Neiman Marcus 2006 Annual Report Download - page 27

In April 2005, the minority investor in Kate Spade LLC exercised the put option with respect to the sale of the full amount of
its 44% stake in such company to NMG. In October 2006, we entered into an agreement to settle the put option whereby we purchased
the interest held by the minority investor for approximately $59.4 million.
In November 2006, we entered into a definitive agreement to sell 100% of the ownership interests in Kate Spade LLC to Liz
Claiborne, Inc. (consisting of both our original 56% interest and the 44% minority interest subsequently purchased by NMG) for
pretax net cash proceeds of approximately $121.5 million. Both the purchase of the minority interest in Kate Spade LLC and the sale of
Kate Spade LLC to Liz Claiborne, Inc. were consummated in December 2006.
Kate Spade LLC designs and markets high-end accessories and had revenues of approximately $75.5 million (after
intercompany eliminations) in fiscal year 2006. Fiscal year 2007 revenues of Kate Spade LLC through its disposition in December
2006 aggregated $29.6 million.
The Company's consolidated financial statements, accompanying notes and other information provided in this Annual Report on
Form 10-K reflect Gurwitch Products, L.L.C. and Kate Spade LLC as discontinued operations for all periods presented.
Recent Developments
On September 6, 2007, we announced preliminary total revenues and comparable revenues of approximately $282.6 million and
$276.3 million, respectively, for the four-week August period of fiscal year 2008, representing increases of 7.0% and 4.6%, respectively,
compared to the four-week August period of fiscal year 2007. For the four-week August period of fiscal year 2008, comparable revenues
increased 5.0% in our Specialty Retail stores and 2.5% in Direct Marketing.
All the financial data set forth above for the four-week August period of fiscal year 2008 are preliminary and unaudited and
subject to revision based upon our review and a review by our independent registered public accounting firm of our financial condition
and results of operations for the quarter ending October 27, 2007. Once we and our independent registered public accounting firm have
completed our respective reviews of our financial information for the quarter ending October 27, 2007, we may report financial results
that are different from those set forth above.
Factors Affecting Our Results
Revenues. We generate our revenues from the sale of high-end merchandise through our Specialty Retail stores and Direct
Marketing operation. Components of our revenues include:
• Sales of merchandise—Revenues from our Specialty Retail stores are recognized at the later of the point of sale or the
delivery of goods to the customer. Revenues from our Direct Marketing operation are recognized when the merchandise is
delivered to the customer. We maintain reserves for anticipated sales returns primarily based on our historical trends related
to returns by both our Specialty Retail and Direct Marketing customers. Revenues exclude sales taxes collected from our
customers.
• Delivery and processing—We generate revenues from delivery and processing charges related to merchandise delivered to
our customers from both our retail and direct marketing operations.
Our revenues can be affected by the following factors:
• changes in the level of consumer spending generally and, specifically, on luxury goods;
• changes in the level of full-price sales;
• changes in the level of promotional events conducted by our Specialty Retail and Direct marketing operations;
• our ability to successfully implement our store expansion and remodeling strategies;
• the rate of growth in internet sales by our Direct Marketing operation; and
• general economic conditions.
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