Neiman Marcus 2010 Annual Report Download - page 117

Table of Contents
Senior Subordinated Notes. NMG has outstanding $500.0 million aggregate principal amount of 10.375% Senior
Subordinated Notes under a senior subordinated indenture (Senior Subordinated Indenture). NMG's Senior Subordinated Notes
mature on October 15, 2015.
The Senior Subordinated Notes are fully and unconditionally guaranteed, on a joint and several unsecured, senior
subordinated basis, by each of NMG's wholly-owned domestic subsidiaries that guarantee NMG's obligations under its Senior Secured
Credit Facilities and by the Company. The Senior Subordinated Notes and the guarantees thereof are NMG's and the guarantors'
unsecured, senior subordinated obligations and rank (i) junior to all of NMG's and the guarantors' existing and future senior
indebtedness, including any borrowings under NMG's Senior Secured Credit Facilities, and the guarantees thereof and NMG's 2028
Debentures; (ii) equally with any of NMG's and the guarantors' future senior subordinated indebtedness; and (iii) senior to any of
NMG's and the guarantors' future subordinated indebtedness. In addition, the Senior Subordinated Notes are structurally subordinated
to all existing and future liabilities, including trade payables, of NMG's subsidiaries that are not providing guarantees.
NMG is not required to make any mandatory redemption or sinking fund payments with respect to the Senior Subordinated
Notes. The indenture governing the Senior Subordinated Notes contains a number of customary negative covenants and events of
defaults, including a cross-default provision in respect of any other indebtedness that has an aggregate principal amount exceeding $50
million, which, if any of them occurs, would permit or require the principal, premium, if any, interest and any other monetary
obligations on all outstanding Senior Subordinated Notes to be due and payable immediately, subject to certain exceptions.
From and after October 15, 2010, NMG may redeem the Senior Subordinated Notes, in whole or in part, at a redemption
price equal to 105.188% of principal amount, declining annually to 100% of principal amount on October 15, 2013, plus accrued and
unpaid interest, and Additional Interest (as defined in the Senior Subordinated Indenture), if any, thereon to the applicable 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 $523.8 million at July 30, 2011 and $517.5 million at
July 31, 2010 based on quoted market prices (Level 2).
Maturities of Long-Term Debt. At July 30, 2011, annual maturities of long-term debt during the next five fiscal years and
thereafter are as follows (in millions):
2012 $ —
2013 —
2014 —
2015 —
2016 500.0
Thereafter 2,181.7
The above table does not reflect future excess cash flow prepayments, if any, that may be required under the Senior Secured
Term Loan Facility.
Loss on Debt Extinguishment. In connection with the Refinancing Transactions, we incurred a loss on debt extinguishment
of $70.4 million which included 1) costs of $37.9 million related to the tender for and redemption of our Senior Notes and 2) the
write-off of $32.5 million of debt issuance costs related to the extinguished debt facilities. The total loss on debt extinguishment was
recorded in the fourth quarter of fiscal year 2011 as a component of interest expense. In addition, we incurred debt issuance costs in
fiscal year 2011, primarily in connection with the Refinancing Transactions, of approximately $33.9 million which are being
amortized over the terms of the amended debt facilities.
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