Neiman Marcus 2008 Annual Report Download - page 108

Table of Contents
• rate used to discount the estimated royalty cash flow projections to their present value (or estimated fair value).
Based upon the review of our tradenames in fiscal year 2009, we determined certain of these tradenames were impaired and
recorded impairment charges aggregating $343.2 million. These impairment charges reflect 1) lower revenues and profitability
projections associated with our tradenames in the near term, 2) lower estimated market royalty rate expectations in light of current
general economic conditions as well as our lower near-term profitability projections and 3) a higher rate (based upon the weighted
average cost of capital) required to discount our cash flow projections in light of current economic conditions and financial market
considerations. We believe our estimates are appropriate based upon current market conditions and the best information available at
the assessment date. However, future impairment charges could be required if we do not achieve our current revenue and profitability
projections, market royalty rates decrease or the weighted average cost of capital increases.
Goodwill. We assess the recoverability of the goodwill associated with our Neiman Marcus stores, Bergdorf Goodman stores
and Direct Marketing reporting units. Such determination is made using discounted cash flow techniques. Inputs to the valuation
model include:
• estimated future cash flows;
• growth assumptions for future revenues as well as future gross margin rates, expense rates and other estimates; and
• rate used to discount our estimated future cash flow projections to their present value (or estimated fair value).
Based upon the review of our recorded goodwill balances in fiscal year 2009, we determined the goodwill balances
associated with our Specialty Retail stores were impaired and recorded impairment charges aggregating $329.7 million. These
impairment charges reflect 1) lower cash flow, revenue and profitability projections associated with these operations and 2) a higher
rate (based upon the weighted average cost of capital) required to discount our cash flow projections in light of current economic
conditions and financial market considerations. We believe our estimates are appropriate based upon current market conditions and
the best information available at the assessment date. However, future impairment charges could be required if we do not achieve our
current cash flow, revenue and profitability projections or the weighted average cost of capital increases.
NOTE 8. ACCRUED LIABILITIES
The significant components of accrued liabilities are as follows:
(in thousands)
August 1,
2009
August 2,
2008
Accrued salaries and related liabilities $ 42,213 $ 51,857
Amounts due customers 62,254 60,602
Self-insurance reserves 35,510 44,132
Sales returns reserves 29,749 45,042
Interest payable 28,933 34,756
Sales taxes 18,323 24,047
Loyalty program liability 16,927 22,974
Other 68,977 77,684
Total $ 302,886 $ 361,094
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