Neiman Marcus 2002 Annual Report Download - page 53

Download and view the complete annual report

Please find page 53 of the 2002 Neiman Marcus annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 175

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175

NOTE 5. Long-term Debt
The significant components of the Company's notes and debentures are as follows:
(in thousands)
Interest
Rate
August 2,
2003
August 3,
2002
Revolving credit facility Variable $ — $ —
Senior unsecured notes 6.65%124,926 124,910
Senior unsecured debentures 7.125%124,807 124,800
Total
$ 249,733 $ 249,710
Effective August 26, 2002, the Company entered into a three-year unsecured revolving credit agreement (the Credit Agreement) with
a group of eleven banks that provides for borrowings of up to $300 million. The Company has two types of borrowing options under
the Credit Agreement, a "committed" borrowing or a "competitive bid" borrowing. The rate of interest payable under a "committed"
borrowing is based on one of two pricing options selected by the Company, the level of outstanding borrowings and the rating of the
Company's senior unsecured long-term debt by Moody's and Standard & Poor's. The pricing options available to the Company under
a "committed" borrowing are based on either LIBOR plus 0.400 percent to 1.625 percent or a "base" rate, based on the higher of the
Prime Rate or 0.500 percent plus the Federal Funds Rate, plus a "base" rate margin of up to 0.625 percent. The rate of interest payable
under a "competitive bid" borrowing is based on one of two pricing options selected by the Company. The pricing options are based
on either LIBOR plus a competitive bid margin or an absolute rate, both determined in the competitive auction process. Changes in
the ratings of the senior unsecured long-term debt do not represent an event of default, accelerate repayment of any outstanding
borrowings or alter any other terms of the Credit Agreement. The Credit Agreement contains covenants that require the Company to
maintain certain leverage and fixed charge ratios. At August 2, 2003, the Company had no borrowings outstanding under its
unsecured credit facility.
The Company also has an uncommitted money market lending arrangement of $25 million in place with one of its lending banks.
The arrangement expires on September 20, 2004 and as of August 2, 2003, the Company had no borrowings outstanding under this
arrangement.
In May 1998, the Company issued $250 million of unsecured senior notes and debentures to the public. The debt is comprised of
$125 million of 6.65 percent senior notes, due 2008 and $125 million of 7.125 percent senior debentures, due 2028. Interest on the
securities is payable semiannually. Based upon quoted prices, the fair value of the Company's senior notes and debentures aggregated
$265.0 million as of August 2, 2003 and $249.9 million as of August 3, 2002.
The significant components of interest expense are as follows:
Years Ended
(in thousands)
August 2,
2003
August 3,
2002
July 28,
2001
Revolving credit facility $ 430 $ 1,532 $ 933
Senior notes 8,308 8,468 8,308
Senior debentures 8,904 9,075 8,904
Debt issue cost amortization and other 1,298 2,008 2,520
Total interest expense $ 18,940 $ 21,083 $ 20,665
Less:
Interest income $ 1,245 $ 2,561 $ 3,523
Capitalized interest 1,425 3,116 1,954
Interest expense, net $ 16,270 $ 15,406 $ 15,188
F-19