Kohl's 2009 Annual Report Download - page 28

Table of Contents
Capital expenditures include costs for new store openings, store remodels, distribution center openings and other base capital needs. Capital expenditures
totaled $666 million for 2009, a $348 million decrease from 2008. This decrease is primarily due to a decrease in the number of new store openings from 75
in 2008 to 56 in 2009.
Capital expenditures, including favorable lease rights, by major category were as follows:
  
New stores  68% 77%
Remodels/relocations  12 6
Distribution centers  4 3
Capitalized software  5 4
Fixtures and store improvements  4 3
Other  7 7
Total  100% 100%
Despite a decrease in new store openings (30 expected in 2010 compared to 56 in 2009), we expect total capital expenditures to increase to approximately
$900 million in fiscal 2010 due to an increase in store remodels (85 expected in 2010 compared to 51 in 2009), the purchase of a second e-commerce
distribution facility on the west coast, and significant investment in our website to support the rapid growth of our e-commerce business. The actual amount of
our future capital expenditures will depend primarily on the number of new stores opened, the mix of owned, leased or acquired stores, the number of stores
remodeled and the timing of distribution center openings. We do not anticipate that our expansion plans will be limited by any restrictive covenants in our
financing agreements. We believe that our capital structure is well positioned to support our expansion plans. We anticipate that internally generated cash flows
will be the primary source of funding for future growth.
Net purchases and sales of long-term investments generated cash of $28 million in 2009 and $40 million in 2008. As of January 30, 2010, we had
investments in auction rate securities (“ARS”) with a par value of $379 million and an estimated fair value of $320 million. ARS are long-term debt
instruments with interest rates reset through periodic short term auctions, which are typically held every 35 days. Beginning in February 2008, liquidity
issues in the global credit markets resulted in the failure of auctions for all of our ARS. A “failed” auction occurs when the amount of securities submitted for
sale in the auction exceeds the amount of purchase bids. As a result, holders are unable to liquidate their investment through the auction. A failed auction is not
a default of the debt instrument, but does set a new interest rate in accordance with the terms of the debt instrument. A failed auction limits liquidity for
holders until there is a successful auction or until such time as another market for ARS develops. ARS are generally callable by the issuer at any time.
Scheduled auctions continue to be held until the ARS matures or is called.
To date, we have collected all interest payable on outstanding ARS when due and expect to continue to do so in the future. In addition, all redemptions to
date were made at par. At this time, we have no reason to believe that any of the underlying issuers of our ARS or their insurers are presently at risk or that the
reduced liquidity has had a significant impact on the underlying credit quality of the assets backing our ARS. While the auction failures limit our ability to
liquidate these investments, we believe that the ARS failures will have no significant impact on our ability to fund ongoing operations and growth initiatives.
Net cash used in investing activities was $1.0 billion in 2008 compared to $1.6 billion in 2007. The decrease reflects lower capital expenditures,
substantially offset by net investment activity. Capital expenditures totaled $1.0 billion for 2008, a $528 million decrease from 2007. This decrease is
primarily due to a decrease of 37 store openings in 2008 compared to 2007. Net purchases and sales of long-term investments generated cash of $40 million in
2008 and used cash of $80 million in 2007.
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