Neiman Marcus 2002 Annual Report Download - page 41

THE NEIMAN MARCUS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. Summary of Significant Accounting Policies
BASIS OF PRESENTATION
The consolidated financial statements of The Neiman Marcus Group, Inc. and subsidiaries (the Company) have been prepared in
accordance with generally accepted accounting principles. The Company's businesses consist of specialty retail stores, primarily
Neiman Marcus Stores and Bergdorf Goodman, and Neiman Marcus Direct, the Company's direct marketing operation.
The Company owns a 51 percent interest in Gurwitch Products, LLC, which distributes and markets the Laura Mercier cosmetic line,
and a 56 percent interest in Kate Spade LLC, a manufacturer and retailer of high-end designer handbags and accessories. All
significant intercompany accounts and transactions have been eliminated.
The Company's fiscal year ends on the Saturday closest to July 31. All references to 2003 relate to the fifty-two weeks ended August
2, 2003; all references to 2002 relate to the fifty-three weeks ended August 3, 2002 and all references to 2001 relate to the fifty-two
weeks ended July 28, 2001. All references to 2004 relate to the fifty-two weeks ending on July 31, 2004.
In the opinion of management, the accompanying consolidated financial statements contain all adjustments, consisting of normal
recurring adjustments (as well as a change in accounting principle in 2003 as more fully described in Note 3, the change in vacation
policy in 2002 as more fully described in Note 10, and impairment and other charges in 2002 as more fully described in Note 11),
necessary to present fairly the financial position, results of operations and cash flows of the Company for the periods presented.
Certain prior period balances have been reclassified to conform to the current period presentation.
ESTIMATES AND CRITICAL ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make
estimates and assumptions about future events. These estimates and assumptions affect amounts of assets, liabilities, revenues and
expenses and the disclosure of gain and loss contingencies at the date of the consolidated financial statements. The amounts currently
estimated by the Company are subject to change if different assumptions as to the outcome of future events were made. The Company
evaluates its estimates and judgments on an ongoing basis and predicates those estimates and judgments on historical experience and
on various other factors that are believed to be reasonable under the circumstances. Management makes adjustments to its
assumptions and judgments when facts and circumstances dictate. Since future events and their effects cannot be determined with
absolute certainty, actual results may differ from the estimates used by the Company in preparing the accompanying financial
statements.
Cash and Cash Equivalents. Cash and cash equivalents primarily consist of cash on hand in the stores, deposits with banks and
overnight investments with banks and financial institutions. Cash equivalents are stated at cost, which approximates fair value. The
Company's cash management system provides for the reimbursement of all major bank disbursement accounts on a daily basis.
Accounts payable includes $48.9 million of outstanding checks not yet presented for payment at August 2, 2003 and $43.6 million at
August 3, 2002.
Proprietary Credit Card Program and Credit Risk. The Company extends credit to certain of its customers pursuant to its proprietary
retail credit card program. Concentration of credit risk with respect to the credit card receivables is limited due to the large number of
customers to whom the Company extends credit. Ongoing credit evaluations of customers' financial conditions are performed and
collateral is not required as a condition of extending credit.
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