Neiman Marcus 2004 Annual Report Download - page 37

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 was $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 our 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.
In the second quarter of 2005, our Board of Directors increased our quarterly cash dividend from $0.13 per share to $0.15 per share. In 2005, we declared
dividends aggregating $28.4 million, of which dividends payable of $7.3 million were included in accrued liabilities in the accompanying consolidated
balance sheet as of July 30, 2005 and were paid in August 2005.
In prior years, our Board of Directors authorized various stock repurchase programs and increases in the number of shares subject to repurchase. In 2005,
we repurchased 58,504 shares at an average price of $52.74. In 2004, we repurchased 175,600 shares at an average purchase price of $40.01 during the first
quarter and 10,450 shares at an average price of $50.48 during the fourth quarter. As of July 30, 2005, approximately 1.2 million shares remain available for
repurchase under our stock repurchase programs.
Financing Structure Related to the Transactions
On May 1, 2005, our Board of Directors approved a definitive agreement to sell the Company to an investment group led by the Sponsors, through a
merger of the Company with an entity owned by the Sponsors. Under the terms of this agreement, Merger Sub will merge with the Company and each share
of our common stock (other than shares held in treasury or owned by Merger Sub, its parent company or any direct or indirect subsidiary of Merger Sub or its
parent company and other than shares held by stockholders who properly demand appraisal rights) will be converted into the right to receive $100.00 in cash,
without interest. The merger will be structured as a reverse subsidiary merger, under which Merger Sub will be merged with and into The Neiman Marcus
Group, Inc. at closing, and The Neiman Marcus Group, Inc. will be the surviving corporation.
The merger is expected to be completed in October 2005, subject to the satisfaction or waiver of all the closing conditions set forth in the merger
agreement. These conditions include the receipt of stockholder approval, the absence of governmental orders and the receipt of certain regulatory approvals.
Since the signing of the merger agreement, the Federal Trade Commission has granted early termination of the applicable waiting period for the merger and
stockholder approval of the merger has been obtained.
We and the Sponsors estimate that the total amount of funds necessary to complete the merger and the related transactions is anticipated to be
approximately $5.4 billion, which includes approximately $5.1 billion to be paid out to our stockholders and holders of other equity-based interests in the
Company with the remainder to be applied to pay related fees and expenses in connection with the merger, the financing arrangements and the related
transactions (including
34