Kohl's 2010 Annual Report Download - page 31

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Table of Contents
Our debt agreements contain various covenants including limitations on additional indebtedness and the following leverage
ratio:

Total Debt per Balance Sheet $2,096
Other Debt —
Subtotal 2,096
Rent x 8 4,263
A Included Indebtedness $6,359
Net Worth $ 8,102
Investments (accounted for under equity method) —
Subtotal 8,102
Included Indebtedness 6,359
B Capitalization $ 14,461
Leverage Ratio (A/B) 0.44
Maximum permitted Leverage Ratio 0.70
As of January 29, 2011, we were in compliance with all debt covenants and expect to remain in compliance during fiscal 2011.
 We generated free cash flow of $915 million in 2010 and $1.6 billion in 2009. The decrease in free cash flow is primarily a result of
lower cash provided by operating activities, as discussed above. Free cash flow is a non-GAAP financial measure which we define as net cash provided by
operating activities less capital expenditures. Free cash flow should be evaluated in addition to, and not considered a substitute for, other financial measures
such as net income and cash flow provided by operations. We believe that free cash flow represents our ability to generate additional cash flow from our
business operations.
The following table reconciles net cash provided by operating activities (a GAAP measure) to free cash flow (a non-GAAP measure).
  

Net cash provided by operating activities  $2,234 $1,698
Acquisition of property and equipment and favorable lease rights  (666) (1,014)
Free cash flow  $1,568 $ 684
We expect to generate $1 billion of free cash flow in fiscal 2011.
31