Exhibit 99.1
Neiman Marcus, Inc. Reports Third Quarter Earnings
DALLAS--(BUSINESS WIRE)--June 7, 2007--Neiman Marcus, Inc. today reported
financial results for the third quarter of 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 TPG Capital (formerly 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 39 weeks ended April 28, 2007 to
the mathematical combination of the Successor and Predecessor periods in the 39
weeks ended April 29, 2006. 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 13 weeks ended April 28, 2007, the Company reported total revenues
of $1.07 billion compared to $992.3 million in the prior year. Comparable
revenues increased 6.1 percent. Operating earnings for the third quarter of
fiscal year 2007 were $162.6 million compared to $133.1 million for the third
quarter of fiscal year 2006. Adjusted operating earnings were $180.6 million in
the third quarter of fiscal year 2007 compared to $150.6 million in the third
quarter of fiscal year 2006, an increase of 19.9 percent.
For the 39 weeks ended April 28, 2007, the Company reported total revenues
of $3.4 billion compared to $3.1 billion in the prior year. Comparable revenues
increased 6.6 percent. Operating earnings for the 39 weeks ended April 28, 2007
were $444.6 million compared to $307.7 million for the comparable period a year
ago. Adjusted operating earnings for the 39 weeks ended April 28, 2007 were
$494.6 million compared to $408.8 million for the comparable period a year ago,
an increase of 21.0 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 in the third
quarter of fiscal year 2007 and 2006 of approximately $18.1 million and $18.0
million, respectively. These amortization costs totaled $54.2 million and $41.5
million for the 39 weeks ended April 28, 2007 and April 29, 2006, 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 that resulted in a credit of
approximately $0.5 million in the third quarter of fiscal year 2006 and charges
totaling $36.0 million for the 39 weeks ended April 29, 2006. 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 December 2006, the Company completed both the purchase of the minority
interest and the sale of Kate Spade LLC for pretax net cash proceeds of
approximately $62.1 million. Also, the Company sold its majority interest in
Gurwitch Products, L.L.C. in July 2006 for pretax net cash proceeds of
approximately $40.8 million. 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, June 7, 2007 beginning at 10:00 a.m.
Central Standard 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)
April 28, April 29,
(in thousands) 2007 2006
----------- -----------
(Successor) (Successor)
ASSETS
- -----------------------------------------------
Current assets:
Cash and cash equivalents $176,803 $107,443
Merchandise inventories 908,060 833,881
Other current assets 150,615 104,047
Current assets of discontinued operations - 40,034
----------- -----------
Total current assets 1,235,478 1,085,405
----------- -----------
Property and equipment, net 1,034,228 1,024,732
Goodwill and intangibles, net 4,170,308 4,276,953
Other assets 110,970 132,127
Non-current assets of discontinued operations - 140,797
----------- -----------
Total assets $6,550,984 $6,660,014
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- -----------------------------------------------
Current liabilities:
Accounts payable $297,841 $240,789
Accrued liabilities 416,077 379,909
Notes payable and current maturities of long-
term liabilities 3,686 3,879
Current liabilities of discontinued
operations - 31,752
----------- -----------
Total current liabilities 717,604 656,329
----------- -----------
Long-term liabilities:
Asset-based revolving credit facility - -
Notes and debentures 3,020,858 3,195,663
Deferred income taxes 1,021,524 1,115,216
Other long-term liabilities 239,564 194,979
Non-current liabilities of discontinued
operations - 16,972
----------- -----------
Total long-term liabilities 4,281,946 4,522,830
----------- -----------
Minority interest - 12,810
Total shareholders' equity 1,551,434 1,468,045
----------- -----------
Total liabilities and shareholders' equity $6,550,984 $6,660,014
=========== ===========
NEIMAN MARCUS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
Thirteen Weeks Ended Thirty-nine Weeks Ended
--------------------------- --------------------------
(in thousands) April 28, April 29, April 28, April 29,
2007 2006 2007 2006
----------- --------------- ------------- ------------
(Successor) (Successor) (Successor) (Combined)
Revenues $1,073,374 $992,318 $3,408,421 $3,132,982
Cost of goods
sold including
buying and
occupancy
costs 627,879 589,264 2,084,916 1,974,581
Selling,
general and
administrative
expenses 247,652 235,555 778,767 735,066
Income from
credit card
operations (17,069) (15,136) (51,370) (43,712)
Depreciation
expense 34,255 31,584 101,503 94,271
Amortization of
customer lists 13,621 13,483 40,764 31,116
Amortization of
favorable
lease
commitments 4,469 4,502 13,408 10,389
Transaction and
other costs - - - 23,544
Other income - - (4,210) -
----------- --------------- ------------- ------------
Operating
earnings 162,567 133,066 444,643 307,727
Interest
expense, net 63,787 67,040 198,142 149,430
----------- --------------- ------------- ------------
Earnings from
continuing
operations
before income
taxes 98,780 66,026 246,501 158,297
Income taxes 37,842 25,051 95,932 59,683
----------- --------------- ------------- ------------
Earnings from
continuing
operations 60,938 40,975 150,569 98,614
Loss from
discontinued
operations,
net of taxes (1,390) (428) (22,771) (20)
----------- --------------- ------------- ------------
Net earnings $59,548 $40,547 $127,798 $98,594
=========== =============== ============= ============
The results of operations have been prepared by comparing the results of
the Successor for the thirty-nine weeks ended April 28, 2007 to the mathematical
combination of the Successor and Predecessor periods in the thirty-nine weeks
ended April 29, 2006. 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: Thirteen Weeks Ended Thirty-nine Weeks Ended
------------------------- -----------------------
(dollars in April 28, April 29, April 28, April 29,
millions) 2007 2006 2007 2006
----------- ------------- ----------- -----------
(Successor) (Successor) (Successor) (Combined)
REVENUES:
Specialty Retail
Stores $908.0 $840.2 $2,857.9 $2,629.0
Direct Marketing 165.4 152.1 550.5 504.0
----------- ------------- ------------ ----------
Total $1,073.4 $992.3 $3,408.4 $3,133.0
=========== ============= ============ ==========
OPERATING EARNINGS:
Specialty Retail
Stores $168.1 $142.6 $446.2 $372.4
Direct Marketing 29.8 23.0 89.7 75.5
Corporate expenses (17.3) (15.0) (41.3) (39.1)
----------- ------------- ------------ ----------
ADJUSTED
OPERATING
EARNINGS $180.6 $150.6 $494.6 $408.8
Amortization of
customer lists
and favorable
lease commitments (18.1) (18.0) (54.2) (41.5)
Non-cash items
related to other
valuation
adjustments made
in connection
with the
acquisition - 0.5 - (36.0)
Other income - - 4.2 -
Transaction and
other costs - - - (23.5)
----------- ------------- ------------ ----------
OPERATING
EARNINGS $162.6 $133.1 $444.6 $307.7
=========== ============= ============ ==========
The results of operations have been prepared by comparing the results of
the Successor for the thirty-nine weeks ended April 28, 2007 to the mathematical
combination of the Successor and Predecessor periods in the thirty-nine weeks
ended April 29, 2006. 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:
Thirteen Weeks Ended Thirty-nine Weeks Ended
----------------------- -----------------------
(dollars in millions) April 28, April 29, April 28, April 29,
2007 2006 2007 2006
----------- ----------- ----------- -----------
(Successor) (Successor) (Successor) (Combined)
Capital Expenditures $33 $38 $104 $133
Depreciation $34 $32 $102 $94
Amortization of
intangibles $18 $18 $54 $42
Rent Expense $21 $20 $66 $60
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