Neiman Marcus, Inc. Reports Fourth Quarter and Fiscal Year 2009 Results

Tue Sep 8, 2009 5:00pm EDT

* Reuters is not responsible for the content in this press release.

DALLAS--(Business Wire)--
Neiman Marcus, Inc. today reported financial results for both the fourth quarter
and fiscal year ended August 1, 2009. The fiscal year 2009 fourth quarter and
fiscal year 2009 amounts are reported on a thirteen and fifty-two week basis,
respectively. The Company`s fiscal year 2008 included a fifty-third week. Unless
otherwise stated, the fiscal year 2008 fourth quarter and fiscal year 2008
amounts are reported on a fourteen and fifty-three week basis, respectively.
However, revenues in the 53rd week are not included in any comparable revenue
calculations. 

For the fourth quarter of fiscal year 2009, the Company reported total revenues
of $768.0 million compared to $1.03 billion in the prior year. Comparable
revenues decreased 23.4 percent. 

The Company reported an operating loss for the fourth quarter of fiscal year
2009 of $192.1 million compared to an operating loss of $6.2 million for the
fourth quarter of fiscal year 2008. The Adjusted operating loss in the fourth
quarter of fiscal year 2009 was $49.0 million compared to adjusted operating
earnings of $25.1 million in the fourth quarter of fiscal year 2008. 

Including non-cash pretax impairment charges of $143.1 million and $31.3 million
as described below under "Other Items", the Company reported a net loss of
$168.6 million for the fourth quarter of fiscal year 2009 compared to a net loss
of $35.7 million in the prior year. Adjusted EBITDA for the fourth quarter of
fiscal year 2009 was $5.7 million compared to Adjusted EBITDA of $86.1 million
in the fourth quarter of fiscal year 2008. 

For fiscal year 2009, the Company reported total revenues of $3.64 billion
compared to $4.60 billion in the prior year. Comparable revenues decreased 21.4
percent. The Company recorded an operating loss for fiscal year 2009 of $652.9
million compared to operating earnings of $466.4 million for the comparable
period a year ago. Adjusted operating earnings for fiscal year 2009 were $50.3
million compared to $465.2 million for the comparable period a year ago. 

Including non-cash pretax impairment charges of $703.2 million and $31.3
million, in fiscal year 2009 and 2008 respectively, and other income of $32.5
million in fiscal year 2008, as described below under "Other Items", the Company
reported a net loss of $668.0 million for fiscal year 2009 compared to net
earnings of $142.8 million in the prior year. Adjusted EBITDA for fiscal year
2009 was $273.8 million compared to Adjusted EBITDA of $685.8 million for the
comparable period a year ago. 

"Fiscal year 2009 was a very challenging year for our Company. We quickly began
addressing the many challenges we faced due to the sharp decline in our
business, precipitated by the downturn in the economy," said Burton M. Tansky,
Chairman and CEO of the Company. "We tightly managed our expenses, resulting in
a total reduction of $183 million, which included the elimination of
approximately $100 million of non-variable costs from our expense structure this
year. We also aggressively reduced our inventory levels to be more in line with
demand, ending the year with 23 percent less merchandise than last year." 

Mr. Tansky added, "In total, we ended the year with cash of $323 million, an $84
million increase from last year. In addition, we recently renegotiated our $600
million revolving credit facility and extended the maturity to 2013." 

Mr. Tansky further noted, "I am extremely proud of our team and what we
accomplished in this very difficult year. I am confident the significant actions
we have taken, combined with our outstanding customer relationships and the
strength of our marketing initiatives, will position us well for the new year." 

This release contains information regarding the Company`s Adjusted operating
(loss) earnings, EBITDA and Adjusted EBITDA, all of which are non-GAAP financial
measures.Areconciliation of these figures to the most directly comparable GAAP
figures, together with certain other information, can be found at the end of
this release.

Other Items

The Company recorded non-cash pretax impairment charges for the writedown of
certain assets to fair value of $143.1 million and $703.2 million, in the fourth
quarter and fiscal year 2009, respectively. The impairment charges for fiscal
2009 include 1) $329.7 million related to goodwill 2) $343.2 million related to
tradenames and 3) $30.3 million related to certain long-lived assets. 

The Company recorded non-cash impairment charges of $31.3 million in the fourth
quarter of fiscal year 2008 for the writedown to fair value of the net carrying
value of the Horchow tradename. In addition, the Company recorded other income
of $32.5 million in the first quarter of fiscal year 2008 which represents a
pension curtailment gain as a result of the Company`s decision to freeze certain
pension and retirement benefits as of December 31, 2007. 

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 9, 2009 beginning at 8:00 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)                                                                               
                                                                                           
 (in thousands)                                August 1,            August 2,          
                                               2009                 2008               
                                                                                       
 ASSETS                                                                                
 Current assets:                                                                       
 Cash and cash equivalents                     $      323,425      $      239,180    
 Merchandise inventories                              755,034             978,044    
 Other current assets                                 143,068             146,435    
 Total current assets                                 1,221,527           1,363,659  
                                                                                       
 Property and equipment, net                          992,715             1,075,294  
 Goodwill and intangible assets, net                  3,278,947           4,042,617  
 Other assets                                         87,837              75,249     
 Total assets                                  $      5,581,026    $      6,556,819  
                                                                                       
 LIABILITIES AND SHAREHOLDERS` EQUITY                                                  
 Current liabilities:                                                                  
 Accounts payable                              $      233,990      $      345,640    
 Accrued liabilities                                  302,886             361,094    
 Total current liabilities                            536,876             706,734    
                                                                                       
 Long-term liabilities:                                                                
 Long-term debt                                       2,980,838           2,946,102  
 Deferred income taxes                                697,810             929,970    
 Other long-term liabilities                          446,667             297,494    
 Total long-term liabilities                          4,125,315           4,173,566  
                                                                                       
 Total shareholders` equity                           918,835             1,676,519  
 Total liabilities and shareholders` equity    $      5,581,026    $      6,556,819  


                                                                                                                                                                                   
 NEIMAN MARCUS, INC.                                                                                                                                                               
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                                                                                                                                   
 (UNAUDITED)                                                                                                                                                                       
                                                                                                                                                                                   
                                                            Fourth Quarter Ended                                      Fiscal Year Ended                                        
 (in thousands)                                             August 1,                    August 2,                  August 1,                     August 2,                
                                                            2009                         2008                       2009                          2008                     
                                                                                                                                                                           
 Revenues                                                   $     768,093              $     1,032,278          $     3,643,346             $     4,600,536        
 Cost of goods sold including buying and occupancy costs          582,887                    717,611                  2,536,764                   2,934,968        
 Selling, general and administrative expenses                     195,777                    242,044                  882,737                     1,045,447        
 Income from credit card program, net                             (16,284   )                (13,460    )             (49,966    )                (65,727    )     
 Depreciation expense                                             36,381                     42,716                   150,759                     148,411          
 Amortization of intangible assets                                13,845                     13,568                   54,826                      54,314           
 Amortization of favorable lease commitments                      4,469                      4,722                    17,877                      17,878           
 Impairment charges                                               143,107                    31,261                   703,266                     31,261           
 Other income                                                     -                          -                        -                           (32,450    )     
                                                                                                                                                                           
 Operating (loss) earnings                                        (192,089  )                (6,184     )             (652,917   )                466,434          
                                                                                                                                                                           
 Interest expense, net                                            60,899                     60,882                   235,574                     239,805          
                                                                                                                                                                           
 (Loss) earnings before income taxes                              (252,988  )                (67,066    )             (888,491   )                226,629          
                                                                                                                                                                           
 Income tax (benefit) expense                                     (84,455   )                (31,424    )             (220,445   )                83,816           
                                                                                                                                                                           
 Net (loss) earnings                                        $     (168,533  )          $     (35,642    )       $     (668,046   )          $     142,813          


The fiscal year 2009 fourth quarter and fiscal year 2009 amounts are reported on
a thirteen and fifty-two week basis, respectively. The fiscal year 2008 fourth
quarter and fiscal year 2008 amounts are reported on a fourteen and fifty-three
week basis, respectively.

                                                                                                                                                                                     
 NEIMAN MARCUS, INC.                                                                                                                                                                 
 OTHER OPERATING DATA                                                                                                                                                                
 (UNAUDITED)                                                                                                                                                                         
                                                                                                                                                                                     
 SEGMENTS:                                                            Fourth Quarter Ended                                  Fiscal Year Ended                                    
 (dollars in millions)                                                August 1,                  August 2,                August 1,                   August 2,              
                                                                      2009                       2008                     2009                        2008                   
                                                                                                                                                                             
 REVENUES:                                                                                                                                                                   
 Specialty Retail Stores                                              $     628.0              $     861.6            $     2,991.3             $     3,853.0        
 Direct Marketing                                                           140.0                    170.7                  652.0                     747.5          
 Total                                                                $     768.0              $     1,032.3          $     3,643.3             $     4,600.5        
                                                                                                                                                                             
                                                                                                                                                                             
 OPERATING (LOSS) EARNINGS:                                                                                                                                                  
 Specialty Retail Stores                                              $     (30.9   )          $     31.9             $     112.4               $     476.7          
 Direct Marketing                                                           16.2                     24.4                   70.6                      117.7          
 Corporate expenses                                                         (16.0   )                (12.9    )             (60.0    )                (57.0    )     
 Amortization of intangible assets and favorable lease commitments          (18.3   )                (18.3    )             (72.7    )                (72.2    )     
 ADJUSTED OPERATING (LOSS) EARNINGS*                                  $     (49.0   )          $     25.1             $     50.3                $     465.2          
 Impairment charges                                                         (143.1  )                (31.3    )             (703.2   )                (31.3    )     
 Other income                                                               -                        -                      -                         32.5           
 OPERATING (LOSS) EARNINGS                                            $     (192.1  )          $     (6.2     )       $     (652.9   )          $     466.4          


*Adjusted operating (loss) earnings, a non-GAAP financial measure, represents
operating (loss) earnings excluding impairment charges and other income. 

Neiman Marcus, Inc. believes reporting adjusted operating (loss) 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 (loss) earnings is not a recognized term under generally accepted
accounting principles (GAAP). Adjusted operating (loss) earnings should not be
considered as an alternative to operating (loss) earnings or net (loss) earnings
as a measure of operating performance or cash flows as a measure of liquidity.
Adjusted operating (loss) earnings should not be considered in isolation to, or
as a substitute for, analysis of the Company`s results reported in accordance
with generally accepted accounting principles. Adjusted operating (loss)
earnings as presented herein are not necessarily comparable to similarly titled
measures from others in the industry.

                                                                                                                           
 NEIMAN MARCUS, INC.                                                                                                       
 OTHER OPERATING DATA                                                                                                      
 (UNAUDITED)                                                                                                               
                                                                                                                           
 OTHER DATA:                                                                                                               
                                Fourth Quarter Ended                         Fiscal Year Ended                         
 (dollars in millions)          August 1,                 August 2,        August 1,                August 2,      
                                2009                      2008             2009                     2008           
                                                                                                                   
 Capital expenditures           $     20                $      50       $     102              $      183    
                                                                                                                   
 Depreciation                   $     36                $      43       $     151              $      148    
 Amortization of intangibles    $     18                $      18       $     73               $      72     
                                                                                                                   
 Rent expense                   $     21                $      23       $     85               $      93     
                                                                                                                   
 EBITDA*                        $     (137  )           $      55       $     (429  )          $      687    
 Adjusted EBITDA*               $     6                 $      86       $     274              $      686    


*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 net (loss) earnings as reflected in the Company`s consolidated statements of operations prepared in accordance with GAAP to EBITDA and Adjusted EBITDA: 
                                                                                                                                                                                     
                                                                           Fourth Quarter Ended                                Fiscal Year Ended                                 
 (dollars in millions)                                                     August 1,                  August 2,              August 1,                  August 2,            
                                                                           2009                       2008                   2009                       2008                 
                                                                                                                                                                             
 Net (loss) earnings                                                       $     (168.6  )          $     (35.7  )       $     (668.0  )          $     142.8        
 Income tax (benefit) expense                                                    (84.4   )                (31.4  )             (220.5  )                83.8         
 Interest expense, net                                                           60.9                     60.9                 235.6                    239.8        
 Depreciation                                                                    36.4                     42.7                 150.8                    148.4        
 Amortization of intangible assets and favorable lease commitments               18.3                     18.3                 72.7                     72.2         
 EBITDA                                                                          (137.4  )                54.8                 (429.4  )                687.0        
 Non-cash impairment of long-lived assets                                        143.1                    31.3                 703.2                    31.3         
 Non-cash gain on curtailment of defined benefit retirement obligations          -                        -                    -                        (32.5  )     
 Adjusted EBITDA                                                           $     5.7                $     86.1           $     273.8              $     685.8        


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 and evaluate our performance relative to other
companies in our industry. 

EBITDA and Adjusted EBITDA are not presentations made in accordance with GAAP
and our computation of EBITDA and Adjusted EBITDA may vary from others in our
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 NMG`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. In addition, EBITDA and Adjusted EBITDA are not presented as and
should not be considered as alternatives to 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 our
results as reported under GAAP. For example, EBITDA and Adjusted EBITDA do not
reflect our cash expenditures, or future requirements, for capital expenditures
or contractual commitments; do not reflect changes in, or cash requirements for,
our working capital needs; do not reflect our considerable interest expense, or
the cash requirements necessary to service interest or principal payments, on
our debt; exclude tax payments that represent a reduction in available cash; and
do not reflect any cash requirements for assets being depreciated and amortized
that may have to be replaced in the future. 





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 



Copyright Business Wire 2009

http://www.businesswire.com/news/home/20090908006633/en

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.