Neiman Marcus 2009 Annual Report Download - page 116

Table of Contents
and unpaid interest, and Additional Interest (as defined in the Senior Subordinated Indenture), if any, thereon to the applicable
redemption date.
At any time prior to October 15, 2010, NMG also may redeem all or a part of the Senior Subordinated Notes at a redemption
price equal to 100% of the principal amount of Senior Subordinated Notes redeemed plus an applicable premium, as provided in the
Senior Subordinated Indenture, and accrued and unpaid interest and Additional Interest, if any, to the redemption date.
Upon the occurrence of a change of control (as defined in the Senior Subordinated Indenture), NMG will make an offer to
purchase all of the Senior Subordinated Notes at a price in cash equal to 101% of the aggregate principal amount thereof plus accrued
and unpaid interest, and Additional Interest, if any, to the date of purchase.
The fair value of NMG's Senior Subordinated Notes was approximately $517.5 million at July 31, 2010 and $355.0 million at
August 1, 2009 based on quoted market prices.
Maturities of Long-Term Debt. At July 31, 2010, annual maturities of long-term debt during the next five fiscal years and
thereafter are as follows (in millions):
2011 $ 7.6
2012 —
2013 1,505.8
2014 —
2015 —
Thereafter 1,373.9
The above table does not reflect either future excess cash flow prepayments, if any, that may be required under the Senior
Secured Term Loan Facility or additional principal amounts under the Senior Notes that could be outstanding as a result of any future
PIK interest election that we may make through October 15, 2010.
Interest expense. The significant components of interest expense are as follows:
Fiscal year ended
(in thousands)
July 31,
2010
August 1,
2009
August 2,
2008
Senior Secured Term Loan Facility $ 83,468 $ 90,952 $ 106,504
2028 Debentures 8,886 8,906 8,903
Senior Notes 68,315 66,356 63,000
Senior Subordinated Notes 51,732 52,028 51,875
Amortization of debt issue costs 18,697 17,185 14,217
Other, net 6,296 1,140 (1,658)
Capitalized interest (286)(993)(3,036)
Interest expense, net $ 237,108 $ 235,574 $ 239,805
NOTE 8. DERIVATIVE FINANCIAL INSTRUMENTS
Interest Rate Swaps. In connection with the Acquisition, we obtained $2,575.0 million of floating rate debt agreements, of
which $2,125.0 million was outstanding at the Acquisition date and $1,513.4 million (including $7.6 million of borrowings classified
as current liabilities) is outstanding at July 31, 2010. Effective December 2005, NMG entered into floating to fixed interest rate swap
agreements for an aggregate notional amount of $1,000.0 million to limit our exposure to interest rate increases related to a portion of
our floating rate indebtedness. These swap agreements hedge a portion of our contractual floating rate interest commitments through
the expiration of the agreements in December 2010. As a result of the swap agreements, NMG's effective fixed interest rates as to the
$1,000.0 million in floating rate indebtedness will currently range from 6.963% to 6.983% per quarter through December 2010 and
result in an average fixed rate of 6.973%. The interest rate swaps expire in December 2010.
As of the effective date, NMG designated the interest rate swaps as cash flow hedges. As cash flow hedges, unrealized
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