This excerpt taken from the JWN 10-Q filed Dec 6, 2007.
Item 3. Quantitative And Qualitative Disclosures About Market Risk (Dollar amounts in thousands)
INTEREST RATE RISK
We are exposed to market risk from changes in interest rates. In seeking to minimize risk, we manage exposure through our regular operating and financing activities. We do not use financial instruments for trading or other speculative purposes and are not party to any leveraged financial instruments.
Interest rate exposure is managed through our mix of fixed and variable rate borrowings. Short-term borrowing and investing activities generally bear interest at variable rates, but because they have maturities of three months or less, we believe that the risk of material loss is low, and that the carrying amount approximates fair value.
In the first quarter of 2007, we entered into new debt, as shown in Note 5: Long-term debt. The principal of the $325,500 Series 2007-1 Class A Notes with a fixed-rate of 4.92% and the principal of the $24,500 Series 2007-1 Class B Notes with a fixed-rate of 5.02% is due April 2010. The effect of these Notes decreases the weighted-average interest rate on principal payments for fiscal 2010 to 5.0%. The principal of the $453,800 Series 2007-2 Class A Notes with a variable-rate of One-Month LIBOR plus 0.06% and the principal of the $46,200 Series 2007-2 Class B Notes with a variable-rate of One-Month LIBOR plus 0.18% is due April 2012.
As of November 3, 2007, we had $200,000 in outstanding Notes issued under our variable funding facility, to be paid during fiscal 2008. The interest rate on this facility is based upon the cost of commercial paper issued by the third party bank conduit plus specified fees. As of November 3, 2007, the cost of commercial paper issued by the third party bank conduit was 5.71%.
In December of 2007, we entered into new debt, as discussed in Note 5: Long-term debt and Note 12: Subsequent events. With our December 2007 debt issuance, we have reclassified $301,500 of the commercial paper facility which has been repaid by the proceeds of the debt offering. The effect of this commercial paper decreases the weighted-average interest rate on principal payments due after fiscal year 2011 to 6.7%.
There were no other changes to our financial instruments that are sensitive to changes in interest rates, including debt obligations and our interest rate swap. For further information on these items, please refer to Item 7A of our 2006 Annual Report on Form 10-K.
FOREIGN CURRENCY EXCHANGE RISK
There were no changes to our instruments subject to foreign currency exchange risk during the first nine months of fiscal 2007. For further information on these items, please refer to Item 7A of our 2006 Annual Report on Form 10-K.