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Nordstrom, Inc. and subsidiaries 43
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in thousands except per share and per option amounts
NOTE 8: LEASES
Future minimum lease payments as of February 3, 2007 are as follows:
Fiscal year
Capital Leases
Operating Leases
2007
$1,946
$78,016
2008
1,946
75,383
2009
1,376
72,757
2010
1,270
68,589
2011
1,120
61,887
Thereafter
5,869
293,627
Total minimum lease payments
13,527
$650,259
Less amount representing interest
(5,011)
Present value of net minimum lease payments
$8,516
Rent expense for 2006, 2005, and 2004 are as follows:
Fiscal year
2006
2005
2004
Minimum rent:
Store locations
$66,768
$62,036
$79,285
Offices, warehouses and equipment
14,554
15,493
21,104
Percentage rent:
Store locations
12,202
10,607
9,214
Property incentives:
(45,910)
(46,645)
(46,737)
Total rent expense
$47,614
$41,491
$62,866
The rent expense above does not include common area maintenance costs of $16,391, $16,105, and $17,527 in 2006, 2005, and 2004.
NOTE 9: SELF INSURANCE
We retain a portion of the risk for certain losses related to health and welfare, workers’ compensation and general liability claims. Liabilities
associated with these losses include estimates of both losses reported and losses incurred but not yet reported. We estimate our ultimate cost based
on analysis of historical data and independent actuarial estimates.
• Workers’ Compensation – We have a deductible per claim of $1,000 or less and no policy limits. Our workers’ compensation reserve was $56,250
and $55,226 at the end of 2006 and 2005 and our expense was $21,470, $12,804, and $29,263 in 2006, 2005, and 2004.
• General Liability – We have a deductible per claim of $1,000 or less and a policy limit up to $150,000. Our general liability insurance reserve was
$9,994 and $10,954 at the end of 2006 and 2005.
• Health and Welfare – We are self insured for our health and welfare coverage and we do not use stop-loss coverage. Participants contribute to the
cost of their coverage and are subject to certain plan limits and deductibles. Our health and welfare reserve was $15,016 and $12,100 at the end of
2006 and 2005.
NOTE 10: POST-RETIREMENT BENEFITS
We have an unfunded Supplemental Executive Retirement Plan (“SERP”), which provides retirement benefits to certain officers and select employees.
This plan is non-qualified and does not have a minimum funding requirement.
We adopted Statement No. 158,
Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans
(“SFAS 158”), effective
February 3, 2007. The impact of the adoption of SFAS 158 is reflected within our consolidated financial statements as of February 3, 2007. SFAS 158
requires the recognition of a plan’s overfunded or underfunded status as an asset or liability in the balance sheet and the recognition of changes in that
funded status in the year in which the changes occur through comprehensive income. The incremental effect of applying SFAS 158 is disclosed as part
of this footnote.