Neiman Marcus 2012 Annual Report Download - page 19

Table of Contents
takes to reopen or replace a damaged facility. Any of the foregoing factors could adversely affect our business and results of operations.
Our business may be adversely affected by catastrophic events and extreme or unseasonable weather conditions.
Unforeseen events, including war, terrorism and other international conflicts, public health issues and natural disasters such as earthquakes,
hurricanes or tornadoes, whether occurring in the United States or abroad, could disrupt our supply chain operations, international trade or result in political
or economic instability. Any of the foregoing events could result in property losses, reduce demand for our products or make it difficult or impossible to obtain
merchandise from our suppliers.
Extreme weather conditions in the areas in which our stores are located, particularly in markets where we have multiple stores, could adversely affect
our business. For example, heavy snowfall, rainfall or other extreme weather conditions over a prolonged period might make it difficult for our customers to
travel to our stores and thereby reduce our sales and profitability. Our business is also susceptible to unseasonable weather conditions. For example, extended
periods of unseasonably warm temperatures during the winter season or cool weather during the summer season could render a portion of our inventory
incompatible with those unseasonable conditions. Reduced sales from extreme or prolonged unseasonable weather conditions could adversely affect our
business.
We are subject to numerous regulations that could affect our operations.
We are subject to customs, anti-corruption laws, truth-in-advertising, intellectual property, labor and other laws, including consumer protection
regulations, credit card regulations and zoning and occupancy ordinances that regulate retailers generally and/or govern the importation, promotion and sale of
merchandise, regulate wage and hour matters with respect to our employees and govern the operation of our retail stores and warehouse facilities. Although we
undertake to monitor changes in these laws, if these laws or the interpretations of these laws change without our knowledge, or are violated by importers,
designers, manufacturers or distributors, we could experience delays in shipments and receipt of goods, suffer damage to our reputation or be subject to fines
or other penalties under the controlling regulations, any of which could adversely affect our business.
If we are unable to enforce our intellectual property rights, or if we are accused of infringing on a third party’s intellectual property rights, our
business or results of operations may be adversely affected.
We and our subsidiaries currently own our tradenames and service marks, including the “Neiman Marcus” and “Bergdorf Goodman” marks. Our
tradenames and service marks are registered in the United States and in various foreign countries. The laws of some foreign countries do not protect
proprietary rights to the same extent as do the laws of the United States. The loss or reduction of any of our significant proprietary rights could have an
adverse effect on our business.
Additionally, third parties may assert claims against us alleging infringement, misappropriation or other violations of their tradename or other
proprietary rights, whether or not the claims have merit. Claims like these could be time consuming and expensive to defend and we could be required to cease
using the tradename or other rights or sell the allegedly infringing products. This could have an adverse effect on our business or results of operations and
cause us to incur significant litigation costs and expenses.
Risks Related to Our Indebtedness
Our significant leverage could adversely affect our ability to fund our operations and prevent us from meeting our obligations under our
indebtedness.
We are significantly leveraged. As of August 3, 2013, the principal amount of our total indebtedness was approximately $2,700.0 million (including
$15.0 million of borrowings outstanding under our Asset-Based Revolving Credit Facility). In addition, as of August 3, 2013, we had $615.0 million of
unused borrowing availability under our $700.0 million Asset-Based Revolving Credit Facility and no outstanding letters of credit.
The Future Sponsors’ Acquisition, if successfully completed, is expected to result in substantial new indebtedness, in part in replacement of existing
indebtedness.
Our current indebtedness, as well as anticipated future indebtedness to be incurred in connection with the Future Sponsors’ Acquisition, combined
with our lease and other financial obligations and contractual commitments, could adversely affect our business, financial condition and results of operations
by:
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