Neiman Marcus 2007 Annual Report Download - page 104

Table of Contents
NOTE 3. DISCONTINUED OPERATIONS
Gurwitch Products, L.L.C. In July 2006, we sold our majority interest in Gurwitch Products, L.L.C. to Alticor Inc., for
pretax net cash proceeds of approximately $40.8 million (Gurwitch Disposition). Gurwitch Products, L.L.C. designs and markets the
Laura Mercier cosmetics line and had revenues of approximately $59.0 million (after intercompany eliminations) in fiscal year 2006.
The net assets of Gurwitch Products, L.L.C. were sold for their net carrying value (after purchase accounting adjustments made in
connection with the Acquisition to state such assets at fair value).
Kate Spade LLC. In February 1999, NMG acquired a 56% controlling interest in Kate Spade LLC, a designer and marketer
of high-end accessories. In April 2005, the minority investor in Kate Spade LLC exercised the put option with respect to the sale of
the full amount of its 44% stake in such company to NMG. In October 2006, we entered into an agreement to settle the put option
whereby we purchased the interest held by the minority investor for approximately $59.4 million.
In November 2006, we entered into a definitive agreement to sell 100% of the ownership interests in Kate Spade LLC to Liz
Claiborne, Inc. (consisting of both our original 56% interest and the 44% minority interest subsequently purchased by NMG) for
pretax net cash proceeds of approximately $121.5 million. Both the purchase of the minority interest in Kate Spade LLC and the sale
of Kate Spade LLC to Liz Claiborne, Inc. were consummated in December 2006.
The Company's consolidated financial statements, accompanying notes and other information provided in this Annual Report
on Form 10-K reflect Gurwitch Products, L.L.C. and Kate Spade LLC as discontinued operations for all periods presented.
Results of Discontinued Operations. Summarized financial information with respect to the results of operations of Kate
Spade LLC and Gurwitch Products L.L.C. is as follows:
(Successor) (Predecessor)
(in thousands)
Fiscal
year
ended
July 28,
2007
Forty-three
weeks
ended
July 29,
2006
Nine
weeks
ended
October 1,
2005
Revenues $ 29,612 $ 115,225 $ 19,277
Earnings (loss) from discontinued operations before income taxes $ 3,494 $ (1,497) $ (1,412)
Income taxes 1,967 12,496 (619)
Net earnings (loss) from discontinued operations 1,527 (13,993) (793)
Loss on disposition before income taxes (13,398) — —
Income taxes (10,900)— —
Net loss on disposition (24,298)— —
Loss from discontinued operations, net of taxes $ (22,771)$ (13,993) $ (793)
In the first quarter of fiscal year 2007, we impaired the intangible assets of Kate Spade LLC by $12.5 million in order to state
the net assets of Kate Spade LLC at their estimated net realizable value to NMG.
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