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