Nordstrom 2007 Annual Report Download - page 58

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50
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share and per option amounts
NOTE 9: LEASES
Future minimum lease payments as of February 2, 2008 are as follows:
Fiscal year Capital Leases Operating Leases
2008 $3 $69
2009 3 71
2010 2 67
2011 2 62
2012 2 49
Thereafter 11 260
Total minimum lease payments 23 $578
Less amount representing interest (8)
Present value of net minimum lease payments $15
Rent expense for 2007, 2006 and 2005 are as follows:
Fiscal year 2007 2006 2005
Minimum rent:
Store locations $67 $67 $62
Offices, warehouses and equipment 14 15 15
Percentage rent - store locations 14 12 11
Property incentives - store locations (47) (46) (47)
Total rent expense $48 $48 $41
The rent expense above does not include common area maintenance costs of $19 in 2007 and $16 in both 2006 and 2005.
NOTE 10: 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.
•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 $14 and $15 at the end of 2007
and 2006.
•Workers’ Compensation – We have a retention per claim of $1 or less and no policy limits. Our workers’ compensation reserve was $53 and $56 at
the end of 2007 and 2006 and our expense was $15, $21 and $13 in 2007, 2006 and 2005.
•General Liability – Our General Liability encompasses two types of losses – Employment Practices Liability and Commercial General Liability. We
have a retention per claim of $1 or less and a policy limit up to $25 and $150, respectively. Our general liability insurance reserve was $10 at the
end of both 2007 and 2006.
NOTE 11: 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.
Effective February 3, 2007, we adopted Statement of Financial Accounting Standards No. 158,
Employers’ Accounting for Defined Benefit Pension and
Other Postretirement Plans
(“SFAS 158”). 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 consolidated balance
sheet and the recognition of changes in that funded status in the year in which the changes occur through comprehensive income.