Neiman Marcus 2005 Annual Report Download - page 49

The following table summarizes the expiration of our significant commercial commitments outstanding at July 29, 2006:
Amount of Commitment by Expiration Period
(in thousands) Total
Fiscal Year
2007
Fiscal
Years
2008-2009
Fiscal
Years
2010-2011
Fiscal Year
2012 and
Beyond
Other commercial commitments:
Senior secured asset-based revolving credit
facility(1) $ 600,000 $ — $ — $ — $ 600,000
Other lending facilities 7,600 7,600 — — —
Surety bonds 4,000 4,000 — — —
$ 611,600 $ 11,600 $ — $ — $ 600,000
(1) As of July 29, 2006, we had no borrowings outstanding under our new senior secured asset-based revolving credit facility and
had $570.9 million of unused borrowing availability, after giving effect to $29.1 million of outstanding letters of credit. Our working
capital requirements are greatest in the first and second fiscal quarters as a result of higher seasonal requirements. See "Description of
Other Indebtedness—Senior Secured Asset-Based Revolving Credit Facility" and "Management's Discussion and Analysis of Financial
Conditions and Results of Operations—Seasonality."
In addition to the items presented above, our other principal commercial commitments are comprised of common area
maintenance costs, tax and insurance obligations and contingent rent payments.
At August 1, 2006 (the most recent measurement date), our actuarially calculated projected benefit obligation for our Pension
Plan was $364.7 million and the fair value of the assets was $293.7 million. Our policy is to fund the Pension Plan at or above the
minimum amount required by law. In fiscal year 2006, we did not make any voluntary contributions to the Pension Plan. In fiscal year
2005, we made a voluntary contribution of $20.0 million in the third fiscal quarter for the plan year ended July 31, 2004. Based upon
currently available information, we will not be required to make contributions in fiscal year 2007 to the Pension Plan for the plan year
ended July 31, 2006.
Investment in Kate Spade LLC. We currently own a 56% interest in Kate Spade LLC, which designs and markets high-end
designer handbags and accessories. A minority investor owns the remaining 44% interest. Our investment in and relationship with Kate
Spade LLC are governed by an operating agreement that provides for an orderly transition process in the event either investor wishes to
sell its interest, or purchase the other investor's interest. Among other things, this operating agreement contains currently exercisable put
option provisions entitling the minority investor to put its interest to us, and currently exercisable call option provisions entitling us to
purchase the minority investor's interest, at a purchase price mutually agreed to by the parties. The purchase price will be determined by
the parties or, in the event the parties are unable to agree on a mutually acceptable price, by a mutually acceptable nationally recognized
investment banking firm, subject to certain conditions. We may elect to defer the consummation of a put option for a period of six months
by cooperating with the minority investor in seeking either a sale of Kate Spade LLC to a third party or a public offering of Kate
Spade LLC's securities. If a sale to a third party or public offering of Kate Spade LLC's securities is not consummated within six months
after the exercise of the put option (which period may be automatically extended for an additional two months if a registration statement
for Kate Spade LLC is filed with the SEC), we are obligated to consummate the put option. Under the terms of the Kate Spade LLC
operating agreement, consummation of the put option shall occur within thirty days after the determination of the valuation with respect
to the exercise of the put option, unless we have elected to defer the consummation of the put option for the six-month period referred to
above, and should a third party sale or public offering of Kate Spade LLC occur within such six-month period, we are required to pay the
minority investor the excess, if any, of the put option valuation price for its interest over the amount it realizes through the third party sale
or public offering.
In April 2005, the minority investor in Kate Spade LLC exercised the put option described above with respect to the full amount
of its stake in such company. We subsequently entered into a standstill agreement to postpone the put process while we engaged in
discussions with the minority investor in Kate Spade LLC regarding certain strategic alternatives, including the possible sale of such
company. The standstill agreement, as extended, expired on March 21, 2006, but the parties are continuing to pursue discussions
regarding a possible sale of such company while the put valuation process proceeds. Although such discussions are ongoing, no assurance
can be given that they will ultimately lead to any transaction. It is possible that we may be required to purchase the shares of the minority
investor in Kate Spade LLC pursuant to the option as early as the second quarter of fiscal year 2007.
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