Kohl's 2008 Annual Report Download - page 62

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KOHL’S CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
9. Quarterly Financial Information (Unaudited) (continued)
2007
First Second Third Fourth
(In Millions, Except Per Share Data)
Net sales ..................................................... $3,572 $3,589 $3,825 $5,487
Gross margin .................................................. $1,318 $1,396 $1,418 $1,882
Net income ................................................... $ 209 $ 269 $ 194 $ 412
Basic shares ................................................... 322 320 317 313
Basic net income per share ....................................... $ 0.65 $ 0.84 $ 0.61 $ 1.32
Diluted shares ................................................. 325 323 319 314
Diluted net income per share ...................................... $ 0.64 $ 0.83 $ 0.61 $ 1.31
Due to changes in stock prices during the year and timing of issuance of shares, the sum of quarterly net
income per share may not equal the annual net income per share.
10. Related Party
One of our directors is also a shareholder of a law firm which performs legal services for us.
We have agreements with Blackhawk Network, Inc. (“Blackhawk”) pursuant to which Blackhawk
distributes our prepaid gift cards for sale in various retail outlets and, beginning in 2008, to which we sell prepaid
gift cards for other retailers in our stores. We pay Blackhawk a fee for Kohl’s gift cards which are sold at other
retailers and receive a fee for selling gift cards for other retailers in our stores. Blackhawk is a subsidiary of
Safeway Stores, Inc. (“Safeway”) and one of our directors is Chairman, President and Chief Executive Officer of
Safeway. The agreements were entered into in the ordinary course of our business, and our director was not
involved in any of the related negotiations. Blackhawk is a leading provider of gift card marketing services in the
retail industry, and Safeway has confirmed that the terms of our agreements with Blackhawk are substantially
similar to the terms of Blackhawk’s agreements with other similarly situated national retailers.
F-23