Neiman Marcus 2006 Annual Report Download - page 138

Subsequent Plan Redesign. In September 2007, our Board of Directors approved certain changes to our long-term benefits
program. Effective January 1, 2008, we will offer a new, enhanced retirement savings plan (RSP) whereby:
• Participants' balances in our current 401(k) Plan will be automatically transferred to the RSP.
• Our matching contributions to the RSP will increase to a potential maximum 75% of the employee contribution (up to a
6% deferral) from the potential maximum 50% to the current 401(k) Plan.
• Our matching contributions will vest to employees in two years as compared to the three year vesting under the current
401(k) Plan.
• All current and future employees who do not participate in the current 401(k) Plan will be automatically enrolled in the
RSP at a salary deferral rate of 3% once eligibly requirements have been met.
Effective January 1, 2008, we will also offer a new defined contribution supplemental executive retirement plan to eligible
employees.
Concurrent with the implementation of the RSP and the new supplemental executive retirement plan, we will freeze the benefits
offered under our Pension Plan and SERP Plan for most employees. An employee with ten years of service or whose age plus years of
service equals at least 65 as of December 31, 2007 will be allowed either 1) to continue participation in our current 401(k) Plan and
Pension Plan (and SERP Plan, if eligible) or 2) to freeze the benefit earned under the Pension Plan (and SERP Plan, if eligible) and
participate in the RSP. No employee who has met vesting requirements will forfeit benefits earned prior to January 1, 2008.
We have not yet determined the impact of the above design changes to 1) the future benefits payments to be made under our
Pension Plan and SERP Plan, 2) the actuarial determination of the funded status of those plans or 3) the accrued obligations to be
reflected on our balance sheet for periods subsequent to September 2007.
NOTE 14. LOSS ON DISPOSITION OF CHEF'S CATALOG
In November 2004, we sold our Chef's Catalog direct marketing business to a private equity firm. Chef's Catalog is a multi-
channel retailer of professional-quality kitchenware with revenues of approximately $73 million in fiscal year 2004. At October 30, 2004,
Chef's Catalog had net tangible assets, primarily inventory, of $12.5 million and net intangible assets of $17.2 million. We received
proceeds, net of selling costs, of $14.4 million from the sale. As the carrying value of the Chef's Catalog assets exceeded the net proceeds
from the sale, we incurred a pretax loss of $15.3 million in the first quarter of 2005 related to the disposition of Chef's Catalog.
NOTE 15. COMMITMENTS AND CONTINGENCIES
Leases. We lease certain property and equipment under various non-cancelable capital and operating leases. The leases provide
for monthly fixed rentals and/or contingent rentals based upon sales in excess of stated amounts and normally require us to pay real estate
taxes, insurance, common area maintenance costs and other occupancy costs. Generally, the leases have primary terms ranging from one
to 99 years and include renewal options ranging from two to 80 years.
Rent expense and related occupancy costs under operating leases 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
Fiscal year
ended
July 30,
2005
Minimum rent $ 45,200 $ 36,000 $ 5,800 $ 36,300
Contingent rent 28,600 22,900 4,700 23,800
Other occupancy costs 13,700 10,400 2,000 12,200
Total rent expense $ 87,500 $ 69,300 $ 12,500 $ 72,300
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