Nordstrom 2013 Annual Report Download - page 28

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We received property incentives from our developers of $89 in 2013, $58 in 2012 and $78 in 2011. These incentives are included in our cash
provided by operations in our Consolidated Statements of Cash Flows in Item 8: Financial Statements and Supplementary Data. However,
operationally we view these as an offset to our capital expenditures. Our capital expenditure percentages, net of property incentives, by
category are summarized as follows:
Fiscal year 2013 2012 2011
Category and expenditure percentage:
New store openings, relocations and remodels 62% 54% 62%
Information technology 27% 27% 20%
Other 11% 19% 18%
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 to significantly increase our capital expenditures, net of property incentives, over the next five years to approximately $3,900,
compared with $2,200 over the previous five years. We plan to spend approximately $840 to $880 in 2014 compared with $714 in 2013. Both
of these increases are primarily due to technology initiatives and our planned entrance into new markets such as Canada, as well as new
Nordstrom Rack and full-line stores. In addition, the growth in capital expenditures over the next five years includes costs for our Manhattan
store. Over these next five years, we expect that approximately 44% of our net capital expenditures will be for new store openings,
relocations, remodels and other with an additional 24% for entry into Canada and Manhattan, and 32% for e-commerce and information
technology. We believe that we have the capacity for additional capital investments should opportunities arise.
CHANGE IN RESTRICTED CASH
In connection with the $500 debt maturity in the first quarter of 2012, we began making required monthly cash deposits of $100 into a
restricted account in December 2011 until we accumulated $500 by April 2012 to retire the debt. As of January 28, 2012, we had
accumulated $200. During the first quarter of 2012, the net amount withdrawn from restricted cash of $200 was recorded as cash received
from investing activities.
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 Rewards program. In 2013, the change in credit card receivables from customers’ third-party purchases using their Nordstrom
VISA credit cards decreased to $6, compared with $42 in 2012, as payment rates slightly increased in 2013, and VISA credit card volume
remained relatively consistent with 2012. In 2012, there was a $204 increase in VISA credit card volume compared with 2011.
Financing Activities
Net cash used in financing activities was $589 in 2013 compared with $1,333 in 2012. Our financing activities include our short-term and
long-term borrowing activity, repurchases of common stock and payment of dividends.
SHORT-TERM AND LONG-TERM BORROWING ACTIVITY
In the fourth quarter of 2013, we issued $665 of 5.00% senior unsecured notes due January 2044 (“2044 Notes”). We used $400 of the
proceeds to retire all 6.75% senior unsecured notes due June 2014. We exchanged $201 of the 7.00% senior unsecured notes due January
2038 (“2038 Notes”) for $265 of the 2044 Notes. The $64 in excess of the outstanding principal of 2038 Notes relates to the lower interest
rate and longer maturity of the new 2044 Notes, and we recorded it as part of the discount to be amortized over the term of the 2044 Notes.
As of February 1, 2014, we had $595 of outstanding 2044 Notes, net of a $70 discount. The 2044 Notes exchanged for the 2038 Notes and
the related discounts represented a non-cash activity of $201 that had no impact to our 2013 Consolidated Statements of Cash Flows for the
year ended February 1, 2014. See Note 8: Debt and Credit Facilities in Item 8: Financial Statements and Supplementary Data for additional
information.
During 2012, we retired our $500 securitized Series 2007-2 Class A & B Notes upon maturity in April 2012 using accumulated restricted cash
described in Investing Activities above.
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.
Also in 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. We recorded the $72 on the sale date as an accumulated adjustment to our long-term debt, which will be
amortized as a reduction of interest expense over the remaining life of the debt. As of February 1, 2014, the accumulated adjustment to our
long-term debt was $48. See Note 1: Nature of Operations and Summary of Significant Accounting Policies and Note 8: Debt and Credit
Facilities in Item 8: Financial Statements and Supplementary Data for additional information related to our swap.
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