expenses despite lower patronage. The lower expenses resulted from cost
containment measures initiated by management during the year.
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Corporate Expenses
Corporate expenses increased $22.2 million in 1991 due primarily to a $17.3 million pre-tax charge
related to the guarantee of certain employee benefits of Carter Hawley Hale Stores, Inc. ("CHH"). Upon
CHH's bankruptcy filing in February 1991, NMG became obligated for these payments.
Merger and Restructuring Charges
The 1991 charge of $72.8 million reflects costs associated with the HBJ merger, including $15.3 million
of transaction costs, $18.9 million of costs associated with the discontinuance of the HBJ ESOP, and $38.6
million of costs reflecting management's decision to consolidate certain facilities. The 1990 charge of $34.0
million includes the estimated costs associated with the disposal of approximately 20 theatres, the closing of
administrative field offices, and a management reorganization that resulted in a reduction in the number of
theatre employees.
Interest Expense
Total interest expense decreased 4.1% in 1991 because of reduced hedging costs associated with the
Company's investment in Cadbury. The Company sold most of its Cadbury stock in October 1990.
Investment Income
Investment income increased 3.1% in 1991. The larger average investment portfolio balance more than
offset lower rates.
Gain on Sale of Securities
In 1990 the Company realized a $129.3 million pre-tax gain on the sale of 98.6 million ordinary shares of
Cad bury.
Income Taxes
The 1991 effective income tax benefit rate of 19.4% is significantly lower than the effective income tax
expense rate of 48.9% in 1990. The 1991 rate reflects limitations on available net operating loss carrybacks
and foreign tax expenses.
Minority Interest
Minority interest expense of $3.3 million in 1991 and 1990 includes dividends paid to minority
shareholders of NMG in excess of their equity.
Operating Results -
1990 vs. 1989
The results of 1990 are difficult to compare to 1989. The 1990 results include an after-tax gain on the
sale of the Company's Cadbury stock of $84.0 million and an after-tax restructuring charge of $20.8 million
related to the Theatre division. .The 1989 results include $48.0 million of income and $1.2 billion of after-tax
gains related to the sale of the Company's soft drink bottling business and HBJ's six theme parks and related
holdings. In addition, 1989 includes $123.8 million of after-tax charges in the Publishing and Insurance
segments as well as a $32.3 million after-tax loss on the early retirement of debt.
Net earnings for 1990 were $30.4 million, and net earnings applicable to common shareholders were
$12.1 million, or $.15 per share. Net earnings for 1989 were $1,043.9 million, and net earnings applicable to
common shareholders were $984.2 million, or $12.51 per share.
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Specialty Retail
The 1990 results are for 53 weeks while the 1989 results are for 52 weeks. The 1989 results include ten
months of operations of the Horchow Mail Order business. The 1990 results include a full year of Horchow
operations.
Total revenues of the NMG segment increased 15.1% in 1990 over 1989 as a result of an 8.7%
comparable sales growth (comparable 53 week periods), the opening of one new Neiman Marcus store, 13 net
additional Con tempo Casuals stores and two additional months of Horchow results.
The operating income from specialty retailing was $99.2 million, an increase of $16.0 million over 1989.
This increase was caused by higher sales and improved margins. Operating margins improved at Contempo
Casuals, Neiman Marcus stores and Neiman Marcus mail order catalogues but were offset by a substantial
loss at Horchow and a slight decline at Bergdorf Goodman.
Publishing
Comparisons are made for the year ended December 31, 1990 versus the year ended December 31, 1989.
Publishing revenues were 5.7% higher in 1990 versus 1989, largely due to higher sales of medical books,
medical and scientific journals and college textbooks. Additionally, executive outplacement counseling
revenues increased significantly as a result of several major projects; revenues from educational testing
products and services were higher due to successful adoptions of new test editions; and bar review course
revenues improved. These higher revenues were partially offset by lower 1990 sales of secondary literature
programs which had major adoptions in 1989.
Operating income in Publishing was $132.6 million higher than in the 1989 period. The 1989 period
included write-offs of $94.6 million. The improvement was largely due to the stronger revenue perfonnance
and somewhat improved gross margins, as well as lower selling and marketing expenses.
Selling and marketing expenses, which include sampling costs, were significantly lower in 1990 than in
1989. In 1989 HBJ reorganized the marketing of elementary and secondary school materials, in effect making
Harcourt Brace Jovanovich the publisher for grades K through 8 and Holt, Rinehart and Winston the
publisher for grades 7 through 12. This reorganization resulted in lower salary, employee benefit costs and
travel expenses in 1990. Sampling expenses for 1990 were lower than in the prior year, primarily for two
reasons: (I) the introduction of two major reading programs resulted in high sampling costs in 1989, and
(2) more stringent management controls over sampling were put in place.
Insurance
Comparisons are made for the year ended December 31, 1990 versus the year ended December 31, 1989.
Insurance revenues increased 4.5% in 1990 compared to 1989 due to higher investment income and
generally increased premiums in most lines of business other than group, which declined. The improvement in
investment income is the result of a larger investment portfolio generated primarily by a substantial increase in
sales of annuity contracts. These increases were partially offset by lower realized capital gains and a portfolio
valuation adjustment. A portfolio valuation reserve of $9.5 million was provided in the third quarter of 1990,
primarily to offset market declines related to high-yield security holdings.
Operating income from HBJ Insurance was $26.1 million, a decline of $2.0 million from 1989. In 1990
there were $9.5 million of portfolio valuation adjustments; in 1989 there were $17.0 million of write-offs. The
decline in operating income resulted from lower realized capital gains, increased loss ratios in accident and
health lines, and losses totaling $5.0 million associated with both the operations and the sale of an interest in a
credit union software company, which occurred in the fourth quarter of 1990.
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Theatre
Theatre division revenues increased 3.3% due to higher prices as compared to 1989, partially offset by a
1.8% decline in patronage.
The operating income from the theatre business in 1990 was $20.7 million lower than in 1989. This
decrease was largely the result of lower attendance and higher film and occupancy costs.
Corporate Expenses
Corporate expenses decreased $17.1 million in 1990 due primarily to an aggregate of $12.2 million of
charges in 1989 associated with underutilized HBJ facilities and reserves for certain employee benefit plans.
Additional savings in 1990 resulted from subleasing previously underutilized HBJ facilities and reducing staff.
Merger and Restructuring Charges
The 1990 charge of $34.0 million includes the estimated costs associated with the disposal of
approximately 20 theatres, the closing of administrative field offices, and a management reorganization that
resulted in a reduction in the number of theatre employees.
Interest Expense
Interest expense decreased 19.0% in 1990 due mainly to the retirement of HBJ bank debt in November
1989 with proceeds from the sale of HBJ's six theme parks and related holdings as well as generally lower
interest rates during the period. This reduction was partially offset by the interest computed on the increased
cumulative carrying value of pay-in-kind and discount debentures (initially issued in 1987) and higher
borrowings at NMG to fund new stores and store remodels as well as higher hedging costs incurred in
connection with the Company's investment in Cadbury. Most of the Cadbury stock was sold in October 1990.
Investment Income
Investment income decreased 32.6% in 1990. The 1989 amount includes a $55.7 million gain recognized
on the exchange of R.J. Reynolds Industries, Inc. ("RJR") common stock for the Company's 10%
subordinated debentures.
Gain on Sale of Securities
In 1990 the Company realized a $129.3 million pre-tax gain on the sale of 98.6 million ordinary'shares of
Cadbury. The 1989 amount relates to the gain on the sale of RJR preferred stock.
Income Taxes
The 1990 effective income tax rate of 48.9% is significantly higher than the effective income tax benefit
rate of 21.7% in 1989. The 1989 tax benefit rate reflects the combination of General Cinema's higher effective
rate of 39.4% with HBJ's effective benefit rate of 30.8%. General Cinema's effective rate approximates the
combined federal and state statutory rates whereas HBJ's rate reflects the benefits of operating losses net of
foreign and state taxes not reduced by reason of such operating losses.
Minority Interest
Minority interest expense of $3.3 million in 1990 and 1989 includes dividends paid to minority
shareholders of NMG in excess of their equity.
Discontinued Operations
Income from discontinued operations in 1989 includes $37.2 million from HBJ's six theme parks and
related holdings segment and $10.8 million from soft drink bottling operations.
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The gain on disposal of discontinued operations of $1.2 billion includes $0.9 billion related to the sale of
soft drink bottling operations and $0.3 billion related to sale of HBJ's six theme parks and related holdings.
Extraordinary Item
HBJ used a portion of the proceeds from the sale of its theme parks and related holdings to retire in full
its bank tenn loan and, initially, all debt outstanding under an HBJ revolving credit agreement. The
unamortized debt issuance costs of $49.0 million associated with HBJ's credit agreement were written off as
an extraordinary loss.
Liquidity and Capital Resources
The Company's. consolidated balance sheet includes segregated balances for Insurance assets and
liabilities. This structured approach is appropriate since substantially all Insurance assets, including cash, are
restricted by statute and therefore generally unavailable for the Company's general corporate purposes.
Similarly, Insurance assets and liabilities are also excluded from the discussion of working capital. Insurance is
discussed in more detail below.
The Company has historically met its operating and cash requirements through funds generated from
operations and the issuance of long-tenn debt. Cash flow from operations, although seasonal in nature, has
been sufficient to fund all working capital needs, as well as a substantial portion of capital expenditures and
dividend requirements, for the last three fiscal years. Future cash flows from operations will benefit from
interest expense reductions in excess of interest income declines resulting from General Cinema's acquisition
of HBJ debt securities. General Cinema significantly reduced its cash position by $1.1 billion to finance the
purchase of HBJ debt securities in connection with, and subsequent to, the HBJ merger. This cash earned
$77.0 million in income in fiscal 1991 while the debt securities acquired represented $227.2 million of interest
expense. As of January 31, 1992, the Company still had over $350 million of cash and short-tenn investments
and $974 millionof long-tenn indebtedness.
.
The acquisition of HBJ debt (classified as a current liability at October 31, 1991) by GCC for cash and
the repayment of HBJ's 'outstanding revolving credit balance resulted in an increase in working capital of
$475.8 million in the first quarter of fiscal 1992. Apart from these transactions, working capital increased
$24.1 million. Significant increases in working capital components, including accounts receivable ($23.4
million), merchandise inventories ($73.7 million) and accounts payable ($45.2 million), were caused
primarily by the seasonal nature of the retail operations, while the increase in unearned subscription income
($50.5 million) resulted from the seasonal nature of the journal publishing business.
The Company's recurring investment transactions consist principally of capital expenditures, although in
1990 the Company paid income taxes on the 1989 sale of its beverage business and sold most of its investment
in Cadbury. Also in 1989, HBJ sold its theme park business and NMG acquired Horchow Mail Order. Capital
expenditures for Publishing were $68.1 million in 1991, and are budgeted at $130 million for 1992. Insurance
capital expenditures were $.9 million in 1991, and are budgeted at $1 million for 1992. Capital expenditures
for Theatre were $6.9 million in 1991, and are budgeted at $16 million for 1992. NMG's capital expenditures
were $96.8 million in 1991, and are budgeted at $90 million for 1992. Capital expenditures for the first quarter
of fiscal 1992 were $39.4 million. The Company has no significant specific commitments for such capital
expenditures, although it expects that all such expenditures will be in the ordinary course of business: The
Company has no reason to believe that the application of the proceeds from the sale of the Securities will
affect the historical or pro fonna relationships reflected in the financial statements included in this Prospectus
Supplement. The Company's cash position, together with funds provided by operations, are expected to be
more than sufficient to support the working capital needs and planned 1992 capital expenditures for
Publishing, Insurance and Theatres. In addition, the Company believes that the funds from NMG's
operations, together with unused debt capacity of NMG, will be sufficient to finance NMG's planned capital
expenditures.
The Company's financing activities primarily reflect transactions in its long-tenn debt and the payment of
dividends. In 1989, HBJ used the proceeds from the sale of its theme park business to substantially reduce its
long-tenndebt. As of January 31, 1992,the Companyhad $974 millionof long-tenn indebtednessand longtenn revolving credit lines with banks under which it could borrow up to $550 million. The Company believes
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its cash position together with its available credit lines is more than sufficient to meet all of its foreseeable
operating and cash requirements.
Insurance
For the quarter ended January 31, 1992, cash used by operations of HBJ Insurance of $12.3 million
included $6.5 million of HBJ Insurance net income, offset by related adjustments of $18.8 million. The
adjustments included a decrease in policyholder reserves of $21.5 million and an increase in deferred policy
acquisition costs of $3.2 million offset by increases in the federal income tax liability and.other accounts. The
decrease in policyholder reserves was largely due to the payout of a large guaranteed investment contract. HBJ
Insurance used $56.1 million of cash in investing activities, primarily to purchase fixed maturity securities with
the proceeds from sales of short-term investments, the prepayment of mortgage loans and the receipt of
policyholder deposits.
HBJ Insurance did not distribute any dividends during fiscal 1991 or the first quarter of fiscal 1992.
Generally, under insurance regulations, without prior regulatory approval, the maximum dividend that HBJ
Insurance can pay during 1992 is $27.9 million. Even if permitted by statute, the payment of dividends would
be subject to other considerations, including maintenance of certain industry ratings of the HBJ Insurance
subsidiaries. In December 1991 GCC provided $20.0 million of capital to further strengthen the statutory
capital surplus of the HBJ Insurance companies.
The investment portfolio of HBJ Insurance included $94.0 million of non-investment grade debt
securities. at January 31, 1992. Approximately $77.0 million of the non-investment grade debt securities were
previously investment-grade securities which were downgraded. Non-investment grade debt securities, stated
at their current market value, represented 3.3% of the $2.1 billion total investment portfolio at January 31,
1992. The portfolio also included $16.3 million of real estate at current appraisals which represented .8% of the
total investment portfolio. In management's opinion, the total portfolio valuation reserve of $38.7 million at
January 31, 1992 is adequate to provide for future losses which may occur upon disposition of these assets.
Seasonality
The Company's businesses are seasonal in nature. Approximately one-half of operating earnings are
expected to be earned in the third quarter of the Company's fiscal year. The third quarter includes the
important educational publishing selling season as well as the summer box office season. Conversely, second
quarter operating earnings are expected to be minimal, because publishing sales are at their lowest point and
that business segment is expected to report operating losses, more than offsetting retail earnings, which are at
their highest point because the Company's second quarter includes NMG's important Christmas selling
season.
RECENT NEIMAN MARCUS GROUP OPERATING RESULTS
On February 26, 1992, NMG reported its second quarter results, which will be consolidated with General
Cinema's second quarter ending April 30, 1992.
NMG revenues for the 13 weeks ended February 1, 1992 were $541.2 million, approximately equal to the
$539.4 million in revenues for the 13 weeks ended February 2, 1991. Comparative revenues declined 3.8%.
The 1992 results include the new Neiman Marcus stores in Minneapolis, Minnesota and Scottsdale, Arizona,
25 new Contempo Casuals stores and seven new Pastille stores opened during the 12 months ended February
1, 1992. The decline in comparable store sales is attributable to the weak retail environment, which had a
particularly severe impact on Contempo Casuals.
NMG operating earnings for the 13 weeks ended February 1, 1992 were $32.0 million, down 14.9%from
$37.6 million for the 13 weeks ended February 2, 1991. The operating earnings decline was due principally to
incremental costs associated with new stores and higher employee benefit costs. Higher occupancy costs
associated with new and renovated stores in 1992 were offset by lower markdowns than in 1991.
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BUSINESS
General Cinema is primarily engaged in the businesses of publishing, specialty retailing, motion picture
exhibition and insurance.
Areas of Business
Publishing. HBJ conducts its publishing business through operating groups which each focus on
different segments of the publishing market.
.
University and Professional Publishing. HBJ's College Division publishes books and materials in a
variety of disciplines for junior colleges, four-year colleges and universities. HBJ College publishes
approximately 260 new and revised titles annually and has approximately 3,300 active titles in print.
Academic Press is an international publisher of books and scholarly journals for the natural, physical and
social sciences. The company annually publishes approximately 380 books and 190 scientific journals. The
books and journals are sold to universities, libraries, businesses, laboratories and individuals.
W.B. Saunders Company, including Grune & Stratton, publishes approximately 125 new titles and 100
periodicals annually in the fields of medicine, nursing, dentistry, allied health professions, veterinary medicine
and bioscience.
HBJ Legal and Professional Publications publishes books and tapes and conducts bar review courses
under the BAR/ BRI name on a national basis. The company also conducts CPA review courses and courses
for students preparing for graduate entrance examinations.
Elementary and Secondary Publishing. HBJ School specializes in elementary publishing while
HRW School focuses on the secondary school market. HBJ School and HRW School are among the leading
elementary and secondary school textbook publishers in the United States.
The Psychological Corporation publishes approximately 200 tests, including aptitude, diagnostic and
achievement tests for elementary and secondary schools. In addition, this group produces occupational
proficiency tests and professional licensing examinations.
Weber Costello manufactures and distributes through a network of wholesale and retail distributors a
complete line of school supplies, including communications boards, dry erase markers and accessories.
Trade. HBJ's Trade Department publishes fiction, non-fiction, children's books and accounting
books. A substantial part of the operating income of HBJ's trade publishing derives from the sale of rights to
book clubs and mass market paperback publishers.
International. HBJ maintains publishing operations in Canada, Australia, Japan and the United
Kingdom. The Australian and Japanese divisions primarily market books and journals published by HBJ's
domestic companies, while the Canadian and United Kingdom divisions also publish a substantial number of
works.
Executive Outplacement. Drake Beam Morin provides career transition, outplacement and counseling services for executives in 21 countries and 94 cities, 51 of which are in the United States.
Specialty Retailing. NMG, in which the Company owns an approximately 63% equity interest on a
fully-converted basis, operates Neiman Marcus, Bergdorf Goodman and Contempo Casuals. Since the
Company acquired a majority interest in NMG in 1987, NMG's strategy has been to make the investments
necessary to modernize its stores and support facilities, to further enhance the quality of customer service, and
to add selectively to the number of its stores. From late 1987 to 1991, NMG made capital expenditures of
approximately $300 million to implement this strategy. Since 1987, NMG has completed the major portion of
its store remodeling program at Neiman Marcus, expanded its Neiman Marcus store network from 22 to 26
stores, renovated extensive portions of the original Bergdorf Goodman store and opened Bergdorf Goodman
Men, and, as of January 31, 1992, increased the Con tempo Casuals chain from 184 to 275 stores while
remodeling 58 older units. As a result of these capital investments, approximately one-half of NMG's total
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retail selling space is new or has been remodeled since 1987. NMG plans to continue its capital spending
program in 1992, with approximately $90 million budgeted for investments.
Neiman Marcus, based in Dallas, Texas, is a high fashion, specialty retailer which seeks to serve up-scale
customers. Its 26 stores sell women's and men's apparel, fashion accessories, precious jewelry, decorative
home accessories, fine china, crystal and silver, and epicurean products. In addition, Neiman Marcus operates
a significant mail order business, including the catalogues of Horchow Mail Order. Neiman Marcus stores are
located in Arizona (Scottsdale), California (five stores: Beverly Hills, Newport Beach, P~lo Alto, San Diego,
and San Francisco); Colorado (Denver); the District of Columbia; Florida (two stores: Fort Lauderdale and
Bal Harbour); Georgia (Atlanta); Illinois (three stores: Chicago, Northbrook, and Oak Brook); Missouri
(St. Louis); Massachusetts (Boston); Minnesota (Minneapolis); Nevada (Las Vegas); New York (White
Plains); Texas (six stores: three in Dallas, one in Fort Worth, and two in Houston); and Virginia (McLean).
The Neiman Marcus average store size is 141,000 gross square feet and the stores range in size from 90,000
gross square feet to 269,000 gross square feet. NMG has announced that it plans to open new stores in Troy,
Michigan in 1992 and in Honolulu, Hawaii in 1994.
Bergdorf Goodman is a high fashion, exclusive retailer of luxury women's and men's apparel, fashion
accessories, precious jewelry, decorative home accessories, fine china, crystal and silver. It operates two leased
stores on Fifth Avenue and 58th Street in New York City. The original store, consisting of 250,000 gross
square feet, is dedicated to women's apparel and accessories, home furnishings and gifts. Bergdorf Goodman
Men, which opened in August 1990, consists of 66,000 gross square feet and is dedicated to men's apparel and
accessories. In addition, Bergdorf Goodman operates a significant mail order business.
.
Contempo Casuals, based in Los Angeles, operates a chain of retail stores which sell quality fashion
apparel and accessories primarily for young women between the ages of 17 and 24 at generally moderate
prices. Almost all apparel carries the Contempo Casuals label. More than 60% of Contempo Casuals
merchandise was designed and produced exclusively for Contempo Casuals in fiscal 1991. As of January 31,
1992, Contempo Casuals operated 275 stores which average 4,000 gross square feet. All of the stores are in
leased facilities located in 33 states, primarily in regional shopping malls. Contempo Casuals plans to open
approximately 25 stores, and renovate approximately 20 existing stores, in fiscal 1992. Contempo Casuals is
evaluating a new chain concept under the name Pastille, which currently operates seven stores. This chain
offers apparel and accessories targeted at women between the ages of 28 and 42.
Motion Picture Exhibition. General Cinema Theatres operates a major circuit of motion picture
theatres. As of January 31, 1992, GCC operated approximately 1,400 screens at approximately 275 locations
in 30 states. Approximately one-third of its locations are in the states of Texas, Florida and California. As a
result of a recently completed building and modernization program, nearly 70% of the Company's screens have
been built or renovated since 1985.
General Cinema Theatres operates the refreshment stands located in its theatre units, and earnings
generated from the refreshment stands are significant to the business of General Cinema Theatres. Most of
the revenues of General Cinema Theatres are derived from the exhibition of films released by the few major
distributors which have distributed, over the years, virtually all of the films with significant commercial appeal.
Films are licensed by the major film distributors through a process of negotiation or competitive bidding.
General Cinema Theatres generally pays to the film distributor a percentage rental based on box office
receipts.
General Cinema Theatres leases virtually all of its theatre locations. The leases typically provide for rent
based on receipts, subject to an annual minimum rental. Also, General Cinema Theatres is usually obligated
to pay taxes, utilities, maintenance costs, and certain other expenses related to its leased theatres.
Insurance. HBJ's insurance companies market insurance in three different areas: general agency, credit
and farm. HBJ's insurance companies include Federal Home Life Insurance Company, PHF Life Insurance
Company and The Harvest Life Insurance Company.
S-18
The general agency division underwrites and markets individual health, life and accident insurance and
annuities. The credit insurance division underwrites and sells credit life insurance and credit health insurance
and sells credit property insurance through group policies issued to automobile dealers, credit unions, banks
and certain financial institutions. Credit life, accident and health policies are offered in connection with motor
vehicle loans and other credit transactions, and the benefits are payable to the creditors or the insured debtor
to reduce or repay unpaid indebtedness. The farm division underwrites and markets health, life and accident
insurance policies and annuity contracts to rural dwellers through self-employed independent contractors who
sell under exclusive contracts with the HBJ insurance companies.
All life, annuity and health insurance is underwritten by Federal Home Life Insurance, PHF Life
Insurance Company or The Harvest Life Insurance Company, and insurance in excess of certain limits is
reinsured with third parties. All property and casualty insurance is underwritten by third-party carriers.
Legal Developments
In February 1991, Carter Hawley Hale Stores, Inc. ("CHH") filed for protection under Chapter 11 of
the Bankruptcy Code. A committee representing certain unsecured creditors of CHH has sought permission
from the U.S. Bankruptcy Court for the Central District of California to bring suit against GCC, NMG and
other potential defendants, alleging that the 1987 restructuring of CHH constituted a violation of the
California Fraudulent Transfer Act. Its motion was denied, without prejudice to renew at a later time. A
special committee of CHH directors, who became members of the CHH Board after the restructuring and are
otherwise independent, is investigating the issue to determine whether CHH should file an action alleging that
any of the activities involved in the CHH restructuring constituted a fraudulent conveyance. The special
committee has submitted a status report stating that the parties should be given an opportunity to resolve the
issues by settlement and that therefore the committee will announce its position when it would be most helpful
to the bankrupt estate to do so.
Under the existing legal precedents, in the absence of proof of an actual intent to defraud creditors, an
essential fact required as an element of the determination that a fraudulent transfer has occurred is whether or
not CHH (i) was insolvent or rendered insolvent at the time of the restructuring, (ii) was left with
unreasonably small capital or property as a result of the restructuring or (iii) intended to incur or believed it
would incur debts beyond its ability to pay as they came due in connection with the restructuring.
The suit, if brought, would seek recovery of the distributions received by GCC and/ or the three divisions
transferred to NMG as part of the 1987 restructuring. These distributions consisted of common and
convertible preferred stock of NMG (representing an equity interest in NMG of approximately 59.~% on a
fully-converted basis) having a value at the time of the transaction of approximately $416 million and
approximately $124.6 million in cash.
This suit, if brought and resolved against GCC and depending upon the relief granted, could have a
material adverse effect on GCe. However, GCC believes that it and NMG have meritorious defenses to any
claims which may be asserted in this suit, intends to defend itself vigorously against any claims which are
asserted, and does not believe that the outcome of this litigation will have a material adverse effect on the
financial condition of GCe.
S-19
DESCRIPTION OF THE NOTES AND DEBENTURES
The following description of the Notes and Debentures offered hereby (referred to in the accompanying
Prospectus as the "Debt Securities") supplements, and to the extent inconsistent therewith, supersedes,
insofar as such description relates to the Notes and Debentures, the description of the general terms and
provisions of the Debt Securities set forth in the accompanying Prospectus, to which description reference is
hereby made. Reference should be made to the accompanying Prospectus for a detailed summary of the
provisions of the Indenture under which the Notes and Debentures are issued.
Notes
The Notes are limited to $150,000,000 aggregate principal amount and will mature on June 1, 2002.
The Notes will bear interest at the rate per annum set forth on the cover page of this Prospectus
Supplement from May 26, 1992, or from the most recent Interest Payment Date to which interest has been
paid or provided for, payable semi-annually in arrears on June I and December 1 of each year, beginning on
December I, 1992, to the persons in whose names the Notes are registered at the close of business on the next
preceding May 15 or November 15, as the case may be.
Debentures
The Debentures are limited to $150,000,000 aggregate principal amount and will mature on June I, 2022.
The Debentures will bear interest at the rate per annum set forth on the cover page of this Prospectus
Supplement from May 26, 1992, or from the most recent Interest Payment Date to which interest has been
paid or provided for, payable semi-annually in arrears on June 1 and December 1 of each year, beginning on
December 1, 1992, to the persons in whose names the Debentures are registered at tbe close of business on the
next preceding May 15 or November 15, as the case may be.
Book-Entry System
The Notes and Debentures initially will be represented by Global Securities deposited with DTC and
registered in the name of a nominee of DTC. Except as set forth below, the Notes and Debentures will be
available for purchase in denominations of $1,000 and integral multiples thereof in book-entry form only. The
term "Depository" refers to DTC or any successor depository.
DTC has advised the Company and the Underwriters as follows: DTC is a limited-purpose trust
company organized under the laws of the State of New York, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC
was created to hold securities of persons who have accounts with DTC ("participants") and to facilitate the
clearance and settlement of securities transactions among its participants in such securities through electronic
book-entry changes in accounts of the participants, thereby eliminating the need for physical movement of
securities certificates. DTC's participants include securities brokers and dealers (including the Underwriters),
banks, trust companies, clearing corporations and certain other organizations, some of which (and/or their
representatives) own DTC. Access to DTC's book-entry system is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant,
either directly or indirectly.
Upon the issuance by the Company of Notes and Debentures represented by the Global Securities, the
Depository or its nominee will credit, on its book-entry registration and transfer system, the respective
principal amounts of the Notes and Debentures represented by such Global Securities to the accounts of
participants. The accounts to be credited shall be designated by the Underwriters. Ownership of beneficial
S-20
interests in Notes and Debentures represented by the Global Securities will be limited to participants or
persons that hold interests through participants. Ownership of such beneficial interests in Notes and
Debentures will be shown on, and the transfer of that ownership wilI be effected only through, records
maintained by the Depository (with respect to interests of participants in the Depository), or by participants in
the Depository or persons that may hold interests through such participants (with respect to persons other
than participants in the Depository). The laws of some states require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such limits and such laws may impair the ability to
transfer beneficial interests in Notes and Debentures repres~nted by Global Securities.
So long as the Depository for a Global Security, or its nominee, is the registered owner of such Global
Security, the Depository or its nominee, as the case may be, will be considered the sole owner or holder of the
Notes or Debentures represented by such Global Security for alI purposes under the Indenture. Unless the
Company elects to issue individual Notes or Debentures in definitive form in exchange for Global Securities,
as described in the third succeeding paragraph, owners of beneficial interests in Global Securities wilI not be
entitled to have the Notes or Debentures represented by such Global Securities registered in their names, will
not receive or be entitled to receive physical delivery of Notes or Debentures in definitive form and will not be
considered the owners or holders thereof under the Indenture. Unless and until the Global Securities are
exchanged in whole or in part for individual certificates evidencing the Notes or Debentures represented
thereby, such Global Securities may not be transferred except as a whole (i) by the Depository for such
Global Securities to a nominee of such Depository, (ii) by a nominee of such Depository to such Depository or
another nominee of such Depository or (iii) by the Depository or any nominee of such Depository to a
successor Depository or any nominee of such successor Depository.
Payments of principal of and interest on the Notes and Debentures represented by Global Securities
registered in the name of the Depository or its nominee wilI be made by the Company through the Paying
Agent to the Depository or its nominee, as the case may be, as the registered owner of such Global Securities.
The Company has been advised that the Depository or its nominee, upon receipt of any payment of
principal or interest in respect of the Notes and Debentures represented by Global Securities, will credit
immediately the accounts of the related participants with payment in amounts proportionate to their respective
beneficial interest in the Notes and Debentures represented by the Global Securities as shown on the records
of the Depository. The Company expects that payments by participants to owners of beneficial interests in the
Notes and Debentures represented by the Global Securities wilI be governed by standing customer instructions
and customary practices, as is now the case with securities held for the accounts of customers in bearer form or
registered in "street name." Such payments wilI be the responsibility of such participants.
If the Depository is at any time unwiIling or unable to continue as Depository and a successor depository
is not appointed by the Company within 90 days, the Company will issue individual Notes and Debentures in
definitive form in exchange for the Global Securities. In addition, the Company may at any time and in its
sole discretion determine not to have the Notes or Debentures represented by Global Securities, and, in such
event, will issue individual Notes or Debentures, as the case may be, in definitive form in exchange for the
Global Securities. Notwithstanding the foregoing sentence, the Company has no present intention to issue
individual Notes or Debentures in definitive form and, except as described in the first sentence of this
paragraph, does not currently anticipate that any circumstances will arise under which it would do so. In
either instance, the Company will issue Notes and Debentures in definitive form equal in aggregate principal
amount to the Global Securities, in such names and in such principal amounts as the Depository shalI request.
Notes and Debentures so issued in definitive form will be issued in denominations of $1,000 and integral
multiples thereof and will be issued in registered form only, without coupons.
Neither the Company, the Trustee, any Paying Agent nor the registrar for the Notes and Debentures wilI
have any responsibility or liability for any aspect of the records relating to or payments made on account of
beneficial ownership interests in the Notes and Debentures represented by such Global Securities or for
maintaining, supervising or reviewing any records relating to such beneficial ownership interests.
S-21
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement, the Company has agreed to
sell to each of the Underwriters named below, and each of the Underwriters has severally agreed to purchase,
the amount of Notes and Debentures set forth opposite its name below:
Principal
Amount of
Noles
Underwriters
Principal
Amount of
Debentures
Salomon Brothers Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 50,000,0006
The First Boston Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shearson Lehman Brothers Inc. .................................
50,000,000
50,000,000
50,000,000 .
50,000,000
Total
.
$150,000,000
$ 50,000,000
$150,000,000
In the Underwriting Agreement, the several Underwriters have agreed, subject to the terms and
conditions set forth therein, to purchase all the Notes and Debentures offered hereby if any Notes and
Debentures are purchased. In the event of default by any Underwriter, the Underwriting Agreement provides
that, in certain circumstances, the Underwriting Agreement may be terminated.
The Company has been advised by the Underwriters that they propose initially to offer the Notes to the
public at the public offering price set forth on the cover page of this Prospectus Supplement, and to certain
dealers at such price less a concession of not more than .400% of the principal amount of the Notes. The
Underwriters may allow and such dealers may reallow a concession of not more than .250% of the principal
amount of the Notes to certain other dealers. After the initial public offering, the public offering price and
such concessions may be changed.
The Company has been advised by the Underwriters that they propose initially to offer the Debentures to
the public at the public offering price set forth on the cover page of this Prospectus Supplement, and to certain
dealers at such price less a concession of not more than .500% of the principal amount of the Debentures. The
Underwriters may allow and such dealers may reallow a concession of not more than .250% of the principal
amount of the Debentures to certain other dealers. After the initial public offering, the public offering price
and such concessions may be changed.
The Company has been advised by the Underwriters that they intend to make a market in the Notes and
Debentures, but that they are not obligated to do so and may discontinue making a market at any time without
notice. The Company currently has no intention to list the Notes or Debentures on any securities exchange,
and there can be no assurance given as to the liquidity of the trading market for the Notes or Debentures.
The Underwriting Agreement provides that the Company will indemnify the several Underwriters against
certain civil liabilities, including liabilities under the Securities Act of 1933, or contribute to payments which
the Underwriters may be required to make in respect thereof.
The Underwriters and their associates may be customers of, engage in transactions with, or perform
services for the Company and its subsidiaries in the ordinary course of business.
LEGAL MATTERS
The legality of the Securities offered hereby will be passed upon for the Company by Eric P. Geller, Esq.,
Senior Vice President, General Counsel and Secretary of the Company. In addition, certain legal matters
relating to the offering of the Securities will be passed upon for the Company by Hale and Dorr, Boston,
Massachusetts. Certain legal matters will be passed upon for the Underwriters by Cravath, Swaine & Moore,
New York, New York. As of May 15, 1992, Mr. Geller held 13,852 shares of Common Stock of the
Company, 6,000 shares of Series A Cumulative Convertible Stock of the Company and options to acquire
40,500 shares of Common Stock of the Company.
S-22
Prospectus
~
~
General Cinema
Corporation
Debt Securities
General Cinema Corporation (the "Company") intends to sell from time to time its senior debt
securities, consisting of notes, debentures or other evidences of indebtedness (the "Debt Securities"). The Debt Securities may be offered as separate series in amounts, at prices and on terms to
be determined at the time of sale and to be set forth in Supplements to this Prospectus. The
Company may sell securities to or through underwriters or dealers, directly to other purchasers or
through agents. See "Plan of Distribution."
The Debt Securities will be unsecured and will rank equally with all other unsecured and
unsubordinated indebtedness of the Company. The terms of the Debt Securities, including where
applicable the specific designation; aggregate principal amount; denominations; maturity; premium;
interest rate (which may be fixed or variable) and time of payment of interest; terms for redemption
at the option of the Company or the holder; terms for sinking fund payments; the initial public
offering price; terms relating to temporary or permanent global securities; special provisions and
restrictions relating to Debt Securities in bearer form or in registered form with coupons; provisions
regarding registration of transfer or exchange; special provisions and restrictions relating to Debt
Securities, the principal, premium, if any, and interest of which is denominated and payable in a
foreign currency or currency unit; and other terms in connection with the offering and sale of the
Debt Securities in respect of which this Prospectus is being delivered, are set forth in the
accompanying Prospectus Supplement (the "Prospectus Supplement").
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The Debt Securities may be sold directly, through agents, underwriters or dealers as designated
from time to time or through a combination of such methods. See "Plan of Distribution." If agents
of the Company or any dealers or underwriters are involved in the sale of the Debt Securities in
respect of which this Prospectus is being delivered, the names of such agents, dealers or
underwriters and any applicable commission or discounts are set forth in or may be calculated from
the Prospectus Supplement with respect to such Debt Securities.
The date of this Prospectus
is April
23, 1992
STATEMENT OF AVAILABLE INFORMATION
The Company is subject to the requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and in accordance therewith files reports and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy and information statements and other information filed by the Company can be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of the
Commission: Chicago Regional Office, Northwest Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and New York Regional Office, 75 Park Place, New York, New Yerk 10007. Copies
of such material may also be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. The Company's Common Stock and Series A
Cumulative Convertible Stock are listed on the New York Stock Exchange, and reports, proxy and
information statements and other information concerning the Company may also be inspected at the offices of
the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a Registration Statement under the Securities Act of 1933,
as amended, with respect to the Debt Securities offered hereby (the "Registration Statement"). This
Prospectus does not contain all of the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the Commission. Reference is made to the
Registration Statement and to the exhibits relating thereto for further information with respect to the
Company and the Debt Securities offered hereby.
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are incorporated herein by
reference:
(I) The Company's Annual Report on Form 10-K for the fiscal year ended October 31,1991;
(2) The Company's Quarterly Report on Form IO-Q for the quarter ended January 31, 1992; and
(3) The Company's Current Reports on Form 8-K dated November 25, 1991 and January 29, 1992.
All documents filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date hereof and prior to the termination of the offering of the
Debt Securities shall be deemed to be incorporated by reference into this Prospectus and to be a part hereof
from the date of filing such documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus
to the extent that a statement contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein or in the Prospectus Supplement modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this Prospectus is delivered, upon a
written or oral request of such person, a copy of any or all of the foregoing documents incorporated by
reference into this Prospectus (without exhibits to such documents other than exhibits specifically incorporated by reference into such documents). Requests for such copies should be directed to the Corporate
Relations Department of the Company, 27 Boylston Street, Chestnut Hill, Massachusetts 02167 (telephone:
(617) 232-8200).
2
THE COMPANY
The Company is primarily engaged in the businesses of publishing, specialty retailing, motion picture
exhibition and insurance.
Publishing. In November 1991, the Company acquired Harcourt Brace Jovanovich, Inc. ("HBJ"),
which is one of the world's leading publishers. HBJ publishes approximately 2,600 new titles and 390
scholarly journals annually for the educational, scientific, technical, medical, legal and trade markets. In the
educational market, HBJ is one of the largest school and college textbook publishers in the world and is a
leading for-profit publisher of psychological testing materials. Through Academic Press and W.B. Saunders,
HBJ is a leading publisher of scientific and technical books and journals and medical books and periodicals.
In the professional field, HBJ conducts bar review and accounting accreditation review courses and, through
Drake Beam Morin, provides outplacement counseling services for executives. HBJ's trade division publishes
non-fiction, fiction and children's books.
Specialty Retailing. The Company has an approximately 63% equity interest, on a fully-converted basis,
in The Neiman Marcus Group, Inc. ("NMG"), which operates Neiman Marcus, Bergdorf Goodman and
Contempo Casuals. Neiman Marcus is a high fashion, specialty retailer which operates 26 stores in 23 cities
throughout the United States. Bergdorf Goodman and Bergdorf Goodman Men, which operate two stores on
Fifth Avenue and 58th Street in New York City, offer high-quality women's and men's apparel, fashion
accessories and other items for upscale customers. Both Neiman Marcus and Bergdorf Goodman operate
significant mail order businesses, including the Horchow Mail Order catalogues operated by Neiman Marcus.
Contempo Casuals, which operates a chain of approximately 275 stores located in regional shopping malls in
33 states, provides quality private-label apparel targeted for young women between the ages of 17 and 24 at
generally moderate prices. More than 60% of Contempo Casuals' merchandise was designed and produced
exclusively for Contempo Casuals in fiscal 1991.
Motion Picture Exhibition. General Cinema Theatres operates a major circuit of motion picture
theatres, virtually all of which are multi-screen complexes located in or near regional shopping centers. The
theatres, which are located in 30 states, generally exhibit films on a "first run" basis. As of January 31, 1992,
the Company operated approximately 1,400 screens at approximately 275 locations. Approximately one-third
of its locations are in the states of Texas, Florida and California. As a result of a recently completed building
and modernization program, nearly 70% of the Company's screens have been built or renovated since 1985.
Insurance. HBJ's operations also include a substantial insurance segment, engaged primarily in the
underwriting of individual health, life, accident and credit insurance policies. More than 90% of the assets in
HBJ's insurance portfolio consists of investment grade securities.
The Company's corporate headquarters are located at 27 Boylston Street, Chestnut Hill, Massachusetts
02167 (telephone: (617) 232-8200).
USE OF PROCEEDS
The net proceeds from the sale of the Debt Securities will be used for general corporate purposes, which
may include capital expenditures, working capital requirements and reduction of outstanding indebtedness.
The precise amount and timing of the application of such proceeds will depend upon the funding requirements
of the Company and the availability and cost of other funds. Pending such application, the net proceeds wiII
be invested in short-term investment grade securities.
More detailed information concerning the use of the proceeds from any particular offering of the Debt
Securities will be contained in the Prospectus Supplement relating to such offering.
3
RATlO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of earnings to fixed charges for the Company for the periods
indicated. These ratios were computed by dividing earnings from continuing operations, before income taxes
and fixed charges, by fixed charges. Fixed charges consist of interest expense (including amortization of
previously capitalized interest), approximately 50% of rent expense (estimated by management to be the
interest component of such rent expense) and preferred stock dividend obligations of HBJ.
Quarter Ended
January 31,
1992
1991
Ratio of earnings to fixed
charges( I) ............
1991
2.09x
Year Ended October 31,
1990
1989
1988
1987
1.06x
( I) For the quarter ended January 31, 1991 and fiscal 1991, 1989, 1988 and 1987, the deficiencies of earnings
to cover fixed charges were $11.0 million, $376.2 million, $247.4 million, $220.4 million and $147.3
million, l.;spectively.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will constitute senior securities of the Company. The Debt Securities will be issued
under an indenture dated as of April 23, 1992 (the "Indenture") between the Company and Bankers Trust
Company, as trustee (the "Trustee").
A copy of the Indenture is filed as an exhibit to the registration statement relating hereto. Certain
provisions of the Indenture are referred to and summarized below. The summaries do not purport to be
complete and are subject to, and are qualified in their entirety by reference to, all the provisions of the
Indenture. Capitalized terms not otherwise defined herein shall have the meanings given to them in the
Indenture. All section references below are to sections of the Indenture.
General
The aggregate principal amount of Debt Securities which can be issued under the Indenture is unlimited
(Section 301). The Debt Securities to which this Prospectus relates will be issued from time to time in
amounts the proceeds of which will aggregate up to $500,000,000 and will be offered to the public on terms
determined by market conditions at the time of sale. The Debt Securities may be issued in one or more series
with the same or various maturities and may be sold at par or at an original issue discount. Debt Securities
sold at an original issue discount may bear no interest or interest at a rate which is below market rates. The
Debt Securities will be unsecured obligations of the Company issued in fully registered form without coupons
or in bearer form with coupons. The Debt Securities will rank as to priority of payment with all other
outstanding unsubordinated and unsecured indebtedness of the Company.
Reference is made to the Prospectus Supplement for the following terms to the extent they are applicable
to the Debt Securities: (a) designation and denomination of and any limit upon the aggregate principal
amount of such Debt Securities, (b) the percentage of principal amount at which such Debt Securities will be
issued, (c) the date on which such Debt Securities will mature, (d) the rate or rates (which may be fixed or
floating) per annum at which such Debt Securities will bear interest, if any, or the method of determining the
same, (e) the times at which interest will be payable, (f) the terms of any redemption provisions at the option
of the Company or any repayment provisions at the option of the holder, (g) whether such Debt Securities are
to be issued in book-entry form, and if so, the identity of the depository and information with respect to bookentry procedures, (h) federal income tax consequences, and (i) other terms of such Debt Securities.
The Debt Securities are obligations exclusively of the Company. Because the operations of the Company
are currently conducted primarily through subsidiaries, the cash flow and the consequent ability to service debt
of the Company, including the Debt Securities, are dependent upon the earnings of its subsidiaries and the
distribution of those earnings to the Company or upon loans or other payments of funds by those subsidiaries
to the Company. Although the Company exerts control over its subsidiaries as the sole ultimate stockholder
of each such subsidiary (except NMG, of which the Company is the majority stockholder), there can be no
4
assurance that legal constraints or other considerations will permit the Company's subsidiaries to make
available to the Company sufficient funds to satisfy the Company's payment obligations on the Debt
Securities.
The Debt Securities will be effectively subordinated to all liabilities, including trade payables, of the
Company's subsidiaries. Any right of the Company to receive assets of any of its subsidiaries upon its
liquidation or reorganization (and the consequent right of the holders of the Debt Securities to participate in
those assets) will be effectively subordinated to the claims of that subsidiary's creditors (including trade
creditors), except to the extent that the Company is itself recognized as a creditor of such subsidiary, in which
case the claims of the Company would still be subordinate to any security interests in the assets of such
subsidiary and any indebtedness of such subsidiary senior to that held by the Company.
Mergers and Sales of Assets by the Company
The Company may not consolidate with or merge into any other Person or convey, transfer or lease all or
substantially all of its assets to any other Person, unless, among other things, (i) the resulting, surviving or
transferee Person (if other than the Company) shall be a corporation, partnership or trust organized and
validly existing under the laws of the United States or any State thereof or the District of Columbia and shall
expressly assume the Company's obligations under the Debt Securities and the Indenture, and (ii) the
Company or such successor Person shall not immediately thereafter be in default under the Indenture. Upon
the assumption of the Company's obligations by such a Person in such circumstances, subject to certain
exceptions, the Company shall be discharged from all its obligations under the Debt Securities and the
Indenture (Section 801).
Other than the restrictions on liens and sale and leaseback transactions set forth in the Indenture and
described below under "Certain Covenants", the Indenture and the Debt Securities do not contain any
covenants or other provisions designed to afford holders of Debt Securities protection in the event of a highly
leveraged transaction involving the Company or any of its subsidiaries.
Amendment and Waiver
Other than amendments not adverse to holders of the Debt Securities, amendments of the Indenture or
the Debt Securities may be made only with the consent of the holders of a majority in principal amount of the
Debt Securities affected (acting as one class). Waivers of compliance with any provision of the Indenture or
the Debt Securities with respect to any series of Debt Securities may be made only with the consent of the
holders of a majority in principal amount of the Debt Securities of that series. The consent of all holders of
affected Debt Securities will be required to (a) change the stated maturity thereof, (b) reduce the principal
amount thereof, (c) reduce the rate, or manner of calculating the same, or change the time of payment of
interest thereon, or (d) impair the right to institute suit for the payment of principal thereof or interest thereon
(Section 902). The holders of a majority in aggregate principal amount of Debt Securities affected may waive
any past default under the applicable Indenture and its consequences, except a default (1) in the payment of
the principal of or interest on such Debt Securities, or (2) in respect of a provision which cannot be waived or
amended without the consent of all holders of Debt Securities affected (Sections 513 and 902).
Global Securities
The Debt Securities of a series may be issued in the form of a global security which is deposited with and
registered in the name of the depository (or a nominee of the depository) specified in the accompanying
Prospectus Supplement. So long as the depository for a global security, or its nominee, is the registered owner
of the global security, the depository or its nominee, as the case may be, will be considered the sole owner or
holder of the Debt Securities represented by such global security for all purposes under the Indenture. Except
as provided in the Indenture, owners of beneficial interests in Debt Securities represented by a global security
will not (a) be entitled to have such Debt Securities registered in their names, (b) receive or be entitled to
receive physical delivery of certificates representing such Debt Securities in definitive form, (c) be considered
the owners or holders thereof under the Indenture or (d) have any rights under the Indenture with respect to
such global security. Unless and until it is exchanged in whole or in part for individual certificates evidencing
the Debt Securities represented thereby, a global security may not be transferred except as a whole by the
5
depository for such global security to a nominee of such depository or by a nominee of such depository to such
depository or another nominee of such depository or by the depository or any nominee to a successor
depository or any nominee of such successor. The Company, in its sole discretion, may at any time determine
. that any series of Debt Securities issued or issuable in the form of a global security shall no longer be
represented by such global security and such global security shall be exchanged for securities in definitive form
pursuant to the Indenture (Section 204).
Upon the issuance of a global security, the depository will credit, on its book-entry registration and
transfer system, the respective principal amounts of such global security to the accoun~ of participants.
Ownership of beneficial interests in a global security will be shown on, and the transfer of that ownership will
be effected only through, records maintained by the depository (with respect to interests of participants in the
depository), or by participants in the depository or persons that may hold interests through such participants
(with respect to persons other than participants in the depository). Ownership of beneficial interests in a
global security will be limited to participants or persons that hold interests through participants. The specific
terms of the depository arrangement with respect to a series of Debt Securities, including the manner in which
principal, premium, if any, and interest on a global security will be payable and interests in such global security
may be exchanged, will be described in the Prospectus Supplement relating to such series.
Information Concerning the Trustee
Bankers Trust Company, the Trustee under the Indenture, is also the trustee with respect to HBJ's 143/.%
Subordinated Discount Debentures Due 2002, HBJ's 143/.%Subordinated Pay-in-Kind Debentures Due 2002,
and HBJ's 14'/.% Subordinated Debentures Due 2004. The Company maintains banking relationships in the
ordinary course of business with the Trustee, which has committed to lend the Company up to $50 million
under a credit facility with the Company and to lend NMG up to $45 million under a credit facility with
NMG.
Certain Covenants
Unless otherwise provided in the Debt Securities, the Company will covenant not to create, assume or
suffer to exist any lien on any Principal Property (described below) of the Company or any Restricted
Subsidiary (described below) or shares of capital stock or indebtedness of any Subsidiary (other than any
Subsidiary of NMG, until such time as NMG shall become a Restricted Subsidiary), or permit any Restricted
Subsidiary to do so, without securing the Debt Securities of any series having the benefit of the covenant
equally and ratably with such debt for so long as such debt shall be so secured, subject to certain exceptions
specified in the Indenture. Exceptions are: (a) existing liens, and liens on property of an entity at the time it
becomes a Restricted Subsidiary; (b) liens existing on property of a corporation at the time such corporation is
merged or consolidated with the Company or a Restricted Subsidiary or at the time of a sale, lease or other
disposition of the properties of a corporation as an entirety or substantially as an entirety to the Company or a
Restricted Subsidiary; (c) liens existing on property when acquired, or incurred to finance the purchase price,
construction or improvement thereof; (d) certain liens in favor of or required by contracts with governmental
entities; (e) any lien securing debt of a Restricted Subsidiary owing to the Company or to another Restricted
Subsidiary; (f) any lien in favor of any customer arising in respect of performance deposits and partial,
progress, advance or other payments made by or on behalf of such customer, which lien shall not exceed the
amount of such deposits or payments; (g) mechanics', workmen's, repairmen's and similar liens arising in the
ordinary course of business; (h) liens created or resulting from any litigation or proceedings which are being
contested in good faith; liens arising out of judgments or awards against the Company or any Restricted
Subsidiary with respect to which the Company or such Restricted Subsidiary is in good faith prosecuting an
appeal or proceeding for review; or liens incurred by the Company or any Restricted Subsidiary for the purpose
of obtaining a stay or discharge in the course of any legal proceeding to which the Company or such Restricted
Subsidiary is a party; (i) any lien for taxes or assessments or governmental charges or levies not yet due or
delinquent or which can thereafter be paid without penalty or which are being contested in good faith by
appropriate proceedings; any landlord's lien on property held under lease and tenants' rights under leases;
easements and any other liens of a nature similar to those hereinabove described in this clause (i) which do
not, in the opinion of the Company, materially impair the use of such property in the operation of the business
6
of the Company or any Restricted Subsidiary or the value of such property for the purposes of such business;
U) any lien which may.be deemed to result from an agreement or commitment to exchange securities of a
Subsidiary for other securities of the Company, whether or not such securities of a Subsidiary are placed in
escrow for such purpose; (k) any extension, renewal or replacement (or successive extensions, renewals or
replacements) in whole or in part of any lien referred to in clauses (a) through U), so long as the principal
amount of the debt secured thereby does not exceed the principal amount of debt so secured at the time of the
extension, renewal or replacement (with certain exceptions) and the lien is limited to all or part of the same
property subject to the lien so extended, renewed or replaced (plus improvements on the property); and
(I) any lien otherwise prohibited by such covenant that secures indebtedness whicl1, together with the
aggregate amount of outstanding indebtedness secured by liens otherwise prohibited by such covenant and the
value of certain sale and leaseback transactions, does not exceed 10% of the Company's Consolidated Net
Assets (Section 1006).
Unless otherwise provided in the Debt Securities, the Company will also covenant not to, and not to
permit any Restricted Subsidiary to, enter into any sale and leaseback transaction covering any Principal
Property of the Company or such Restricted Subsidiary unless (a) the Company or such Restricted
Subsidiary would be entitled under the provisions described above to incur debt equal to the value of such sale
and leaseback transaction, secured by liens on the facilities to be leased, without equally and ratably securing
the Debt Securities, or (b) the Company, during the 180 days following the effective date of such sale and
leaseback transaction, applies an amount equal to the value of such sale and leaseback transaction to the
voluntary retirement of long-term indebtedness, purchases Principal Property having a fair value at least equal
to the value of such sale and leaseback transaction or cancels Debt Securities or Funded Debt in an aggregate
principal amount at least equal to the value of such sale and leaseback transaction (Section 1007).
The Indenture defines Consolidated Net Assets as the total amount of all assets appearing on the
consolidated balance sheet of the Company and its Restricted Subsidiaries (calculated as described in the
Indenture), less total current liabilities other than long-term liabilities due within one year, less insurance
liabilities and less any goodwill acquired after the date of the Indenture.
The Indenture defines Restricted Subsidiary as any Subsidiary of the Company (which term generally
includes majority-owned direct and indirect subsidiaries) that owns or leases a Principal Property, other than
NMG and its Subsidiaries and other than a Subsidiary that is principally engaged in the business of finance,
credit, leasing, financial services or other similar operations (although the Company has no such subsidiaries
as of the date of this Prospectus). The Indenture provides, however, that NMG will become a Restricted
Subsidiary in the event that a Restricted Subsidiary merges with, consolidates with or transfers substantially
all of its assets to NMGor in the event that NMG becomes a wholly-owned subsidiary of the Company.
The Indenture defines Principal Property as all land, buildings, machinery and equipment, and leasehold
interests and improvements in respect of the foregoing, that are located in the United States of America and
that would be reflected on the consolidated balance sheet of a Person; provided that such term shall not
include any property which the Board of Directors of the Company by resolution determines not to be of
material importance to the total business conducted by the Company and its subsidiaries as an entirety.
There are no other restrictive covenants contained in the Indenture.
Events of Default
Events of Default with respect to any series of Debt Securities under the Indenture will include:
(a) default in the payment of any principal of, or any premium on, such series; (b) default in the payment of
any installment of interest on such series and continuance of such default for a period of 30 days; (c) default
in the performance of any other covenant in the Indenture or in the Debt Securities and continuance of such
default for a period of 90 days after receipt by the Company of notice of such default from the Trustee or by
the Company and the Trustee from the holders of at least 25% in principal amount of Debt Securities of such
series; (d) a default under any bond, debenture, note or other evidence of indebtedness for money borrowed by
the Company or any Restricted Subsidiary (other than the Securities), or under any mortgage, indenture or
instrument under which there may be secured or evidenced any indebtedness for money borrowed by the
Company or any Restricted Subsidiary (other than the Securities), whether such indebtedness now exists or
7
shall hereafter be created, which default shall have resulted in indebtedness in excess of $15,000,000 becoming
due and payable prior to the date on which it would otherwise have become due and payable, without such
indebtedness having been discharged or such acceleration having been rescinded or annulled within 30 days
after the date on which written notice thereof is given to the Company by the Trustee or to the Company and
the Trustee by holders of at least 25% in principal amount of the Debt Securities then outstanding; or
(e) certain events of bankruptcy, insolvency or reorganization in respect of the Company (Section SOl). The
Trustee may withhold notice to the holders of a series of Debt Securities of any default (except in the payment
of principal of, premium on or interest on such series of Debt Securities) if it considers such withholding to be
in the interest of holders of the Debt Securities (Section 602). Not all Events of Default with respect to a
particular series of Debt Securities issued under the Indenture necessarily constitute Events of Default with
respect to any other series of Debt Securities.
On the occurrence of an Event of Default with respect to a series of Debt Securities, the Trustee or the
holders of at least 25% in principal amount of Debt Securities of such series then outstanding may declare the
principal (or in the case of Debt Securities sold at an original issue discount, the amount specified in the terms
thereof) and accrued interest thereon to be due and payable immediately (Section 502).
Within 120 days after the end of each fiscal year, an officer of the Company must inform the Trustee
whether such officer knows of any default, describing any such default and the status thereof (Section 1004).
Subject to provisions relating to its duties in case of default, the Trustee is under no obligation to exercise any
of its rights or powers under the Indenture at the direction of any holders of Debt Securities unless the Trustee
shall have received a satisfactory indemnity (Section 601).
Defeasance
The Indenture provides that the Company, at the Company's option, (a) will be discharged from all
obligations in respect of the Debt Securities of a series (except for certain obligations to register the transfer or
exchange of Debt Securities, replace stolen, lost or destroyed Debt Securities, maintain paying agencies and
hold moneys for payment in trust), or (b) will be released from the provisions of one or more of Sections
SOl(5), 1006 and 1007 of the Indenture (relating to cross-acceleration, the incurrence of liens and sale and
leaseback transactions, respectively), in each case if the Company irrevocably deposits in trust with the
Trustee money or obligations of or guaranteed by the United States of America which through the payment of
interest thereon and principal thereof in accordance with their terms will provide money, in an amount
sufficient to pay all the principal of (including any mandatory sinking fund payments) and interest on the Debt
Securities of such series on the dates such payments are due in accordance with the terms of such Debt
Securities. To exercise either option, the Company is required to deliver to the Trustee an opinion of counsel
to the effect that the deposit and related defeasance would not cause the holders of the Debt Securities of such
series to recognize income, gain or loss for Federal income tax purposes. To exercise the option described in
clause (a) above, such opinion must be based on a ruling of the Internal Revenue Service, a regulation of the
Treasury Department or a provision of the Internal Revenue Code (Section 403).
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities (a) directly to purchasers, (b) through agents, (c) to dealers
as principals, and (d) through underwriters.
Offers to purchase Debt Securities may be solicited directly by the Company or by agents designated by
the Company from time to time. Any such agent, who may be deemed to be an underwriter, as that term is
defined in the Securities Act of 1933, involved in the offer or sale of the Debt Securities is named, and any
commissions payable by the Company to such agent are set forth, in the Prospectus Supplement.
If a dealer is utilized in the sale of the Debt Securities, the Company will sell such Debt Securities to the
dealer as principal. The dealer may then resell such Debt Securities to the public at varying prices to be
determined by such dealer at the time of resale.
If an underwriter or underwriters are utilized in the sale of the Debt Securities, the Company will enter
into an underwriting agreement with such underwriters at the time of sale to them. The names of the
underwriters and the terms of the transaction are set forth in the Prospectus Supplement, which will be used
by the underwriters to make resales of the Debt Securities.
8
Agents, dealers or underwriters may be entitled under agreements which may be entered into with the
Company to indemnification by the Company against certain civil liabilities, including liabilities under the
Securities Act of 1933, and may be customers of, engage in transactions with or perform services for the
Company in the ordinary course of business.
If so indicated in the Prospectus Supplement, the Company wiII authorize underwriters or agents to
solicit offers by certain institutions to purchase Debt Securities from the Company at the public offering price
set forth in the Prospectus Supplement pursuant to Delayed Delivery Contracts providing for amounts,
payment and delivery as described in the Prospectus Supplement. Institutions with whom the contracts may
be made include commercial and savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and other institutions, but shall in all cases be subject to the approval of
the Company. A commission described in the Prospectus Supplement wiII be paid to underwriters and agents
soliciting purchases of Debt Securities pursuant to contracts accepted by the Company. Such contracts wiII
not be subject to any conditions except that (a) the purchase by an institution of the Debt Securities covered
by its contract shall not at the time of delivery be prohibited under the laws of any jurisdiction in the United
States to which such institution is subject and (b) the Company shall have sold and delivered to any
underwriters named in the Prospectus Supplement that portion of the issue of Debt Securities as is set forth
therein. The underwriters and agents will not have any responsibility in respect of the validity or the
performance of the contracts.
If the Company sells the Debt Securities directly, it anticipates that any of its emloyees who would
participate in such direct sales would be exempt from registration as a broker under federal securities laws
pursuant to the exemption set forth in Rule 3a4-1 under the Securities Exchange Act of 1934. The Company
believes that such exemption wiII be available because such employees would not be compensated in
connection with their participation in such sales by the payment of commissions or other remuneration based
either directly or indirectly on transactions in securities; such persons would primarily perform at the end of
the offering, substantial duties for the Company otherwise than in connection with transactions in securities;
such persons would not have been a broker or dealer, or an associated person of a broker or dealer, within the
preceding twelve months; and such persons would not participate in selling an offering of securities for any
issuer more than once every 12 months (as calculated pursuant to Rule 3a4-1).
The place and time of delivery for the Debt Securities are set forth in the Prospectus Supplement.
EXPERTS
The following audited consolidated financial statements and consolidated financial statement schedules
and the combination of the historical audited consolidated financial statements and consolidated financial
statement schedules of the Company and HBJ, incorporated by reference herein, have been audited by
Deloitte & Touche, independent certified public accountants, as indicated in their reports with respect thereto,
and are incorporated herein in reliance upon the authority of such firm as.experts in auditing and accounting in
giving such reports:
( I) The financial statements and financial statement schedules of the Company as of October 31,
1991 and 1990 and for each of the three years in the period ended October 31, 1991, after restatement for
the pooling of interests;
(2) The financial statements and financial statement schedules of the Company as of October 31,
1991 and 1990 and for each of the three years in the period ended October 31, 1991, before restatement
for the pooling of interests; and
(3) The financial statements and financial statement schedules of HBJ as of October 31, 1991 and
for the year then ended.
The audited consolidated financial statements and consolidated financial statement schedules of HBJ and
its subsidiaries as of December 31, 1990 and for each of the two years in the period ended December 31, 1990,
incorporated by reference herein, have been audited by Arthur Andersen & Co., independent certified public
accountants, as indicated in their report with respect thereto, and are incorporated herein in reliance upon the
authority of such firm as experts in auditing and accounting in giving such report.
9
No dealer, salesperson or other individual has
been authorized to give any information or to
make any representations, other than those
contained in or incorporated by reference in
this Prospectus Supplement or the accompanying Prospectus, in connection with the
offer contained in this Prospectus Supplement and the accompanying Prospectus, and,
if given or made, any such information or
representation must not be relied upon as
having been authorized by the Company or
any underwriter, dealer or agent. This Prospectus Supplement and the accompanying
Prospectus do not constitute an offer to sell
or a solicitation of an offer to buy any of the
securities offered hereby by anyone in any
jurisdiction in which such offer or solicitation
is not authorized or in which the person making such offer or solicitation is not qualified to
do so or to any person to whom it is unlawful
to make such offer or solicitation. Neither the
delivery of this Prospectus Supplement and
the accompanying Prospectus nor any sale
made hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of the Company
since the date hereof.
$300,000,000
~
~
General Cinema
Corporation
$150,000,000
8114% Senior Notes Due 2002
$150,000,000
8~8%Senior Debentures Due 2022
Table of Contents
Page
Prospectus Supplement
The Company . . . . . . . . . . . . . . . . . . . . . . .
Use of Proceeds ....................
Capitalization. . . . . . . . . . . . . . . . . . . . . . . .
Summary Consolidated Financial Data
Management's Discussion and
Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . . .
Recent Neiman Marcus Group
Operating Results .................
Business. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Description of the Notes and
Debentures .......................
Underwriting ........................
Legal Matters .. . . . . . . . . . . . . . . . . . . . . .
Prospectus
Statement of Available Information. . . .
Incorporation of Certain Documents by
Reference ........................
The Company . . . . . . . . . . . . . . . . . . . . . . .
Use of Proceeds ....................
Ratio of Earnings to Fixed Charges . . .
Description of Debt Securities
...
Plan of Distribution
..........
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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S-4
S-4
S-5
S-8
S-16
S-17
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8-22
8-22
Salomon Brothers Inc
The First Boston Corporation
Lehman Brothers
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Prospectus Supplement
Dated May 18, 1992