Nordstrom 2002 Annual Report Download - page 38

notes to consolidated
financial statements
36 NORDSTROM INC. AND SUBSIDIARIES
Note 16: Leases
We lease land, buildings and equipment under noncancelable lease
agreements with expiration dates ranging from 2003 to 2080.
Certain leases include renewal provisions at our option. Most of
the leases provide for additional rent payments based upon specific
percentages of sales and require us to pay for certain common area
maintenance and other costs.
Year ended January 31, 2003 2002 2001
Minimum rent:
Store locations $23,511 $26,951 $16,907
Offices, warehouses
and equipment 25,851 20,144 21,070
Percentage rent:
Store locations 7,776 8,047 9,241
Total rent expense $57,138 $55,142 $47,218
Future minimum lease payments as of January 31, 2003 are as
follows:
Capital Operating
Year ended January 31, Leases Leases
2004 $1,120 $73,158
2005 1,120 73,053
2006 1,120 68,271
2007 1,120 63,796
2008 1,120 60,088
Thereafter 10,350 442,015
Total minimum lease payments 15,950 $780,381
Less amount representing interest 7,013
Present value of net minimum
lease payments $8,937
Note 17: Stock-Based Compensation
Stock Option Plan: We have a stock option plan (the “Nordstrom, Inc.
Plan”) under which stock options, performance share units and
restricted stock may be granted to key employees. Options vest
over periods ranging from four to eight years, and expire ten years
after the date of grant.
Performance Share Units: In 2002, 2001 and 2000 we granted
190,396, 273,864 and 355,072 performance share units which
will vest over three years if certain financial goals are met.
Employees may elect to receive common stock or cash upon vesting
of these performance shares. At January 31, 2003 and 2002,
$4,441 and $4,713 was recorded in accrued salaries, wages and
related benefits for these performance shares. Employees who
receive performance share units pay no monetary consideration.
No amounts have been paid and no common stock has been issued
in connection with this program. As of January 31, 2003 and
2002, 415,640 and 518,189 units were outstanding.
Restricted Stock: We also granted 30,069 and 180,000 shares
of restricted stock in 1999 and 1998, with a weighted average
fair value of $32.09 and $27.75. In September 2000, we
accelerated the vesting of 144,000 shares of restricted stock
resulting in compensation expense of $3,039, and cancelled
14,175 shares of restricted stock. In January 2002, we
accelerated 9,536 unvested shares of restricted stock, resulting
in compensation expense of $193. The remaining shares vested
normally. As of January 31, 2003 and 2002, there were no shares
of unvested restricted stock.
At January 31, 2003, approximately 6,391,703 shares are
reserved for future stock option grants pursuant to the Plan.
We apply APB No. 25, “Accounting for Stock Issued to Employees,”
in measuring compensation costs under our stock-based
compensation programs. Stock options are issued at the fair
market value of the stock at the date of grant. Accordingly, we
recognized no compensation cost for stock options issued under
the plan. For performance share units, we record compensation
expense over the performance period at the fair value of the stock
on the date when it is probable that the employees will earn the
units. Restricted stock compensation expense is based on the
market price on the date of grant and is recorded over the vesting
period. Stock-based compensation expense for 2002, 2001
and 2000 was $1,130, $3,414 and $6,480.