Saks Fifth Avenue 2008 Annual Report Download - page 23

The year ended January 31, 2009 included net after-tax charges totaling $26.2 million or $0.19 per share,
primarily related to $7.0 million or $0.05 per share of asset impairment charges incurred in the normal course of
business and approximately $6.7 million or $0.05 per share of severance costs related to the Company’s 2008
downsizing initiative and the Ft. Lauderdale store closing. The year ended January 31, 2009 also included a
write-off and adjustment of $14.6 million or $0.11 per share of certain deferred tax assets primarily associated
with Federal Net Operating Loss tax credits that expired at the end of fiscal 2008. These expenses were partially
offset by a net gain of $2.1 million or $0.02 per share related to the sale of three unutilized properties.
The year ended February 2, 2008 included net after-tax charges totaling $16.0 million, or $0.10 per share,
primarily related to $18.1 million, or $0.12 per share, for retention, severance, and transition costs related to the
Company’s downsizing and consolidation following the disposition of its SDSG businesses. Additionally, legal
and investigation costs totaled $3.7 million, or $.02 per share, associated with the previously disclosed
investigation by the SEC (which has been concluded) and the investigation by the Office of the United States
Attorney for the Southern District of New York as well as the settlement of two related vendor lawsuits. The year
ended February 2, 2008 also included a loss on extinguishment of debt totaling $3.4 million or $.02 per share,
related to the repurchase of $106.3 million of senior notes, $2.7 million, or $.02 per share, related to asset
impairments and dispositions, and $0.8 million expense related to a state tax adjustment. These expenses were
partially offset by an insurance adjustment (credit) of $8.1 million, or $0.05 per share, related to the New Orleans
Store, as well as a gain of $1.6 million, or $.01 per share, related to an OFF 5th store closing and the sale of an
unused support facility. Lastly, there was a $3.0 million, or $.02 per share, state income tax valuation adjustment
(credit).
The year ended February 3, 2007 included net after-tax charges totaling $33.9 million, or $0.25 per share,
primarily due to $22.3 million, or $0.16 per share, for retention and severance and a $21.0 million, or $0.15 per
share, non-cash charge related to the accounting treatment under the Statement of Financial Accounting Standard
(“SFAS”) No. 123R “Share-Based Payment,” (“SFAS No. 123R”) for the discretionary anti-dilution adjustment
made to outstanding options in connection with the Company’s $4 per common share dividends paid in May and
November 2006. Additionally, there was a charge of $7.4 million, or $0.06 per share, primarily related to asset
impairments and dispositions, and expenses of $3.6 million, or $0.03 per share, related to legal and other costs
associated with the previously disclosed investigations. This was partially offset by income of $16.8 million, or
$0.12 per share, due to the favorable conclusion of certain tax examinations and the adjustment of certain tax
valuation allowances, a gain of $2.6 million, or $0.02 per share, related to a one-time gain on the curtailment of
the Company’s pension plan, and an insurance adjustment (credit) of $1.0 million, or $0.01 per share, related to
the New Orleans store.
The year ended February 3, 2007 included an extra week, creating a 53-week fiscal year that occurs every
six years in the accounting cycle for many retailers. Management estimates that the 53rd week added $0.06 per
share to earnings per share for the year ended February 3, 2007.
The retail environment is challenging and competitive. Uncertain conditions make the forecasting of near-
term results difficult. The Company believes that execution of key strategic initiatives provides the Company an
opportunity and the resources to enhance shareholder value.
The Company believes that an understanding of its reported financial condition and results of operations is
not complete without considering the effect of all other components of MD&A included herein.
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