2001 ANNUAL REPORT
[why this store. why now.]
20200324 NORDSTROM
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Financial Highlights
Dollars in thousands except per share amounts
Fiscal Year
Net sales
Earnings before income taxes
Net earnings
Basic earnings per share
Diluted earnings per share
Cash dividends paid per share
Stock Prices
Fiscal Year
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
2001
2000
% Change
$5,634,130
204,488
124,688
.93
.93
.36
2001
$5,528,537
167,018
101,918
.78
.78
.35
1.9
22.4
22.3
19.2
19.2
2.9
2000
high
low
high
low
21.17
22.75
22.97
25.50
15.60
17.00
13.80
14.25
34.50
30.00
19.50
21.00
18.25
16.56
14.19
14.88
Nordstrom, Inc. common stock is traded on the New York Stock Exchange NYSE Symbol JWN
Comparable Store Sales % Change
Total Sales % Change
•
•
Sales per Square Foot
%
8
9
.
•
%
6
7.
•
%
4
1
.
•
%
4
1
.
•
%
1
5
.
•
%
6
5
.
•
%
4
4
.
•
%
5
8
.
•
%
7
0
-
.
•
%
4
8
.
•
%
6
0
.
•
%
0
4
.
•
%
1
9
.
•
%
8
3
.
•
%
7
2
-
.
•
%
1
1
-
.
•
%
7
2
.
•
%
0
2
.
•
%
4
7.
•
%
3
0
.
•
91 92 93 94
95 96
97
98
99
00
%
9
.
1
•
%
9
.
2
-
•
01
5
9
3
$
•
8
8
3
$
1
8
3
$
3
8
3
$
•••
4
8
3
$
2
8
3
$
7
7
3
$
•••
2
6
3
$
•
0
5
3
$
•
2
4
3
$
•
1
2
3
$
•
91 92 93 94 95 96 97 98 99 00
01
SG&A as a % of Sales
Diluted Earnings per Share
.
%
6
1
% 3
•
6
9
2
.
•
%
6
.
0
3
•
%
3
8
2
.
•
3
2
1
$
.
•
6
8
0
$
.
0
0
1
$
.
•
2
8
0
$
.
2
8
0
$
.
•••
1
4
1
$
.
•
0
2
1
$
.
•
6
4
1
$
.
•
3
9
.
0
8 $
7
0
$
•
.
•
0
9
0
$
.
•
%
6
7.
2
%
7
7.
2
•••
%
5
7.
2
%
2
6
2
.
%
4
6
2
.
%
2
6
2
.
%
4
6
2
.
••••
91 92 93
94 95
96 97 98
99 00
01
91
92 93 94 95 96 97 98
99 00
01
Index
9 Management’s Discussion and Analysis
19 Consolidated Statements of Cash Flows
40 Officers of the Corporation
16 Consolidated Statements of Earnings
20 Notes to Consolidated Financial Statements
and Executive Team
17 Consolidated Balance Sheets
37
Independent Auditors’ and Management Report
41 Board of Directors and Committees
18 Consolidated Statements of Shareholders’ Equity
38 Eleven-Year Statistical Summary
42 Retail Store Facilities
1 NORDSTROM INC. AND SUBSIDIARIES
View this entire report online. Please visit www.nordstrom.com to see this report and obtain the latest available information.
44 Shareholder Information
20200324 NORDSTROM
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why Nordstrom?
What is it that makes this
company uniquely positioned
to not only survive, but thrive,
in today’s uncertain economic
environment? Good question.
At Nordstrom, we truly believe
we have something special to
offer. Most notably, we have
a team of really incredible
people all dedicated to
enhancing our reputation
and improving the way we do
business on a daily basis.
So who better to answer
questions about the state of our
company than the folks
ultimately responsible for
making it all happen.
20200324 NORDSTROM
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Q: What is Nordstrom
doing differently in response to the
challenging state of retail today?
AA:: "Today, from a merchandising standpoint, it’s all about great items. Styles customers can really get excited
about. Things I get excited about. To me, that’s the definition of customer service. When the customer leaves
the store with a big smile on her face because she found just what she was looking for. Or maybe she picked up
something that just caught her eye. Something she couldn’t resist. At Nordstrom, we carry a huge selection.
Both name brands and private labels. Stock a ton of sizes. And these days value is a big part of the equation.
The customer needs to feel she’s getting her money’s worth. Whether it’s a $50 pair of shoes or a $250 pair of
shoes, I need to make sure it’s the best pair of shoes available for that price. When all is said and done, we
want every customer to walk away feeling really good about what they bought.”
GENIE YAO
BP. SHOES BUYER
Northern California
13 YEARS OF SERVICE
2 NORDSTROM INC. AND SUBSIDIARIES
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AA:: "I work in Encore, our plus-size department, and some women come in not feeling that good about
themselves. But I tell them we don’t allow that here. It’s not allowed. So lift your head up when you come
into my department. And when we get to the counter it’s like a little party. Women are laughing and
conversing, and it’s just a whole new experience for them. We discuss things. It’s uplifting. I think that
brings them back here even during times we’re going through right now. Maybe more so. So to answer
the question are we doing anything different? Maybe there is a renewed sense of community and a
greater appreciation for the people we interact with. More of a connection. But really that’s the way we’ve
always gone about it. Sure we’re selling clothes. But it’s more about the relationships. About listening to
customers and caring enough to make them feel good. And that makes me feel good. I’m proud to be
working for a family-owned business that truly appreciates its customers — and allows its sales
associates the freedom to do whatever it takes to ensure their satisfaction."
SUE BAKER
ENCORE SALESPERSON
Indianapolis, Indiana
6 YEARS OF SERVICE
NORDSTROM INC. AND SUBSIDIARIES 2
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Q: What are the key benefits you expect
to realize with Perpetual Inventory?
AA:: “First and foremost, we view Perpetual
Inventory as a tool — a very powerful tool
that will ultimately allow us to better
serve the customer. It will accomplish
this in many ways. The big plus at the
point of sale will be our ability to track
down and transfer an item for a customer
much more quickly and efficiently. The
obvious byproduct of this greater
efficiency is expense savings. Our legacy
system was very manual. With the new
system, there’s no more paperwork. In
the end, we’ll save time. We’ll save
money. We’ll have more time to spend
with that customer.
At its core, Perpetual Inventory is a
merchandising system. Basically, it will
give our buyers the ability to make better
decisions about the products they buy for
our stores. If they know more about what
they’re selling by store, by size and by
color, they will be able to make better
decisions about what to buy in the future.
What’s more, they’ll be able to more
effectively manage their inventory, and
react to trends a lot faster.
Right now, there’s definitely a lot of
learning going on, but in general the
implementation is going very well. When
all is said and done, Perpetual Inventory
undoubtedly will have a positive impact
on the way we run our business, but only
to the extent that it allows us to be a
better, smarter, more efficient retailer.
And better serve our customers."
TONJA KUNTZ
VICE PRESIDENT
CORPORATE MERCHANDISE MANAGER
Women’s Active Sportswear/Hosiery/Lingerie
14 YEARS OF SERVICE
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Q: How does
Nordstrom
transfer the
company’s core
values to new
markets?
AA:: "At Nordstrom, we’re not only trying to build long-term relationships with our customers, we’re
building lasting relationships with our employees as well. And that’s how the culture thrives. All of my
managers, my mentors, have wanted me to succeed. That’s something you really feel around here. In
fact, they recommended me for the manager position here in Tampa. So I made the move. Now I’m
passing my knowledge and experience on to the next generation. Ultimately, I want the people on my
team to go on to Orlando or Coral Gables when we open those stores. I think that’s what it’s really all
about. By promoting from within, we’re grooming people for what they really want to do. We’re creating
new leaders. And that’s an awesome feeling, because you’re also working toward the company’s goals.
In the end, everyone wins."
JAIME FERNANDEZ
MEN’S FURNISHINGS
DEPARTMENT MANAGER
Tampa, Florida
4 YEARS OF SERVICE
NORDSTROM INC. AND SUBSIDIARIES 5
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Q: What is the company
doing to bring expenses
under control?
A: "Speaking from an operations perspective, I think we have established clarity on exactly what we need
to invest in. As you might imagine, we are focusing our resources on the customer experience — what they
see, what they feel when they walk into our stores. To that end, we engaged in some pretty in-depth
analysis on what is at the core of our long-term operational strategy. After deciding on the things it made
sense committing to, we made sure we could deliver them with a quality/cost balance. It all boils down to
best practices. Leveraging our size to make smarter purchases. Looking at our distribution network and
utilizing it to service the stores more efficiently. The bottom line in operations, we feel that if we can
deliver our product to store managers, regional managers, merchandisers, front-line salespeople in a
manner that is essentially transparent to them, they will be free of distractions in their interactions with
the customers in our stores.”
MIKE SATO
VICE PRESIDENT
Full-Line Stores Operations
17 YEARS OF SERVICE
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Q: What is Nordstrom
doing to enhance the
customer experience?
A: "Nordstrom has always been defined by the customer experience — and it’s this experience that draws
customers in and keeps them coming back. As a company, it’s what we all focus on. From the buyers who
buy the clothes, to people who stock the shelves. And of course, there’s our salespeople. We pride
ourselves on having the best in the business. My job is to remove any barriers that would keep them from
making the customer happy. To give them the tools they need, and then get out of the way. As for the store
itself, I think we have done a better job recently defining the merchandise offering in each of our
departments, which makes it easier for customers to find what they’re looking for. I also think the buyers
have done a good job of taking all the feedback—and they get a lot—and adjusting the merchandise mix to
reflect what our customers really want."
MICHELLE HAGGARD
STORE MANAGER
Riverside, California
10 YEARS OF SERVICE
NORDSTROM INC. AND SUBSIDIARIES 7
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Dear Customers, Employees and Shareholders,
Dear Customers, Employees and Shareholders,
At Nordstrom, nothing is more important than the connection between our
salespeople and customers. For this relationship to flourish, our customers must
believe we are sincere in our desire to make their shopping experience as enjoyable
and rewarding as possible. And our folks on front lines must feel that they are
empowered to not only meet, but exceed our customers’ expectations.
Over the past 12 months, we have made significant progress in our goal to regain the
trust and goodwill of these two key groups. As we’ve increased our focus on the front
lines, we have also reviewed many of our operating procedures and practices to make
sure our time and energy are well spent — all while building upon the core values
that define our culture and differentiate our position in the marketplace.
I’ve highlighted some of our more noteworthy accomplishments below.
• We’ve worked to clarify the offering in each of our lifestyle departments, making it
easier for customers to find the items that appeal to them, while providing more
balance to our overall merchandise mix.
• We’ve improved on getting the right item, at the right time, at the right price in each
of these departments, which is helping to drive volume.
• We’ve finished testing and begun implementation of our Perpetual Inventory
system, a vital merchandising tool that will provide us with information to make
smarter decisions throughout the selling process, and better serve our customers.
• We’ve streamlined back-of-the-house operations, saving valuable time and effort,
while also helping us achieve significant reductions in our overall costs.
There is no doubt that none of these things would have been possible without the
focus and dedication of our entire team. Through their efforts, we believe we are
getting back on track regarding what it is that makes Nordstrom unique and special.
But we realize there is still more work to be done. Obviously, these are challenging
times, and consumers have many choices when it comes to spending their hard-
earned money. At Nordstrom, we need to make sure that we are providing real,
tangible reasons why they might choose to shop with us. We must continue to hone
our listening skills, and maintain a sense of urgency when responding to our
customers’ needs. I’m confident we’re doing just that.
Sincerely,
Blake W. Nordstrom
PRESIDENT
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Management’s Discussion and Analysis
Overview
Net Sales (in millions)
Earnings for 2001 (the fiscal year ended January 31, 2002) for
Nordstrom, Inc. and its subsidiaries (collectively, the “Company”)
increased by 22% as compared to 2000. This increase was
primarily attributable to nonrecurring charges experienced in
the prior year. Excluding nonrecurring charges, earnings for
2001 declined by 8.4% due in large part to the slowing economy.
The Company experienced a modest increase in net sales due to
the opening of new stores but comparable store sales (sales from
stores open at least one full fiscal year) declined. Gross profit as
a percent of sales also declined primarily due to higher markdowns
taken to increase sales and liquidate excess inventories. Selling,
general and administrative expenses as a percent of sales declined
as a result of focused ef forts in 2001 to reduce costs.
$6,000
$5,500
$5,000
$4,500
$4,000
5
6
8
,
4
$
9
4
0
,
5
$
9
4
1
,
5
$
9
2
5
,
5
$
4
3
6
,
5
$
1997 1998 1999 2000
2001
In 2002 (the fiscal year ending January 31, 2003), the Company
Year over year net sales percentage increases and comparable store
plans to focus on sales growth, managing merchandise inventory
sales percentages are as follows:
levels, controlling expenses, and making disciplined capital
Fiscal Year
investment decisions. The Company will also strive to build on
its core values of customer service and delivering the right mix
of quality merchandise at the right price.
Net sales increase
Comparable store sales
2001
1.9%
(2.9%)
2000
1999
7.4%
0.3 %
2.0%
(1.1%)
RESULTS OF OPERATIONS
The net sales increase of 1.9% in 2001 was due to new store
openings. During 2001, the Company opened four Nordstrom
full-line stores, eight Nordstrom Rack stores and three Façonnable
boutiques. The increases in net sales were of fset by negative
Percentage of 2001 Sales by Merchandise Category
comparable store sales and a decline in sales at Nordstrom.com.
Children’s Apparel
and Accessories 4%
Other 3%
Men’s Apparel and
Furnishings 18%
Comparable store sales in the first half of the year were lower
by 1.3% and in the second half of the year were lower by 4.4%.
The decline in the second half of 2001 was largely due to the
overall slowdown in the economy. The most significant sales
Women’s Apparel 35%
declines were in men’s apparel and shoes while women’s apparel
was essentially f lat.
Shoes 19%
Net sales increased 7.4% in 2000 due to new store openings.
During 2000, the Company opened six Nordstrom full-line stores
and ten Nordstrom Rack stores. Comparable store sales were
essentially f lat in 2000, with increases in shoes, cosmetics
and accessories of fset by decreases in women’s apparel.
The decrease in women’s apparel was primarily attributable
Women’s Accessories 21%
to a change in product mix.
NORDSTROM INC. AND SUBSIDIARIES 9
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Management’s Discussion and Analysis
In 2002, the Company plans to open eight full-line stores,
Excluding nonrecurring charges, selling, general and administrative
four Nordstrom Rack stores and two Façonnable boutiques,
expenses as a percentage of net sales decreased in 2001 primarily
increasing retail square footage 8%. Given the continued weakness
due to a focused ef fort to control expenses in the areas of sales
in the economy, comparable store sales are planned to be f lat.
promotion, direct selling and information technology. These
Based on the sales trend seen in the prior year, comparable store
decreases were partially of fset by an increase in bad debt on
sales are planned to be negative in the first half of the year
the Company’s credit cards.
and positive in the second half of the year.
Gross Profit
Gross profit as a percentage of net sales is as follows:
In 2000, before nonrecurring charges, the increase in selling,
general and administrative expenses as a percent of sales was
due to increased costs in the areas of direct selling, credit
and sales promotion, related in part to store openings, and
increased costs for information services resulting from
Fiscal Year
2001
2000
1999
the Company’s investment in new technology.
Gross profit as a percent
Fiscal 2000 included nonrecurring charges of $23 million,
of net sales
33.2%
34.0%
34.8%
of which approximately $10 million (pre-tax) related to the
Gross profit as a percentage of net sales declined in 2001
due to higher markdowns and new store occupancy expenses.
The higher markdowns were taken to drive sales and to liquidate
excess inventory caused by the decrease in comparable store sales.
In 2000, the decline in gross profit as a percentage of sales was
due to increased markdowns taken to liquidate excess inventory
and increased occupancy expenses as a result of additional stores.
In 2002, gross profit as a percentage of sales is expected to
improve moderately through careful management of inventory
levels in relation to sales trends. However, any improvement may
be limited if sales trends are weaker than expected. The Company
write-of f of abandoned and impaired information technology
projects, and approximately $13 million (pre-tax) related to
employee severance and other costs associated with a change
in management.
In 2002, selling, general and administrative expenses as
a percent of net sales are expected to improve slightly as
the Company continues its focus on expense management
while incurring higher costs related to new stores, higher
depreciation related to new information systems and
continued high levels of bad debt.
expects to complete the rollout of its perpetual inventory system
Interest Expense, Net
in 2002. The benefits of having better inventory tracking tools
Interest expense, net increased 19.7% in 2001 due to higher
through perpetual inventory should, over time, also improve gross
average borrowings, partially of fset by a decrease in interest rates.
profit performance.
In 2000, interest expense, net increased 24.4% primarily
due to higher average borrowings.
Selling, General and Administrative
Selling, general and administrative expenses as a percent of net
sales are as follows:
Fiscal Year
2001
2000
1999
Selling, general and
administrative
Nonrecurring charges
Selling, general and
administrative before
nonrecurring charges
30.6%
—
31.6%
0.4%
29.6%
0.2%
30.6%
31.2%
29.4%
10 NORDSTROM INC. AND SUBSIDIARIES
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Management’s Discussion and Analysis
Service Charge Income and Other, Net (in millions)
Earnings per Share (Diluted)
1
1
1
$
0
1
1
$
7
1
1
$
1
3
1
$
4
3
1
$
0
2
.
1
$
1
4
.
1
$
6
4
.
1
$
8
7
.
0
$
3
9
.
0
$
$140
$130
$120
$110
$100
$1.60
$1.40
$1.20
$1.00
$0.80
1997 1998 1999 2000
2001
1997 1998 1999 2000
2001
Service charge income and other, net primarily represents income
Diluted earnings per share are as follows:
from the Company’s credit card operations. Service charge income
declined slightly in 2001 due to lower interest rates, f lat credit
sales and a steady number of credit accounts. This decline was
of fset by lower miscellaneous charges compared to the prior year.
In 2000, service charge income increased due to higher credit sales
and increases in the number of credit accounts. Credit sales and
Fiscal Year
Diluted earnings per share
Nonrecurring charges
Diluted earnings per share
2001
$.93
—
2000
1999
$.78
.26
$1.46
.04
before nonrecurring charges
$.93
$1.04
$1.50
the number of credit accounts increased as a result of a targeted
Excluding nonrecurring charges, earnings per share for 2001 were
marketing ef fort toward inactive accounts and the introduction of
10.6% worse than 2000 primarily driven by a decline in comparable
a rewards program.
In 2002, service charge income is planned to be higher due to a
store sales and a decline in gross profit percent of fset by decreases
in selling, general and administrative expenses as a percent of sales.
small increase in credit sales and credit accounts, and adjustments
Excluding nonrecurring charges, earnings per share for 2000 were
to interest rates charged.
Write-of f of Investment
The Company held common shares in Streamline, Inc., an
Internet grocery and consumer goods delivery company, at
a cost of approximately $33 million. Streamline ceased its
operations ef fective November 2000. During 2000, the
Company wrote of f its entire investment in Streamline.
30.7% lower than 1999 primarily due to the decline in gross profit
percent and higher selling, general and administrative expenses,
partially of fset by higher service charge income.
Fourth Quarter Results
Fourth quarter 2001 earnings per share were $.38 compared with
$.20 in 2000. The prior year included a $.01 nonrecurring charge
related to the write-of f of the remaining Streamline investment.
Total sales for the quarter declined by 1.5% versus the same quarter
in the prior year and comparable store sales declined by 3.4%.
The decline in sales was primarily due to the overall slowdown in
the economy. Gross profit increased compared to the same quarter
in the prior year due to lower markdowns. Selling, general and
administrative expenses improved in the quarter compared to the
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Management’s Discussion and Analysis
prior year due to lower costs in selling and sales promotion,
At January 31, 2002, approximately $456 million has been
partially of fset by higher bad debt. The lower selling, general
contractually committed for the construction of new stores
and administrative costs were the result of a focused ef fort
or remodel of existing stores. Although the Company has made
to control costs.
LIQUIDITY AND CAPITAL RESOURCES
The Company finances its working capital needs, capital
expenditures, acquisitions, and share repurchase activity with
a combination of cash f lows from operations and borrowings.
Management believes that the Company’s operating cash f lows,
existing cash and available credit facilities are suf ficient to
finance the Company’s operations and planned growth for the
foreseeable future.
Cash Flows from Operations
Net cash provided by operating activities increased approximately
$238 million in 2001 compared to 2000 primarily due to decreases
in merchandise inventories and accounts receivable.
commitments for stores opening in 2002 and beyond, it is possible
that some stores may not be opened as scheduled because of delays
inherent in the development process, or because of the termination
of store site negotiations.
Total Square Footage (thousands)
4
1
6
,
2
1
3
9
5
,
3
1
7
8
4
,
4
1
6
5
0
,
6
1
8
4
0
7,
1
18,000
16,000
14,000
12,000
10,000
1997 1998 1999 2000
2001
Net cash provided by operating activities decreased approximately
$193 million in 2000 compared to 1999 largely due to lower
Share Repurchase
net earnings and increases in credit card accounts receivable
and merchandise inventories.
In 2002, cash f lows provided by operating activities are expected
to decrease due to increases in accounts receivable related to
increases in credit sales and inventory increases related to the
opening of new stores.
Capital Expenditures
In May 1995, the Board of Directors authorized $1.1 billion of share
repurchases. As of January 31, 2002, the Company has purchased
39 million shares of its common stock for $1 billion, with remaining
share repurchase authority of $82 million. The share repurchase
represents 24% of the shares outstanding as of May 1995 after
adjusting for the 1998 stock split, at an average price per share
of $25.93. Share repurchases have been partially financed through
additional borrowings, resulting in an increase in the Company’s
debt to capital ratio.
The Company’s capital expenditures aggregated approximately $683
million over the last three years, net of developer reimbursements,
principally to add stores, improve existing facilities and purchase
Dividend Policy
or develop new information systems. Over 3.5 million square feet
of retail store space was added during this period, representing
an increase of 25% since January 31, 1999.
In 2001, the Company paid $.36 per share of common stock
in cash dividends, the fifth consecutive annual dividend increase.
The Company paid $.35 and $.32 per share of common stock
The Company plans to spend approximately $875 million, net of
in fiscal 2000 and 1999.
developer reimbursements, on capital projects during the next
three years, including new stores, the remodeling of existing
stores, new systems and technology, and other items.
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Management’s Discussion and Analysis
Acquisition
In 2000, the Company acquired Façonnable, S.A. ("Façonnable"),
of Nice, France, a designer, wholesaler and retailer of high quality
consolidated balance sheets. The Visa VFN is scheduled to expire
in April 2002. The Company is in the process of renewing this
credit facility.
men’s and women’s apparel and accessories. The Company paid
The Company owns a 49% interest in a limited partnership which
$88 million in cash and issued 5,074,000 shares of common
constructed a new corporate of fice building in which the Company
stock of the Company for a total consideration of $169 million.
is the primary occupant. Land, building and equipment includes
The purchase also provides for a contingent payment to one
capitalized costs related to this building of $93 million and $57
of the previous owners that may be paid after five years from
million as of January 31, 2002 and 2001. The Company is a
the acquisition date. If the previous owner continues to have
guarantor of a $93 million credit facility of the limited partnership
active involvement in the business and performance targets
of which $89 million and $53 million is outstanding as of January
are met, the contingent payment would approximate $10 million.
31, 2002 and 2001 and is included in other long-term debt.
Since the contingent payment is performance based, the actual
amount paid will likely vary from this amount and will be
expensed when it becomes probable that the targets will be met.
Debt, Available Credit and Debt Ratings
In October 2000, the Company issued $300 million of 8.95%
Senior Notes due in 2005. These proceeds were used to reduce
short-term indebtedness, to fund the acquisition of Façonnable,
and for general corporate purposes.
The Company entered into a variable interest rate swap agreement
in the third quarter of 2001. The swap has a $300 million notional
amount and a four-year term. Under the agreement, the Company
receives a fixed rate of 8.95% and pays a variable rate based on
LIBOR plus a margin of 4.44% set at six-month intervals (6.85%
at January 31, 2002). Any dif ferences between the amounts paid
and received on interest rate swap agreements are recognized as
adjustments to interest expense over the life of the swap.
In November 2001, the Company issued $300 million of Class A
notes backed by Nordstrom Private Label Receivables (“PL Term”).
The PL Term bears a fixed interest rate of 4.82% and has a maturity
of five years. Both the debt and related assets of the PL Term are
included in the Company’s consolidated balance sheet. The
Company will use the proceeds for general corporate purposes
and capital expansion.
The limited partnership is currently refinancing the $93 million
credit facility and has signed a commitment agreement for an
$85 million mortgage secured by the property. The obligation
will have a fixed interest rate of 7.68% and a term of 18 years.
The Company expects the agreement to close in April 2002 subject
to various requirements. The dif ference between the amount
outstanding under the original credit facility and the new mortgage
will be funded by the Company.
In November 2001, the Company entered into a $300 million
unsecured revolving credit facility that expires in November 2004.
This credit facility replaced an existing $500 million line of credit,
that was scheduled to expire in July 2002. As of January 31, 2002,
no borrowings have been made against this revolving credit facility.
In November 2001, the Company issued a variable funding note
backed by Nordstrom Private Label Receivables (“PL VFN”) with
a $200 million capacity. As of January 31, 2002, no borrowings
have been made against this note.
The Company has the following credit ratings as of the date of
this report.
Credit Ratings
Senior unsecured debt
Commercial paper
*negative outlook
Moody’s*
Standard
and Poor’s*
Baa1
P-2
A-
A-2
The Company has an outstanding $200 million variable funding
These ratings are subject to change depending on the Company’s
note backed by Nordstrom VISA credit card receivables (“Visa VFN”).
performance. A significant ratings drop could result in the
In accordance with SFAS No. 140 "Accounting for Transfers and
termination of the $200 million PL VFN and the $200 million
Servicing of Financial Assets and Extinguishments of L iabilities"
Visa VFN, and a change in interest rates on the $300 million
this debt and the related assets are not reflected in the Company’s
8.95% Senior Notes and the $300 million revolving credit facility.
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Management’s Discussion and Analysis
The remainder of the Company’s outstanding debt is not subject
Put Agreement
to termination or interest rate adjustments based on changes in
credit ratings.
The holders of the minority interest of Nordstrom.com LLC, through
their ownership interests in its managing member, Nordstrom.com,
The following table summarizes the Company’s contractual
Inc., have the right to sell their shares of Nordstrom.com, Inc. to the
obligations and the expected ef fect on liquidity and cash f lows
Company for ef fectively $80 million in the event that certain events
excluding the $93 million construction loan and any potential
do not occur. This right would terminate if the Company provides at
liability related to the Nordstrom.com Put Agreement.
least $100 million in additional funding to Nordstrom.com, Inc.
Less
than
1 Year
1 - 3
Years
4 – 5
Years
Over
5 Years
Fiscal Year
Total
Long-term
Debt
$1,330.6
$77.7
$3.0
$700.6
$549.3
Capital Leases
17.2
1.3
2.2
2.2
11.5
prior to July 1, 2002 or if Nordstrom.com, Inc. completes an initial
public of fering of its common stock prior to September 1, 2002.
It is possible that the Company will choose not to provide the $100
million in additional funding and that Nordstrom.com, Inc. will not
complete an initial public of fering on or before September 1, 2002.
If and when the Company determines that neither of those events is
likely to occur and that the purchase of the minority interest shares
Operating
Leases
674.1
66.9
125.2
108.5
373.5
is probable, the Company will begin to accrete, over the period
Construction
Commitments 456.1
195.9
151.2
—
109.0
million and the fair value of the shares. Based on current values
remaining prior to the purchase, the dif ference between that $80
Total
$2,478.0
$341.8 $281.6
$811.3
$1,043.3
for similar businesses, management of the Company believes that
the amount of that dif ference could range from $55 million to
Construction commitments include $109 million shown in the
Over 5 Years category for new stores construction. These contracts
do not have specific due dates and may become due sooner than
$65 million.
five years.
Valuation of Intangible Assets
CRITICAL ACCOUNTING POLICIES
The preparation of the Company’s financial statements require
that management make estimates and judgments that af fect the
reported amounts of assets, liabilities, revenues and expenses,
and disclosure of contingent assets and liabilities. On an on-
going basis, the Company evaluates its estimates including
those related to doubtful accounts, inventory valuation, intangible
The Company is in the process of performing a valuation to
determine if there has been an impairment of the $138 million
intangible asset resulting from the purchase of Façonnable. This is
the Company’s only intangible asset. The valuation is dependent
on many factors including future performance and market
conditions. Should this asset be impaired, a charge will be
recorded in the first quarter of 2002.
assets, income taxes, self-insurance liabilities, pensions, contingent
Realization of Deferred Tax Assets
liabilities and litigation. The Company bases its estimates on
historical experience and on other assumptions that management
believes to be reasonable under the circumstances. Actual results
may dif fer from these estimates under dif ferent assumptions
or conditions.
As of January 31, 2002, the Company has $34 million of capital
loss carryforwards. The utilization of this deferred tax asset is
contingent upon the ability to generate capital gains within the
next four years. No valuation allowance has been provided
because management believes it is probable that the full benefit
of the carryforwards will be realized.
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Management’s Discussion and Analysis
RECENT ACCOUNTING PRONOUNCEMENTS
In February 2002, the Company adopted SFAS No. 144,
In February 2001, the Company adopted SFAS No. 133,
“Accounting for Derivative Instruments and Hedging Activities,”
as amended by SFAS No. 137 and No. 138. It requires the fair
value of all derivatives to be recognized as assets or liabilities,
and specifies accounting for changes in their fair value. Adoption
of this standard did not have a material impact on the Company’s
“Accounting for the Impairment or Disposal of Long-L ived Assets.”
SFAS No. 144 retains the fundamental provisions of SFAS No. 121,
but establishes new criteria for asset classification and broadens
the scope of qualifying discontinued operations. The adoption of
this statement did not have a material impact on the Company’s
financial statements.
financial statements.
FORWARD-LOOKING INFORMATION CAUTIONARY STATEMENT
In March 2001, the Company adopted SFAS No. 140 “Accounting
Certain statements made in this annual report include forward-
for Transfers and Servicing of Financial Assets and Extinguishments
looking statements regarding the Company’s performance, liquidity
of L iabilities,” a replacement of SFAS No. 125 with the same title.
and adequacy of capital resources. These statements are based
It revises the standards for securitizations and other transfers of
on the Company’s current assumptions and expectations and are
financial assets and collateral and requires certain additional
subject to certain risks and uncertainties that could cause actual
disclosures, but otherwise retains most of SFAS No. 125’s
results to dif fer materially from those projected. Forward-looking
provisions. Adoption of this standard did not have a material
statements are qualified by the risks and challenges posed by
impact on the Company’s financial statements.
increased competition, shifting consumer demand, changing
consumer credit markets, changing capital markets and general
economic conditions, hiring and retaining ef fective team members,
sourcing merchandise from domestic and international vendors,
investing in new business strategies, achieving growth objectives,
and other risks and uncertainties, including the uncertain economic
and political environment arising from the terrorist acts of
September 11th and subsequent terrorist activities. As a result,
while the Company believes there is a reasonable basis for the
forward-looking statements, one should not place undue reliance
on those statements.
The Emerging Issues Task Force reached a consensus on Issue
No. 99-20, “Recognition of Interest Income and Impairment
on Purchased and Retained Beneficial Interests in Securitized
Financial Assets,” which provides guidance on how a transferor
that retains an interest in securitized financial assets, or an
enterprise that purchases a beneficial interest in securitized
financial assets, should account for related interest income
and impairment. Adoption of this accounting issue for the
quarter ended July 31, 2001, did not have a material impact
on the Company’s financial statements.
In February 2002, the Company adopted SFAS No. 141 “Business
Combinations” and No. 142 “Goodwill and Other Intangible Assets.”
SFAS No. 141 requires that the purchase method of accounting
be used for all business combinations initiated after June 30, 2001,
and establishes specific criteria for the recognition of goodwill
separate from other intangible assets. Adoption of the accounting
provisions of SFAS No. 141 did not have a material impact on the
Company’s financial statements. Under SFAS No. 142, goodwill
and intangible assets having indefinite lives will no longer be
amortized but will be subject to annual impairment tests.
Other intangible assets will continue to be amortized over their
estimated useful lives. The Company is currently evaluating the
impact of SFAS No. 142 on its earnings and financial position.
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Consolidated Statements of Earnings
Dollars in thousands except per share amounts
Year ended January 31,
% of
sales
2002
% of
sales
2001
% of
sales
2000
Net sales
$5,634,130
100.0
$5,528,537
100.0
$5,149,266
100.0
Cost of sales and related
buying and occupancy
(3,765,859)
(66.8)
(3,649,516)
(66.0)
(3,359,760)
(65.2)
Gross profit
1,868,271
33.2
1,879,021
34.0
1,789,506
34.8
Selling, general and administrative
(1,722,635)
(30.6)
(1,747,048)
(31.6)
(1,523,836)
(29.6)
Operating income
145,636
2.6
131,973
2.4
265,670
5.2
Interest expense, net
(75,038)
(1.4)
(62,698)
(1.1)
(50,396)
(1.0)
Write-down of investment
Service charge income and other, net
Earnings before income taxes
—
133,890
204,488
—
2.4
3.6
(32,857)
(0.6)
130,600
167,018
2.3
3.0
—
116,783
332,057
—
2.2
6.4
Income taxes
Net earnings
Basic earnings per share
Diluted earnings per share
Cash dividends paid per share
(79,800)
(1.4)
(65,100)
(1.2)
(129,500)
(2.5)
$124,688
2.2
$101,918
1.8
$202,557
3.9
$0.93
$0.93
$0.36
$0.78
$0.78
$0.35
$1.47
$1.46
$0.32
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
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Consolidated Balance Sheets
Dollars in thousands
January 31,
Assets
Current assets:
Cash and cash equivalents
Accounts receivable, net
Merchandise inventories
Prepaid expenses
Other current assets
Total current assets
Land, buildings and equipment, net
Intangible assets, net
Other assets
Total assets
L iabilities and Shareholders’ Equity
Current liabilities:
Notes payable
Accounts payable
Accrued salaries, wages and related benefits
Income taxes and other accruals
Current portion of long-term debt
Total current liabilities
Long-term debt
Deferred lease credits
Other liabilities
Shareholders’ equity:
Common stock, no par:
250,000,000 shares authorized;
134,468,608 and 133,797,757
shares issued and outstanding
Unearned stock compensation
Retained earnings
Accumulated other comprehensive earnings
Total shareholders’ equity
Total liabilities and shareholders’ equity
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
2002
2001
$331,327
698,475
888,172
34,375
102,249
2,054,598
1,761,082
138,331
94,768
$25,259
721,953
945,687
28,760
91,323
1,812,982
1,599,938
143,473
52,11 0
$4,048,779
$3,608,503
$148
490,988
236,373
142,002
78,227
947,738
1,351,044
342,046
93,463
341,316
(2,680)
975,203
649
1,314,488
$4,048,779
$83,060
466,476
234,833
153,613
12,586
950,568
1,099,710
275,252
53,405
330,394
(3,740)
900,090
2,824
1,229,568
$3,608,503
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Consolidated Statements of Shareholders’ Equity
Dollars in thousands except per share amounts
Common Stock
Unearned Stock
Amount Compensation
Shares
Retained
Earnings
Accum. Other
Comprehensive
Earnings
Total
Balance at February 1, 1999
142,114,167
$230,761
$(4,703)
$1,074,487
Net earnings
Unrealized gain on investment, net of tax
Comprehensive net earnings:
Cash dividends paid ($.32 per share)
Issuance of common stock
Stock compensation
—
—
—
—
341,947
40,274
Purchase and retirement of common stock
(10,216,400)
—
—
—
—
9,577
7,221
—
—
—
—
—
—
(3,890)
202,557
—
—
(44,463)
—
—
—
(302,965)
— $1,300,545
—
202,557
$17,032
17,032
—
—
—
—
—
219,589
(44,463)
9,577
3,331
(302,965)
Balance at January 31, 2000
132,279,988
247,559
(8,593)
929,616
17,032
1,185,614
Net earnings
Other comprehensive earnings:
—
Unrealized loss on investment during period, net of tax —
Reclassification of realized loss, net of tax
Foreign currency translation adjustment
Comprehensive net earnings:
Cash dividends paid ($.35 per share)
Issuance of common stock for:
Stock option plans
Employee stock purchase plan
Business acquisition
Stock compensation, net
—
—
—
—
—
—
—
—
—
—
181,910
165,842
4,039
2,211
5,074,000
77,696
(14,075)
(1,111)
4,853
—
—
—
—
—
—
—
—
—
101,918
—
101,918
—
—
—
—
(45,935)
—
—
—
—
(23,461)
(23,461)
6,429
2,824
—
—
—
—
—
—
—
6,429
2,824
87,710
(45,935)
4,039
2,211
77,696
3,742
(85,509)
Purchase and retirement of common stock
(3,889,908)
—
—
(85,509)
Balance at January 31, 2001
133,797,757
330,394
(3,740)
900,090
2,824
1,229,568
Net earnings
Other comprehensive earnings:
Foreign currency translation adjustment
Comprehensive net earnings:
Cash dividends paid ($.36 per share)
Issuance of common stock for:
Stock option plans
Employee stock purchase plan
Stock compensation
—
—
—
—
186,165
541,677
19,009
Purchase and retirement of common stock
(76,000)
—
—
—
—
3,788
6,754
380
—
—
—
—
—
—
—
1,060
—
124,688
—
124,688
—
—
(48,265)
—
—
—
(1,310)
(2,175)
(2,175)
—
—
—
—
—
—
122,513
(48,265)
3,788
6,754
1,440
(1,310)
Balance at January 31, 2002
134,468,608
$341,316
$(2,680)
$975,203
$649
$1,314,488
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
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Consolidated Statements of Cash Flows
Dollars in thousands
Year ended January 31,
Operating Activities
Net earnings
2002
2001
2000
$124,688
$101,918
$202,557
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization of buildings and equipment
Amortization of intangible assets
Amortization of deferred lease credits and other, net
Stock-based compensation expense
Deferred income taxes, net
Write-down of investment
213,089
4,630
(8,538)
3,414
15,662
—
Change in operating assets and liabilities, net of ef fects from acquisition of business:
Accounts receivable, net
Merchandise inventories
Prepaid expenses
Other assets
Accounts payable
Accrued salaries, wages and related benefits
Income tax liabilities and other accruals
Other liabilities
Net cash provided by operating activities
Investing Activities
Capital expenditures
Additions to deferred lease credits
Payment for acquisition, net of cash acquired
Other, net
Net cash used in investing activities
Financing Activities
Proceeds (payments) from notes payable
Proceeds from issuance of long-term debt
Principal payments on long-term debt
Capital contribution to subsidiary from minority shareholders
Proceeds from issuance of common stock
Cash dividends paid
Purchase and retirement of common stock
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
22,556
215,731
(1,684)
(16,770)
(159,636)
(203)
(11,310)
12,088
413,717
(390,138)
126,383
—
(3,309)
(267,064)
(82,912)
300,000
(18,640)
—
10,542
(48,265)
(1,310)
159,415
306,068
25,259
203,048
1,251
(12,349)
6,480
(3,716)
32,857
(102,945)
6,741
(173)
(3,821)
(67,924)
17,850
3,879
(7,184)
175,912
(321,454)
92,361
(83,828)
(1,781)
(314,702)
12,126
308,266
(58,191)
—
6,250
(45,935)
(85,509)
137,007
(1,783)
27,042
Cash and cash equivalents at end of year
$331,3 27
$25,259
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
193,718
—
(6,387)
3,331
(22,859)
—
(29,854)
79,894
(6,976)
(8,880)
(76,417)
14,942
965
25,212
369,246
(305,052)
114,910
—
(452)
(190,594)
(7,849)
—
(63,341)
16,000
9,577
(44,463)
(302,965)
(393,041)
(214,389)
241,431
$27,042
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Notes to Consolidated Financial Statements
Dollars in thousands except per share amounts
Advertising: Costs for newspaper, television, radio and other media
Note 1: Summary of Significant Accounting Policies
The Company: Nordstrom, Inc. is a fashion specialty retailer
of fering a wide selection of high-quality apparel, shoes and
accessories for women, men and children, in the United States
through 80 Nordstrom full-line stores, 46 Nordstrom Rack and
clearance stores, 4 Façonnable boutiques and 2 free-standing
are generally expensed as incurred. Direct response advertising
costs, consisting primarily of catalog book production and printing
costs, are deferred and recognized over the expected life of the
catalog, not to exceed six months. Total advertising expenses were
$145,341, $190,991 and $160,957 in 2001, 2000 and 1999.
Store Preopening Costs: Store opening and preopening costs
shoe stores. The Company also operates 24 Façonnable boutiques
are charged to expense when incurred.
located primarily in Europe. Additionally, the Company generates
Cash Equivalents: Cash equivalents represent short-term investments
catalog and Internet sales through Nordstrom.com LLC and service
with a maturity of three months or less from the time of purchase.
charge income through Nordstrom Credit, Inc.
Cash Management: The Company’s cash management system
Basis of Presentation: The consolidated financial statements
provides for the reimbursement of all major bank disbursement
include the balances of Nordstrom, Inc. and its subsidiaries for
accounts on a daily basis. Accounts payable at January 31, 2002
the entire fiscal year. All significant intercompany transactions
includes $31,817 of checks not yet presented for payment drawn
and balances are eliminated in consolidation.
in excess of cash balances.
Use of Estimates: Management makes estimates and assumptions
Customer Accounts Receivable: In accordance with industry
that af fect the reported amounts in the financial statements and
practices, installments maturing in more than one year and deferred
accompanying notes. Actual results could dif fer from those
payment accounts receivable are included in current assets.
estimates.
Merchandise Inventories: Merchandise inventories are stated
Reclassifications: Certain reclassifications of prior year balances
at the lower of cost (first-in, first-out basis) or market, using
have been made for consistent presentation with the current year.
the retail method.
Revenue Recognition: Revenues are recorded net of estimated
Land, Buildings and Equipment: Depreciation is computed using
returns and exclude sales tax. Revenue is recorded at the point
a combination of accelerated and straight-line methods. Estimated
of sale for retail stores. Catalog and e-commerce sales include
useful lives by major asset category are as follows:
shipping revenue and are recorded upon shipment to the customer.
Buying and Occupancy Costs: Buying costs consist primarily
of salaries and expenses incurred by the Company’s merchandise
managers, buyers and private label product development group.
Asset
Buildings
Store fixtures and equipment
Life (in years)
5-40
3-15
Leasehold improvements
Shorter of life of lease or asset life
Occupancy costs include rent, depreciation, property taxes and
operating costs related to the Company’s retail and distribution
Software
3-7
facilities.
Shipping and Handling Costs: The Company's costs for shipping
and handling to customers include payments to third-party shippers
and costs incurred to store, move and prepare merchandise for
shipment. Shipping and handling costs of $30,868, $38,062
and $29,085 in 2001, 2000 and 1999 were included in selling,
general and administrative expenses.
Asset Impairment: The Company reviews its intangibles and
other long-lived assets for impairment when events or changes
in circumstances indicate the carrying value of these assets may
not be recoverable.
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Notes to Consolidated Financial Statements
Deferred Lease Credits: The Company receives developer
impact on the Company’s financial statements.
reimbursements as incentives to construct stores in certain
developments. The Company capitalizes certain property, plant
and equipment for these stores during the construction period.
At the end of the construction period, developer reimbursements
in excess of construction costs are recorded as deferred lease
credits and amortized as a reduction to rent expense, on a straight-
line basis over the life of the applicable lease or operating covenant.
Construction costs in excess of developer reimbursements are
recorded as prepaid rent and amortized as rent expense on
a straight-line basis over the life of the applicable lease or
operating covenant.
Fair Value of Financial Instruments: The carrying amount of
cash equivalents and notes payable approximates fair value.
The fair value of long-term debt (including current maturities),
using quoted market prices of the same or similar issues with
the same remaining term to maturity, is approximately $1,378,000
and $1,041,000 at January 31, 2002 and 2001.
The Emerging Issues Task Force (“EITF”) has reached a
consensus on Issue No. 99-20, “Recognition of Interest Income
and Impairment on Purchased and Retained Beneficial Interests
in Securitized Financial Assets,” which provides guidance on how
a transferor that retains an interest in securitized financial assets,
or an enterprise that purchases a beneficial interest in securitized
financial assets, should account for related interest income
and impairment. Adoption of this accounting issue in the quarter
ended July 31, 2001, did not have a material impact on the
Company’s financial statements.
In July 2001, the FASB issued SFAS No. 141 “Business
Combinations.” SFAS No. 141 requires that the purchase
method of accounting be used for all business combinations
initiated after June 30, 2001, and establishes specific criteria
for the recognition of goodwill separate from other intangible
assets. Adoption of the accounting provisions of SFAS No. 141
in February 2002 did not have a material impact on the
Derivatives Policy: The Company limits its use of derivative
Company’s financial statements.
financial instruments to the management of foreign currency
and interest rate risks. The ef fect of these activities is not material
to the Company’s financial condition or results of operations.
The Company has no material of f-balance sheet credit risk,
and the fair value of derivative financial instruments at
January 31, 2002 and 2001 is not material.
At February 1, 2002, the Company implemented SFAS No. 142
“Goodwill and Other Intangible Assets.” Under SFAS No. 142,
goodwill and intangible assets having indefinite lives will no longer
be amortized but will be subject to annual impairment tests.
Other intangible assets will continue to be amortized over their
estimated useful lives. Prior to the adoption of SFAS No. 142,
Recent Accounting Pronouncements: In February 2001, the
the Company’s intangible assets were amortized over their
Company adopted Statement of Financial Accounting Standards
estimated useful lives on a straight-line basis ranging from 10
(“SFAS”) No. 133, “Accounting for Derivative Instruments and
to 35 years. Accumulated amortization of intangible assets was
Hedging Activities,” as amended by SFAS No. 137 and No. 138.
$5,881 and $1,251 at January 31, 2002 and 2001. The Company
It requires the fair value of all derivatives to be recognized as either
is currently evaluating the impact of SFAS No. 142 on its earnings
assets or liabilities and specifies accounting for changes in their
and financial position.
fair value. Adoption of this standard did not have a material
impact on the Company’s financial statements.
In February 2002, the Company adopted SFAS No. 144,
“Accounting for the Impairment or Disposal of Long-L ived Assets.”
In March 2001, the Company adopted SFAS No. 140 “Accounting
SFAS No. 144 retains the fundamental provisions of SFAS No. 121,
for Transfers and Servicing of Financial Assets and Extinguishments
but establishes new criteria for asset classification and broadens
of L iabilities,” a replacement of SFAS No. 125 with the same title.
the scope of qualifying discontinued operations. The adoption of
It revises the standards for securitizations and other transfers of
this statement did not have a material impact on the Company’s
financial assets and collateral and requires certain additional
financial statements.
disclosures, but otherwise retains most of SFAS No. 125’s
provisions. Adoption of this standard did not have a material
NORDSTROM INC. AND SUBSIDIARIES 21
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Notes to Consolidated Financial Statements
Note 2: Acquisition
Note 5: Income Taxes
In 2000, the Company acquired Façonnable, S.A. ("Façonnable"),
Income tax expense consists of the following:
of Nice, France, a designer, wholesaler and retailer of high quality
Year ended January 31,
2002
2001
2000
men’s and women’s apparel and accessories. The Company paid
$87,685 in cash and issued 5,074,000 shares of common stock of
the Company for a total consideration of $168,868. The purchase
also provides for a contingent payment to one of the previous owners
that may be paid after five years from the acquisition date. If the
previous owner continues to have active involvement in the business
and performance targets are met, the contingent payment would
approximate $10,000. Since the contingent payment is
performance based, the actual amount paid will likely vary from
Current income taxes:
Federal
$58,122
$79,778
$130,524
State and local
6,142
11,591
21,835
Total current
income taxes
Deferred income taxes:
Current
Non-current
64,264
91,369
152,359
(7,217)
(11,215)
(18,367)
22,753
(15,054)
(4,492)
this amount and will be expensed when it becomes probable that
Total deferred income taxes
15,536
(26,269)
(22,859)
the targets will be met.
Note 3: Employee Benefits
Total income taxes
$79,800
$65,100
$129,500
A reconciliation of the statutory Federal income tax rate to the
The Company provides a profit sharing plan and 401(k) plan for
Company’s ef fective tax rate is as follows:
employees. The profit sharing plan is non-contributory and is fully
funded by the Company. The Board of Directors establishes the
Company’s contribution to the profit sharing plan each year.
The 401(k) plan is funded by voluntary employee contributions.
In addition, the Company provides matching contributions up to
a stipulated percentage of employee contributions. The Company’s
Year ended January 31,
2002
2001
2000
Statutory rate
State and local
income taxes, net of
Federal income taxes
35.00%
35.00%
35.00%
3.93
.09
3.93
.05
4.06
(.06)
matching contributions to the 401(k) plan and contributions to the
Other, net
profit sharing plan totaled $28,525, $29,113 and $47,500 in 2001,
Ef fective tax rate
39.02%
38.98%
39.00%
2000 and 1999.
Note 4: Interest Expense, Net
The components of interest expense, net are as follows:
Year ended January 31,
2002
2001
2000
Short-term debt
Long-term debt
$3,741
$12,682
$2,584
83,225
58,988
56,831
Total interest expense
Less: Interest income
Capitalized interest
86,966
(1,545)
(10,383)
71,670
59,415
(1,330)
(7,642)
(3,521)
(5,498)
Interest expense, net
$75,038
$62,698
$50,396
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Notes to Consolidated Financial Statements
Deferred income taxes ref lect the net tax ef fect of temporary
Note 6: Earnings Per Share
dif ferences between amounts recorded for financial reporting
purposes and amounts used for tax purposes. The major
components of deferred tax assets and liabilities are as follows:
Basic earnings per share is computed on the basis of the weighted
average number of common shares outstanding during the year.
January 31,
Accrued expenses
Compensation and
benefits accruals
Merchandise inventories
Capital loss on investment
Other
2002
2001
weighted average number of common shares outstanding during
Diluted earnings per share is computed on the basis of the
$33,896
$33,458
the year plus dilutive common stock equivalents (primarily stock
options, performance share units and restricted stock).
48,584
24,643
13,399
21,123
43,803
26,290
12,751
18,298
Options with an exercise price greater than the average market
price were not included in the computation of diluted earnings
per share. These options totaled 8,563,996, 7,409,387 and
2,798,966 shares in 2001, 2000 and 1999.
Total deferred tax assets
141,645
134,600
Year ended January 31,
2002
2001
2000
Land, buildings and
equipment basis and
depreciation dif ferences
(49,978)
(25,678)
Net earnings
$124,688
$101,918
$202,557
Basic shares
134,104,582 131,012,412 137,814,589
Employee benefits
Other
(9,771)
(10,937)
Basic earnings per share
$0.93
$0.78
$1.47
(3,195)
(3,748)
Dilutive ef fect of stock options
Total deferred tax liabilities
(62,944)
(40,363)
and restricted stock
234,587
100,673
610,255
Net deferred tax assets
$78,701
$94,237
Diluted shares
134,339,169 131,113,085 138,424,844
As of January 31, 2002, the Company has $34,357 of capital
loss carryforwards available to be utilized within four years to
reduce future capital gain income. No valuation allowance has
been provided because management believes it is more likely
than not that the full benefit of the carryforwards will be realized.
Diluted earnings per share
$0.93
$0.78
$1.46
Note 7: Investment
In September 1998, the Company made an investment
in Streamline.com, Inc. (“Streamline”), an Internet grocery
and consumer goods delivery company. Streamline ceased its
operations ef fective November 22, 2000, due to failure to
obtain additional capital to fund its operations. During 2000,
the Company wrote of f its entire investment in Streamline, for
a total pre-tax loss on the investment of $32,857.
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Notes to Consolidated Financial Statements
Note 8: Accounts Receivable
volatility and risk of the assets and are calculated using an
The components of accounts receivable are as follows:
January 31,
2002
2001
Unrestricted trade receivables
$73,157
$716,218
Restricted trade receivables
628,271
—
Other
21,325
22,266
Allowance for doubtful accounts
(24,278)
(16,531)
Accounts receivable, net
$698,475
$721,953
Bad debt expense totaled $34,750, $20,368 and $11,707
in 2001, 2000 and 1999.
established formula that considers both the current interest rate
environment and credit spreads.
The following table summarizes the estimated fair value of the
securities held by the Company and certain cash f lows received
from and paid to the master trust.
Year ended January 31,
2002
2001
Class B Certificate
Seller Retained Interest
Interest Only Strip
Principal collections reinvested
$10,849
$11,000
47,102
1,335
42,052
3,464
Restricted trade receivables back the $300 million of Class A notes
in new receivables
669,582
485,422
and the $200 million variable funding note issued by the Company
Gains on sales of receivables
in November 2001. Other accounts receivable consists primarily
Income earned on retained assets
of vendor receivables and cosmetic rebates receivable.
Cash f lows from retained assets:
Note 9: Receivable-backed Securities
Nordstrom has $200 million in outstanding debt securities (Class A)
and holds securities that represent undivided interests (Class B and
Seller Retained Interest) or residual interests (Interest Only Strip)
Class B Certificate
Seller Retained Interest
Interest Only Strip
Servicing Fees
3,147
6,711
715
6,217
4,984
8,440
5,356
9,035
684
4,411
4,955
8,121
in a master trust. These securities are collateralized by Nordstrom
Interest income earned on the Class B certificate, Interest Only
VISA credit card receivables that are sold to the trust on an ongoing
Strip and the Seller Retained Interest are included in service charge
basis. The carrying amounts of the retained interests approximate
income and other on the consolidated statements of earnings.
fair value and are included in customer accounts receivable.
Gains or losses are recognized on the sale of VISA receivables to
the trust based on the dif ference between the face value of the
receivables sold and the fair value of the assets created in the
securitization process. The receivables sold to the trust are then
allocated between the various interests in the trust based on those
interests’ relative fair market value. The fair values of the assets
are calculated as the present value of their expected future cash
f lows, which assumes the weighted average remaining life of 2.4
months, average credit losses of 7.41%, average gross yield of
17.48%, average interest expense on issued securities of 2.38%,
average payment rate of 22.04%, and discount rates of 7.75% for
the Seller Retained Interest, 13.62% for the Class B and 25.35%
for the Interest Only Strip. These discount rates represent the
24 NORDSTROM INC. AND SUBSIDIARIES
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Notes to Consolidated Financial Statements
The following table illustrates the change in fair market value
Under the terms of the trust agreement, the Company may be
estimates given independent changes in assumptions.
required to fund certain amounts upon the occurrence of specific
+10%
+20%
-10%
-20%
events. The Company does not believe additional funding will
be required.
668
1,339
(661)
(1,312)
—
156
—
313
—
—
(156)
(313)
Gross Yield:
IO Strip
Class B
Seller Retained Interest
Interest Expense on
Issued Classes:
IO Strip
Class B
Seller Retained Interest
Card Holders Payment Rate:
IO Strip
Class B
Seller Retained Interest
Charge Of fs:
IO Strip
Class B
(85)
(170)
—
—
—
—
(76)
(137)
7
58
14
110
(325)
(647)
—
—
Seller Retained Interest
(136)
(271)
Discount Rate:
IO Strip
Class B
(10)
(28)
(19)
(57)
Seller Retained Interest
(71)
(142)
The Company’s continuing involvement in the securitization
of Visa receivables will include recording gains/losses on sales
in accordance with SFAS No. 140 and recognizing income on
retained assets as prescribed by EITF 99-20, holding both
subordinated, non-subordinated, and residual interests in
the trust, and servicing the portfolio.
The Company also issued $300 million of receivable-backed
securities supported by substantially all of its private label credit
cards. This transaction is accounted for as a secured financing.
171
—
—
195
Total principal receivables of the securitized portfolio on January
(18)
31, 2002 were approximately $625,516, receivables more than
(161)
30 days past due were approximately $19,301, and charged of f
receivables for the 12 months ending January 31, 2002 were
661
$28,134. The private label receivables also serve as collateral for
—
a variable funding facility with a limit of $200 million. Nothing
273
was outstanding on this facility on January 31, 2002.
19
57
142
The Company’s continuing involvement in the securitization of
private label receivables will include pledging new receivables
to the master note trust, accounting for the transaction as a
secured financing and servicing the portfolio.
85
—
—
90
(9)
(71)
330
—
136
10
29
71
The total principal balance of the VISA receivables is $258,075 as
of January 31, 2002. Gross credit losses were $17,050 for the 12
months ending January 31, 2002 and receivables past due for more
than 30 days were $8,170 on January 31, 2002.
The following table illustrates default projections using net credit
losses as a percentage of average outstanding receivables in
comparison to actual performance:
2002
2001
2000
Original projection
Actual
7.66%
N/A
5.99%
6.62%
5.39%
5.46%
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Notes to Consolidated Financial Statements
Note 10: Land, Buildings and Equipment
Note 11: Notes Payable
Land, buildings and equipment consist of the following:
A summary of notes payable is as follows:
January 31,
2002
2001
Year ended January 31,
2002
2001
2000
Land and land improvements
$59,141
$60,871
Average daily short-
Buildings
683,926
760,029
term borrowings
$81,647
$192,392
$45,030
Leasehold improvements
910,291
903,925
Maximum amount
Capitalized software
46,603
38,642
outstanding
177,100
360,480
178,533
Store fixtures and equipment
1,142,169
1,172,914
Weighted average
Less accumulated depreciation
and amortization
(1,663,409) (1,554,081)
2,842,130 2,936,381
interest rate:
During the year
At year-end
4.6%
—
6.6%
6.4%
5.8%
6.0%
1,178,721 1,382,300
At January 31, 2002, the Company has an unsecured line of
credit totaling $300,000, which is available as liquidity support
Construction in progress
582,361
217,638
for the Company’s commercial paper program, and expires in
November 2004. The line of credit agreement contains restrictive
$1,761,082 $1,599,938
covenants, which include maintaining certain financial ratios.
Land, buildings and
equipment, net
Capitalized software includes external direct costs, capitalized
internal direct labor and other employee benefits, and capitalized
interest associated with the development of internal-use computer
software. Depreciation begins in the period in which the software
is ready for its intended use. Construction in progress includes
$127,847 and $46,696 of software in progress at January 31,
2002 and 2001.
The Company pays a commitment fee for the line based on the
Company’s debt rating.
In November 2001, the Company issued a variable funding note
backed by Nordstrom Private Label Receivables (“PL VFN”) with
a $200 million capacity. Interest on the PL VFN varies based
on 30-day commercial paper rated at A1/P1. As of January 31,
2002, there have been no borrowings on the PL VFN.
At January 31, 2002, the Company has contractual commitments
of approximately $456,090 for the construction of new stores
or remodeling of existing stores.
Additionally, in connection with the purchase of foreign
merchandise, the Company has outstanding letters of credit
totaling $77,085 at January 31, 2002.
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Notes to Consolidated Financial Statements
Note 12: Long-Term Debt
The Company owns a 49% interest in a limited partnership that
A summary of long-term debt is as follows:
January 31,
2002
2001
completed construction on a new corporate of fice building in
which the Company is the primary occupant. Land, buildings
and equipment includes capitalized costs related to this building
Receivable-backed PL Term, 4.82%,
of $92,952 and $57,270 as of January 31, 2002 and 2001
due 2006
Senior debentures, 6.95%,
due 2028
$300,000
—
which includes noncash amounts of $78,003 and $41,883 as of
300,000
$300,000
of $89,180 and $53,060 is included in other long-term debt.
January 31, 2002 and 2001. The corresponding finance obligation
Senior notes, 5.625%, due 2009
250,000
250,000
This finance obligation will be amortized as rental payments are
Senior notes, 8.950%, due 2005
300,000
300,000
made by the Company to the limited partnership over the life of
Medium-term notes, 7.25%, due 2002
76,750
87,750
the permanent financing. The Company is a guarantor of a
Notes payable, 6.7%, due 2005
100,000
100,000
$93,000 credit facility of the limited partnership. The credit
Other
Total long-term debt
Less current portion
102,521
74,546
facility provides for interest at either the LIBOR rate plus 0.75%,
1,429,271 1,112,296
(78,227)
(12,586)
or the greater of the Federal Funds rate plus 0.5% and the prime
rate, and matures in August 2002 (2.63% and 6.36% at
Total due beyond one year
$1,351,044 $1,099,710
January 31, 2002 and 2001).
The Company entered into a variable interest rate swap agreement
in the third quarter of 2001. The swap has a $300 million notional
amount and a four-year term. Under the agreement, the Company
receives a fixed rate of 8.95% and pays a variable rate based on
LIBOR plus a margin of 4.44% set at six-month intervals (6.85%
at January 31, 2002). Any dif ferences between the amounts paid
The limited partnership is currently refinancing the $93,000 credit
facility and has signed a commitment agreement for an $85,000
mortgage secured by the property. The obligation will have a
fixed interest rate of 7.68% and a term of 18 years. The Company
expects the agreement to close in April 2002 subject to various
requirements. The dif ference between the amount outstanding
under the original credit facility and the new mortgage will be
and received on interest rate swap agreements are recognized as
funded by the Company.
adjustments to interest expense over the life of the swap. The swap
agreement qualifies as a fair value hedge and is recorded at fair
value in other liabilities.
In November 2001, the Company issued $300 million of Class A
notes backed by Nordstrom Private Label Receivables (“PL Term”).
The PL Term bears a fixed interest rate of 4.82% and has a
maturity of five years. The Company will use the proceeds for
general corporate purposes and capital expansion.
Required principal payments on long-term debt, excluding capital
lease obligations and construction loan obligations, are as follows:
Year ended January 31,
2003
2004
2005
2006
2007
Thereafter
$77,730
1,535
1,463
400,410
300,188
549,332
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Notes to Consolidated Financial Statements
Note 13: Leases
periods ranging from four to eight years, and expire ten years after
The Company leases land, buildings and equipment under
the date of grant.
noncancelable lease agreements with expiration dates ranging
In addition to option grants, the Company granted 273,864,
from 2002 to 2080. Certain leases include renewal provisions
355,072 and 272,970 performance share units in 2001, 2000
at the Company’s option. Most of the leases provide for additional
and 1999, which will vest over three years if certain financial goals
rent payments based upon specific percentages of sales and
are attained. Employees may elect to receive common stock or cash
require the Company to pay for certain common area maintenance
upon vesting of these performance shares. At January 31, 2002
and other costs.
Year ended January 31,
2002
2001
2000
Minimum rent:
Store locations
$26,951
$16,907
$18,794
Of fices, warehouses
and equipment
20,144
21,070
19,926
Percentage rent:
Store locations
8,047
9,241
7,441
Total rent expense
$55,142
$47,218
$46,161
Future minimum lease payments as of January 31, 2002 are as
follows:
Year ended January 31,
Capital
Leases
Operating
Leases
and 2001, $4,713 and $2,741 was recorded in accrued salaries,
wages and related benefits for these performance shares.
Employees who receive performance share units pay no monetary
consideration. No amounts have been paid and no common stock
has been issued in connection with this program. As of January 31,
2002, 518,189 units were outstanding.
The Company also granted 30,069 and 180,000 shares of
restricted stock in 1999 and 1998, with a weighted average fair
value of $32.09 and $27.75. In September 2000, the Company
accelerated the vesting of 144,000 shares of restricted stock
resulting in compensation expense of $3,039, and also cancelled
14,175 shares of restricted stock as a result of management
changes. In January 2002, the Company accelerated the vesting
on the remaining 9,536 unvested shares of restricted stock,
resulting in compensation expense of $193. At January 31, 2002,
$1,335
$66,940
there are no shares of unvested restricted stock.
2003
2004
2005
2006
2007
Thereafter
Total minimum lease payments
Less amount representing interest
Present value of net minimum
1,120
1,120
1,120
1,120
11,470
17,285
7,851
64,480
60,680
56,191
52,285
373,517
$674,093
lease payments
$9,434
Note 14: Stock-Based Compensation
Stock Option Plan
At January 31, 2002, approximately 7,856,298 shares are
reserved for future stock option grants pursuant to the Plan.
The Company applies Accounting Principles Board Opinion No. 25,
“Accounting for Stock Issued to Employees,” in measuring
compensation costs under its stock-based compensation programs.
Accordingly, no compensation cost has been recognized for stock
options issued under the Plan. Performance share compensation
expense is recorded over the performance period at the fair value
of the stock at the date when probable that such shares have been
earned. Restricted stock compensation expense is based on the
market price on the date of grant and is recorded over the vesting
period. Stock-based compensation expense for 2001, 2000 and
The Company has a stock option plan (“the Plan”) under which
1999 was $3,414, $6,480 and $3,331.
stock options, performance share units and restricted stock may
be granted to key employees. Stock options are issued at the fair
market value of the stock at the date of grant. Options vest over
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Stock option activity for the Nordstrom, Inc. Plan was as follows:
Year ended January 31,
2002
Weighted-
Average
Exercise
Price
2001
Weighted-
Average
Exercise
Price
Shares
Shares
Shares
Outstanding, beginning of year
8,873,342
$27
8,135,301
$28
5,893,632
Granted
Exercised
Cancelled
3,288,826
(186,165)
(1,212,110)
Outstanding, end of year
10,763,893
Options exercisable at end of year
4,533,281
19
18
25
$24
$27
2,470,169
(181,910)
(1,550,218)
8,873,342
3,833,379
21
20
28
$27
$26
2,926,368
(341,947)
(342,752)
8,135,301
3,145,393
2000
Weighted-
Average
Exercise
Price
$27
31
23
30
$28
$25
The following table summarizes information about stock options outstanding for the Nordstrom, Inc. Plan as of January 31, 2002:
Options Outstanding
Options Exercisable
Range of
Exercise Prices
Shares
$13 – $22
6,183,330
$23 – $32
2,479,733
$33 – $40
2,100,830
10,763,893
Weighted-
Average
Remaining
Contractual
L ife (Years)
8
6
7
7
Stock option activity for the Nordstrom.com 1999 and 2000 Plans were as follows:
Year ended January 31,
Outstanding, beginning of year
4,174,950
Shares
Granted
Exercised
Cancelled
41,500
—
(691,642)
Outstanding, end of year
3,524,808
Options exercisable at end of year
1,241,104
2002
Weighted-
Average
Exercise
Price
$1.72
1.92
—
1.68
$1.73
$1.68
Shares
1,373,950
3,794,931
(135,000)
(858,931)
Weighted-
Average
Exercise
Price
$19
27
36
$24
2001
Weighted-
Average
Exercise
Price
$1.67
1.73
1.67
1.68
Shares
1,671,982
1,683,022
1,178,277
4,533,281
Shares
—
1,379,950
—
(6,000)
Weighted-
Average
Exercise
Price
$20
27
35
$27
2000
Weighted-
Average
Exercise
Price
—
$1.67
—
1.67
4,174,950
$1.72
1,373,950
$1.67
703,750
$1.67
—
—
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Notes to Consolidated Financial Statements
Nordstrom.com
The Black-Scholes method was used to estimate the fair value of
Nordstrom.com has two stock option plans, the “1999 Plan” and the
the options at grant date based on the following factors:
“2000 Plan.” Vested options under the 1999 Plan are exercisable
only in the event of an initial public of fering of Nordstrom.com.
As of January 31, 2002, the weighted average contractual life for
options outstanding was 8.2 years with exercise prices ranging
from $1.67 to $1.92 per share. No compensation cost has been
recognized related to the options under the 2000 plan because the
exercise price was equal to the fair value of Nordstrom.com stock
Year ended January 31,
2002
2001
2000
Stock Options:
Risk-free interest rate
Volatility
Dividend yield
Expected life in years
4.8%
68.0%
1.3%
5.0
6.4%
65.0%
1.0%
5.0
5.7%
61.0%
1.0%
5.0
on the date of grant. The options vest over a period of two and one-
Weighted-average fair value
half to four years and must be exercised within ten years of the
at grant date
$10
$12
$17
grant date. Nordstrom.com LLC has also issued warrants to
purchase 2,176,250 common shares at an exercise price of $1.67
to its managing member, Nordstrom.com, Inc. The warrants expire
on January 31, 2012. As of January 31, 2002, warrants to purchase
135,000 common shares are exercisable.
Employee Stock Purchase Plan
In May 2000, the Company’s shareholders approved the
establishment of an Employee Stock Purchase Plan (the “ESPP”)
ESPP:
Risk-free interest rate
Volatility
Dividend yield
Expected life in years
4.3%
68.0%
1.3%
0.5
6.0%
65.0%
1.0%
0.5
Weighted-average fair value
at grant date
$5
$6
—
—
—
—
—
under which 3,500,000 shares of the Company’s common stock
For Nordstrom.com, the Company used the following weighted-
are reserved for issuance to employees. The plan qualifies as a
average assumptions:
noncompensatory employee stock purchase plan under Section
423 of the Internal Revenue Code. Employees are eligible to
participate through payroll deductions in amounts related to
their base compensation. At the end of each of fering period,
shares are purchased by the participants at 85% of the lower
Year ended January 31,
Risk-free interest rate
Volatility
Dividend yield
of the fair market value at the beginning or the end of the of fering
Expected life in years
2002
4.5%
2001
6.2%
127.0%
121.0%
0.0%
4.0
0.0%
4.0
2000
6.0%
81.0%
0.0%
4.0
period, usually six months. Under the ESPP, 541,677 and 165,842
shares were issued in 2001 and 2000. As of January 31, 2002,
payroll deductions totaling $2,641 were accrued for purchase of
Weighted-average fair value
at grant date
$1.56
$1.39
$1.05
shares on March 31, 2002.
SFAS No. 123
Note 15: Postretirement Benefits
The Company has a Supplemental Executive Retirement Plan
If the Company had elected to recognize compensation cost
("SERP"), which provides retirement benefits to certain of ficers
based on the fair value of the options and shares at grant date
and other select employees of the Company. The benefits are
as prescribed by SFAS No. 123, “Accounting for Stock-Based
unfunded and limited to a maximum of 60% of the monthly
Compensation,” net earnings and earnings per share would have
average compensation less the actuarial equivalent of any
been the pro forma amounts shown below:
monthly benefits payable under the profit sharing plan.
Year ended January 31,
2002
2001
2000
Pro forma net earnings
$107,436
$88,460
$192,916
Pro forma basic EPS
Pro forma diluted EPS
$0.80
$0.80
$0.68
$0.67
$1.40
$1.39
30 NORDSTROM INC. AND SUBSIDIARIES
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Notes to Consolidated Financial Statements
The following provides a reconciliation of benefit obligations,
Note 16: Supplementary Cash Flow Information
funded status of the SERP, as well as a summary of significant
assumptions:
January 31,
The Company capitalizes certain property, plant and equipment
during the construction period of commercial buildings which are
2002
2001
subsequently derecognized and leased back. During the year ended
Change in benefit obligation:
Benefit obligation at beginning of year
$23,543
$23,645
January 31, 2002, the noncash activity related to the derecognition
of new stores that qualified as sale and leaseback were $75,555.
630
Supplementary cash f low information includes the following:
Service cost
Interest cost
Amortization of adjustments
Change in additional minimum liability
1,092
2,668
1,821
7,308
2,044
688
(1,519)
Distributions
(2,021)
(1,945)
Benefit obligations at end of year
$34,411
$23,543
Year ended January 31,
2002
2001
2000
Cash paid during the year for:
Interest (net of
capitalized interest)
$77,025
$58,190
$54,195
Income taxes
80,689
88,911
129,566
Funded status of plan:
Under funded status
Unrecognized transitional obligation
Unrecognized prior service cost
Unrecognized loss
Accrued pension cost
Note 17: Segment Reporting
$(39,547)
$(28,964)
The Company has three reportable segments that have been
324
6,396
6,983
648
240
5,792
identified based on dif ferences in products and services of fered
and regulatory conditions: the Retail Stores, Credit Operations,
and Catalog/Internet segments. The Retail Stores segment derives
$(25,844)
$(22,284)
its revenues from sales of high-quality apparel, shoes and
Balance sheet amounts:
Additional minimum liability
$(8,567)
$(1,259)
Intangible asset
6,720
888
The components of SERP expense are as follows:
accessories. It includes the Company’s product development
group, which coordinates the design and production of private
label merchandise sold in the Company’s retail stores. The Credit
Operations segment revenues consist primarily of finance charges
earned through issuance of the Nordstrom proprietary and VISA
credit cards. The Catalog/Internet segment generates revenues
from direct mail catalogs and the Nordstrom.com website.
January 31,
Service cost
Interest cost
Amortization of adjustments
2002
2001
2000
The measurements used to compute net earnings for reportable
$1,092
2,668
1,821
$630
2,044
688
$906
segments are consistent with those used to compute net earnings
1,952
1,013
for the Company. The accounting policies of the operating
segments are the same as those described in the summary of
Total SERP expense
$5,581
$3,362
$3,871
significant accounting policies in Note 1.
Assumption percentages:
The following tables set forth the information for the Company’s
Discount rate
7.25%
Rate of compensation increase
5.00%
7.50%
5.00%
6.50%
reportable segments and a reconciliation to the consolidated totals:
5.00%
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Notes to Consolidated Financial Statements
Year ended January 31, 2002
Revenues from external
customers (b)
Service charge income
Intersegment revenues
Interest expense, net
Depreciation and amortization
Amortization of intangible assets
Income tax expense (benefit)
Net earnings (loss)
Assets (a)(b)
Intangible assets
Capital expenditures
Year ended January 31, 2001
Revenues from external
customers (b)
Service charge income
Intersegment revenues
Interest expense, net
Depreciation and amortization
Amortization of intangible assets
Income tax expense (benefit)
Net earnings (loss)
Assets (a)(b)
Intangible assets
Capital expenditures
Year ended January 31, 2000
Revenues from external customers
Service charge income
Intersegment revenues
Interest expense, net
Depreciation and amortization
Income tax expense (benefit)
Net earnings (loss)
Assets (a)
Capital expenditures
Retail
Stores
Credit
Operations
Catalog/
Internet
Corporate
and Other
Eliminations
Total
$5,356,875
—
20,204
994
182,960
4,630
150,921
235,815
2,564,375
138,331
373,909
—
$129,697
33,767
24,994
2,253
—
9,104
14,226
695,556
—
2,054
$277,255
—
—
77
5,498
—
—
(8,139)
69,457
—
2,554
—
—
—
$48,973
22,378
—
(80,225)
(117,214)
719,391
—
11,621
—
—
$(53,971)
—
—
—
—
—
—
—
—
$5,634,130
129,697
—
75,038
213,089
4,630
79,800
124,688
4,048,779
138,331
390,138
Retail
Stores
Credit
Operations
Catalog/
Internet
Corporate
and Other
Eliminations
Total
$5,217,889
—
30,294
795
176,758
1,251
165,150
258,416
2,557,616
143,473
286,941
Retail
Stores
$4,914,293
—
20,285
728
170,826
191,790
300,009
2,051,327
263,352
—
$135,121
26,889
29,267
1,786
—
13,140
20,557
703,077
—
3,095
Credit
Operations
—
$125,727
25,963
26,933
1,424
19,450
30,417
601,320
2,792
$310,648
—
—
(604)
7,552
—
—
(29,367)
68,010
—
5,187
Catalog/
Internet
$234,973
—
—
(167)
6,313
—
(35,685)
95,241
5,206
—
—
—
$33,240
16,952
—
(113,190)
(147,688)
279,800
—
26,231
Corporate
and Other
—
—
—
$22,902
15,155
(81,740)
(92,184)
314,193
33,702
—
—
$(57,183)
—
—
—
—
—
—
—
—
Eliminations
—
—
$(46,248)
—
—
—
—
—
—
$5,528,537
135,121
—
62,698
203,048
1,251
65,100
101,918
3,608,503
143,473
321,454
Total
$5,149,266
125,727
—
50,396
193,718
129,500
202,557
3,062,081
305,052
(a) Segment assets in Corporate and Other include unallocated assets in corporate headquarters, consisting primarily of land, buildings
and equipment, and deferred tax assets.
(b) Includes sales of foreign operations of $68,487 for the year ended January 31, 2002, and $12,318 for the period from October 24,
2000, the date of acquisition, to January 31, 2001, and assets of $198,689 and $206,601 as of January 31, 2002 and 2001.
32 NORDSTROM INC. AND SUBSIDIARIES
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Notes to Consolidated Financial Statements
Note 18: Restructurings, Impairments, and Other One-Time Charges
During the year ended January 31, 2000, the Company recorded
The following table provides a summary of restructuring,
impairments and other charges:
Year ended January 31,
Employee severance
Other expenses
2002
$1,791
—
Restructuring subtotal
1,791
Management severance
Asset impairment
Litigation settlement costs
—
—
—
$13,000
10,227
—
a charge of $10,000 in selling, general and administrative expenses
primarily associated with the restructuring of the Company’s
information technology services area. The charge consisted of
2001
2000
$4,053 in the disposition of several software projects under
—
—
—
$2,685
1,206
3,891
—
4,053
2,056
development, $2,685 in employee severance and $1,206 in other
miscellaneous costs. Additionally, the Company recorded $2,056
related to settlement costs for two lawsuits. The restructuring
included the termination of 50 employees in the information
technology department.
The following table presents the activity and balances of the
Total charges
$1,791
$23,227
$10,000
reserves established in connection with the restructuring charges:
During the year ended January 31, 2002, the Company
streamlined its operations through a reduction in workforce
of approximately 2,600 employees. As a result, the Company
recorded a restructuring charge of $1,791 in selling, general
and administrative expenses relating to severance for
approximately 195 employees. Personnel af fected were
primarily located in the corporate center and in full-line stores.
During the year ended January 31, 2001, the Company
Year ended January 31,
Beginning balance
Additions
Payments
Adjustments
Ending balance
2002
$178
1,7 91
2001
$1,452
2000
—
—
$3,891
(1,890)
(1,220)
(2,122)
(79)
$—
(54)
(317)
$178
$1,452
Note 19: Vulnerability Due to Certain Concentrations
recorded an impairment charge of $10,227, consisting of
Approximately 31% of the Company’s retail square footage is
$9,627 recorded in selling, general and administrative
located in the state of California. At January 31, 2002, the net
expenses and $600 in interest expense. Due to changes
book value of property located in California was approximately
in business strategy, the Company determined that several
$276,000. Accordingly, the Company carries earthquake insurance
software projects under development were either impaired or
in California with a $50,000 deductible and a $50,000 coverage
obsolete. The charges consisted of $6,542 primarily related
limit per occurrence.
to the disposition of transportation management software.
Additionally, merchandise software was written down $3,685
to its estimated fair value. During the same year, the Company
accrued and paid $13,000 for certain severance and other
costs related to a change in management.
At January 31, 2002 and 2001, approximately 40% and 41% of
the Company’s receivables were obligations of customers residing
in California. Concentration of the remaining receivables is
considered to be limited due to their geographical dispersion.
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Notes to Consolidated Financial Statements
Note 20: Nordstrom.com Put Agreement
Cosmetics. The Company was originally named as a defendant along
The holders of the minority interest of Nordstrom.com LLC,
through their ownership interests in its managing member,
Nordstrom.com, Inc., have the right to sell their shares of
Nordstrom.com, Inc. to the Company for ef fectively $80 million
in the event that certain events do not occur. This right would
terminate if the Company provides at least $100 million in
additional funding to Nordstrom.com, Inc. prior to July 1, 2002
or if Nordstrom.com, Inc. completes an initial public of fering of its
common stock prior to September 1, 2002. It is possible that the
Company will choose not to provide the $100 million in additional
funding and that Nordstrom.com, Inc. will not complete an initial
with other department store and specialty retailers in nine separate
but virtually identical class action lawsuits filed in various Superior
Courts of the State of California in May, June and July 1998 that
have now been consolidated in Marin County state court. In May
2000, plaintif fs filed an amended complaint naming a number of
manufacturers of cosmetics and fragrances and two other retailers
as additional defendants. Plaintif fs' amended complaint alleges
that the retail price of the "prestige" cosmetics sold in department
and specialty stores was collusively controlled by the retailer and
manufacturer defendants in violation of the Cartwright Act and
the California Unfair Competition Act.
public of fering on or before September 1, 2002. If and when
Plaintif fs seek treble damages and restitution in an unspecified
the Company determines that neither of those events is likely to
amount, attorneys' fees and prejudgment interest, on behalf of
occur and that the purchase of the minority interest shares is
a class of all California residents who purchased cosmetics and
probable, the Company will begin to accrete, over the period
fragrances for personal use from any of the defendants during
remaining prior to the purchase, the dif ference between that $80
the period four years prior to the filing of the amended complaint.
million and the fair value of the shares. Based on current values
Defendants, including the Company, have answered the amended
for similar businesses, management of the Company believes
complaint denying the allegations. The Company and the other
that the amount of that dif ference could range from $55,000
retail defendants have produced documents and responded to
plaintif fs' other discovery requests, including providing witnesses
for depositions. Plaintif fs have not yet moved for class
certification. Pursuant to an order of the court, plaintif fs
and defendants participated in mediation sessions in May
and September 2001.
to $65,000.
Note 21: Contingent L iabilities
The Company has been named in various lawsuits and intends to
vigorously defend itself in those cases. The Company is not in
a position at this time to quantify the amount or range of any
possible losses related to those claims. While no assurance can
be given as to the ultimate outcome of these lawsuits, based on
preliminary investigations, management currently believes that
resolving these matters will not have a material adverse ef fect
on the Company's financial position, results of operations or
cash f lows.
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Notes to Consolidated Financial Statements
Washington Public Trust Advocates. In early 2002, the Company
was named as one of 30 defendants in Washington Public Trust
Advocates, ex rel., et al. v. City of Spokane, et al., filed in the
Spokane County Superior Court, State of Washington. Plaintif f is
a not-for-profit corporation bringing claims on behalf of the City of
Spokane and the Spokane Parking Public Development Authority.
The claims relate to the River Park Square Mall and Garage Project
in Spokane, Washington (the “Project”), which includes a
Nordstrom store. The portion of the complaint applicable to the
Company seeks to recover from the Company the amount of a
Department of Housing and Urban Development loan made to
the developer of the Project. Damages are sought in the amount
of $22.75 million, or a lesser amount to the extent that the HUD
loan proceeds were used for the construction of the store and not
as tenant improvements. Other portions of the complaint seek
to invalidate bonds issued to finance the public parking garage
serving the Project, terminate the lease of the parking garage
by the City of Spokane, and rescind other agreements between
the City of Spokane and the developer of the Project, as well
as damages from the developer of the Project in unspecified
amounts. The Complaint also alleges breach of fiduciary duties
by various defendants, including the Company, to the people
of the City of Spokane regarding lack of disclosures concerning
the developer and the Project. Unspecified damages are sought
for this cause of action. The lawsuit was recently filed, the
Company has not answered, and no discovery has commenced.
Other. The Company is also subject to other ordinary routine
litigation incidental to its business and with respect to which
no material liability is expected.
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Notes to Consolidated Financial Statements
Note 22: Selected Quarterly Data (unaudited)
Year ended January 31, 2002
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Total
Net sales
Gross profit
Earnings before income taxes
Net earnings
Basic earnings per share
Diluted earnings per share
Dividends per share
Common stock price
High
Low
$1,218,040
$1,545,759
$1,239,241
$1,631,090
$5,634,130
504,851
402,280
541,530
1,868,271
419,610
40,555
24,755
.18
.18
.09
21.17
15.60
63,499
38,699
.29
.29
.09
22.75
17.00
17,095
10,495
.08
.08
.09
22.97
13.80
83,339
50,739
.38
.38
.09
25.50
14.25
204,488
124,688
.93
.93
.36
25.50
13.80
Total
Year ended January 31, 2001
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Net sales
Gross profit
Write-down of investment
Earnings before income taxes
Net earnings
Basic earnings per share
Diluted earnings per share
Dividends per share
Common stock price
High
Low
$1,153,377
$1,457,035
$1,262,390
$1,655,735
$5,528,537
407,722
—
53,689
32,789
.25
.25
.08
34.50
18.25
502,722
(10,540)
74,501
45,401
.35
.35
.09
30.00
16.56
438,522
(20,655)
(5,520)
(3,320)
(.03)
(.03)
.09
19.50
14.19
530,055
1,879,021
(1,662)
44,348
27,048
.20
.20
.09
21.00
14.88
(32,857)
167,018
101,918
.78
.78
.35
34.50
14.19
36 NORDSTROM INC. AND SUBSIDIARIES
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550
Independent Auditors’ and Management Report
Independent Auditors’ Report
Management Report
We have audited the accompanying consolidated balance
Management is responsible for preparing the Company’s
sheets of Nordstrom, Inc. and subsidiaries (the “Company”)
financial statements and the other information that appears
as of January 31, 2002 and 2001, and the related consolidated
in the annual report. The financial statements have been
statements of earnings, shareholders’ equity and cash f lows for
prepared in accordance with accounting principles generally
each of the three years in the period ended January 31, 2002.
accepted in the United States of America and include estimates
These financial statements are the responsibility of the Company’s
based on management’s best judgment.
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
The Company maintains a comprehensive system of internal
controls and procedures designed to provide reasonable
We conducted our audits in accordance with auditing standards
assurance that assets are safeguarded and transactions are
generally accepted in the United States of America. Those
executed in accordance with established procedures.
standards require that we plan and perform the audit to obtain
The concept of reasonable assurance is based on the recognition
reasonable assurance about whether the financial statements
that the cost of maintaining the system of internal accounting
are free of material misstatement. An audit includes examining,
controls should not exceed the benefit derived from the system.
on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the accompanying consolidated financial
statements present fairly, in all material respects, the financial
position of Nordstrom, Inc. and subsidiaries as of January 31, 2002
and 2001, and the results of their operations and their cash f lows
for each of the three years in the period ended January 31, 2002,
in conformity with accounting principles generally accepted in the
United States of America.
Deloitte and Touche LLP audits the Company’s financial
statements in accordance with auditing standards generally
accepted in the United States of America and provides an
objective, independent review of the Company’s internal controls
and the fairness of its reported financial condition and results
of operations.
The Audit Committee, which is comprised of five independent
directors, meets periodically with management and the
independent auditors to ensure that each is properly fulfilling its
responsibilities. The Committee oversees the Company’s systems
of internal control, accounting practices, financial reporting and
audits to ensure their quality, integrity and objectivity are
suf ficient to protect shareholders’ investments.
Deloitte & Touche LLP
Seattle, Washington
March 25, 2002
Michael G. Koppel
Executive Vice President and Chief Financial Of ficer
NORDSTROM INC. AND SUBSIDIARIES 37
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Eleven-Year Statistical Summary
Dollars in thousands except square footage and per share amounts
Year ended January 31,
Financial Position
Customer accounts receivable, net
Merchandise inventories
Current assets
Current liabilities
Working capital
Working capital ratio
Land, buildings and equipment, net
Long-term debt, including current portion
Debt/capital ratio
Shareholders’ equity
Shares outstanding
Book value per share
Total assets
Operations
Net sales
Gross profit
2002
2001
2000
1999
$677,150
888,172
$699,687
945,687
$596,020
$567,661
797,845
750,269
2,054,598
1,812,982
1,564,648
1,668,689
947,738
1,106,860
2.17
1,761,082
1,429,271
.5209
950,568
862,414
1.91
1,599,938
1,112,296
.4929
866,509
698,139
1.81
794,490
874,199
2.10
1,429,492
1,378,006
804,982
868,234
.4249
.4214
1,314,488
1,229,568
1,185,614
1,300,545
134,468,608
133,797,757
132,279,988
142,114,167
9.78
9.19
8.96
9.15
4,048,779
3,608,503
3,062,081
3,103,689
5,634,130
1,868,271
5,528,537
1,879,021
5,149,266
5,049,182
1,789,506
1,704,237
Selling, general and administrative
(1,722,635)
(1,747,048)
(1,523,836)
(1,429,837)
Operating income
Interest expense, net
Write-down of investment
Service charge income and other, net
Earnings before income taxes
Income taxes
Net earnings
Basic earnings per share
Diluted earnings per share
Dividends per share
Comparable store sales percentage increase (decrease)
Net earnings as a percent of net sales
Return on average shareholders’ equity
Sales per square foot for Company-operated stores
145,636
(75,038)
—
133,890
204,488
(79,800)
124,688
.93
.93
.36
(2.9%)
2.21%
9.80%
321
131,973
(62,698)
(32,857)
130,600
167,018
(65,100)
101,918
.78
.78
.35
.3%
1.84%
8.44%
342
265,670
274,400
(50,396)
(47,091)
—
116,783
332,057
—
110,414
337,723
(129,500)
(131,000)
202,557
206,723
1.47
1.46
.32
(1.1%)
3.93%
16.29%
350
1.41
1.41
.30
(2.7%)
4.09%
14.98%
362
Stores
Total square footage
156
140
104
97
17,048,000
16,056,000
14,487,000
13,593,000
38 NORDSTROM INC. AND SUBSIDIARIES
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1998
1997
1996
1995
1994
1993
1992
$641,862
826,045
$693,123
719,919
1,613,492
1,549,819
979,031
634,461
1.65
795,321
754,498
1.95
$874,103
626,303
1,612,776
833,443
779,333
1.94
1,252,513
1,152,454
1,103,298
420,865
.3194
380,632
.2720
439,943
.3232
$655,715
$565,151
$584,379
$585,490
627,930
585,602
536,739
1,397,713
1,314,914
1,219,844
693,015
704,698
2.02
984,195
373,910
.2575
631,064
683,850
2.08
845,596
438,574
.2934
516,397
703,447
2.36
824,142
481,945
.3337
506,632
1,177,638
558,768
618,870
2.11
856,404
491,076
.4029
927,465
1,458,950
1,457,084
1,408,053
1,330,437
1,153,594
1,038,649
152,518,104
159,269,954
162,226,288
164,488,196
164,118,256
163,949,594
163,688,454
9.57
9.15
8.68
8.09
7.03
6.34
5.67
2,890,664
2,726,495
2,732,619
2,396,783
2,177,481
2,053,170
2,041,875
4,864,604
1,568,791
4,457,931
1,378,472
4,113,717
1,310,931
3,895,642
3,591,228
1,297,018
1,121,539
3,415,613
1,079,608
3,174,822
1,007,554
(1,338,235)
(1,232,860)
(1,136,069)
(1,029,856)
(940,708)
(901,446)
230,556
(34,250)
—
110,907
307,213
(121,000)
186,213
1.20
1.20
.265
4.0%
3.83%
12.77%
384
145,612
(39,400)
—
135,331
241,543
(95,227)
146,316
.90
.90
.25
0.6%
3.28%
10.21%
377
174,862
(39,295)
—
134,179
269,746
(106,190)
163,556
1.00
1.00
.25
(0.7%)
3.98%
11.94%
382
267,162
(30,664)
—
98,311
334,809
(132,304)
202,505
1.23
1.23
.1925
4.4%
5.20%
16.30%
395
180,831
(37,646)
—
88,509
231,694
(90,804)
140,890
.86
.86
.17
2.7%
3.92%
12.85%
383
178,162
(44,810)
—
86,140
219,492
(84,489)
135,003
.82
.82
.16
1.4%
3.95%
13.73%
381
(831,005)
176,549
(49,106)
—
87,443
214,886
(80,527)
134,359
.82
.82
.155
1.4%
4.23%
15.41%
388
92
83
78
76
74
72
68
12,614,000
11,754,000
10,713,000
9,998,000
9,282,000
9,224,000
8,590,000
NORDSTROM INC. AND SUBSIDIARIES 39
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Officers of the Corporation and Executive Team
Officers of the Corporation
Michael G. Koppel, 45
James R. O'Neal, 43
Jammie Baugh, 49
Executive Vice President,
Human Resources
MEMBER OF EXECUTIVE TEAM
Laurie M. Black, 43
Executive Vice President and
President, Nordstrom Rack
MEMBER OF EXECUTIVE TEAM
Mark S. Brashear, 40
Executive Vice President and
President, Façonnable, S.A.S.
Dale Cameron, 53
Executive Vice President,
Corporate Merchandise Manager, Cosmetics
Full-line Stores
Executive Vice President and
Executive Vice President and
Chief Financial Of ficer
MEMBER OF EXECUTIVE TEAM
President, Nordstrom Product Group
MEMBER OF EXECUTIVE TEAM
L lynn (Len) A. Kuntz, 41
Suzanne R. Patneaude, 55
Executive Vice President,
WA/AK Regional Manager
Full-line Stores
Vice President, Corporate
Merchandise Manager, Designer/ Savvy
Full-line Stores
David P. L indsey, 52
R. Michael Richardson, 45
Vice President, Store Planning
Vice President and
David L. Mackie, 53
Vice President, Real Estate
and Legal Affairs
Robert J. Middlemas, 45
Executive Vice President,
Chief Information Of ficer
Karen Bowman Roesler, 46
Vice President, Marketing
Nordstrom Credit Group
K.C. (Karen) Shaf fer, 48
Central States Regional Manager
Executive Vice President,
Robert E. Campbell, 46
Full-line Stores
Nordstrom Rack NW Regional Manager
Vice President, Strategy and Planning,
Treasurer
N. Claire Chapman, 41
Corporate Secretary
L inda Toschi Finn, 54
MEMBER OF EXECUTIVE TEAM
Bonnie M. Junell, 45
Vice President,
Jack H. Minuk, 47
Vice President,
Joel T. Stinson, 52
Executive Vice President and
Corporate Merchandise Manager,
Chief Administrative Of ficer
Women’s Shoes
Full-line Stores
President
MEMBER OF EXECUTIVE TEAM
Delena M. Sunday, 41
Executive Vice President,
Diversity Af fairs
MEMBER OF EXECUTIVE TEAM
MEMBER OF EXECUTIVE TEAM
Bruce A. Nordstrom, 68
Geevy S.K. Thomas, 37
Executive Vice President, Marketing
Blake W. Nordstrom, 41
Corporate Merchandise Manager,
Chairman of the Board of Directors
Executive Vice President,
Point of View, Narrative
Full-line Stores
Kevin T. Knight, 46
Executive Vice President, Chairman and
Chief Executive Of ficer of Nordstrom fsb,
President of Nordstrom Credit, Inc.
MEMBER OF EXECUTIVE TEAM
Erik B. Nordstrom, 38
Executive Vice President,
Full-line Stores
Peter E. Nordstrom, 40
Executive Vice President and
President, Full-line Stores
MEMBER OF EXECUTIVE TEAM
South Regional Manager
Full-line Stores
Additional Member of Nordstrom, Inc.
Executive Team
J. Daniel Nordstrom, 39
Chief Executive Of ficer, Nordstrom.com
40 NORDSTROM INC. AND SUBSIDIARIES
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Board of Directors and Committees
Committees
Executive
John A. McMillan
Bruce A. Nordstrom
John N. Nordstrom
Corporate Governance
and Nominating
D. Wayne Gittinger, Chair
Enrique Hernandez, Jr.
Alfred E. Osborne, Jr.
William D. Ruckelshaus
Audit
Enrique Hernandez, Jr.
Alfred E. Osborne, Jr.
William D. Ruckelshaus
Bruce G. Willison, Chair
Alison A. Winter
Compensation
and Stock Options
Enrique Hernandez, Jr.
Alfred E. Osborne, Jr.
William D. Ruckelshaus, Chair
Alison A. Winter
Finance
D. Wayne Gittinger
Enrique Hernandez, Jr.
John A. McMillan
John N. Nordstrom
Alfred E. Osborne, Jr., Chair
Bruce G. Willison
FIRST ROW
D. Wayne Gittinger, 69
Partner, Lane Powell Spears Lubersky LLP
Seattle, Washington
Enrique Hernandez, Jr., 46
President and CEO,
Inter-Con Security Systems, Inc.
Pasadena, California
John A. McMillan, 70
Retired Co-Chairman of
the Board of Directors
Seattle, Washington
SECOND ROW
Bruce A. Nordstrom, 68
Chairman of the Board of Directors
Seattle, Washington
John N. Nordstrom, 65
Retired Co-Chairman of
the Board of Directors
Seattle, Washington
Alfred E. Osborne, Jr., 57
Director of the Harold Price Center
for Entrepreneurial Studies and
Associate Professor of Business Economics,
The Anderson School at UCLA
Los Angeles, California
THIRD ROW
William D. Ruckelshaus, 69
A Strategic Director,
Madrona Venture Group
Seattle, Washington
Bruce G. Willison, 53
Dean, The Anderson School at UCLA
Los Angeles, California
Alison A. Winter, 55
Executive Vice President for
Midwest Personal Financial Services,
The Northern Trust Corporation
Chicago, Illinois
NORDSTROM INC. AND SUBSIDIARIES 41
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Retail Store Facilities open at January 31, 2002
Redondo Beach
The Galleria at South Bay
Location
Southwest Group
Arizona
Chandler
Scottsdale
California
Arcadia
Brea
Canoga Park
Cerritos
Corte Madera
Costa Mesa
Escondido
Glendale
Los Angeles
Mission Viejo
Montclair
Palo Alto
Pleasanton
Riverside
Roseville
Sacramento
San Diego
San Diego
San Diego
San Francisco
San Francisco
San Jose
San Mateo
Santa Ana
Santa Barbara
Walnut Creek
East Coast Group
Connecticut
Farmington
Florida
Boca Raton
Tampa
Georgia
Atlanta
Buford
Store Name
Store Square
Footage
Chandler Fashion Center
149,000
Scottsdale Fashion Square
235,000
Santa Anita
Brea Mall
Topanga
Los Cerritos Center
The Village at Corte Madera
151,000
195,000
154,000
122,000
116,000
Location
Maryland
Annapolis
Bethesda
Columbia
Towson
New Jersey
Edison
Freehold
Paramus
Short Hills
South Coast Plaza
235,000
New York
North County
156,000
Garden City
Glendale Galleria
147,000
White Plains
Store Name
Store Square
Footage
Annapolis Mall
162,000
Montgomery Mall
225,000
The Mall in Columbia
173,000
Towson Town Center
205,000
Menlo Park
266,000
Freehold Raceway Mall
174,000
Garden State Plaza
282,000
The Mall at Short Hills
188,000
Roosevelt Field
The Westchester
241,000
219,000
Westside Pavilion
The Shops at Mission Viejo
Montclair Plaza
Stanford Shopping Center
Stoneridge Mall
The Galleria at Tyler in Riverside
Galleria at Roseville
Arden Fair
150,000
172,000
134,000
187,000
173,000
161,000
164,000
149,000
190,000
Fashion Valley Center
220,000
Horton Plaza
University Towne Centre
Stonestown Galleria
San Francisco Shopping Centre
Valley Fair
Hillsdale Shopping Center
MainPlace/Santa Ana
Paseo Nuevo
Broadway Plaza
151,000
130,000
174,000
350,000
232,000
149,000
169,000
186,000
193,000
Westfarms
189,000
Town Center at Boca Raton
International Plaza
193,000
172,000
Perimeter Mall
243,000
Mall of Georgia
172,000
Pennsylvania
King of Prussia
The Plaza at King of Prussia
238,000
Rhode Island
Providence
Virgina
Arlington
McLean
Norfolk
Central States
Illinois
Chicago
Oak Brook
Schaumburg
Skokie
Indiana
Indianapolis
Kansas
Overland Park
Michigan
Troy
Minnesota
Bloomington
Ohio
Beachwood
Columbus
Providence Place
206,000
The Fashion Centre at Pentagon City
241,000
Tysons Corner Center
253,000
MacArthur Center
166,000
Michigan Avenue
271,000
Oakbrook Center
249,000
Woodfield Shopping Center
215,000
Old Orchard Center
209,000
Circle Centre
216,000
Oak Park Mall
219,000
Somerset Collection
258,000
Mall of America
240,000
Beachwood Place
Easton Town Center
231,000
174,000
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Location
Texas
Dallas
Frisco
Hurst
Northwest Group
Alaska
Anchorage
Colorado
Broomfield
L ittleton
Oregon
Portland
Portland
Portland
Salem
Tigard
Utah
Murray
Salt Lake City
Washington
Bellevue
Lynnwood
Seattle
Seattle
Spokane
Tacoma
Tukwila
Vancouver
Other
Honolulu, HI
Honolulu, HI
Façonnable
Façonnable
Nordstrom Rack Group
Chandler, AZ
Phoenix, AZ
Scottsdale, AZ
Brea, CA
Chino, CA
Colma, CA
Store Name
Store Square
Footage
Location
Store Name
Store Square
Footage
Dallas Galleria
249,000
Glendale, CA
Glendale Fashion Center Rack
Costa Mesa, CA
Metro Pointe Rack
Stonebriar Centre
North East Mall
149,000
149,000
Los Angeles, CA
The Promenade at Howard
Hughes Center Rack
Oxnard, CA
Roseville, CA
Esplanade Shopping Center Rack
Creekside Town Center Rack
Sacramento, CA
Howe ‘Bout Arden Center Rack
Anchorage
97,000
San Diego, CA
FlatIron Crossing
172,000
Park Meadows
245,000
Clackamas Town Center
121,000
Downtown Portland
L loyd Center
Salem Center
174,000
150,000
71,000
Washington Square
189,000
Fashion Place
Crossroads Plaza
110,000
140,000
Bellevue Square
285,000
Alderwood Mall
127,000
Downtown Seattle
383,000
Northgate
Spokane
Tacoma Mall
Southcenter
Vancouver Mall
122,000
137,000
134,000
170,000
71,000
San Francisco, CA
San Jose, CA
San Leandro, CA
Woodland Hills, CA
L ittleton, CO
Broomfield, CO
Buford, GA
Honolulu, HI
Northbrook, IL
Oak Brook, IL
Schaumburg, IL
Gaithersburg, MD
*Silver Spring, MD
Towson, MD
Grand Rapids, MI
Troy, MI
Bloomington, MN
Las Vegas, NV
Westbury, NY
Beaverton, OR
Clackamas, OR
Portland, OR
Mission Valley Rack
555 Ninth Street
Retail Center Rack
Westgate Mall Rack
San Leandro Rack
Topanga Rack
Meadows Marketplace Rack
Flatiron Marketplace Rack
Mall of Georgia Crossing Rack
Victoria Ward Center Rack
Northbrook Rack
The Shops at Oak Brook
Place Rack
Woodfield Rack
Gaithersburg Rack
City Place Rack
Towson Rack
Centerpointe Mall Rack
Troy Marketplace Rack
Mall of America Rack
Silverado Ranch Plaza Rack
The Mall at the Source Rack
Tanasbourne Town Center Rack
Clackamas Promenade Rack
Downtown Portland Rack
Women’s Ala Moana Shoes
Men’s Ala Moana Shoes
U.S. (4 boutiques)
International (24 boutiques)
Chandler Festival Rack
Last Chance
The Promenade Rack
Brea Union Plaza Rack
Chino Marketplace Rack
Colma Rack
14,000
8,000
40,000
81,000
37,000
48,000
38,000
45,000
30,000
31,000
Philadelphia, PA
Franklin Mills Mall Rack
Hurst, TX
Plano, TX
The Shops at North East Mall Rack
Preston Shepard Place Rack
Salt Lake City, UT
Sugarhouse Rack
Dulles, VA
Woodbridge, VA
Auburn, WA
Bellevue, WA
Lynnwood, WA
Seattle, WA
Spokane, WA
Dulles Town Crossing Rack
Potomac Mills Rack
SuperMall of the Great
Northwest Rack
Factoria Mall Rack
Golde Creek Plaza Rack
Downtown Seattle Rack
NorthTown Mall Rack
50,000
36,000
41,000
38,000
36,000
54,000
57,000
43,000
48,000
44,000
64,000
34,000
36,000
44,000
34,000
40,000
42,000
45,000
49,000
37,000
31,000
40,000
40,000
41,000
33,000
48,000
53,000
28,000
19,000
43,000
40,000
39,000
31,000
41,000
46,000
48,000
46,000
38,000
42,000
28,000
* Store closed January 21, 2002, however it has been treated as open for the full year.
NORDSTROM INC. AND SUBSIDIARIES 43
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Shareholder Information
Independent Auditors
Deloitte & Touche LLP
Counsel
Lane Powell Spears Lubersky LLP
Transfer Agent and Registrar
Mellon Investor Services LLC
P.O. Box 3315
South Hackensack, New Jersey 07606
Telephone (800) 318-7045
TDD for Hearing Impaired (800) 231-5469
Foreign Shareholders (201) 329-8660
TDD Foreign Shareholders (201) 329-8354
General Of fices
1617 Sixth Avenue
Seattle, Washington 98101-1742
Telephone (206) 628-2111
Annual Meeting
May 21, 2002 at 11:00 a.m.
Pacific Daylight Time
Nordstrom Downtown Seattle Store
John W. Nordstrom Room, fifth f loor
1617 Sixth Avenue
Seattle, Washington 98101-1742
Form 10-K
The Company's annual report on Form 10-K
for the year ended January 31, 2002 will be
provided to shareholders upon written request to:
Nordstrom, Inc. Investor Relations
P.O. Box 2737
Seattle, Washington 98111
Or by calling (206) 303-3200
Shareholder Information
Please visit www.nordstrom.com to obtain shareholder information.
In addition, the Company is always willing to discuss matters of
concern to shareholders, including its vendor standards compliance
mechanisms and progress in achieving compliance.
44 NORDSTROM INC. AND SUBSIDIARIES
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2001 Annual Report • VERSION
8.375 x 10.875 • SCITEX • 175 lpi • Kodak 80# Cougar
Full Color + 550pms + Var
OBC
Varn
pms
550
Cyan
Mag
Yelo
Blk