Neiman Marcus 2008 Annual Report Download - page 33

Table of Contents
Given the dislocation in the financial markets and the uncertainty as to when reasonable conditions will return, we have
elected to pay PIK Interest for the three quarterly interest periods ending October 14, 2009 and to make such interest
payments with the issuance of additional Senior Notes at the PIK Interest rate of 9.75% instead of paying interest in
cash. As a result, the original principal amount of Senior Notes of $700.0 million increased by $17.1 million on April
14, 2009 and $17.4 million on July 14, 2009 and will increase by $18.1 million on October 14, 2009.
Prior to the beginning of each eligible interest period in the future, we will evaluate whether to continue utilizing this
PIK feature, taking into account market conditions and other relevant factors at that time. After October 15, 2010, we are
required to make all interest payments on the Senior Notes entirely in cash.
• Outlook—We expect retail demand and revenues will remain weak for an extended period of time. We will continue to
align our inventory levels and purchases with anticipated lower customer demand. Despite the anticipated continuation
of current economic conditions, we believe the cash generated from our operations along with our available sources of
financing will enable us to meet our cash obligations for fiscal year 2010.
OPERATING RESULTS
Performance Summary
The following table sets forth certain items expressed as percentages of net revenues for the periods indicated.
Fiscal year ended
August 1,
2009
August 2,
2008
July 28,
2007
Revenues 100.0% 100.0% 100.0%
Cost of goods sold including buying and occupancy costs
(excluding depreciation) 69.6 63.8 62.7
Selling, general and administrative expenses (excluding
depreciation) 24.2 22.7 23.1
Income from credit card program, net (1.4) (1.4) (1.5)
Depreciation expense 4.1 3.2 3.1
Amortization of intangible assets 1.5 1.2 1.2
Amortization of favorable lease commitments 0.5 0.4 0.4
Impairment charges 19.3 0.7 0.3
Other income — (0.7)(0.2)
Operating (loss) earnings (17.9) 10.1 10.9
Interest expense, net 6.5 5.2 5.9
(Loss) earnings from continuing operations before income
taxes (24.4) 4.9 4.9
Income tax (benefit) expense (6.1)1.8 1.9
(Loss) earnings from continuing operations (18.3) 3.1 3.1
Loss from discontinued operation, net of taxes — — (0.5)
Net (loss) earnings (18.3)% 3.1%2.5%
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