Neiman Marcus 2013 Annual Report Download - page 129

Table of Contents
Significant assumptions utilized in the calculation of our projected benefit obligations as of August 2, 2014 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:
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



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




Pension Plan:
Discount rate
4.35%
0.25 %
$ (20.3)
$ 0.5
Expected long-term rate of return on plan assets
6.50%
(0.50)%
N/A
$ 1.9
SERP Plan:
Discount rate
4.20%
0.25 %
$ (3.2)
$ 0.1
Postretirement Plan:
Discount rate
4.25%
0.25 %
$ (0.3)
$ —
Ultimate health care cost trend rate
5.00%
1.00 %
$ 1.4
$ 0.1

On March 28, 2012, the Board of Directors of NMG declared a cash dividend (the 2012 Dividend) of $435 per share of its outstanding common
stock resulting in total distributions to our former stockholders and certain former option holders (including related expenses) of $449.3 million. The 2012
Dividend was paid on March 30, 2012 to former stockholders of record at the close of business on March 28, 2012.


Stock Options. The Predecessor had equity-based management arrangements, which authorized equity awards to be granted to certain management
employees. At the time of the Acquisition, Predecessor stock options for 101,730 shares were outstanding, consisting of vested options for 67,899 shares and
unvested options for 33,831 shares. In connection with the Acquisition, previously unvested options became fully vested at October 25, 2013.
All Predecessor stock options were subject to settlement in connection with the Acquisition in amounts equal to the excess of the per share merger
consideration over the exercise prices of such options. The fair value of the consideration payable to holders of Predecessor stock options aggregated $187.4
million, of such amount $135.9 million represented the fair value of previously vested options which amount was included in the consideration paid by the
Sponsors to acquire the Company. The remaining $51.5 million represented the fair value of previously unvested options, such amount was expensed in the
results of operations of the Successor for the second quarter of fiscal year 2014.
We recognized compensation expense for Predecessor stock options on a straight-line basis over the vesting period. We recognized non-cash stock
compensation expense of $2.5 million in the first quarter of fiscal year 2014, $9.7 million in fiscal year 2013 and $6.9 million in fiscal year 2012, which is
included in selling, general and administrative expenses.
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Stock Options. Subsequent to the Acquisition, Parent established various incentive plans pursuant to which eligible employees, consultants and
non-employee directors are eligible to receive stock-based awards. Under the incentive plans, Parent is authorized to grant stock options, restricted stock and
other types of awards that are valued in whole or in part by reference to, or are payable or otherwise based on, the shares of common stock of Parent. Charges
with respect to options issued by Parent pursuant to the incentive plans are reflected by the Company in the preparation of our Consolidated Financial
Statements.
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