Nordstrom 2011 Annual Report Download - page 55

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Nordstrom, Inc. and subsidiaries 55
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and unit amounts
NOTE 10: LEASES
We lease the land or the land and buildings at many of our stores. Additionally, we lease office facilities, warehouses and equipment. Most of these
leases are classified as operating leases and they expire at various dates through 2080. The majority of our fixed, non-cancelable lease terms are 15
to 30 years for Nordstrom full-line stores and 10 to 15 years for Nordstrom Rack stores. Many of our leases include options that allow us to extend
the lease term beyond the initial commitment period, subject to terms agreed to at lease inception. Most of our leases also provide for payment of
operating expenses, such as common area charges, real estate taxes and other executory costs, and some leases require additional payments based
on sales, referred to as “percentage rent.”
Future minimum lease payments as of January 28, 2012 are as follows:
Fiscal year Capital leases Operating leases
2012 $2 $122
2013 2 118
2014 2 111
2015 2 106
2016 2 100
Thereafter 3 506
Total minimum lease payments 13 $1,063
Less: amount representing interest (3)
Present value of net minimum lease payments $10
Rent expense for 2011, 2010 and 2009 was as follows:
Fiscal year 2011 2010 2009
Minimum rent:
Store locations $108 $94 $76
Offices, warehouses and equipment 23 19 13
Percentage rent 12 9 9
Property incentives (65) (60) (55)
Total rent expense $78 $62 $43
The rent expense above does not include common area charges, real estate taxes and other executory costs which were $69 in 2011, $65 in 2010 and
$60 in 2009.
NOTE 11: COMMITMENTS AND CONTINGENT LIABILITIES
Our estimated total purchase obligations, capital expenditure contractual commitments and inventory purchase orders were $1,443 as of January 28,
2012. In connection with the purchase of foreign merchandise, we have outstanding trade letters of credit totaling $2 as of January 28, 2012.
We are subject from time to time to various claims and lawsuits arising in the ordinary course of business including lawsuits alleging violations of
state and/or federal wage and hour and other employment laws, privacy and other consumer-based claims. Some of these lawsuits purport or may
be determined to be class or collective actions and seek substantial damages or injunctive relief, or both, and some may remain unresolved for
several years. We believe the recorded reserves in our consolidated financial statements are adequate in light of the probable and estimable
liabilities. As of the date of this report, we do not believe any currently identified claim, proceeding or litigation, either alone or in the aggregate,
will have a material impact on our results of operations, financial position or cash flows. Since these matters are subject to inherent uncertainties,
our view of them may change in the future.