Nordstrom 2013 Annual Report Download - page 52

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NOTE 9: FAIR VALUE MEASUREMENTS
We disclose our financial assets and liabilities that are measured at fair value in our Consolidated Balance Sheets by level within the fair
value hierarchy as defined by applicable accounting standards:
Level 1: Quoted market prices in active markets for identical assets or liabilities
Level 2: Other observable market-based inputs or unobservable inputs that are corroborated by market data
Level 3: Unobservable inputs that cannot be corroborated by market data that reflect the reporting entity’s own
assumptions
We did not have any financial assets or liabilities that were measured at fair value on a recurring basis as of February 1, 2014 or February 2,
2013.
Financial instruments not measured at fair value on a recurring basis include cash and cash equivalents, accounts receivable and accounts
payable and approximate fair value due to their short-term nature. We estimate the fair value of long-term debt using quoted market prices of
the same or similar issues, and as such this is considered a Level 2 fair value measurement. The following table summarizes the carrying
value and fair value estimate of our long-term debt, including current maturities:
February 1, 2014 February 2, 2013
Carrying value of long-term debt1$3,113 $3,131
Fair value of long-term debt 3,511 3,665
1 The carrying value of long-term debt includes the remaining unamortized adjustment from our previous effective fair value hedge.
We also measure certain non-financial assets at fair value on a nonrecurring basis, primarily goodwill and long-lived tangible and intangible
assets, in connection with periodic evaluations for potential impairment. See Note 1: Nature of Operations and Summary of Significant
Accounting Policies for additional information related to goodwill, intangible assets and long-lived assets. We did not record any material
impairment charges for these assets in 2013 and 2012. During the fourth quarter of 2011, as part of our annual impairment analysis for
goodwill related to HauteLook, we wrote down the carrying value of $146 as of the acquisition date to its implied fair value of $121, resulting
in an impairment charge of $25. The impairment charge was included in Retail selling, general and administrative expenses in the
Consolidated Statements of Earnings. We estimate the fair value of goodwill and long-lived tangible and intangible assets using primarily
unobservable inputs, and as such these are considered Level 3 fair value measurements.
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 February 1, 2014 are as follows:
Fiscal year Capital leases Operating leases
2014 $2 $177
2015 2 193
2016 2 196
2017 2 189
2018 1 186
Thereafter — 1,054
Total minimum lease payments $9 $1,995
Less: amount representing interest (2)
Present value of net minimum lease payments $7
Table of Contents
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and unit amounts