Nordstrom 2003 Annual Report Download - page 45

NORDSTROM, INC. and SUBSIDIARIES
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The Black-Scholes method was used to estimate the fair value of the
options at grant date based on the following factors:
Fiscal Year 2003 2002 2001
Stock Options:
Risk-free interest rate 2.9% 4.3% 4.8%
Volatility 71.0% 69.0% 68.0%
Dividend yield 1.5% 1.5% 1.3%
Expected life in years 5.0 5.0 5.0
Weighted-average fair value
at grant date $10 $14 $10
ESPP:
Risk-free interest rate 1.1% 1.9% 4.3%
Volatility 71.0% 69.0% 68.0%
Dividend yield 1.5% 1.5% 1.3%
Expected life in years 0.5 0.5 0.5
Weighted-average fair value
at grant date $7 $7 $5
For options issued in 2001 under the Nordstrom.com plans, we used a risk-
free interest rate of 4.5%, volatility of 127%, dividend yield of 0% and
expected life of 4 years to calculate the fair value at grant date of $1.56.
Note 16: Accumulated Other Comprehensive Earnings
The following table shows the components of accumulated other
comprehensive earnings:
January 31, 2004 2003 2002
Foreign currency translation $15,783 $8,404 $649
SERP adjustment (11,679) (6,511) —
Securitization fair value
adjustment 4,764 807 1,757
Total accumulated other
comprehensive earnings $8,868 $2,700 $2,406
Note 17: Supplementary Cash Flow Information
We capitalize certain property, plant and equipment during the construction
period of commercial buildings which is subsequently derecognized and
reclassed to prepaid rent or deferred lease credits. We also had noncash
activity related to the construction of our corporate office building. The
noncash activity is as follows:
Fiscal Year 2003 2002 2001
Noncash activity:
Reclassification
of new stores $753 $61,792 $75,555
Corporate office construction 1,880 (3,951) 36,120
Supplementary cash flow information includes the following:
Fiscal Year 2003 2002 2001
Cash paid during the year for:
Interest (net of
capitalized interest) $96,824 $84,898 $77,025
Income taxes 121,271 48,386 80,689
Note 18: Segment Reporting
We have four segments: Retail Stores, Credit Operations, Catalog/Internet,
and Corporate and Other.
The Retail Stores segment derives its revenues from sales of high-quality
apparel, shoes and accessories. It includes our full-line, Nordstrom
Rack and Façonnable stores as well as our product development group,
which coordinates the design and production of private label merchandise
sold in our retail stores.
The Credit Operations segment revenues consist primarily of finance
charges earned through issuance of the Nordstrom private label and
VISA credit cards.
The Catalog/Internet segment generates revenues from direct mail
catalogs and the Nordstrom.com website.
During 2003, Nordstrom Direct, which contains our Internet and catalog
business, was consolidated into Nordstrom, Inc. as a division. As a result
of this change, the Internet and catalog segment will be presented as part
of our retail stores segment starting in 2004.
We use the same measurements to compute net earnings for reportable
segments as we do for the consolidated company. The accounting policies
of the operating segments are the same as those described in the
summary of significant accounting policies in Note 1.
notes to consolidated financial statements