Neiman Marcus 2004 Annual Report Download - page 98
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the provisions of current accounting rules related to the calculation of the gains on sale of the previous Sold Interests and the valuation of both Sold and
Retained Interests. During the Transition Period, the $7.6 million premium was amortized as a reduction of our net earnings from our credit card portfolio
(recorded as a reduction of selling, general and administrative expenses in the consolidated statements of earnings). Of the $7.6 million premium, $5.3 million
was amortized in the second quarter of 2004 and the remaining $2.3 million was amortized in the third quarter of 2004.
NOTE 3. Goodwill and Intangible Assets
The significant components of goodwill and intangible assets, included in other assets in the accompanying consolidated balance sheets, are as follows:
July 30,
2005
July 31,
2004
(in thousands)
Goodwill $14,872 $23,747
Trademarks 56,645 64,945
$71,517 $88,692
We adopted the provisions of SFAS No. 142, "Goodwill and Other Intangible Assets" as of the beginning of the first quarter of 2003. SFAS No. 142
established a new fair value-based accounting model for the valuation of goodwill and indefinite-lived intangible assets recorded in connection with business
combinations. Pursuant to the provisions of SFAS No. 142, goodwill and indefinite-lived intangible assets are measured for impairment by applying a fair
value-based test at least annually and are not amortized.
In connection with the adoption of the provisions of SFAS No. 142, we engaged third-party appraisal experts to assist with the determination of the fair
value of our goodwill and intangible assets. Fair value was determined using a discounted cash flow methodology. For each of our operating segments, a
summary of the carrying values of our intangible assets is as follows:
SFAS No. 142 Adjustments
Sale of
Chef's
Catalog
in 2005
At
August 4,
2002
At
Adoption
During
2003
During
2004
At
July 30,
2005
(in thousands)
Direct Marketing
Goodwill $ 23,747 $ — $ — $ — $ (8,875) $14,872
Indefinite-lived tradenames 60,732 (24,066) (813) (3,853) (8,300) 23,700
Other
Indefinite-lived tradenames 32,945 — — — — 32,945
$117,424 $(24,066) $ (813) $(3,853) $(17,175) $71,517
The $24.1 million writedown in the carrying value of the indefinite-lived intangible assets of our Direct Marketing segment required upon adoption of
SFAS No. 142 is reflected as a change in accounting principle ($14.8 million, net of taxes) in the accompanying consolidated statement of earnings for 2003.
The additional writedowns of $0.8 million in 2003 (included in selling, general and
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