Kohl's 2011 Annual Report Download - page 69

Download and view the complete annual report

Please find page 69 of the 2011 Kohl's annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 80

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80

KOHL’S CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
9. Quarterly Financial Information (Unaudited) (continued)
2010
First Second Third Fourth
(In Millions, Except Per Share Data)
Net sales ..................................................... $4,035 $4,100 $4,218 $6,038
Gross margin .................................................. $1,537 $1,651 $1,622 $2,223
Net income ................................................... $ 195 $ 255 $ 176 $ 494
Basic shares ................................................... 307 307 307 295
Basic net income per share ....................................... $ 0.63 $ 0.83 $ 0.57 $ 1.68
Diluted shares ................................................. 309 308 308 297
Diluted net income per share ...................................... $ 0.63 $ 0.83 $ 0.57 $ 1.66
Due to changes in stock prices during the year and timing of issuance of shares, the sum of quarterly net
income per share may not equal the annual net income per share.
10. Related Party Transactions
One of our directors is also a shareholder of a law firm which performs legal services for us.
We have agreements with Blackhawk Network, Inc. (“Blackhawk”) pursuant to which Blackhawk
distributes our prepaid gift cards for sale in various retail outlets and to which we sell prepaid gift cards for other
retailers in our stores. We pay Blackhawk a fee for Kohl’s gift cards which are sold at other retailers and we
receive a fee for selling gift cards for other retailers in our stores. Blackhawk is a subsidiary of Safeway, Inc.
(“Safeway”) and one of our directors is Chairman, President and Chief Executive Officer of Safeway. This
director also holds a small minority ownership interest in Blackhawk. The Blackhawk agreements were entered
into in the ordinary course of our business, and our director was not involved in any negotiations. Blackhawk is a
leading provider of gift card marketing services in the retail industry, and Safeway has confirmed that the terms
of our agreements with Blackhawk are substantially similar to the terms of Blackhawk’s agreements with other
similarly situated national retailers.
11. Recent Accounting Pronouncements
Disclosures about Fair Value Measurements
In May 2011, the Financial Accounting Standards Board (“FASB”) issued an accounting standards update
which amends the definition of fair value measurement principles and disclosure requirements to eliminate
differences between U.S. GAAP and International Financial Reporting Standards. The update requires new
quantitative and qualitative disclosures about the sensitivity of recurring Level 3 measurement disclosures, as
well as transfers between Level 1 and Level 2 of the fair value hierarchy. The update will be effective for us in
the first quarter of Fiscal 2012. It will primarily impact our disclosures, and is not expected to have a material
impact on our results of operations, cash flows or financial position.
F-23