Neiman Marcus 2008 Annual Report Download - page 105

Table of Contents
NOTE 4. INCOME FROM CREDIT CARD PROGRAM, NET
In June 2005, we entered into a marketing and servicing alliance with HSBC. Pursuant to the agreement with HSBC
(Program Agreement), HSBC offers credit cards and non-card payment plans and bears substantially all credit risk with respect to
sales transacted on the cards bearing our brands. We receive ongoing payments from HSBC related to credit card sales and
compensation for marketing and servicing activities (HSBC Program Income). The Program Agreement expires in June 2010. We
recognize HSBC Program Income when earned.
The Program Agreement, as amended, provides for 1) the allocation between HSBC and NMG of additional income, if any,
to be generated from the credit card program as a result of certain changes made to the terms of credit extended to our customers since
the inception of the Program Agreement and 2) the allocation of certain credit card losses between HSBC and NMG. In light of
current economic conditions that have led to higher delinquencies and losses on consumer indebtednesses, net losses are currently
allocable to NMG. As of August 1, 2009, our reserve for credit card net losses aggregated $3.5 million, which is included in accrued
liabilities in the consolidated balance sheets.
NOTE 5. PROPERTY AND EQUIPMENT, NET
The significant components of our property and equipment, net are as follows:
(in thousands)
August 1,
2009
August 2,
2008
Land, buildings and improvements $ 868,026 $ 829,647
Fixtures and equipment 617,303 560,537
Construction in progress 48,632 77,320
1,533,961 1,467,504
Less accumulated depreciation and amortization 541,246 392,210
Property and equipment, net $ 992,715 $ 1,075,294
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