<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended January 31, 1996
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number 0-6074
Nordstrom, Inc.
______________________________________________________
(Exact name of Registrant as specified in its charter)
Washington 91-0515058
_______________________________ __________________
(State or other jurisdiction of (IRS employer
incorporation or organization) Identification No.)
1501 Fifth Avenue, Seattle, Washington 98101
______________________________________________________
(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code: 206-628-2111
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, without par value
____________________________________
(Title of class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES /X/ NO / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. /X/
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<PAGE>
On March 19, 1996, 81,294,822 shares of common stock were outstanding, and
the aggregate market value of those shares (based upon the closing price as
reported by NASDAQ) held by non-affiliates was approximately $2.5 billion.
Documents Incorporated by Reference:
Portions of Nordstrom, Inc. 1995 Annual Report to Shareholders
(Parts I, II and IV)
Portions of Proxy Statement for 1996 Annual Meeting of Shareholders
(Part III)
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<PAGE>
PART I
Item 1. Business.
- ------------------
Nordstrom, Inc. (the "Company") was incorporated in the State of Washington in
1946 as successor to a retail shoe business started in 1901. As of January 31,
1996, the Company operates 58 large specialty stores in Alaska, California,
Illinois, Indiana, Maryland, Minnesota, New Jersey, New York, Oregon, Utah,
Virginia, and Washington, selling a wide selection of apparel, shoes and
accessories for women, men and children.
The Company also operates eighteen stores under the name "Nordstrom Rack" and
one clearance store which serve as outlets for clearance merchandise from the
Company's large specialty stores. The Racks also purchase merchandise
directly from manufacturers. The Racks are located in California, Illinois,
Maryland, Oregon, Pennsylvania, Utah, Virginia, and Washington.
The Company also operates a men's specialty store in New York and leased shoe
departments in twelve department stores in Hawaii and Guam. In addition, the
Company operates a Direct Sales Division which commenced operations in January
1994 with the mailing of its first catalog.
In March 1996, the Company opened two new large specialty stores in King of
Prussia, Pennsylvania and Dallas, Texas, and will open a Rack in Northbrook,
Illinois in April, and two additional stores in Troy, Michigan and Denver,
Colorado, in August to complete the Company's planned new store opening
schedule for 1996. In 1997, three large specialty stores are planned to open
in Long Island, New York; West Hartford, Connecticut and Beachwood, Ohio, and
a Rack is planned to open in Bellevue, Washington.
The Company regularly employs on a full or part-time basis an average of
approximately 37,000 employees. Due to the seasonal nature of the Company's
business, the number increased to approximately 43,500 employees in July for
the Company's anniversary sale, and in December for the Christmas selling
season.
The Company's business is highly competitive. Its stores compete with other
national, regional and local retail establishments within its operating areas
which carry similar lines of merchandise, including department stores,
specialty stores, boutiques and mail order businesses. The Company
believes the principal methods of competing in its industry include customer
service, value, fashion, advertising, store location and depth of selection.
Certain other information required under Item 1 is contained within the
following sections of the Company's 1995 Annual Report to Shareholders, which
sections are incorporated by reference herein from Exhibit 13.1 of this
report:
Management Discussion and Analysis
Note 1 in Notes to Consolidated Financial Statements
Note 12 in Notes to Consolidated Financial Statements
Retail Store Facilities
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<PAGE>
Executive Officers of the Registrant
- ------------------------------------
<TABLE>
<CAPTION>
Officer
Name Age Title Since Family Relationship
- -------------------- --- ----------------- ------- -------------------
<S> <C> <C> <C> <C>
Jammie Baugh 42 Executive Vice 1990 None
President
Gail A. Cottle 44 Executive Vice 1985 None
President
Joseph V. Demarte 44 Vice President 1990 None
John A. Goesling 50 Executive Vice 1980 None
President and Treasurer
Jack F. Irving 51 Executive Vice 1980 None
President
Raymond A. Johnson 54 Co-Chairman of the 1976 None
Board of Directors
Blake W. Nordstrom 35 Co-President 1991 Brother of Erik B. and
Peter E. Nordstrom
Erik B. Nordstrom 32 Co-President 1995 Brother of Blake W. and
Peter E. Nordstrom
J. Daniel Nordstrom 33 Co-President 1995 Brother of William E.
Nordstrom
James A. Nordstrom 34 Co-President 1991 Cousin of J. Daniel and
William E. Nordstrom
Peter E. Nordstrom 33 Co-President 1995 Brother of Blake W. and
Erik B. Nordstrom
William E. Nordstrom 32 Co-President 1995 Brother of J. Daniel
Nordstrom
Cynthia C. Paur 45 Executive Vice 1983 None
President
John C. Walgamott 50 President of 1991 None
Nordstrom Credit, Inc.
and Nordstrom National
Credit Bank
John J. Whitacre 43 Co-Chairman of the 1989 None
Board of Directors
<FN>
All of the above people that have not been officers for the past five years
have been full-time employees of the Company during that period. The officers
are re-elected annually by the Board of Directors following each year's Annual
Meeting. Each officer is elected for a term of one year and until a successor
is elected and qualifies.
</TABLE>
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<PAGE>
Item 2. Properties.
- --------------------
<TABLE>
The following table summarizes at January 31, 1996 the number of stores owned
or operated by the Company and the percentage of total store area represented
by each listed category:
<CAPTION>
Number of % of total store
stores square footage
--------- ----------------
<S> <C> <C>
Owned Stores 20 26%
Leased Stores 29 20
Owned on leased land 26 49
Partly owned & partly leased 3 5
--------- ----------------
78 100%
========= ================
</TABLE>
The Company also operates seven merchandise distribution centers, five of
which are owned and two of which are leased. The Company leases its principal
offices in Seattle, Washington, and owns an office building in the Denver,
Colorado metropolitan area which serves as the principal offices of Nordstrom
Credit, Inc. and Nordstrom National Credit Bank.
Certain other information required under this item is included in the
following sections of the Company's 1995 Annual Report to Shareholders, which
sections are incorporated by reference herein from Exhibit 13.1 of this
report:
Note 6 in Notes to Consolidated Financial Statements
Retail Store Facilities
Item 3. Legal Proceedings.
- ---------------------------
The Company is not involved in any material pending legal proceedings, other
than routine litigation in the ordinary course of business.
Item 4. Submission of Matters to a Vote of Security Holders.
- -------------------------------------------------------------
None
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<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters.
- ----------------------------------------------------------------------
The Company's Common Stock, without par value, is traded in the over-the-
counter market and is quoted daily by NASDAQ. The approximate number of
holders of Common Stock as of March 19, 1996 was 72,600.
Certain other information required under this Item with respect to stock
prices and dividends is included in the following sections of the Company's
1995 Annual Report to Shareholders, which sections are incorporated by
reference herein from Exhibit 13.1 of this report:
Financial Highlights
Stock Trading
Consolidated Statements of Shareholders' Equity
Note 8 in Notes to Consolidated Financial Statements
Note 13 in Notes to Consolidated Financial Statements
Item 6. Selected Financial Data.
- ---------------------------------
The information required under this item is included in the following section
of the Company's 1995 Annual Report to Shareholders, which section is
incorporated by reference herein from Exhibit 13.1 of this report:
Ten-Year Statistical Summary
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
- ------------------------------------------------------------------------
The information required under this item is included in the following section
of the Company's 1995 Annual Report to Shareholders, which section is
incorporated by reference herein from Exhibit 13.1 of this report:
Management Discussion and Analysis
Item 8. Financial Statements and Supplementary Data.
- -----------------------------------------------------
The information required under this item is included in the following sections
of the Company's 1995 Annual Report to Shareholders, which sections are
incorporated by reference herein from Exhibit 13.1 of this report:
Consolidated Statements of Earnings
Consolidated Balance Sheets
Consolidated Statements of Shareholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditors' Report
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<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
- ------------------------------------------------------------------------
None
PART III
Item 10. Directors and Executive Officers of the Registrant.
- ------------------------------------------------------------
The information required under this item with respect to the Company's
Directors and compliance with Section 16(a) of the Exchange Act is included in
the following sections of the Company's Proxy Statement for its 1996 Annual
Meeting of Shareholders, which sections are incorporated by reference herein
and will be filed within 120 days after the end of the Company's fiscal year:
Election of Directors
Compliance with Section 16(a) of the Exchange Act of 1934
The information required under this item with respect to the Company's
Executive Officers is incorporated by reference from Part I, Item 1 of this
report under "Executive Officers of the Registrant".
Item 11. Executive Compensation.
- --------------------------------
The information required under this item is included in the following sections
of the Company's Proxy Statement for its 1996 Annual Meeting of Shareholders,
which sections are incorporated by reference herein and will be filed within
120 days after the end of the Company's fiscal year:
Compensation of Executive Officers in the Year Ended
January 31, 1996
Compensation and Stock Option Committee Report on Fiscal Year
1995 Executive Compensation
Stock Price Performance
Compensation of Directors
Compensation Committee Interlocks and Insider Participation
Item 12. Security Ownership of Certain Beneficial Owners and Management.
- ------------------------------------------------------------------------
The information required under this item is included in the following section
of the Company's Proxy Statement for its 1996 Annual Meeting of Shareholders,
which section is incorporated by reference herein and will be filed within
120 days after the end of the Company's fiscal year:
Principal Shareholders
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<PAGE>
Item 13. Certain Relationships and Related Transactions.
- --------------------------------------------------------
The information required under this item is included in the following sections
of the Company's Proxy Statement for its 1996 Annual Meeting of Shareholders,
which sections are incorporated by reference herein and will be filed within
120 days after the end of the Company's fiscal year:
Election of Directors
Compensation Committee Interlocks and Insider Participation
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
- --------------------------------------------------------------------------
(a)1. Financial Statements
--------------------
The following consolidated financial information and statements of
Nordstrom, Inc. and its subsidiaries and the Independent Auditors' Report are
incorporated by reference herein from Exhibit 13.1 of this report:
Consolidated Statements of Earnings
Consolidated Balance Sheets
Consolidated Statements of Shareholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditors' Report
(a)2. Financial Statement Schedules
-----------------------------
Page
----
Independent Auditors' Consent and Report on Schedule 13
II - Valuation and Qualifying Accounts 14
Other schedules for which provision is made in Regulation S-X are not
required, are inapplicable, or the information is included in the
Company's 1995 Annual Report to Shareholders as incorporated by
reference herein from Exhibit 13.1 of this report.
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<PAGE>
(a)3. Exhibits
--------
(3.1) Articles of Incorporation of the Registrant are hereby
incorporated by reference from the Registrant's Form 10-K for the
year ended January 31, 1990, Exhibit A.
(3.2) By-laws of the Registrant, as amended, are filed herein as an
Exhibit.
(4.1) The Indenture between Nordstrom Credit, Inc. (a wholly-owned
subsidiary of the Registrant) and First Interstate Bank of
Denver, N.A., as successor trustee, dated November 15, 1984, the
First Supplement thereto dated January 15, 1988, the Second
Supplement thereto dated June 1, 1989 and the Third Supplement
thereto dated October 19, 1990 are hereby incorporated by
reference from Registration No. 33-3765, Exhibit 4.2; Registration
No. 33-19743, Exhibit 4.2; Registration No. 33-29193, Exhibit 4.3;
and the Nordstrom Credit, Inc. Annual Report on Form 10-K (SEC
File No. 0-12994) for the year ended January 31, 1991, Exhibit
4.2, respectively.
Securities authorized under each of any other long-term debt
instruments of the Company or its subsidiaries do not exceed 10%
of the consolidated total assets of the Company and its
subsidiaries. The Company will furnish a copy of any such long-
term debt instrument or agreement to the Commission upon request.
(4.2) Trustee Resignation of First Interstate Bank of Washington, N.A.
dated March 13, 1995 is hereby incorporated by reference from the
Registrant's Form 10-K for the year ended January 31, 1995,
Exhibit 4.2.
(4.3) Trustee Acceptance of First Interstate Bank of Denver, N.A. dated
March 13, 1995 is hereby incorporated by reference from the
Registrant's Form 10-K for the year ended January 31, 1995,
Exhibit 4.3.
(10.1) Operating Agreement dated August 30, 1991 between Nordstrom
Credit, Inc. and Nordstrom National Credit Bank is hereby
incorporated by reference from the Nordstrom Credit, Inc.
Quarterly Report on Form 10-Q (SEC File No. 0-12994) for the
quarter ended July 31, 1991, Exhibit 10.1, as amended.
(10.2) Merchant Agreement dated August 30, 1991 between Registrant and
Nordstrom National Credit Bank is hereby incorporated by reference
from the Registrant's Quarterly Report on Form 10-Q for the
quarter ended July 31, 1991, Exhibit 10.1.
(10.3) The 1987 Nordstrom Stock Option Plan is hereby incorporated by
reference from the Registrant's Proxy Statement for the 1987
Annual Meeting of Shareholders.
(10.4) The Nordstrom Supplemental Retirement Plan is hereby incorporated
by reference from the Registrant's Form 10-K for the year ended
January 31, 1993, Exhibit 10.3.
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<PAGE>
(a)3. Exhibits (continued)
--------------------
(10.5) The 1993 Non-Employee Director Stock Incentive Plan is hereby
incorporated by reference from the Registrant's Form 10-K for the
year ended January 31, 1994, Exhibit 10.4.
(10.6) Investment Agreement dated October 8, 1984 between the Registrant
and Nordstrom Credit, Inc. is hereby incorporated by reference
from the Nordstrom Credit, Inc. Form 10, Exhibit 10.1.
(10.7) Operating Agreement for VISA Accounts and Receivables dated May 1,
1994 between Nordstrom Credit, Inc. and Nordstrom National Credit
Bank is hereby incorporated by reference from Registration No.
33-55905, Exhibit 10.1.
(13.1) The Company's 1995 Annual Report to Shareholders is filed herein
as an Exhibit.
(21.1) List of the Registrant's Subsidiaries is filed herein as an
Exhibit.
(23.1) Independent Auditors' Consent and Report on Schedule is on page 13
of this report.
(27.1) Financial Data Schedule is filed herein as an Exhibit.
All other exhibits are omitted because they are not applicable, not
required, or because the required information is included in the
Company's 1995 Annual Report to Shareholders.
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the last quarter of the period
for which this report is filed.
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
NORDSTROM, INC.
(Registrant)
/s/ John A. Goesling
Date March 29, 1996 by __________________________________________
____________________ John A. Goesling
Executive Vice President and Treasurer
(Principal Accounting and Financial Officer)
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<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
Principal Accounting and
Financial Officer:
/s/ John A. Goesling
_______________________________
John A. Goesling
Executive Vice President
and Treasurer
Co-Presidents:
/s/ Blake W. Nordstrom /s/ James A. Nordstrom
_______________________________ ________________________________
Blake W. Nordstrom James A. Nordstrom
Co-President Co-President
/s/ Erik B. Nordstrom /s/ Peter E. Nordstrom
_______________________________ ________________________________
Erik B. Nordstrom Peter E. Nordstrom
Co-President Co-President
/s/ J. Daniel Nordstrom /s/ William E. Nordstrom
_______________________________ ________________________________
J. Daniel Nordstrom William E. Nordstrom
Co-President Co-President
Directors:
/s/ Philip M. Condit /s/ Bruce A. Nordstrom
_______________________________ ________________________________
Philip M. Condit Bruce A. Nordstrom
Director Director
/s/ D. Wayne Gittinger /s/ John N. Nordstrom
_______________________________ ________________________________
D. Wayne Gittinger John N. Nordstrom
Director Director
/s/ John F. Harrigan /s/ Alfred E. Osborne Jr.
_______________________________ ________________________________
John F. Harrigan Alfred E. Osborne Jr.
Director Director
/s/ Raymond A. Johnson /s/ William D. Ruckelshaus
_______________________________ ________________________________
Raymond A. Johnson William D. Ruckelshaus
Co-Chairman and Director Director
/s/ Charles A. Lynch /s/ Elizabeth Crownhart Vaughan
_______________________________ _________________________________
Charles A. Lynch Elizabeth Crownhart Vaughan
Director Director
11 of 14
<PAGE>
Directors: (continued)
/s/ Ann D. McLaughlin /s/ John J. Whitacre
_______________________________ ________________________________
Ann D. McLaughlin John J. Whitacre
Director Co-Chairman and Director
/s/ John A. McMillan
_______________________________
John A. McMillan
Director
Principal Executive Officers:
/s/ Raymond A. Johnson /s/ John J. Whitacre
_______________________________ ________________________________
Raymond A. Johnson John J. Whitacre
Co-Chairman and Director Co-Chairman and Director
Date March 29, 1996
___________________________
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<PAGE>
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT AND REPORT ON SCHEDULE
Shareholders and Board of Directors
Nordstrom, Inc.
We consent to the incorporation by reference in Registration Statements Nos.
33-18321 and 2-81695 of Nordstrom, Inc. on Form S-8 of our reports dated
March 8, 1996 appearing in and incorporated by reference in this Annual
Report on Form 10-K of Nordstrom, Inc. and subsidiaries for the year ended
January 31, 1996.
We have audited the consolidated financial statements of Nordstrom, Inc. and
subsidiaries as of January 31, 1996 and 1995, and for each of the three years
in the period ended January 31, 1996, and have issued our report thereon dated
March 8, 1996; such financial statements and report are included in your 1995
Annual Report to Shareholders and are incorporated herein by reference. Our
audits also included the consolidated financial statement schedule of
Nordstrom, Inc. and subsidiaries, listed in Item 14(a)2. This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
such consolidated financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly in all material respects the information set forth therein.
Deloitte & Touche LLP
March 29, 1996
Seattle, Washington
13 of 14
<PAGE>
NORDSTROM, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(Dollars in thousands)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
---------- ---------- ---------- ---------- ---------
Additions Deductions
---------- ----------
Account
Balance at Charged to write-offs Balance
beginning costs and net of at end of
Description of period expenses recoveries period
- ----------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts:
Year ended:
January 31, 1994 $23,969 $25,713 $26,537 $23,145
January 31, 1995 $23,145 $20,219 $20,406 $22,958
January 31, 1996 $22,958 $39,589 $33,154 $29,393
</TABLE>
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<PAGE>
NORDSTROM INC. AND SUBSIDIARIES
<TABLE>
Exhibit Index
<CAPTION>
Exhibit Method of Filing
- ------- ----------------
<S> <C> <C>
3.1 Articles of Incorporation Incorporated by reference
from the Registrant's Form
10-K for the year ended
January 31, 1990,
Exhibit A.
3.2 By-laws, as amended Filed herewith electronically
4.1 Indenture between Nordstrom Credit, Incorporated by reference
Inc. and First Interstate Bank of from Registration
Denver, N.A., as successor trustee, No. 33-3765, Exhibit 4.2;
dated November 15, 1984, the First Registration No. 33-19743,
Supplement thereto dated January 15, Exhibit 4.2; Registration
1988, the Second Supplement thereto No. 33-29193, Exhibit 4.3;
dated June 1, 1989 and the Third and the Nordstrom Credit,
Supplement thereto dated October 19, Inc. Annual Report on Form
1990 10-K (SEC File No. 0-12994)
for the year ended January
31, 1991, Exhibit 4.2,
respectively.
4.2 Trustee Resignation of First Interstate Incorporated by reference
Bank of Washington, N.A. dated March 13, from the Registrant's Form
1995 10-K for the year ended
January 31, 1995,
Exhibit 4.2.
4.3 Trustee Acceptance of First Interstate Incorporated by reference
Bank of Denver, N.A. dated March 13, from the Registrant's Form
1995 10-K for the year ended
January 31, 1995,
Exhibit 4.3.
10.1 Operating Agreement dated August 30, 1991 Incorporated by reference
between Nordstrom Credit, Inc. and from the Nordstrom Credit,
Nordstrom National Credit Bank Inc. Quarterly Report on
Form 10-Q (SEC File No.
0-12994) for the quarter
ended July 31, 1991,
Exhibit 10.1, as amended.
10.2 Merchant Agreement dated August 30, 1991 Incorporated by reference
between Registrant and Nordstrom from the Registrant's
National Credit Bank Quarterly Report on Form
10-Q for the quarter ended
July 31, 1991, Exhibit
10.1.
10.3 1987 Nordstrom Stock Option Plan Incorporated by reference
from the Registrant's Proxy
Statement for the 1987
Annual Meeting of
Shareholders.
<PAGE>
Exhibit Index (continued)
10.4 Nordstrom Supplemental Retirement Plan Incorporated by reference
from the Registrant's Form
10-K for the year ended
January 31, 1993, Exhibit
10.3.
10.5 1993 Non-Employee Director Stock Incorporated by reference
Incentive Plan from the Registrant's Form
10-K for the year ended
January 31, 1994, Exhibit
10.4.
10.6 Investment Agreement dated October 8, Incorporated by reference
1984 between the Registrant and from the Nordstrom Credit,
Nordstrom Credit, Inc. Inc. Form 10, Exhibit 10.1.
10.7 Operating Agreement for VISA Accounts Incorporated by reference
and Receivables dated May 1, 1994 from Registration No. 33-
between Nordstrom Credit, Inc. and 55905, Exhibit 10.1.
Nordstrom National Credit Bank
13.1 1995 Annual Report to Shareholders Filed herewith electronically
21.1 Subsidiaries of the Registrant Filed herewith electronically
23.1 Independent Auditors' Consent
and Report on Schedule Filed herewith electronically
27.1 Financial Data Schedule Filed herewith electronically
</TABLE>
<PAGE>
Exhibit 3.2
BYLAWS
OF
NORDSTROM, INC.
(Amended and Restated as of June 19, 1995)
ARTICLE I
Offices
The principal office of the corporation in the State of Washington
shall be located in the city of Seattle. The corporation may have such
other offices, either within or without the State of Washington, as the
Board of Directors may designate or as the business of the corporation
may require from time to time.
The registered office of the corporation required by the
Washington Business Corporation Act to be maintained in the State of
Washington may be, but need not be, identical with the principal office
in the State of Washington, and the address of the registered office may
be changed from time to time by the Board of Directors or by officers
designated by the Board of Directors.
ARTICLE II
Shareholders
Section 1. Annual Meetings. The annual meeting of the
shareholders shall be held on the third Tuesday in the month of May each
year, at the hour of 11:00 a.m., unless the Board of Directors shall
have designated a different hour and day in the month of May to hold
said meeting. The meeting shall be for the purpose of electing
directors and the transaction of such other business as may come before
the meeting. If the day fixed for the annual meeting shall be a legal
holiday in the State of Washington, and if the Board of Directors has
not designated some other day in the month of May for such meeting, such
meeting shall be held at the same hour and place on the next succeeding
business day not a holiday. The failure to hold an annual meeting at
the time stated in these Bylaws does not affect the validity of any
corporate action. If the election of directors shall not be held on the
day designated herein or by the Board of Directors for any annual
meeting of the shareholders, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of
the shareholders as soon thereafter as conveniently may be.
Section 2. Special Meetings. Special meetings of the
shareholders may be called for any purpose or purposes, unless otherwise
prescribed by statute, at any time by the Chairman (or any Co-Chairman),
by the President (or any Co-President), or by the Board of Directors,
and shall be called by the Chairman (or any Co-Chairman) or the
President (or any Co-President) at the request of holders of not less
than 10% of all outstanding shares of the corporation entitled to vote
on any issue proposed to be considered at the meeting. Only business
within the purpose or purposes described in the meeting notice may be
conducted at a special shareholder's meeting.
<PAGE>
Section 3. Place of Meeting. The Board of Directors may
designate any place, either within or without the State of Washington,
as the place of meeting for any annual meeting or for any special
meeting of the corporation. If no such designation is made, the place
of meeting shall be the principal offices of the corporation in the
State of Washington.
Section 4. Notice of Meetings. Written notice of annual or
special meetings of shareholders stating the place, day, and hour of the
meeting, and, in the case of a special meeting, the purpose or purposes
for which the meeting is called, shall be given by the Secretary, or
persons authorized to call the meeting, to each shareholder of record
entitled to vote at the meeting, not less than ten (10) nor more than
sixty (60) days prior to the date of the meeting, unless otherwise
prescribed
by statute.
Section 5. Waiver of Notice. Notice of the time, place, and
purpose of any meeting may be waived in writing (either before or after
such meeting) and will be waived by any shareholder by attendance of the
shareholder in person or by proxy, unless the shareholder at the
beginning of the meeting objects to holding the meeting or transacting
business at the meeting. Any shareholder waiving notice of a meeting
shall be bound by the proceedings of the meeting in all respects as if
due notice thereof had been given.
Section 6. Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of
shareholders, or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or to make a determination of
shareholders for any other proper purpose, the Board of Directors may
fix in advance a record date for any such determination of shareholders,
such date to be not more than seventy (70) days and, in the case of a
meeting of shareholders, not less than ten (10) days, prior to the date
on which the particular action requiring such determination of
shareholders is to be taken. If no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a
meeting of shareholders, or shareholders entitled to receive payment of
a dividend, the day before the date on which notice of the meeting is
mailed or the date on which the resolution of the Board of Directors
declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders. When a
determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this Section, the
determination shall apply to any adjournment thereof, unless the Board
of Directors fixes a new record date, which it must do if the meeting is
adjourned more than one hundred twenty (120) days after the date fixed
for the original meeting.
<PAGE>
Section 7. Voting Lists. After fixing a record date for a
shareholders' meeting, the corporation shall prepare an alphabetical
list of the names of all shareholders on the record date who are
entitled to notice of the shareholders' meeting. The list shall show
the address of and number of shares held by each shareholder. A
shareholder, shareholder's agent, or a shareholder's attorney may
inspect the shareholder list, at the shareholder's expense, beginning
ten days prior to the shareholders' meeting and continuing through the
meeting, at the corporation's principal office or at a place identified
in the meeting notice in the city where the meeting will be held during
regular business hours. The shareholder list shall be kept open for
inspection at the time and place of such meeting or any adjournment.
Section 8. Quorum and Adjourned Meetings. Unless the Articles of
Incorporation or applicable law provide otherwise, a majority of the
outstanding shares of the corporation entitled to vote, represented in
person or by proxy, shall constitute a quorum at a meeting of
shareholders. Once a share is represented at a meeting, other than to
object to holding the meeting or transacting business, it is deemed to
be present for the remainder of the meeting and any adjournment thereof
unless a new record date is set or is required to be set for the
adjourned meeting. A majority of the shares represented at a meeting,
even if less than a quorum, may adjourn the meeting from time to time
without further notice. At a reconvened meeting at which a quorum shall
be present or represented, any business may be transacted which might
have been transacted at the original meeting. Business may continue to
be conducted at a duly organized meeting and at any adjournment of such
meeting (unless a new record date is or must be set for the adjourned
meeting), notwithstanding the withdrawal of enough shares from either
meeting to leave less than a quorum.
Section 9. Proxies. At all meetings of shareholders, a
shareholder may vote by proxy executed in writing by the shareholder or
by the shareholder's duly authorized attorney in fact. Such proxy shall
be filed with the Secretary of the corporation before or at the time of
the meeting. No proxy shall be valid after eleven (11) months from the
date of its execution, unless otherwise provided in the proxy.
Section 10. Voting of Shares. Every shareholder of record shall
have the right at every shareholders' meeting to one vote for every
share standing in the shareholder's name on the books of the
corporation. If a quorum exists, action on a matter, other than
election of directors, is approved by the shareholders if the votes cast
favoring the action exceed the votes cast opposing the action, unless
the Articles of Incorporation or applicable law require a greater number
of affirmative votes. Notwithstanding the foregoing, shares of the
corporation may not be voted if they are owned, directly or indirectly,
by another corporation, and the corporation owns, directly or
indirectly, a majority of shares of the other corporation entitled to
vote for directors of the other corporation.
<PAGE>
Section 11. Acceptance of Votes. If the name signed on a vote,
consent, waiver or proxy appointment does not correspond to the name of
a shareholder of the corporation, the corporation may accept the vote,
consent, waiver or proxy appointment, and give effect to it as the act
of the shareholder if: (i) the shareholder is an entity and the name
signed purports to be that of an officer, partner or agent of the
entity; (ii) the name signed purports to be that of an administrator,
executor, guardian or conservator representing the shareholder; (iii)
the name signed purports to be that of a receiver or trustee in
bankruptcy of the shareholder; (iv) the name signed purports to be that
of a pledgee, beneficial owner or attorney-in-fact of the shareholder;
or (v) two or more persons are the shareholder as co-tenants or
fiduciaries and the name signed purports to be the name of at least one
of the co-owners and the person signing appears to be acting on behalf
of all co-owners.
ARTICLE III
Board of Directors
Section 1. General Powers. The business and affairs of the
corporation shall be managed by its Board of Directors.
Section 2. Number, Tenure and Qualifications. The number of
directors of the corporation shall be twelve (12). Each director shall
hold office until the next annual meeting of shareholders and until his
successors shall have been elected and qualified. Directors need not be
residents of the State of Washington or shareholders of the corporation.
Section 3. Regular Meeting. A regular meeting of the Board of
Directors shall be held without other notice than this Bylaw immediately
after, and at the same place as, the annual meeting of shareholders.
Regular meetings of the Board of Directors shall be held at such place
and on such day and hour as shall from time to time be fixed by the
Chairman (or any Co-Chairman), the President (or any Co-President) or
the Board of Directors. No other notice of regular meeting of the Board
of Directors shall be necessary.
Section 4. Special Meetings. Special meetings of the Board of
Director may be called by or at the request of the Chairman (or any Co-
Chairman), the President (or any Co-President) or any two Directors.
The person or persons authorized to call special meetings of the Board
of Directors may fix any place, either within or without the State of
Washington, as the place for holding any special meeting of the Board of
Directors called by them.
<PAGE>
Section 5. Notice. Notice of any special meeting shall be given
at least two days previously thereto by either oral or written notice.
Any Director may waive notice of any meeting. The attendance of a
Director at a meeting shall constitute a waiver of notice of such
meeting, except where a Director attends a meeting for the express
purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
Board of Directors need be specified in the notice or waiver of notice
of such meeting.
Section 6. Quorum. A majority of the number of Directors fixed
by Section 2 of this Article III shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors, but if
less than such majority is present at a meeting, a majority of the
Directors present may adjourn the meeting from time to time without
further notice.
Section 7. Manner of Acting. The act of the majority of the
Directors present at a meeting at which a quorum is present shall be the
act of the Board of Directors.
Section 8. Vacancies. Any vacancy occurring in the Board of
Directors may be filled by the affirmative vote of a majority of the
remaining Directors though less than a quorum of the Board of Directors.
A Director elected to fill a vacancy shall be elected for the unexpired
term of his predecessor in office. A vacancy on the Board of Directors
created by reason of an increase in the number of Directors may be
filled by election by the Board of Directors for a term of the office
continuing only until the next election of Directors by the
shareholders.
Section 9. Compensation. By resolution of the Board of
Directors, each Director may be paid his expenses, if any, of attendance
at each meeting of the Board of Directors and at each meeting of a
committee of the Board of Directors, and may be paid a stated salary as
director, a fixed sum for attendance at each such meeting, or both. No
such payment shall preclude any Director from serving the corporation in
any other capacity and receiving compensation therefor.
Section 10. Presumption of Assent. A Director of the corporation
who is present at a meeting of the Board of Directors at which action on
any corporate matter is taken shall be presumed to have assented to the
action taken unless his dissent shall be entered in the minutes of the
meeting, or unless he shall file his written dissent to such action with
the person acting as the secretary of the meeting before the adjournment
thereof, or shall forward such dissent by registered mail to the
Secretary of the corporation immediately after the adjournment of the
meeting. Such right to dissent shall not apply to a director who voted
in favor of such action.
<PAGE>
ARTICLE IV
Special Measures Applying to Both
Shareholder and Director Meetings
Section 1. Actions by Written Consent. Any corporate action
required or permitted by the Articles of Incorporation, Bylaws, or the
laws under which the corporation is formed, to be voted upon or approved
at a duly called meeting of the Directors, committee of Directors, or
shareholders may be accomplished without a meeting if one or more
unanimous written consents of the respective Directors or shareholders,
setting forth the actions so taken, shall be signed, either before or
after the action taken, by all the Directors, committee members or
shareholders, as the case may be. Action taken by unanimous written
consent of the Directors or a committee of the Board of Directors is
effective when the last Director or committee member signs the consent,
unless the consent specifies a later effective date. Action taken by
unanimous written consent of the shareholders is effective when all
consents have been delivered to the corporation, unless the consent
specifies a later effective date.
Section 2. Meetings by Conference Telephone. Members of the
Board of Directors, members of a committee of Directors, or shareholders
may participate in their respective meetings by means of a conference
telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other at the same
time; participation in a meeting by such means shall constitute presence
in person at such meeting.
Section 3. Written or Oral Notice. Oral notice may be
communicated in person, or by telephone, wire or wireless equipment,
which does not transmit a facsimile of the notice. Oral notice is
effective when communicated. Written notice may be transmitted by mail,
private carrier, or personal delivery; telegraph or teletype; or
telephone, wire or wireless equipment which transmits a facsimile of the
notice. Written notice to a shareholder is effective when mailed, if
mailed with first class postage prepaid and correctly addressed to the
shareholder's address shown in the corporation's current record of
shareholders. In all other instances, written notice is effective on
the earliest of the following: (a) when dispatched to the person's
address, telephone number, or other number appearing on the records of
the corporation by telegraph, teletype or facsimile equipment; (b) when
received; (c) five days after deposit in the United States mail, as
evidenced by the postmark, if mailed with first class postage, prepaid
and correctly addressed; or (d) on the date shown on the return receipt,
if sent by registered or certified mail, return receipt requested, and
the receipt is signed by or on behalf of the addressee. In addition,
notice may be given in any manner not inconsistent with the foregoing
provisions and applicable law.
<PAGE>
ARTICLE V
Officers
Section 1. Number. The offices and officers of the corporation
shall be as designated from time to time by the Board of Directors.
Such offices may include a Chairman or two or more Co-Chairmen, a
President or two or more Co-Presidents, one or more Vice Presidents,
a Secretary, a Treasurer and a Controller. Such other officers and
assistant officers as may be deemed necessary may be elected or
appointed by the Board of Directors. Any two or more offices may be
held by the same persons.
Section 2. Election and Term of Office. The officers of the
corporation shall be elected annually by the Board of Directors at the
first meeting of the Board of Directors held after each annual meeting
of shareholders. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as conveniently
may be. Each officer shall hold office until a successor shall have
been duly elected and qualified, or until the officer's death or
resignation, or the officer has been removed in the manner hereinafter
provided.
Section 3. Removal. Any officer or agent may be removed by the
Board of Directors whenever in its judgment, the best interests of the
corporation will be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not of itself
create contract rights.
Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by
the Board of Directors for the unexpired portion of the term.
Section 5. Chairman. The Chairman or Co-Chairmen, subject to the
authority of the Board of Directors, shall preside at meetings of
shareholders and Directors and, together with the President and
Co-Presidents, shall have general supervision and control over the
business and affairs of the corporation. The Chairman or a Co-Chairman
may sign any and all documents, deeds, mortgages, bonds, contracts,
leases, or other instruments in the ordinary course of business with or
without the signature of a second corporate officer, may sign
certificates for shares of the corporation with the Secretary or
Assistant Secretary of the corporation and may sign any documents which
the Board of Directors has authorized to be executed, except in cases
where the signing and execution thereof shall be expressly delegated by
the Board of Directors or by these Bylaws to some other officer or agent
of the corporation, or shall be required by law to be otherwise signed
or executed; and in general may perform all duties which are normally
incident to the office of Chairman or President and such other duties,
authority, and responsibilities as may be prescribed by the Board of
Directors from time to time.
<PAGE>
Section 6. President. The President or Co-Presidents, together
with the Chairman or Co-Chairmen, shall have general supervision and
control over the business and affairs of the corporation subject to the
authority of the Chairman or Co-Chairmen and the Board of Directors. If
the Board of Directors appoint two or more Co-Presidents, the
Co-Presidents shall, without further action or appointment by the Board
of Directors, occupy the Office of the President, the members of which
shall each have the authority and duties as set forth in this Section.
The President or a Co-President may sign any and all documents,
mortgages, bonds, contracts, leases, or other instruments in the
ordinary course of business with or without the signature of a second
corporate officer, may sign certificates for shares of the corporation
with the Secretary or Assistant Secretary of the corporation, and may
sign any documents which the Board of Directors has authorized to be
executed, except in cases where the signing and execution thereof shall
be expressly delegated by the Board of Directors or by these Bylaws to
some other officer or agent of the corporation, or shall be required by
law to be otherwise signed or executed; and in general shall perform all
duties incident to the office of President and such other duties,
authority, and responsibilities as may be prescribed by the Chairman or
Co-Chairmen or the Board of Directors from time to time.
Section 7. The Vice President. In the absence of the President
and all
Co-Presidents, or in the event of their death, inability or
refusal to act, the Executive Vice President, if of one is designated
and otherwise the Vice Presidents in the order designated at the time of
their election or in the absence of any designation, then in the order
of their election, shall perform the duties of the President and when so
acting, shall have all the powers of and be subject to all the
restrictions upon the President. Any Vice President may sign, with
the Secretary or an Assistant Secretary, certificates for shares of the
corporation and shall perform such other duties as, from time to time,
may be assigned to the Vice President by the President or any
Co-President, or by the Board of Directors.
Section 8. The Secretary. The Secretary shall: (a) keep the
minutes of the proceedings of the shareholders and of the Board of
Directors in one or more books provided for that purpose; (b) see that
all notices are duly given in accordance with the provisions of these
Bylaws or as required by law; (c) be custodian of the corporate records
and of the seal of the corporation and see that the seal of the
corporation is affixed to all documents and the execution of which on
behalf of the corporation under its seal is duly authorized; (d) keep a
register of the post office address of each shareholder which shall be
furnished to the Secretary by such shareholders; (e) sign with the
President or a Co-President, or with a Vice President, certificates for
shares of the corporation, or contracts, deeds or mortgages the issuance
or execution of which shall have been authorized by resolution of the
Board of Directors; (f) have general charge of the stock transfer books
of the corporation subject to the authority delegated to a transfer
agent or registrar if appointed; and (g) in general perform all duties
incident to the office of Secretary and such other duties as from time
to time may be assigned to the Secretary by the President or any Co-
<PAGE>
President, or by the Board of Directors.
Section 9. The Treasurer. The Treasurer shall: (a) have charge
and custody of and be responsible for all funds and securities of the
corporation; (b) receive and give receipts for monies due and payable to
the corporation from any source whatsoever, and deposit all such monies
in the name of the corporation in such banks, trust companies or other
depositories as shall be selected in accordance with the provisions of
Article VII of these Bylaws; and (c) in general perform all of the
duties incident to the office of Treasurer and such other duties as from
time to time may be assigned to the Treasurer by the President or any
Co-President, or by the Board of Directors. If required by the Board of
Directors, the Treasurer shall give a bond for the faithful discharge of
his duties in such sum and with such surety or sureties as the Board of
Directors shall determine.
Section 10. Assistant Secretaries and Assistant Treasurers. The
Assistant Secretaries, when authorized by the Board of Directors, may
sign with the President or a Co-President, or with a Vice President,
certificates for shares of the corporation or contracts, deeds or
mortgages, the issuance or execution of which shall have been authorized
by a resolution of the Board of Directors. The Assistant Treasurers
shall respectively, if required by the Board of Directors, give bonds
for the faithful discharge of their duties in such sums and with such
sureties as the Board of Directors shall determine. The Assistant
Secretaries and Assistant Treasurers, in general, shall perform such
duties as shall be assigned to them by the Secretary or the Treasurer,
respectively, or by the President or any Co-President, or by the Board
of Directors.
Section 11. The Controller. The Controller shall report to the
Treasurer and shall supervise and be responsible for daily operations of
the Financial Department, accounts and account books of the corporation,
all in the ordinary course of business. The Controller shall also
perform such other duties as may from time to time be assigned by the
Treasurer, by the Chairman or Co-Chairman, by the President or any Co-
President, or by the Board of Directors.
ARTICLE VI
Executive Committee
Section 1. Appointment. The Board of Directors by resolution
adopted by a majority of the full Board, may designate two or more of
its members to constitute an Executive Committee. The designation of
such committee and the delegation thereto of authority shall not operate
to relieve the Board of Directors, or any member thereof, of any
responsibility imposed by law.
Section 2. Authority. The Executive Committee, when the Board of
Directors is not in session, shall have and may exercise all of the
authority of the Board of Directors except to the extent, if any, that
such authority shall be limited by the resolution appointing the
Executive Committee and except also that the Executive Committee shall
<PAGE>
not have the authority of the Board of Directors in reference to
amending the Articles of Incorporation, adopting a plan of merger or
consolidation, recommending to the shareholders the sale, lease or other
disposition of all or substantially all of the property and assets of
the corporation otherwise than in the usual and regular course of its
business, recommending to the shareholders voluntary dissolution of the
corporation or a revocation thereof, amending the Bylaws of the
corporation or any other action prohibited by applicable law.
Section 3. Tenure and Qualifications. Each member of the
Executive Committee shall hold office until the next regular annual
meeting of the Board of Directors following his designation and until
his successor is designated as a member of the Executive Committee and
is elected and qualified.
Section 4. Meetings. Regular meetings of the Executive Committee
may be held without notice at such times and places as the Executive
Committee may fix from time to time by resolution. Special meetings of
the Executive Committee may be called by any member thereof upon not
less than one day's notice stating the place, date and hour of the
meeting, which notice may be written or oral. Any member of the
Executive Committee may waive notice of any meeting and no notice of any
meeting need be given to any member thereof who attends in person. The
notice of a meeting of the Executive Committee need not state the
business proposed to be transacted at the meeting.
Section 5. Quorum. A majority of the members of the Executive
Committee shall constitute a quorum for the transaction of business at
any meeting thereof and action of the Executive Committee must be
authorized by the affirmative vote of a majority of the members present
at a meeting at which a quorum is present.
Section 6. Vacancies. Any vacancy in the Executive Committee may
be filled by a resolution adopted by a majority of the full Board of
Directors.
Section 7. Resignations and Removal. Any member of the Executive
Committee may be removed at any time with or without cause by resolution
adopted by a majority of the full Board of Directors. Any member of the
Executive Committee may resign from the Executive Committee at any time
by giving written notice to the Chairman (or any Co-Chairman), the
President (or any Co-President), or to the Secretary, of the
corporation, and unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
Section 8. Procedure. The Executive Committee shall elect a
presiding officer from its members and may fix its own rules of
procedure which shall not be inconsistent with these Bylaw. It shall
keep regular minutes of its proceedings and report the same to the Board
of Directors for its information at the meeting thereof held next after
the proceedings shall have been taken.
<PAGE>
ARTICLE VII
Contracts, Loans, Checks and Deposits
Section 1. Contracts. The Board of Directors may authorize any
officer or officers, agent or agents, to enter into any contract or
execute and deliver any instrument in the name of and on behalf of the
corporation, and such authority may be general or confined to specific
instances.
Section 2. Loans. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name
unless authorized by the Board of Directors. Such authority may be
general or confined to specific instances.
Section 3. Checks. Drafts. etc. All checks, drafts or other
orders for the payment of money, notes or other evidences of
indebtedness issued in the name of the corporation, shall be signed by
such officers, agent or agents of the corporation and in such manner as
shall from time to time be determined by the Board of Directors.
Section 4. Deposits. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the
corporation in such banks, trust companies or other depositories as the
Board of Directors may select.
ARTICLE VIII
Certificates for Shares and Their Transfer
Section 1. Certificates for Shares. Certificates representing
shares of the corporation shall be in such form as shall be determined
by the Board of Directors. Such certificates shall be signed by the
Chairman (or any Co-Chairman), the President (or any Co-President) or a
Vice President, and by the Secretary or an Assistant Secretary, and
sealed with the corporate seal or a facsimile thereof. The signatures
of such officers upon a certificate may be facsimiles if the certificate
is countersigned by a transfer agent, or registered by a registrar,
other than the corporation itself or one of its employees. If any
officer who signed a certificate, either manually or in facsimile, no
longer holds such office when the certificate is issued, the certificate
is nevertheless valid. All certificates for shares shall be
consecutively numbered or otherwise identified. The name and address of
the person to whom the shares represented thereby are issued, with the
number of shares and date of issue, shall be entered on the stock
transfer books of the corporation. All certificates surrendered to the
corporation for transfer shall be canceled and no new certificate shall
be issued until the former certificate for a like number of shares shall
have been surrendered and canceled, except that in case of a lost,
destroyed or mutilated certificate a new one may be issued therefor upon
such terms and indemnity to the corporation as the Board of Directors
may prescribe.
Section 2. Transfer of Shares. Transfer of shares of the
corporation shall be made only on the stock transfer books of the
<PAGE>
corporation by the holder of record thereof or by his legal
representative, who shall furnish proper evidence of authority to
transfer or by his attorney thereunto authorized by power of attorney
duly executed and filed with the Secretary of the corporation, or with
its transfer agent, if any, and on surrender for cancellation of the
certificate for such shares. The person in whose name shares stand on
the books of the corporation shall be deemed by the corporation to be
the owner thereof for all purposes.
ARTICLE IX
Fiscal Year
The fiscal year of the corporation shall begin on the first day of
February and end on the thirty-first day of January in each year.
ARTICLE X
Dividends
The Board of Directors may, from time to time, declare and the
corporation may pay dividends on its outstanding shares in the manner,
and upon the terms and conditions provided by law and its articles of
incorporation.
ARTICLE XI
Corporate Seal
The Board of Directors shall provide a corporate seal which shall
be circular in form and shall have inscribed thereon the name of the
corporation and the state of incorporation and the words, "Corporate
Seal."
ARTICLE XII
Indemnification of Directors, Officers, and Others
Section 1. Right to Indemnification. Each person (including a
person's personal representative) who was or is made a party or is
threatened to be made a party to or is otherwise involved (including,
without limitation, as a witness) in any threatened, pending, or
completed action, suit or proceeding, whether civil, criminal,
administrative, investigative or by or in the right of the corporation,
or otherwise (hereinafter a "proceeding") by reason of the fact that he
or she (or a person of whom he or she is a personal representative) is
or was a director or officer of the corporation or, being or having been
such a director or officer, is or was serving at the request of the
corporation as a director, officer, partner, trustee, employee, agent or
in any other relationship or capacity whatsoever, of any other foreign
or domestic corporation, partnership, joint venture, employee benefit
plan or trust or other trust, enterprise or other private or
governmental entity, agency, board, commission, body or other unit
whatsoever (hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action or inaction in an official capacity as a
director, officer, partner, trustee, employee, agent or in any other
<PAGE>
relationship or capacity whatsoever, shall be indemnified and held
harmless by the corporation to the fullest extent not prohibited by the
Washington Business Corporation Act, as the same exists or may hereafter
be amended (but, in the case of any such amendment, only to the extent
that such amendment does not prohibit the corporation from providing
broader indemnification rights than prior to the amendment), against all
expenses, liabilities, and losses (including but not limited to
attorneys' fees, judgments, claims, fines, ERISA and other excise and
other taxes and penalties, and other adverse effects and amounts paid in
settlement), reasonably incurred or suffered by the indemnitee;
provided, however, that no such indemnity shall indemnify any person
from or on account of acts or omissions of such person finally adjudged
to be intentional misconduct or a knowing violation of law, or from or
on account of conduct of a director finally adjudged to be in violation
of RCW 23B.08.310, or from or on account of any transaction with respect
to which it was finally adjudged that such person personally received a
benefit in money, property, or services to which the person was not
legally entitled; and further provided, however, that except as provided
in Section 2 of this Article with respect to suits relating to rights to
indemnification, the corporation shall indemnify any indemnitee in
connection with a proceeding (or part thereof) initiated by the
indemnitee only if such proceeding (or part thereof) was authorized by
the Board of Directors of the corporation.
The right to indemnification granted in this Article is a contract
right and includes the right to payment by, and the right to receive
reimbursement from, the corporation of all expenses as they are incurred
in connection with any proceeding in advance of its final disposition
(hereinafter an "advance of expenses"); provided, however, that an
advance of expenses received by an indemnitee in his or her capacity as
a director or officer (and not in any other capacity in which service
was or is rendered by such indemnitee unless required by the Board of
Directors) shall be made only upon (i) receipt by the corporation of a
written undertaking (hereinafter an "undertaking") by or on behalf of
such indemnitee, to repay advances of expenses if and to the extent it
shall ultimately be determined by order of a court having jurisdiction
(which determination shall become final upon expiration of all rights to
appeal), hereinafter a "final adjudication", that the indemnitee is not
entitled to be indemnified for such expenses under this Article, and
(ii) receipt by the corporation of written affirmation by the indemnitee
of his or her good faith belief that he or she has met the standard of
conduct applicable (if any) under the Washington Business Corporation
Act necessary for indemnification by the corporation under this Article.
Section 2. Right of Indemnitee to Bring Suit. If any claim for
indemnification under Section 1 of this Article is not paid in full by
the corporation within sixty days after a written claim has been
received by the corporation, except in the case of a claim for an
advance of expenses, in which case the applicable period shall be twenty
days, the indemnitee may at any time thereafter bring suit against the
corporation to recover the unpaid amount of the claim. If the
indemnitee is successful in whole or in part in any such suit, or in any
suit in which the corporation seeks to recover an advance of expenses,
<PAGE>
the corporation shall also pay to the indemnitee all the indemnitee's
expenses in connection with such suit. The indemnitee shall be presumed
to be entitled to indemnification under this Article upon the
corporation's receipt of indemnitee's written claim (and in any suits
relating to rights to indemnification where the required undertaking and
affirmation have been received by the corporation), and thereafter the
corporation shall have the burden of proof to overcome that presumption.
Neither the failure of the corporation (including its Board of
Directors, independent legal counsel, or shareholders) to have made a
determination prior to other commencement of such suit that the
indemnitee is entitled to indemnification, nor an actual determination
by the corporation (including its Board of Directors, independent legal
counsel or shareholders) that the indemnitee is not entitled to
indemnification, shall be a defense to the suit or create a presumption
that the indemnitee is not so entitled. It shall be a defense to a
claim for an amount of indemnification under this Article (other than a
claim for advances of expenses prior to final disposition of a
proceeding where the required undertaking and affirmation have been
received by the corporation) that the claimant has not met the standards
of conduct applicable (if any) under the Washington Business Corporation
Act to entitle the claimant to the amount claimed, but the corporation
shall have the burden of proving such defense. If requested by the
indemnitee, determination of the right to indemnity and amount of
indemnity shall be made by final adjudication (as defined above) and
such final adjudication shall supersede any determination made in
accordance with RCW 23B.08.550.
Section 3. Non-Exclusivity of Rights. The rights to
indemnification (including, but not limited to, payment, reimbursement
and advances of expenses) granted in this Article shall not be exclusive
of any other powers or obligations of the corporation or of any other
rights which any person may have or hereafter acquire under any statute,
the common law, the corporation's Articles of Incorporation or Bylaws,
agreement, vote of shareholders or disinterested directors, or
otherwise. Notwithstanding any amendment to or repeal of this Article,
any indemnitee shall be entitled to indemnification in accordance with
the provisions hereof with respect to any acts or omissions of such
indemnitee occurring prior to such amendment or repeal.
Section 4. Insurance, Contracts and Funding. The corporation may
purchase and maintain insurance, at its expense, to protect itself and
any person (including a person's personal representative) who is or was
a director, officer, employee or agent of the corporation or who is or
was a director, officer, partner, trustee, employee, agent, or in any
other relationship or capacity whatsoever, of any other foreign or
domestic corporation, partnership, joint venture, employee benefit plan
or trust or other trust, enterprise or other private or governmental
entity, agency, board, commission, body or other unit whatsoever,
against any expense, liability or loss, whether or not the power to
indemnify such person against such expense, liability or loss is now or
hereafter granted to the corporation under the Washington Business
Corporation Act. The corporation may enter into contracts granting
indemnity, to any such person whether or not in furtherance of the
<PAGE>
provisions of this Article, and may create trust funds, grant security
interests and use other means (including, without limitation, letters of
credit) to secure and ensure the payment of indemnification amounts.
Section 5. Indemnification of Employees and Agents. The
corporation may, by action of the Board of Directors, provide
indemnification and pay expenses in advance of the final disposition of
a proceeding to employees and agent of the corporation with the same
scope and effect as the provisions of this Article with respect to the
indemnification and advancement of expenses of directors and officers of
the corporation or pursuant to rights granted under, or provided by, the
Washington Business Corporation Act or otherwise.
Section 6. Separability of Provisions. If any provision or
provisions of this Article shall be held to be invalid, illegal or
unenforceable for any reason whatsoever (i) the validity, legality and
enforceability of the remaining provisions of this Article (including
without limitation, all portions of any sections of this Article
containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby, and
(ii) to the fullest extent possible, the provisions of this Article
(including, without limitation, all portions of any paragraph of this
Article containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent
manifested by the provision held invalid, illegal or unenforceable.
Section 7. Partial Indemnification. If an indemnitee is entitled
to indemnification by the corporation for some or a portion of expenses,
liabilities or losses, but not for the total amount thereof, the
corporation shall nevertheless indemnify the indemnitee for the portion
of such expenses, liabilities and losses to which the indemnitee is
entitled.
Section 8. Successors and Assigns. All obligations of the
corporation to indemnify any indemnitee: (i) shall be binding upon all
successors and assigns of the corporation (including any transferee of
all or substantially all of its assets and any successor by merger or
otherwise by operation of law), (ii) shall be binding on and inure to
the benefit of the spouse, heirs, personal representatives and estate of
the indemnitee, and (iii) shall continue as to any indemnitee who has
ceased to be a director, officer, partner, trustee, employee or agent
(or other relationship or capacity).
ARTICLE XIII
Books and Records
Section 1. Books of Accounts, Minutes and Share Register. The
corporation shall keep as permanent records minutes of all meetings of
its shareholders and Board of Directors, a record of all actions taken
by the shareholders or Board of Directors without a meeting, and a
<PAGE>
record of all actions taken by a committee of the Board of Directors
exercising the authority of the Board of Directors on behalf of the
corporation. The corporation shall maintain appropriate accounting
records. The corporation or its agent shall maintain a record of its
shareholders, in a form that permits preparation of a list of the names
and addresses of all shareholders, in alphabetical order showing the
number and class of shares held by each. The corporation shall keep a
copy of the following records at its principal office: the Articles or
Restated Articles of Incorporation and all amendments currently in
effect; the Bylaws or Restated Bylaws and all amendments currently in
effect; the minutes of all shareholders' meetings, and records of all
actions taken by shareholders without a meeting, for the past three
years; its financial statements for the past three years, including
balance sheets showing in reasonable detail the financial condition of
the corporation as of the close of each fiscal year, and an income
statement showing the results of its operations during each fiscal year
prepared on the basis of generally accepted accounting principles or, if
not, prepared on a basis explained therein; all written communications
to shareholders generally within the past three years; a list of the
names and business addresses of its current directors and officers; and
its most recent annual report delivered to the Secretary of State of
Washington.
Section 2. Copies of Resolutions. Any person dealing with the
corporation may rely upon a copy of any of the records of the
proceedings, resolutions, or votes of the Board of Directors or
shareholders, when certified by the Chairman (or any Co-Chairman),
President (or any Co-President) or Secretary.
ARTICLE XIV
Amendment of Bylaws
These Bylaws may be amended, altered, or repealed by the
affirmative vote of a majority of the full Board of Directors at any
regular or special meeting of the Board of Directors.
<PAGE>
EXHIBIT 13.1
PORTIONS OF THE 1995 ANNUAL REPORT TO SHAREHOLDERS
FINANCIAL HIGHLIGHTS
<TABLE>
Dollars in thousands except per share amounts
<CAPTION>
Fiscal Year 1995 Fiscal Year 1994 % Change
--------------------------------------------------
<S> <C> <C> <C>
Net sales $4,113,517 $3,894,478 +5.6
Earnings before income taxes 272,312 335,558 -18.8
Net earnings 165,112 202,958 -18.6
Net earnings per share 2.02 2.47 -18.2
Cash dividends paid per share .500 .385 +29.9
</TABLE>
STOCK TRADING
<TABLE>
<CAPTION>
Fiscal Year 1995 Fiscal Year 1994
-----------------------------------------------
High Low High Low
<S> <C> <C> <C> <C>
First Quarter 45 1/4 36 1/4 44 1/2 34
Second Quarter 44 3/4 35 45 3/4 38 3/4
Third Quarter 43 36 5/8 49 3/4 37
Fourth Quarter 43 3/8 37 49 1/2 39 1/2
</TABLE>
Nordstrom, Inc. common stock is traded over-the-counter and quoted daily in
leading financial publications. NASDAQ Symbol -- Nobe.
Graph - Net Sales
The vertical bar graph compares net sales for the past ten years. Beginning
with the most recent fiscal year on the left, net sales (dollars are in
millions) were as follows: 1995-$4,114; 1994-$3,894; 1993-$3,590; 1992-$3,422;
1991-$3,180; 1990-$2,894; 1989-$2,671; 1988-$2,328; 1987-$1,920; and 1986-
$1,630.
Graph - Net Earnings
The vertical bar graph compares net earnings for the past ten years. Beginning
with the most recent fiscal year on the left, net earnings (dollars in
millions) were as follows: 1995-$165.1; 1994-$203.0; 1993-$140.4; 1992-$136.6
1991-$135.8; 1990-$115.8; 1989-$114.9; 1988-$123.3; 1987-$92.7; and 1986-
$72.9.
Nordstrom, Inc. and Subsidiaries Page 3
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
The following discussion and analysis gives a more detailed review of the past
three years, as well as additional information on future commitments and
trends. This discussion and analysis should be read in conjunction with the
basic consolidated financial statements and the Ten-Year Statistical Summary.
Sales
Sales have increased to record levels in each of the past three years. The
percentage change by year is as follows:
<TABLE>
<CAPTION>
Fiscal Year 1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales in comparable stores
(open at least fourteen months) (0.7%) 4.4% 2.7%
Sales in new stores 6.3% 4.1% 2.2%
----- ---- ----
Total percentage increase 5.6% 8.5% 4.9%
===== ==== ====
</TABLE>
After steadily increasing rates of sales gains in comparable stores in 1994
and 1993, sales in comparable stores declined in 1995. This was due to
slowing consumer demand for apparel and sales decreases at several stores in
the Company's Chicago and New Jersey markets resulting from new store openings
in those markets.
Sales in new stores includes sales from the Company's own direct mail catalogs
as well as sales from stores open less than fifteen months. The direct mail
catalog division, which started in 1994, contributed a .8% increase in sales
for that year and a 1.8% increase for 1995. The Company has also continued to
expand its store base over the past several years with new store openings.
These new stores are generally not as productive as the Company's average
store because customer base and traffic patterns are developed over time.
As a result, sales growth from these new stores does not match the increase
in average square footage over the past several years.
There has been little, if any, inflation in overall merchandise prices during
the past several years. The change in the retail prices of apparel, shoes,
and accessories as measured by the Bureau of Labor Statistics on an overall
basis was 1% for 1993, -1% for 1994, and 1% for 1995. Management believes
that these statistics are the best available measure of the effect of
inflation on the Company's selling prices.
Graph - Percentage of 1995 Sales by Merchandise Category
The pie chart depicts each merchandise category and its percent of total
sales. Clockwise: Shoes - 20%; Men's Apparel and Furnishings - 17%;
Children's Apparel and Accessories - 4%; Other - 2%; Women's Apparel - 37%;
and Women's Accessories - 20%. The caption below the graph reads, "Sales by
major merchandise category have changed only slightly over the past several
years."
Page 12 Nordstrom, Inc. and Subsidiaries
<PAGE>
MANAGEMENT AND DISCUSSION AND ANALYSIS
Costs and Expenses
As a result of increased sales, the total amount of costs and expenses has
increased in each year. As a percentage of sales, total costs and expenses
were 93.6% in 1993, 91.4% in 1994, and 93.4% in 1995. Unless otherwise
indicated, the changes discussed below are stated as a percentage of sales
as shown on page 16.
Cost of sales and related buying and occupancy costs fluctuate as a percentage
of sales primarily because of changes in the cost of sales component. With
the changes in merchandise styles and selections from season to season, cost
of sales, and therefore the merchandise gross margin, can fluctuate up and
down. In 1993, the merchandise gross margin decreased because of softness in
demand for women's apparel. During 1994, the merchandise margin improved
dramatically because of higher than anticipated sales increases and
implementation of part of the Company's new inventory management system.
Nearly all categories of merchandise had higher margins, but women's apparel
showed the greatest improvement following the low level in 1993. In 1995, the
merchandise gross margin decreased because of excess inventory levels as
sales did not meet expectations.
Buying costs increased each year as the Company spent more to develop its own
merchandise brands and to develop and implement a new inventory management
system. Occupancy costs increased in 1995 as a result of new store openings
and remodeling of older stores.
Selling, general and administrative expenses decreased in 1993 primarily
because of a reduction in bad debts. Bad debts continued to decline in 1994.
Medical plan benefits also decreased in 1994 as a result of changes to the
plan implemented by the Company. These decreases were offset by costs incurred
in the startup of the Company's direct mail catalog division and a higher
contribution to the Company's profit sharing plan. In 1995, selling, general
and administrative expenses increased for several reasons. Expenses in
comparable stores continued to increase while sales declined. In addition,
bad debts increased primarily as a result of the growth of the Company's Visa
credit card program, and the direct mail catalog division continued to incur
high operating costs.
In 1993, interest expense decreased because of lower short-term interest rates
and reductions in debt outstanding. During 1994, interest expense decreased as
more interest was capitalized on projects under construction. Interest expense
increased in 1995 because of higher borrowings to finance the Company's
customer accounts receivable balances.
Other income in 1993 was impacted by two separate events. The Company paid
substantially all the claims in settlement of a class-action lawsuit by the
end of 1993, and the resulting adjustment of a previously established reserve
amount increased other income in the fourth quarter of 1993 by $4.5 million
($.03 per share after income taxes). Also, in the fourth quarter of 1993,
other income was reduced by $5 million ($.04 per share after income taxes) for
expenses and property losses resulting from an earthquake in Southern
California. The Company does not carry earthquake insurance in California
because of its high cost.
In 1995, other income increased primarily due to an increase in service charge
income because of higher levels of customer accounts receivable outstanding
during the year.
Nordstrom, Inc. and Subsidiaries Page 13
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
Liquidity and Capital Resources
During 1993, cash provided by operating activities exceeded cash used in
investing activities as shown on page 19. The Company used this excess cash
flow to reduce total debt outstanding. The Company incurred additional
indebtedness in both 1994 and 1995 as the Company increased its spending on
new store construction and its investment in customer accounts receivable.
The Company believes that operating working capital (net working capital less
short-term investments plus notes payable and the current portion of long-term
debt) is a more appropriate measure of the Company's on-going working capital
requirements than net working capital because it eliminates the effect of
changes in the levels of short-term investments and borrowings. These levels
can vary each year depending on financing activities. The Company's operating
working capital has fluctuated as shown below:
<TABLE>
<CAPTION>
Fiscal Year 1995 1994 1993
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating working capital (in thousands) $1,068,923 $843,924 $745,040
Percentage change from prior year 26.7% 13.3% (2.7%)
Net sales/average operating
working capital 3.9 4.6 4.8
</TABLE>
In 1993, operating working capital decreased because of reduced customer
accounts receivable. Credit sales on the Company's credit card decreased,
reflecting more cautious use of credit by consumers in general and increased
competition from third-party cards. In 1994, customer accounts receivable
increased because the Company commenced its own Visa credit card program.
The increase in customer accounts receivable along with higher merchandise
inventories caused operating working capital to increase. In 1995, the
Company increased its investment in customer accounts receivable through
continued promotion of its Visa card program and reducing the minimum payment
on its proprietary credit card. This also caused operating working capital
to increase. The Company does not expect customer accounts receivable to
continue growing at the same rate in 1996; however, with the growth in the
Company's Visa credit card program, the Company expects future operating
working capital requirements to increase over historical levels.
Graph - Investing and Operating Cash Flows
The vertical bar graph compares cash provided by operating activities and cash
used in investing activities for each year, for the past ten years. Dollars
are in millions.
<TABLE>
<CAPTION>
Cash used Cash provided
in investing by operating
Year activities activities
- ---- ------------ -------------
<S> <C> <C>
1995 $254.0 $121.9
1994 $246.9 $231.8
1993 $132.7 $262.1
1992 $ 71.9 $235.6
1991 $147.2 $154.0
1990 $200.7 $148.1
1989 $168.7 $122.2
1988 $153.4 $ 46.0
1987 $128.3 $ 87.7
1986 $ 69.8 $115.0
</TABLE>
Page 14 Nordstrom, Inc. and Subsidiaries
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
Liquidity and Capital Resources (continued)
The Company has spent $642 million during the last three years to add new
stores and facilities and to improve existing stores and facilities. Over
1.5 million square feet of selling space has been added during this time
period, representing an increase of 16%. Most of the new stores have been
constructed by the Company on land that it owns or leases under long-term
agreements, thus providing a strong basis for future operations.
The Company plans to spend over $750 million on capital projects during the
next three years, with over $100 million allocated to the refurbishment of
existing stores. Although the Company has made commitments for stores to be
opening in 1996 and beyond, it is possible that some stores may not be opened
as scheduled because of environmental and land use regulations and the
difficulties encountered by shopping center developers in securing financing.
Management believes that the Company's current financial strength provides
the resources necessary to maintain its existing stores and the flexibility
to take advantage of new store opportunities.
With the decrease in the Company's debt to capital ratio that occurred over
the previous five years, the Board of Directors approved a $100 million common
stock repurchase program in May of 1995. Through the end of 1995, the Company
spent $50 million to repurchase outstanding shares of its common stock.
Depending upon the price of the Company's shares and operating results,
management expects to complete this program in 1996.
The anticipated growth of the Company's operations will require some external
capital in the next three years. Most of these external capital requirements
will be funded with additional long- and short-term debt issued by the
Company's captive finance subsidiary. Management believes that the expansion
of the Company's operations over the next several years will not significantly
increase its debt to capital percentage.
Graph - Square Footage by Market Area at end of 1995
The pie chart shows the percent of total square feet in each region and also
gives the number of square feet for that region. Clockwise: Washington,
12.9%, 1,383,000; Other, 1.3%, 145,000; Midwest, 11.0%, 1,174,000; Oregon,
7.7%, 823,000; Utah, 3.3%, 357,000; Southern California, 25.1%, 2,687,000;
Northern California, 16.6%, 1,772,000; Capital, 11.6%, 1,243,000; and
Northeast, 10.5%, 1,129,000.
Nordstrom, Inc. and Subsidiaries Page 15
<PAGE>
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
Dollars in thousands except per share amounts
% of % of % of
Year ended January 31, 1996 sales 1995 sales 1994 sales
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Sales $4,113,517 100.0 $3,894,478 100.0 $3,589,938 100.0
----------------------------------------------------------
Costs and Expenses:
Cost of sales and related
buying and occupancy 2,806,250 68.2 2,599,553 66.7 2,469,304 68.8
Selling, general and
administrative 1,120,790 27.2 1,023,347 26.3 940,579 26.2
Interest, net 39,295 1.0 30,664 .8 37,646 1.1
Service charge income
and other, net (125,130) (3.0) (94,644) (2.4) (88,509) (2.5)
----------------------------------------------------------
Total Costs and Expenses 3,841,205 93.4 3,558,920 91.4 3,359,020 93.6
----------------------------------------------------------
Earnings before income taxes 272,312 6.6 335,558 8.6 230,918 6.4
Income taxes 107,200 2.6 132,600 3.4 90,500 2.5
----------------------------------------------------------
Net Earnings $ 165,112 4.0 $ 202,958 5.2 $ 140,418 3.9
==========================================================
Net Earnings per share $2.02 $2.47 $1.71
==========================================================
Cash dividends paid per share $.50 $.385 $.34
==========================================================
<FN>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
</TABLE>
Page 16 Nordstrom, Inc. and Subsidiaries
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Dollars in thousands
January 31, 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 24,517 $ 32,497
Accounts receivable, net 893,927 675,891
Merchandise inventories 626,303 627,930
Prepaid income taxes and other 68,029 61,395
-----------------------------------
Total Current Assets 1,612,776 1,397,713
Property, buildings and equipment, net 1,103,298 984,195
Other assets 16,545 14,875
-----------------------------------
Total Assets $2,732,619 $2,396,783
===================================
Liabilities and Shareholders' Equity
Current Liabilities:
Notes payable $ 232,501 $ 87,388
Accounts payable 277,584 273,084
Accrued salaries, wages, and taxes 185,540 190,501
Accrued expenses 47,834 40,990
Accrued income taxes 14,644 22,524
Current portion of long-term debt 74,210 75,967
-----------------------------------
Total Current Liabilities 832,313 690,454
Long-term debt 365,733 297,943
Deferred lease credits and other
deferred items 111,601 64,586
Shareholders' Equity 1,422,972 1,343,800
-----------------------------------
Total Liabilities and Shareholders' Equity $2,732,619 $2,396,783
===================================
<FN>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
</TABLE>
Nordstrom, Inc. and Subsidiaries Page 17
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Dollars in thousands except per share amounts
Year ended January 31, 1996 1995 1994
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock
Authorized 250,000,000 shares; issued and
outstanding 81,113,144, 82,244,098 and
82,059,128 shares
Balance at beginning of year $ 163,334 $ 157,374 $ 155,439
Issuance of common stock 5,106 5,960 1,935
--------------------------------------
Balance at end of year 168,440 163,334 157,374
--------------------------------------
Retained Earnings
Balance at beginning of year 1,180,466 1,009,130 896,592
Net earnings 165,112 202,958 140,418
Cash dividends paid ($.50, $.385, and $.34
per share) (41,001) (31,622) (27,880)
Purchase and retirement of common stock (50,045) - -
---------------------------------------
Balance at end of year 1,254,532 1,180,466 1,009,130
---------------------------------------
Total Shareholders' Equity $1,422,972 $1,343,800 $1,166,504
======================================
<FN>
The accompany Notes to Consolidated Financial Statements are an integral part
of these statements.
</TABLE>
Page 18 Nordstrom, Inc. and Subsidiaries
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Dollars in thousands
Year ended January 31, 1996 1995 1994
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities
Net earnings $165,112 $202,958 $140,418
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization 134,347 110,789 103,466
Change in:
Accounts receivable, net (218,036) (89,450) 16,757
Merchandise inventories 1,627 (42,328) (48,863)
Prepaid income taxes and other (6,634) (9,746) (878)
Accounts payable 4,500 9,029 43,879
Accrued salaries, wages, and taxes (4,961) 33,554 (1,081)
Accrued expenses 6,844 4,996 4,853
Income tax liabilities (12,621) (4,518) 3,540
Deferred lease credits 51,756 16,558 2
----------------------------------------
Net cash provided by operating activities 121,934 231,842 262,093
----------------------------------------
Investing Activities
Additions to property, buildings and
equipment, net (252,876) (248,608) (124,403)
Other, net (1,103) 1,660 (8,306)
----------------------------------------
Net cash used in investing activities (253,979) (246,948) (132,709)
----------------------------------------
Financing Activities
Increase in notes payable 145,113 47,051 2,018
Proceeds from issuance of long-term debt, net 140,859 49,656 -
Principal payments on long-term debt (75,967) (114,664) (43,371)
Proceeds from issuance of common stock 5,106 5,960 1,935
Cash dividends paid (41,001) (31,622) (27,880)
Purchase and retirement of common stock (50,045) - -
----------------------------------------
Net cash provided by (used in) financing
activities 124,065 (43,619) (67,298)
----------------------------------------
Net (decrease) increase in cash
and cash equivalents (7,980) (58,725) 62,086
Cash and cash equivalents at beginning of year 32,497 91,222 29,136
----------------------------------------
Cash and cash equivalents at end of year $ 24,517 $ 32,497 $ 91,222
========================================
<FN>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
</TABLE>
Nordstrom, Inc. and Subsidiaries Page 19
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollars in thousands except per share amounts
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company: Nordstrom, Inc. is a fashion specialty retailer offering a wide
selection of high quality apparel, shoes and accessories for women, men and
children, principally through 58 large specialty stores and 19 clearance
stores. All of the Company's stores are located in the United States, with
approximately 40% of its retail square footage located in the state of
California.
The Company purchases a significant percentage of its merchandise from foreign
countries, principally from the Far East. Any event causing a disruption in
imports from the Far East could have a material adverse impact on the Company's
operations.
In connection with the purchase of foreign merchandise, the Company has
outstanding letters of credit totaling $61,822 at January 31, 1996.
Basis of Presentation: The Consolidated Financial Statements include the
accounts of Nordstrom, Inc. and its subsidiaries. All significant intercompany
transactions and accounts are eliminated in consolidation.
The presentation of financial statements in conformity with Generally Accepted
Accounting Principles requires management to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses in
the accompanying financial statements. Actual results could differ from those
estimates.
Merchandise Inventories: Merchandise inventories are stated at the lower of
cost (first-in, first-out basis) or market, using the retail method.
Property, Buildings and Equipment: Straight-line and accelerated methods are
applied in the calculation of depreciation and amortization.
Lives used for calculating depreciation and amortization rates for the
principal asset classifications are as follows: buildings, 10 to 40 years;
store fixtures and equipment, three to 15 years; leasehold improvements, life
of lease or applicable shorter period.
Store Preopening Costs: Store opening and preopening costs are charged to
expense when incurred.
Capitalization of Interest: The interest carrying costs of facilities being
constructed are capitalized during their construction period based on the
Company's weighted average borrowing rate.
Earnings per Share: Earnings per share are computed on the basis of the
weighted average number of common shares outstanding during the year. Average
shares outstanding were 81,919,625, 82,144,079, and 82,003,407 in 1995, 1994
and 1993.
Cash Equivalents: The Company considers all short-term investments with a
maturity at date of purchase of three months or less to be cash equivalents.
The carrying amount approximates fair value because of the short maturity of
these instruments.
Customer Accounts Receivable: In accordance with trade practices, installments
maturing in more than one year or deferred payment accounts receivable are
included in current assets.
<PAGE>
Cash Management: The Company's cash management system provides for the
reimbursement of all major bank disbursement accounts on a daily basis.
Accounts payable at January 31, 1996 and 1995 include $16,760 and $29,223 of
checks drawn in excess of cash balances not yet presented for payment.
Deferred Lease Credits: Deferred lease credits are amortized on a
straight-line basis over the life of the applicable lease.
Derivatives: The Company limits its use of derivative financial instruments
to the management of well-defined foreign currency and interest rate risks.
The effect of these activities is not material to the Company's financial
condition or results of operations. The Company has no off-balance sheet
credit risk, and the fair value of derivative financial instruments at
January 31, 1996 and 1995 is not material.
Reclassifications: Certain reclassifications of prior year balances have been
made for consistent presentation.
NOTE 2: EMPLOYEE BENEFITS
The Company provides a profit sharing plan for employees. The plan is fully
funded by the Company and is non-contributory except for employee contributions
made under Section 401(k) of the Internal Revenue Code. Under this provision,
the Company provides matching contributions up to a stipulated percentage of
employee contributions. The Company contribution is established each year by
the Board of Directors and totaled $40,000, $44,000 and $35,500 in 1995, 1994,
and 1993.
Page 20 Nordstrom, Inc. and Subsidiaries
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3: INTEREST EXPENSE
The components of interest expense are as follows:
<TABLE>
<CAPTION>
Year ended January 31, 1996 1995 1994
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Nordstrom, Inc.
Short-term debt $ 69 $ 69 $ 46
Long-term debt 8,635 10,780 12,830
Nordstrom Credit, Inc.
Short-term debt 10,184 5,085 2,361
Long -term debt 27,788 23,161 25,543
-----------------------------------
Total interest incurred 46,676 39,095 40,780
Less: Interest income (2,204) (2,416) (1,624)
Capitalized interest (5,177) (6,015) (1,510)
-----------------------------------
Interest, net $39,295 $30,664 $37,646
===================================
</TABLE>
NOTE 4: INCOME TAXES
Income taxes consist of the following:
<TABLE>
<CAPTION>
Year ended January 31, 1996 1995 1994
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Current income taxes:
Federal $ 94,855 $118,558 $77,231
State and local 19,649 23,986 16,149
------------------------------------
Total current income taxes 114,504 142,544 93,380
------------------------------------
Deferred income taxes:
Current (3,339) (10,113) (648)
Non-current (3,965) 169 (2,232)
------------------------------------
Total deferred income taxes (7,304) (9,944) (2,880)
------------------------------------
Total income taxes $107,200 $132,600 $90,500
====================================
</TABLE>
A reconciliation of the statutory Federal income tax rate with the effective
tax rate is as follows:
<TABLE>
<CAPTION>
Year ended January 31, 1996 1995 1994
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory rate 35.00% 35.00% 35.00%
State and local income taxes,
net of Federal income taxes 4.39 4.39 4.41
Other, net (0.03) 0.11 (0.21)
---------------------------------
Effective tax rate 39.36% 39.50% 39.20%
==================================
</TABLE>
<PAGE>
(Note 4 continued)
Deferred income taxes result from temporary differences in the timing of
recognition of revenue and expenses for tax and financial statement reporting
as follows:
<TABLE>
<CAPTION>
Year ended January 31, 1996 1995 1994
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Tax basis depreciation ($2,620) $ 521 $ 740
Accrued expenses (4,833) (4,416) (2,850)
Other 149 (6,049) (770)
-----------------------------------
Total deferred income taxes ($7,304) ($9,944) ($2,880)
===================================
</TABLE>
These items comprise substantially all of the deferred tax asset and liability
balances.
NOTE 5: ACCOUNTS RECEIVABLE
The components of accounts receivable are as follows:
<TABLE>
<CAPTION>
January 31, 1996 1995
- ----------------------------------------------------------------------------
<S> <C> <C>
Customers $903,496 $678,673
Other 19,824 20,176
Allowance for doubtful accounts (29,393) (22,958)
----------------------
Accounts receivable, net $893,927 $675,891
======================
</TABLE>
Credit risk with respect to accounts receivable is concentrated in the
geographic regions in which the Company operates stores. At January 31, 1996
and 1995, approximately 50% of the Company's receivables were concentrated in
California. Concentration of the remaining receivables is considered to be
limited due to their geographical dispersion.
Bad debt expense totaled $39,589, $20,219 and $25,713 in 1995, 1994, and 1993.
Nordstrom, Inc. and Subsidiaries Page 21
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6: PROPERTY, BUILDINGS AND EQUIPMENT
Property, buildings and equipment consist of the following (at cost):
<TABLE>
<CAPTION>
January 31, 1996 1995
- ----------------------------------------------------------------------------
<S> <C> <C>
Land and land improvements $ 42,814 $ 42,355
Buildings 448,596 423,342
Leasehold improvements 642,295 550,412
Store fixtures and equipment 672,887 565,605
------------------------
$1,806,592 $1,581,714
Less accumulated depreciation
and amortization (838,812) (746,712)
------------------------
967,780 835,002
Construction in progress 135,518 149,193
------------------------
Property, buildings and
equipment, net $1,103,298 $ 984,195
========================
</TABLE>
At January 31, 1996 the Company has contractual commitments of approximately
$52,745 for construction of new stores.
At January 31, 1996, the net book value of property located in California is
approximately $320,265. The Company does not carry earthquake insurance in
California because of its high cost.
NOTE 7: NOTES PAYABLE
A summary of notes payable is as follows:
<TABLE>
<CAPTION>
Year ended January 31, 1996 1995 1994
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Average daily short-term borrowings $173,343 $106,092 $ 76,779
Maximum amount outstanding 303,072 209,605 117,023
Weighted average interest rate:
During the year 5.9% 4.9% 3.1%
At year-end 5.5% 6.0% 3.1%
</TABLE>
At January 31, 1996, Nordstrom Credit, Inc. has an unsecured line of credit
with a group of commercial banks totaling $300,000 which is available as
liquidity support for short-term debt, and expires in June 2000. Nordstrom
Credit, Inc. pays commitment fees for the line in lieu of compensating
balance requirements.
The carrying amount of notes payable approximates fair value because of the
short maturity of these instruments.
<PAGE>
NOTE 8: LONG-TERM DEBT
A summary of long-term debt is as follows:
<TABLE>
<CAPTION>
January 31, 1996 1995
- ----------------------------------------------------------------------------
<S> <C> <C>
Senior notes, 8.875%, due 1998 $ 50,000 $100,000
Medium-term notes,
Nordstrom Credit, Inc.,
7.83%-9.6%, due 1996-2001 226,000 209,000
Notes payable,
Nordstrom Credit, Inc.,
6.7%, due 2005 100,000 -
Sinking fund debentures,
Nordstrom Credit, Inc.,
9.375%, due 2016, payable in
annual installments of $3,750
beginning in 1997 43,100 43,100
Other 20,843 21,810
----------------------
Total long-term debt 439,943 373,910
Less current portion (74,210) (75,967)
----------------------
Total due beyond one year $365,733 $297,943
======================
</TABLE>
The senior note agreements contain restrictive covenants which, among other
things, restrict dividends to shareholders to a formula amount. At
January 31, 1996, approximately $722,580 of retained earnings is not
restricted.
Aggregate principal payments on long-term debt are as follows: 1996-$74,210;
1997-$55,053; 1998-$105,183; 1999-$5,076; and 2000-$47,023.
The fair value of long-term debt, estimated using quoted market prices of the
same or similar issues with the same remaining maturity, is approximately
$478,000 and $381,000 at January 31, 1996 and 1995.
In February 1996, the Company prepaid $43,100 of Nordstrom Credit, Inc. sinking
fund debentures at a premium of $1,965.
Page 22 Nordstrom, Inc. and Subsidiaries
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9: LEASES
The Company leases land, buildings and equipment under noncancelable lease
agreements with expiration dates ranging from 1996 to 2080. Certain of the
leases include renewal provisions at the Company's option. Most of the leases
provide for additional rentals based upon specific percentages of sales and
require the Company to pay for certain other costs.
Future minimum lease payments as of January 31, 1996 are as follows:
1996-$27,857; 1997-$26,997; 1998-$27,210; 1999-$26,713; 2000-$25,271; and
thereafter-$212,787.
The following is a schedule of rent expense:
<TABLE>
<CAPTION>
Year ended January 31, 1996 1995 1994
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Minimum rent:
Store locations $15,864 $16,022 $14,899
Office, warehouses and equipment 17,309 18,336 19,390
Contingent rent:
Store location percentage rent 13,741 14,078 13,964
Common area costs, taxes and other 9,831 9,032 8,692
-----------------------------------
Total rent expense $56,745 $57,468 $56,945
===================================
</TABLE>
NOTE 10: STOCK OPTIONS
The Company provides a stock option plan for certain key employees. Options
are issued at market value on the date of grant and become exercisable over a
four-year period. The number of shares reserved for future stock option grants
is 489,750.
The Company currently follows the provisions of Accounting Principles Board
(APB) Opinion No. 25, under which no recognition of expense is required in
accounting for its stock options. In October 1995, the Financial Accounting
Standards Board issued Statement No. 123, which allows the Company to elect to
continue to follow the recognition and measurement provisions of APB Opinion
No. 25, provided that it makes certain additional footnote disclosures. The
Company intends to make this election; therefore, adoption of Statement No. 123
in 1996 will require additional footnote disclosures, but will not result in
additional expense recognition.
<PAGE>
(Note 10 continued)
A summary of stock option activity follows:
<TABLE>
<CAPTION>
Range of prices
Shares per share
- -------------------------------------------------------------------------
<S> <C> <C>
Outstanding,
February 1, 1993 1,444,357 $ 7-43
Granted 450,950 28-36
Exercised (81,410) 7-33
Cancelled (81,433) 22-43
--------------------------------
Outstanding,
January 31, 1994 1,732,464 7-43
Granted 345,770 44-48
Exercised (182,662) 7-43
Cancelled (17,322) 22-44
--------------------------------
Outstanding,
January 31, 1995 1,878,250 13-48
Granted 419,080 39-42
Exercised (154,366) 13-36
Cancelled (41,625) 28-48
--------------------------------
Outstanding,
January 31, 1996 2,101,339 $22-48
================================
Exercisable,
January 31, 1996 1,139,638 $22-48
================================
</TABLE>
NOTE 11: SUPPLEMENTARY CASH FLOW INFORMATION
Supplementary cash flow information includes the following:
<TABLE>
<CAPTION>
Year ended January 31, 1996 1995 1994
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Cash paid during the year for:
Interest (net of capitalized
interest) $ 42,248 $ 34,520 $41,122
Income taxes 121,212 146,590 86,485
</TABLE>
Nordstrom, Inc. and Subsidiaries Page 23
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12: CREDIT CARD AND FINANCING SUBSIDIARIES
Nordstrom National Credit Bank (the Bank), a wholly owned subsidiary of the
Company, issues a credit card for use in Company stores, and in 1994 introduced
a VISA card. Nordstrom Credit, Inc., also a wholly owned subsidiary, finances
all receivables generated through the use of these credit cards. Servicing of
the receivables is performed by the Bank. At January 31, 1996 and 1995, net
VISA receivables total $204,736 and $85,211.
Condensed combined financial information of these subsidiaries is as follows:
<TABLE>
<CAPTION>
Year ended January 31, 1996 1995 1994
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Service charge income $122,973 $ 92,591 $91,026
Other income 14,799 12,525 5,086
------------------------------------
Total revenue $137,772 $105,116 $96,112
====================================
Net earnings $ 23,835 $ 23,019 $22,209
====================================
</TABLE>
<TABLE>
<CAPTION>
January 31, 1996 1995
- ----------------------------------------------------------------------------
<S> <C> <C>
Assets:
Cash and cash equivalents $ 23,190 $ 24,286
Accounts receivable, net 873,893 655,427
Other assets 8,126 7,650
----------------------
Total assets $905,209 $687,363
======================
Liabilities and investment of Nordstrom, Inc.:
Notes payable:
Nordstrom, Inc. $ 86,000 $148,000
Other 232,501 87,388
Accounts payable and
accrued liabilities 14,988 21,091
Long-term debt 369,100 252,100
Investment of Nordstrom, Inc. 202,620 178,784
----------------------
Total liabilities and investment
of Nordstrom, Inc. $905,209 $687,363
======================
</TABLE>
<PAGE>
NOTE 13: SELECTED QUARTERLY DATA (UNAUDITED)
<TABLE>
<CAPTION>
Year ended January 31, 1996 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $815,598 $1,149,239 $906,848 $1,241,832 $4,113,517
Gross profit 261,864 369,455 294,564 381,384 1,307,267
Earnings before income taxes 45,677 89,065 48,542 89,028 272,312
Net earnings 27,677 53,865 29,442 54,128 165,112
Earnings per share .34 .65 .36 .67 2.02
Dividends per share 0.125 0.125 0.125 0.125 0.50
Year ended January 31, 1995 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total
- ------------------------------------------------------------------------------------------
Net sales $762,062 $1,079,501 $861,968 $1,190,947 $3,894,478
Gross profit 251,927 355,841 292,656 394,501 1,294,925
Earnings before income taxes 52,773 104,223 63,079 115,483 335,558
Net earnings 31,973 63,023 38,079 69,883 202,958
Earnings per share .39 .77 .46 .85 2.47
Dividends per share .085 .10 .10 .10 .385
</TABLE>
Page 24 Nordstrom, Inc. and Subsidiaries
<PAGE>
MANAGEMENT AND INDEPENDENT AUDITORS' REPORTS
REPORT OF MANAGEMENT
The accompanying consolidated financial statements, including the notes
thereto, and the other financial information presented in this Annual Report
have been prepared by management. The financial statements have been prepared
in accordance with generally accepted accounting principles and include
amounts that are based upon our best estimates and judgments. Management is
responsible for the consolidated financial statements, as well as the other
financial information in this Annual Report.
The Company maintains an effective system of internal accounting control. We
believe that this system provides reasonable assurance that transactions are
executed in accordance with management authorization, and that they are
appropriately recorded, in order to permit preparation of financial statements
in conformity with generally accepted accounting principles and to adequately
safeguard, verify and maintain accountability of assets. The concept of
reasonable assurance is based on the recognition that the cost of a system of
internal control should not exceed the benefits derived.
The consolidated financial statements and related notes have been audited by
Deloitte & Touche LLP, independent certified public accountants. The
accompanying auditors' report expresses an independent professional opinion on
the fairness of presentation of management's financial statements.
The Audit Committee of the Board of Directors is composed of the outside
directors, and is responsible for recommending the independent certified
public accounting firm to be retained for the coming year, subject to
shareholder approval. The Audit Committee meets periodically with the
independent auditors, as well as with management and internal auditors, to
review accounting, auditing, internal accounting controls and financial
reporting matters. The independent auditors and the internal auditors also
meet privately with the Audit Committee.
John A. Goesling
Executive Vice President and Chief Financial Officer
<PAGE>
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying consolidated balance sheets of Nordstrom,
Inc. and subsidiaries as of January 31, 1996 and 1995, and the related
consolidated statements of earnings, shareholders' equity and cash flows for
each of the three years in the period ended January 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, 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, such consolidated financial statements present fairly, in all
material respects, the financial position of Nordstrom, Inc. and subsidiaries
as of January 31, 1996 and 1995, and the results of their operations and their
cash flows for each of the three years in the period ended January 31, 1996,
in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Seattle, Washington; March 8, 1996
Nordstrom, Inc. and Subsidiaries Page 25
<PAGE>
TEN YEAR STATISTICAL SUMMARY
Dollars in thousands except square footage and per share amounts
<TABLE>
<CAPTION>
Year ended January 31, 1996 1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Financial Position
Customer accounts
receivable, net $ 874,103 $ 655,715 $ 565,151 $ 584,379 $ 585,490 $ 558,573
Merchandise inventories 626,303 627,930 585,602 536,739 506,632 448,344
Current assets 1,612,776 1,397,713 1,314,914 1,219,844 1,177,638 1,090,379
Current liabilities 832,313 690,454 627,485 511,196 553,903 551,835
Working capital 780,463 707,259 687,429 708,648 623,735 538,544
Working capital ratio 1.94 2.02 2.10 2.39 2.13 1.98
Property, buildings and
equipment, net 1,103,298 984,195 845,596 824,142 856,404 806,191
Long-term debt 439,943 373,910 438,574 481,945 511,000 489,172
Debt/capital ratio 32.09 25.56 29.11 33.09 40.74 43.59
Shareholders' Equity 1,422,972 1,343,800 1,166,504 1,052,031 939,231 826,410
Shares outstanding 81,113,144 82,244,098 82,059,128 81,974,797 81,844,227 81,737,910
Book value per share 17.54 16.34 14.22 12.83 11.48 10.11
Total assets 2,732,619 2,396,783 2,177,481 2,053,170 2,041,875 1,902,589
Operations
Net sales 4,113,517 3,894,478 3,589,938 3,421,979 3,179,820 2,893,904
Costs and expenses:
Cost of sales and
related buying and
occupancy 2,806,250 2,599,553 2,469,304 2,339,107 2,169,437 2,000,250
Selling, general and
administrative 1,120,790 1,023,347 940,579 902,083 831,505 747,770
Interest, net 39,295 30,664 37,646 44,810 49,106 52,228
Service charge income
and other, net (125,130) (94,644) (88,509) (86,140) (87,443) (84,660)
Total costs and expenses 3,841,205 3,558,920 3,359,020 3,199,860 2,962,605 2,715,588
Earnings before income
taxes 272,312 335,558 230,918 222,119 217,215 178,316
Income taxes 107,200 132,600 90,500 85,500 81,400 62,500
Net earnings 165,112 202,958 140,418 136,619 135,815 115,816
Earnings per share 2.02 2.47 1.71 1.67 1.66 1.42
Dividends per share .50 .385 .34 .32 .31 .30
Net earnings as a percent
of net sales 4.01% 5.21% 3.91% 3.99% 4.27% 4.00%
Return on average
shareholders' equity 11.94% 16.17% 12.66% 13.72% 15.38% 14.85%
Sales per square foot
for Company-operated
stores 382 395 383 381 388 391
Stores and Facilities
Company-operated stores 78 76 74 72 68 63
Total square footage 10,713,000 9,998,000 9,282,000 9,224,000 8,590,000 7,655,000
</TABLE>
Page 26 Nordstrom, Inc. and Subsidiaries
<PAGE>
TEN YEAR STATISTICAL SUMMARY (CONTINUED)
Dollars in thousands except square footage and per share amounts
<TABLE>
<CAPTION>
Year ended January 31, 1990 1989 1988 1987
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Financial Position
Customer accounts
receivable, net $ 519,656 $ 465,929 $ 391,387 $ 344,045
Merchandise inventories 419,976 403,795 312,696 257,334
Current assets 1,011,148 913,986 730,182 645,326
Current liabilities 489,888 448,165 394,699 324,697
Working capital 521,260 465,821 335,483 320,629
Working capital ratio 2.06 2.04 1.85 1.99
Property, buildings and
equipment, net 691,937 594,038 502,661 424,228
Long-term debt 468,412 389,216 260,343 271,054
Debt/capital ratio 43.78 43.12 39.57 41.57
Shareholders' Equity 733,250 639,941 533,209 451,196
Shares outstanding 81,584,710 81,465,027 81,371,106 80,981,722
Book value per share 8.99 7.86 6.55 5.57
Total assets 1,707,420 1,511,703 1,234,267 1,071,124
Operations
Net sales 2,671,114 2,327,946 1,920,231 1,629,918
Costs and expenses:
Cost of sales and
related buying and
occupancy 1,829,383 1,563,832 1,300,720 1,095,584
Selling, general and
administrative 669,159 582,973 477,488 408,664
Interest, net 49,121 39,977 32,952 34,910
Service charge income
and other, net (55,958) (57,268) (53,662) (49,479)
Total costs and expenses 2,491,705 2,129,514 1,757,498 1,489,679
Earnings before income
taxes 179,409 198,432 162,733 140,239
Income taxes 64,500 75,100 70,000 67,300
Net earnings 114,909 123,332 92,733 72,939
Earnings per share 1.41 1.51 1.13 .91
Dividends per share .28 .22 .18 .13
Net earnings as a percent
of net sales 4.30% 5.30% 4.83% 4.48%
Return on average
shareholders' equity 16.74% 21.03% 18.84% 19.06%
Sales per square foot
for Company-operated
stores 398 380 349 322
Stores and Facilities
Company-operated stores 59 58 56 53
Total square footage 6,898,000 6,374,000 5,527,000 5,098,000
</TABLE>
Nordstrom, Inc. and Subsidiaries Page 27
<PAGE>
RETAIL STORE FACILITIES
<TABLE>
The following table sets forth certain information with respect to each of the
stores operated by the Company. The Company also operates leased shoe
departments in 12 department stores in Hawaii and Guam. In addition, the
Company operates seven distribution centers and leases other space for
administrative functions.
<CAPTION>
Present Present
Year opened total store Year opened total store
Location or acquired area/sq. ft. Location or acquired area/sq. ft.
- ------------------------------------------------ --------------------------------------------------
<S> <C> <C> <C> <C> <C>
WASHINGTON GROUP NORTHERN CALIFORNIA GROUP
Downtown Seattle(1) 1963 245,000 Hillsdale Shopping Center 1982 149,000
Northgate Mall 1965 122,000 Broadway Plaza 1984 193,000
Tacoma Mall 1966 134,000 Stanford Shopping Center 1984 187,000
Bellevue Square 1967 285,000 The Village at Corte Madera 1985 116,000
Southcenter Mall 1968 170,000 Valley Fair 1987 165,000
Yakima 1972 44,000 280 Metro Center Rack 1987 31,000
Spokane 1974 121,000 Stonestown Galleria 1988 174,000
Alderwood Mall 1979 127,000 Downtown San Francisco 1988 350,000
Alderwood Rack 1985 25,000 Arden Fair 1989 190,000
Downtown Seattle Rack 1987 42,000 Stoneridge Mall 1990 173,000
Bellis Fair Rack 1990 20,000 Marina Square Rack 1990 44,000
SuperMall Rack 1995 48,000
UTAH GROUP
OREGON GROUP Crossroads Plaza 1980 140,000
Lloyd Center 1963 150,000 Fashion Place Mall 1981 110,000
Downtown Portland 1966 174,000 Ogden City Mall 1982 76,000
Washington Square 1974 189,000 Sugarhouse Center Rack 1991 31,000
Vancouver Mall 1977 71,000
Salem Centre 1980 71,000 CAPITAL GROUP
Clackamas Town Center 1981 121,000 Tysons Corner Center 1988 253,000
Clackamas Rack 1983 28,000 The Fashion Centre at
Downtown Portland Rack 1986 19,000 Pentagon City 1989 241,000
Potomac Mills Rack 1990 46,000
SOUTHERN CALIFORNIA GROUP Montgomery Mall 1991 225,000
South Coast Plaza 1978 235,000 City Place Rack 1992 37,000
Brea Mall 1979 195,000 Towson Town Center 1992 205,000
Los Cerritos Center 1981 122,000 Towson Rack 1992 31,000
Fashion Valley Mall 1981 156,000 Franklin Mills Factory
Glendale Galleria 1983 147,000 Direct 1993 43,000
Santa Ana Rack 1983 22,000 Annapolis Mall 1994 162,000
Topanga Plaza 1984 154,000
University Towne Centre 1984 130,000 NORTHEAST GROUP
Woodland Hills Rack 1984 48,000 Garden State Plaza 1990 272,000
The Galleria at South Bay 1985 161,000 Menlo Park Mall 1991 266,000
Westside Pavilion 1985 150,000 Freehold Raceway Mall 1992 174,000
Horton Plaza 1985 151,000 Faconnable 1993 10,000
Mission Valley Rack 1985 27,000 The Westchester 1995 219,000
Montclair Plaza 1986 133,000 The Mall at Short Hills 1995 188,000
North County Fair 1986 156,000
MainPlace Mall 1987 169,000 MIDWEST GROUP
Chino Town Square Rack 1987 30,000 Oakbrook Center 1991 249,000
Paseo Nuevo 1990 186,000 Mall of America 1992 240,000
The Galleria at Tyler 1991 164,000 Woodfield Rack 1994 45,000
Santa Anita 1994 151,000 Old Orchard 1994 209,000
Woodfield Shopping Center 1995 215,000
ALASKA GROUP Circle Centre Mall 1995 216,000
Anchorage 1975 97,000
CLEARANCE STORES
Arizona 48,000
<FN>
(1) Excludes approximately 23,000 square feet of
corporate and administrative offices.
</TABLE>
Page 30 Nordstrom, Inc. and Subsidiaries
<PAGE>
NORDSTROM, INC. AND SUBSIDIARIES
Appendix
<TABLE>
<CAPTION>
Graph Page
- --------------------------------------------
<S> <C>
Net Sales 3
Net Earnings 3
Percentage of 1995 Sales by Merchandise Category 12
Investing and Operating Cash Flows 14
Square Footage by Market Area at end of 1995 15
</TABLE>
<PAGE>
EXHIBIT 21.1
NORDSTROM, INC. AND SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
Name of Subsidiary State of Incorporation
- ------------------ ----------------------
<S> <C>
Nordstrom Credit, Inc. Colorado
Nordstrom National Credit Bank Colorado
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-END> JAN-31-1996
<CASH> 24,517
<SECURITIES> 0
<RECEIVABLES> 923,320
<ALLOWANCES> 29,393
<INVENTORY> 626,303
<CURRENT-ASSETS> 1,612,776
<PP&E> 1,942,110
<DEPRECIATION> 838,812
<TOTAL-ASSETS> 2,732,619
<CURRENT-LIABILITIES> 832,313
<BONDS> 365,733
<COMMON> 168,440
0
0
<OTHER-SE> 1,254,532
<TOTAL-LIABILITY-AND-EQUITY> 2,732,619
<SALES> 4,113,517
<TOTAL-REVENUES> 4,113,517
<CGS> 2,806,250
<TOTAL-COSTS> 3,841,205
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 39,589
<INTEREST-EXPENSE> 39,295
<INCOME-PRETAX> 272,312
<INCOME-TAX> 107,200
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 165,112
<EPS-PRIMARY> 2.02
<EPS-DILUTED> 2.02
</TABLE>
