Saks Fifth Avenue 2010 Annual Report Download - page 22

DISCONTINUED OPERATIONS
As of January 31, 2009, the Company discontinued the operations of its CLL business, which consisted of
98 leased, mall-based specialty stores, targeting girls aged 4-12 years old. Charges incurred during 2008
associated with the closing of these stores totaled approximately $44.5 million and included inventory liquidation
costs of approximately $7.0 million, asset impairment charges of $17.0 million, lease termination costs of $14.0
million, severance and personnel related costs of $5.1 million, and other closing costs of $1.4 million. These
amounts are included in discontinued operations in the Consolidated Statement of Income and the Consolidated
Statement of Cash Flows for fiscal year 2008. Discontinued operations include nominal charges (income) for
2009 and 2010 from residual CLL store closing activities.
FINANCIAL PERFORMANCE SUMMARY
On a consolidated basis, total net sales and comparable store sales for the year ended January 29, 2011
increased 5.9% and 6.4%, respectively. The Company recorded income from continuing operations of $47.4
million, or $0.30 per share compared to a loss from continuing operations of $57.7 million, or $0.40 per share,
for the years ended January 29, 2011 and January 30, 2010, respectively. After recognition of the Company’s
after-tax gain from discontinued operations of $0.4 million, net income totaled $47.8 million, or $0.30 per share
for the year ended January 29, 2011. After recognition of the Company’s after-tax loss from discontinued
operations of $0.3 million, net loss totaled $57.9 million, or $0.40 per share for the year ended January 30, 2010.
The year ended January 29, 2011 included a net after-tax gain totaling $17.2 million or $0.11 per share,
primarily related to a $26.7 million or $0.17 per share gain related to the reversal of certain estimated income tax
reserves deemed no longer necessary due to the expiration of the statute of limitations. This gain was partially
offset by a net after-tax charge of $7.5 million or $0.05 per share, primarily related to store closings and asset
impairments and a $2.0 million or $0.01 per share non-cash pension charge related to excess lump sum
distributions during 2010.
The year ended January 30, 2010 included net after tax charges totaling $10.4 million or $0.07 per share,
primarily related to $17.3 million or $0.12 per share of asset impairment charges incurred in the normal course of
business and a $3.1 million or $0.02 per share non-cash pension charge related to excess lump sum distributions
during 2009 primarily resulting from the Company’s 2009 reductions-in-force. The year ended January 30, 2010
also included a net gain of $10.0 million or $0.07 per share, related to federal and state tax adjustments. The net
gain included income resulting from an increase in the state deferred tax rate, release of tax reserves due to the
expiration of the statute of limitations and reversal of a portion of the valuation allowance against deferred tax
assets.
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 (“NOL”) 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 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.
21