The Neiman Marcus Group Reports Third Quarter Earnings.Business Editors DALLAS--(BUSINESS WIRE)--June 4, 2003 The Neiman Marcus Neiman Marcus U.S. department-store chain. It was founded in Dallas, Texas, in 1907 by Herbert Marcus, his sister Carrie Marcus Neiman, and her husband, A.L. Neiman. Group, Inc. (NYSE NYSE See: New York Stock Exchange :NMG NmG No More Gas (Myers Motors electric vehicle) NMG Navy Metrication Group NMG Nuera Media Gateway NMG Network Media Gateway NMG Network Management Gateway NMG Network Measurement Group .A)(NYSE:NMG.B) today reported financial results for the third quarter of fiscal year 2003. For the 13 weeks ended May 3, 2003, the Company reported total revenues of $723 million compared to $693 million in the prior year and comparable revenues increased 1.5 percent. Net earnings were $41 million, or $0.87 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, in the third quarter of fiscal year 2003 compared to $47 million, or $0.98 per diluted share, in the third quarter of fiscal year 2002. Excluding the impact of implementing a new vacation VACATION. That period of time between the end of one term and beginning of another. During vacation, rules and orders are made in such cases as are urgent, by a judge at his chambers. policy and certain other items, as described below, adjusted earnings for the third quarter of fiscal 2002 were $42 million, or $0.87 per diluted share. See the attached "Reconciliation of GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (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 39 weeks ended May 3, 2003, total revenues increased to $2.40 billion compared to $2.28 billion in the prior year and comparable revenues increased 2.3 percent. Net earnings were $102 million, or $2.14 per diluted share, for the 39 weeks ended May 3, 2003 compared to $94 million, or $1.97 per diluted share, for the 39 weeks ended April 27, 2002. Adjusted earnings for the 39 weeks ended May 3, 2003 exclude the impact of adopting a new accounting standard as described below. Adjusted earnings for the 39 weeks ended April 27, 2002 exclude the impact of implementing a new vacation policy and certain other items as described below. Adjusted earnings for the 39 weeks ended May 3, 2003 were $117 million, or $2.45 per diluted share, compared to $90 million, or $1.89 per diluted share, for the prior year. "Overall, given the continued challenging retail environment, I am pleased with our third quarter results," said Burton Burton can mean: Places Australia
Based on the current sales trends, the Company anticipates its comparable store revenues for the fourth quarter of fiscal year 2003 to increase in the range of 2 percent to 4 percent. In addition, the Company currently anticipates the decline in gross margin in the fourth quarter to approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. the decline experienced in the third quarter primarily as a result of an expected year over year increase in inventory markdowns. Business Segments During the fourth quarter of fiscal year 2002, the Company realigned its business segments to reflect its current operating strategies. All the Company's online operations are now included in the Direct Marketing segment. Previously, certain online operations were included in the Other business segment. The Company's principal business segments are Specialty Retail Stores and Direct Marketing. All prior amounts have been restated based on this new alignment Alignment is the adjustment of an object in relation with other objects, or a static orientation of some object or set of objects in relation to others.
Third quarter revenues for the Specialty Retail Stores segment, which consists of Neiman Marcus Stores and Bergdorf Goodman Bergdorf Goodman is a major, world-renowned luxury goods department store based in Midtown, Manhattan in New York City. It is owned by Neiman Marcus. History Beginnings , were $591 million compared to $573 million in the previous year. Revenues for the third quarter of fiscal year 2003 compared to last year increased 3.1 percent and 4.0 percent at Neiman Marcus Stores and Bergdorf Goodman, respectively. Comparable revenues for Neiman Marcus Stores decreased 0.9 percent for the third quarter of fiscal year 2003. Third quarter operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before for the Specialty Retail Stores segment were $67 million compared to $67 million in the prior year. Neiman Marcus Direct, the Company's direct marketing division, reported third quarter fiscal year 2003 revenues of $113 million compared to $102 million in the previous year. Operating earnings for Neiman Marcus Direct were $10 million in the third quarter compared to $10 million a year ago. The Company's Other segment includes the operations of the Kate n. 1. (Zool.) The brambling finch. Spade and Laura Mercier Laura Mercier is a French make-up artist who has lent her name to a line of cosmetics. History Raised in Provence, Laura Mercier began her training at age 17 when she entered painting school in Paris. 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 Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. ". Based upon the valuation results of its third party appraisal experts, the Company recorded a pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern charge of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $24 million in the first quarter of fiscal year 2003 as a result of implementing the fair value model of the new accounting standard. During the third quarter of fiscal year 2002, the Company terminated ter·mi·nate v. ter·mi·nat·ed, ter·mi·nat·ing, ter·mi·nates v.tr. 1. To bring to an end or halt: its prior vacation plan. Under the previous plan, eligible employees received an annual vacation grant at the beginning of each service year. Pursuant to the new vacation policy, eligible employees earn vacation pay ratably over the course of the year in which services are rendered. As a result of this change, the Company's $17 million vacation accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. was no longer required and, therefore, the liability was eliminated and credited to operating results. Also in the third quarter of fiscal 2002, the Company recorded an $8.2 million pretax charge. This charge related to 1) the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of the net carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of the Company's investment in the WeddingChannel.com, an internet bridal registry A bridal registry is a system designed by department stores for the purpose of allowing an engaged couple to manage the purchase of gifts for their wedding. From what is available at the store, the couple creates a list of items that they would like to receive, then the list is service, 2) the write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of the carrying values of the fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → of the two Neiman Marcus Galleries stores to estimated fair value and 3) the accrual of the estimated loss associated with the abandonment of excess warehouse space held by the Company pursuant to a long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. operating lease Operating Lease A lease contract that allows the use of an asset, but does not convey rights similar to ownership of the asset. Notes: An operating lease is not capitalized it is accounted for as a rental expense. . During the second quarter of fiscal year 2002, the Company incurred expenses of approximately $2.0 million in connection with cost reduction strategies. These expenses consisted primarily of severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs and lease termination expenses incurred in connection with the closing of the Neiman Marcus Galleries store in Seattle, Washington  This page is protected from moves until disputes have been resolved on the .The reason for its protection is listed on the protection policy page. . 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 Wednesday: see week. , June June: see month. 4, 2003 beginning at 4:00 p.m. Central Daylight For other uses, see Daylight (disambiguation). Daylight or the light of day is the combination of all direct and indirect sunlight outdoors during the daytime (and perhaps twilight). 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. This release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , including statements regarding the Company's objectives and expectations concerning, among other things, its productivity and profitability; merchandising merchandising Element of marketing concerned especially with the sale of goods and services to customers. One aspect of merchandising is advertising, which aims to capture the interest of the segment of the population most likely to buy the product. and marketing strategies; inventory performance; store renovation and expansion plans; capital expenditures; liquidity; and development of management information systems. These forward-looking statements are made based on management's expectations and beliefs concerning future events, as well as on assumptions made by and data currently available to management. Therefore, these forward-looking statements involve a number of risks and uncertainties and are not guarantees of future performance. A variety of factors could cause the Company's actual results to differ materially from the anticipated or expected results expressed in these forward-looking statements. Factors that could affect future performance include, but are not limited to: current political and economic conditions; changes in political and economic conditions that may occur in the future; terrorist activities in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , as well as the potential escalation es·ca·late v. es·ca·lat·ed, es·ca·lat·ing, es·ca·lates v.tr. To increase, enlarge, or intensify: escalated the hostilities in the Persian Gulf. v.intr. in the international war on terrorism Terrorist acts and the threat of Terrorism have occupied the various law enforcement agencies in the U.S. government for many years. The Anti-Terrorism and Effective Death Penalty Act of 1996, as amended by the usa patriot act ; changes in consumer confidence resulting in a reduction of discretionary spending on goods that are, or are perceived per·ceive tr.v. per·ceived, per·ceiv·ing, per·ceives 1. To become aware of directly through any of the senses, especially sight or hearing. 2. To achieve understanding of; apprehend. 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 and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. inventory liquidations by vendors or other retailers; delays in the receipt of merchandise ordered by the Company due to work stoppages and/or other causes of delay in connection with either the manufacture or shipment of such merchandise; seasonality of the retail business; adverse weather conditions, particularly during peak selling seasons; delays in anticipated store openings; political, social, economic or other events resulting in the short or long-term disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. in business at the Company's stores, distribution centers or offices; natural disasters; significant increases in paper, printing and postage POSTAGE. The money charged by law for carrying letters, packets and documents by mail. By act of congress of March 3, 1851, Minot's Statute at Large, U. S. 587, it is enacted as follows: 2.-Sec. 1. costs; litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. that may have an adverse effect on the financial results or reputation of the Company; 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; changes in foreign currency exchange rates; impact of funding requirements related to the Company's noncontributory non·con·trib·u·to·ry adj. Of or relating to a pension plan in which participating members or employees are not required to support the plan with their own contributions. defined benefit pension plan; changes in the Company's relationships with certain of its 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 Regulatory requirements are part of the process of drug discovery and drug development. Regulatory requirements describe what is necessary for a new drug to be approved for marketing in any particular country. increasing the Company's cost of operations. The Company undertakes no obligation to update or revise (publicly or otherwise) any forward-looking statements to reflect subsequent events, new information or future circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or .
THE NEIMAN MARCUS GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands) May 3, April 27,
2003 2002
------- ---------
ASSETS
----------------------------------------
Current assets:
Cash and cash equivalents $ 133,670 $ 150,059
Undivided interests in NMG Credit
Card Master Trust 279,556 263,614
Accounts receivable, net 25,132 24,975
Merchandise inventories 719,118 635,252
Other current assets 58,681 57,557
------------------ -----------
Total current assets 1,216,157 1,131,457
------------------ -----------
Property and equipment, net 676,059 647,741
Other assets 107,851 126,210
------------------ -----------
Total assets $ 2,000,067 $1,905,408
================== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
----------------------------------------
Current liabilities:
Notes payable and current maturities
of long-term liabilities $ 1,799 $ 1,098
Accounts payable 224,945 227,237
Accrued liabilities 293,145 284,810
------------------ -----------
Total current liabilities 519,889 513,145
------------------ -----------
Long-term liabilities:
Notes and debentures 249,727 249,704
Other long-term liabilities 87,530 87,389
------------------ -----------
Total long-term liabilities 337,257 337,093
------------------ -----------
Minority interest 9,462 9,508
Total shareholders' equity 1,133,459 1,045,662
------------------ -----------
Total liabilities and shareholders'
equity $ 2,000,067 $1,905,408
================== ===========
THE NEIMAN MARCUS GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
Thirteen Weeks Ended Thirty-Nine Weeks Ended
-------------------- -----------------------
(in thousands, except per May 3, April 27, May 3, April 27,
share data) 2003 2002 2003 2002
--------- --------- ----------- -----------
Revenues $722,917 $692,741 $2,395,467 $2,281,976
Cost of goods sold
including buying and
occupancy costs 463,713 441,412 1,572,222 1,523,068
Selling, general and
administrative expenses 187,372 179,292 617,765 597,782
Effect of change in
vacation policy - (16,576) - (16,576)
Impairment and other
charges (1) - 8,163 - 10,163
--------- --------- ----------- -----------
Operating earnings 71,832 80,450 205,480 167,539
Interest expense, net 4,245 3,914 12,183 12,160
--------- --------- ----------- -----------
Earnings before income
taxes, minority interest
and change in accounting
principle 67,587 76,536 193,297 155,379
Income taxes 26,020 29,084 74,419 59,044
--------- --------- ----------- -----------
Earnings before minority
interest and change in
accounting principle 41,567 47,452 118,878 96,335
Minority interest in net
earnings of subsidiaries (437) (489) (1,946) (2,077)
--------- --------- ----------- -----------
Earnings before change in
accounting principle 41,130 46,963 116,932 94,258
Change in accounting
principle - write-down of
intangible assets, net of
taxes - - (14,801) -
--------- --------- ----------- -----------
Net earnings $ 41,130 $ 46,963 $ 102,131 $ 94,258
========= ========= =========== ===========
Weighted average number of
common and common
equivalent shares
outstanding:
Basic 47,240 47,524 47,498 47,407
========= ========= =========== ===========
Diluted 47,497 48,011 47,772 47,782
========= ========= =========== ===========
Basic earnings per share:
Earnings before
effect of change in
accounting principle $ 0.87 $ 0.99 $ 2.46 $ 1.99
Change in accounting
principle - write-down
of intangible assets,
net of taxes - - (0.31) -
--------- --------- ----------- -----------
Basic earnings per
share $ 0.87 $ 0.99 $ 2.15 $ 1.99
========= ========= =========== ===========
Diluted earnings per
share:
Earnings before
effect of change in
accounting principle $ 0.87 $ 0.98 $ 2.45 $ 1.97
Change in accounting
principle - write-down
of intangible assets,
net of taxes - - (0.31) -
--------- --------- ----------- -----------
Diluted earnings per
share $ 0.87 $ 0.98 $ 2.14 $ 1.97
========= ========= =========== ===========
(1) Impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. and other charges for the thirty-nine weeks ended April 27, 2002 include severance costs and lease termination expenses incurred in connection with the closing of the Neiman Marcus Galleries store in Seattle, Washington recorded in the second fiscal quarter and the following impairment and other charges recorded in the third fiscal quarter: a) the write-off of the net carrying value of the Company's investment in the WeddingChannel.com, an internet bridal registry service, b) the write-down of the carrying values of the fixed assets of the two Neiman Marcus Galleries stores to estimated fair value and c) the accrual of the estimated loss associated with the abandonment of the excess warehouse space held by the Company pursuant to a long-term operating lease.
THE NEIMAN MARCUS GROUP, INC.
OTHER OPERATING DATA
(UNAUDITED)
SEGMENTS: Thirteen Weeks Thirty-Nine Weeks
Ended Ended
--------------------- -------------------
May 3, April 27, May 3, April 27,
(in millions) 2003 2002 2003 2002
---------- --------- --------- ---------
REVENUES:
Specialty Retail Stores $ 591.2 $ 573.4 $1,948.5 $1,880.0
Direct Marketing 112.8 101.7 388.4 348.0
Other (1) 18.9 17.6 58.6 54.0
---------- --------- --------- ---------
Total $ 722.9 $ 692.7 $2,395.5 $2,282.0
========== ========= ========= =========
OPERATING EARNINGS:
Specialty Retail Stores $ 67.3 $ 67.3 $ 182.9 $ 156.5
Direct Marketing 10.4 10.3 35.8 16.3
Other (1) (5.9) (5.6) (13.2) (11.7)
Effect of change in vacation
policy - 16.6 - 16.6
Impairment and other charges - (8.1) - (10.2)
---------- --------- --------- ---------
Total $ 71.8 $ 80.5 $ 205.5 $ 167.5
========== ========= ========= =========
OTHER DATA: Thirteen Weeks Thirty-Nine Weeks
Ended Ended
-------------------- -------------------
(in millions) May 3, April 27, May 3, April 27,
2003 2002 2003 2002
-------- -------- -------- --------
Capital Expenditures $ 16 $ 37 $ 81 $122
Depreciation and Amortization 18 22 58 63
(1) Other includes the results of operations of Kate Spade LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , Gurwitch Bristow Bristow, or Bristowe, can refer to the following. People
THE NEIMAN MARCUS GROUP, INC.
RECONCILIATION OF GAAP NET EARNINGS TO NON-GAAP ADJUSTED EARNINGS
(UNAUDITED)
Thirteen Weeks Thirty-Nine Weeks
Ended Ended
------------------ -------------------
(in thousands, except per share May 3, April 27, May 3, April 27,
data) 2003 2002 2003 2002
-------- --------- --------- ---------
Net earnings (GAAP) $41,130 $ 46,963 $102,131 $ 94,258
Effect of change in vacation
policy, net of taxes - (10,277) - (10,277)
Impairment and other
charges, net of taxes (1) - 5,061 - 6,301
Change in accounting
principle - write-down of
intangible assets, net of
taxes - - 14,801 -
-------- --------- --------- ---------
Adjusted earnings (Non-GAAP) $41,130 $ 41,747 $116,932 $ 90,282
======== ========= ========= =========
Diluted earnings per share
(GAAP) $ 0.87 $ 0.98 $ 2.14 $ 1.97
Effect of change in vacation
policy, net of taxes - (0.21) - (0.21)
Impairment and other
charges, net of taxes (1) - 0.10 - 0.13
Change in accounting
principle - write-down of
intangible assets, net of
taxes - - 0.31 -
-------- --------- --------- ---------
Adjusted earnings (Non-GAAP) $ 0.87 $ 0.87 $ 2.45 $ 1.89
======== ========= ========= =========
The Neiman Marcus Group, Inc. believes reporting adjusted earnings is a more accurate representation of the Company's on-going Adj. 1. on-going - currently happening; "an ongoing economic crisis" ongoing current - occurring in or belonging to the present time; "current events"; "the current topic"; "current negotiations"; "current psychoanalytic theories"; "the ship's current position" 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 Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting . (1) Impairment and other charges for the thirty-nine weeks ended April 27, 2002 include severance costs and lease termination expenses incurred in connection with the closing of the Neiman Marcus Galleries store in Seattle, Washington recorded in the second fiscal quarter and the following impairment and other charges recorded in the third fiscal quarter: 1) the write-off of the net carrying value of the Company's investment in the WeddingChannel.com, an internet bridal registry service, 2) the write-down of the carrying values of the fixed assets of the two Neiman Marcus Galleries stores to estimated fair value and 3) the accrual of the estimated loss associated with the abandonment of the excess warehouse space held by the Company pursuant to a long-term operating lease. |
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