Exhibit 99.1
The Neiman Marcus Group Reports First Quarter Earnings
DALLAS--(BUSINESS WIRE)--Dec. 8, 2005--The Neiman Marcus Group, Inc. today
reported financial results for the first quarter of fiscal year 2006. On October
6, 2005, the Company announced the completion of the acquisition of Neiman
Marcus by an investor group led by Texas Pacific Group and Warburg Pincus LLC.
The accompanying consolidated statements of earnings and related information
present the Company's results of operations for the period preceding the
acquisition (Predecessor) and the period succeeding the acquisition (Successor).
The results of operations have been prepared by comparing the mathematical
combination of the Successor and Predecessor periods in the thirteen weeks ended
October 29, 2005 to the thirteen weeks ended October 30, 2004. The presentation
does not comply with generally accepted accounting principles, but the Company
believes that it provides a more meaningful method of comparison. For further
information related to the Company's financial results, refer to the Company's
Form 10-Q and other information available from the Securities and Exchange
Commission.
For the 13 weeks ended October 29, 2005, the Company reported total
revenues of $976 million compared to $908 million in the prior year. Comparable
revenues increased 8.4 percent. Operating earnings for the thirteen weeks ended
October 29, 2005 were $104 million compared to $110 million for the first
quarter of fiscal year 2005.
The Neiman Marcus Group, Inc. believes reporting adjusted operating
earnings is a more meaningful representation of the Company's on-going economic
performance and therefore uses adjusted reporting internally to evaluate and
manage the Company's operations. Excluding the impact of certain items as
described below under "Other Items", adjusted operating earnings were $140
million in the first quarter of fiscal year 2006 compared to $125 million in the
first quarter of fiscal year 2005, which represents an increase of 12 percent.
See the attached schedule of "Other Operating Data" for the reconciliation of
adjusted operating earnings and the Company's statements regarding the use of
this non-GAAP financial measure.
Business Segments
First quarter revenues for the Specialty Retail Stores segment, which
consists of Neiman Marcus Stores and Bergdorf Goodman, were $807 million,
compared to $737 million in the previous year, which represents an increase of
8.9 percent at Neiman Marcus Stores and 13.7 percent at Bergdorf Goodman.
Comparable revenues for Neiman Marcus Stores increased 8.0 percent for the first
quarter of fiscal year 2006. First quarter fiscal year 2006 operating earnings
for the Specialty Retail Stores segment were $135 million, compared to $120
million in the first quarter of fiscal year 2005, which represents an increase
of 13 percent.
Neiman Marcus Direct, the Company's direct marketing operation, reported
first quarter fiscal year 2006 revenues of $139 million, compared to $140
million in the previous year. On a comparable basis, excluding Chef's Catalog,
revenues increased 10.4 percent in the first quarter of fiscal year 2006.
Operating earnings for Neiman Marcus Direct were $15 million in the first
quarter compared to $11 million in the prior year, which represents an increase
of 29 percent.
The Company's Other segment includes the operations of the Kate Spade and
Laura Mercier brands.
Other Items
The Company sold its Chef's Catalog direct marketing business in November
2004. Comparable revenues have been adjusted to exclude the sales of Chef's
Catalog prior to its disposition.
As a result of the acquisition, the Company recorded the following charges
in the first quarter of fiscal year 2006: transaction and other costs of
approximately $23.5 million, costs related to various valuation adjustments of
approximately $7.8 million and amortization of customer lists and favorable
lease commitments of approximately $4.9 million.
In connection with the sale of Chef's Catalog, the Company recorded a
pre-tax loss of approximately $15.3 million in its first quarter of fiscal year
2005.
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 Thursday, December 8, 2005 beginning at 2:00 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;
changes in the Company's relationships with key customers; delays in the receipt
of 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 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)
October 29, October 30,
(in thousands) 2005 2004
----------- -------------
(Successor) (Predecessor)
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 192,097 $ 258,367
Reserved cash 134,734 -
Accounts receivable, net of allowance 39,940 641,236
Merchandise inventories 978,796 881,266
Other current assets 97,540 72,429
----------- -------------
Total current assets 1,443,107 1,853,298
----------- -------------
Property and equipment, net 1,114,363 776,665
Goodwill and intangibles, net 4,307,731 71,514
Other assets 121,214 56,598
----------- -------------
Total assets $6,986,415 $ 2,758,075
=========== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $ 347,810 $ 293,344
Accrued liabilities 339,741 347,232
Notes payable and current maturities of
long-term liabilities 5,700 4,200
Senior notes due 2008 134,734 -
Borrowings under Credit Card Facility - 225,000
----------- -------------
Total current liabilities 827,985 869,776
----------- -------------
Long-term liabilities:
Asset-based revolving credit facility 150,000 -
Notes and debentures 3,295,565 249,762
Deferred income taxes 1,117,244 20,750
Other long-term liabilities 172,189 165,306
----------- -------------
Total long-term liabilities 4,734,998 435,818
----------- -------------
Minority interest 11,751 11,474
Total shareholders' equity 1,411,681 1,441,007
----------- -------------
Total liabilities and shareholders' equity $6,986,415 $ 2,758,075
=========== =============
THE NEIMAN MARCUS GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
First Quarter First Quarter
2006 2005
------------------------------------ -------------
Four Nine Thirteen Thirteen
weeks weeks weeks weeks
ended ended ended ended
Oct. 29, Oct. 1, Oct. 29, Oct. 30,
(in thousands) 2005 2005 2005 2004
----------- ------------- ---------- -------------
(Successor) (Predecessor) (Combined) (Predecessor)
Revenues $ 324,790 $ 651,648 $976,438 $ 907,936
Cost of goods sold
including buying
and occupancy
costs 195,209 378,767 573,976 531,183
Selling, general
and administrative
expenses 79,200 161,035 240,235 227,104
Depreciation
expense 9,709 19,960 29,669 24,386
Amortization of
customer lists 3,378 - 3,378 -
Amortization of
favorable lease
commitments 1,559 - 1,559 -
Transaction and
other costs - 23,544 23,544 -
Loss on disposition
of Chef's Catalog - - - 15,348
----------- ------------- ---------- -------------
Operating earnings 35,735 68,342 104,077 109,915
Interest (income)
expense, net 17,285 (866) 16,419 4,037
----------- ------------- ---------- -------------
Earnings before
income taxes and
minority interest 18,450 69,208 87,658 105,878
Income taxes 7,269 25,607 32,876 40,975
----------- ------------- ---------- -------------
Earnings before
minority interest 11,181 43,601 54,782 64,903
Minority interest
in net (loss)
earnings of
subsidiaries (332) 553 221 (787)
----------- ------------- ---------- -------------
Net earnings $ 10,849 $ 44,154 $ 55,003 $ 64,116
=========== ============= ========== =============
THE NEIMAN MARCUS GROUP, INC.
OTHER OPERATING DATA
(UNAUDITED)
SEGMENTS: First Quarter First Quarter
2006 2005
------------------------------------ -------------
Four Nine Thirteen Thirteen
weeks weeks weeks weeks
ended ended ended ended
(dollars in Oct. 29, Oct. 1, Oct. 29, Oct. 30,
millions) 2005 2005 2005 2004
----------- ------------- ---------- -------------
(Successor) (Predecessor) (Combined) (Predecessor)
REVENUES:
Specialty Retail
Stores $ 262.4 $ 544.9 $ 807.3 $ 736.9
Direct Marketing 51.4 87.5 138.9 139.8
Other (1) 11.0 19.2 30.2 31.2
----------- ------------- ---------- -------------
Total $ 324.8 $ 651.6 $ 976.4 $ 907.9
=========== ============= ========== =============
OPERATING EARNINGS:
Specialty Retail
Stores $ 44.1 $ 91.4 $ 135.4 $ 120.2
Direct Marketing 6.4 8.2 14.7 11.3
Other (1) 1.2 (2.0) (0.8) 2.9
Corporate
expenses (3.2) (5.8) (9.0) (9.2)
----------- ------------- ---------- -------------
ADJUSTED
OPERATING
EARNINGS $ 48.5 $ 91.8 $ 140.3 $ 125.2
Amortization of
customer lists (3.4) - (3.4) -
Amortization of
favorable lease
commitments (1.6) - (1.6) -
Non-cash charges
related to
other valuation
adjustments
made in
connection with
the acquisition (7.8) - (7.8) -
Transaction and
other costs - (23.5) (23.5) -
Loss on
disposition of
Chef's Catalog - - - (15.3)
----------- ------------- ---------- -------------
OPERATING
EARNINGS $ 35.7 $ 68.3 $ 104.0 $ 109.9
=========== ============= ========== =============
(1) Other includes the results of operations of Kate Spade LLC and
Gurwitch Products, LLC.
The results of operations have been prepared by comparing the mathematical
combination of the Successor and Predecessor periods in the thirteen weeks ended
October 29, 2005 to the thirteen weeks ended October 30, 2004. The presentation
does not comply with generally accepted accounting principles, but the Company
believes that it provides a more meaningful method of comparison.
Adjusted operating earnings represents operating earnings adjusted for
amortization of customer lists and favorable lease commitments, purchase
accounting adjustments, transaction and other costs and the loss on disposition
of Chef's Catalog.
The Neiman Marcus Group, Inc. believes reporting adjusted operating earnings is
a more meaningful 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 operating earnings is not a recognized term under generally
accepted accounting principles (GAAP). 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. Adjusted operating earnings as presented herein are not necessarily
comparable to similarly titled measures.
THE NEIMAN MARCUS GROUP, INC.
OTHER OPERATING DATA
(UNAUDITED)
OTHER DATA:
First Quarter First Quarter
2006 2005
------------------------------------ -------------
Four Nine Thirteen Thirteen
weeks weeks weeks weeks
ended ended ended ended
(dollars in Oct. 29, Oct. 1, Oct. 29, Oct. 30,
millions) 2005 2005 2005 2004
----------- ------------- ---------- -------------
(Successor) (Predecessor) (Combined) (Predecessor)
Capital
Expenditures $ 23 $ 26 $ 49 $ 51
Depreciation 10 20 30 24
Amortization 5 - 5 -
CONTACT: The Neiman Marcus Group, Inc., Dallas
James E. Skinner, 214-743-7625
or
Stacie Shirley, 214-757-2967