Neiman Marcus 2007 Annual Report Download - page 7

Table of Contents
depreciation and amortization charges have significantly increased. As a result, our successor financial statements subsequent to the
Acquisition are not comparable to our predecessor financial statements.
We have prepared our discussion of the results of operations for the fiscal year ended July 29, 2006 by combining the
earnings and cash flows for the Predecessor nine-week period ended October 1, 2005 and the Successor forty-three week period ended
July 29, 2006. Although this combined presentation does not comply with generally accepted accounting principles (GAAP), we
believe that it provides a meaningful method of comparison. The combined operating results have not been prepared on a pro forma
basis under applicable regulations and may not reflect the actual results we would have achieved absent the Acquisition.
Discontinued Operations
Gurwitch Products, L.L.C. In July 2006, we sold our majority interest in Gurwitch Products, L.L.C. to Alticor Inc., for
pretax net cash proceeds of approximately $40.8 million (Gurwitch Disposition). Gurwitch Products, L.L.C. designs and markets the
Laura Mercier cosmetics line and had revenues of approximately $59.0 million (after intercompany eliminations) in fiscal year 2006.
The net assets of Gurwitch Products, L.L.C. were sold for their net carrying value (after purchase accounting adjustments made in
connection with the Acquisition to state such assets at fair value).
Kate Spade LLC. In February 1999, NMG acquired a 56% controlling interest in Kate Spade LLC, a designer and marketer
of high-end accessories. 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.
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 4, 2008, we announced preliminary total revenues and comparable revenues of approximately $285 million
and $281 million, respectively, for the four-week August period of fiscal year 2009. In the four-week August period, total revenues
increased 0.7% and comparable revenues decreased 0.5% compared to the four-week August period of fiscal year 2008. Comparable
revenues decreased 0.4% in our Specialty Retail stores and 1.1% in Direct Marketing for the four-week August period of fiscal year
2009.
All the financial data set forth above for the four-week August period of fiscal year 2009 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 November 1, 2008. Once we and our independent registered public accounting firm
have completed our respective reviews of our financial information for the quarter ending November 1, 2008, we may report financial
results that are different from those set forth above.
Industry Overview
We operate in the luxury apparel and accessories segment of the U.S. retail industry and have arrangements with luxury-
branded fashion vendors, including, but not limited to, Chanel, Prada, Giorgio Armani, David Yurman, St. John, Gucci, Ermenegildo
Zegna, Manolo Blahnik and Brioni to market and sell their merchandise. Luxury-branded fashion vendors typically manage the
distribution and marketing of their merchandise to maximize the perception of brand exclusivity and to facilitate the sale of their
goods at premium prices, including limitations on the number of retail locations through which they distribute their merchandise.
These retail locations typically consist of a limited number of specialty stores, high-end department stores and, in
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