Neiman Marcus 2008 Annual Report Download - page 43

Table of Contents
Net cash used for investing activities, representing capital expenditures, was $101.5 million in fiscal year 2009 and $183.5
million in fiscal year 2008. We incurred significant capital expenditures in fiscal year 2009 related to the construction of new stores in
Topanga (the greater Los Angeles area) and Bellevue (suburban Seattle). We incurred capital expenditures in fiscal year 2008 related
to the construction of new stores in Natick and Topanga and the remodel of our Atlanta and Westchester stores. We opened our Natick
store in September 2007, our Topanga store in September 2008 and our Bellevue store in September 2009. In light of current
economic conditions and delays in certain real estate projects, we have reduced our current and near-term construction commitments
and currently project gross capital expenditures for fiscal year 2010 to be approximately $70 to $80 million. Net of developer
contributions, capital expenditures for fiscal year 2010 are projected to be approximately $55 to $65 million.
Net cash used for financing activities was $25.0 million in fiscal year 2009 as compared to $3.9 million in fiscal year 2008.
In fiscal year 2009, we incurred $23.4 million of debt issuance costs as a result of amending and restating the terms of our asset-based
revolving credit facility.
In response to current economic conditions, we have taken and will continue to take actions to maintain appropriate liquidity
by: • stimulating sales through additional promotional and other events;
• reducing inventory levels and purchases;
• implementing expense control initiatives; and
• reviewing future capital expenditures and eliminating or postponing certain projects.
Financing Structure at August 1, 2009
Our major sources of funds are comprised of vendor financing, a $600.0 million Asset-Based Revolving Credit Facility,
$1,625.0 million Senior Secured Term Loan Facility (including $26.6 million of borrowings classified as current liabilities), $734.5
million Senior Notes, $500.0 million Senior Subordinated Notes, $125.0 million 2028 Debentures and operating leases.
Senior Secured Asset-Based Revolving Credit Facility. On July 15, 2009, NMG amended and restated the terms of its
existing asset-based revolving credit facility (which had been scheduled to mature on October 6, 2010). The terms of the amended
and restated Asset-Based Revolving Credit Facility include a scheduled maturity date of January 15, 2013 and a maximum committed
borrowing capacity of $600.0 million (the same amount as in the prior facility). The new facility also provides an uncommitted
accordion feature that allows NMG to request the lenders to provide additional capacity in either the form of increased revolving
commitments or incremental term loans, subject to a potential total maximum facility of $800 million.
The Asset-Based Revolving Credit Facility provides committed financing of up to $600.0 million, subject to a borrowing
base. The Asset-Based Revolving Credit Facility includes borrowing capacity available for letters of credit and for borrowings on
same-day notice. The borrowing base for the Asset-Based Revolving Credit Facility is equal to at any time the sum of (a) the lesser of
(i) 80% of eligible inventory (valued at the lower of cost or market value) and (ii) 85% of the net orderly liquidation value of eligible
inventory, and (b) 85% of the amounts owed by credit card processors in respect of eligible credit card accounts constituting proceeds
arising from the sale or disposition of inventory, less certain reserves. Through April 30, 2011 NMG is required to maintain excess
availability of at least the greater of (a) 10% of the lesser of (i) the aggregate revolving commitments and (ii) the borrowing base and
(b) $50 million under the terms of the Asset-Based Revolving Credit Facility. After April 30, 2011, if at any time, excess availability
is less than the greater of (a) 15% of the lesser of (i) the aggregate revolving commitments and (ii) the borrowing base and (b) $60
million, NMG will be required to maintain a pro forma ratio of consolidated EBITDA to consolidated Fixed Charges (as such terms
are defined in the credit agreement) of at least 1.1 to 1.0. On August 1, 2009, NMG had no borrowings outstanding under this facility,
$32.8 million of outstanding letters of credit and $468.5 million of unused borrowing availability.
See Note 9 of our Notes to Consolidated Financial Statements in Item 15 for a further description of the terms of the Asset-
Based Revolving Credit Facility.
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