Nordstrom 2008 Annual Report Download - page 44

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44
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share and per option amounts
NOTE 3: LAND, BUILDINGS AND EQUIPMENT
Land, buildings and equipment consist of the following:
January 31, 2009 February 2, 2008
Land and land improvements $67 $65
Buildings and building improvements 847 842
Leasehold improvements 1,631 1,313
Store fixtures and equipment 2,214 1,995
Software 347 303
Construction in progress 222 391
5,328 4,909
Less: accumulated depreciation and amortization (3,107) (2,926)
Land, buildings and equipment, net $2,221 $1,983
The total cost of buildings and equipment held under capital lease obligations was $28 at the end of both 2008 and 2007, with related accumulated
amortization of $21 in 2008 and $20 in 2007. The amortization of capitalized leased buildings and equipment of $1 in both 2008 and 2007 was
recorded in depreciation expense.
NOTE 4: EMPLOYEE BENEFITS
We provide a 401(k) and profit sharing plan for our employees. Our Board of Directors establishes our profit sharing contribution each year.
The 401(k) component is funded by voluntary employee contributions and our matching contributions up to a fixed percentage of employee
contributions. Our expense related to the profit sharing component and matching contributions to the 401(k) component totaled $39, $50
and $73 in 2008, 2007 and 2006.
NOTE 5: INCOME TAXES
We recorded a liability for uncertain tax benefits upon adoption of Financial Accounting Standards Board (FASB) Interpretation No. 48,
Accounting for
Uncertainty in Income Taxes
(“FIN 48”) as of February 4, 2007. A reconciliation of the beginning and ending amount of unrecognized tax benefits for
2008 and 2007 is as follows:
Fiscal Year 2008 2007
Unrecognized tax benefit at beginning of year $27 $21
Gross increase to tax positions in prior periods 2 5
Gross decrease to tax positions in prior periods (1) (1)
Gross increase to tax positions in current period 4 3
Lapse of statute (1) (1)
Settlements (3) -
Unrecognized tax benefit at end of year $28 $27
Unrecognized tax benefits related to federal, state and foreign tax positions may decrease by $13 by January 30, 2010, if years close and audits are
completed during 2009.
As of January 31, 2009 and February 2, 2008, $10 and $9 of the ending gross unrecognized tax benefit balance relates to deferred items which, if
recognized, would not impact the effective tax rate.
Interest and penalties related to income tax matters are classified as a component of income tax expense. During 2008 and 2007, our income tax
expense included $2 and $3 of tax-related interest and penalties. At the end of 2008 and 2007, our liability for interest and penalties was $6 and $4.