Exhibit 99.1
Neiman Marcus, Inc. Reports First Quarter Earnings
DALLAS--(BUSINESS WIRE)--Dec. 7, 2006--Neiman Marcus, Inc. today
reported financial results for the first quarter fiscal year 2007. On
October 6, 2005, the Company announced the completion of the
acquisition of Neiman Marcus, Inc. by an investor group led by Texas
Pacific Group and Warburg Pincus LLC. The accompanying condensed
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 results of the Successor for the 13 weeks ended October 28, 2006
to the mathematical combination of the Successor and Predecessor
periods in the 13 weeks ended October 29, 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.
Neiman Marcus, 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 first quarter of fiscal year 2007, the Company reported
total revenues of $1.04 billion compared to $946.2 million in the
prior year. Comparable revenues increased 6.8 percent. Operating
earnings for the first quarter of fiscal 2007 were $154.3 million
compared to $104.9 million for the first quarter of fiscal year 2006.
Adjusted operating earnings were $168.1 million in the first quarter
of fiscal year 2007 compared to $140.2 million in the first quarter of
fiscal year 2006, an increase of 19.9%.
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
in the first quarter of fiscal year 2007 and 2006 of approximately
$18.0 million and $4.8 million, respectively. In addition, the Company
recorded other income of approximately $4.2 million in the first
quarter of fiscal year 2007 which represents proceeds it received from
its investment in an internet retailer. The Company also recorded
other non-cash items related to various valuation adjustments during
the first quarter of fiscal 2006 of approximately $7.0 million. 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.
In October 2006, the Company entered into an agreement to purchase
the interest held by the minority investor of Kate Spade LLC. In
November 2006, the Company entered into a definitive agreement to sell
100% of its ownership in Kate Spade LLC. Also, in July 2006 the
Company sold its majority interest in Gurwitch Products, L.L.C. The
Company's financial statements reflect Kate Spade LLC and Gurwitch
Products, L.L.C. as discontinued operations for all periods presented.
A live webcast of the conference call on earnings can be accessed
through the Investor Information section of the Neiman Marcus, Inc.
website at www.neimanmarcusgroup.com on Thursday, December 7, 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, Inc. 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 and elsewhere;
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; 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 or 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 Company's success in enforcing its intellectual
property rights; the effects of incurring a substantial amount of
indebtedness under the Company's senior secured credit facilities,
senior notes and senior subordinated notes and of complying with the
related covenants and conditions; 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 or
inflation 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.
NEIMAN MARCUS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
October 28, October 29,
(in thousands) 2006 2005
----------- -----------
(Successor) (Successor)
ASSETS
- ---------------------------------------------
Current assets:
Cash and cash equivalents $ 159,430 $ 191,532
Restricted cash - 134,734
Accounts receivable, net of allowance 46,207 23,115
Merchandise inventories 971,302 959,103
Other current assets 75,928 94,780
Current assets of discontinued operations 16,354 39,843
----------- -----------
Total current assets 1,269,221 1,443,107
----------- -----------
Property and equipment, net 1,038,138 1,095,403
Goodwill and intangibles, net 4,205,723 4,188,316
Other assets 109,791 119,173
Non-current assets of discontinued operations 79,297 140,416
----------- -----------
Total assets $6,702,170 $6,986,415
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ---------------------------------------------
Current liabilities:
Accounts payable $ 320,212 $ 335,097
Accrued liabilities 431,295 322,374
Notes payable and current maturities of
long-term liabilities 4,179 200
Senior notes due 2008 - 134,734
Current liabilities of discontinued
operations 28,565 35,580
----------- -----------
Total current liabilities 784,251 827,985
----------- -----------
Long-term liabilities:
Asset-based revolving credit facility - 150,000
Notes and debentures 3,195,760 3,295,565
Deferred income taxes 1,031,959 1,106,419
Other long-term liabilities 222,265 169,826
Non-current liabilities of discontinued
operations 12,735 13,188
----------- -----------
Total long-term liabilities 4,462,719 4,734,998
----------- -----------
Minority interest 5,993 11,751
Total shareholders' equity 1,449,207 1,411,681
----------- -----------
Total liabilities and shareholders' equity $6,702,170 $6,986,415
=========== ===========
NEIMAN MARCUS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
First Quarter Ended
-----------------------
(in thousands) October 28, October 29,
2006 2005
----------- -----------
(Successor) (Combined)
Revenues $1,039,211 $946,184
Cost of goods sold including buying and
occupancy costs 606,778 563,070
Selling, general and administrative expenses 247,530 232,895
Income from credit card operations (16,371) (11,603)
Depreciation expense 33,175 28,531
Amortization of customer lists 13,564 3,249
Amortization of favorable lease commitments 4,470 1,559
Transaction and other costs - 23,544
Other income (4,210) -
----------- ----------
Operating earnings 154,275 104,939
Interest expense, net 68,818 16,344
----------- --------
Earnings from continuing operations before
income taxes 85,457 88,595
Income taxes 34,002 33,016
----------- ----------
Earnings from continuing operations 51,455 55,579
Loss from discontinued operations, net of
taxes (24,226) (576)
----------- ----------
Net earnings $ 27,229 $ 55,003
=========== ==========
The results of operations have been prepared by comparing the
results of the Successor for the 13 weeks ended October 28, 2006 to
the mathematical combination of the Successor and Predecessor periods
in the 13 weeks ended October 29, 2005. The presentation does not
comply with generally accepted accounting principles, but the Company
believes that it provides a more meaningful method of comparison.
NEIMAN MARCUS, INC.
OTHER OPERATING DATA
(UNAUDITED)
SEGMENTS: First Quarter Ended
-----------------------
(dollars in millions) October 28, October 29,
2006 2005
----------- -----------
(Successor) (Combined)
REVENUES:
Specialty Retail Stores $ 879.9 $ 807.3
Direct Marketing 159.3 138.9
---------- - ----------
Total $1,039.2 $ 946.2
========== = ==========
OPERATING EARNINGS:
Specialty Retail Stores $ 156.6 $ 135.5
Direct Marketing 20.8 14.6
Corporate expenses (9.3) (9.9)
---------- - ----------
ADJUSTED OPERATING EARNINGS $ 168.1 $ 140.2
Amortization of customer lists and favorable
lease commitments (18.0) (4.8)
Non-cash items related to other valuation
adjustments made in connection with the
acquisition - (7.0)
Other income 4.2 -
Transaction and other costs - (23.5)
---------- - ----------
OPERATING EARNINGS $ 154.3 $ 104.9
========== = ==========
The results of operations have been prepared by comparing the
results of the Successor for the 13 weeks ended October 28, 2006 to
the mathematical combination of the Successor and Predecessor periods
in the 13 weeks ended October 29, 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, other income and
transaction and other costs.
Neiman Marcus, 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. Neiman Marcus, 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.
NEIMAN MARCUS, INC.
OTHER OPERATING DATA
(UNAUDITED)
OTHER DATA:
First Quarter Ended
--------------------------
(dollars in millions) October 28, October 29,
2006 2005
----------- ------------
(Successor) (Combined)
Capital Expenditures $ 41 $ 48
Depreciation $ 33 $ 29
Amortization of intangibles $ 18 $ 5
Rent Expense $ 21 $ 19
CONTACT: Neiman Marcus, Inc.
James E. Skinner, 214-757-2954
Senior Vice President and Chief Financial Officer
or
Stacie Shirley, 214-757-2967
Vice President - Finance and Treasurer