Neiman Marcus 2004 Annual Report Download - page 100
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"competitive bid" borrowing is based on one of two pricing options that we select. The pricing options are based on either LIBOR plus a competitive bid
margin or an absolute rate, both determined in the competitive auction process.
The Credit Agreement contains covenants that require us, among other things, to maintain certain leverage and fixed charge ratios. The Credit
Agreement also places restrictions on the Company related to 1) the incurrence of liens on our assets and indebtedness by our subsidiaries, 2) sales,
consolidations and mergers, 3) transactions with affiliates and 4) certain common stock repurchase transactions. In addition, the Credit Agreement provides
for 1) acceleration of amounts due, including the nonpayment of amounts due pursuant to the Credit Agreement on a timely basis and the acceleration of other
indebtedness greater than $25 million, 2) customary events of default and 3) termination in the event of a change in control of the Company. Changes in the
ratings of the senior unsecured long-term debt do not represent an event of default, accelerate repayment of outstanding borrowings or alter any other terms of
the Credit Agreement. At July 30, 2005, we were in compliance with the covenants and terms of the Credit Agreement.
In May 1998, we issued $250 million of unsecured senior notes and debentures to the public. This debt is comprised of $125 million of 6.65% senior
notes, due 2008 and $125 million of 7.125% senior debentures, due 2028. Interest on the securities is payable semiannually. Based upon quoted prices, the
fair value of our senior notes and debentures aggregated $273.9 million as of July 30, 2005 and $268.3 million as of July 31, 2004.
Our unsecured senior notes and debentures contain covenants related primarily to 1) limitations on liens on Company assets, 2) timely payment of
principal and interest and 3) matters related to corporate organization. In addition, the unsecured senior notes and debentures provide for customary events of
default and acceleration of amounts due, including the nonpayment of amounts due and the acceleration of other indebtedness greater than $15 million.
The significant components of interest expense are as follows:
Years Ended
July 30,
2005
July 31,
2004
August 2,
2003
(in thousands)
Credit Agreement $ 560 $ 422 $ 430
Senior notes 8,308 8,308 8,308
Senior debentures 8,904 8,904 8,904
Credit Card Facility 5,243 1,778 —
Debt issue cost amortization and other 1,269 1,679 1,298
Total interest expense 24,284 21,091 18,940
Less:
Interest income 6,556 2,132 1,245
Capitalized interest 5,350 3,036 1,425
Interest expense, net $12,378 $15,923 $16,270
F-21