Neiman Marcus 2007 Annual Report Download - page 29
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Table of Contents
allowances are recorded as a reduction of our advertising costs when earned. Vendor allowances earned and recorded as a reduction to
selling, general and administrative expenses aggregated approximately $75.7 million, or 1.6% of revenues, in fiscal year 2008, $63.4
million, or 1.4% of revenues, in fiscal year 2007 and $61.7 million, or 1.5% of revenues, in fiscal year 2006 (including $18.6 million for
the Predecessor prior to the Acquisition).
We also receive allowances from certain merchandise vendors in conjunction with compensation programs for employees who
sell the vendor's merchandise. These allowances are netted against the related compensation expense that we incur. Amounts received
from vendors related to compensation programs were $71.6 million, or 1.6% of revenues, in fiscal year 2008, $65.4 million, or 1.5% of
revenues, in fiscal year 2007 and $59.5 million, or 1.5% of revenues, in fiscal year 2006 (including $10.1 million for the Predecessor prior
to the Acquisition).
Changes in our selling, general and administrative expenses are affected primarily by the following factors:
• changes in the number of sales associates primarily due to new store openings and expansion of existing stores, including
increased health care and related benefits expenses;
• changes in expenses incurred in connection with our advertising and marketing programs; and
• changes in expenses related to insurance and long-term benefits due to general economic conditions such as rising health
care costs.
Income from credit card program. Pursuant to a long-term marketing and servicing alliance with HSBC, HSBC offers credit
card and non-card payment plans bearing our brands and we receive ongoing payments from HSBC based on net credit card sales and
compensation for marketing and servicing activities (HSBC Program Income). We recognize HSBC Program Income when earned. In
the future, the HSBC Program Income may be:
• increased or decreased based upon the level of utilization of our proprietary credit cards by our customers;
• increased or decreased based upon future changes to our historical credit card program related to, among other things, the
interest rates applied to unpaid balances and the assessment of late fees; and
• decreased based upon the level of future services we provide to HSBC.
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