Neiman Marcus 2008 Annual Report Download - page 106

Table of Contents
NOTE 6. GOODWILL AND INTANGIBLE ASSETS, NET
The significant components of our intangible assets and goodwill, by our reportable operating segments, are as follows:
(in thousands)
Customer
lists
Favorable
lease
commitments Tradenames Goodwill
Specialty Retail
Balance at July 28, 2007 $ 418,058 $ 447,319 $ 1,406,030 $ 1,300,253
Amortization (39,542) (17,878)
Adjustments related to pre-
acquisition tax contingencies — — — 4,805
Balance at August 2, 2008 $ 378,516 $ 429,441 $ 1,406,030 $ 1,305,058
Amortization (39,499) (17,877)
Adjustments related to pre-
acquisition tax contingencies (15,687)
Writedown of tradenames (311,835)
Writedown of goodwill (329,709)
Balance at August 1, 2009 $ 339,017 $ 411,564 $ 1,094,195 $ 959,662
Direct Marketing
Balance at July 28, 2007 $ 59,187 $ — $ 204,285 $ 304,887
Amortization (14,772) —
Adjustments related to pre-
acquisition tax contingencies 1,246
Writedown of Horchow tradename (31,261)—
Balance at August 2, 2008 $ 44,415 $ — $ 173,024 $ 306,133
Amortization (14,772) — (555)
Adjustments related to pre-
acquisition tax contingencies (2,362)
Writedown of tradenames (31,374)
Balance at August 1, 2009 $ 29,643 $ — $ 141,095 $ 303,771
Total at August 1, 2009 $ 368,660 $ 411,564 $ 1,235,290 $ 1,263,433
Total accumulated amortization at
August 1, 2009 $ 207,830 $ 68,416 $ 555
During the third quarter of fiscal year 2009, we closed the Internal Revenue Service (IRS) examination of fiscal years 2005
and 2006 and received net refunds of approximately $2.8 million. In addition, as a result of the completion of the audit and IRS
determination regarding certain deductions taken in connection with the Acquisition, we recorded a decrease in the gross amount of
unrecognized tax benefits of $13.7 million and a decrease in accrued interest and penalties of $2.2 million. This $15.9 million
reduction in our liability for unrecognized tax benefits resulted in a decrease to goodwill of $17.3 million and a tax benefit of $1.3
million, offset by a decrease to deferred tax liabilities of $2.7 million during fiscal year 2009. Finally, in the fourth quarter of fiscal
year 2009, we recorded a decrease to our recorded liability for unrecognized tax benefits and a corresponding reduction to goodwill of
$0.7 million as a result of the expiration of statutes of limitation in various taxing jurisdictions.
In the first quarter of fiscal year 2008, the cumulative effect of adopting FASB Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes" (FIN 48) resulted in a net increase to our accruals for uncertain tax positions of $9.1 million for the
derecognition of certain tax benefits. This increase to our accruals was offset by a corresponding increase to goodwill as these
uncertainties existed at the time of the Acquisition. During the fourth quarter of fiscal year 2008, we entered into a negotiated
settlement with a state tax authority regarding a state non-filing position which resulted in a decrease in our accruals for uncertain tax
positions and a reduction to goodwill of $3.0 million related to the resolution of tax uncertainties that existed at the time of the
Acquisition.
In the fourth quarters of fiscal years 2008 and 2007, we recorded $31.3 million and $11.5 million pretax impairment charges
related to the writedown to fair value of the Horchow tradename based upon lower revenues and royalty rate
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