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8-K - FORM 8-K - NORDSTROM INC | v55017e8vk.htm |
Exhibit 99.1
FOR RELEASE: February 22, 2010 at 1:05 p.m. PT |
INVESTOR CONTACT: | Rob Campbell Nordstrom, Inc. (206) 303-3290 |
|
MEDIA CONTACT: | Colin Johnson Nordstrom, Inc. (206) 373-3036 |
NORDSTROM REPORTS FOURTH QUARTER AND FISCAL YEAR 2009 EARNINGS
SEATTLE, Wash. (February 22, 2010) Nordstrom, Inc. (NYSE: JWN) today reported net earnings
of $172 million, or $0.77 per diluted share, for the fourth quarter ended January 30, 2010. This
represented an increase of 152 percent compared with net earnings of $68 million, or $0.31 per
diluted share, for the same quarter last year.
Fourth quarter same-store sales increased 6.9 percent compared with the same period in fiscal
2008. Net sales in the fourth quarter were $2.54 billion, an increase of 10.3 percent compared with
net sales of $2.30 billion during the same period in fiscal 2008.
Fourth Quarter Summary
Nordstroms fourth quarter performance reflected a continuation of the discipline and
execution the company demonstrated throughout the year. The breadth and quality of its merchandise
offering, combined with a steady flow of fashion into the stores, led to same-store sales increases
in each month of the quarter.
| Full-line same-store sales in the fourth quarter increased 3.9 percent and sales for Nordstrom Direct increased 32.1 percent, combining for a multi-channel same-store sales increase of 7.1 percent compared with the same period in fiscal 2008. Most of the companys merchandise categories generated positive same-store sales during the quarter. Highlights for multi-channel sales performance included Womens Better Apparel, Womens Shoes and Jewelry. The Midwest, South, and Northwest regions were the top-performing geographic areas for full-line stores relative to the fourth quarter of 2008. | ||
| Nordstrom Rack experienced its fourth consecutive quarter of positive performance with a same-store sales increase of 4.6 percent in the fourth quarter compared with the same period in fiscal 2008. During the fourth quarter, the company opened two Nordstrom Rack stores. | ||
| Gross profit, as a percentage of net sales, increased approximately 530 basis points compared with last years fourth quarter. The improvement was mainly driven by merchandise margin as a percentage of net sales. Additionally, the increase in sales allowed for some leverage in buying and occupancy costs as a percentage of net sales, despite higher performance-related expenses. Markdowns were reduced considerably from last years fourth quarter, which was a highly promotional period. The company saw improvement in its management of inventory and ended the year with an inventory turn of 5.4, the highest in recent company history despite a decline in annual same-store sales. | ||
| Retail selling, general and administrative expenses increased $56 million compared with last years fourth quarter. The increase was due primarily to higher performance-related and variable expenses which increased as a result of the improvement in sales, partially offset by a decrease in fixed expenses. Retail selling, general and administrative expenses also were impacted by an additional $13 million from stores opened since the fourth quarter of 2008. The company opened 3 full-line stores and 13 Nordstrom Rack stores since the fourth quarter of 2008, increasing retail square footage by 0.9 million, or 4.1 percent. | ||
| Credit selling, general, and administrative expenses increased $16 million compared with last years fourth quarter. The majority of the increase reflects higher bad debt expense. Based on fourth quarter trends and continuing uncertainty regarding the overall economic environment, the company increased its reserve for bad debt by $20 million in the quarter. |
Full Year Results
For the fiscal year ended January 30, 2010, net earnings were $441 million, an increase of
10 percent compared with net earnings of $401 million for the fiscal year ended January 31, 2009.
Earnings per diluted share for the same periods were $2.01 and $1.83, respectively.
Full year same-store sales decreased 4.2 percent compared with fiscal 2008. Net sales for the
year were $8.26 billion, a decrease of 0.2 percent compared with prior year net sales of $8.27
billion.
Expansion Update
During the fourth quarter of 2009, Nordstrom opened the following stores:
Location | Store Name | Square Footage | Date | |||||
Nordstrom Rack Stores |
||||||||
Orlando, Florida |
Millenia Crossing | 35,000 | November 6 | |||||
Cincinnati, Ohio |
Rookwood Pavillion | 35,000 | November 20 |
In 2010, Nordstrom plans to open the following stores:
Location | Store Name | Square Footage | Timing | |||||
Full-Line Stores |
||||||||
Braintree, Massachusetts |
South Shore Plaza | 150,000 | March | |||||
Newport Beach, California |
Fashion Island | 138,000 | April | |||||
Santa Monica, California |
Santa Monica Place | 122,000 | August |
In May, Nordstrom also plans to relocate a full-line store at Los Cerritos Center in Cerritos, California which will replace a store built in 1981. |
Location | Store Name | Square Footage | Timing | |||||
Nordstrom Rack Stores |
||||||||
Houston, Texas |
The Centre at Post Oak | 30,000 | February | |||||
Kendall, Florida |
The Palms at Town & Country | 35,000 | March | |||||
Coral Gables, Florida |
Miracle Marketplace | 33,000 | March | |||||
Denver, Colorado |
Cherry Creek | 39,000 | March | |||||
Framingham, Massachusetts |
Shoppers World | 40,159 | April | |||||
Atlanta, Georgia |
Buckhead Station | 38,000 | April | |||||
New York, New York |
One Union Square South | 32,136 | May | |||||
Arlington, Virginia |
Pentagon Centre | 33,912 | August | |||||
Fairfax, Virginia |
Fair Lakes Promenade | 37,500 | August | |||||
Durham, North Carolina |
Renaissance Center | 33,000 | September | |||||
St. Louis, Missouri |
Brentwood Square | 34,000 | September | |||||
Boca Raton, Florida |
University Commons | 36,000 | September | |||||
Chicago, Illinois |
Chicago Avenue | 36,000 | September | |||||
Tampa, Florida |
Walter's Crossing Neighborhood | 45,000 | October | |||||
Lakewood, California |
Lakewood Center | 33,400 | October | |||||
Peoria, Arizona |
Arrowhead Crossing | 36,000 | Fall |
Fiscal Year 2010 Outlook
Nordstrom is planning for 2010 based on recent business trends but with continuing caution
about the economic environment and its impact on the customer. Although there was meaningful
improvement in the latter half of 2009 that could continue in the first half of 2010, the company
believes growth could moderate in the second half of 2010 as it overlaps with the improving trends
from the prior year. The company plans to continue to align the key drivers of its business
(inventory, expenses, working capital and capital expenditures) to improve profitability, enhance
free cash flow, increase return on invested capital and maintain a healthy balance sheet. For the
2010 fiscal year, Nordstrom expects same-store sales to increase 2.0 to 4.0 percent, which yields earnings per share in the range
of $2.35 to $2.55 for the full year.
The companys expectations for fiscal 2010 are as follows:
Same-store Sales
|
2.0 percent to 4.0 percent increase | |
Credit Card Revenues
|
$35 to $45 million increase | |
Gross Profit (%)
|
20 to 60 basis point increase | |
Retail Selling, General and Admin. Expense ($)
|
$125 to $175 million increase | |
Credit Selling, General and Admin. Expense ($)
|
$10 to $25 million decrease | |
Total Selling, General and Admin. Expense (%)
|
60 to 80 basis point decrease | |
Interest Expense, net
|
$15 to $25 million decrease | |
Effective Tax Rate
|
39.0 percent | |
Earnings per Diluted Share
|
$2.35 to $2.55 | |
Diluted Shares Outstanding
|
222.4 million |
Conference Call Information
The companys senior management will host a conference call to discuss fourth quarter results
at 4:45 p.m. Eastern Standard Time today. To listen, please dial 517-308-9140 (passcode: NORD). A
telephone replay will be available beginning approximately one hour after the conclusion of the
call by dialing 203-369-0107 (passcode: 6673) until the close of business on March 1, 2010.
Interested parties may also listen to the live call over the Internet by visiting the Investor
Relations section of the companys corporate Web site at http://investor.nordstrom.com. An archived
webcast will be available in the Webcasts section through May 24, 2010.
About Nordstrom
Nordstrom, Inc. is one of the nations leading fashion specialty retailers, with 184 stores
located in 28 states. Founded in 1901 as a shoe store in Seattle, today Nordstrom operates 112
full-line stores, 69 Nordstrom Racks, two Jeffrey boutiques and one clearance store. Nordstrom also
serves customers through its online presence at www.nordstrom.com and through its catalogs.
Nordstrom, Incs common stock is publicly traded on the NYSE under the symbol JWN.
Certain statements in this news release contain forward-looking information (as defined in
the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties,
including, but not limited to, anticipated financial outlook for the fiscal year ending January 29,
2011, anticipated annual same-store sales rate, anticipated store openings and trends in company
operations. Such statements are based upon current beliefs and expectations of the companys
management and are subject to significant risks and uncertainties. Actual future results may differ
materially from historical results or current expectations depending upon factors including but not
limited to the impact of deteriorating economic and market conditions and the resultant impact on
consumer spending patterns, the companys ability to respond to the business environment and
fashion trends, the companys ability to safeguard its brand and reputation, effective inventory
management, efficient and proper allocation of the companys capital resources, successful
execution of the companys store growth strategy including the timely completion of construction
associated with newly planned stores, relocations and remodels, all of which may be impacted by the
financial health of third parties, the companys compliance with applicable banking and related
laws and regulations impacting the companys ability to extend credit to its customers, trends in
personal bankruptcies and bad debt write-offs, availability and cost of credit, impact of the
current regulatory environment and financial system reforms, changes in interest rates, disruptions
in the companys supply chain, the companys ability to maintain its relationship with vendors and
developers who may be experiencing economic difficulties, the geographic locations of the companys
stores, the companys ability to maintain its relationships with its employees and to effectively
train and develop its future leaders, the companys compliance with information security and
privacy laws and regulations, employment laws and regulations and other laws and regulations
applicable to the company, successful execution of the companys information technology strategy,
successful execution of the companys multi-channel strategy, risks related to fluctuations in
world currencies, public health concerns and the resulting impact on consumer spending patterns,
supply chain, and employee health, weather conditions and hazards of nature that affect consumer
traffic and consumers purchasing patterns, the effectiveness of planned advertising, marketing,
and promotional campaigns, and the companys ability to control costs. Our SEC reports, including
our Form 10-K for the fiscal year ended January 31, 2009 our Form 10-Q for the fiscal quarter ended
October 31, 2009, and our Form 10-K for the fiscal year ended January 30, 2010, to be filed with
the SEC on or about March 19, 2010, contain other information on these and other factors that could
affect our financial results and cause actual results to differ materially from any forward-looking
information we may provide. The company undertakes no obligation to update or revise any
forward-looking statements to reflect subsequent events, new information or future circumstances.
NORDSTROM, INC.
CONSOLIDATED STATEMENTS OF EARNINGS 4th Quarter and Fiscal Year
(unaudited; amounts in millions, except per share data)
CONSOLIDATED STATEMENTS OF EARNINGS 4th Quarter and Fiscal Year
(unaudited; amounts in millions, except per share data)
Quarter ended | Year ended | |||||||||||||||
1/30/10 | 1/31/09 | 1/30/10 | 1/31/09 | |||||||||||||
Net sales |
$ | 2,539 | $ | 2,301 | $ | 8,258 | $ | 8,272 | ||||||||
Credit card revenues |
101 | 85 | 369 | 301 | ||||||||||||
Total revenues |
2,640 | 2,386 | 8,627 | 8,573 | ||||||||||||
Cost of sales and related buying & occupancy costs |
(1,593 | ) | (1,565 | ) | (5,328 | ) | (5,417 | ) | ||||||||
Selling, general and administrative expenses: |
||||||||||||||||
Retail stores, direct and other segments |
(631 | ) | (575 | ) | (2,109 | ) | (2,103 | ) | ||||||||
Credit segment |
(106 | ) | (90 | ) | (356 | ) | (274 | ) | ||||||||
Earnings before interest and income taxes |
310 | 156 | 834 | 779 | ||||||||||||
Interest expense, net |
(33 | ) | (33 | ) | (138 | ) | (131 | ) | ||||||||
Earnings before income taxes |
277 | 123 | 696 | 648 | ||||||||||||
Income tax expense |
(105 | ) | (55 | ) | (255 | ) | (247 | ) | ||||||||
Net earnings |
$ | 172 | $ | 68 | $ | 441 | $ | 401 | ||||||||
Earnings per share |
||||||||||||||||
Basic |
$ | 0.79 | $ | 0.32 | $ | 2.03 | $ | 1.85 | ||||||||
Diluted |
$ | 0.77 | $ | 0.31 | $ | 2.01 | $ | 1.83 | ||||||||
Weighted average shares outstanding |
||||||||||||||||
Basic |
217.7 | 215.6 | 216.8 | 216.6 | ||||||||||||
Diluted |
221.7 | 216.8 | 219.7 | 219.2 |
NORDSTROM, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited; amounts in millions)
CONSOLIDATED BALANCE SHEETS
(unaudited; amounts in millions)
1/30/10 | 1/31/09 | |||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 795 | $ | 72 | ||||
Accounts receivable, net |
2,035 | 1,942 | ||||||
Merchandise inventories |
898 | 900 | ||||||
Current deferred tax assets, net |
238 | 210 | ||||||
Prepaid expenses and other |
88 | 93 | ||||||
Total current assets |
4,054 | 3,217 | ||||||
Land, buildings and equipment, net |
2,242 | 2,221 | ||||||
Goodwill |
53 | 53 | ||||||
Other assets |
230 | 170 | ||||||
Total assets |
$ | 6,579 | $ | 5,661 | ||||
Liabilities and Shareholders Equity |
||||||||
Current liabilities: |
||||||||
Commercial paper |
$ | | $ | 275 | ||||
Accounts payable |
726 | 563 | ||||||
Accrued salaries, wages and related benefits |
336 | 214 | ||||||
Other current liabilities |
596 | 525 | ||||||
Current portion of long-term debt |
356 | 24 | ||||||
Total current liabilities |
2,014 | 1,601 | ||||||
Long-term debt, net |
2,257 | 2,214 | ||||||
Deferred property incentives, net |
469 | 435 | ||||||
Other liabilities |
267 | 201 | ||||||
Commitments and contingent liabilities |
||||||||
Shareholders equity: |
||||||||
Common stock, no par value: 1,000 shares
authorized; 217.7 and 215.4 shares
issued and outstanding |
1,066 | 997 | ||||||
Retained earnings |
525 | 223 | ||||||
Accumulated other comprehensive loss |
(19 | ) | (10 | ) | ||||
Total shareholders equity |
1,572 | 1,210 | ||||||
Total liabilities and shareholders equity |
$ | 6,579 | $ | 5,661 | ||||
NORDSTROM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; amounts in millions)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; amounts in millions)
Year | Year | |||||||
ended | ended | |||||||
1/30/10 | 1/31/09 | |||||||
Operating Activities |
||||||||
Net earnings |
$ | 441 | $ | 401 | ||||
Adjustments to reconcile net earnings to net cash provided
by operating activities: |
||||||||
Depreciation and amortization of buildings and equipment, net |
313 | 302 | ||||||
Amortization of deferred property incentives and other, net |
(42 | ) | (21 | ) | ||||
Stock-based compensation expense |
32 | 28 | ||||||
Deferred income taxes, net |
(58 | ) | (36 | ) | ||||
Tax benefit from stock-based payments |
6 | 3 | ||||||
Excess tax benefit from stock-based payments |
(7 | ) | (4 | ) | ||||
Provision for bad debt expense |
251 | 173 | ||||||
Change in operating assets and liabilities: |
||||||||
Accounts receivable |
(159 | ) | (93 | ) | ||||
Merchandise inventories |
(1 | ) | 53 | |||||
Prepaid expenses and other assets |
(38 | ) | 38 | |||||
Accounts payable |
168 | 16 | ||||||
Accrued salaries, wages and related benefits |
120 | (54 | ) | |||||
Other current liabilities |
8 | 28 | ||||||
Income taxes |
73 | (76 | ) | |||||
Deferred property incentives |
96 | 119 | ||||||
Other liabilities |
48 | (29 | ) | |||||
Net cash provided by operating activities |
1,251 | 848 | ||||||
Investing Activities |
||||||||
Capital expenditures |
(360 | ) | (563 | ) | ||||
Change in credit card receivables originated at third parties |
(182 | ) | (232 | ) | ||||
Other, net |
1 | 3 | ||||||
Net cash used in investing activities |
(541 | ) | (792 | ) | ||||
Financing Activities |
||||||||
(Repayments) proceeds from commercial paper borrowings, net |
(275 | ) | 275 | |||||
Proceeds from long-term borrowings, net |
399 | 150 | ||||||
Principal payments on long-term borrowings |
(25 | ) | (410 | ) | ||||
Increase in cash book overdrafts |
9 | 20 | ||||||
Proceeds from exercise of stock options |
21 | 13 | ||||||
Proceeds from employee stock purchase plan |
13 | 17 | ||||||
Excess tax benefit from stock-based payments |
7 | 4 | ||||||
Cash dividends paid |
(139 | ) | (138 | ) | ||||
Repurchase of common stock
|
| (264 | ) | |||||
Other, net |
3 | (9 | ) | |||||
Net cash provided by (used in) financing activities |
13 | (342 | ) | |||||
Net increase (decrease) in cash and cash equivalents |
723 | (286 | ) | |||||
Cash and cash equivalents at beginning of year |
72 | 358 | ||||||
Cash and cash equivalents at end of year |
$ | 795 | $ | 72 | ||||
NORDSTROM, INC.
STATEMENTS OF EARNINGS BY SEGMENT
(unaudited; amounts in millions, except percentages)
STATEMENTS OF EARNINGS BY SEGMENT
(unaudited; amounts in millions, except percentages)
Retail Stores, Direct and Other Segments
Our Retail Stores segment includes our full-line and Rack stores; our Direct segment includes our
online store; and our Other segment includes our product development group and corporate center
operations. The following tables summarize the combined results of our Retail Stores, Direct and
Other segments for the quarter and year ended January 30, 2010 compared with the quarter and year
ended January 31, 2009:
Quarter | Quarter | |||||||||||||||
ended | ended | |||||||||||||||
1/30/10 | % of sales1 | 1/31/09 | % of sales1 | |||||||||||||
Net sales |
$ | 2,539 | 100.0 | % | $ | 2,301 | 100.0 | % | ||||||||
Cost of sales and related buying
& occupancy costs |
(1,575 | ) | (62.0 | %) | (1,550 | ) | (67.4 | %) | ||||||||
Gross profit |
964 | 38.0 | % | 751 | 32.6 | % | ||||||||||
Other revenues |
| N/A | | N/A | ||||||||||||
Selling, general and administrative
expenses |
(631 | ) | (24.9 | %) | (575 | ) | (24.9 | %) | ||||||||
Earnings before interest and income taxes |
333 | 13.1 | % | 176 | 7.7 | % | ||||||||||
Interest expense, net |
(23 | ) | (0.9 | %) | (22 | ) | (1.0 | %) | ||||||||
Earnings before income taxes |
$ | 310 | 12.2 | % | $ | 154 | 6.7 | % | ||||||||
Year | Year | |||||||||||||||
ended | ended | |||||||||||||||
1/30/10 | % of sales1 | 1/31/09 | % of sales1 | |||||||||||||
Net sales |
$ | 8,258 | 100.0 | % | $ | 8,272 | 100.0 | % | ||||||||
Cost of sales and related buying
& occupancy costs |
(5,273 | ) | (63.9 | %) | (5,367 | ) | (64.9 | %) | ||||||||
Gross profit |
2,985 | 36.1 | % | 2,905 | 35.1 | % | ||||||||||
Other revenues |
(1 | ) | N/A | (1 | ) | N/A | ||||||||||
Selling, general and administrative
expenses |
(2,109 | ) | (25.5 | %) | (2,103 | ) | (25.4 | %) | ||||||||
Earnings before interest and income taxes |
875 | 10.6 | % | 801 | 9.7 | % | ||||||||||
Interest expense, net |
(97 | ) | (1.2 | %) | (81 | ) | (1.0 | %) | ||||||||
Earnings before income taxes |
$ | 778 | 9.4 | % | $ | 720 | 8.7 | % | ||||||||
1 | Subtotals and totals may not foot due to rounding. |
NORDSTROM, INC.
STATEMENTS OF EARNINGS BY SEGMENT
(unaudited; amounts in millions)
STATEMENTS OF EARNINGS BY SEGMENT
(unaudited; amounts in millions)
Credit Segment
Our Credit segment earns finance charges, interchange fees and late fee income through operation of
the Nordstrom private label and Nordstrom VISA credit cards. The following tables summarize the
results of our Credit segment for the quarter and year ended January 30, 2010 compared with the
quarter and year ended January 31, 2009:
Quarter | Quarter | |||||||
ended | ended | |||||||
1/30/10 | 1/31/09 | |||||||
Credit card revenues |
$ | 101 | $ | 85 | ||||
Interest expense |
(10 | ) | (11 | ) | ||||
Net credit card income |
91 | 74 | ||||||
Cost of sales loyalty program |
(18 | ) | (15 | ) | ||||
Selling, general and administrative expenses: |
||||||||
Operational and marketing expense |
(30 | ) | (23 | ) | ||||
Bad debt expense |
(76 | ) | (67 | ) | ||||
Loss before income taxes |
$ | (33 | ) | $ | (31 | ) | ||
Year | Year | |||||||
ended | ended | |||||||
1/30/10 | 1/31/09 | |||||||
Credit card revenues |
$ | 370 | $ | 302 | ||||
Interest expense |
(41 | ) | (50 | ) | ||||
Net credit card income |
329 | 252 | ||||||
Cost of sales loyalty program |
(55 | ) | (50 | ) | ||||
Selling, general and administrative expenses: |
||||||||
Operational and marketing expense |
(105 | ) | (101 | ) | ||||
Bad debt expense |
(251 | ) | (173 | ) | ||||
Loss before income taxes |
$ | (82 | ) | $ | (72 | ) | ||
NORDSTROM, INC.
ADJUSTED DEBT TO EBITDAR (NON-GAAP FINANCIAL MEASURE)
(unaudited; amounts in millions)
ADJUSTED DEBT TO EBITDAR (NON-GAAP FINANCIAL MEASURE)
(unaudited; amounts in millions)
We use various financial measures in our conference calls, investor meetings, and other forums
which may be considered non-GAAP financial measures within the meaning of Regulation G of the
Securities and Exchange Commission. The following disclosure provides additional information
regarding our Adjusted Debt to EBITDAR as of January 30, 2010:
Adjusted Debt to EBITDAR is one of our key financial metrics, and we believe that our debt levels
are best analyzed using this measure. Our goal today is to manage debt levels at a point which we
believe will help us maintain an investment grade credit rating as well as operate with an
efficient capital structure for our size, growth plans and industry. Investment grade credit
ratings are important to maintaining access to a variety of short-term and long-term sources of
funding, and we rely on these funding sources to continue to grow our business. We believe a higher
ratio, among other factors, could result in rating agency downgrades. In contrast, we believe a
lower ratio would result in a higher cost of capital and could negatively impact shareholder
returns. As of both January 30, 2010 and January 31, 2009, our Adjusted Debt to EBITDAR was 2.5.
Adjusted Debt to EBITDAR is not a measure of financial performance under GAAP and should not be
considered a substitute for debt to net earnings, net earnings or debt as determined in accordance
with GAAP. In addition, Adjusted Debt to EBITDAR does have limitations:
| Adjusted Debt is not exact, but rather our best estimate of the total company debt we would incur if we had purchased the property associated with our operating leases; | ||
| EBITDAR does not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments, including leases, or the cash requirements necessary to service interest or principal payments on our debt; and | ||
| Other companies in our industry may calculate Adjusted Debt to EBITDAR differently than we do, limiting its usefulness as a comparative measure. |
To compensate for these limitations, we analyze Adjusted Debt to EBITDAR in conjunction with other
GAAP financial and performance measures impacting liquidity, including operating cash flows,
capital spending and net earnings. The closest GAAP measure is debt to net earnings, which was 5.9
and 6.3 as of January 30, 2010 and January 31, 2009, respectively. The following is a
reconciliation of debt to net earnings and Adjusted Debt to EBITDAR:
20091 | 20081 | |||||||
Debt2 |
$ | 2,613 | $ | 2,513 | ||||
Add: rent expense x 83 |
341 | 298 | ||||||
Adjusted Debt |
$ | 2,954 | $ | 2,811 | ||||
Net earnings |
441 | 401 | ||||||
Add: income tax expense |
255 | 247 | ||||||
Add: interest expense, net |
138 | 131 | ||||||
Earnings before interest and income taxes |
834 | 779 | ||||||
Add:
depreciation and amortization of buildings and equipment |
313 | 302 | ||||||
Add: rent expense |
43 | 37 | ||||||
EBITDAR |
$ | 1,190 | $ | 1,118 | ||||
Debt to Net Earnings |
5.9 | 6.3 | ||||||
Adjusted Debt to EBITDAR |
2.5 | 2.5 | ||||||
1 | The components of adjusted debt are as of January 30, 2010 and January 31, 2009, while the components of EBITDAR are for the 12 months ended January 30, 2010 and January 31, 2009. | |
2 | Debt includes $275 of commercial paper borrowings outstanding as of January 31, 2009. There were no outstanding commercial paper borrowings as of January 30, 2010. | |
3 | The multiple of eight times rent expense used to calculate adjusted debt is our best estimate of the debt we would record for our leases which are classified as operating if we had purchased the property. |
NORDSTROM, INC.
FREE CASH FLOW (NON-GAAP FINANCIAL MEASURE)
(unaudited; amounts in millions)
FREE CASH FLOW (NON-GAAP FINANCIAL MEASURE)
(unaudited; amounts in millions)
We use various financial measures in our conference calls, investor meetings, and other forums
which may be considered non-GAAP financial measures within the meaning of Regulation G of the
Securities and Exchange Commission. The following disclosure provides additional information
regarding our free cash flow for the years ended January 30, 2010 and January 31, 2009:
Free cash flow is one of our key liquidity measures, and we believe that our cash levels are more
appropriately analyzed using this measure. Free cash flow is not a measure of liquidity under GAAP
and should not be considered a substitute for operating cash flows as determined in accordance with
GAAP. In addition, free cash flow does have limitations:
| Free cash flow does not necessarily represent funds available for discretionary use and is not necessarily a measure of our ability to fund our cash needs; and | ||
| Other companies in our industry may calculate free cash flow differently than we do, limiting its usefulness as a comparative measure. |
To compensate for these limitations, we analyze free cash flow in conjunction with other GAAP
financial and performance measures impacting liquidity, including operating cash flows. The closest
GAAP measure is net cash provided by operating activities, which was $1,251 and $848 for the years
ended January 30, 2010 and January 31, 2009. The following is a reconciliation of our net cash
provided by operating activities and free cash flow:
Year ended | Year ended | |||||||
1/30/10 | 1/31/09 | |||||||
Net cash provided by operating activities |
$ | 1,251 | $ | 848 | ||||
Less: Capital expenditures |
(360 | ) | (563 | ) | ||||
Change in credit card receivables
originated at third parties |
(182 | ) | (232 | ) | ||||
Cash dividends paid |
(139 | ) | (138 | ) | ||||
Add: Increase in cash book overdrafts |
9 | 20 | ||||||
Free cash flow |
$ | 579 | $ | (65 | ) | |||