Saks Fifth Avenue 2010 Annual Report Download - page 57

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SAKS INCORPORATED & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
NOTE 1—GENERAL
ORGANIZATION
Saks Incorporated, a Tennessee corporation first incorporated in 1919, and its subsidiaries (together the
“Company”) consist of Saks Fifth Avenue (“SFA”), Saks Fifth Avenue OFF 5TH (“OFF 5TH”), and SFA’s
e-commerce operations (“Saks Direct”). Previously, the Company also operated Club Libby Lu (“CLL”) (the
operations of which were discontinued in January 2009).
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 $44,521 and included inventory liquidation costs of
approximately $6,965, asset impairment charges of $16,993, lease termination costs of $14,045, severance and
personnel related costs of $5,074 and other closing costs of $1,444. These amounts and the results of operations
of CLL are included in discontinued operations in the Consolidated Statements of Income and the Consolidated
Statements of Cash Flows for fiscal year 2008. Discontinued operations include nominal charges (income) for
2009 and 2010 from residual CLL store closing activities.
NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally accepted accounting principles
(“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual results could differ from these
estimates.
The accompanying consolidated financial statements include the accounts of the Company and its
subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
The Company’s fiscal year ends on the Saturday closest to January 31. Fiscal years 2010, 2009, and 2008
ended on January 29, 2011 (“2010”), January 30, 2010 (“2009”), and January 31, 2009 (“2008”), respectively.
Certain reclassifications were made to prior period amounts to conform to the current year presentation.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In January 2010, the Financial Accounting Standards Board (“FASB”) issued an accounting standard update
related to improving disclosures about fair value measurements. The update requires reporting entities to make
new disclosures about recurring or nonrecurring fair value measurements including significant transfers into and
out of Level 1 and Level 2 fair value measurements and information on purchases, sales, issuances, and
settlements on a gross basis in the reconciliation of Level 3 fair value measurements. The accounting standard
update is effective for reporting periods beginning after December 15, 2009, except for Level 3 reconciliation
disclosures which are effective for periods beginning after December 15, 2010. Adoption of this accounting
standard update as it relates to Level 1 and Level 2 fair value disclosures did not impact the Company’s
consolidated financial statements. The Company does not expect the adoption of the accounting standard update
related to the Level 3 reconciliation disclosures to have a material impact on its consolidated financial
statements.
F-7