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Nordstrom Reports Fourth Quarter and Fiscal Year 2011 Earnings

Achieves Record Sales for Fiscal Year 2011

SEATTLE--(BUSINESS WIRE)--Feb. 16, 2012-- Nordstrom, Inc. (NYSE: JWN) today reported net earnings of $236 million, or $1.11 per diluted share, for the fourth quarter ended January 28, 2012. This represented an increase of 1.7 percent compared with net earnings of $232 million, or $1.04 per diluted share, for the same quarter last year.

Fourth quarter same-store sales increased 7.1 percent compared with the same period in fiscal 2010. Net sales in the fourth quarter were $3.17 billion, an increase of 12.5 percent compared with net sales of $2.82 billion during the same period in fiscal 2010. Additionally, total net sales of $10.50 billion for fiscal 2011 were the highest in the company’s history and represented two consecutive years of approximately 13 percent annual growth.

FOURTH QUARTER SUMMARY

Nordstrom’s fourth quarter performance was consistent with the strong trends the company experienced throughout 2011. The company achieved record sales for fiscal 2011, while continuing to make significant investments in the business to evolve with customers and to enhance its platform for sustainable, profitable growth.

  • Nordstrom net sales, which include results from the full-line and Direct businesses, increased $232 million, or 9.8 percent, compared with the same period in fiscal 2010. Same-store sales increased 8.4 percent. Top-performing merchandise categories included Handbags, Designer and Cosmetics. The South and Midwest regions were the top-performing geographic areas for full-line stores relative to the fourth quarter of 2010. The Direct channel continued to show strong performance, with 35 percent quarter-over-quarter sales growth.
  • Nordstrom Rack net sales increased $85 million, or 17.7 percent, compared with the same period in fiscal 2010, with same-store sales up 2.2 percent.
  • Gross profit, as a percentage of net sales, increased 12 basis points compared with last year’s fourth quarter. The improvement was driven by the ability to leverage buying and occupancy expenses during the quarter.
  • Retail selling, general and administrative expenses increased $121 million compared with last year’s fourth quarter. The increase was primarily attributable to various customer facing e-commerce initiatives, including HauteLook, and sales growth in both existing and new stores.
  • In the Credit segment, customer payment rates improved, resulting in favorable trends in delinquency and write-off rates, and a corresponding decrease in finance charge revenue. Annualized net write-offs were 5.4 percent of average credit card receivables during the quarter, down from 7.2 percent in the fourth quarter of 2010. Delinquencies as a percentage of credit card receivables at the end of the fourth quarter were 2.6 percent, down from 3.0 percent at the end of the fourth quarter of 2010. As a result of these improvements, the overall performance of the credit portfolio and economic trends, the reserve for bad debt was reduced by $10 million.
  • Earnings before interest and taxes increased $11 million to $417 million, or 12.8 percent of total revenues, from $406 million, or 13.9 percent of total revenues, in last year’s fourth quarter.

FULL YEAR RESULTS

For the fiscal year ended January 28, 2012, net earnings were up $70 million to $683 million, an increase of 11.4 percent compared with net earnings of $613 million for the fiscal year ended January 29, 2011. Earnings per diluted share for the same periods were $3.14 and $2.75, respectively.

Full year same-store sales increased 7.2 percent compared with fiscal 2010. Net sales for the year were a record $10.50 billion, an increase of 12.7 percent compared with prior year net sales of $9.31 billion.

CAPITAL INVESTMENT AND EXPANSION UPDATE

In fiscal 2012, the company’s capital expenditures, net of property incentives, are expected to total between $480 and $520 million, compared with approximately $430 million in fiscal 2011. The majority of the increase is attributable to investments in e-commerce.

Nordstrom has announced plans to open the following stores in fiscal year 2012:

Location   Store Name   Square

Footage

(000’s)

  Timing

Nordstrom Full-line Stores

     
Salt Lake City, Utah City Creek Center 125 March 22
Nordstrom Rack
Orange, California Outlets at Orange 35 March 1
Seattle, Washington1 Westlake Center 43 March 15
Boise, Idaho Boise Towne Plaza 37 April 12
Alpharetta, Georgia North Point MarketCenter 35 April 19
Farmington, Connecticut West Farms Shopping Center 35 April 26
Temecula, California Commons at Temecula 36 May 3
Willow Grove, Pennsylvania Willow Grove Park 40 May 10
Long Island, New York2 Gallery at Westbury Plaza 36 Fall
Phoenix, Arizona Town & Country 35 Fall
Manchester, Missouri Manchester 35 Fall
San Diego, California Carmel Mountain Plaza 39 Fall
Huntington Beach, California Edinger Plaza 34 Fall
Warwick, Rhode Island Warwick Mall 37 Fall
Tysons Corner, Virginia   Tysons Corner   42   Fall
(1)Nordstrom plans to relocate its Downtown Seattle Nordstrom Rack store to the nearby Westlake Center.
 
(2)Nordstrom plans to relocate its Nordstrom Rack store at the Mall at the Source in Long Island, New York to the nearby Gallery at Westbury Plaza.
 

FISCAL YEAR 2012 OUTLOOK

In 2012, Nordstrom plans to continue to invest and build upon the foundation for sustainable growth in top-line revenues, earnings and Return on Invested Capital (“ROIC”). For the 2012 fiscal year, Nordstrom expects same-store sales to increase 4 to 6 percent, and earnings per diluted share in the range of $3.30 to $3.45 for the full year. The expectations include the impact of the 53rd week, which will add $160 to $170 million to total sales and approximately $0.03 to $0.05 to earnings per diluted share.

The company’s expectations for fiscal 2012 are as follows:

Same-store sales       4 to 6 percent increase
Credit card revenues $0 to $10 million increase
Gross profit (%) 5 to 35 basis point decrease
Retail selling, general and administrative expenses ($) $265 to $330 million increase
Credit selling, general and administrative expenses ($) $10 to $20 million increase
Interest expense, net $25 to $30 million increase
Effective tax rate 39.0 percent
Earnings per diluted share $3.30 to $3.45
Diluted shares outstanding 213.0 million

CONFERENCE CALL INFORMATION

The company’s senior management will host a conference call to discuss fourth quarter and fiscal year 2011 results and 2012 outlook at 4:45 p.m. Eastern Standard Time today. To listen to the live call online and view the speakers’ slides, visit the Investor Relations section of the company’s corporate website at http://investor.nordstrom.com. An archived webcast with the speakers’ slides will be available in the webcasts section for one year. Interested parties may also dial 415-228-4850 (passcode: NORD). A telephone replay will be available beginning approximately one hour after the conclusion of the call by dialing 203-369-1323 (passcode: 6673) until the close of business on February 23, 2012.

ABOUT NORDSTROM

Nordstrom, Inc. is one of the nation’s leading fashion specialty retailers. Founded in 1901 as a shoe store in Seattle, today Nordstrom operates 225 stores in 30 states, including 117 full-line stores, 104 Nordstrom Racks, two Jeffrey boutiques, one treasure&bond store and one clearance store. Nordstrom also serves customers through Nordstrom.com and through its catalogs. Additionally, the Company operates in the online private sale marketplace through its subsidiary HauteLook. Nordstrom, Inc.’s 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 February 2, 2013, anticipated annual same-store sales rate, anticipated store openings, anticipated capital expenditures for fiscal year 2012 and trends in our operations. Such statements are based upon the current beliefs and expectations of the company’s 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 economic and market conditions and the resultant impact on consumer spending patterns; our ability to maintain our relationships with vendors; our ability to respond to the business environment, fashion trends and consumer preferences, including changing expectations of service and experience in stores and online; effective inventory management; successful execution of our growth strategy, including possible expansion into new markets, technological investments and acquisitions, including our ability to realize the anticipated benefits from such acquisitions, and the timely completion of construction associated with newly planned stores, relocations and remodels, which may be impacted by the financial health of third parties; our ability to maintain relationships with our employees and to effectively attract, develop and retain our future leaders; successful execution of our multi-channel strategy; our compliance with applicable banking and related laws and regulations impacting our ability to extend credit to our customers; impact of the current regulatory environment and financial system and health care reforms; the impact of any systems failures and/or security breaches, including any security breaches that result in the theft, transfer or unauthorized disclosure of customer, employee or company information or our compliance with information security and privacy laws and regulations in the event of such an incident; our compliance with employment laws and regulations and other laws and regulations applicable to us; trends in personal bankruptcies and bad debt write-offs; changes in interest rates; efficient and proper allocation of our capital resources; availability and cost of credit; our ability to safeguard our brand and reputation; successful execution of our information technology strategy; weather conditions, natural disasters, health hazards or other market disruptions, or the prospects of these events and the impact on consumer spending patterns; disruptions in our supply chain; the geographic locations of our stores; the effectiveness of planned advertising, marketing and promotional campaigns; our ability to control costs; and the timing and amounts of share repurchases by the company, if any, or any share issuances by the company, including issuances associated with option exercises or other matters. Our SEC reports, including our Form 10-K for the fiscal year ended January 29, 2011, our Forms 10-Q for the fiscal quarters ended April 30, 2011, July 30, 2011 and October 29, 2011, and our Form 10-K for the fiscal year ended January 28, 2012, to be filed with the SEC on or about March 16, 2012, 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

(unaudited; amounts in millions, except per share data)

 

   
Quarter Ended Year Ended
  1/28/12       1/29/11     1/28/12       1/29/11  
Net sales $ 3,169 $ 2,816 $ 10,497 $ 9,310
Credit card revenues   97     100     380     390  
Total revenues 3,266 2,916 10,877 9,700
Cost of sales and related buying and

occupancy costs

(1,973 ) (1,758 ) (6,592 ) (5,897 )
Selling, general and administrative expenses:
Retail (818 ) (697 ) (2,807 ) (2,412 )
Credit   (58 )   (55 )   (229 )   (273 )
Earnings before interest and income taxes 417 406 1,249 1,118
Interest expense, net   (38 )   (33 )   (130 )   (127 )
Earnings before income taxes 379 373 1,119 991
Income tax expense   (143 )   (141 )   (436 )   (378 )
Net earnings $ 236   $ 232   $ 683   $ 613  
 
Earnings per share:
Basic $ 1.13 $ 1.06 $ 3.20 $ 2.80
Diluted $ 1.11 $ 1.04 $ 3.14 $ 2.75
 
Weighted average shares outstanding:
Basic 208.2 218.8 213.5 218.8
Diluted 212.3 222.9 217.7 222.6
NORDSTROM, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited; amounts in millions)

 

   
  1/28/12     1/29/11  
Assets
Current assets:
Cash and cash equivalents $ 1,877 $ 1,506
Accounts receivable, net 2,033 2,026
Merchandise inventories 1,148 977
Current deferred tax assets, net 220 236
Prepaid expenses and other   282     79  
Total current assets 5,560 4,824
 
Land, buildings and equipment, net 2,469 2,318
Goodwill 175 53
Other assets   287     267  
Total assets $ 8,491   $ 7,462  
 
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable $ 917 $ 846
Accrued salaries, wages and related benefits 388 375
Other current liabilities 764 652
Current portion of long-term debt   506     6  
Total current liabilities 2,575 1,879
 
Long-term debt, net 3,141 2,775
Deferred property incentives, net 500 495
Other liabilities 319 292
 
Commitments and contingencies
 
Shareholders’ equity:
Common stock, no par value: 1,000 shares

authorized; 207.6 and 218.0 shares

issued and outstanding

 

1,484

 

1,168

Retained earnings 517 882
Accumulated other comprehensive loss   (45 )   (29 )
Total shareholders’ equity   1,956     2,021  
Total liabilities and shareholders’ equity $ 8,491   $ 7,462  
NORDSTROM, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited; amounts in millions)

 

 
Year Ended
  1/28/12       1/29/11  
Operating Activities
Net earnings $ 683 $ 613
Adjustments to reconcile net earnings to net cash provided by

operating activities:

Depreciation and amortization expenses 371 327
Amortization of deferred property incentives and other, net (46 ) (54 )
Deferred income taxes, net 14 2
Stock-based compensation expense 50 42
Tax benefit from stock-based compensation 20 15
Excess tax benefit from stock-based compensation (22 ) (16 )
Provision for bad debt expense 101 149
Change in operating assets and liabilities:
Accounts receivable (98 ) (74 )
Merchandise inventories (137 ) (80 )
Prepaid expenses and other assets - 1
Accounts payable 54 72
Accrued salaries, wages and related benefits 6 37
Other current liabilities 95 42
Deferred property incentives 78 95
Other liabilities   8     6  
Net cash provided by operating activities   1,177     1,177  
 
Investing Activities
Capital expenditures (511 ) (399 )
Change in restricted cash (200 ) -
Change in credit card receivables originated at third parties (7 ) (66 )
Other, net   (10 )   3  
Net cash used in investing activities   (728 )   (462 )
 
Financing Activities
Proceeds from long-term borrowings, net of discounts 824 498
Principal payments on long-term borrowings (6 ) (356 )
Proceeds from sale of interest rate swap 72 -
(Decrease) increase in cash book overdrafts (30 ) 37
Cash dividends paid (197 ) (167 )
Payments for repurchase of common stock (840 ) (84 )
Proceeds from issuances under stock compensation plans 76 48
Excess tax benefit from stock-based compensation 22 16
Other, net   1     4  
Net cash used in financing activities   (78 )   (4 )
 
Net increase in cash and cash equivalents 371 711
Cash and cash equivalents at beginning of year   1,506     795  
Cash and cash equivalents at end of year $ 1,877   $ 1,506  
NORDSTROM, INC.

STATEMENTS OF EARNINGS BY SEGMENT

(unaudited; amounts in millions, except percentages)

 

       

Retail

Our Retail business includes our Nordstrom branded full-line and online stores, our Nordstrom Rack stores, and our other retail channels including our HauteLook online private sale subsidiary, our Jeffrey stores and our treasure&bond store. It also includes unallocated corporate center expenses. The following tables summarize the results of our Retail business for the quarter and year ended January 28, 2012 compared with the quarter and year ended January 29, 2011:

 
Quarter

Ended

1/28/12

% of sales1 Quarter

Ended

1/29/11

% of sales1
Net sales $ 3,169 100.0 % $ 2,816 100.0 %
Cost of sales and related buying and

occupancy costs

  (1,950 ) (61.5 %)   (1,739 ) (61.7 %)
Gross profit 1,219 38.5 % 1,077 38.3 %
Selling, general and administrative expenses   (818 ) (25.8 %)   (697 ) (24.8 %)
Earnings before interest and income taxes 401 12.6 % 380 13.5 %
Interest expense, net   (34 ) (1.1 %)   (28 ) (1.0 %)
Earnings before income taxes $ 367   11.6 % $ 352   12.5 %
 
Year

Ended

1/28/12

% of sales1 Year

Ended

1/29/11

% of sales1
Net sales $ 10,497 100.0 % $ 9,310 100.0 %
Cost of sales and related buying and

occupancy costs

  (6,517 ) (62.1 %)   (5,831 ) (62.6 %)
Gross profit 3,980 37.9 % 3,479 37.4 %
Selling, general and administrative expenses   (2,807 ) (26.7 %)   (2,412 ) (25.9 %)
Earnings before interest and income taxes 1,173 11.2 % 1,067 11.5 %
Interest expense, net   (117 ) (1.1 %)   (106 ) (1.1 %)
Earnings before income taxes $ 1,056   10.1 % $ 961   10.3 %
 

1Subtotals and totals may not foot due to rounding.

NORDSTROM, INC.

STATEMENTS OF EARNINGS BY SEGMENT

(unaudited; amounts in millions, except percentages)

 

 

   

Credit

Our Credit business 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 business for the quarter and year ended January 28, 2012 compared with the quarter and year ended January 29, 2011:

 
Quarter Ended Year Ended
  1/28/12       1/29/11     1/28/12       1/29/11  
Credit card revenues $ 97 $ 100 $ 380 $ 390
Interest expense   (4 )   (5 )   (13 )   (21 )
Net credit card income 93 95 367 369
Cost of sales – loyalty program (23 ) (19 ) (75 ) (66 )
Selling, general and administrative expenses:
Operational and marketing expenses (39 ) (31 ) (128 ) (124 )
Bad debt expense   (19 )   (24 )   (101 )   (149 )
Earnings before income taxes $ 12   $ 21   $ 63   $ 30  
 

The following table illustrates the activity in our allowance for credit losses for the quarter and year ended January 28, 2012 and January 29, 2011:

 

 

Quarter Ended

Year Ended

  1/28/12     1/29/11     1/28/12     1/29/11  
Allowance at beginning of period $ 125 $ 160 $ 145 $ 190
Bad debt provision 19 24 101 149
Write-offs (34 ) (44 ) (153 ) (211 )
Recoveries   5     5     22     17  
Allowance at end of period $ 115   $ 145   $ 115   $ 145  
 
Net write-offs as a percentage of average credit card receivables 5.4 % 7.2 % 6.3 % 9.2 %
 
 
  1/28/12     1/29/11  
30+ days delinquent as a percentage of ending credit card receivables 2.6 % 3.0 %
Allowance as a percentage of ending credit card receivables 5.5 % 6.9 %
NORDSTROM, INC.

RETURN ON INVESTED CAPITAL (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 Return on Invested Capital (ROIC) for the years ended January 28, 2012 and January 29, 2011:

 

We believe that ROIC is a useful financial measure for investors in evaluating our operating performance. When analyzed in conjunction with our net earnings and total assets and compared to return on assets (net earnings divided by average total assets), it provides investors with a useful tool to evaluate our ongoing operations and our management of assets from period to period. ROIC is one of our key financial metrics, and we also incorporate it into our executive incentive measures. We believe that overall performance as measured by ROIC correlates directly to shareholders’ return over the long term. For the 12 fiscal months ended January 28, 2012, our ROIC decreased to 13.3% compared with 13.6% for the 12 fiscal months ended January 29, 2011. ROIC is not a measure of financial performance under GAAP, should not be considered a substitute for return on assets, net earnings or total assets as determined in accordance with GAAP, and may not be comparable with similarly titled measures reported by other companies. The closest measure calculated using GAAP amounts is return on assets, which increased to 8.7% from 8.6% for the 12 fiscal months ended January 28, 2012, compared with the 12 fiscal months ended January 29, 2011. The following is a comparison of return on assets to ROIC:

 
12 fiscal months ended
  1/28/12       1/29/11  
Net earnings $ 683 $ 613
Add: income tax expense 436 378
Add: interest expense   132     128  
Earnings before interest and income tax expense 1,251 1,119
 
Add: rent expense 78 62
Less: estimated depreciation on capitalized operating leases1   (42 )   (32 )
Net operating profit 1,287 1,149
 
Estimated income tax expense2   (501 )   (439 )
Net operating profit after tax $ 786   $ 710  
 
Average total assets3 $ 7,890 $ 7,091
Less: average non-interest-bearing current liabilities4 (2,041 ) (1,796 )
Less: average deferred property incentives3 (504 ) (487 )
Add: average estimated asset base of capitalized operating leases5   555     425  
Average invested capital $ 5,900   $ 5,233  
 
Return on assets 8.7 % 8.6 %
ROIC 13.3 % 13.6 %

1Capitalized operating leases is our best estimate of the asset base we would record for our leases that are classified as operating if they had met the criteria for a capital lease, or we purchased the property. Asset base is calculated as described in footnote 5 below.

2Based upon our effective tax rate multiplied by the net operating profit for the 12 fiscal months ended January 28, 2012 and January 29, 2011.

3Based upon the trailing 12-month average.

4Based upon the trailing 12-month average for accounts payable, accrued salaries, wages and related benefits, and other current liabilities.

5Based upon the trailing 12-month average of the monthly asset base, which is calculated as the trailing 12-months rent expense multiplied by 8. The multiple of eight times rent expense is a commonly used method of estimating the asset base we would record for our capitalized operating leases described in footnote 1.

NORDSTROM, INC.

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 28, 2012 and January 29, 2011:

 

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 current goal is to manage debt levels to 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 January 28, 2012, our Adjusted Debt to EBITDAR was 2.4 compared with 2.2 as of January 29, 2011.

 

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 hold if we had purchased the property and issued debt 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 measure calculated using GAAP amounts is debt to net earnings, which was 5.3 and 4.5 for 2011 and 2010. The following is a comparison of debt to net earnings and Adjusted Debt to EBITDAR:

   
  2011(1 )   2010(1 )
 
Debt $ 3,647 $ 2,781
Add: rent expense x 82 627 500
Less: fair value basis adjustment included in long-term debt   (72 )   (25 )
Adjusted Debt $ 4,202   $ 3,256  
 
Net earnings 683 613
Add: income tax expense 436 378
Add: interest expense, net   130     127  
Earnings before interest and income taxes 1,249 1,118
 
Add: depreciation and amortization expenses 371 327
Add: rent expense 78 62
Add: non-cash acquisition-related charges   21     -  
EBITDAR $ 1,719   $ 1,507  
 
Debt to Net Earnings 5.3 4.5
Adjusted Debt to EBITDAR 2.4 2.2

1The components of Adjusted Debt are as of January 28, 2012 and January 29, 2011, while the components of EBITDAR are for the 12 months ended January 28, 2012 and January 29, 2011.

2The multiple of eight times rent expense used to calculate Adjusted Debt is a commonly used method of estimating the debt we would record for our leases that are classified as operating if they had met the criteria for a capital lease, or we had purchased the property.

NORDSTROM, INC.

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 28, 2012 and January 29, 2011:

 

Free Cash Flow is one of our key liquidity measures, and, in conjunction with GAAP measures, provides us with a meaningful analysis of our cash flows. We believe that our ability to generate cash is 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 measure calculated using GAAP amounts is net cash provided by operating activities, which was $1,177 for each of the years ended January 28, 2012 and January 29, 2011. The following is a reconciliation of our net cash provided by operating activities and Free Cash Flow:

 
Year Ended
  1/28/12       1/29/11  
 
Net cash provided by operating activities $ 1,177 $ 1,177
Less: capital expenditures (511 ) (399 )
Less: cash dividends paid (197 ) (167 )
Less: change in credit card receivables originated at third parties (7 ) (66 )
(Less) Add: change in cash book overdrafts   (30 )   37  
Free Cash Flow $ 432   $ 582  
 
Net cash used in investing activities $ (728 ) $ (462 )
Net cash used in financing activities $ (78 ) $ (4 )

Source: Nordstrom, Inc.

Nordstrom, Inc.
INVESTOR CONTACT: Rob Campbell, 206-233-6550
MEDIA CONTACT: Colin Johnson, 206-303-3036