Neiman Marcus 2009 Annual Report Download - page 38

Table of Contents
In the fourth quarter of fiscal year 2008, we recorded a $31.3 million, or 0.7% of revenues, pretax impairment charge related
to the writedown to fair value of the Horchow tradename.
Other income. In the first quarter of fiscal year 2008, we recorded a pension curtailment gain of $32.5 million, or 0.7% of
revenues, as a result of our decision to freeze certain Pension and SERP benefits as of December 31, 2007, as more fully explained in
Notes 10 and 13 in the Notes to Consolidated Financial Statements.
Segment operating earnings. Segment operating earnings for our Specialty Retail stores and Direct Marketing segments do
not reflect either the impact of adjustments to revalue our assets and liabilities to estimated fair value at the Acquisition date or
impairment charges related to declines in fair value subsequent to the Acquisition date. The reconciliation of segment operating
earnings to total operating (loss) earnings is as follows:
Fiscal year ended
August 1, August 2,
(in millions) 2009 2008
Specialty Retail stores $ 124.3 $ 476.7
Direct Marketing 73.3 117.7
Corporate expenses (52.1) (57.0)
Other expenses (22.5) —
Amortization of intangible assets and favorable lease commitments (72.7) (72.2)
Impairment charges (703.2) (31.3)
Other income — 32.5
Total operating (loss) earnings $ (652.9)$ 466.4
Operating earnings for our Specialty Retail stores segment were $124.3 million, or 4.2% of Specialty Retail stores revenues,
for fiscal year 2009 compared to $476.7 million, or 12.4% of Specialty Retail stores revenues, for the prior fiscal year. The decrease
in operating margin as a percentage of revenues was primarily due to:
• lower level of full-price sales as a result of weak customer demand and higher net markdowns and promotional costs
incurred to liquidate on-hand inventories held in excess of sales trends; and
• the deleveraging of a significant portion of our expenses on the lower level of revenues; partially offset by
• a lower level of spending for advertising and promotion costs.
Operating earnings for Direct Marketing were $73.3 million, or 11.2% of Direct Marketing revenues, in fiscal year 2009
compared to $117.7 million, or 15.7% of Direct Marketing revenues, for the prior fiscal year. The decrease in operating margin as a
percentage of revenues for Direct Marketing was primarily the result of:
• a decrease in margins primarily due to higher net markdowns in response to weak customer demand; and
• the deleveraging of a significant portion of our expenses.
Other expenses of $22.5 million in fiscal year 2009 consist primarily of costs (professional fees and severance) incurred in
connection with cost reductions and corporate initiatives.
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