Exhibit 99.1
Neiman Marcus, Inc. Reports Fourth Quarter and
Fiscal Year Earnings
DALLAS--(BUSINESS WIRE)--September 26, 2007--Neiman Marcus, Inc.
today reported financial results for the fourth 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 52 weeks ended July
28, 2007 to the mathematical combination of the Successor and
Predecessor periods in the 52 weeks ended July 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-K and
other information available from the Securities and Exchange
Commission.
This release contains information regarding the Company's adjusted
operating earnings and EBITDA, both of which are non-GAAP financial
measures (as described in the footnotes to the accompanying condensed
consolidated statements of earnings and related information). Neiman
Marcus, Inc. believes reporting adjusted operating earnings and EBITDA
are a more meaningful representation of the Company's on-going
economic performance and therefore uses these metrics 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 fourth quarter of fiscal year 2007, the Company reported
total revenues of $981.7 million compared to $897.1 million in the
prior year. Comparable revenues increased 7.0 percent. Operating
earnings for the fourth quarter of fiscal year 2007 were $32.2 million
compared to $21.2 million for the fourth quarter of fiscal year 2006.
Adjusted operating earnings were $55.8 million in the fourth quarter
of fiscal year 2007 compared to $37.8 million in the fourth quarter of
fiscal year 2006, an increase of 47.6 percent.
For fiscal year 2007, the Company reported total revenues of $4.4
billion compared to $4.0 billion in the prior year. Comparable
revenues increased 6.7 percent. Operating earnings for fiscal year
2007 were $476.8 million compared to $329.0 million for the comparable
period a year ago. Adjusted operating earnings for fiscal year 2007
were $550.4 million compared to $446.5 million for the comparable
period a year ago, an increase of 23.3 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 both the fourth quarters of fiscal year 2007 and 2006 of
approximately $18.1 million. These amortization costs totaled $72.3
million and $59.6 million for the 52 weeks ended July 28, 2007 and
July 29, 2006, respectively. The Company also recorded other net
expense of $5.5 million in the fourth quarter of fiscal year 2007
which includes an $11.5 million pretax impairment charge related to
the writedown to fair value in the net carrying value of the Horchow
tradename, offset by $6.0 million of other income related to aged,
non-escheatable gift cards. 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. These three items resulted in a net other
expense of $1.3 million for fiscal year 2007. The Company also
recorded other non-cash items related to various valuation adjustments
that resulted in a credit of approximately $1.5 million in the fourth
quarter of fiscal year 2006 and charges totaling $34.4 million for the
52 weeks ended July 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 Wednesday, September 26, 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)
July 28, July 29,
(in thousands) 2007 2006
----------- -----------
(Successor) (Successor)
ASSETS
- ----------------------------------------------
Current assets:
Cash and cash equivalents $141,207 $223,740
Merchandise inventories 918,269 793,621
Other current assets 155,493 101,878
Current assets of discontinued operations - 16,617
----------- -----------
Total current assets 1,214,969 1,135,856
----------- -----------
Property and equipment, net 1,043,711 1,030,279
Goodwill and intangibles, net 4,140,019 4,223,757
Other assets 102,300 125,323
Non-current assets of discontinued operations - 92,746
----------- -----------
Total assets $6,500,999 $6,607,961
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ----------------------------------------------
Current liabilities:
Accounts payable $361,299 $300,439
Accrued liabilities 403,162 377,968
Other current liabilities 3,426 3,887
Current liabilities of discontinued
operations - 16,764
----------- -----------
Total current liabilities 767,887 699,058
----------- -----------
Long-term liabilities:
Asset-based revolving credit facility - -
Notes and debentures 2,945,906 3,195,711
Deferred income taxes 1,002,982 1,048,925
Other long-term liabilities 226,212 217,511
Non-current liabilities of discontinued
operations - 12,775
----------- -----------
Total long-term liabilities 4,175,100 4,474,922
----------- -----------
Minority interest in discontinued operations - 6,314
Total shareholders' equity 1,558,012 1,427,667
----------- -----------
Total liabilities and shareholders' equity $6,500,999 $6,607,961
=========== ===========
NEIMAN MARCUS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
Fourth Quarter Ended
-----------------------------
(in thousands) July 28, July 29,
2007 2006
------------ ----------------
(Successor) (Successor)
Revenues $ 981,655 $ 897,128
Cost of goods sold including buying and
occupancy costs 668,898 616,398
Selling, general and administrative
expenses 236,377 222,919
Income from credit card program (14,352) (13,459)
Depreciation expense 34,964 31,888
Amortization of customer lists 13,622 13,742
Amortization of favorable lease
commitments 4,469 4,395
Transaction and other costs - -
Other expense, net 5,519 -
------------ ----------------
Operating earnings 32,158 21,245
Interest expense, net 61,661 67,323
------------ ---------------
(Loss) earnings from continuing
operations before income taxes (29,503) (46,078)
Income taxes (13,637) (18,866)
------------ ----------------
(Loss) earnings from continuing
operations (15,866) (27,212)
Loss from discontinued operations, net
of taxes - (14,773)
------------ ----------------
Net (loss) earnings $ (15,866) $ (41,985)
============ ================
Fiscal Year Ended
----------------------------
(in thousands) July 28, 2007 July 29,
2006
-------------- -------------
(Successor) (Combined)
Revenues $ 4,390,076 $ 4,030,110
Cost of goods sold including buying and
occupancy costs 2,753,814 2,590,980
Selling, general and administrative
expenses 1,015,140 957,987
Income from credit card program (65,723) (57,171)
Depreciation expense 136,468 126,159
Amortization of customer lists 54,387 44,857
Amortization of favorable lease
commitments 17,878 14,783
Transaction and other costs - 23,544
Other expense, net 1,309 -
-------------- -------------
Operating earnings 476,803 328,971
Interest expense, net 259,805 216,755
-------------- ------------
(Loss) earnings from continuing
operations before income taxes 216,998 112,216
Income taxes 82,295 40,821
-------------- -------------
(Loss) earnings from continuing
operations 134,703 71,395
Loss from discontinued operations, net of
taxes (22,771) (14,786)
-------------- -------------
Net (loss) earnings $ 111,932 $ 56,609
============== =============
The results of operations have been prepared by comparing the
results of the Successor for the fifty-two weeks ended July 28, 2007
to the mathematical combination of the Successor and Predecessor
periods in the fifty-two weeks ended July 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: Fourth Quarter Ended Fiscal Year Ended
------------------------- ------------------------
(dollars in July 28, July 29, July 28, July 29,
millions) 2007 2006 2007 2006
------------ ------------ ------------ -----------
(Successor) (Successor) (Successor) (Combined)
REVENUES:
Specialty Retail
Stores $ 816.7 $ 745.8 $ 3,674.6 $ 3,374.8
Direct Marketing 165.0 151.3 715.5 655.3
------------ ------------ ------------- ----------
Total $ 981.7 $ 897.1 $ 4,390.1 $ 4,030.1
============ ============ ============= ==========
OPERATING EARNINGS:
Specialty Retail
Stores $ 44.4 $ 31.3 $ 490.6 $ 403.7
Direct Marketing 26.3 22.7 116.0 98.2
Corporate
expenses (14.9) (16.2) (56.2) (55.4)
------------ ------------ ------------- ----------
ADJUSTED
OPERATING
EARNINGS $ 55.8 $ 37.8 $ 550.4 $ 446.5
Amortization of
customer lists
and favorable
lease
commitments (18.1) (18.1) (72.3) (59.6)
Non-cash items
related to other
valuation
adjustments made
in connection
with the
acquisition - 1.5 - (34.4)
Other expense,
net (5.5) - (1.3) -
Transaction and
other costs - - - (23.5)
------------ ------------ ------------- ----------
OPERATING
EARNINGS $ 32.2 $ 21.2 $ 476.8 $ 329.0
============ ============ ============= ==========
The results of operations have been prepared by comparing the
results of the Successor for the fifty-two weeks ended July 28, 2007
to the mathematical combination of the Successor and Predecessor
periods in the fifty-two weeks ended July 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 expense 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:
Fourth Quarter Ended Fiscal Year Ended
------------------------- -------------------------
(dollars in July 28, July 29, July 28, July 29,
millions) 2007 2006 2007 2006
------------ ------------ ------------ ------------
(Successor) (Successor) (Successor) (Combined)
Capital
Expenditures $ 44 $ 31 $ 148 $ 164
Depreciation $ 35 $ 32 $ 136 $ 126
Amortization of
intangibles $ 18 $ 18 $ 72 $ 60
Rent Expense $ 21 $ 20 $ 88 $ 82
EBITDA $ 686 $ 515
The results of operations have been prepared by comparing the
results of the Successor for the fifty-two weeks ended July 28, 2007
to the mathematical combination of the Successor and Predecessor
periods in the fifty-two weeks ended July 29, 2006.
EBITDA represents earnings from continuing operations excluding
income taxes, interest, depreciation and amortization. We present the
non-GAAP financial measure EBITDA because we use this measure to
monitor and evaluate the performance of our business and believe the
presentation of this measure will enhance investors' ability to
analyze trends in our business, evaluate our performance relative to
other companies in our industry and evaluate our ability to service
our debt. In addition, we use EBITDA as a component of the measurement
of incentive compensation.
EBITDA is not a presentation made in accordance with GAAP and this
computation may vary from others in the industry. In addition, EBITDA
contains some, but not all, adjustments that are taken into account in
the calculation of the components of various covenants in the
indentures governing the Company's senior secured Asset-Based
Revolving Credit Facility, Senior Secured Term Loan Facility, Senior
Notes and Senior Subordinated Notes. EBITDA should not be considered
as an alternative to operating earnings or net earnings as measures of
operating performance or cash flows as measures of liquidity. EBITDA
has important limitations as an analytical tool and should not be
considered in isolation, or as a substitute for analysis of the
Company's results as reported under GAAP. For example, EBITDA does not
reflect cash expenditures, or future requirements, for capital
expenditures or contractual commitments; does not reflect changes in,
or cash requirements, for working capital needs; does not reflect
interest expense, or the cash requirements necessary to service
interest or principal payments, on the Company's debt; excludes tax
payments that represent a reduction in cash available; and does not
reflect any cash requirements for assets being depreciated and
amortized that may have to be replaced in the future.
NEIMAN MARCUS, INC.
OTHER OPERATING DATA
(UNAUDITED)
The following table reconciles earnings from continuing operations as
reflected in the Company's consolidated statements of earnings
prepared in accordance with GAAP to EBITDA:
Fiscal Year Ended
------------------------
(dollars in millions) July 28, July 29,
2007 2006
------------ -----------
(Successor) (Combined)
Earnings from continuing operations $ 134.7 $ 71.4
Income taxes 82.3 40.8
Interest expense (income), net 259.8 216.8
Depreciation 136.5 126.2
Amortization of customer lists and
favorable lease commitments
72.3 59.6
------------ -----------
EBITDA $ 685.6 $ 514.8
============ ===========
For explanation of items included in EBITDA, see "Other Items."
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