Macy's 2009 Annual Report Download - page 25

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credit operations was $323 million in 2009 as compared to $372 million in 2008. Advertising expense, net of
cooperative advertising allowances, was $1,087 million for 2009 compared to $1,239 million for 2008.
Division consolidation costs and store closing-related costs for 2009 amounted to $276 million and included
$270 million of costs and expenses associated with the division consolidation and localization initiatives
announced in February 2009, primarily severance and other human resource-related costs, and $6 million of costs
and expenses related to the store closings announced in January 2010.
Division consolidation costs and store closing-related costs for 2008 amounted to $187 million and included
$146 million of costs and expenses associated with the division consolidation and localization initiatives
announced in February 2008, primarily severance and other human resource-related costs, $30 million of
severance costs in connection with the division consolidation and localization initiatives announced in February
2009, and $11 million of costs and expenses related to the store closings announced in January 2009.
Asset impairment charges for 2009 amounted to $115 million and related to properties held and used, of
which $10 million related to the store closings announced in January 2010.
Asset impairment charges for 2008 amounted to $211 million and included $136 million of asset
impairment charges related to properties held and used, of which $40 million related to the store closings
announced in January 2009, $63 million of asset impairment charges associated with acquired indefinite-lived
private brand tradenames and $12 million of asset impairment charges associated with marketable securities.
Goodwill impairment charges for 2008 amounted to $5,382 million, which represented a write down of
goodwill in the amount of the excess of the previous carrying value of goodwill over the implied fair value of
goodwill, as calculated under the two-step goodwill impairment process in accordance with ASC Subtopic
350-20, “Goodwill.”
Net interest expense was $556 million for 2009, compared to $560 million for 2008, a decrease of $4
million. The decrease in net interest expense for 2009, as compared to 2008, resulted primarily from a lower
level of borrowings due to retirement of debt at maturity and the debt tender offer completed during 2009, and
was partially offset by a decrease in interest income due to lower rates on invested cash.
The Company’s effective income tax rate of 30.9% for 2009 differs from the federal income tax statutory
rate of 35.0% principally because of the effect of state and local income taxes and the settlement of various tax
issues and tax examinations. Federal, state and local income tax expense for 2009 included a benefit of
approximately $21 million related to the settlement of federal income tax examinations, primarily attributable to
the disposition of former subsidiaries. The Company’s effective income tax rate for 2008 differed from the
federal income tax statutory rate of 35.0%, principally because of the impact of non-deductible goodwill
impairment charges, the effect of state and local income taxes and the settlement of various tax issues and tax
examinations.
Comparison of the 52 Weeks Ended January 31, 2009 and February 2, 2008. The net loss for 2008 was
$4,803 million compared to net income of $893 million for 2007. The net loss for 2008 reflected the lower sales
trend and includes the impact of $5,382 million of goodwill impairment charges, $187 million of division
consolidation costs and store closing-related costs and $211 million of asset impairment charges. The net income
for 2007 included income from continuing operations of $909 million and a loss from discontinued operations of
$16 million. The income from continuing operations in 2007 included the impact of $219 million of May
integration costs. The loss from discontinued operations in 2007 included the loss on disposal of the After Hours
Formalwear business.
Net sales for 2008 totaled $24,892 million, compared to net sales of $26,313 million for 2007, a decrease of
$1,421 million or 5.4%. On a comparable store basis, net sales for 2008 were down 4.6% compared to 2007.
Sales in 2008 were strongest at macys.com and bloomingdales.com and were weakest at Bloomingdale’s, Macy’s
West and Macy’s Florida. 2008 sales at Bloomingdale’s were weakest during the third and fourth quarters. Sales
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