Nordstrom 2010 Annual Report Download - page 37

Nordstrom, Inc. and subsidiaries 29
We received property incentives from our developers of $95 in 2010, $96 in 2009 and $119 in 2008. These incentives are included in our cash provided by
operations in our consolidated statements of cash flows. However, operationally we view these as an offset to our capital expenditures. Our capital
expenditure percentages, net of property incentives, for the last three years by category are summarized as follows:
Fiscal year 2010 2009 2008
Category and expenditure percentage:
New store openings, relocations and remodels 67% 74% 85%
Information technology 15% 13% 8%
Other 18% 13% 7%
Total 100% 100% 100%
Other capital expenditures consist of ongoing improvements to our stores in the ordinary course of business and expenditures related to various
growth initiatives.
We expect that our capital expenditures, net of property incentives, will be approximately $2,200 over the next five years, with approximately $400 to
$440 in 2011. Over these five years, we expect that approximately 72% of our net capital expenditures will be for new store openings, relocations and
remodels; 15% for information technology; and 13% for other projects. Our current five-year plans include 22 new stores and 4 relocations announced
through 2013, and 2 new stores announced with dates to be determined. These would represent a 6.1% increase in square footage. Of the announced
new stores, 18 will be Nordstrom Rack stores. We believe that we have the capacity for additional capital investments should opportunities arise.
CHANGE IN CREDIT CARD RECEIVABLES ORIGINATED AT THIRD PARTIES
The Nordstrom VISA credit cards allow our customers to make purchases at merchants outside of our stores and accumulate points for our Nordstrom
Fashion Rewards® program. In 2010, net cash outflows from customers’ third-party purchases using their Nordstrom VISA credit cards decreased to $66,
compared with $182 in 2009, as a result of improved payment rates.
Financing Activities
Net cash used in financing activities was $4 in 2010 compared with $13 provided by financing activities in 2009. Our financing activities include our short-
term and long-term borrowing activity, dividends paid and repurchases of common stock.
SHORT-TERM AND LONG-TERM BORROWING ACTIVITY
During 2010, we issued $500 of senior unsecured notes at 4.75%, due May 2020. After deducting the original issue discount, underwriting fees and
other expenses of $2, net proceeds from the offering were $498. Additionally, we retired $350 of securitized notes in April 2010 using available cash.
We had no short-term borrowings and no amounts outstanding on our revolving line of credit during the year.
DIVIDENDS
In 2010, we paid dividends of $167, or $0.76 per share, compared with $139, or $0.64 per share, in 2009. During the second quarter of 2010, we increased
our quarterly dividend from $0.16 per share to $0.20 per share. In determining the amount of dividends to pay, we analyze our dividend payout ratio and
dividend yield, while taking into consideration our operating performance and capital resources. We plan to target a 25% to 30% dividend payout ratio,
which is calculated as our dividend payments divided by net earnings.
In February 2011, we declared a first quarter dividend of $0.23 per share.
SHARE REPURCHASES
In August 2010, our Board of Directors authorized a program to repurchase up to $500 of our outstanding common stock, through January 28, 2012.
Under this program, we have repurchased 2.3 shares of our common stock for an aggregate purchase price of $89, and had $411 in remaining capacity.
The actual amount and timing of future share repurchases, if any, will be subject to market conditions and applicable Securities and Exchange
Commission rules.