EX-99.1 2 a4834404ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 The Neiman Marcus Group Reports Record Second Quarter Earnings DALLAS--(BUSINESS WIRE)--March 2, 2005--The Neiman Marcus Group, Inc. (NYSE:NMG.A)(NYSE:NMG.B) today reported financial results for the second quarter of fiscal year 2005. For the 13 weeks ended January 29, 2005, the Company reported total revenues of $1.13 billion compared to $1.05 billion in the prior year. Net earnings were $71 million, or $1.43 per diluted share in the second quarter of fiscal year 2005 compared to $59 million, or $1.21 per diluted share, in the second quarter of fiscal year 2004. Excluding a $7.5 million, or $0.15 per diluted share, impact of favorable settlements associated with previous state tax filings, adjusted earnings per diluted share were $1.06 in the second quarter of fiscal year 2004. On an adjusted basis, earnings improved 37 percent from the second quarter of fiscal year 2004 to the second quarter of fiscal year 2005. See the attached "Reconciliation of GAAP Net Earnings to Non-GAAP Adjusted Earnings" for the reconciliation of adjusted earnings and the Company's statements regarding the use of this non-GAAP financial measure. For the 26 weeks ended January 29, 2005, total revenues increased to $2.04 billion compared to $1.87 billion in the prior year. Net earnings were $135 million, or $2.73 per diluted share, for the 26 weeks ended January 29, 2005 compared to $115 million, or $2.37 per diluted share, for the 26 weeks ended January 31, 2004. Excluding the loss on disposition of Chef's Catalog recorded in the first quarter of fiscal year 2005 and the $7.5 million, or $0.15 per diluted share, tax impact in the second quarter of fiscal year 2004 described above, adjusted earnings were $144 million, or $2.92 per diluted share, for the 26 weeks ended January 29, 2005, compared to $108 million or $2.22 per diluted share, for the 26 weeks ended January 31, 2004, which represents a 33 percent improvement. "Our second quarter financial results confirm our strong position in the luxury market. This quarter represents our sixth consecutive quarter of double digit comparable store sales increases," said Burton M. Tansky, President and Chief Executive Officer. "The key to our successful second quarter included our continued focus on full price selling and inventory management which led to high sales productivity and improved gross margins." Mr. Tansky further added, "We believe these results further demonstrate our ability to deliver strong value to our shareholders. And, although we have achieved numerous records to date, we believe there are additional opportunities for continued sales and profit growth." Business Segments Second quarter revenues for the Specialty Retail Stores segment, which consists of Neiman Marcus Stores and Bergdorf Goodman, were $912 million, compared to $832 million in the previous year. Comparable revenues for the Specialty Retail Stores segment increased 9.6 percent for the second quarter of fiscal year 2005. Revenues for the second quarter of fiscal year 2005 compared to the second quarter of fiscal year 2004 increased 9.0 percent and 14.5 percent at Neiman Marcus Stores and Bergdorf Goodman, respectively. Comparable revenues for Neiman Marcus Stores increased 9.0 percent for the second quarter of fiscal year 2005. Second quarter fiscal year 2005 operating earnings for the Specialty Retail Stores segment were $99 million compared to $73 million in the second quarter of fiscal year 2004. Neiman Marcus Direct, the Company's direct marketing operation, reported second quarter fiscal year 2005 revenues of $188 million compared to $191 million in the previous year. Excluding Chef's Catalog, revenues for the second quarter of fiscal year 2004 were $162 million. On a comparable basis, excluding Chef's Catalog, revenues increased 15.8 percent for the second quarter of fiscal year 2005. Operating earnings for Neiman Marcus Direct increased to $28 million in the second quarter of fiscal year 2005 from $25 million a year ago. The Company's Other segment includes the operations of the Kate Spade and Laura Mercier brands and corporate expenses. Lease Accounting The Company periodically receives allowances from developers related to the construction of new stores. The Company has historically recorded these allowances as a reduction of its capital expenditures and, as a result, the carrying values of its fixed assets. Like other retailers, the Company has reviewed its accounting for leases and after consultation with Deloitte & Touche LLP, the Company's independent registered public accounting firm, the Company has changed the classification of these developer funds from a reduction of fixed assets to a deferred real estate credit on the balance sheet. The deferred real estate credit will be amortized over the lease term which is consistent with the amortization period for the constructed assets. As a result of the change in classification, property and equipment and long-term liabilities have been increased by $69 million at January 29, 2005 and $73 million at January 31, 2004. Other Items The Company sold its Chef's Catalog direct marketing business in November 2004. Comparable revenues have been adjusted to exclude the sales of Chef's Catalog prior to its disposition. 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, March 2, 2004 beginning at 4:00 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) January 29, January 31, 2005 2004 ----------- ----------- ASSETS ---------------------------------------------- Current assets: Cash and cash equivalents $377,857 $251,658 Undivided interests in NMG Credit Card Master Trust -- 164,652 Accounts receivable 659,015 321,005 Merchandise inventories 726,169 658,177 Other current assets 79,679 75,985 ----------- ----------- Total current assets 1,842,720 1,471,477 ----------- ----------- Property and equipment, net 793,146 746,816 Other assets 119,327 112,380 ----------- ----------- Total assets $2,755,193 $2,330,673 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY ---------------------------------------------- Current liabilities: Notes payable and current maturities of long-term liabilities $2,200 $845 Accounts payable 241,946 227,121 Accrued liabilities 327,435 304,103 Current portion of borrowings under Credit Card Facility 225,000 -- ----------- ----------- 796,581 532,069 ----------- ----------- Long-term liabilities: Notes and debentures 249,768 249,745 Borrowings under Credit Card Facility -- 111,326 Other long-term liabilities 187,569 163,561 ----------- ----------- Total long-term liabilities 437,337 524,632 ----------- ----------- Minority interest 11,664 10,729 Total shareholders' equity 1,509,611 1,263,243 ----------- ----------- Total liabilities and shareholders' equity $2,755,193 $2,330,673 =========== =========== THE NEIMAN MARCUS GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) Thirteen Weeks Ended Twenty-Six Weeks Ended ----------------------- ----------------------- (in thousands, except January 29, January 31, January 29, January 31, per share data) 2005 2004 2005 2004 ----------- ----------- ----------- ----------- Revenues $1,129,225 $1,048,367 $2,037,161 $1,867,136 Cost of goods sold including buying and occupancy costs 761,989 718,986 1,316,699 1,229,336 Selling, general and administrative expenses 247,576 239,380 475,539 450,511 Loss on disposition of Chef's Catalog -- -- 15,348 -- ----------- ----------- ----------- ----------- Operating earnings 119,660 90,001 229,575 187,289 Interest expense, net 3,978 3,764 8,015 7,225 ----------- ----------- ----------- ----------- Earnings before income taxes and minority interest 115,682 86,237 221,560 180,064 Income taxes 44,326 26,132 85,301 62,724 ----------- ----------- ----------- ----------- Earnings before minority interest 71,356 60,105 136,259 117,340 Minority interest in net earnings of subsidiaries (769) (934) (1,556) (1,944) ----------- ----------- ----------- ----------- Net earnings $70,587 $59,171 $134,703 $115,396 =========== =========== =========== =========== Weighted average number of common and common equivalent shares outstanding: Basic 48,309 47,954 48,268 47,789 =========== =========== =========== =========== Diluted 49,454 48,897 49,293 48,647 =========== =========== =========== =========== Earnings per share: Basic $1.46 $1.23 $2.79 $2.41 ----------- ----------- ----------- ----------- Diluted $1.43 $1.21 $2.73 $2.37 =========== =========== =========== =========== THE NEIMAN MARCUS GROUP, INC. OTHER OPERATING DATA (UNAUDITED) SEGMENTS: Thirteen Twenty-Six Weeks Ended Weeks Ended --------------- --------------- (in millions) January January January January 29, 31, 29, 31, 2005 2004 2005 2004 ------- ------- ------- ------- REVENUES: Specialty Retail Stores $912 $832 $1,649 $1,496 Direct Marketing 188 191 328 320 Other (1) 29 25 60 51 ------- ------- ------- ------- Total $1,129 $1,048 $2,037 $1,867 ======= ======= ======= ======= OPERATING EARNINGS: (LOSSES) Specialty Retail Stores $99 $73 $219 $164 Direct Marketing 28 25 39 35 Other (1) (7) (8) (13) (12) Loss on disposition of Chef's Catalog -- -- (15) -- ------- ------- ------- ------- Total $120 $90 $230 $187 ======= ======= ======= ======= OTHER DATA: Thirteen Twenty-Six Weeks Ended Weeks Ended --------------- --------------- (in millions) January January January January 29, 31, 29, 31, 2005 2004 2005 2004 ------- ------- ------- ------- Capital Expenditures $46 $31 $81 $53 Depreciation 28 27 51 48 (1) Other includes the results of operations of Kate Spade LLC, Gurwitch Products, LLC and corporate expenses. THE NEIMAN MARCUS GROUP, INC. RECONCILIATION OF GAAP NET EARNINGS TO NON-GAAP ADJUSTED EARNINGS (UNAUDITED) Thirteen Weeks Twenty-Six Weeks Ended Ended ----------------- ------------------- (in thousands, except per share January January January January data) 29, 31, 29, 31, 2005 2004 2005 2004 -------- -------- --------- --------- Net earnings (GAAP) $70,587 $59,171 $134,703 $115,396 Loss on disposition of Chef's Catalog, net of taxes -- -- 9,288 -- Effect of favorable tax settlements -- (7,500) -- (7,500) -------- -------- --------- --------- Adjusted earnings (Non-GAAP) $70,587 $51,671 $143,991 $107,896 ======== ======== ========= ========= Diluted earnings per share (GAAP) $1.43 $1.21 $2.73 $2.37 Loss on disposition of Chef's Catalog, net of taxes -- -- 0.19 -- Effect of favorable tax settlements -- (0.15) -- (0.15) -------- -------- --------- --------- Adjusted earnings per share (Non-GAAP) $1.43 $1.06 $2.92 $2.22 ======== ======== ========= ========= The Neiman Marcus Group, Inc. believes reporting adjusted earnings is a more accurate representation of the Company's on-going economic performance and therefore uses adjusted reporting internally to evaluate and manage the Company's operations. The Neiman Marcus Group, 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 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. CONTACT: The Neiman Marcus Group, Inc., Dallas James E. Skinner, 214-743-7625 or Stacie Shirley, 214-757-2967