Neiman Marcus 2007 Annual Report Download - page 6

Table of Contents
circulated approximately 90 million catalogs in fiscal year 2008. With the growth of internet sales, we have reduced catalog
circulation in recent years and would expect flat to declining catalog circulation in the foreseeable future.
We regularly send e-mails to over 2.9 million e-mail addresses, alerting our customers to our newest merchandise and the
latest fashion trends. Over the last five fiscal years, Direct Marketing has achieved a CAGR in revenues (excluding revenues of our
Chef's Catalog brand sold in November 2004) of 12.4%.
For more information about our reportable segments, see Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Note 16 of the Notes to Consolidated Financial Statements in Item 15.
Our fiscal year ends on the Saturday closest to July 31. Like many other retailers, we follow a 4-5-4 reporting calendar which
resulted in an extra week in fiscal year 2008 (the 53rd week). All references to fiscal year 2008 relate to the 53 weeks ended August 2, 2008; all
references to fiscal year 2007 relate to the 52 weeks ended July 28, 2007 and all references to fiscal year 2006 relate to the combined 52 weeks ended July 29,
2006 (calculated as described in "The Acquisition"). References to fiscal years 2009 and years thereafter relate to our fiscal years for such periods.
We make our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and related
amendments, available free of charge through our website at www.neimanmarcusgroup.com as soon as reasonably practicable after
we electronically file such material with (or furnish such material to) the Securities and Exchange Commission. The information
contained on our website is not incorporated by reference into this Annual Report on Form 10-K and should not be considered to be
part of this Annual Report on Form 10-K.
The Acquisition
On April 22, 2005, Neiman Marcus, Inc., formerly Newton Acquisition, Inc. (the Company), and its wholly-owned
subsidiary, Newton Acquisition Merger Sub, Inc. (Merger Sub), were formed and incorporated in the state of Delaware. On April 29,
2005, the Company received subscriptions for 900 shares of its common stock from Newton Holding, LLC (Holding) in exchange for
a capital contribution of $900 and Merger Sub issued 900 shares of its common stock to the Company in exchange for a capital
contribution of $900. Holding, the Company and Merger Sub were formed by investment funds affiliated with TPG Capital (formerly
Texas Pacific Group) and Warburg Pincus LLC (collectively, the Sponsors) for the purpose of acquiring The Neiman Marcus
Group, Inc. (NMG).
In connection with the acquisition of NMG, Holding made an aggregate cash equity contribution of $1,420.0 million and a
noncash equity contribution of $25.0 million to the Company in exchange for the Company issuing 999,100 shares of its common
stock to Holding. In addition, certain members of executive management of the Company made cash equity contributions aggregating
$7.7 million and noncash equity contributions, consisting of shares of common stock and common stock options in NMG, aggregating
$17.9 million in exchange for 12,264 shares of common stock in the Company.
The acquisition of NMG was completed on October 6, 2005 through the merger of Merger Sub with and into NMG, with
NMG being the surviving entity (the Acquisition). Subsequent to the Acquisition, NMG is a subsidiary of the Company, which is
controlled by Holding. In connection with the Acquisition, NMG incurred significant indebtedness and became highly leveraged. See
Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital
Resources." All references to "we" and "our" relate to the Company for periods subsequent to the Acquisition and to NMG for
periods prior to the Acquisition.
Prior to the Acquisition, the Company had no independent assets or operations. After the Acquisition, the Company
represents the successor to NMG since the Company's sole asset is its investment in NMG and its operations consist solely of the
operating activities of NMG as well as costs incurred by the Company related to its investment in NMG. For periods prior to the
Acquisition, NMG is deemed to be the predecessor to the Company. As a result, for periods prior to the Acquisition, the financial
statements of the Company consist of the financial statements of NMG for such periods. The accompanying consolidated statements
of earnings and cash flows present our results of operations and cash flows for the periods preceding the Acquisition (Predecessor) and
the periods succeeding the Acquisition (Successor), respectively.
The purchase price paid in connection with the Acquisition was allocated to state the acquired assets and liabilities at fair
value at the Acquisition date. The purchase accounting adjustments increased the carrying values of our property and equipment and
inventory, established intangible assets for our tradenames, customer lists and favorable lease commitments and revalued our long-
term benefit plan obligations, among other things. Subsequent to the Acquisition, interest expense and non-cash
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