Neiman Marcus 2009 Annual Report Download - page 36

Table of Contents
Other expenses of $21.9 million in fiscal year 2010 and $22.5 million in fiscal year 2009 consist primarily of costs
(professional fees and severance) incurred in connection with cost reductions and corporate initiatives.
Interest expense, net. Net interest expense was $237.1 million, or 6.4% of revenues, in fiscal year 2010 and $235.6 million,
or 6.5% of revenues, for the prior fiscal year. The significant components of interest expense are as follows:
Fiscal year ended
(in thousands)
July 31,
2010
August 1,
2009
Senior Secured Term Loan Facility $ 83,468 $ 90,952
2028 Debentures 8,886 8,906
Senior Notes 68,315 66,356
Senior Subordinated Notes 51,732 52,028
Amortization of debt issue costs 18,697 17,185
Other, net 6,296 1,140
Capitalized interest (286)(993)
Interest expense, net $ 237,108 $ 235,574
Income tax (benefit) expense. In fiscal year 2010, we generated a loss before income taxes of approximately $5.3 million,
which resulted in a recorded income tax benefit of approximately $3.5 million and an effective tax rate of 65.4%. The effective tax
rate exceeds the statutory rate primarily due to the relative significance of state taxes, non-taxable income and non-deductible expense
to our pretax loss. For fiscal year 2009, we generated a loss before income taxes of approximately $888.5 million, which resulted in a
recorded income tax benefit of approximately $220.5 million and an effective tax rate of 24.8%. For fiscal year 2009, no income tax
benefit exists related to the $329.7 million of goodwill impairment charges recorded. Excluding the impact of the goodwill
impairment charges, our effective income tax rate was 39.5% for fiscal year 2009.
During the fourth quarter of fiscal year 2010, the Internal Revenue Service (IRS) closed their examination of our fiscal year
2007 federal income tax return with no changes or assessments. We anticipate the IRS will begin an examination of fiscal years 2008
and 2009 sometime in fiscal year 2011. With respect to state and local jurisdictions, with limited exceptions, the Company and its
subsidiaries are no longer subject to income tax audits for fiscal years before 2006. We believe our recorded tax liabilities as of
July 31, 2010 are sufficient to cover any potential assessments to be made by the IRS or other taxing authorities upon the completion
of their examinations and we will continue to review our recorded tax liabilities for potential audit assessments based upon subsequent
events, new information and future circumstances. We believe it is reasonably possible that additional adjustments in the amounts of
our unrecognized tax benefits could occur within the next twelve months as a result of settlements with tax authorities or expiration of
statutes of limitation. At this time, we do not believe such adjustments will have a material impact on our consolidated financial
statements.
Fiscal Year Ended August 1, 2009 Compared to Fiscal Year Ended August 2, 2008
Revenues. Our revenues for fiscal year 2009 of $3,643.3 million decreased $957.2 million, or 20.8%, from $4,600.5 million
in fiscal year 2008. The decrease in revenues was due to decreases in comparable revenues for both our Specialty Retail stores and
Direct Marketing operation as a result of the current challenging economic environment and lower customer demand. Customer
demand, especially during the holiday selling season, was well below our initial expectations and the prior year and the lower level of
customer demand continued throughout the Spring season of fiscal year 2009.
Comparable revenues for the fifty-two weeks ended August 1, 2009 were $3,575.4 million compared to $4,548.5 million in
fiscal year 2008, representing a decrease of 21.4%. Comparable revenues decreased in fiscal year 2009 by 23.2% for Specialty Retail
stores and 12.2% for Direct Marketing. New stores generated revenues of $67.9 million in fiscal year 2009.
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