Nordstrom 2014 Annual Report Download - page 53

Table of Contents
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and per unit amounts
Nordstrom, Inc. and subsidiaries 53
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 the 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 January 31, 2015, we had $598 of outstanding 2044 Notes, net of a $67 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.
Our mortgage payable is secured by an office building that had a net book value of $64 at the end of 2014. Other secured debt as of
January 31, 2015 consisted primarily of capital lease obligations.
Required principal payments on long-term debt, excluding capital lease obligations, are as follows:
Fiscal year
2015 $6
2016 333
2017 659
2018 41
2019 8
Thereafter 2,116
Interest Expense
The components of interest expense, net are as follows:
Fiscal year 2014 2013 2012
Interest on long-term debt and short-term borrowings $156 $176 $167
Less:
Interest income (1) (1) (2)
Capitalized interest (17) (14) (5)
Interest expense, net $138 $161 $160
Credit Facilities
As of January 31, 2015, we had total short-term borrowing capacity available for general corporate purposes of $800, which is our five-year
$800 senior unsecured revolving credit facility (“revolver”) that expires in March 2018. Under the terms of our revolver, we pay a variable rate
of interest and a commitment fee based on our debt rating. The revolver is available for working capital, capital expenditures and general
corporate purposes and backs our commercial paper program. We have the option to increase the revolving commitment by up to $200, to a
total of $1,000, provided that we obtain written consent from the lenders.
The revolver requires that we maintain an adjusted debt to earnings before interest, income taxes, depreciation, amortization and rent
(“EBITDAR”) leverage ratio of less than four times. As of January 31, 2015 and February 1, 2014, we were in compliance with this covenant.
Our $800 commercial paper program allows us to use the proceeds to fund operating cash requirements. Under the terms of the commercial
paper agreement, we pay a rate of interest based on, among other factors, the maturity of the issuance and market conditions. The issuance
of commercial paper has the effect, while it is outstanding, of reducing borrowing capacity under our revolver by an amount equal to the
principal amount of commercial paper.
During 2014, 2013 and 2012, we had no issuances under our commercial paper program and no borrowings under our revolver.
In November 2013, our wholly owned subsidiary in Puerto Rico entered into a $52 unsecured borrowing facility to support our expansion into
that market. The facility expires in November 2018 and borrowings on this facility incur interest based upon the LIBOR plus 1.275% per
annum and also incurs a fee based on our unused commitment. As of January 31, 2015, we had $37 outstanding on this facility.