Exhibit 99.1
The Neiman Marcus Group Reports Third Quarter Earnings
DALLAS--(BUSINESS WIRE)--June 8, 2006--The Neiman Marcus Group, Inc. today
reported financial results for the third 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 for the fiscal year-to-date period have been prepared
by comparing the mathematical combination of the Successor and Predecessor
periods in the 39 weeks ended April 29, 2006 to the results of the Predecessor
for the 39 weeks ended April 30, 2005. 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.
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. Adjusted operating earnings exclude the impact
of certain items as described below under "Other Items".
For the 13 weeks ended April 29, 2006, the Company reported total revenues
of $1.0 billion compared to $933.4 million in the prior year. Comparable
revenues increased 6.8 percent. Operating earnings for the third quarter of
fiscal 2006 were $132.7 million compared to $134.7 million for the third quarter
of fiscal year 2005. Adjusted operating earnings were $151.0 million in the
third quarter of fiscal year 2006 compared to $134.7 million in the third
quarter of fiscal year 2005, an increase of 12.1 percent.
For the 39 weeks ended April 29, 2006, the Company reported total revenues
of $3.2 billion compared to $3.0 billion in the prior year. Comparable revenues
increased 7.1 percent. Operating earnings for the 39 weeks ended April 29, 2006
were $309.3 million compared to $364.2 million for the comparable period a year
ago. Adjusted operating earnings for the 39 weeks ended April 29, 2006 were
$413.4 million compared to $379.5 million for the comparable period a year ago,
an increase of 8.9 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.
Other Items
As a result of the acquisition, the Company recorded costs related to the
amortization of customer lists and favorable lease commitments during the third
quarter of fiscal year 2006 and the thirty-nine weeks ended April 29, 2006 of
approximately $18.2 million and $42.0 million, respectively. The Company
recorded non-cash charges related to various valuation adjustments during the
third quarter of fiscal year 2006 and the thirty-nine weeks ended April 29, 2006
of approximately $0.1 million and $38.6 million, respectively. Also, prior to
consummation of the acquisition, the Company recorded in the first quarter of
fiscal year 2006 transaction and other costs of approximately $23.5 million.
The Company sold its Chef's Catalog direct marketing business in November
2004 and recorded a loss in connection with the sale of approximately $15.3
million in the first quarter of fiscal year 2005. Comparable revenues have been
adjusted to exclude the sales of Chef's Catalog prior to its disposition.
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, June 8, 2006 beginning at 10:00 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.
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)
April 29, April 30,
(in thousands) 2006 2005
----------- -------------
(Successor) (Predecessor)
ASSETS
- ------
Current assets:
Cash and cash equivalents $108,982 $337,589
Restricted cash - 37,500
Accounts receivable, net of allowance 56,744 666,455
Merchandise inventories 854,979 788,915
Other current assets 64,700 49,715
----------- -------------
Total current assets 1,085,405 1,880,174
----------- -------------
Property and equipment, net 1,045,184 821,810
Goodwill and intangibles, net 4,396,417 71,517
Other assets 133,008 66,305
----------- -------------
Total assets $6,660,014 $2,839,806
=========== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $251,444 $246,971
Accrued liabilities 389,756 352,526
Notes payable and current maturities of
long-term liabilities 15,129 200
Borrowings under Credit Card Facility - 187,500
----------- -------------
Total current liabilities 656,329 787,197
----------- -------------
Long-term liabilities:
Notes and debentures 3,195,663 249,773
Deferred income taxes 1,129,899 33,614
Other long-term liabilities 197,268 173,929
----------- -------------
Total long-term liabilities 4,522,830 457,316
----------- -------------
Minority interest 12,810 13,498
Total shareholders' equity 1,468,045 1,581,795
----------- -------------
Total liabilities and shareholders' equity $6,660,014 $2,839,806
=========== =============
THE NEIMAN MARCUS GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
Thirteen Weeks Ended Thirty-Nine Weeks Ended
---------------------------- --------------------------
(in thousands) April 29, April 30, April 29, April 30,
2006 2005 2006 2005
------------ ------------ ----------- -------------
(Successor) (Predecessor) (Combined) (Predecessor)
Revenues $ 1,027,009 $ 933,372 $ 3,234,863 $ 2,970,533
Cost of goods
sold including
buying and
occupancy
costs 602,957 549,740 2,012,954 1,816,602
Selling,
general and
administrative
expenses 255,380 240,396 792,825 747,432
Income from
credit card
operations, net (15,136) (19,030) (43,712) (52,414)
Depreciation
expense 32,913 27,614 97,937 79,338
Amortization of
intangible assets 13,715 - 31,652 -
Amortization of
favorable lease
commitments 4,502 - 10,389 -
Transaction and
other costs - - 23,544 -
Loss on
disposition
of Chef's
Catalog - - - 15,348
------------ ------------ ----------- --------------
Operating
earnings 132,678 134,652 309,274 364,227
Interest expense,
net 67,216 2,933 149,760 10,948
------------ ------------ ----------- -------------
Earnings before
income taxes
and minority
interest 65,462 131,719 159,514 353,279
Income taxes 24,953 50,713 60,398 136,014
------------ ------------ ----------- --------------
Earnings before
minority interest 40,509 81,006 99,116 217,265
Minority interest
in net loss
(earnings) of
Subsidiaries 38 (1,231) (522) (2,787)
------------ ------------ ----------- --------------
Net earnings $ 40,547 $ 79,775 $ 98,594 $ 214,478
============ ============== =========== ==============
The results of operations have been prepared by comparing the
mathematical combination of the Successor and Predecessor periods in
the thirty-nine weeks ended April 29, 2006 to the thirty-nine weeks
ended April 30, 2005. The presentation does not comply with generally
accepted accounting principles, but the Company believes that it
provides a more meaningful method of comparison.
THE NEIMAN MARCUS GROUP, INC.
OTHER OPERATING DATA
(UNAUDITED)
SEGMENTS: Thirteen Weeks Ended Thirty-Nine Weeks Ended
--------------------------- ------------------------
(dollars in April 29, April 30, April 29, April 30,
millions) 2006 2005 2006 2005
----------- ------------- ---------- -------------
(Successor) (Predecessor) (Combined) (Predecessor)
REVENUES:
Specialty Retail
Stores $ 840.2 $ 766.9 $ 2,629.0 $ 2,415.7
Direct Marketing 152.1 130.5 504.0 458.5
Other (1) 34.7 36.0 101.9 96.3
---------- ----------- ----------- -----------
Total $ 1,027.0 $ 933.4 $ 3,234.9 $ 2,970.5
========== =========== =========== ===========
OPERATING EARNINGS:
Specialty Retail
Stores $ 142.6 $ 125.8 $ 372.4 $ 343.8
Direct Marketing 23.0 16.8 75.5 55.9
Other (1) (0.2) 4.6 2.0 10.2
Corporate expenses (14.4) (12.5) (36.5) (30.4)
---------- ----------- ----------- -----------
ADJUSTED OPERATING
EARNINGS $ 151.0 $ 134.7 $ 413.4 $ 379.5
Amortization of
intangible assets (18.2) - (42.0) -
Non-cash charges
related to other
valuation
adjustments made
in connection
with the
acquisition (0.1) - (38.6) -
Transaction and
other costs - - (23.5) -
Loss on
disposition of
Chef's Catalog - - - (15.3)
---------- ----------- ----------- -----------
OPERATING
EARNINGS $ 132.7 $ 134.7 $ 309.3 $ 364.2
========== =========== =========== ===========
(1) Other includes the results of operations of Kate Spade LLC and
Gurwitch Products, L.L.C.
The results of operations have been prepared by comparing the mathematical
combination of the Successor and Predecessor periods in the thirty-nine weeks
ended April 29, 2006 to the thirty-nine weeks ended April 30, 2005. 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 excluding
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:
Thirteen Weeks Ended Thirty-Nine Weeks Ended
-------------------------- --------------------------
(dollars in April 29, April 30, April 29, April 30,
millions) 2006 2005 2006 2005
---------- ----------- ----------- ------------
(Successor) (Predecessor) (Combined) (Predecessor)
Capital
Expenditures $ 40 $ 56 $ 139 $ 151
Depreciation $ 33 $ 28 $ 98 $ 79
Amortization $ 18 $ - $ 42 $ -
Rent Expense $ 22 $ 20 $ 65 $ 59
CONTACT: The Neiman Marcus Group, Inc., Dallas
James E. Skinner, 214-757-2954
or
Stacie Shirley, 214-757-2967