Kohl's 2012 Annual Report Download - page 49

KOHL’S CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-10
1. Business and Summary of Accounting Policies (continued)
The tax effects of each component of other comprehensive income (loss) are as follows:
2012 2011 2010
(In Millions)
Unrealized gains (losses) on investments:
Before-tax amounts .............................................................................................. $ 9 $ 21 $ (2)
Tax (expense) benefit........................................................................................... (4)(8) 1
After-tax amounts................................................................................................. 513 (1)
Interest rate derivatives:
Before-tax amounts .............................................................................................. 5(47) —
Tax (expense) benefit ........................................................................................... (2)18 —
After-tax amounts................................................................................................. 3(29) —
Other comprehensive income (loss)............................................................................ $ 8 $(16) $ (1)
Revenue Recognition
Revenue from the sale of merchandise at our stores is recognized at the time of sale, net of any returns. E-Commerce
sales are recorded based on estimated receipt of merchandise by the customer. Net sales do not include sales tax as we are
considered a pass-through conduit for collecting and remitting sales taxes.
Revenue from gift card sales is recognized when the gift card is redeemed. Gift card breakage revenue is based on
historical redemption patterns and represents the balance of gift cards for which we believe the likelihood of redemption by a
customer is remote.
Cost of Merchandise Sold and Selling, General and Administrative Expenses
The following table illustrates the primary costs classified in Cost of Merchandise Sold and Selling, General and
Administrative Expenses:
Cost of Merchandise Sold Selling, General and
Administrative Expenses
• Total cost of products sold including product development
costs, net of vendor payments other than reimbursement of
specific, incremental and identifiable costs
• Inventory shrink
• Markdowns
• Freight expenses associated with moving merchandise
from our vendors to our distribution centers
• Shipping and handling expenses of E-Commerce sales
• Terms cash discount
• Compensation and benefit costs including:
• Stores
• Corporate headquarters, including buying and
merchandising
• Distribution centers
• Occupancy and operating costs of our retail,
distribution and corporate facilities
• Net revenues from the Kohl’s credit card program
• Freight expenses associated with moving
merchandise from our distribution centers to our
retail stores, and among distribution and retail
facilities
• Advertising expenses, offset by vendor payments for
reimbursement of specific, incremental and
identifiable costs
• Costs incurred prior to new store openings, such as
advertising, hiring and training costs for new
employees, processing and transporting initial
merchandise, and rent expense
• Other administrative revenues and expenses
The classification of these expenses varies across the retail industry.