Exhibit 99.1
The Neiman Marcus Group Reports Record Results Fourth Quarter Earnings
Growth of 187%; Fiscal Year Earnings Growth of 87%
DALLAS--(BUSINESS WIRE)--Sept. 7, 2004--The Neiman Marcus Group,
Inc. (NYSE:NMG.A)(NYSE:NMG.B) today reported financial results for the
fourth quarter and fiscal year 2004.
For the fourth quarter of fiscal year 2004, the Company reported
total revenues of $789 million compared to $703 million in the prior
year. Comparable revenues increased 12.5 percent. Net earnings were
$21 million, or $0.42 per diluted share, in the fourth quarter of
fiscal year 2004 compared to $7 million, or $0.15 per diluted share,
in the fourth quarter of fiscal year 2003, an increase of 187 percent.
Excluding the impact of certain items as described below under "Other
Items", adjusted earnings for the fourth quarter of fiscal year 2004
were $23 million, or $0.47 per diluted share. See the attached
"Reconciliation of GAAP Net Earnings to Non-GAAP Adjusted Earnings"
for the reconciliation of adjusted earnings and the Company's
statements regarding the use of this non-GAAP financial measure.
For fiscal year 2004, total revenues were $3.55 billion compared
to $3.10 billion in the prior year. Comparable revenues increased 14.0
percent for fiscal year 2004. Net earnings for fiscal year 2004 were
$205 million, or $4.19 per diluted share, compared to $109 million, or
$2.29 per diluted share, for fiscal year 2003, which represents an
increase of 87 percent. Adjusted earnings for fiscal year 2004 were
$200 million, or $4.09 per diluted share, compared to adjusted
earnings of $124 million, or $2.60 per diluted share, for the prior
year, which is an increase of 61 percent. Adjusted earnings for fiscal
year 2004 and 2003 exclude the impact of certain items as described
below under "Other Items".
"I am extremely pleased with our fourth quarter and fiscal year
2004 performance. We exceeded many historical milestones this year by
maintaining our long-term commitment to quality, fashion leadership
and outstanding customer service," said Burton M. Tansky, President
and Chief Executive Officer. "In addition, our intense focus on
full-price selling, inventory management and expense control resulted
in record sales and earnings for the fourth quarter and fiscal year
2004."
Mr. Tansky further added, "Our strong operating results, coupled
with our disciplined asset management, allowed us to continue to
strengthen our balance sheet as highlighted by the significant
increase in our cash balances. The financial strength of the Company
provides us with the flexibility to pursue initiatives and strategies
that will further enhance our position with the affluent customer and
increase the value to our shareholders."
Business Segments
Fourth quarter revenues for the Specialty Retail Stores segment,
which consists of Neiman Marcus Stores and Bergdorf Goodman, were $641
million compared to $577 million in the previous year. Total revenues
for the fourth quarter of fiscal year 2004 compared to last year
increased 10.0 percent and 20.3 percent at Neiman Marcus Stores and
Bergdorf Goodman, respectively. Comparable store revenues increased
10.2 percent at Neiman Marcus Stores for the fourth quarter of fiscal
year 2004. Fourth quarter operating earnings for the Specialty Retail
Stores segment were $31 million compared to $12 million in the prior
year.
Fiscal year 2004 revenues for the Specialty Retail Stores segment,
were $2.87 billion compared to $2.52 billion in the previous year.
Total revenues for fiscal year 2004 compared to last year increased
12.6 percent and 22.2 percent at Neiman Marcus Stores and Bergdorf
Goodman, respectively. Comparable store revenues increased 12.0
percent at Neiman Marcus Stores for fiscal year 2004. Fiscal year 2004
operating earnings for the Specialty Retail Stores segment were $311
million compared to $198 million in the prior year.
Neiman Marcus Direct, the Company's direct marketing division,
reported fourth quarter fiscal year 2004 revenues of $125 million
compared to $105 million in the previous year. Operating earnings for
Neiman Marcus Direct were $16 million in the fourth quarter compared
to $10 million a year ago.
Neiman Marcus Direct reported fiscal year 2004 revenues of $571
million compared to $493 million in the previous year. Operating
earnings for Neiman Marcus Direct were $61 million in fiscal year 2004
compared to $46 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 fourth quarter of fiscal year 2004, the Company recorded a
pretax charge of approximately $3.9 million for the impairment of the
Chef's Catalog trade name.
In the second quarter of fiscal year 2004, the Company recorded
approximately $7.5 million for the impact of favorable settlements
associated with previous tax filings.
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.
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 7, 2004
beginning at 3:30 p.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.
From time to time, the Company may make statements that predict or
forecast future events or results, depend on future events for their
accuracy or otherwise contain "forward-looking information." These
statements are made based on management's expectations and beliefs
concerning future events and are not guarantees of future performance.
The Company cautions readers that actual results may differ
materially as a result of various factors, some of which are beyond
its control, including but not limited to: political or economic
conditions; terrorist activities in the United States or escalation in
the international war on terrorism; disruptions 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; changes in the Company's relationships
with key customers; 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 and renovations; natural disasters;
significant increases in paper, printing and postage costs; litigation
that may have an adverse effect on the Company's financial results or
reputation; 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; the
design and implementation of new information systems or enhancement of
existing systems; 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 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.
These and other factors that may adversely effect the Company's
future performance or financial condition are contained in its Annual
Report in Form 10-K and other reports filed with and available from
the Securities and Exchange Commission. The Company undertakes no
obligation to update or revise any forward-looking statements to
reflect subsequent events, new information or future circumstances.
THE NEIMAN MARCUS GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands) July 31, August 2,
2004 2003
----------- -----------
ASSETS
- -----------------------------------------------
Current assets:
Cash and cash equivalents $ 368,367 $ 206,950
Undivided interests in NMG Credit Card
Master Trust - 243,145
Accounts receivable 551,687 22,595
Merchandise inventories 720,277 687,062
Other current assets 65,835 86,369
----------- -----------
Total current assets 1,706,166 1,246,121
----------- -----------
Property and equipment, net 693,772 674,185
Other assets 145,812 114,124
----------- -----------
Total assets $2,545,750 $2,034,430
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- -----------------------------------------------
Current liabilities:
Accounts payable $ 289,282 $ 262,909
Accrued liabilities 286,833 266,259
Notes payable and current maturities of
long-term liabilities 1,563 1,241
Current portion of borrowings under Credit
Card Facility 150,000 -
----------- -----------
Total current liabilities 727,678 530,409
----------- -----------
Long-term liabilities:
Notes and debentures 249,757 249,733
Borrowings under Credit Card Facility 75,000 -
Other long-term liabilities 112,455 108,234
----------- -----------
Total long-term liabilities 437,212 357,967
----------- -----------
Minority interest 10,298 8,206
Total shareholders' equity 1,370,562 1,137,848
----------- -----------
Total liabilities and shareholders' equity $2,545,750 $2,034,430
=========== ===========
THE NEIMAN MARCUS GROUP, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
Fourth Quarter Ended Fiscal Year Ended
----------------------- -----------------------
(in thousands, except July 31, August 2, July 31, August 2,
per share data) 2004 2003 2004 2003
----------- ----------- ----------- -----------
Revenues $ 788,994 $ 702,656 $3,545,559 $3,098,124
Cost of goods sold
including buying and
occupancy costs 552,257 501,357 2,321,110 2,073,579
Selling, general and
administrative
expenses 194,534 184,670 875,360 802,435
Impairment charge 3,853 - 3,853 -
----------- ----------- ----------- -----------
Operating earnings 38,350 16,629 345,236 222,110
Interest expense, net 4,107 4,087 15,923 16,270
----------- ----------- ----------- -----------
Earnings before
income taxes,
minority interest
and change in
accounting principle 34,243 12,542 329,313 205,840
Income taxes 13,356 4,828 120,932 79,248
----------- ----------- ----------- -----------
Earnings before
minority interest
and change in
accounting principle 20,887 7,714 208,381 126,592
Minority interest in
net earnings of
subsidiaries (300) (542) (3,549) (2,488)
----------- ----------- ----------- -----------
Earnings before
change in accounting
principle 20,587 7,172 204,832 124,104
Change in accounting
principle -
writedown of
intangible assets,
net of taxes - - - (14,801)
----------- ----------- ----------- -----------
Net earnings $ 20,587 $ 7,172 $ 204,832 $ 109,303
=========== =========== =========== ===========
Weighted average
number of common and
common equivalent
shares outstanding:
Basic 48,201 47,355 47,997 47,462
=========== =========== =========== ===========
Diluted 49,074 47,862 48,873 47,795
=========== =========== =========== ===========
Basic earnings per
share:
Earnings before
effect of change in
accounting
principle $ 0.43 $ 0.15 $ 4.27 $ 2.61
Change in
accounting
principle - - - (0.31)
----------- ----------- ----------- -----------
Basic earnings per
share $ 0.43 $ 0.15 $ 4.27 $ 2.30
=========== =========== =========== ===========
Diluted earnings per
share:
Earnings before
effect of change
in accounting
principle $ 0.42 $ 0.15 $ 4.19 $ 2.60
Change in
accounting
principle - - - (0.31)
----------- ----------- ----------- -----------
Diluted earnings
per share $ 0.42 $ 0.15 $ 4.19 $ 2.29
=========== =========== =========== ===========
THE NEIMAN MARCUS GROUP, INC.
OTHER OPERATING DATA
(UNAUDITED)
SEGMENTS: Fourth Quarter Ended Fiscal Year Ended
--------------------- ---------------------
(in millions) July 31, August 2, July 31, August 2,
2004 2003 2004 2003
---------- ---------- ---------- ----------
REVENUES:
Specialty Retail Stores $ 641 $ 577 $ 2,871 $ 2,525
Direct Marketing 125 105 571 493
Other (1) 23 21 104 80
---------- ---------- ---------- ----------
Total $ 789 $ 703 $ 3,546 $ 3,098
========== ========== ========== ==========
OPERATING EARNINGS:
Specialty Retail Stores $ 31 $ 12 $ 311 $ 198
Direct Marketing 16 10 61 46
Other (1) (5) (5) (23) (22)
Impairment and other
charges (4) - (4) -
---------- ---------- ---------- ----------
Total $ 38 $ 17 $ 345 $ 222
========== ========== ========== ==========
OTHER DATA: Fourth Quarter Ended Fiscal Year Ended
-------------------- ----------------------
(in millions) July 31, August 2, July 31, August 2,
2004 2003 2004 2003
---------- --------- ----------- ----------
Capital Expenditures $ 37 $ 19 $ 118 $ 100
Depreciation and
Amortization 25 21 94 79
(1) Other includes the results of operations of Kate Spade LLC,
Gurwitch Products, LLC and corporate expenses.
PRESENTATION OF ACCOUNTS RECEIVABLE:
A reconciliation of the outstanding balance of the Company's
accounts receivable to the balances recorded by the Company at July
31, 2004 and August 2, 2003 is as follows:
July 31, August 2,
2004 2003
----------- -----------
(in millions)
Credit card receivables $ 526 $ 468
Less: Sold Interests originally
qualifying for
Off-Balance Sheet Accounting - (225)
----------- -----------
526 243
Other receivables 26 23
----------- -----------
Total accounts receivable $ 552 $ 266
=========== ===========
At the end of the fourth quarter of fiscal year 2004, the
Company's entire credit card portfolio was included in accounts
receivable in its condensed consolidated balance sheet and the $225
million repayment obligation was shown as a liability.
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 July 31, August 2, July 31, August 2,
share data) 2004 2003 2004 2003
---------- ---------- --------- ---------
Net earnings (GAAP) $ 20,587 $ 7,172 $204,832 $109,303
Effect of favorable tax
settlements (1) - - (7,500) -
Impairment charge, net of
taxes (2) 2,350 - 2,350 -
Change in accounting
principle (3) - - - 14,801
---------- ---------- --------- ---------
Adjusted earnings (Non-GAAP) $ 22,937 $ 7,172 $199,682 $124,104
========== ========== ========= =========
Diluted earnings per share
(GAAP) $ 0.42 $ 0.15 $ 4.19 $ 2.29
Effect of favorable tax
settlements (1) - - (0.15) -
Impairment charge, net of
taxes (2) 0.05 - 0.05 -
Change in accounting
principle (3) - - - 0.31
---------- ---------- --------- ---------
Adjusted earnings per share
(Non-GAAP) $ 0.47 $ 0.15 $ 4.09 $ 2.60
========== ========== ========= =========
(1) In the second quarter of fiscal year 2004, the Company recorded
approximately $7.5 million for the impact of favorable settlements
associated with previous tax filings.
(2) In the fourth quarter of fiscal year 2004, the Company recorded a
pretax charge of approximately $3.9 million for the impairment of
the Chef's Catalog trade name.
(3) 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.
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 earnings 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.
CONTACT: The Neiman Marcus Group, Inc.
James E. Skinner, 214-743-7625
or
Stacie Shirley, 214-757-2967