EX-99.1 2 a5166348ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 The Neiman Marcus Group Reports Third Quarter Earnings DALLAS--(BUSINESS WIRE)--June 8, 2006--The Neiman Marcus Group, Inc. today reported financial results for the third quarter of fiscal year 2006. On October 6, 2005, the Company announced the completion of the acquisition of Neiman Marcus by an investor group led by Texas Pacific Group and Warburg Pincus LLC. The accompanying 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 for the fiscal year-to-date period have been prepared by comparing the mathematical combination of the Successor and Predecessor periods in the 39 weeks ended April 29, 2006 to the results of the Predecessor for the 39 weeks ended April 30, 2005. 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. The Neiman Marcus Group, 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 29, 2006, the Company reported total revenues of $1.0 billion compared to $933.4 million in the prior year. Comparable revenues increased 6.8 percent. Operating earnings for the third quarter of fiscal 2006 were $132.7 million compared to $134.7 million for the third quarter of fiscal year 2005. Adjusted operating earnings were $151.0 million in the third quarter of fiscal year 2006 compared to $134.7 million in the third quarter of fiscal year 2005, an increase of 12.1 percent. For the 39 weeks ended April 29, 2006, the Company reported total revenues of $3.2 billion compared to $3.0 billion in the prior year. Comparable revenues increased 7.1 percent. Operating earnings for the 39 weeks ended April 29, 2006 were $309.3 million compared to $364.2 million for the comparable period a year ago. Adjusted operating earnings for the 39 weeks ended April 29, 2006 were $413.4 million compared to $379.5 million for the comparable period a year ago, an increase of 8.9 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 during the third quarter of fiscal year 2006 and the thirty-nine weeks ended April 29, 2006 of approximately $18.2 million and $42.0 million, respectively. The Company recorded non-cash charges related to various valuation adjustments during the third quarter of fiscal year 2006 and the thirty-nine weeks ended April 29, 2006 of approximately $0.1 million and $38.6 million, respectively. 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. The Company sold its Chef's Catalog direct marketing business in November 2004 and recorded a loss in connection with the sale of approximately $15.3 million in the first quarter of fiscal year 2005. 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 Thursday, June 8, 2006 beginning at 10:00 a.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 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) April 29, April 30, (in thousands) 2006 2005 ----------- ------------- (Successor) (Predecessor) ASSETS ------ Current assets: Cash and cash equivalents $108,982 $337,589 Restricted cash - 37,500 Accounts receivable, net of allowance 56,744 666,455 Merchandise inventories 854,979 788,915 Other current assets 64,700 49,715 ----------- ------------- Total current assets 1,085,405 1,880,174 ----------- ------------- Property and equipment, net 1,045,184 821,810 Goodwill and intangibles, net 4,396,417 71,517 Other assets 133,008 66,305 ----------- ------------- Total assets $6,660,014 $2,839,806 =========== ============= LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Current liabilities: Accounts payable $251,444 $246,971 Accrued liabilities 389,756 352,526 Notes payable and current maturities of long-term liabilities 15,129 200 Borrowings under Credit Card Facility - 187,500 ----------- ------------- Total current liabilities 656,329 787,197 ----------- ------------- Long-term liabilities: Notes and debentures 3,195,663 249,773 Deferred income taxes 1,129,899 33,614 Other long-term liabilities 197,268 173,929 ----------- ------------- Total long-term liabilities 4,522,830 457,316 ----------- ------------- Minority interest 12,810 13,498 Total shareholders' equity 1,468,045 1,581,795 ----------- ------------- Total liabilities and shareholders' equity $6,660,014 $2,839,806 =========== ============= THE NEIMAN MARCUS GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) Thirteen Weeks Ended Thirty-Nine Weeks Ended ---------------------------- -------------------------- (in thousands) April 29, April 30, April 29, April 30, 2006 2005 2006 2005 ------------ ------------ ----------- ------------- (Successor) (Predecessor) (Combined) (Predecessor) Revenues $ 1,027,009 $ 933,372 $ 3,234,863 $ 2,970,533 Cost of goods sold including buying and occupancy costs 602,957 549,740 2,012,954 1,816,602 Selling, general and administrative expenses 255,380 240,396 792,825 747,432 Income from credit card operations, net (15,136) (19,030) (43,712) (52,414) Depreciation expense 32,913 27,614 97,937 79,338 Amortization of intangible assets 13,715 - 31,652 - Amortization of favorable lease commitments 4,502 - 10,389 - Transaction and other costs - - 23,544 - Loss on disposition of Chef's Catalog - - - 15,348 ------------ ------------ ----------- -------------- Operating earnings 132,678 134,652 309,274 364,227 Interest expense, net 67,216 2,933 149,760 10,948 ------------ ------------ ----------- ------------- Earnings before income taxes and minority interest 65,462 131,719 159,514 353,279 Income taxes 24,953 50,713 60,398 136,014 ------------ ------------ ----------- -------------- Earnings before minority interest 40,509 81,006 99,116 217,265 Minority interest in net loss (earnings) of Subsidiaries 38 (1,231) (522) (2,787) ------------ ------------ ----------- -------------- Net earnings $ 40,547 $ 79,775 $ 98,594 $ 214,478 ============ ============== =========== ============== The results of operations have been prepared by comparing the mathematical combination of the Successor and Predecessor periods in the thirty-nine weeks ended April 29, 2006 to the thirty-nine weeks ended April 30, 2005. The presentation does not comply with generally accepted accounting principles, but the Company believes that it provides a more meaningful method of comparison. THE NEIMAN MARCUS GROUP, INC. OTHER OPERATING DATA (UNAUDITED) SEGMENTS: Thirteen Weeks Ended Thirty-Nine Weeks Ended --------------------------- ------------------------ (dollars in April 29, April 30, April 29, April 30, millions) 2006 2005 2006 2005 ----------- ------------- ---------- ------------- (Successor) (Predecessor) (Combined) (Predecessor) REVENUES: Specialty Retail Stores $ 840.2 $ 766.9 $ 2,629.0 $ 2,415.7 Direct Marketing 152.1 130.5 504.0 458.5 Other (1) 34.7 36.0 101.9 96.3 ---------- ----------- ----------- ----------- Total $ 1,027.0 $ 933.4 $ 3,234.9 $ 2,970.5 ========== =========== =========== =========== OPERATING EARNINGS: Specialty Retail Stores $ 142.6 $ 125.8 $ 372.4 $ 343.8 Direct Marketing 23.0 16.8 75.5 55.9 Other (1) (0.2) 4.6 2.0 10.2 Corporate expenses (14.4) (12.5) (36.5) (30.4) ---------- ----------- ----------- ----------- ADJUSTED OPERATING EARNINGS $ 151.0 $ 134.7 $ 413.4 $ 379.5 Amortization of intangible assets (18.2) - (42.0) - Non-cash charges related to other valuation adjustments made in connection with the acquisition (0.1) - (38.6) - Transaction and other costs - - (23.5) - Loss on disposition of Chef's Catalog - - - (15.3) ---------- ----------- ----------- ----------- OPERATING EARNINGS $ 132.7 $ 134.7 $ 309.3 $ 364.2 ========== =========== =========== =========== (1) Other includes the results of operations of Kate Spade LLC and Gurwitch Products, L.L.C. The results of operations have been prepared by comparing the mathematical combination of the Successor and Predecessor periods in the thirty-nine weeks ended April 29, 2006 to the thirty-nine weeks ended April 30, 2005. 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, transaction and other costs and the loss on disposition of Chef's Catalog. The Neiman Marcus Group, 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. 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 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. THE NEIMAN MARCUS GROUP, INC. OTHER OPERATING DATA (UNAUDITED) OTHER DATA: Thirteen Weeks Ended Thirty-Nine Weeks Ended -------------------------- -------------------------- (dollars in April 29, April 30, April 29, April 30, millions) 2006 2005 2006 2005 ---------- ----------- ----------- ------------ (Successor) (Predecessor) (Combined) (Predecessor) Capital Expenditures $ 40 $ 56 $ 139 $ 151 Depreciation $ 33 $ 28 $ 98 $ 79 Amortization $ 18 $ - $ 42 $ - Rent Expense $ 22 $ 20 $ 65 $ 59 CONTACT: The Neiman Marcus Group, Inc., Dallas James E. Skinner, 214-757-2954 or Stacie Shirley, 214-757-2967