JP Morgan High Yield Conference January 22, 2007 Miami, Florida

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1 JP Morgan High Yield Conference January 22, 2007 Miami, Florida

2 Forward Looking Statements Disclaimer The following information contains, or may be deemed to contain, forward-looking statements (as defined in the U.S. Private Securities Litigation Reform Act of 1995). By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The future results of the company may vary from the results expressed in, or implied by, the following forward-looking statements, possibly to a material degree. For a discussion of some of the important factors that could cause the company s results to differ from those expressed in, or implied by, the following forward-looking statements, please refer to the company s Offering Circular. The company undertakes no obligation to update or revise any forward-looking statements. 2

3 Company Overview High-end specialty retailer offering luxury apparel and accessories Revenue Composition Specialty Retail Bergdorf Goodman 12% Neiman Marcus Direct 16% Neiman Marcus Direct Neiman Marcus Stores 72% LTM Revenue: $4.1 Billion* 3 * Note: LTM revenue as of Q1 FY 07 (excludes Gurwitch Products LLC and Kate Spade LLC).

4 Prime Store Locations Minneapolis Chicago Northbrook, Oakbrook Troy Westchester, NYC - BG (2) LA, SF, Palo Alto, San Diego, Newport Beach 1 Honolulu 5 La s Vegas 1 1 Scottsdale Denver King of Prussia Atlanta 1 Boston Short Hills, Paramus Wa shington D.C. Tyson s Corner Charlotte 37 Neiman Marcus Stores 2 Bergdorf Goodman Stores Northpark, Houston, Dallas, Plano, Ft. Worth, San Antonio St. Louis Bal Harbour, Coral Gables, Ft. Lauderdale, Tampa Bay, Orlando, Palm Beach, Boca Raton Geographically diverse store base in premier locations in the nation s most affluent markets 4

5 Professional, Relationship-Focused Salesforce Focus on building long-term relationships, not just transactions Highly specialized sales associate selection, training, and development programs Sales Associate Turnover Sales Associate Productivity (3) 65% 64% 34% 18% Neiman Marcus (1) (2) Retail Average % of Associates Selling Over $500,000 % of Associates Selling Over $1 million (1) Includes all full-time and part-time sales associates for fiscal (2) Retail average turnover statistics are for full-time only sales staff provided by 2005 National Retail Federation Annual Compensation and Benefits Survey. (3) Represents fiscal 2006 revenues at Neiman Marcus full-line stores and Bergdorf Goodman only. Excludes associates with less than one year of service. 5

of Total Neiman Marcus Store Sales 9% CAGR $1,324 60% Annual Purchases ($) $611 $12,179 Difference vs. Non-InCircle 19.

2x $1,000 $1,008 50% Spend Per Item ($) $81 $197 Difference vs. Non-InCircle 2.

6 Unique Customer Loyalty Program Unique and powerful InCircle rewards program drives superior loyalty from an attractive, affluent customer base InCircle Program Revenue InCircle Customer Behavior InCircle Sales Non-InCircle InCircle ($ in millions) $1,400 % of Total Neiman Marcus Store Sales 9% CAGR $1,324 60% Annual Purchases ($) $611 $12,179 Difference vs. Non-InCircle 19.9x $1,200 $1,174 Trips Per Year Difference vs. Non-InCircle 5.2x $1,000 $1,008 50% Spend Per Item ($) $81 $197 Difference vs. Non-InCircle 2.4x $800 $600 $880 40% $850 37% $894 41% 43% 45% 46% 40% $ % Note: InCircle customer behavior data presented for calendar year Customer behavior statistics based on private label credit card information only 6

7 Powerful Relationships With Diverse Group of Top Vendors 2006 Merchandise Mix (1), (2) No dependency on any one product category Designer and Precious Jewelry Other Home Furnishings and Décor 10% 5% Women s Apparel 8% 35% Men s Apparel and Shoes 12% 11% 19% Cosmetics and Fragrances Women s Shoes, Handbags and Accessories Neiman Marcus long-term relationships with leading designers and diverse merchandise base mitigates fashion / brand risk (1) Amounts exclude revenues from leased departments, shipping / delivery revenues, and revenue adjustments for returns reserves, etc. (2) Other Merchandise primarily includes Clearance Centers and Children's. 7

8 Disciplined Inventory Management Conservative Planning Merchandising Group Lockerstock Program Maximizing Sustainable Margins Product Reporting Full Price Selling 8

9 Specialty Retail Initiatives Drive Greater Merchandise Productivity Attract and Develop a Younger Customer Base Maintaining and Expanding our Leadership Position Maximize Return on Full Line Stores Expand Last Call Clearance Strategy 9

10 Focused Expansion Strategy STATE COMPLETION DATE SQ. FOOTAGE New Stores Charlotte North Carolina September 2006 (Opened) 80,000 Austin Texas Spring ,000 Natick Massachusetts Fall ,000 Topanga California Fall ,000 Bellevue Washington Spring ,000 Long Island New York Fall ,000 Princeton New Jersey Spring ,000 Remodels San Diego California Summer 2007 No additional sq. footage Atlanta Georgia Fall 2008 Additional 50,000 10

11 San Antonio 11

12 Charlotte 12

13 Last Call Clearance Centers 19 Clearance Centers in 12 states 17 Last Call 2 Horchow Planned 3 stores in FY 07 Evaluating potential opportunity of business model Developing infrastructure to support growth Distribution Merchandising Beginning to view as separate business unit 13

14 CUSP store openings LOCATION MALL/AREA OPENING DATE SQ. FOOTAGE Washington, DC Tyson s Mall July 2006 (Opened) 9,500 Los Angeles Century City August 2006 (Opened) 8,200 Washington, DC Georgetown March ,000 TBD TBD Fiscal '07 TBD 14

15 CUSP 15

16 CUSP 16

17 CUSP 17

18 18

19 5F 19

20 20

21 Neiman Marcus Direct

22 Expanding Brand Reach Through Multi- Channels Retail Online Catalog Incremental and highly complementary to retail stores Focus on Brands, Not Channels 22

23 Direct Marketing Initiatives Emerging elite customer Designer sites Online clearance Technology investment 23

24 Neiman Marcus Direct Growth of Internet FY2002 FY % 38% 62% 83% Internet Catalog 24

25 Business Activities Present Fiscal Year Launched internet business 2000 Formed separate NMG Corporate team 2001 Formed new Merchandise Planning Group 2003 Launched BG.com 2005 Formed Strategic Planning Team 2005 Sold Chef s Catalog 2005 Developed Designer Sites 2005 Sold Credit Card Portfolio 2005 Sold Gurwitch Products 2006 Opened first CUSP store 2006 Sold Kate Spade

26 Financial Overview

27 Historical Financial Performance Historical Financial Performance ($ in millions) 7% Revenue CAGR 11% EBIT CAGR $2,913 $2,998 $2,580 $2,181 $2,338 $1,888 $2,042 $248 $150 $159 $183 $199 $183 $203 $2,905 $172 $3,046 $220 $3,484 $347 $3,775 $418 $4,106 $ Fiscal Years Ending July Revenue EBIT Consistent growth through multiple business and economic cycles highlighted by Revenue and EBIT CAGRs of 7% and 11%, respectively Note: All information for 2000 and thereafter reflects the change in classification of revenues deferred in connection with the Compan y s loyalt y programs. EBIT fi gures exclude nonrecurring items. FY have been restated to exclude Gurwitch Products. FY 2002 reflects 53 weeks ended August 3, Operating earnings are adjusted to exclude amortization of customer lists and favorable lease commitments, purchase accounting adjustments, transaction and other costs, gain on credit card sale and the loss on disposition of Chef s Catalog. 27

28 Financial Metrics Specialty Retail Revenue ($ in millions) ($ in millions) Specialty Retail EBIT 6% CAGR $3,103 $3, 375 8% CAGR $378 $404 $2,850 $311 $2,442 $2,487 $2,417 $2,507 $249 $201 $171 $ % 10.9% 12.2% 12.0% 10.2% 8.1% 7.1% NMD Revenue ($ in millions) ($ in millions) EBIT EBIT Margin NMD EBIT 8% CAGR $494 $438 $444 $405 $655 $592 $571 $23 $11 $2 2.5% 5.1% 91% CAGR $98 $75 $ % $ % 10.7% 9.3% EBIT EBIT Margin Note: Specialty Retail revenue reflects the change in classifi cation of revenues deferred in connection with the Company s loyalt y programs. 28

29 Superior Performance NMG Sales per Square Foot $440 $452 $497 $511 $478 $472 $528 $577 $611 $ LTM Q1 FY '07 NMG Comparable Revenue Growth 6.0% 2.6% 11.8% 2.3% 3.8% 14.4% 9.8% 6.8% 6.7% -4.8% LTM Q1 FY '07 Note: NMG comparable revenue growth figures for reflect the change in classification of revenues deferred in connection with the Company s loyalty programs and reflect the sale of Gurwitch Products. NMG Sales per Square Foot figures represent Specialty Retail and exclude clearance centers. 29

30 Superior Performance $700 $600 $500 $400 $300 $200 $100 Sales Per Square Foot NMG Nordstrom SFAE Federated Note Figures are from LTM ending October 28, NMG data is for the Specialty Retail segment only (Full line Neiman Marcus Stores and Bergdorf Goodman). SFAE is estimated Saks Fifth Avenue stores and internet sales (excludes estimated clearance center sales). 30

31 Fiscal st Quarter Financial Highlights NMG Q1 FY 07 Q1 FY 06 % change Comparable Sales 6.8% 9.0% Adjusted Operating Earnings ($M)* $168 $ % Specialty Retail Comparable Store Sales 5.4% 8.8% Operating Earnings ($M) $157 $ % Neiman Marcus Direct Sales Growth 14.7% 10.4% Operating Earnings ($M) $21 $ % Source Neiman Marcus, Inc. FY2007 Q1 Earnings Release. (For the fiscal period ended October 28, 2006). NMG comparable sales figures exclude Gurwitch Products LLC and Kate Spade LLC. Adjusted operating earnings excluding amortization of customer lists and favorable lease commitments, purchase accounting adjustments, other income and trans action and ot her costs. Results exclude the operations of Gurwitch Products, LLC. 31

32 Reconciliation of Adjusted Operating Earnings FY 2007 FY 2006 (dollars in millions) Q1 Q1 OPERATING EARNINGS: Specialty Retail Stores $ 157 $ 136 Direct Marketing Corporate expenses (9) (10) ADJUSTED OPERATING EARNINGS $ 168 $ 140 Amortization of intangible assets (18) (5) Non-cash charges related to other valuation adjustments made in connection with the acquisition 0 (7) Other income 4 0 Transaction and other costs 0 (24) OPERATING EARNINGS $ 154 $ 105 Depreciation & Amortization Source Neiman Marcus, Inc. FY2007 Q1 Earnings Release. (For the fiscal period ended October 28, 2006). 32

33 Reconciliation of Adjusted Operating Earnings Fiscal Year Fiscal Year (dollars in millions) Combined Predecessor OPERATING EARNINGS: Specialty Retail Stores $ 404 $ 378 Direct Marketing Other (1) (0) 12 Corporate expenses (52) (46) ADJUSTED OPERATING EARNINGS $ 450 $ 418 Amortization of intangible assets (60) - Non-cash charges related to other valuation adjustments made in connection with the acquisition (38) - Transaction and other costs (24) - Loss on disposition of Chef s Catalog - (15) Gain on Credit Card Sale - 6 OPERATING EARNINGS $ 328 $ 409 Depreciation & Amortization Source Neiman Marcus, Inc. 10-K (For the fiscal year ended July 29, 2006). (1) Other includes the results of operations of Kate Spade LLC & and excludes Gurwitch Products, LLC. 33

34 Summary Balance Sheet ($ in millions) 1Q FY Q FY 2006 Cash $ 159 $ 192 Merchandise inventories Current liabilities $ 784 $ 828 Asset-based revolving credit facility Long-term debt 3,196 3,296 Shareholder s equity $ 1,449 $ 1,412 34

35 Historical Capital Expenditures Average gross capex spend of $155 million between 2001 and 2006 ($M) $220 $203 $180 $172 $170 $180 $140 $131 $130 $121 $100 $60 $20 ($20) E New Stores Major Remodels Information Technology Other Note: Figures represent gross capital expenditures and include Gurwitch products. 35

36 Capitalization (As of October 28, 2006) ($ in millions) Q1 FY '07 % of Cap. $600 Million Asset-Based Revolving Credit Facility - Senior Debentures due 2028 (7.125%) 121 Senior Secured Term Loan 1,875 Other Senior Secured Debt 4 Total Senior Secured Debt $2, % Senior Unsecured Notes (9.00%) 700 Total Senior Debt $2, % Senior Subordinated Notes (10.375%) 500 Total Debt $3, % Equity 1, % Total Capitalization $4, % Q1 FY '07 Q4 FY '06 Debt/EBITDA (LTM) No maintenance covenants or mandatory amortization Senior Unsecured Notes Cash / PIK feature provides flexibility Excess liquidity from $600 million Asset-Based Revolver (1 ) LTM EBITDA excludes Gurwitch Products LLC, Kate Spade LLC, inventory purchase price adjustments, lease credit amortization and trans action costs. 36

37 EBITDA Reconciliation ($ in millions) As of As of Q1 FY '07 Q4 FY '06 LTM EBITDA (Reported) 1 $ 582 $ 515 Adjustments: Inventory purchase price adjustment Transaction costs - 24 Total EBITDA adjustments LTM EBITDA (Adjusted) $ 613 $ 577 Debt/LTM Adjusted EBITDA (1 ) LTM EBI TDA excludes Gurwitch Products LLC and Kate Spade LLC. 37

Lehman Brothers High Yield Bond & Syndicated Loan Conference March 28, 2007 Scottsdale, AZ

Lehman Brothers High Yield Bond & Syndicated Loan Conference March 28, 2007 Scottsdale, AZ Forward Looking Statements Disclaimer The following information contains, or may be deemed to contain, forward-looking