Neiman Marcus 2003 Annual Report Download - page 31

accruals have been established or be required to pay amounts in excess of recorded reserves, the Company's effective tax rate in a
given financial statement period could be materially impacted.
Litigation. The Company is periodically involved in various legal actions arising in the normal course of business. Management is
required to assess the probability of any adverse judgments as well as the potential range of any losses. Management determines the
required accruals after a careful review of the facts of each significant legal action. The Company's accruals may change in the future
due to new developments in these matters.
Recent Accounting Pronouncements
In December 2003, the Financial Accounting Standards Board (FASB), revised SFAS No. 132, "Employers' Disclosures about
Pensions and other Postretirement Benefits," (SFAS No. 132R) which requires additional disclosures about the assets, obligations,
cash flows, and net periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans. SFAS
No. 132R was effective January 31, 2004 and the Company has provided the revised disclosures.
In December 2003, the U.S. Congress enacted the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (Act)
that will provide a prescription drug subsidy, beginning in 2006, to companies that sponsor postretirement health care plans that
provide drug benefits. Additional legislation is anticipated that will clarify whether a company is eligible for the subsidy, the amount
of the subsidy available and the procedures to be followed in obtaining the subsidy. In May 2004, the FASB issued Staff Position
106-2 "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of
2003" that provides guidance on the accounting and disclosure for the effects of the Act. The Company is evaluating the impact of the
Act on its Postretirement Plan as well as future actions that the Company might take in response to the Act. As a result, the Company
is currently unable to quantify the effects of this legislation on its obligations pursuant to the Postretirement Plan.
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