Neiman Marcus 2008 Annual Report Download - page 122

Table of Contents
• Participants' balances in our 401(k) Plan were automatically transferred to the RSP.
• Our matching contributions to the RSP increased to a potential maximum 75% of the employee contributions (up to a
6% deferral) from the potential maximum 50% to the 401(k) Plan (subject to IRS limit of $16,500 in 2009 for employee
contributions).
• Our matching contributions vest to employees in two years as compared to the three year vesting under the 401(k) Plan.
• All current employees, who did not participate in the former 401(k) Plan, and future employees are automatically
enrolled in the RSP at a salary deferral rate of 3% once eligibility requirements have been met.
Concurrent with the implementation of the RSP and the Defined Contribution SERP Plan, we froze benefits offered under
our Pension and SERP Plans for most employees. Employees with a minimum of ten years of service and whose age plus years of
service equaled at least 65 (Rule of 65) as of December 31, 2007 were allowed either 1) to continue participation in our 401(k) Plan
and Pension Plan (and SERP Plan, if eligible) or 2) to freeze the benefits earned under the Pension Plan (and SERP Plan, if eligible)
and participate in the RSP. No employee who met vesting requirements forfeited benefits earned prior to December 31, 2007.
Costs of Benefits. The components of the expenses we incurred under our Pension Plan, SERP Plan and Postretirement Plan
are as follows:
Fiscal year ended
(in thousands)
August 1,
2009
August 2,
2008
July 28,
2007
Pension Plan:
Service cost $ 6,057 $ 10,815 $ 14,886
Interest cost 24,361 22,866 22,214
Expected return on plan assets (26,048 )(24,626 )(23,458 )
Pension Plan expense $ 4,370 $ 9,055 $ 13,642
Curtailment gain $ — $ 26,113 $ —
SERP Plan:
Service cost $ 689 $ 1,254 $ 1,719
Interest cost 5,312 4,960 4,928
SERP Plan expense $ 6,001 $ 6,214 $ 6,647
Curtailment gain $ — $ 6,337 $ —
Postretirement Plan:
Service cost $ 92 $ 124 $ 57
Interest cost 1,343 1,356 786
Net amortization of losses (gains) 282 547 (64 )
Postretirement Plan expense $ 1,717 $ 2,027 $ 779
For purposes of determining pension expense, the expected return on plan assets is calculated using the market related value
of plan assets. At August 1, 2009, the market related value of plan assets exceeded fair value by $57.8 million.
Benefit Obligations. Our obligations for the Pension Plan, SERP Plan and Postretirement Plan are valued annually as of the
beginning of each fiscal year. With respect to the Pension Plan and the SERP Plan, our obligations consist of both a projected benefit
obligation (PBO) and an accumulated benefit obligation (ABO). The PBO represents the present value of benefits ultimately payable
to plan participants for both past and future services expected to be provided by the plan participants. The ABO represents the present
value of benefits payable to plan participants for only services rendered at the valuation date.
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