Exhibit 99.1
The Neiman Marcus Group Reports Fourth Quarter and Fiscal Year Earnings;
Fourth Quarter Earnings Growth of 35%
DALLAS--(BUSINESS WIRE)--Sept. 9, 2003--The Neiman Marcus Group,
Inc. (NYSE:NMG.A)(NYSE:NMG.B) today reported financial results for the
fourth quarter and fiscal year 2003. The fiscal year 2003 fourth
quarter and fiscal year 2003 amounts are reported on a thirteen and
fifty-two week basis, respectively. The Company's fiscal year 2002
included a fifty-third week. Unless otherwise stated, the fiscal year
2002 fourth quarter and fiscal year 2002 amounts are reported on a
fourteen and fifty-three week basis, respectively.
For the fourth quarter of fiscal year 2003, the Company reported
total revenues of $703 million compared to $666 million in the prior
year. Net earnings were $7 million, or $0.15 per diluted share, in the
fourth quarter of fiscal year 2003 compared to $5 million, or $0.11
per diluted share, in the fourth quarter of fiscal year 2002, which is
an increase of 35 percent. Excluding the impact of certain items as
described below, adjusted earnings for the fourth quarter of fiscal
year 2002 were $6 million, or $0.13 per diluted share. See the
"Reconciliation of GAAP Net Earnings to Non-GAAP Adjusted Earnings"
table below for the reconciliation of adjusted earnings and the
Company's statements regarding the use of this non-GAAP financial
measure.
For fiscal year 2003, total revenues increased 5.1 percent to
$3.10 billion compared to $2.95 billion in the prior year. Net
earnings for fiscal year 2003 were $109 million, or $2.29 per diluted
share, compared to $100 million, or $2.08 per diluted share, for
fiscal year 2002, which represents an increase of 9.8 percent.
Adjusted earnings for fiscal year 2003 were $124 million, or $2.60 per
diluted share, compared to $97 million, or $2.02 per diluted share,
for the prior year, which is an increase of 28 percent. Adjusted
earnings for fiscal year 2003 and 2002 exclude the impact of certain
items as described below.
"Overall, I am very pleased with our fiscal year 2003 results,"
said Burton M. Tansky, President and Chief Executive Officer. "Our
focus on sales growth, inventory management and expense control
contributed to a successful year in a particularly challenging
period."
Mr. Tansky continued, "In the last few months, we have seen an
improvement in the retail environment. While these recent trends are
encouraging, we remain committed to improving the operational
efficiencies of our business. The initiatives we began in fiscal 2003,
combined with our 2004 plans, position us to benefit in an improving
economy."
Based on the current sales trends, the Company anticipates its
comparable store revenues for the first quarter of fiscal year 2004 to
increase in the mid-single digit range.
Business Segments
During the fourth quarter of fiscal year 2002, the Company
realigned its business segments to reflect its current operating
strategies. All of the Company's online operations are now included in
the Direct Marketing segment. Previously, certain online operations
were included in the Other business segment. The Company's principal
business segments are Specialty Retail Stores and Direct Marketing.
All prior amounts have been restated based on this new alignment.
Fourth quarter revenues for the Specialty Retail Stores segment,
which consists of Neiman Marcus Stores and Bergdorf Goodman, were $576
million compared to $553 million in the previous year. Revenues for
the fourth quarter of fiscal year 2003 compared to last year increased
3.7 percent and 8.1 percent at Neiman Marcus Stores and Bergdorf
Goodman, respectively. Total revenues for the Company's fifty-third
week of fiscal year 2002 were $37 million. On a thirteen-week basis,
comparable store revenues increased 5.2 percent at Neiman Marcus
Stores and 16.2 percent at Bergdorf Goodman. Fourth quarter operating
earnings for the Specialty Retail Stores segment were $12 million
compared to $14 million in the prior year.
Neiman Marcus Direct, the Company's direct marketing division,
reported fourth quarter fiscal year 2003 revenues of $105 million
compared to $96 million in the previous year. Operating earnings for
Neiman Marcus Direct were $10 million in the fourth quarter compared
to $7 million a year ago.
The Company's Other segment includes the operations of the Kate
Spade and Laura Mercier brands and corporate expenses.
Other Items
In the first quarter of fiscal year 2003, the Company adopted the
provisions of Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets." Based upon the valuation
results of its third party appraisal experts, the Company recorded a
pretax charge of approximately $24 million in the first quarter of
fiscal year 2003 as a result of implementing the fair value model of
the new accounting standard.
During the fourth quarter of fiscal 2002, the Company wrote-down
the carrying values of the fixed assets of three Kate Spade retail
stores to their estimated fair value. The write-down resulted in a
pretax charge of $3 million.
During the third quarter of fiscal year 2002, the Company
terminated its prior vacation plan. Under the previous plan, eligible
employees received an annual vacation grant at the beginning of each
service year. Pursuant to the new vacation policy, eligible employees
earn vacation pay ratably over the course of the year in which
services are rendered. As a result of this change, the Company's
previously recorded $17 million vacation accrual was no longer
required and, therefore, the liability was eliminated and credited to
operating results.
Also in the third quarter of fiscal 2002, the Company recorded an
$8 million pretax charge. This charge related to 1) the write-off of
the net carrying value of the Company's investment in
WeddingChannel.com, an Internet bridal registry service, 2) the
write-down of the carrying values of the fixed assets of the two
Neiman Marcus Galleries stores to estimated fair value and 3) the
accrual of the estimated loss associated with the abandonment of
excess warehouse space held by the Company pursuant to a long-term
operating lease.
During the second quarter of fiscal year 2002, the Company
incurred expenses of approximately $2 million in connection with cost
reduction strategies. These expenses consisted primarily of severance
costs and lease termination expenses incurred in connection with the
closing of the Neiman Marcus Galleries store in Seattle, Washington.
A live webcast of the conference call on earnings can be accessed
through the Investor Information section of the Neiman Marcus Group
website at www.neimanmarcusgroup.com on Tuesday, September 9, 2003
beginning at 7:30 a.m. Central Daylight Time. Following the live
broadcast, interested parties may replay the webcast by accessing this
website. To access financial information that will be presented during
the call, please visit the Investor Information section of the Neiman
Marcus Group website at www.neimanmarcusgroup.com.
This release contains forward-looking statements, including
statements regarding the Company's objectives and expectations
concerning, among other things, its productivity and profitability;
merchandising and marketing strategies; inventory performance; store
renovation and expansion plans; capital expenditures; liquidity; and
development of management information systems. These forward-looking
statements are made based on management's expectations and beliefs
concerning future events, as well as on assumptions made by and data
currently available to management. Therefore, these forward-looking
statements involve a number of risks and uncertainties and are not
guarantees of future performance. A variety of factors could cause the
Company's actual results to differ materially from the anticipated or
expected results expressed in these forward-looking statements.
Factors that could affect future performance include, but are not
limited to: current political and economic conditions; changes in
political and economic conditions that may occur in the future;
terrorist activities in the United States, as well as the potential
escalation in the international war on terrorism; political, social,
economic or other events resulting in the short or long-term
disruption in business at the Company's stores, distribution centers
or offices; changes in consumer confidence resulting in a reduction of
discretionary spending on goods that are, or are perceived to be,
"luxuries;" changes in demographic or retail environments; changes in
consumer preferences or fashion trends; competitive responses to the
Company's marketing, merchandising and promotional efforts and/or
inventory liquidations by vendors or other retailers; delays in the
receipt of merchandise ordered by the Company due to work stoppages
and/or other causes of delay in connection with either the manufacture
or shipment of such merchandise; seasonality of the retail business;
adverse weather conditions, particularly during peak selling seasons;
delays in anticipated store openings; natural disasters; significant
increases in paper, printing and postage costs; litigation that may
have an adverse effect on the financial results or reputation of the
Company; changes in the Company's relationships with designers,
vendors and other sources of merchandise; the financial viability of
the Company's designers, vendors and other sources of merchandise;
changes in foreign currency exchange rates; impact of funding
requirements related to the Company's noncontributory defined benefit
pension plan; changes in the Company's relationships with certain of
its key sales associates; changes in key management personnel; changes
in the Company's proprietary credit card arrangement that adversely
impact its ability to provide consumer credit; or changes in
government or regulatory requirements increasing the Company's cost of
operations. The Company undertakes no obligation to update or revise
(publicly or otherwise) any forward-looking statements to reflect
subsequent events, new information or future circumstances.
THE NEIMAN MARCUS GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
August 2, August 3,
2003 2002
----------- -----------
ASSETS
- ------
Current assets:
Cash and cash equivalents $206,950 $178,638
Undivided interests in NMG Credit Card
Master Trust 243,145 208,602
Accounts receivable 22,595 19,778
Merchandise inventories 687,062 656,844
Other current assets 86,369 63,764
----------- -----------
Total current assets 1,246,121 1,127,626
----------- -----------
Property and equipment, net 674,185 653,166
Other assets 114,124 126,754
----------- -----------
Total assets $2,034,430 $1,907,546
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Notes payable and current maturities of
long-term liabilities $1,241 $1,098
Accounts payable 262,909 257,560
Accrued liabilities 266,259 259,800
----------- -----------
Total current liabilities 530,409 518,458
----------- -----------
Long-term liabilities:
Notes and debentures 249,733 249,710
Other long-term liabilities 108,234 77,473
----------- -----------
Total long-term liabilities 357,967 327,183
----------- -----------
Minority interest 8,206 6,592
Total shareholders' equity 1,137,848 1,055,313
----------- -----------
Total liabilities and shareholders' equity $2,034,430 $1,907,546
=========== ===========
THE NEIMAN MARCUS GROUP, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
Fourth Quarter Fiscal Year
Ended Ended
------------------- -----------------------
(in thousands, except per August 2, August 3, August 2, August 3,
share data) 2003 2002 2003 2002
--------- --------- ----------- -----------
Revenues $702,656 $666,356 $3,098,124 $2,948,332
Cost of goods sold
including buying and
occupancy costs 501,357 474,310 2,073,579 1,997,378
Selling, general and
administrative expenses 184,670 178,865 802,435 776,647
Effect of change in
vacation policy -- -- -- (16,576)
Impairment and other
charges (1) -- 3,070 -- 13,233
--------- --------- ----------- -----------
Operating earnings 16,629 10,111 222,110 177,650
Interest expense, net 4,087 3,246 16,270 15,406
--------- --------- ----------- -----------
Earnings before income
taxes, minority interest
and change in accounting
principle 12,542 6,865 205,840 162,244
Income taxes 4,828 2,609 79,248 61,653
--------- --------- ----------- -----------
Earnings before minority
interest and change in
accounting principle 7,714 4,256 126,592 100,591
Minority interest in net
earnings of subsidiaries (542) 1,060 (2,488) (1,017)
--------- --------- ----------- -----------
Earnings before change in
accounting principle 7,172 5,316 124,104 99,574
Change in accounting
principle -- write-down
of intangible assets, net
of taxes -- -- (14,801) --
--------- --------- ----------- -----------
Net earnings $7,172 $5,316 $109,303 $99,574
========= ========= =========== ===========
Weighted average number of
common and common
equivalent shares
outstanding:
Basic 47,355 47,692 47,462 47,444
========= ========= =========== ===========
Diluted 47,862 48,129 47,795 47,835
========= ========= =========== ===========
Basic earnings per share:
Earnings before effect
of change in
accounting principle $0.15 $0.11 $2.61 $2.10
Change in accounting
principle -- -- (0.31) --
--------- --------- ----------- -----------
Basic earnings per
share $0.15 $0.11 $2.30 $2.10
========= ========= =========== ===========
Diluted earnings per
share:
Earnings before
effect of change in
accounting principle $0.15 $0.11 $2.60 $2.08
Change in accounting
principle -- -- (0.31) --
--------- --------- ----------- -----------
Diluted earnings per
share $0.15 $0.11 $2.29 $2.08
========= ========= =========== ===========
(1) Impairment and other charges for the fiscal year ended August
3, 2002 include: severance costs and lease termination
expenses incurred in connection with the closing of the Neiman
Marcus Galleries store in Seattle recorded in the second
fiscal quarter; the following impairment and other charges
recorded in the third fiscal quarter: a) the write-off of the
net carrying value of the Company's investment in
WeddingChannel.com, an Internet bridal registry service, b)
the write-down of the carrying values of the fixed assets of
the two Neiman Marcus Galleries stores to estimated fair value
and c) the accrual of the estimated loss associated with the
abandonment of excess warehouse space held by the Company
pursuant to a long-term operating lease; and the write-down of
the carrying values of the fixed assets of three Kate Spade
retail stores to their estimated fair value recorded in the
fourth fiscal quarter.
THE NEIMAN MARCUS GROUP, INC.
OTHER OPERATING DATA
(UNAUDITED)
SEGMENTS: Fourth Quarter Ended Fiscal Year Ended
-------------------- -------------------
August 2, August 3, August 2, August 3,
(in millions) 2003 2002 2003 2002
---------- --------- --------- ---------
REVENUES:
Specialty Retail Stores $576.3 $553.2 $2,524.8 $2,433.2
Direct Marketing 105.1 96.1 493.5 444.0
Other (1) 21.3 17.1 79.8 71.1
---------- --------- --------- ---------
Total $702.7 $666.4 $3,098.1 $2,948.3
========== ========= ========= =========
OPERATING EARNINGS:
Specialty Retail Stores $12.2 $14.0 $198.2 $170.5
Direct Marketing 10.0 6.5 45.8 22.8
Other (1) (5.6) (7.3) (21.9) (19.0)
Effect of change in vacation
policy -- -- -- 16.6
Impairment and other charges -- (3.1) -- (13.2)
---------- --------- --------- ---------
Total $16.6 $10.1 $222.1 $177.7
========== ========= ========= =========
OTHER DATA: Fourth Quarter Ended Fiscal Year Ended
-------------------- -------------------
August 2, August 3, August 2, August 3,
(in millions) 2003 2002 2003 2002
---------- --------- --------- ---------
Capital Expenditures $19 $27 $100 $149
Depreciation and Amortization 21 18 79 82
(1) Other includes the results of operations of Kate Spade, LLC,
Gurwitch Products, LLC and corporate expenses. All of the
Company's online operations are now included in the Direct
Marketing segment. Previously, certain online operations were
included in the Other business segment. Prior year amounts
have been reclassified to conform to the current year
presentation.
THE NEIMAN MARCUS GROUP, INC.
RECONCILIATION OF GAAP NET EARNINGS TO NON-GAAP ADJUSTED EARNINGS
(UNAUDITED)
Fourth Quarter Ended Fiscal Year Ended
-------------------- -------------------
(in thousands, except per August 2, August 3, August 2, August 3,
share data) 2003 2002 2003 2002
---------- --------- --------- ---------
Net earnings (GAAP) $7,172 $5,316 $109,303 $99,574
Effect of change in
vacation policy, net of
taxes -- -- -- (10,277)
Impairment and other
charges, net of taxes (1) -- 1,066 -- 7,368
Change in accounting
principle -- -- 14,801 --
---------- --------- --------- ---------
Adjusted earnings (Non-GAAP) $7,172 $6,382 $124,104 $96,665
========== ========= ========= =========
Diluted earnings per share
(GAAP) $0.15 $0.11 $2.29 $2.08
Effect of change in
vacation policy, net of
taxes -- -- -- (0.21)
Impairment and other
charges, net of taxes (1) -- 0.02 -- 0.15
Change in accounting
principle -- -- 0.31 --
---------- --------- --------- ---------
Adjusted earnings per share
(Non-GAAP) $0.15 $0.13 $2.60 $2.02
========== ========= ========= =========
The Neiman Marcus Group, Inc. believes reporting adjusted earnings
is a more accurate representation of the Company's on-going economic
performance and therefore uses adjusted reporting internally to
evaluate and manage the Company's operations. The Neiman Marcus Group,
Inc. has chosen to provide this information to investors to enable
them to perform more meaningful comparisons of operating results and
as a means to emphasize the results of on-going operations. Adjusted
earnings should be considered in addition to, not as a substitute for,
the Company's other measures of financial performance reported in
accordance with generally accepted accounting principles.
(1) Impairment and other charges for the fiscal year ended August
3, 2002 include: severance costs and lease termination
expenses incurred in connection with the closing of the Neiman
Marcus Galleries store in Seattle recorded in the second
fiscal quarter; the following impairment and other charges
recorded in the third fiscal quarter: a) the write-off of the
net carrying value of the Company's investment in the
WeddingChannel.com, an Internet bridal registry service, b)
the write-down of the carrying values of the fixed assets of
the two Neiman Marcus Galleries stores to estimated fair value
and c) the accrual of the estimated loss associated with the
abandonment of the excess warehouse space held by the Company
pursuant to a long-term operating lease; and the write-down of
the carrying values of the fixed assets of three Kate Spade
retail stores to their estimated fair value recorded in the
fourth fiscal quarter.
CONTACT: The Neiman Marcus Group, Inc., Dallas
James E. Skinner, 214-743-7625
or
Stacie Shirley, 214-757-2967