EX-99.1 2 a4653887ex991.txt NEIMAN MARCUS PRESS RELEASE FOR 8-K Exhibit 99.1 The Neiman Marcus Group Reports 61 Percent Increase in Third Quarter Earnings DALLAS--(BUSINESS WIRE)--June 2, 2004--The Neiman Marcus Group, Inc. (NYSE:NMG.A)(NYSE:NMG.B) today reported financial results for the third quarter of fiscal year 2004. For the 13 weeks ended May 1, 2004, the Company reported total revenues of $878 million compared to $723 million in the prior year and comparable revenues increased 21.4 percent. Net earnings were $69 million, or $1.40 per diluted share, in the third quarter of fiscal year 2004 compared to $41 million, or $0.87 per diluted share, in the third quarter of fiscal year 2003. For the 13 weeks ended May 1, 2004, earnings per share increased 61 percent from the prior year. For the 39 weeks ended May 1, 2004, total revenues increased to $2.76 billion compared to $2.40 billion in the prior year and comparable revenues increased 14.4 percent. Net earnings were $184 million, or $3.78 per diluted share, for the 39 weeks ended May 1, 2004, compared to $102 million, or $2.14 per diluted share, for the 39 weeks ended May 3, 2003. Earnings before change in accounting principle as described below and excluding the $7.5 million, or $0.15 per diluted share, impact of favorable settlements associated with previous state tax filings recorded in the Company's second quarter of fiscal year 2004, were $177 million or $3.63 per diluted share, for the 39 weeks ended May 1, 2004, compared to $117 million, or $2.45 per diluted share for the 39 weeks ended May 3, 2003. "We achieved exceptional results this quarter, attaining several new performance milestones, including our highest ever quarterly operating income margin and net income," said Burton M. Tansky, President and Chief Executive Officer. Mr. Tansky further stated, "This performance is a result of the many initiatives we have taken over the past few years, including an intense focus on regular price sales growth, disciplined inventory management and active expense control. Though we are very pleased with our results, we remain focused on driving our business to even higher levels to further enhance shareholder value." Business Segments Third quarter revenues for the Specialty Retail Stores segment, which consists of Neiman Marcus Stores and Bergdorf Goodman, were $722 million compared to $591 million in the previous year. Revenues for the third quarter of fiscal year 2004 compared to last year increased 21 percent and 30 percent at Neiman Marcus Stores and Bergdorf Goodman, respectively. Comparable revenues for Neiman Marcus Stores increased 21 percent for the third quarter of fiscal year 2004. Third quarter operating earnings for the Specialty Retail Stores segment were $115 million compared to $68 million in the prior year. Neiman Marcus Direct, the Company's direct marketing division, reported third quarter fiscal year 2004 revenues of $126 million compared to $113 million in the previous year. Operating earnings for Neiman Marcus Direct were $10 million in the third quarter which is relatively flat with the results a year ago. The Company's Other segment includes the operations of the Kate Spade and Laura Mercier brands and corporate expenses. Other Items In the first quarter of fiscal year 2003, the Company adopted the provisions of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets." Based upon the valuation results of its third party appraisal experts, the Company recorded a pretax charge of approximately $24 million in the first quarter of fiscal year 2003 as a result of implementing the fair value model of the new accounting standard. 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 Wednesday, June 2, 2004, beginning at 3:30 p.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 (including statements contained in this release) 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) (in thousands) May 1, May 3, 2004 2003 ----------- ------------ ASSETS ---------------------------------------------- Current assets: Cash and cash equivalents $311,985 $133,670 Undivided interests in NMG Credit Card Master Trust -- 279,556 Accounts receivable, net 599,581 25,132 Merchandise inventories 715,539 719,118 Other current assets 46,372 58,681 ----------- ------------ Total current assets 1,673,477 1,216,157 ----------- ------------ Property and equipment, net 685,928 676,059 Other assets 104,158 107,851 ----------- ------------ Total assets $2,463,563 $2,000,067 =========== ============ LIABILITIES AND SHAREHOLDERS' EQUITY ---------------------------------------------- Current liabilities: Notes payable and current maturities of long-term liabilities $1,237 $1,799 Current portion of borrowings under Credit Card Facility 37,500 -- Accounts payable 234,264 224,945 Accrued liabilities 316,305 293,145 ----------- ------------ Total current liabilities 589,306 519,889 ----------- ------------ Long-term liabilities: Notes and debentures 249,751 249,727 Borrowings under Credit Card Facility 187,500 -- Other long-term liabilities 97,307 87,530 ----------- ------------ Total long-term liabilities 534,558 337,257 ----------- ------------ Minority interest 12,799 9,462 Total shareholders' equity 1,326,900 1,133,459 ----------- ------------ Total liabilities and shareholders' equity $2,463,563 $2,000,067 =========== ============ THE NEIMAN MARCUS GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) Thirteen Weeks Ended Thirty-Nine Weeks Ended -------------------- ----------------------- (in thousands, except per May 1, May 3, May 1, May 3, share data) 2004 2003 2004 2003 ---------- --------- ----------- ----------- Revenues $877,576 $722,917 $2,756,563 $2,395,467 Cost of goods sold including buying and occupancy costs 543,275 463,713 1,768,852 1,572,222 Selling, general and administrative expenses 214,706 187,372 680,827 617,765 --------- --------- ----------- ----------- Operating earnings 119,595 71,832 306,884 205,480 Interest expense, net 4,589 4,245 11,814 12,183 --------- --------- ----------- ----------- Earnings before income taxes, minority interest and change in accounting principle 115,006 67,587 295,070 193,297 Income taxes 44,852 26,020 107,576 74,419 --------- --------- ----------- ----------- Earnings before minority interest and change in accounting principle 70,154 41,567 187,494 118,878 Minority interest in net earnings of subsidiaries (1,305) (437) (3,249) (1,946) --------- --------- ----------- ----------- Earnings before change in accounting principle 68,849 41,130 184,245 116,932 Change in accounting principle -- write-down of intangible assets, net of taxes -- -- -- (14,801) --------- --------- ----------- ----------- Net earnings $68,849 $41,130 $184,245 $102,131 ========= ========= =========== =========== Weighted average number of common and common equivalent shares outstanding: Basic 48,208 47,240 47,929 47,498 ========= ========= =========== =========== Diluted 49,124 47,497 48,806 47,772 ========= ========= =========== =========== Basic earnings per share: Earnings before change in accounting principle $1.43 $0.87 $3.84 $2.46 Change in accounting principle -- write-down of intangible assets, net of taxes -- -- -- (0.31) --------- --------- ----------- ----------- Basic earnings per share $1.43 $0.87 $3.84 $2.15 ========= ========= =========== =========== Diluted earnings per share: Earnings before change in accounting principle $1.40 $0.87 $3.78 $2.45 Change in accounting principle -- write-down of intangible assets, net of taxes -- -- -- (0.31) --------- --------- ----------- ----------- Diluted earnings per share $1.40 $0.87 $3.78 $2.14 ========= ========= =========== =========== THE NEIMAN MARCUS GROUP, INC. OTHER OPERATING DATA (UNAUDITED) SEGMENTS: Thirteen Weeks Ended Thirty-Nine Weeks Ended -------------------- ----------------------- May 1, May 3, May 1, May 3, (in millions) 2004 2003 2004 2003 --------- ---------- ----------- ----------- REVENUES: Specialty Retail Stores $722 $591 $2,230 $1,948 Direct Marketing 126 113 446 388 Other (1) 30 19 81 59 --------- ---------- ----------- ----------- Total $878 $723 $2,757 $2,395 ========= ========== =========== =========== OPERATING EARNINGS: Specialty Retail Stores $115 $68 $279 $186 Direct Marketing 10 10 45 36 Other (1) (5) (6) (17) (16) --------- ---------- ----------- ----------- Total $120 $72 $307 $206 ========= ========== =========== =========== OTHER DATA: Thirteen Weeks Ended Thirty-Nine Weeks Ended -------------------- ----------------------- May 1, May 3, May 1, May 3, (in millions) 2004 2003 2004 2003 ---------- --------- ---------- ------------ Capital Expenditures $35 $16 $81 $81 Depreciation 23 18 69 58 (1) Other includes the results of operations of Kate Spade LLC, Gurwitch Products, LLC and corporate expenses. PRESENTATION OF ACCOUNTS RECEIVABLE: A reconciliation of the outstanding balance of the Company's accounts receivable to the balances recorded by the Company at May 1, 2004, and May 3, 2003, is as follows: May 1, May 3, 2004 2003 --------------- -------------- (in millions) Credit card receivables $570 $505 Less: Sold Interests originally qualifying for Off-Balance Sheet Accounting -- (225) --------------- -------------- 570 280 Other receivables 30 25 --------------- -------------- Total accounts receivable $600 $305 =============== ============== At the end of the third quarter of fiscal year 2004, the Company's entire credit card portfolio was included in accounts receivable in its condensed consolidated balance sheet and the $225 million repayment obligation was shown as a liability. CONTACT: The Neiman Marcus Group, Inc., Dallas James E. Skinner, 214-743-7625 or Stacie Shirley, 214-757-2967