Exhibit 99.1
Neiman Marcus, Inc. Reports First Quarter Earnings
DALLAS--(BUSINESS WIRE)--Dec. 5, 2007--Neiman Marcus, Inc. today
reported financial results for the first quarter of fiscal year 2008.
This release contains information regarding the Company's adjusted
operating earnings, EBITDA and adjusted EBITDA, all 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, EBITDA and adjusted EBITDA is 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 first quarter of fiscal year 2008, the Company reported
total revenues of $1.13 billion compared to $1.04 billion in the prior
year. Comparable revenues increased 6.5 percent. Operating earnings
for the first quarter of fiscal year 2008 were $189.7 million compared
to $154.3 million for the first quarter of fiscal year 2007. Adjusted
operating earnings were $175.2 million in the first quarter of fiscal
year 2008 compared to $168.1 million in the first quarter of fiscal
year 2007.
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
The Company recorded other income of $32.5 million in the first
quarter of fiscal year 2008 which represents a one-time pension
curtailment gain as a result of the Company's decision to freeze
pension and retirement benefits as of December 31, 2007. 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.
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. The Company's financial
statements reflect Kate Spade LLC 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, December 5, 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)
October 27, October 28,
(in thousands) 2007 2006
----------- -----------
ASSETS
- ----------------------------------------------
Current assets:
Cash and cash equivalents $ 80,556 $ 159,430
Merchandise inventories 1,085,511 971,302
Other current assets 165,110 148,220
Current assets of discontinued operations - 16,354
----------- -----------
Total current assets 1,331,177 1,295,306
----------- -----------
Property and equipment, net 1,057,994 1,038,138
Goodwill and intangible assets, net 4,131,294 4,205,723
Other assets 91,250 109,791
Non-current assets of discontinued operations - 79,297
----------- -----------
Total assets $ 6,611,715 $ 6,728,255
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ----------------------------------------------
Current liabilities:
Accounts payable $ 350,365 $ 346,297
Accrued liabilities 442,642 431,295
Other current liabilities 3,470 4,179
Current liabilities of discontinued
operations - 28,565
----------- -----------
Total current liabilities 796,477 810,336
----------- -----------
Long-term liabilities:
Long-term debt 2,945,955 3,195,760
Deferred income taxes 982,492 1,031,959
Other long-term liabilities 261,074 222,265
Non-current liabilities of discontinued
operations - 12,735
----------- -----------
Total long-term liabilities 4,189,521 4,462,719
----------- -----------
Minority interest in discontinued operations - 5,993
Total shareholders' equity 1,625,717 1,449,207
----------- -----------
Total liabilities and shareholders' equity $ 6,611,715 $ 6,728,255
=========== ===========
NEIMAN MARCUS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
First Quarter Ended
------------------------
October 27, October 28,
(in thousands) 2007 2006
----------- -----------
Revenues $1,132,243 $1,039,211
Cost of goods sold including buying and
occupancy costs 667,137 606,778
Selling, general and administrative expenses 271,975 247,530
Income from credit card program (17,294) (16,371)
Depreciation expense 35,135 33,175
Amortization of customer lists 13,611 13,564
Amortization of favorable lease commitments 4,385 4,470
Other income (32,450) (4,210)
----------- -----------
Operating earnings 189,744 154,275
Interest expense, net 61,223 68,818
----------- -----------
Earnings from continuing operations before
income taxes 128,521 85,457
Income taxes 49,763 34,002
----------- -----------
Earnings from continuing operations 78,758 51,455
Loss from discontinued operations, net of
taxes - (24,226)
----------- -----------
Net earnings $ 78,758 $ 27,229
=========== ===========
NEIMAN MARCUS, INC.
OTHER OPERATING DATA
(UNAUDITED)
SEGMENTS: First Quarter Ended
------------------------
(dollars in millions) October 27, October 28,
2007 2006
REVENUES:
Specialty Retail Stores $ 961.6 $ 879.9
Direct Marketing 170.6 159.3
----------- -----------
Total $ 1,132.2 $ 1,039.2
=========== ===========
OPERATING EARNINGS:
Specialty Retail Stores $ 165.6 $ 156.6
Direct Marketing 23.2 20.8
Corporate (13.6) (9.3)
----------- -----------
ADJUSTED OPERATING EARNINGS $ 175.2 $ 168.1
Amortization of customer lists and
favorable lease commitments (18.0) (18.0)
Other income 32.5 4.2
----------- -----------
OPERATING EARNINGS $ 189.7 $ 154.3
=========== ===========
Adjusted operating earnings represents operating earnings
excluding amortization of customer lists and favorable lease
commitments and other income.
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 operating 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
------------------------
October 27, October 28,
(dollars in millions) 2007 2006
----------- -----------
Capital expenditures $ 46 $ 41
Depreciation $ 35 $ 33
Amortization of intangibles $ 18 $ 18
Rent Expense $ 23 $ 21
EBITDA $ 243 $ 206
Adjusted EBITDA $ 210 $ 206
For an explanation of EBITDA and Adjusted EBITDA, see "Non-GAAP
Financial Measure."
NEIMAN MARCUS, INC.
NON-GAAP FINANCIAL MEASURE
(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 and Adjusted EBITDA:
First Quarter Ended
------------------------
October 27, October 28,
(dollars in millions) 2007 2006
----------- -----------
Earnings from continuing operations $ 78.8 $ 51.5
Income taxes 49.8 34.0
Interest expense, net 61.2 68.8
Depreciation 35.1 33.2
Amortization of customer lists and
favorable lease commitments 18.0 18.0
----------- -----------
EBITDA 242.9 205.5
Non-cash gain on curtailment of defined
benefit retirement obligations (32.5) -
----------- -----------
Adjusted EBITDA $ 210.4 $ 205.5
=========== ===========
We present the non-GAAP financial measures EBITDA and Adjusted
EBITDA because we use these measures to monitor and evaluate the
performance of our business and believe the presentation of these
measures 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 and Adjusted EBITDA as components of the measurement of
incentive compensation.
EBITDA and Adjusted EBITDA are not presentations made in
accordance with GAAP and this computation may vary from others in the
industry. In addition, EBITDA and Adjusted EBITDA contain 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 and Adjusted EBITDA should not be considered as
alternatives to operating earnings or net earnings as measures of
operating performance or cash flows as measures of liquidity. EBITDA
and Adjusted EBITDA have important limitations as analytical tools 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
and Adjusted EBITDA do not reflect cash expenditures, or future
requirements, for capital expenditures or contractual commitments; do
not reflect changes in, or cash requirements, for working capital
needs; do not reflect our considerable interest expense, or the cash
requirements necessary to service interest or principal payments, on
the Company's debt; exclude tax payments that represent a reduction in
cash available; and do not reflect any cash requirements for assets
being depreciated and amortized that may have to be replaced in the
future.
CONTACT: Neiman Marcus, Inc.
James E. Skinner, 214-757-2954
Executive Vice President and
Chief Financial Officer
or
Stacie Shirley, 214-757-2967
Vice President - Finance and Treasurer