Neiman Marcus 2006 Annual Report Download - page 118

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NOTE 4. DISCONTINUED OPERATIONS
Gurwitch Products, L.L.C. On July 27, 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.
Kate Spade LLC. 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.
Kate Spade LLC designs and markets high-end accessories and had revenues of approximately $75.5 million (after
intercompany eliminations) in fiscal year 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.
Results of Discontinued Operations. Summarized financial information with respect to the results of operations of Kate Spade
LLC and Gurwitch Products L.L.C. is as follows:
(Successor) (Predecessor)
(in thousands)
Fiscal
year
ended
July 28
2007
Forty-three
weeks
ended
July 29,
2006
Nine
weeks
ended
October 1,
2005
Fiscal
year
ended
July 30,
2005
Revenues $ 29,612 $ 115,225 $ 19,277 $ 126,850
Earnings (loss) from discontinued operations before income taxes $ 3,494 $ (1,497) $ (1,412) $ 10,134
Income taxes 1,967 12,496 (619)5,114
Net earnings (loss) from discontinued operations 1,527 (13,993) (793)5,020
Loss on disposition before income taxes (13,398) — — —
Income taxes (10,900)— — —
Net loss on disposition (24,298)— — —
(Loss) earnings from discontinued operations, net of taxes $ (22,771)$ (13,993) $ (793)$ 5,020
In the first quarter of fiscal year 2007, we impaired the intangible assets of Kate Spade LLC by $12.5 million in order to state the
net assets of Kate Spade LLC at their estimated net realizable value to NMG.
F-22