Neiman Marcus 2012 Annual Report Download - page 40

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related to remodels of our Bergdorf Goodman and Bal Harbour stores and information technology enhancements. During fiscal year 2013, we also incurred
capital expenditures for the renovation of our Michigan Avenue Neiman Marcus store (Chicago, Illinois) as well as for the construction of a distribution facility
in Pittston, Pennsylvania. Currently, we project gross capital expenditures for fiscal year 2014 to be approximately $190 to $200 million. Net of developer
contributions, capital expenditures for fiscal year 2014 are projected to be approximately $170 to $180 million.
Net cash used for financing activities was $105.4 million in fiscal year 2013 compared to a net cash used of $349.9 million in fiscal year 2012. Net
cash used for financing activities in fiscal year 2013 reflects the impact of the Refinancing Transactions executed during the second quarter of fiscal year
2013. In connection with the Refinancing Transactions, we incurred incremental borrowings under the Senior Secured Term Loan Facility, as amended, of
approximately $500.0 million. These proceeds, along with cash on hand, were used to repurchase or redeem the principal amount of the 10.375% Senior
Subordinated Notes due 2015 (the Senior Subordinated Notes). Our payments to holders of the Senior Subordinated Notes in the tender offer and redemption
(including transaction costs), taken together, aggregated approximately $510.7 million. In addition, we incurred debt issuance costs of approximately
$9.8 million in connection with the Refinancing Transactions and the repricing amendment with respect to the Senior Secured Term Loan Facility. Net cash
used for financing activities in fiscal year 2013 also included a net $85.0 million repayment of outstanding borrowings under our Asset-Based Revolving
Credit Facility. Net cash used for financing activities in fiscal year 2012 reflects the net impact of the 2012 Dividend payment of $449.3 million in the third
quarter of fiscal year 2012.
Financing Structure at August 3, 2013
Our major sources of funds have been comprised of vendor payment terms, a $700.0 million Asset-Based Revolving Credit Facility,
$2,560.0 million Senior Secured Term Loan Facility, $125.0 million 2028 Debentures and operating leases.
In the second quarter of fiscal year 2013, we executed the following transactions, collectively referred to as the “Refinancing Transactions”:
· amended the Senior Secured Term Loan Facility to provide for the incurrence of an incremental term loan, increasing the principal amount of
that facility to $2,560.0 million;
· repurchased or redeemed $500.0 million principal amount of Senior Subordinated Notes; and
· amended the Senior Secured Asset-Based Revolving Credit Facility to allow these transactions.
The purpose of the Refinancing Transactions was to lower our interest expense going forward by taking advantage of current market conditions and
to extend the maturity of our indebtedness.
Senior Secured Asset-Based Revolving Credit Facility. At August 3, 2013, we had a Senior Secured Asset-Based Revolving Credit Facility
providing for a maximum committed borrowing capacity of $700.0 million (the Asset-Based Revolving Credit Facility). The Asset-Based Revolving Credit
Facility matures on May 17, 2016 (or, if earlier, the date that is 45 days prior to the scheduled maturity of our Senior Secured Term Loan Facility, or any
indebtedness refinancing it, unless refinanced as of that date). On August 3, 2013, we had $15.0 million of borrowings outstanding under this facility, no
outstanding letters of credit and $615.0 million of unused borrowing availability. On August 29, 2013, we made a voluntary prepayment of $126.9 million
on our Senior Secured Term Loan Facility, which was funded by cash on hand and borrowings of $100.0 million under our Senior Secured Asset-Based
Revolving Credit Facility.
Availability under the Asset-Based Revolving Credit Facility is 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 is equal to at any time the sum of (a) 90% of the
net orderly liquidation value of eligible inventory, net of certain reserves, plus (b) 85% of the amounts owed by credit card processors in respect of eligible
credit card accounts constituting proceeds from the sale or disposition of inventory, less certain reserves. NMG must at all times maintain excess availability
of at least the greater of (a) 10% of the lesser of 1) the aggregate revolving commitments and 2) the borrowing base and (b) $50.0 million, but NMG is not
required to maintain a fixed charge coverage ratio.
See Note 6 of the Notes to Consolidated Financial Statements in Item 15, which contains a further description of the terms of the Asset-Based
Revolving Credit Facility.
Senior Secured Term Loan Facility. In October 2005, we entered into a credit agreement and related security and other agreements for a
$1,975.0 million Senior Secured Term Loan Facility (the Senior Secured Term Loan Facility). In May 2011, we entered into an amendment and restatement
(the TLF Amendment) of the Senior Secured Term Loan Facility. The
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