Nordstrom 2003 Annual Report Download - page 21

LIQUIDITY AND CAPITAL RESOURCES
We finance our working capital needs, capital expenditures, acquisitions,
debt repurchase and share repurchase activity with a combination of
cash flows from operations and borrowings.
We believe that our operating cash flows, existing cash and available
credit facilities are sufficient to finance our cash requirements for the next
12 months. Additionally, we believe our operating cash flows, existing cash
and credit available to us under existing and potential future facilities are
sufficient to meet our cash requirements for the next 10 years.
Operating Activities
Our operations are seasonal in nature. The second quarter, which includes
our Anniversary Sale, accounts for approximately 28% of net sales, while
the fourth quarter, which includes the holiday season, accounts for about
30% of net sales. Cash requirements are highest in the third quarter as
we build our inventory for the holiday season.
The increase in net cash provided by operating activities between 2003 and
2002 was primarily due to an increase in net earnings before noncash items,
decreases in inventories and increases in accounts payable partially
offset by an increase in our retained interest in accounts receivable.
Strong sales and effective inventory management left us with low inventory
levels after the holidays. January receipts of new merchandise replenished
our inventory levels resulting in an increase in accounts payable. Retained
interest in accounts receivable increased as Nordstrom VISA credit sales
increased during the year.
The decrease in net cash provided by operating activities between 2002
and 2001 was primarily due to increases in inventories and accounts
receivable partially offset by an increase in net earnings before noncash
items and an increase in our accrual for income taxes. Inventory grew as
we added stores during the year. Accounts receivable increased as
Nordstrom VISA credit sales improved. The increased income tax accrual
resulted from the timing of payments.
In 2004, cash flows provided by operating activities are expected to be in
the range of approximately $380.0 - $420.0 million. Payables are expected
to remain consistent with 2003 and inventory is expected to increase
modestly from new store openings. These factors will be partially offset
by a slower growth in accounts receivable compared to 2003.
Investing Activities
For the last three years, investing activities have primarily consisted of capital
expenditures and the minority interest purchase of Nordstrom.com.
Capital Expenditures
Our capital expenditures over the last three years totaled approximately
$712 million, net of developer reimbursements, principally to add stores,
improve existing facilities and purchase or develop new information
systems. More than 3.0 million square feet of retail store space has
been added during this period, representing an increase of 19% since
January 31, 2001.
We plan to spend approximately $725 - $775 million, net of developer
reimbursements, on capital projects during the next three years.
Approximately 63% of this investment will be to build new stores and
remodel existing stores and 17% will go toward information technology,
while the remaining 20% is for maintenance and other miscellaneous
spending. Compared to the previous three years, we plan to open fewer
stores, slow spending on information systems and increase our spending
on the improvement of existing facilities. To maximize the profitability of
our new stores, we are opening fewer new stores but are placing them
in established large regional shopping centers. In the information systems
area, we are in the process of implementing our “Point of Sale” system,
which we expect to complete during 2004.
At January 31, 2004, approximately $249 million has been contractually
committed primarily for the construction of new stores or remodeling of
existing stores. Although we have made commitments for stores opening
in 2004 and beyond, it is possible that some stores may not be opened as
scheduled because of delays in the development process, or because of
the termination of store site negotiations.
Total Square Footage (in thousands)
management’s discussion and analysis
NORDSTROM, INC. and SUBSIDIARIES
[19 ]
99 00 01 02 03
14,487
16,056
17,048
18,428
19,138