Neiman Marcus 2009 Annual Report Download - page 128

Table of Contents
Significant assumptions utilized in the calculation of our projected benefit obligations as of July 31, 2010 and future expense
requirements for our Pension Plan, SERP Plan and Postretirement Plan, and sensitivity analysis related to changes in these
assumptions, are as follows:
Using Sensitivity Rate
Actual
Rate
Sensitivity Rate
Increase/(Decrease)
Increase in
Liability
(in millions)
Increase/
(Decrease) in
Expense
(in millions)
Pension Plan:
Discount rate 5.20% (0.25)% $ 18.4 $ 0.3
Expected long-term rate of return
on plan assets 8.00% (1.00)% N/A $ 3.3
SERP Plan:
Discount rate 5.20% (0.25)% $ 2.9 $ (0.1)
Postretirement Plan:
Discount rate 5.10% (0.25)% $ 0.6 $ 0.1
Ultimate health care cost trend rate 8.00% 1.00% $ 2.4 $ 0.1
NOTE 14. COMMITMENTS AND CONTINGENCIES
Leases. We lease certain property and equipment under various 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:
Fiscal year ended
(in thousands)
July 31,
2010
August 1,
2009
August 2,
2008
Minimum rent $ 56,100 $ 55,400 $ 53,000
Contingent rent 20,100 19,600 29,700
Other occupancy costs 15,100 15,700 13,600
Amortization of deferred real estate
credits (6,300)(5,300)(3,700)
Total rent expense $ 85,000 $ 85,400 $ 92,600
Future minimum rental commitments, excluding renewal options, under non-cancelable leases are as follows: fiscal year
2011—$55.7 million; fiscal year 2012—$55.1 million; fiscal year 2013—$53.2 million; fiscal year 2014—$48.5 million; fiscal year
2015—$43.6 million; all fiscal years thereafter—$618.0 million.
Long-term Incentive Plan. We have a long-term incentive plan (Long-term Incentive Plan) that provides for a cash
incentive payable to certain employees upon a change of control, as defined, subject to the attainment of certain performance
objectives. Performance objectives and targets are based on cumulative EBITDA percentages for rolling three year periods beginning
in fiscal year 2006. Earned awards for each completed performance period will be credited to a book account and will earn interest at
a contractually defined annual rate until the award is paid. Awards will be paid upon a change of control, as defined, or an initial
public offering, as defined, subject to the requirement that, in each case, the internal rate of return to the Sponsors is positive. As of
July 31, 2010, the vested participant balance in the Long-Term Incentive Plan aggregated $6.5 million.
Cash Incentive Plan. We also have a cash incentive plan (Cash Incentive Plan) to aid in the retention of certain key
executives. The Cash Incentive Plan provides for the creation of a $14 million cash bonus pool. Each participant in the Cash
Incentive Plan will be entitled to a cash bonus upon the earlier to occur of a change of control, as defined, or an initial public offering,
as defined, subject to the requirement that, in each case, the internal rate of return to the Sponsors is positive.
Litigation. On April 30, 2010, a Class Action Complaint for Injunction and Equitable Relief was filed in the United States
District Court for the Central District of California by Sheila Monjazeb, individually and on behalf of other members of the general
public similarly situated, against the Company, Newton Holding, LLC, TPG Capital, L.P. and Warburg Pincus, LLC.
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