Nordstrom 2011 Annual Report Download - page 30

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We expect that our capital expenditures, net of property incentives, will be approximately $3,300 over the next five years, with approximately $480
to $520 in 2012. Over these five years, we expect that approximately 60% of our net capital expenditures will be for new store openings, relocations
and remodels, 30% for information technology and 10% for other projects. Our current five-year plan includes thirteen new stores and three
relocations announced through 2013, and two new stores announced with dates to be determined. These would represent a 3.3% increase in square
footage. Of the announced new stores, twelve will be Nordstrom Rack stores. We believe that we have the capacity for additional capital investments
should opportunities arise.
CHANGE IN RESTRICTED CASH
In connection with the April 2012 maturity of our securitized Series 2007-2 Class A & B Notes totaling $500, we began making monthly cash deposits
into a restricted account in December 2011. As of January 28, 2012, we had accumulated $200, which is included in our consolidated balance sheet in
prepaid expense and other. See further discussion in Credit Capacity and Commitments below.
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 2011, change in credit card receivables from customers’ third-party purchases using their Nordstrom VISA
credit cards decreased to $7, compared with $66 in 2010, as a result of improved payment rates.
Financing Activities
Net cash used in financing activities was $78 in 2011 compared with $4 in 2010. Our financing activities include our short-term and long-term borrowing
activity, repurchases of common stock and dividends paid.
SHORT-TERM AND LONG-TERM BORROWING ACTIVITY
During 2011, we issued $500 of senior unsecured notes at 4.00%, due October 2021. After deducting the original issue discount of $1, net proceeds
from the offering were $499. Additionally, we issued $325 Series 2011-1 Class A Notes at 2.28%, due October 2016. We had no short-term borrowings
and no amounts outstanding on our revolving line of credit during the year.
During 2011, we received proceeds of $72 from the sale of our interest rate swap agreements (collectively, the “swap”) with a $650 notional amount
maturing in 2018. Under the swap, we received a fixed rate of 6.25% and paid a variable rate based on one-month LIBOR plus a margin of 2.9%. As of
the swap’s sale date, the accumulated adjustment to our long-term debt was $72, which will be amortized as a reduction of interest expense over the
remaining life of the related debt.
SHARE REPURCHASES
In August 2010, our Board of Directors authorized a program (the “2010 Program”) to repurchase up to $500 of our outstanding common stock, through
January 28, 2012. In May 2011, our Board of Directors authorized a new program (the “2011 Program”) to repurchase up to $750 of our outstanding
common stock, through February 2, 2013, in addition to the remaining amount available for repurchase under the 2010 Program. During 2011, we
repurchased 18.5 shares of our common stock for an aggregate purchase price of $851. We completed our 2010 Program in the second quarter of 2011,
and as of January 28, 2012, had $310 in remaining share repurchase capacity under the 2011 Program. Subsequent to year-end, in February 2012, our
Board of Directors authorized a new program (the “2012 Program”) to repurchase up to $800 of our outstanding common stock, through February 1, 2014,
in addition to the amount available for repurchase under the 2011 Program. The actual number and timing of future share repurchases, if any, will be
subject to market and economic conditions and applicable Securities and Exchange Commission rules.
DIVIDENDS
In 2011, we paid dividends of $197, or $0.92 per share, compared with $167, or $0.76 per share, in 2010. During the first quarter of 2011, we increased our
quarterly dividend from $0.20 per share to $0.23 per share. In determining the amount of dividends to pay, we analyze our dividend payout ratio and
dividend yield, while taking into consideration our current and projected operating performance and liquidity. We target a 25% to 30% dividend payout
ratio, which is calculated as our dividend payments divided by net earnings.
In February 2012, we declared a quarterly dividend of $0.27 per share, increased from $0.23 per share in 2011.