NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company
Founded in
1901
as a shoe store in Seattle, Washington, today Nordstrom, Inc. is a leading fashion specialty retailer that offers customers a well-edited selection of high-quality fashion brands focused on apparel, shoes, cosmetics and accessories for men, women and children. This breadth of merchandise allows us to serve a wide range of customers who appreciate quality fashion and a superior shopping experience. We offer a wide selection of brand name and private label merchandise through multiple retail channels, including
117
'Nordstrom' branded full-line stores and our online store at www.nordstrom.com (collectively, "Nordstrom"),
119
off-price 'Nordstrom Rack' stores, our 'HauteLook' online private sale subsidiary,
two
'Jeffrey' boutiques,
one
philanthropic 'treasure&bond' store and
one
'Last Chance' clearance store. Our stores are located in
31
states throughout the U.S.
Through our Credit segment, we provide our customers with a variety of payment products and services, including a Nordstrom private label card,
two
Nordstrom VISA credit cards and a debit card for Nordstrom purchases. These products also allow our customers to participate in our loyalty program, which is designed to increase customer visits and spending. Although the primary purpose of our Credit segment is to foster greater customer loyalty and drive more sales, we also generate revenues through finance charges and other fees on these cards and, on a consolidated basis, we avoid costs that would be incurred if our customers used third-party cards.
Fiscal Year
We operate on a 52/53-week fiscal year ending on the Saturday closest to January 31st. References to
2012
relate to the 53-week fiscal year ended
February 2, 2013
. References to any other years included within this document are based on a 52-week fiscal year.
Principles of Consolidation
The consolidated financial statements include the balances of Nordstrom, Inc. and its subsidiaries. All intercompany transactions and balances are eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities during the reporting period. Uncertainties regarding such estimates and assumptions are inherent in the preparation of financial statements and actual results may differ from these estimates and assumptions. Our most significant accounting judgments and estimates include the allowance for credit losses, revenue recognition, inventory, goodwill and income taxes.
Net Sales
We recognize revenue from sales at our retail stores at the point of sale, net of estimated returns and excluding sales taxes. Revenue from sales to customers shipped directly from our stores, website and catalog, which includes shipping revenue when applicable, is recognized upon estimated receipt by the customer. We estimate customer merchandise returns based on historical return patterns and reduce sales and cost of sales accordingly. Activity in the allowance for sales returns, net, for the past three fiscal years is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal year
|
2012
|
|
|
2011
|
|
|
2010
|
|
Allowance at beginning of year
|
|
$103
|
|
|
|
$85
|
|
|
|
$76
|
|
Additions
|
1,724
|
|
|
1,411
|
|
|
1,180
|
|
Returns, net
1
|
(1,711
|
)
|
|
(1,393
|
)
|
|
(1,171
|
)
|
Allowance at end of year
|
|
$116
|
|
|
|
$103
|
|
|
|
$85
|
|
1
Returns, net consist of actual returns offset by the value of the merchandise returned and the sales commission reversed. The increase in 2012 over 2011 is driven primarily by the growth of our online business.
Credit Card Revenues
Credit card revenues include finance charges, late fees and other revenue generated by our combined Nordstrom private label card and Nordstrom VISA credit card programs, and interchange fees generated by the use of Nordstrom VISA cards at third-party merchants. Finance charge and late fees are assessed according to the terms of the related cardholder agreements and recognized as revenue when earned.
Cost of Sales
Cost of sales includes the purchase cost of inventory sold (net of vendor allowances), in-bound freight and certain costs of loyalty program benefits related to our credit and debit cards.
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and unit amounts
Loyalty Program
Customers who use our Nordstrom private label credit or debit card or our Nordstrom VISA credit cards can participate in the Nordstrom Fashion Rewards
®
program through which customers accumulate points based on their level of spending. Upon reaching a certain threshold, customers receive Nordstrom Notes
®
, which can be redeemed for goods or services in our Nordstrom full-line and Rack stores and on our website. Fashion Rewards customers receive a credit for complimentary alterations and a personal triple points day, in addition to early access to sales events. With increased spending, they can receive additional amounts of these benefits as well as access to exclusive fashion and shopping events.
We estimate the net cost of Nordstrom Notes that will be issued and redeemed, and record this cost as rewards points are accumulated. These costs, as well as complimentary alterations, are recorded in cost of sales given that we provide customers with products and services for these rewards. Other costs of the loyalty program, including shipping and fashion events, are recorded in selling, general and administrative expenses.
Buying and Occupancy Costs
Buying costs consist primarily of compensation and other costs incurred by our merchandising and product development groups. Occupancy costs include rent, depreciation, property taxes and facility operating costs of our retail, corporate center and distribution operations.
Rent
We recognize minimum rent expense, net of landlord reimbursements, on a straight-line basis over the minimum lease term from the time that we control the leased property. For leases that contain predetermined, fixed escalations of the minimum rent, we recognize the rent expense on a straight-line basis and record the difference between the rent expense and the rent payable as a deferred credit. Contingent rental payments, typically based on a percentage of sales, are recognized in rent expense when payment of the contingent rent is probable.
We receive incentives from landlords to construct stores in certain developments. These property incentives are recorded as a deferred credit and recognized as a reduction of rent expense on a straight-line basis over the lease term. At the end of
2012
and
2011
, the deferred credit balance was
$544
and
$556
.
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist primarily of compensation and benefit costs (other than those included in buying and occupancy costs), advertising, shipping and handling costs, bad debt expense related to our credit card operations and other miscellaneous expenses.
Advertising
Advertising production costs for Internet, magazines, store events and other media are expensed the first time the advertisement is run. Total advertising expenses, net of vendor allowances, of
$161
,
$128
and
$114
in
2012
,
2011
and
2010
were included in selling, general and administrative expenses.
Vendor Allowances
We receive allowances from merchandise vendors for cosmetic selling expenses, purchase price adjustments, cooperative advertising programs and various other expenses. Allowances for cosmetic selling expenses are recorded in selling, general and administrative expenses as a reduction of the related costs when incurred. Purchase price adjustments are recorded as a reduction of cost of sales at the point they have been earned and the related merchandise has been sold. Allowances for cooperative advertising and promotion programs and other expenses are recorded in selling, general and administrative expenses as a reduction of the related costs when incurred. Any allowances in excess of actual costs incurred that are included in selling, general and administrative expenses are recorded as a reduction of cost of sales. Vendor allowances earned are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal year
|
2012
|
|
|
2011
|
|
|
2010
|
|
Cosmetic selling expenses
|
|
$137
|
|
|
|
$128
|
|
|
|
$118
|
|
Purchase price adjustments
|
125
|
|
|
108
|
|
|
96
|
|
Cooperative advertising and promotion
|
92
|
|
|
78
|
|
|
67
|
|
Other
|
3
|
|
|
2
|
|
|
2
|
|
Total vendor allowances
|
|
$357
|
|
|
|
$316
|
|
|
|
$283
|
|
Nordstrom, Inc. and subsidiaries
41
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and unit amounts
Shipping and Handling Costs
Our shipping and handling costs include payments to third-party shippers and costs to hold, move and prepare merchandise for shipment. These costs do not include in-bound freight to our distribution centers, which we include in the cost of our inventory. Shipping and handling costs of
$240
,
$178
and
$133
in
2012
,
2011
and
2010
were included in selling, general and administrative expenses.
Stock-Based Compensation
We recognize stock-based compensation expense related to stock options at their estimated grant date fair value, recorded on a straight-line basis over the requisite service period. The total compensation expense is reduced by estimated forfeitures expected to occur over the vesting period of the award. We estimate the grant date fair value of stock options using the Binomial Lattice option valuation model. Stock-based compensation expense also includes amounts related to HauteLook stock compensation, performance share units and our Employee Stock Purchase Plan, based on their fair values as of the end of each reporting period.
New Store Opening Costs
Non-capital expenditures associated with opening new stores, including marketing expenses, relocation expenses and temporary occupancy costs, are charged to expense as incurred. These costs are included in both buying and occupancy costs and selling, general and administrative expenses according to their nature as disclosed above.
Gift Cards
We recognize revenue from the sale of gift cards when the gift card is redeemed by the customer, or we recognize breakage income when the likelihood of redemption, based on historical experience, is deemed to be remote. Based on an analysis of our program since its inception in 1999, we determined that balances remaining on cards issued beyond
five
years are unlikely to be redeemed and therefore may be recognized as income. Breakage income was
$10
,
$9
and
$9
in
2012
,
2011
and
2010
. To date, our breakage rate is approximately
3.0%
of the amount initially issued as gift cards. Gift card breakage income is included in selling, general and administrative expenses in our consolidated statement of earnings. We had outstanding gift card liabilities of
$231
and
$209
at the end of
2012
and
2011
, which are included in other current liabilities.
Income Taxes
We use the asset and liability method of accounting for income taxes. Using this method, deferred tax assets and liabilities are recorded based on differences between the financial reporting and tax basis of assets and liabilities. The deferred tax assets and liabilities are calculated using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. We routinely evaluate the likelihood of realizing the benefit of our deferred tax assets and may record a valuation allowance if, based on all available evidence, it is determined that some portion of the tax benefit will not be realized.
We regularly evaluate the likelihood of realizing the benefit for income tax positions that we have taken in various federal, state and foreign filings by considering all relevant facts, circumstances and information available. If we believe it is more likely than not that our position will be sustained, we recognize a benefit at the largest amount that we believe is
cumulatively greater than 50%
likely to be realized.
Interest and penalties related to income tax matters are classified as a component of income tax expense.
Comprehensive Net Earnings
Comprehensive net earnings include net earnings and other comprehensive earnings and losses. Other comprehensive losses in
2012
,
2011
and
2010
consisted of adjustments, net of tax, related to our postretirement benefit obligations. Accumulated other comprehensive losses at the end of
2012
and
2011
consisted of unrecognized losses on postretirement benefit obligations.
Cash Equivalents
Cash equivalents are short-term investments with a maturity of three months or less from the date of purchase and are carried at amortized cost, which approximates fair value. Our cash management system provides for the reimbursement of all major bank disbursement accounts on a daily basis. Accounts payable at the end of
2012
and
2011
included
$86
and
$81
of checks not yet presented for payment drawn in excess of our bank deposit balances.
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and unit amounts
Accounts Receivable
Accounts receivable includes credit card receivables from our Nordstrom private label and VISA credit cards, as well as credit and debit card receivables due from third-party financial institutions. We record credit card receivables on our consolidated balance sheets at the outstanding balance, net of an allowance for credit losses. The allowance for credit losses reflects our best estimate of the losses inherent in our receivables as of the balance sheet date, including uncollectible finance charges and fees. We estimate such credit losses based on several factors, including historical aging and delinquency trends, write-off experience, concentration and risk metrics and general economic conditions. Credit card receivables constitute unsecured consumer loans, for which the risk of cardholder default and associated credit losses tend to increase as general economic conditions deteriorate.
We consider a credit card account delinquent if the minimum payment is not received by the payment due date. Our aging method is based on the number of completed billing cycles during which the customer has failed to make a minimum payment. Delinquent accounts, including accrued finance charges and fees, are written off when they are determined to be uncollectible, usually after they become
150 days
past due. Accounts are written off sooner in the event of customer bankruptcy or other circumstances that make further collection unlikely.
We recognize finance charges and fees on delinquent accounts until they become
120 days
past due, after which we place accounts on non-accrual status. Payments received for accounts on non-accrual status are applied to accrued finance charges, fees and principal balances consistent with other accounts, with subsequent finance charge income recognized only when actually received. Non-accrual accounts may return to accrual status when we receive
three
consecutive minimum payments or the equivalent lump sum.
Our Nordstrom private label credit card can be used only in our Nordstrom full-line and Rack stores and on our website, while our Nordstrom VISA cards allow our customers the option of using the cards for purchases of Nordstrom merchandise and services, as well as for purchases outside of Nordstrom. Cash flows from the use of both the private label and Nordstrom VISA credit cards for sales originating at our stores and our website are treated as an operating activity within the consolidated statements of cash flows, as they relate to sales at Nordstrom. Cash flows arising from the use of Nordstrom VISA cards outside of our stores are treated as an investing activity within the consolidated statements of cash flows, as they represent loans made to our customers for purchases at third parties.
Merchandise Inventories
Merchandise inventories are valued at the lower of cost or market, using the retail method (weighted-average cost). Under the retail method, the valuation of inventories and the resulting gross margins are determined by applying a calculated cost-to-retail ratio to the retail value of ending inventory. The value of our inventory on the balance sheet is then reduced by a charge to cost of sales for retail inventory markdowns taken on the selling floor. To determine if the retail value of our inventory should be marked down, we consider current and anticipated demand, customer preferences, age of the merchandise and fashion trends. We reserve for obsolescence based on historical trends and specific identification.
Land, Buildings and Equipment
Land is recorded at historical cost, while buildings and equipment are recorded at cost less accumulated depreciation. Capitalized software includes the costs of developing or obtaining internal-use software, including external direct costs of materials and services and internal payroll costs related to the software project.
We capitalize interest on construction in progress and software projects during the period in which expenditures have been made, activities are in progress to prepare the asset for its intended use and actual interest costs are being incurred.
Depreciation is computed using the straight-line method over the asset's estimated useful life, which is determined by asset category as follows:
|
|
|
Asset
|
Life (in years)
|
Buildings and improvements
|
5 – 40
|
Store fixtures and equipment
|
3 – 15
|
Leasehold improvements
|
Shorter of initial lease term or asset life
|
Capitalized software
|
3 – 7
|
Leasehold improvements made at the inception of the lease are amortized over the shorter of the initial lease term or the asset life. Leasehold improvements made during the lease term are amortized over the shorter of the asset life or the remaining lease term. Lease terms include the fixed, non-cancelable term of a lease, plus any renewal periods determined to be reasonably assured.
Nordstrom, Inc. and subsidiaries
43
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and unit amounts
Goodwill, Intangible Assets and Long-Lived Assets
Goodwill represents the excess of acquisition cost over the fair value of the related net assets acquired, and is not subject to amortization. As of
February 2, 2013
, we had HauteLook goodwill of
$121
and nordstrom.com and Jeffrey goodwill of
$53
. We review our goodwill annually for impairment or when circumstances indicate its carrying value may not be recoverable. We review our HauteLook goodwill as of the first day of the fourth quarter and review our nordstrom.com and Jeffrey goodwill on the first day of the first quarter. We perform this evaluation at the reporting unit level, comprised of the principal business units within our Retail segment, through the application of a two-step fair value test. The first step compares the carrying value of the reporting unit to its estimated fair value, which is based on the expected present value of future cash flows, comparable public companies and acquisitions, or a combination of both. If fair value is lower than the carrying value, then a second step is performed to quantify the amount of the impairment. For nordstrom.com and Jeffrey, the fair values substantially exceeded carrying values and therefore we had
no
goodwill impairment in
2012
,
2011
or
2010
. In 2011, the year we acquired HauteLook, we recorded a goodwill impairment loss of
$25
. In
2012
, our testing indicated that the fair value of HauteLook substantially exceeded the carrying value, and therefore we did not record goodwill impairment for
2012
.
When facts and circumstances indicate that the carrying values of long-lived assets, including buildings, equipment and amortizable intangible assets, may be impaired, we perform an evaluation of recoverability by comparing the carrying values of the net assets to their related projected undiscounted future cash flows, in addition to other quantitative and qualitative analyses. Upon indication that the carrying values of long-lived assets will not be recoverable, we recognize an impairment loss. We estimate the fair value of the assets using the expected present value of future cash flows of the assets. Land, buildings and equipment are grouped at the lowest level at which there are identifiable cash flows when assessing impairment. Cash flows for our retail store assets are identified at the individual store level, while our intangible assets associated with HauteLook are identified at the HauteLook reporting unit level. We did not record an impairment loss for long-lived tangible or amortizable intangible assets in
2012
,
2011
or
2010
.
Self-Insurance
We retain a portion of the risk for certain losses related to employee health and welfare, workers' compensation and general liability claims. Liabilities associated with these losses include undiscounted estimates of both losses reported and losses incurred but not yet reported. We estimate our ultimate cost based on an actuarially based analysis of claims experience, regulatory changes and other relevant factors.
Derivatives
During 2011, we held interest rate swap agreements (collectively, the "swap"), which were intended to hedge our exposure to changes in the fair value of our fixed-rate senior notes due in 2018 from interest rate risk. The swap was designated as a fully effective fair value hedge. As such, the interest rate swap fair value was included in other assets or other liabilities on our consolidated balance sheet, with an offsetting adjustment to the carrying value of our long-term debt (included in other unsecured debt). In the fourth quarter of 2011, we sold our swap and received proceeds of
$72
. The accumulated adjustments to the associated debt of
$60
as of February 2, 2013 are being amortized as a reduction of interest expense over the remaining life of the debt. The cash flows from the sale of our swap are treated as a financing activity within our consolidated statement of cash flows. See Note 8: Debt and Credit Facilities for additional information related to our swap.
Recent Accounting Pronouncements
In December 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU') No. 2011-11,
Disclosures about Offsetting Assets and Liabilities
, which was subsequently modified in January 2013 by ASU No. 2013-01,
Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities.
This ASU
has requirements that are disclosure-only in nature. It requires disclosures about offsetting and related arrangements for certain financial instruments and derivative instruments, including gross and net information and evaluation of the effect of netting arrangements on the statement of financial position. We do not expect the provisions of this ASU, which are effective for us beginning with the first quarter of 2013, to have a material impact on our consolidated financial statements.
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and unit amounts
NOTE 2: HAUTELOOK
In 2011, we acquired
100%
of the outstanding equity of HauteLook, Inc., an online private sale retailer offering limited time sale events on fashion and lifestyle brands, for upfront consideration of
$180
in Nordstrom stock and an "earn-out" provision of up to
$90
that was ultimately settled in 2011 for
$30
of additional Nordstrom stock. The upfront consideration included
$27
related to amounts attributable to HauteLook employees that are subject to ongoing vesting requirements and are recorded as compensation expense as the related service is performed over the respective employee vesting periods of up to
four
years after the acquisition date.
On the acquisition date, we recorded intangible assets of
$62
and goodwill of
$146
, offset by other net liabilities of
$13
. We amortize the intangible assets over their estimated lives of
two
to
seven
years on a straight-line basis, which reasonably approximates the pattern of expected economic benefit. We recorded intangible amortization expense of
$19
for 2012 and
$16
for 2011.
The goodwill value of
$146
recorded at the time of the acquisition was the excess of the purchase price over the net assets recognized. We include this goodwill, which is not deductible for tax purposes, in our Retail segment. In 2011, we recognized a goodwill impairment charge of
$25
, reducing the HauteLook goodwill to
$121
due to a reorganization of HauteLook, changes in expected business results and market dynamics. Additionally, as part of the reorganization, we recorded income of
$12
related to the settlement of the earn-out liability. We recognized no goodwill impairment charge for fiscal 2012. See Note 9: Fair Value Measurements for additional information relating to the valuation of the goodwill impairment charge.
NOTE 3: ACCOUNTS RECEIVABLE
The components of accounts receivable are as follows:
|
|
|
|
|
|
|
|
|
|
February 2, 2013
|
|
|
January 28, 2012
|
|
Credit card receivables:
|
|
|
|
Nordstrom VISA credit card receivables
|
|
$1,348
|
|
|
|
$1,347
|
|
Nordstrom private label card receivables
|
794
|
|
|
727
|
|
Total credit card receivables
|
2,142
|
|
|
2,074
|
|
Allowance for credit losses
|
(85
|
)
|
|
(115
|
)
|
Credit card receivables, net
|
2,057
|
|
|
1,959
|
|
Other accounts receivable
1
|
72
|
|
|
74
|
|
Accounts receivable, net
|
|
$2,129
|
|
|
|
$2,033
|
|
1
Other accounts receivable consist primarily of credit and debit card receivables due from third-party financial institutions.
Our credit card receivables are restricted under our securitization program. Our Series 2011-1 Class A Notes and the 2007-A Variable Funding Note are secured by
100%
of the Nordstrom private label credit card receivables and
90%
of the Nordstrom VISA credit card receivables, while the remaining
10%
of the Nordstrom VISA credit card receivables secure the variable funding credit facility held by our wholly owned federal savings bank, Nordstrom fsb. As of
February 2, 2013
and
January 28, 2012
, our restricted credit card receivables included more receivables than necessary to collateralize our outstanding secured debt and variable funding facilities, and as such can be utilized to increase the current usage of our securitization program. Our credit card securitization agreements set a maximum percentage of receivables that can be associated with various receivable categories, such as employee or foreign receivables, and as of
February 2, 2013
and
January 28, 2012
, these maximums were not exceeded.
Activity in the allowance for credit losses is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal year
|
2012
|
|
|
2011
|
|
|
2010
|
|
Allowance at beginning of year
|
|
$115
|
|
|
|
$145
|
|
|
|
$190
|
|
Bad debt provision
|
56
|
|
|
101
|
|
|
149
|
|
Write-offs
|
(111
|
)
|
|
(153
|
)
|
|
(211
|
)
|
Recoveries
|
25
|
|
|
22
|
|
|
17
|
|
Allowance at end of year
|
|
$85
|
|
|
|
$115
|
|
|
|
$145
|
|
For purposes of determining impairment and recording the associated allowance for credit losses, we evaluate our credit card receivables on a collective basis as they are composed of large groups of smaller-balance homogeneous loans and, therefore, are not individually evaluated for impairment.
Nordstrom, Inc. and subsidiaries
45
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and unit amounts
Under certain circumstances, we may make modifications to payment terms for a customer experiencing financial difficulties in an effort to help the customer avoid bankruptcy and to maximize our recovery of the outstanding balance. These modifications, which meet the definition of troubled debt restructurings ("TDRs"), include reduced or waived fees and finance charges, and/or reduced minimum payments. Receivables classified as TDRs were
$53
, or
2.5%
of our total credit card receivables as of
February 2, 2013
and
$58
, or
2.8%
of our total credit card receivables as of
January 28, 2012
. As with other aged receivables in our portfolio, the allowance for credit losses related to receivables classified as TDRs is primarily based on our historical aging and delinquency trends and write-off experience, with qualitative consideration of factors affecting the credit quality of our portfolio, including amounts of and trends in TDRs.
Credit Quality
The primary indicators of the credit quality of our credit card receivables are aging and delinquency, particularly the levels of account balances delinquent
30
days or more as these are the accounts most likely to be written off. The following table illustrates the aging and delinquency status of our credit card receivables:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 2, 2013
|
|
January 28, 2012
|
|
Balance
|
|
|
% of total
|
|
|
Balance
|
|
|
% of total
|
|
Current
|
|
$2,018
|
|
|
94.2
|
%
|
|
|
$1,928
|
|
|
93.0
|
%
|
1 – 29 days delinquent
|
84
|
|
|
3.9
|
%
|
|
92
|
|
|
4.4
|
%
|
30+ days delinquent:
|
|
|
|
|
|
|
|
30 – 59 days delinquent
|
15
|
|
|
0.7
|
%
|
|
20
|
|
|
1.0
|
%
|
60 – 89 days delinquent
|
10
|
|
|
0.5
|
%
|
|
13
|
|
|
0.6
|
%
|
90 days or more delinquent
|
15
|
|
|
0.7
|
%
|
|
21
|
|
|
1.0
|
%
|
Total 30+ days delinquent
|
40
|
|
|
1.9
|
%
|
|
54
|
|
|
2.6
|
%
|
Total credit card receivables
|
|
$2,142
|
|
|
100.0
|
%
|
|
|
$2,074
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
Receivables not accruing finance charges
|
|
$11
|
|
|
|
|
|
$15
|
|
|
|
Receivables 90 days or more delinquent
and still accruing finance charges
|
|
$8
|
|
|
|
|
|
$11
|
|
|
|
We also evaluate credit quality using FICO credit scores. The following table illustrates the distribution of our credit card receivables across FICO score ranges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 2, 2013
|
|
January 28, 2012
|
FICO Score Range
1
|
Balance
|
|
|
% of total
|
|
|
Balance
|
|
|
% of total
|
|
801+
|
|
$310
|
|
|
14.5
|
%
|
|
|
$307
|
|
|
14.8
|
%
|
660 – 800
|
1,366
|
|
|
63.8
|
%
|
|
1,313
|
|
|
63.3
|
%
|
001 – 659
|
379
|
|
|
17.7
|
%
|
|
390
|
|
|
18.8
|
%
|
Other
2
|
87
|
|
|
4.0
|
%
|
|
64
|
|
|
3.1
|
%
|
Total credit card receivables
|
|
$2,142
|
|
|
100.0
|
%
|
|
|
$2,074
|
|
|
100.0
|
%
|
1
Credit scores for our cardholders are updated at least every
60
days for active accounts and every
90
days for inactive accounts. Amounts listed in the table reflect the most recently obtained credit scores as of the dates indicated.
2
Other consists of amounts not yet posted to customers' accounts and receivables from customers for whom FICO scores are temporarily unavailable.
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and unit amounts
NOTE 4: LAND, BUILDINGS AND EQUIPMENT
Land, buildings and equipment consist of the following:
|
|
|
|
|
|
|
|
|
|
February 2, 2013
|
|
|
January 28, 2012
|
|
Land and land improvements
|
|
$76
|
|
|
|
$76
|
|
Buildings and building improvements
|
975
|
|
|
960
|
|
Leasehold improvements
|
2,209
|
|
|
2,062
|
|
Store fixtures and equipment
|
2,679
|
|
|
2,528
|
|
Capitalized software
|
518
|
|
|
461
|
|
Construction in progress
|
186
|
|
|
173
|
|
Land, buildings and equipment
|
6,643
|
|
|
6,260
|
|
Less: accumulated depreciation and amortization
|
(4,064
|
)
|
|
(3,791
|
)
|
Land, buildings and equipment, net
|
|
$2,579
|
|
|
|
$2,469
|
|
The total cost of buildings and equipment held under capital lease obligations was
$28
at the end of both
2012
and
2011
, with related accumulated amortization of
$24
in
2012
and
$23
in
2011
. Depreciation expense was
$410
in
2012
and
$355
in
2011
.
NOTE 5: SELF-INSURANCE
Our self-insurance reserves are summarized as follows:
|
|
|
|
|
|
|
|
|
|
February 2, 2013
|
|
|
January 28, 2012
|
|
Workers' compensation
|
|
$63
|
|
|
|
$53
|
|
Employee health and welfare
|
23
|
|
|
19
|
|
General liability
|
16
|
|
|
14
|
|
Total
|
|
$102
|
|
|
|
$86
|
|
Our workers' compensation policies have a retention per claim of
$1
or less and
no policy limits
.
We are self-insured for the majority of our employee health and welfare coverage, and we do not use stop-loss coverage. Participants contribute to the cost of their coverage through both premiums and out-of-pocket expenses and are subject to certain plan limits and deductibles.
Our general liability policies, encompassing employment practices liability and commercial general liability, have a retention per claim of
$3
or less and a policy limit up to
$30
and
$150
, respectively.
NOTE 6: 401(k) AND PROFIT SHARING
We provide a 401(k) and profit sharing plan for our employees. Our Board of Directors establishes our profit sharing contribution each year. The 401(k) component is funded by voluntary employee contributions and our discretionary company contribution in an amount determined by our Board of Directors. Our expense related to the profit sharing component and the matching contributions of the 401(k) component totaled
$83
,
$88
and
$86
in
2012
,
2011
and
2010
.
NOTE 7: POSTRETIREMENT BENEFITS
We have an unfunded defined benefit Supplemental Executive Retirement Plan ("SERP"), which provides retirement benefits to certain officers and select employees. The SERP has different benefit levels depending on the participant's role in the company. At the end of
2012
, we had
59
participants in the plan, including
32
officers and select employees eligible for SERP benefits,
26
retirees and
1
beneficiary. This plan is non-qualified and does not have a minimum funding requirement.
Nordstrom, Inc. and subsidiaries
47
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and unit amounts
Benefit Obligations and Funded Status
|
|
|
|
|
|
|
|
|
|
February 2, 2013
|
|
|
January 28, 2012
|
|
Change in benefit obligation:
|
|
|
|
Benefit obligation at beginning of year
|
|
$152
|
|
|
|
$122
|
|
Participant service cost
|
4
|
|
|
3
|
|
Interest cost
|
7
|
|
|
7
|
|
Benefits paid
|
(5
|
)
|
|
(5
|
)
|
Actuarial loss
|
9
|
|
|
25
|
|
Benefit obligation at end of year
|
167
|
|
|
152
|
|
Change in plan assets:
|
|
|
|
Fair value of plan assets at beginning of year
|
—
|
|
|
—
|
|
Employer contribution
|
5
|
|
|
5
|
|
Benefits paid
|
(5
|
)
|
|
(5
|
)
|
Fair value of plan assets at end of year
|
—
|
|
|
—
|
|
Underfunded status at end of year
|
|
($167
|
)
|
|
|
($152
|
)
|
The accumulated benefit obligation, which is the present value of benefits, assuming no future compensation changes, was
$158
and
$144
at the end of
2012
and
2011
.
Amounts recognized as liabilities in the consolidated balance sheets consist of the following:
|
|
|
|
|
|
|
|
|
|
February 2, 2013
|
|
|
January 28, 2012
|
|
Current liabilities
|
|
$6
|
|
|
|
$6
|
|
Noncurrent liabilities
|
161
|
|
|
146
|
|
Net amount recognized
|
|
$167
|
|
|
|
$152
|
|
Components of SERP Expense
The components of SERP expense recognized in the consolidated statements of earnings are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal year
|
2012
|
|
|
2011
|
|
|
2010
|
|
Participant service cost
|
|
$4
|
|
|
|
$3
|
|
|
|
$2
|
|
Interest cost
|
7
|
|
|
7
|
|
|
6
|
|
Amortization of net loss
|
7
|
|
|
4
|
|
|
2
|
|
Total SERP expense
|
|
$18
|
|
|
|
$14
|
|
|
|
$10
|
|
Amounts not yet reflected in SERP expense and included in accumulated other comprehensive loss (pre-tax) consist of the following:
|
|
|
|
|
|
|
|
|
|
February 2, 2013
|
|
|
January 28, 2012
|
|
Accumulated loss
|
|
($60
|
)
|
|
|
($58
|
)
|
Prior service cost
|
(1
|
)
|
|
(1
|
)
|
Total accumulated other comprehensive loss
|
|
($61
|
)
|
|
|
($59
|
)
|
In
2013
, we expect
$8
of costs currently in accumulated other comprehensive loss to be recognized as components of SERP expense.
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and unit amounts
Assumptions
Weighted-average assumptions used to determine our benefit obligation and SERP expense are as follows:
|
|
|
|
|
|
|
|
|
|
Fiscal year
|
2012
|
|
|
2011
|
|
|
2010
|
|
Assumptions used to determine benefit obligation:
|
|
|
|
|
|
Discount rate
|
4.30
|
%
|
|
4.50
|
%
|
|
5.60
|
%
|
Rate of compensation increase
|
3.00
|
%
|
|
3.00
|
%
|
|
3.00
|
%
|
Assumptions used to determine SERP expense:
|
|
|
|
|
|
Discount rate
|
4.50
|
%
|
|
5.60
|
%
|
|
5.95
|
%
|
Rate of compensation increase
|
3.00
|
%
|
|
3.00
|
%
|
|
3.00
|
%
|
Future Benefit Payments and Contributions
As of
February 2, 2013
, the expected future benefit payments based upon the assumptions described above and including benefits attributable to estimated future employee service are as follows:
|
|
|
|
|
Fiscal year
|
|
2013
|
|
$6
|
|
2014
|
7
|
|
2015
|
8
|
|
2016
|
9
|
|
2017
|
9
|
|
2018 – 2022
|
53
|
|
In
2013
, we expect to make contributions and pay benefits of
$6
.
Nordstrom, Inc. and subsidiaries
49
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and unit amounts
NOTE 8: DEBT AND CREDIT FACILITIES
Debt
A summary of our long-term debt is as follows:
|
|
|
|
|
|
|
|
|
|
February 2, 2013
|
|
|
January 28, 2012
|
|
Secured
|
|
|
|
Series 2007-2 Class A Notes, one-month LIBOR plus 0.06% per year, due April 2012
|
—
|
|
|
|
$454
|
|
Series 2007-2 Class B Notes, one-month LIBOR plus 0.18% per year, due April 2012
|
—
|
|
|
46
|
|
Series 2011-1 Class A Notes, 2.28%, due October 2016
|
|
$325
|
|
|
325
|
|
Mortgage payable, 7.68%, due April 2020
|
47
|
|
|
51
|
|
Other
|
10
|
|
|
12
|
|
|
382
|
|
|
888
|
|
Unsecured
|
|
|
|
Senior notes, 6.75%, due June 2014, net of unamortized discount
|
400
|
|
|
399
|
|
Senior notes, 6.25%, due January 2018, net of unamortized discount
|
648
|
|
|
648
|
|
Senior notes, 4.75%, due May 2020, net of unamortized discount
|
498
|
|
|
498
|
|
Senior notes, 4.00%, due October 2021, net of unamortized discount
|
499
|
|
|
499
|
|
Senior debentures, 6.95%, due March 2028
|
300
|
|
|
300
|
|
Senior notes, 7.00%, due January 2038, net of unamortized discount
|
344
|
|
|
343
|
|
Other
|
60
|
|
|
72
|
|
|
2,749
|
|
|
2,759
|
|
|
|
|
|
Total long-term debt
|
3,131
|
|
|
3,647
|
|
Less: current portion
|
(7
|
)
|
|
(506
|
)
|
Total due beyond one year
|
|
$3,124
|
|
|
|
$3,141
|
|
All of our Nordstrom private label card receivables and a
90%
interest in our Nordstrom VISA credit card receivables serve as collateral for various borrowings and credit facilities, including our Series 2011-1 Class A Notes and our Variable Funding Note facility ("2007-A VFN"). Upon maturity in April
2012
, we retired our Series 2007-2 Class A & B Notes ("the Notes") totaling
$500
, which had also been secured by our restricted receivables. The Notes were retired using cash that had been accumulated monthly into a restricted account beginning in December 2011. Prior to the retirement, the accumulated cash was included in our consolidated balance sheet in prepaid expenses and other.
Our mortgage payable is secured by an office building that had a net book value of
$70
at the end of
2012
. Other secured debt as of
February 2, 2013
consisted primarily of capital lease obligations.
During
2011
, we received proceeds of
$72
from the sale of our interest rate swap agreements (collectively, the "swap") with a
$650
notional amount maturing in
2018
. Under the swap, we received a fixed rate of
6.25%
and paid a variable rate based on
one-month LIBOR plus a margin of 2.9%
. As of
February 2, 2013
, the accumulated adjustment to our long-term debt was
$60
, which will be amortized as a reduction of interest expense over the remaining life of the related debt, and is included as part of other unsecured debt in the table above. See Note 1: Nature of Operations and Summary of Significant Accounting Policies for additional information related to our swap.
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and unit amounts
Required principal payments on long-term debt, excluding capital lease obligations, are as follows:
|
|
|
|
|
Fiscal year
|
|
2013
|
|
$5
|
|
2014
|
406
|
|
2015
|
6
|
|
2016
|
331
|
|
2017
|
7
|
|
Thereafter
|
2,318
|
|
Interest Expense
The components of interest expense, net are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal year
|
2012
|
|
|
2011
|
|
|
2010
|
|
Interest on long-term debt and short-term borrowings
|
|
$167
|
|
|
|
$139
|
|
|
|
$133
|
|
Less:
|
|
|
|
|
|
Interest income
|
(2
|
)
|
|
(2
|
)
|
|
(1
|
)
|
Capitalized interest
|
(5
|
)
|
|
(7
|
)
|
|
(5
|
)
|
Interest expense, net
|
|
$160
|
|
|
|
$130
|
|
|
|
$127
|
|
Credit Facilities
As of February 2, 2013, we had total short-term borrowing capacity available for general corporate purposes of $800. Of the total capacity, we had $600 under our commercial paper program, which is backed by our unsecured revolving credit facility ("revolver") that expires in June 2016, and $200 under our 2007-A Variable Funding Note ("2007-A VFN") that expires in January 2014.
Under the terms of our $600 revolver, we pay a variable rate of interest and a commitment fee based on our debt rating. The revolver is available for working capital, capital expenditures and general corporate purposes, including liquidity support for our commercial paper program. We have the option to increase the revolving commitment by up to $100, to a total of $700, provided that we obtain written consent from the lenders.
The revolver requires that we maintain a
leverage ratio, defined as Adjusted Debt to Earnings before Interest, Income Taxes, Depreciation, Amortization and Rent ("EBITDAR"), of less than four times.
As of February 2, 2013, we were in compliance with this covenant.
Our $600 commercial paper program allows us to use the proceeds to fund operating cash requirements. Under the terms of the commercial paper agreement, we pay a rate of interest based on, among other factors, the maturity of the issuance and market conditions. The issuance of commercial paper has the effect, while it is outstanding, of reducing borrowing capacity under our revolver by an amount equal to the principal amount of commercial paper.
During
2012
and
2011
, we had
no borrowings under our revolver
and
no issuances under our commercial paper program
.
The 2007-A VFN has a capacity of $200 and is backed by all of the Nordstrom private label card receivables and a 90% interest in the co-branded Nordstrom VISA credit card receivables. Borrowings under the 2007-A VFN incur interest based upon one-month LIBOR plus 35 basis points. We pay a commitment fee for the facility based on the size of the commitment.
During
2012
and
2011
, we had
no borrowings against this facility
.
Our wholly owned federal savings bank, Nordstrom fsb, also maintains a variable funding facility with a short-term credit capacity of $100. This facility is backed by the remaining 10% interest in the Nordstrom VISA credit card receivables and is available, if needed, to provide liquidity support to Nordstrom fsb. Borrowings under the facility incur interest at an agreed upon rate with investors in the facility.
During
2012
and 2011, Nordstrom fsb had no outstanding borrowings against this facility.
Nordstrom, Inc. and subsidiaries
51
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and unit amounts
NOTE 9: FAIR VALUE MEASUREMENTS
We disclose our financial assets that are measured at fair value in our consolidated balance sheets by level within the fair value hierarchy as defined by applicable accounting standards:
Level 1: Quoted market prices in active markets for identical assets or liabilities
Level 2: Other observable market-based inputs or unobservable inputs that are corroborated by market data
Level 3: Unobservable inputs that cannot be corroborated by market data that reflect the reporting entity's own
assumptions
We did not have any financial assets or liabilities that were measured at fair value on a recurring basis as of February 2, 2013 or January 28, 2012.
Financial instruments not measured at fair value on a recurring basis include cash and cash equivalents, accounts receivable and accounts payable and approximate fair value due to their short-term nature. We also estimate on a nonrecurring basis the fair value of our long-term debt, including current maturities and the remaining fair value adjustment from our previous effective fair value hedge, which was
$3,665
as of
February 2, 2013
, compared with a carrying value of
$3,131
, and as of
January 28, 2012
the fair value was
$4,152
, compared with a carrying value of
$3,647
. We estimated the fair value of long-term debt using quoted market prices of the same or similar issues, and as such this is considered a Level 2 fair value measurement.
We also measure certain non-financial assets at fair value on a nonrecurring basis, primarily goodwill and long-lived tangible and intangible assets, in connection with periodic evaluations for potential impairment. See Note 1: Nature of Operations and Summary of Significant Accounting Policies for additional information related to goodwill, intangible assets and long-lived assets. We recorded
no
impairment charges for these assets in
2012
. During the fourth quarter of
2011
, as part of our annual impairment analysis for goodwill related to HauteLook, we wrote down the carrying value of
$146
as of the acquisition date to its implied fair value of
$121
, resulting in an impairment charge of
$25
. The impairment charge was included in Retail selling, general and administrative expenses in the consolidated statement of earnings. We estimated the fair value of our HauteLook goodwill using an income approach and a market approach based on comparable public companies and acquisitions. These valuation approaches are based on Level 3 inputs in the fair value hierarchy.
NOTE 10: LEASES
We lease the land or the land and buildings at many of our stores. Additionally, we lease office facilities, warehouses and equipment. Most of these leases are classified as operating leases and they expire at various dates through
2080
. The majority of our fixed, non-cancelable lease terms are
15
to
30
years for Nordstrom full-line stores and
10
to
15
years for Nordstrom Rack stores. Many of our leases include options that allow us to extend the lease term beyond the initial commitment period, subject to terms agreed to at lease inception. Most of our leases also provide for payment of operating expenses, such as common area charges, real estate taxes and other executory costs, and some leases require additional payments based on sales, referred to as "percentage rent."
Future minimum lease payments as of
February 2, 2013
are as follows:
|
|
|
|
|
|
|
|
|
Fiscal year
|
Capital leases
|
|
|
Operating leases
|
|
2013
|
|
$2
|
|
|
|
$153
|
|
2014
|
2
|
|
|
159
|
|
2015
|
2
|
|
|
158
|
|
2016
|
2
|
|
|
155
|
|
2017
|
1
|
|
|
144
|
|
Thereafter
|
1
|
|
|
850
|
|
Total minimum lease payments
|
10
|
|
|
|
$1,619
|
|
Less: amount representing interest
|
(2
|
)
|
|
|
Present value of net minimum lease payments
|
|
$8
|
|
|
|
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and unit amounts
Rent expense for
2012
,
2011
and
2010
was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal year
|
2012
|
|
|
2011
|
|
|
2010
|
|
Minimum rent:
|
|
|
|
|
|
Store locations
|
|
$124
|
|
|
|
$108
|
|
|
|
$94
|
|
Offices, warehouses and equipment
|
32
|
|
|
23
|
|
|
19
|
|
Percentage rent
|
14
|
|
|
12
|
|
|
9
|
|
Property incentives
|
(65
|
)
|
|
(65
|
)
|
|
(60
|
)
|
Total rent expense
|
|
$105
|
|
|
|
$78
|
|
|
|
$62
|
|
The rent expense above does not include common area charges, real estate taxes and other executory costs which were
$74
in
2012
,
$69
in
2011
and
$65
in
2010
.
NOTE 11: COMMITMENTS AND CONTINGENT LIABILITIES
Our estimated total purchase obligations, capital expenditure contractual commitments and inventory purchase orders were
$1,901
as of
February 2, 2013
. In connection with the purchase of foreign merchandise, we have outstanding trade letters of credit totaling
$2
as of
February 2, 2013
.
We are subject from time to time to various claims and lawsuits arising in the ordinary course of business, including lawsuits alleging violations of state and/or federal wage and hour and other employment laws, privacy and other consumer-based claims. Some of these lawsuits purport or may be determined to be class or collective actions and seek substantial damages or injunctive relief, or both, and some may remain unresolved for several years. We believe the recorded reserves in our consolidated financial statements are adequate in light of the probable and estimable liabilities. As of the date of this report, we do not believe any currently identified claim, proceeding or litigation, either alone or in the aggregate, will have a material impact on our results of operations, financial position or cash flows. Since these matters are subject to inherent uncertainties, our view of them may change in the future.
NOTE 12: SHAREHOLDERS' EQUITY
Share Repurchase Program
In February 2012, our Board of Directors authorized a program to repurchase up to
$800
of our outstanding common stock, through February 1, 2014, in addition to the remaining amount available for repurchase under the previously authorized programs. The following is a summary of the activity related to our share repurchase programs in
2010
,
2011
and
2012
:
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Average price
per share
|
|
|
Amount
|
|
Capacity at January 30, 2010
|
|
|
|
|
—
|
|
August 2010 authorization (ended January 28, 2012)
|
|
|
|
|
|
$500
|
|
Shares repurchased
|
2.3
|
|
|
|
$39
|
|
|
(89
|
)
|
Capacity at January 29, 2011
|
|
|
|
|
|
$411
|
|
May 2011 authorization (ended February 2, 2013)
|
|
|
|
|
750
|
|
Shares repurchased
|
18.5
|
|
|
|
$46
|
|
|
(851
|
)
|
Capacity at January 28, 2012
|
|
|
|
|
|
$310
|
|
February 2012 authorization (ends February 1, 2014)
|
|
|
|
|
800
|
|
Shares repurchased
|
14.0
|
|
|
|
$51
|
|
|
(717
|
)
|
Capacity at February 2, 2013
|
|
|
|
|
|
$393
|
|
Subsequent to year-end, in February 2013 our Board of Directors authorized a new program to repurchase up to $800 of our outstanding common stock, through March 1, 2015, in addition to the remaining amount available for repurchase under our February 2012 authorization.
The actual number and timing of future share repurchases, if any, will be subject to market and economic conditions and applicable Securities and Exchange Commission rules.
Dividends
We paid dividends of
$1.08
per share in
2012
,
$0.92
per share in
2011
and
$0.76
per share in
2010
. In
February 2013
, we declared a quarterly dividend of
$0.30
per share, increased from
$0.27
per share in
2012
.
Nordstrom, Inc. and subsidiaries
53
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and unit amounts
NOTE 13: STOCK-BASED COMPENSATION
We currently have three stock-based compensation plans: the 2010 Equity Incentive Plan ("2010 Plan"), our Employee Stock Purchase Plan ("ESPP") and the 2002 Nonemployee Director Stock Incentive Plan. Additionally, as part of our acquisition of HauteLook in 2011, we granted awards from shares available that were not allocated to a specific plan.
In 2010, our shareholders approved the adoption of the 2010 Plan, which replaced the 2004 Equity Incentive Plan ("2004 Plan"). The 2010 Plan authorizes the grant of stock options, performance share units, restricted stock units, stock appreciation rights and both restricted and unrestricted shares of common stock to employees. The aggregate number of shares to be issued under the 2010 Plan may not exceed
11.6
plus any shares currently outstanding under the 2004 Plan which are forfeited or which expire during the term of the 2010 Plan. No future grants will be made under the 2004 Plan. As of
February 2, 2013
, we have
54.4
shares authorized,
33.5
shares issued and outstanding and
6.8
shares remaining available for future grants under the 2010 Plan.
Under the ESPP, employees may make payroll deductions of up to
10%
of their base and bonus compensation. At the end of each
six
-month offering period, participants may apply their accumulated payroll deductions toward the purchase of shares of our common stock at
90%
of the fair market value on the last day of the offer period. As of
February 2, 2013
, we had
12.6
shares authorized and
3.8
shares available for issuance under the ESPP. We issued
0.3
shares under the ESPP during
2012
. At the end of both
2012
and
2011
, we had current liabilities of
$5
, for future purchases of shares under the ESPP.
The 2002 Nonemployee Director Stock Incentive Plan authorizes the grant of stock awards to our nonemployee directors. These awards may be deferred or issued in the form of restricted or unrestricted stock, non-qualified stock options or stock appreciation rights. As of
February 2, 2013
, we had
0.9
shares authorized and
0.6
shares available for issuance under this plan. In
2012
, we deferred shares with a total expense of less than
$1
.
The following table summarizes our stock-based compensation expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal year
|
2012
|
|
|
2011
|
|
|
2010
|
|
Stock options
|
|
$36
|
|
|
|
$32
|
|
|
|
$35
|
|
HauteLook stock compensation
|
9
|
|
|
9
|
|
|
—
|
|
Performance share units
|
3
|
|
|
4
|
|
|
3
|
|
Employee stock purchase plan
|
2
|
|
|
2
|
|
|
2
|
|
Other
|
3
|
|
|
3
|
|
|
2
|
|
Total stock-based compensation expense, before income tax benefit
|
53
|
|
|
50
|
|
|
42
|
|
Income tax benefit
|
(17
|
)
|
|
(17
|
)
|
|
(16
|
)
|
Total stock-based compensation expense, net of income tax benefit
|
|
$36
|
|
|
|
$33
|
|
|
|
$26
|
|
The stock-based compensation expense before income tax benefit was recorded in our consolidated statements of earnings as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal year
|
2012
|
|
|
2011
|
|
|
2010
|
|
Cost of sales and related buying and occupancy costs
|
|
$14
|
|
|
|
$12
|
|
|
|
$13
|
|
Selling, general and administrative expenses
|
39
|
|
|
38
|
|
|
29
|
|
Total stock-based compensation expense, before income tax benefit
|
|
$53
|
|
|
|
$50
|
|
|
|
$42
|
|
The benefits of tax deductions in excess of the compensation cost recognized for stock-based awards are classified as financing cash inflows and are reflected as "Excess tax benefit from stock-based compensation" in the consolidated statements of cash flows.
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and unit amounts
Stock Options
We used the following assumptions to estimate the fair value for stock options at grant date:
|
|
|
|
|
|
|
|
|
|
Fiscal year
|
2012
|
|
|
2011
|
|
|
2010
|
|
Risk-free interest rate:
Represents the yield on U.S. Treasury zero-coupon securities that mature over the 10-year life of the stock options.
|
0.3% – 2.0%
|
|
|
0.4% – 3.5%
|
|
|
0.5% – 4.0%
|
|
Weighted-average volatility:
Based on a combination of the historical volatility of our common stock and the implied volatility of exchange traded options for our common stock.
|
36.5
|
%
|
|
39.0
|
%
|
|
40.0
|
%
|
Weighted-average expected dividend yield:
Our forecasted dividend yield for the next 10 years.
|
2.1
|
%
|
|
2.0
|
%
|
|
1.3
|
%
|
Expected life in years:
Represents the estimated period of time until option exercise. The expected term of options granted was derived from the output of the Binomial Lattice option
valuation model and was based on our historical exercise behavior, taking into consideration the contractual term of the option and our employees' expected exercise and post-vesting employment termination behavior.
|
6.1
|
|
|
5.9
|
|
|
5.7
|
|
The weighted-average fair value per option at the grant date was
$15
,
$15
and
$13
in
2012
,
2011
and
2010
. In
2012
,
2011
and
2010
, stock option awards to employees were approved by the Compensation Committee of our Board of Directors and their exercise price was set at
$53
,
$45
and
$37
, the closing price of our common stock on
February 22, 2012
,
February 25, 2011
and
February 26, 2010
(the dates of grant). The awards are determined based upon a percentage of the recipients' base salary and the fair value of the stock options. In
2012
, we awarded stock options to
1,477
employees, compared with
1,331
and
1,259
employees in
2011
and 2010.
As of
February 2, 2013
, we have
13.5
options outstanding under the 2010 Plan. Options vest over
four
years, and expire
10
years after the date of grant. A summary of the stock option activity for
2012
is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal year
|
2012
|
|
Shares
|
|
Weighted-
average
exercise price
|
|
|
Weighted-average
remaining
contractual
life (years)
|
|
Aggregate
intrinsic
value
|
|
Outstanding, beginning of year
|
14.1
|
|
|
$32
|
|
|
|
|
|
Granted
|
2.9
|
|
53
|
|
|
|
|
|
Exercised
|
(3.0)
|
|
25
|
|
|
|
|
|
Cancelled
|
(0.5)
|
|
44
|
|
|
|
|
|
Outstanding, end of year
|
13.5
|
|
|
$38
|
|
|
6
|
|
|
$237
|
|
Options exercisable at end of year
|
6.7
|
|
|
$33
|
|
|
5
|
|
|
$148
|
|
Options vested or expected to vest at end of year
|
12.6
|
|
|
$37
|
|
|
6
|
|
|
$226
|
|
The total intrinsic value of options exercised during
2012
,
2011
and
2010
was
$90
,
$80
and
$51
. The total fair value of stock options vested during
2012
,
2011
and
2010
was
$32
,
$29
and
$27
. As of
February 2, 2013
, the total unrecognized stock-based compensation expense related to nonvested stock options was
$57
, which is expected to be recognized over a weighted-average period of
26
months.
Nordstrom, Inc. and subsidiaries
55
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and unit amounts
HauteLook
As discussed in Note 2: HauteLook, consideration for our acquisition of HauteLook payable in Nordstrom stock includes ongoing vesting requirements for HauteLook's employees. These amounts are recorded as compensation expense as the related service is performed over the respective employee vesting periods of up to
four
years after the acquisition date.
A summary of the nonvested restricted stock award activity related to HauteLook for
2012
is as follows:
|
|
|
|
|
|
|
|
Fiscal year
|
2012
|
|
Shares
|
|
|
Weighted-
average grant-
date fair value
|
|
Outstanding, beginning of year
|
0.8
|
|
|
|
$42
|
|
Vested
|
(0.5
|
)
|
|
42
|
|
Outstanding, end of year
|
0.3
|
|
|
|
$42
|
|
The total fair value of restricted stock vested during
2012
was
$22
. As of
February 2, 2013
, the total unrecognized stock-based compensation expense related to HauteLook nonvested restricted stock awards was
$9
, which is expected to be recognized over a weighted-average period of
eight
months.
Performance Share Units
We grant performance share units to executive officers as one of the ways to align compensation with shareholder interests. Performance share units vest after a
three
-year period only when our total shareholder return (reflecting daily stock price appreciation and compounded reinvestment of dividends) is positive and outperforms companies in a defined group of competitors determined by the Compensation Committee of our Board of Directors. The percentage of units that are earned depends on our relative position at the end of the vesting period and can range from
0%
to
175%
of the number of units granted.
Performance share units are payable in either cash or stock as elected by the employee; therefore, they are classified as a liability award. The liability is remeasured, with a corresponding adjustment to earnings, at each fiscal quarter-end during the vesting period. The performance share unit liability is remeasured using the estimated percentage of units earned multiplied by the closing market price of our common stock on the current period-end date and is pro-rated based on the amount of time passed in the vesting period. The price used to issue stock or cash for the performance share units upon vesting is the closing market price of our common stock on the vest date.
Following is a summary of performance share unit activity:
|
|
|
|
|
Fiscal year
|
2012
|
|
Outstanding units, beginning of year
|
127,368
|
|
Granted
|
55,244
|
|
Vested but unearned
|
(15,987
|
)
|
Vested and earned
|
(47,961
|
)
|
Cancelled
|
(13,756
|
)
|
Outstanding units, end of year
|
104,908
|
|
|
|
Total fair value of performance share units earned
|
|
$3
|
|
Total fair value of performance share units settled or to be settled in cash
|
|
$2
|
|
As of
February 2, 2013
, our other liabilities included
$4
for performance share units. As of
February 2, 2013
, the remaining unrecognized stock-based compensation expense for unvested performance share units was
$1
, which is expected to be recognized over a weighted-average period of
12
months.
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and unit amounts
NOTE 14: INCOME TAXES
Income tax expense consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal year
|
2012
|
|
|
2011
|
|
|
2010
|
|
Current income taxes:
|
|
|
|
|
|
Federal
|
|
$362
|
|
|
|
$359
|
|
|
|
$324
|
|
State and local
|
66
|
|
|
63
|
|
|
52
|
|
Total current income tax expense
|
428
|
|
|
422
|
|
|
376
|
|
Deferred income taxes:
|
|
|
|
|
|
Federal
|
21
|
|
|
20
|
|
|
4
|
|
State and local
|
1
|
|
|
(6
|
)
|
|
(2
|
)
|
Total deferred income tax expense
|
22
|
|
|
14
|
|
|
2
|
|
Total income tax expense
|
|
$450
|
|
|
|
$436
|
|
|
|
$378
|
|
A reconciliation of the statutory federal income tax rate to the effective tax rate on earnings before income taxes is as follows:
|
|
|
|
|
|
|
|
|
|
Fiscal year
|
2012
|
|
|
2011
|
|
|
2010
|
|
Statutory rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State and local income taxes, net of federal income taxes
|
3.6
|
|
|
3.6
|
|
|
3.4
|
|
Non-taxable acquisition-related items
|
—
|
|
|
0.6
|
|
|
—
|
|
Other, net
|
(0.6
|
)
|
|
(0.2
|
)
|
|
(0.2
|
)
|
Effective tax rate
|
38.0
|
%
|
|
39.0
|
%
|
|
38.2
|
%
|
In 2011, we acquired HauteLook in a tax-free merger transaction. The non-taxability of certain acquisition-related items, including goodwill impairment, resulted in an increase in our effective tax rate in 2011.
The major components of deferred tax assets and liabilities are as follows:
|
|
|
|
|
|
|
|
|
|
February 2, 2013
|
|
|
January 28, 2012
|
|
Compensation and benefits accruals
|
|
$177
|
|
|
|
$167
|
|
Allowance for sales returns
|
51
|
|
|
45
|
|
Accrued expenses
|
43
|
|
|
41
|
|
Merchandise inventories
|
24
|
|
|
22
|
|
Gift cards and gift certificates
|
18
|
|
|
17
|
|
Loyalty reward certificates
|
22
|
|
|
17
|
|
Allowance for credit losses
|
33
|
|
|
45
|
|
Federal benefit of state taxes
|
7
|
|
|
6
|
|
Gain on sale of interest rate swap
|
24
|
|
|
29
|
|
Other
|
13
|
|
|
17
|
|
Total deferred tax assets
|
412
|
|
|
406
|
|
Land, buildings and equipment basis and depreciation differences
|
(90
|
)
|
|
(63
|
)
|
Total deferred tax liabilities
|
(90
|
)
|
|
(63
|
)
|
Net deferred tax assets
|
|
$322
|
|
|
|
$343
|
|
Nordstrom, Inc. and subsidiaries
57
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and unit amounts
A reconciliation of the beginning and ending amount of unrecognized tax benefits for
2012
,
2011
and
2010
is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal year
|
2012
|
|
|
2011
|
|
|
2010
|
|
Unrecognized tax benefit at beginning of year
|
|
$21
|
|
|
|
$43
|
|
|
|
$43
|
|
Gross increase to tax positions in prior periods
|
1
|
|
|
14
|
|
|
3
|
|
Gross decrease to tax positions in prior periods
|
(7
|
)
|
|
(14
|
)
|
|
(3
|
)
|
Gross increase to tax positions in current period
|
1
|
|
|
2
|
|
|
3
|
|
Settlements
|
(1
|
)
|
|
(24
|
)
|
|
(3
|
)
|
Unrecognized tax benefit at end of year
|
|
$15
|
|
|
|
$21
|
|
|
|
$43
|
|
Settlement activity in 2011 includes amounts paid for a state tax matter and to close our 2008 IRS audit.
At the end of
2012
,
2011
and
2010
,
$7
,
$11
and
$21
of the ending gross unrecognized tax benefit related to items which, if recognized, would affect the effective tax rate.
Our income tax expense included a decrease to expense of
$1
in
2012
and
$4
in
2011
and an increase to expense of
$5
in
2010
for tax-related interest and penalties. At the end of
2012
,
2011
and
2010
, our liability for interest and penalties was
$7
,
$5
and
$11
.
We file income tax returns in the U.S. and a limited number of foreign jurisdictions. With few exceptions, we are no longer subject to federal, state and local, or non-U.S. income tax examinations for years before 2008. Unrecognized tax benefits related to federal, state and local tax positions may decrease by
$2
by
February 1, 2014
, due to the completion of examinations and the expiration of various statutes of limitations.
NOTE 15: EARNINGS PER SHARE
Earnings per basic share is computed using the weighted-average number of common shares outstanding during the year. Earnings per diluted share uses the weighted-average number of common shares outstanding during the year plus dilutive common stock equivalents, primarily stock options.
The computation of earnings per share is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal year
|
2012
|
|
|
2011
|
|
|
2010
|
|
Net earnings
|
|
$735
|
|
|
|
$683
|
|
|
|
$613
|
|
|
|
|
|
|
|
Basic shares
|
203.0
|
|
|
213.5
|
|
|
218.8
|
|
Dilutive effect of stock options and other
|
3.7
|
|
|
4.2
|
|
|
3.8
|
|
Diluted shares
|
206.7
|
|
|
217.7
|
|
|
222.6
|
|
|
|
|
|
|
|
Earnings per basic share
|
|
$3.62
|
|
|
|
$3.20
|
|
|
|
$2.80
|
|
Earnings per diluted share
|
|
$3.56
|
|
|
|
$3.14
|
|
|
|
$2.75
|
|
Options and other equity instruments totaling
4.2
shares in
2012
,
3.9
shares in
2011
and
6.1
shares in
2010
were excluded from earnings per diluted share because their impact was anti-dilutive.
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and unit amounts
NOTE 16: SEGMENT REPORTING
As of the end of
2012
, we have
two
reportable segments:
Retail
and
Credit
. Our
Retail
segment includes our "Nordstrom" operating segment, which is composed of our Nordstrom full-line stores and our online store at www.nordstrom.com. Through our multi-channel initiatives, we have integrated the operations, merchandising and technology of our Nordstrom full-line and online stores, consistent with our customers' expectations of a seamless shopping experience, regardless of channel. Our internal reporting to our president, who is our chief operating decision maker, is consistent with these multi-channel initiatives. We aggregate our Nordstrom Rack operating segment into the Retail reporting segment, based on similar economic and other qualitative characteristics. Additionally, we include HauteLook, Jeffrey and treasure&bond in the Retail reporting segment.
Through our
Credit
segment, we provide our customers with a variety of payment products and services, including a Nordstrom private label card,
two
Nordstrom VISA credit cards and a debit card for Nordstrom purchases. Our credit and debit card products also include a loyalty program that provides benefits to our cardholders based on their level of spending.
Amounts in the
Corporate/Other
column include unallocated corporate expenses and assets, inter-segment eliminations and other adjustments to segment results necessary for the presentation of consolidated financial results in accordance with generally accepted accounting principles.
In general, we use the same measurements to compute earnings before income taxes for reportable segments as we do for the consolidated company. However, redemptions of our Nordstrom Notes are included in net sales for our Retail segment. The sales amount in our Corporate/Other column includes an entry to eliminate these transactions from our consolidated net sales. There is no impact to consolidated earnings before income taxes for this adjustment. The related Nordstrom Notes expenses and other costs associated with the Fashion Rewards program are included in our Credit segment. In addition, our sales return reserve and other corporate adjustments are recorded in the Corporate/Other column. Other than as described above, the accounting policies of the operating segments are the same as those described in Note 1: Nature of Operations and Summary of Significant Accounting Policies.
Nordstrom, Inc. and subsidiaries
59
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and unit amounts
The following table sets forth information for our reportable segments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
|
|
|
Credit
|
|
|
Corporate/Other
|
|
|
Total
|
|
Fiscal year 2012
|
|
|
|
|
|
|
|
Net sales
|
|
$11,949
|
|
|
—
|
|
|
|
($187
|
)
|
|
|
$11,762
|
|
Credit card revenues
|
—
|
|
|
|
$386
|
|
|
—
|
|
|
386
|
|
Earnings (loss) before interest and income taxes
|
1,757
|
|
|
67
|
|
|
(479
|
)
|
|
1,345
|
|
Interest expense, net
|
—
|
|
|
(26
|
)
|
|
(134
|
)
|
|
(160
|
)
|
Earnings (loss) before income taxes
|
1,757
|
|
|
41
|
|
|
(613
|
)
|
|
1,185
|
|
Capital expenditures
|
371
|
|
|
2
|
|
|
140
|
|
|
513
|
|
Depreciation and amortization
|
357
|
|
|
2
|
|
|
70
|
|
|
429
|
|
Goodwill
|
175
|
|
|
—
|
|
|
—
|
|
|
175
|
|
Assets
1
|
3,922
|
|
|
2,201
|
|
|
1,966
|
|
|
8,089
|
|
|
|
|
|
|
|
|
|
Fiscal year 2011
|
|
|
|
|
|
|
|
Net sales
|
|
$10,656
|
|
|
—
|
|
|
|
($159
|
)
|
|
|
$10,497
|
|
Credit card revenues
|
—
|
|
|
|
$380
|
|
|
—
|
|
|
380
|
|
Earnings (loss) before interest and income taxes
|
1,570
|
|
|
76
|
|
|
(397
|
)
|
|
1,249
|
|
Interest expense, net
|
—
|
|
|
(13
|
)
|
|
(117
|
)
|
|
(130
|
)
|
Earnings (loss) before income taxes
|
1,570
|
|
|
63
|
|
|
(514
|
)
|
|
1,119
|
|
Capital expenditures
|
424
|
|
|
2
|
|
|
85
|
|
|
511
|
|
Depreciation and amortization
|
313
|
|
|
2
|
|
|
56
|
|
|
371
|
|
Goodwill
|
175
|
|
|
—
|
|
|
—
|
|
|
175
|
|
Assets
1
|
3,642
|
|
|
2,135
|
|
|
2,714
|
|
|
8,491
|
|
|
|
|
|
|
|
|
|
Fiscal year 2010
|
|
|
|
|
|
|
|
Net sales
|
|
$9,420
|
|
|
—
|
|
|
|
($110
|
)
|
|
|
$9,310
|
|
Credit card revenues
|
—
|
|
|
|
$390
|
|
|
—
|
|
|
390
|
|
Earnings (loss) before interest and income taxes
|
1,406
|
|
|
51
|
|
|
(339
|
)
|
|
1,118
|
|
Interest expense, net
|
—
|
|
|
(21
|
)
|
|
(106
|
)
|
|
(127
|
)
|
Earnings (loss) before income taxes
|
1,406
|
|
|
30
|
|
|
(445
|
)
|
|
991
|
|
Capital expenditures
|
361
|
|
|
1
|
|
|
37
|
|
|
399
|
|
Depreciation and amortization
|
295
|
|
|
2
|
|
|
30
|
|
|
327
|
|
Goodwill
|
53
|
|
|
—
|
|
|
—
|
|
|
53
|
|
Assets
1
|
3,234
|
|
|
2,060
|
|
|
2,168
|
|
|
7,462
|
|
1
Assets in Corporate/Other include unallocated assets in corporate headquarters, consisting primarily of cash, land, buildings and equipment and deferred tax assets.
The following table summarizes net sales within our reportable segments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal year
|
2012
|
|
|
2011
|
|
|
2010
|
|
Nordstrom full-line stores
|
|
$7,964
|
|
|
|
$7,513
|
|
|
|
$6,995
|
|
Direct
|
1,269
|
|
|
913
|
|
|
705
|
|
Nordstrom
|
9,233
|
|
|
8,426
|
|
|
7,700
|
|
Nordstrom Rack
|
2,445
|
|
|
2,045
|
|
|
1,691
|
|
Other retail
1
|
271
|
|
|
185
|
|
|
29
|
|
Total Retail segment
|
11,949
|
|
|
10,656
|
|
|
9,420
|
|
Corporate/Other
|
(187
|
)
|
|
(159
|
)
|
|
(110
|
)
|
Total net sales
|
|
$11,762
|
|
|
|
$10,497
|
|
|
|
$9,310
|
|
1
Other retail includes our HauteLook online private sale subsidiary, our Jeffrey stores and our treasure&bond store.
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and unit amounts
The following table summarizes net sales by merchandise category:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal year
|
2012
|
|
2011
|
|
2010
|
|
Net sales
|
|
|
% of total
|
|
|
Net sales
|
|
|
% of total
|
|
|
Net sales
|
|
|
% of total
|
|
Women’s apparel
|
|
$3,684
|
|
|
31
|
%
|
|
|
$3,438
|
|
|
33
|
%
|
|
|
$3,184
|
|
|
34
|
%
|
Shoes
|
2,716
|
|
|
23
|
%
|
|
2,413
|
|
|
23
|
%
|
|
2,094
|
|
|
23
|
%
|
Men’s apparel
|
1,866
|
|
|
16
|
%
|
|
1,612
|
|
|
15
|
%
|
|
1,415
|
|
|
15
|
%
|
Women’s accessories
|
1,574
|
|
|
13
|
%
|
|
1,311
|
|
|
12
|
%
|
|
1,101
|
|
|
12
|
%
|
Cosmetics
|
1,255
|
|
|
11
|
%
|
|
1,106
|
|
|
11
|
%
|
|
972
|
|
|
10
|
%
|
Kids’ apparel
|
381
|
|
|
3
|
%
|
|
341
|
|
|
3
|
%
|
|
303
|
|
|
3
|
%
|
Other
|
286
|
|
|
3
|
%
|
|
276
|
|
|
3
|
%
|
|
241
|
|
|
3
|
%
|
Total net sales
|
|
$11,762
|
|
|
100
|
%
|
|
|
$10,497
|
|
|
100
|
%
|
|
|
$9,310
|
|
|
100
|
%
|
NOTE 17: SELECTED QUARTERLY DATA (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1st Quarter
|
|
|
2nd Quarter
|
|
|
3rd Quarter
|
|
|
4th Quarter
|
|
|
Total
|
|
Fiscal year 2012
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$2,535
|
|
|
|
$2,918
|
|
|
|
$2,713
|
|
|
|
$3,596
|
|
|
|
$11,762
|
|
Same-store sales percentage change
1
|
8.5
|
%
|
|
4.5
|
%
|
|
10.7
|
%
|
|
6.3
|
%
|
|
7.3
|
%
|
Credit card revenues
|
94
|
|
|
91
|
|
|
95
|
|
|
106
|
|
|
386
|
|
Gross profit
2
|
951
|
|
|
1,039
|
|
|
983
|
|
|
1,357
|
|
|
4,330
|
|
Selling, general and administrative expenses:
|
|
|
|
|
|
|
|
|
|
Retail
|
721
|
|
|
778
|
|
|
755
|
|
|
912
|
|
|
3,166
|
|
Credit
|
44
|
|
|
62
|
|
|
46
|
|
|
53
|
|
|
205
|
|
Earnings before income taxes
|
240
|
|
|
250
|
|
|
239
|
|
|
456
|
|
|
1,185
|
|
Net earnings
|
149
|
|
|
156
|
|
|
146
|
|
|
284
|
|
|
735
|
|
Earnings per basic share
|
|
$0.72
|
|
|
|
$0.76
|
|
|
|
$0.73
|
|
|
|
$1.43
|
|
|
|
$3.62
|
|
Earnings per diluted share
|
|
$0.70
|
|
|
|
$0.75
|
|
|
|
$0.71
|
|
|
|
$1.40
|
|
|
|
$3.56
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal year 2011
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$2,229
|
|
|
|
$2,716
|
|
|
|
$2,383
|
|
|
|
$3,169
|
|
|
|
$10,497
|
|
Same-store sales percentage change
1
|
6.5
|
%
|
|
7.3
|
%
|
|
7.9
|
%
|
|
7.1
|
%
|
|
7.2
|
%
|
Credit card revenues
|
94
|
|
|
94
|
|
|
95
|
|
|
97
|
|
|
380
|
|
Gross profit
2
|
844
|
|
|
993
|
|
|
872
|
|
|
1,196
|
|
|
3,905
|
|
Selling, general and administrative expenses:
|
|
|
|
|
|
|
|
|
|
Retail
|
611
|
|
|
708
|
|
|
670
|
|
|
818
|
|
|
2,807
|
|
Credit
|
55
|
|
|
59
|
|
|
57
|
|
|
58
|
|
|
229
|
|
Earnings before income taxes
|
241
|
|
|
290
|
|
|
209
|
|
|
379
|
|
|
1,119
|
|
Net earnings
|
145
|
|
|
175
|
|
|
127
|
|
|
236
|
|
|
683
|
|
Earnings per basic share
|
|
$0.66
|
|
|
|
$0.81
|
|
|
|
$0.60
|
|
|
|
$1.13
|
|
|
|
$3.20
|
|
Earnings per diluted share
|
|
$0.65
|
|
|
|
$0.80
|
|
|
|
$0.59
|
|
|
|
$1.11
|
|
|
|
$3.14
|
|
1
Same-store sales include sales from stores that have been open at least one full year at the beginning of the year. Fiscal year 2012 includes an extra week (the 53
rd
week) in the fourth quarter as a result of our 4-5-4 retail reporting calendar. The 53
rd
week is not included in same-store sales calculations. We also include sales from our Nordstrom online store in same-store sales because of the integration of our Nordstrom full-line stores and online store.
2
Gross profit is calculated as net sales less cost of sales and related buying and occupancy costs (for all segments).
Nordstrom, Inc. and subsidiaries
61