Saks Fifth Avenue 2009 Annual Report Download - page 29

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Table of Contents
IMPAIRMENTS AND DISPOSITIONS
For the year ended January 30, 2010, the Company recognized net charges from impairments and dispositions of $29.3 million compared to net charges of
$11.1 million for the year ended January 31, 2009. The current and prior year charges were primarily due to asset impairments in the normal course of business.
INTEREST EXPENSE
Interest expense increased to $49.5 million in 2009 from $45.7 million in 2008 and, as a percentage of net sales, was 1.9% in 2009 and 1.5% in 2008. The
increase of $3.8 million was primarily due to the issuance of $120.0 million of convertible notes in May 2009 and the amortization of financing costs associated
with these notes and the amended revolving credit facility offset in part by the extinguishment of $23.0 million of senior notes in July 2009 and the retirement of
$84.1 million in principal amount of senior notes which matured in November 2008. Noncash interest expense associated with the adoption ASC 470 related to
accounting for convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) was $9.8 million and $6.8 million for
the years ended January 30, 2010 and January 31, 2009, respectively.
GAIN ON EXTINGUISHMENT OF DEBT
During the year ended January 30, 2010, the Company extinguished approximately $23.0 million of senior notes. The repurchase of these notes resulted in
a gain on extinguishment of debt of $0.8 million. There were no such gains recorded during the year ended January 31, 2009.
OTHER INCOME, NET
Other income decreased to $1.0 million in 2009 from $5.6 million in 2008. Other income in 2009 is primarily attributable to interest income. Other income
in 2008 included a $3.4 million gain on the sale of three unutilized properties.
INCOME TAXES
For 2009 and 2008, the effective income tax rate for continuing operations differs from the federal statutory tax rate due to state income taxes and other
items such as the change in the valuation allowance against state NOL carryforwards, the effect of concluding tax examinations and other tax reserve
adjustments, the write-off of an expired federal NOL, and the change in the overall state tax rate. Including the effect of these items, the Company’s effective
income tax rate for continuing operations was 43.6% and 27.9% in 2009 and 2008, respectively.
2008 COMPARED TO FISCAL YEAR ENDED FEBRUARY 2, 2008 (“2007”)
DISCUSSION OF OPERATING INCOME (LOSS) – CONTINUING OPERATIONS
The following table shows the changes in operating income (loss) from 2007 to 2008:
(In Millions)
Total
Company
2007 Operating Income—Continuing Operations $ 102.9
Store sales and margin (284.1)
Operating expenses 52.7
Impairments and dispositions (6.9)
Change (238.3)
2008 Operating Loss—Continuing Operations $ (135.4)
27
Source: SAKS INC, 10-K, March 18, 2010 Powered by Morningstar® Document Research℠