<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, 1997
/ / 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/
1 of 14
<PAGE>
On March 17, 1997, 78,682,335 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 $1.9 billion.
Documents Incorporated by Reference:
Portions of Nordstrom, Inc. 1996 Annual Report to Shareholders
(Parts I, II and IV)
Portions of Proxy Statement for 1997 Annual Meeting of Shareholders
(Part III)
2 of 14
<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,
1997, the Company operates 62 large specialty stores in Alaska, California,
Colorado, Illinois, Indiana, Maryland, Michigan, Minnesota, New Jersey, New
York, Oregon, Pennsylvania, Texas, Utah, Virginia, and Washington, selling a
wide selection of apparel, shoes and accessories for women, men and children.
The Company also operates nineteen 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 boutique in New York under the
name "Faconnable", and leased shoe departments in twelve department stores in
Hawaii and Guam. The licenses for the leased shoe departments have been
terminated effective November 17, 1997. In addition, the Company operates a
Direct Sales Division which commenced operations in January 1994 with the
mailing of its first catalog.
In August 1997, the Company will open a large specialty store in Long Island,
New York and two more large specialty stores in West Hartford, Connecticut and
Cleveland, Ohio in September 1997. In February 1997, the Company opened two
new Rack stores in Southern California, which replaced existing Rack
locations. The Company will open two new Racks in Bellevue, Washington, in
May 1997 and in Hempstead, New York, in September 1997. The Company also
plans to open a men's and women's Faconnable boutique in Beverly Hills,
California in September to complete its planned new store opening schedule
for 1997. In 1998, three new large specialty stores are planned to open in
Atlanta, Georgia, Overland Park, Kansas, and Scottsdale, Arizona. In 1998,
the Company also plans to open a new flagship store in downtown Seattle,
Washington, and to remodel a store in San Diego, California.
The Company regularly employs on a full or part-time basis an average of
approximately 39,600 employees. Due to the seasonal nature of the Company's
business, the number increased to approximately 46,000 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 1996 Annual Report to Shareholders, which
sections are incorporated by reference herein from Exhibit 13.1 of this
report:
Message to Our Shareholders
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 43 Executive Vice 1990 None
President
Gail A. Cottle 45 Executive Vice 1985 None
President
John A. Goesling 51 Executive Vice 1980 None
President and Treasurer
Jack F. Irving 52 Executive Vice 1980 None
President
Blake W. Nordstrom 36 Co-President 1991 Brother of Erik B. and
Peter E. Nordstrom
Erik B. Nordstrom 33 Co-President 1995 Brother of Blake W. and
Peter E. Nordstrom
J. Daniel Nordstrom 34 Co-President 1995 Brother of William E.
Nordstrom and cousin
of James A. Nordstrom
James A. Nordstrom 35 Co-President 1991 Cousin of J. Daniel and
William E. Nordstrom
Peter E. Nordstrom 34 Co-President 1995 Brother of Blake W. and
Erik B. Nordstrom
William E. Nordstrom 33 Co-President 1995 Brother of J. Daniel
Nordstrom and cousin
of James A. Nordstrom
John C. Walgamott 51 President of 1991 None
Nordstrom Credit, Inc.
and Nordstrom National
Credit Bank
John J. Whitacre 44 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 of Shareholders. 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, 1997 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 21 25%
Leased Stores 30 19
Owned on leased land 29 51
Partly owned & partly leased 3 5
--------- ----------------
83 100%
========= ================
</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 1996 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 on the NASDAQ
National Market under the symbol "NOBE." The approximate number of
holders of Common Stock as of March 17, 1997 was 74,000.
Certain other information required under this item with respect to stock
prices and dividends is included in the following sections of the Company's
1996 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 1996 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 1996 Annual Report to Shareholders, which sections are
incorporated by reference herein from Exhibit 13.1 of this report:
Management Discussion and Analysis
Note 5 in Notes to Consolidated Financial Statements
Item 8. Financial Statements and Supplementary Data.
- -----------------------------------------------------
The information required under this item is included in the following
sections of the Company's 1996 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
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
- ------------------------------------------------------------------------
None
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<PAGE>
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 1997 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 1997 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, 1997
Compensation and Stock Option Committee Report on Fiscal Year
1996 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 1997 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:
Security Ownership of Certain Beneficial Owners and Management
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 1997 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
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<PAGE>
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 1996 Annual Report to Shareholders as incorporated by
reference herein from Exhibit 13.1 of this report.
(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, 1989, 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 Norwest Bank Colorado, 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.
8 of 14
<PAGE>
(a)3. Exhibits (continued)
--------------------
(4.2) Trustee Resignation of Wells Fargo Bank (Colorado), N.A., (as
successor to First Interstate Bank of Denver, N.A.), dated
March 20, 1997 is filed herein as an Exhibit.
(4.3) Trustee Acceptance of Norwest Bank Colorado, N.A., dated
March 20, 1997 is filed herein as an Exhibit.
(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.
(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.
(10.8) Agreement to terminate the Operating Agreement for VISA Accounts
and Receivables dated May 1, 1994 between Nordstrom Credit, Inc.
and Nordstrom National Credit Bank, dated August 14, 1996 is
hereby incorporated by reference from the Nordstrom Credit, Inc.
Quarterly Report on Form 10-Q for the quarter ended October 31,
1996, Exhibit 10.1.
(10.9) Master Pooling and Servicing Agreement dated August 14, 1996
between Nordstrom National Credit Bank and Norwest Bank Colorado,
N.A., as trustee, is hereby incorporated by reference from the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
October 31, 1996, Exhibit 10.1.
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<PAGE>
(a)3. Exhibits (continued)
--------------------
(10.10) Series 1996-A Supplement to Master Pooling and Servicing Agreement
dated August 14, 1996 between Nordstrom National Credit Bank,
Nordstrom Credit, Inc. and Norwest Bank Colorado, N.A., as
trustee, is hereby incorporated by reference from the Registrant's
Quarterly Report on Form 10-Q for the quarter ended October 31,
1996, Exhibit 10.2.
(10.11) Transfer and Administration Agreement dated August 14, 1996
between Nordstrom National Credit Bank, Enterprise Funding
Corporation and Nationsbank, N.A. is hereby incorporated by
reference from the Registrant's Quarterly Report on Form 10-Q
for the quarter ended October 31, 1996, Exhibit 10.3.
(10.12) Receivables Purchase Agreement dated August 14, 1996 between
Registrant and Nordstrom Credit, Inc. is filed herein as an
Exhibit.
(10.13) The Nordstrom, Inc. 1997 Stock Option Plan is hereby incorporated
by reference from the Registrant's Proxy Statement for the 1997
Annual Meeting of Shareholders.
(13.1) The Company's 1996 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 1996 Annual Report to Shareholders.
10 of 14
<PAGE>
(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)
Date March 31, 1997 by /s/ John A. Goesling
-------------- ------------------------------------------
John A. Goesling
Executive Vice President and Treasurer
(Principal Accounting and Financial Officer)
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 Principal Executive Officer:
Financial Officer:
/s/ John A. Goesling /s/ John J. Whitacre
- ------------------------------- --------------------------------
John A. Goesling John J. Whitacre
Executive Vice President Chairman and Director
and Treasurer
11 of 14
<PAGE>
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/ Raymond A. Johnson /s/ Alfred E. Osborne, Jr.
- ------------------------------- --------------------------------
Raymond A. Johnson Alfred E. Osborne, Jr.
Director Director
/s/ Charles A. Lynch /s/ William D. Ruckelshaus
- ------------------------------- --------------------------------
Charles A. Lynch William D. Ruckelshaus
Director Director
/s/ Ann D. McLaughlin /s/ Elizabeth Crownhart Vaughan
- ------------------------------- --------------------------------
Ann D. McLaughlin Elizabeth Crownhart Vaughan
Director Director
/s/ John A. McMillan /s/ John J. Whitacre
- ------------------------------- ---------------------------------
John A. McMillan John J. Whitacre
Director Chairman of the Board of Directors
Date March 31, 1997
___________________________
12 of 14
<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 33-28882 of Nordstrom, Inc. on Form S-8 of our reports dated
March 10, 1997 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, 1997.
We have audited the consolidated financial statements of Nordstrom, Inc. and
subsidiaries as of January 31, 1997 and 1996, and for each of the three years
in the period ended January 31, 1997, and have issued our report thereon dated
March 10, 1997; such financial statements and report are included in your 1996
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 31, 1997
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, 1995 $23,145 $20,219 $20,406 $22,958
January 31, 1996 $22,958 $39,589 $33,154 $29,393
January 31, 1997 $29,393 $51,352 $53,952 $26,793
</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, 1989,
Exhibit A
3.2 By-laws, as amended Filed herewith electronically
4.1 Indenture between Nordstrom Credit, Incorporated by reference
Inc. and Norwest Bank Colorado, from Registration
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 Wells Fargo Filed herewith electronically
Bank (Colorado), N.A., dated
March 20, 1997
4.3 Trustee Acceptance of Norwest Bank Filed herewith electronically
Colorado, N.A., dated March 20,
1997
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.
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.
<PAGE>
Exhibit Index (continued)
- -------------------------
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
10.8 Agreement to terminate the Operating Incorporated by reference
Agreement for VISA Accounts and from the Nordstrom Credit,
Receivables dated May 1, 1994 Inc. Quarterly Report on
between Nordstrom Credit, Inc. Form 10-Q for the quarter
and Nordstrom National Credit ended October 31, 1996,
Bank, dated August 14, 1996 Exhibit 10.1
10.9 Master Pooling and Servicing Incorporated by reference
Agreement dated August 14, 1996 from the Registrant's
between Nordstrom National Credit Quarterly Report on Form
Bank and Norwest Bank Colorado, 10-Q for the quarter ended
N.A., as trustee October 31, 1996, Exhibit
10.1.
10.10 Series 1996-A Supplement to Master Incorporated by reference
Pooling and Servicing Agreement from the Registrant's
dated August 14, 1996 between Quarterly Report on Form
Nordstrom National Credit Bank, 10-Q for the quarter ended
Nordstrom Credit, Inc. and Norwest October 31, 1996, Exhibit
Bank Colorado, N.A., as trustee 10.2.
10.11 Transfer and Administration Agreement Incorporated by reference
dated August 14, 1996 between from the Registrant's
Nordstrom National Credit Bank, Quarterly Report on Form
Enterprise Funding Corporation and 10-Q for the quarter ended
Nationsbank, N.A. October 31, 1996, Exhibit
10.3.
10.12 Receivables Purchase Agreement Filed herewith electronically
dated August 14, 1996 between
Registrant and Nordstrom Credit,
Inc.
10.13 1997 Nordstrom Stock Option Plan Incorporated by reference
from the Registrant's Proxy
Statement for the 1997
Annual Meeting of
Shareholders.
13.1 1996 Annual Report to Shareholders Filed herewith electronically
21.1 Subsidiaries of the Registrant Filed herewith electronically
<PAGE>
Exhibit Index (continued)
- -------------------------
23.1 Independent Auditors' Consent
and Report on Schedule Filed herewith electronically
27.1 Financial Data Schedule Filed herewith electronically
</TABLE>
<PAGE>
BYLAWS
OF
NORDSTROM, INC.
(Amended and Restated as of March 19, 1997)
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) of the Board of Directors, by
the President (or any Co-President), or by the Board of Directors and shall be
called by the Chairman (or any Co-Chairman) of the Board of Directors 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.
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
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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.
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
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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) of the
Board of Directors, 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 Directors
may be called by or at the request of the Chairman (or any Co-Chairman) of the
Board of Directors, 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.
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.
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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.
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
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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.
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 of the Board of Directors, 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.
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Section 5. Chairman of the Board of Directors. The Chairman or
Co-Chairmen of the Board of Directors, 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 of the Board of Directors 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 of the Board of Directors or President and such other
duties, authority and responsibilities as may be prescribed by the Board of
Directors from time to time.
Section 6. President. The President or Co-Presidents, together with the
Chairman or Co-Chairmen of the Board of Directors, shall have general
supervision and control over the business and affairs of the corporation
subject to the authority of the Chairman or Co-Chairmen of the Board of
Directors 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 of the Board of Directors 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 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 Chairman or Co-Chairmen of
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the Board of Directors, 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 Chairman or Co-Chairmen of the Board of Directors, 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
Chairman or Co-Chairmen of the Board of Directors, President or any Co-
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 Chairman or Co-Chairmen of the Board of Directors, 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 Chairman or Co-Chairmen of the Board of Directors, 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 Chairman or Co-Chairmen of the Board of Directors,
President or any Co-President, or by the Board of Directors.
Section 11. The Controller. The Controller shall report to the
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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-Chairmen of the Board of Directors, 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 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.
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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) of the Board of
Directors, 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 Chairman of
the Executive Committee or two or more Co-Chairmen of the Executive Committee
from its members and may fix its own rules of procedure which shall not be
inconsistent with these Bylaws. 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.
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-
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Chairman) of the Board of Directors, 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 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."
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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 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
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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, 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
13
<PAGE>
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 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
14
<PAGE>
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 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 the 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) of the Board of Directors,
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.
15
<PAGE>
TRUSTEE RESIGNATION
TO: Nordstrom Credit, Inc.
In connection with the appointment of Norwest Bank Colorado, National
Association as successor trustee under the indenture (defined below),
Wells Fargo Bank (Colorado), N.A. (the "Resigning Trustee"), hereby
resigns as trustee under that certain indenture by and between the
Company and the Resigning Trustee dated as of November 15, 1984 as
supplemented by the First Supplemental Indenture dated as of January 15,
1988, the Second Supplemental Indenture dated as of June 1, 1989 and the
Third Supplemental Indenture dated as of October 19, 1990 (as
supplemented, the "Indenture"), providing for the issuance from time to
time of unsecured debentures, notes or other evidences of indebtedness
of the Company (the "Securities") to be issued in one or more series
under such Indenture. The Resigning Trustee acknowledges that
$311,000,000.00 aggregate principal amount of debt securities are
outstanding under the Indenture.
The resignation is provided pursuant to Section 610(b) of the
Indenture, and shall be applicable with respect to all series of
Securities heretofore issued under the Indenture.
DATED: March 20, 1997
WELLS FARGO BANK
(COLORADO), N.A.
BY /s/ Richard J. Sullivan
------------------------
Richard J. Sullivan, III
Vice President
<PAGE>
TRUSTEE ACCEPTANCE
TO: Wells Fargo Bank (Colorado), N.A.
Nordstrom Credit, Inc.
Norwest Bank Colorado, National Association (the "Successor Trustee"),
hereby acknowledges and accepts its appointment by Nordstrom Credit, Inc.
(The "Company") as successor trustee under that certain indenture by and
between the Company and Wells Fargo Bank (Colorado), N.A., as successor
trustee (the "Resigning Trustee"), dated as of November 15, 1984, as
supplemented by the First Supplemental Indenture dated as of January 15,
1988, the Second Supplemental Indenture dated as of June 1, 1989, and the
Third Supplemental Indenture dated as of October 19, 1990 (as supplemented,
the "Indenture"), providing for the issuance from time to time of unsecured
debentures, notes or other evidences of indebtedness of the Company (the
"Securities") to be issued in one or more series under such Indenture.
This acceptance is given pursuant to Section 611 of the Indenture, and shall
be applicable with respect to all series of Securities heretofore issued
under the Indenture.
Dated: March 20, 1997
NORWEST BANK COLORADO,
NATIONAL ASSOCIATION
BY:/s/ Cheryl J. Hanson
----------------------------
Cheryl J. Hanson, Vice President
The Company hereby confirms Norwest Bank Colorado, National Association is
vested with all the rights, powers, trusts and duties of the Resigning
Trustee under the Indenture.
Dated: March 20, 1997
NORDSTROM CREDIT, INC.
BY:/s/ John C. Walgamott
-----------------------------
John C. Walgamott, President
<PAGE>
RECEIVABLES PURCHASE AGREEMENT
This Receivables Purchase Agreement is executed by and between
Nordstrom, Inc., a Washington corporation ("Nordstrom") and Nordstrom
Credit, Inc., a Colorado corporation and a wholly owned subsidiary of
Nordstrom ("Credit").
WHEREAS Credit is the owner and holder of certain amounts owing, from
time to time, by a person or persons, including any guarantor thereof,
under certain VISA accounts (I) owned by Nordstrom National Credit Bank
as of July 31, 1996, other than VISA accounts which are 30 days or more
delinquent on a contractual basis as of July 31, 1996, or (ii)
originated y Nordstrom National Credit Bank during the period from the
close of business on July 31, 1996 to the close of business on August
14, 1996, including in each case without limitation, amounts owing for
the purchase of merchandise and services, periodic finance charges, cash
advances and cash advance fees, access checks, annual cardholder fees,
credit insurance premiums, late fees, overlimit fees, return check fees
and all other fees and charges, and all monies due or to become due with
respect to any of the foregoing and all proceeds (including "proceeds"
as defined in the Uniform Commercial Code (the "UCC") of the State of
Colorado) thereof, the aggregate amount of which as of July 31, 1996 was
$208,462,983 (the "Receivables"); and
WHEREAS Nordstrom desire to purchase from Credit, and Credit desires
to sell to Nordstrom, the Receivables;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Credit hereby sells, transfers, assigns and conveys to Nordstrom
all of Credit's right, title and interest in and to the Receivables, and
Nordstrom hereby purchases all of such right, title and interest in and
to the Receivables for a purchase price of $208,462,983; and
2. Credit agrees to do and perform, from time to time, any and all
acts and to execute any and all further instruments required or
reasonably requested by Nordstrom more fully to effect the purposes of
this Agreement, including, without limitation, a financing statement
relating to the transfer of the Receivables pursuant to this Agreement
under the provisions of the UCC of the State of Colorado and any other
applicable state and any financing statements or continuation statements
relating to the Receivables requested by Nordstrom for filing under the
provisions of the UCC of the State of Colorado or any other applicable
state.
This Agreement shall be construed in accordance with the laws of the
State of Colorado, without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder shall
be determined in accordance with such laws.
DATED this 14th day of August, 1996.
NORDSTROM, INC.,
a Washington corporation
<PAGE>
By /s/ John A. Goesling
------------------------------
John A. Goesling, Executive
Vice President
NORDSTROM CREDIT, INC.
a Colorado corporation
By /s/ John A. Goesling
------------------------------
John A. Goesling, Executive
Vice President
<PAGE>
EXHIBIT 13.1
PORTIONS OF THE 1996 ANNUAL REPORT TO SHAREHOLDERS
FINANCIAL HIGHLIGHTS
<TABLE>
Dollars in thousands except per share amounts
<CAPTION>
Fiscal Year 1996 Fiscal Year 1995 % Change
--------------------------------------------------
<S> <C> <C> <C>
Net sales $4,453,063 $4,113,517 +8.3
Earnings before income taxes 243,505 272,312 -10.6
Net earnings 147,505 165,112 -10.7
Net earnings per share 1.82 2.02 -9.9
Cash dividends paid per share .500 .500 0.0
</TABLE>
STOCK TRADING
<TABLE>
<CAPTION>
Fiscal Year 1996 Fiscal Year 1995
-----------------------------------------------
High Low High Low
<S> <C> <C> <C> <C>
First Quarter 50 7/8 39 1/4 45 1/4 36 1/4
Second Quarter 52 7/8 39 1/4 44 3/4 35
Third Quarter 42 3/8 35 1/2 43 36 5/8
Fourth Quarter 44 35 7/16 43 3/8 37
</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 oldest fiscal year on the left, net sales (dollars are in
millions) were as follows: 1987-$1,920; 1988-$2,328; 1989-$2,671; 1990-$2,894;
1991-$3,180; 1992-$3,422; 1993-$3,590; 1994-$3,894; 1995-$4,114; and 1996-
$4,453.
Graph - Net Earnings
The vertical bar graph compares net earnings for the past ten years. Beginning
with the oldest fiscal year on the left, net earnings (dollars in
millions) were as follows: 1987-$92.7; 1988-$123.3; 1989-$114.9; 1990-$115.8
1991-$135.8; 1992-$136.6; 1993-$140.4; 1994-$203.0; 1995-$165.1; and 1996-
$147.5.
Nordstrom, Inc. and Subsidiaries Page 3
<PAGE>
MESSAGE TO OUR SHAREHOLDERS
The past year has been full of ambitious change and exciting growth for
Nordstrom. We opened new stores in Philadelphia, Dallas, Detroit, and Denver,
each generating strong sales volume. Nordstrom achieved an 8.3 percent sales
volume increase to a record $4.5 billion, although net income declined 10.7
percent to $147.5 million. While we did see a modest increase in sales, it
came primarily from store expansion. Needless to say, we are disappointed with
lower net income.
A strategic reorganization of some of our women's apparel divisions brought
higher-than-average markdowns that, combined with other factors including a
disappointing holiday season, contributed to lower earnings. While we may have
underestimated the downward impact that the merchandise reorganization would
have on our financial results, we believe our women's apparel areas are now
better positioned for future growth.
In addition to our new full-line Nordstrom stores, the Rack Division opened its
second Midwest location in Northbrook Court on the North Shore of Chicago.
This brings our total number of full-line stores to 62 and Rack/clearance
stores to 20. The additional 1,041,000 square feet brings the company total
to 11,754,000.
The Direct Sales Catalog Division continues to grow at a brisk pace. Operating
performance was dramatically improved over the previous year. Additionally, we
broke ground on a state-of-the-art fulfillment center in Cedar Rapids, Iowa.
The center will not only better serve our mail order customers, but will allow
room for further growth. We intend to have the first catalog filled and
delivered through this facility in late summer 1997.
This year, even more opportunity awaits us with new stores opening in
Cleveland, Long Island and Hartford-significant markets for us. In 1998 and
beyond, we are preparing to add stores in existing regions and expand into
other excellent new markets. Some of these include Atlanta, Georgia; Overland
Park, Kansas; Scottsdale, Arizona; Honolulu, Hawaii; Providence, Rhode Island;
and a new flagship store in downtown Seattle, Washington.
With continued store expansion and a focused effort to improve results at
existing stores, our goal is to increase earnings and build value for our
shareholders. As we look to the future, we do so with confidence. Our
strength has always been -- and continues to be -- not just the quality of our
merchandise, but the quality of our people.
John Whitacre
Page 4 Nordstrom, Inc. and Subsidiaries
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
The following discussion and analysis gives a detailed review of the past
three years, in addition to information on future commitments and trends. Some
of the information in this annual report, including anticipated store openings,
planned capital expenditures and trends in company operations are forward
looking statements which are subject to risks and uncertainties. Actual future
results and trends may differ materially depending upon a variety of factors,
including but not limited to, the Company's ability to predict fashion trends,
consumer apparel buying patterns, the Company's ability to control costs and
expenses, trends in personal bankruptcies and bad debt write-offs, employee
relations, adverse weather conditions and other hazards of nature such as
earthquakes and floods, the Company's ability to continue its expansion plans,
and the impact of competitive market factors. 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 1996 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales in comparable stores
(open at least fourteen months) 0.6% (0.7%) 4.4%
Sales in new stores 7.0% 5.2% 3.3%
Direct sales catalog 0.7% 1.1% 0.8%
----- ---- ----
Total percentage increase 8.3% 5.6% 8.5%
===== ==== ====
</TABLE>
After a healthy gain in comparable store sales in 1994, sales in comparable
stores have changed only slightly in the last two years. In 1995, the Company
experienced declining demand for apparel in general, as well as sales decreases
at several stores in the Company's Chicago and New Jersey markets resulting
from new store openings in those markets. In mid-1996, the Company changed the
merchandise mix in most of its women's apparel departments in response to
changing customer profiles and vendor product offerings. While management
believes these changes will better position our women's apparel departments for
future growth, they resulted in sales decreases in many of the departments.
These decreases offset increases in other areas of business. In addition, in
the fourth quarter, portions of the Company's holiday merchandising strategy
were not executed as well as planned. The Company is continuing to evaluate
its merchandise mix to meet customers' changing needs and increase sales.
Sales in new stores includes sales from stores open less than fifteen months.
The Company has 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.
The direct sales catalog division, which started in 1994, continues to grow
rapidly with sales of $103 million in 1996.
Although the Company's average price point has increased over the past several
years, this has been due to changes in the merchandise mix. There has been
little, if any, inflation in overall merchandise prices during the past several
years.
Page 10 Nordstrom, Inc. and Subsidiaries
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
Graph - Percentage of 1996 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 - 18%;
Women's Accessories - 20%; Children's Apparel and Accessories - 4%;
Women's Apparel - 35%; and Other - 3%. The caption below the graph reads,
"Sales by major merchandise category have changed only slightly over the
past several years."
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 91.4% in 1994, 93.4% in 1995, and 94.5% for 1996. Unless otherwise
indicated, the changes discussed below are stated as a percentage of sales
as shown on page 14.
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
changes in merchandise styles and selections, cost of sales, and therefore the
merchandise gross margin, can fluctuate up and down from year to year. 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
excess inventory levels led to higher markdowns as sales did not meet
expectations. Merchandise margins decreased again in 1996 due to higher
markdowns which resulted from the merchandise changes in the Company's women's
apparel departments discussed earlier, a lower markup, and sales that were
below expectations. Buying costs increased both in 1994 and 1995 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
and 1996 as a result of new store openings and remodeling of older stores.
Selling, general and administrative expenses increased in both 1995 and 1996
for several reasons. In 1995, expenses in comparable stores continued to
increase while sales declined. In addition, bad debts increased as a result of
the growth of the Company's VISA credit card program, and the direct sales
catalog division continued to incur high operating costs. In 1996, selling,
general and administrative expenses increased primarily because of higher bad
debts. Rising consumer debt levels have led to higher charge-offs on the
Company's credit card balances, particularly from personal bankruptcies.
Improvements in the operating costs of the direct sales catalog division were
offset by rising expenses in stores.
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.
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 11
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
Liquidity and Capital Resources
Net cash used in investing activities exceeded net cash provided by operating
activities in 1994 and 1995 as the Company increased its spending on new store
construction and its investment in customer accounts receivable. In 1996, net
cash provided exceeded net cash used as the growth of credit card receivables
slowed dramatically.
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 1996 1995 1994
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating working capital (in thousands) $939,204 $1,068,923 $843,924
Percentage change from prior year (12.1%) 26.7% 13.3%
Net sales/average operating
working capital 4.4 4.3 4.9
</TABLE>
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 by reducing the minimum
payment on its proprietary credit card. This caused operating working
capital to increase at a significantly greater rate than sales.
During 1996, the Company's proprietary credit card balances did not increase
because of continuing competition from third-party cards. The Company also
reduced its efforts to promote its VISA credit card because of concerns about
rising charge-offs. In addition, in 1996 the Company securitized its VISA
credit card portfolio, as described more fully in Notes 5 and 12 to the
accompanying financial statements. These factors together resulted in a
decrease in operating working capital for the year.
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>
1987 $128.3 $ 87.7
1988 $153.4 $ 46.0
1989 $168.7 $122.2
1990 $200.7 $148.1
1991 $147.2 $154.0
1992 $ 71.9 $235.6
1993 $132.7 $262.1
1994 $246.9 $231.8
1995 $254.0 $121.9
1996 $206.1 $248.9
</TABLE>
Page 12 Nordstrom, Inc. and Subsidiaries
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
Liquidity and Capital Resources (continued)
The Company has spent approximately $730 million during the last three years to
add new stores and facilities and to improve existing stores and facilities.
Over 2.4 million square feet of selling space has been added during this time
period, representing an increase of 27%. 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 approximately $900 million on capital projects
during the next three years, with approximately $250 million allocated to the
refurbishment of existing stores. Although the Company has made commitments
for stores to be opening in 1997 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.
In view of the decrease in the Company's debt to capital ratio that occurred
over time, the Board of Directors approved $100 million common stock
repurchase programs in each of May 1995, November 1996 and February 1997.
Through the end of 1996, the Company spent $121 million to repurchase 3,138,375
outstanding shares of its common stock under these programs. Management
expects to complete the second program, and depending upon the price of the
Company's shares and operating results, begin the third program in 1997.
The anticipated growth of the Company's operations will require some external
capital in the next three years. Nordstrom Credit, Inc. anticipates filing a
shelf registration statement to register up to $250 million in debt securities
in the first quarter of 1997. Management believes, however, that the expansion
of the Company's operations over the next several years will not increase its
debt to capital percentage. Management and the Board of Directors will
continue to evaluate the prospects for future share repurchases.
Graph - Square Footage by Market Area at end of 1996
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,
11.8%, 1,383,000; Other, 1.2%, 145,000; Midwest, 12.5%, 1,472,000; Oregon,
7.0%, 823,000; Utah/Colorado, 5.1%, 602,000; Southern California, 22.9%,
2,688,000; Northern California, 15.1%, 1,772,000; Capital, 12.6%, 1,481,000;
Southwest, 2.1%, 249,000; and Northeast, 9.7%, 1,139,000.
Nordstrom, Inc. and Subsidiaries Page 13
<PAGE>
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
Dollars in thousands except per share amounts
% of % of
Year ended January 31, 1997 1996 sales 1995 sales
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Sales $4,453,063 100.0 $4,113,517 100.0 $3,894,478 100.0
----------------------------------------
Costs and Expenses:
Cost of sales and related
buying and occupancy 3,082,037 69.2 2,806,250 68.2 2,599,553 66.7
Selling, general and
administrative 1,217,590 27.3 1,120,790 27.2 1,023,347 26.3
Interest, net 39,400 .9 39,295 1.0 30,664 .8
Service charge income
and other, net (129,469) (2.9) (125,130) (3.0) (94,644) (2.4)
----------------------------------------------------------
Total Costs and Expenses 4,209,558 94.5 3,841,205 93.4 3,558,920 91.4
----------------------------------------------------------
Earnings before income taxes 243,505 5.5 272,312 6.6 335,558 8.6
Income taxes 96,000 2.2 107,200 2.6 132,600 3.4
----------------------------------------------------------
Net Earnings $ 147,505 3.3 $ 165,112 4.0 $ 202,958 5.2
==========================================================
Net Earnings per share $1.82 $2.02 $2.47
==========================================================
Cash dividends paid per share $.50 $.50 $.385
==========================================================
<FN>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
</TABLE>
Page 14 Nordstrom, Inc. and Subsidiaries
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Dollars in thousands
January 31, 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 28,284 $ 24,517
Accounts receivable, net 714,589 893,927
Merchandise inventories 719,919 626,303
Prepaid income taxes and other 69,607 68,029
-----------------------------------
Total Current Assets 1,532,399 1,612,776
Property, buildings and equipment, net 1,152,454 1,103,298
Other assets 17,654 16,545
-----------------------------------
Total Assets $2,702,507 $2,732,619
===================================
Liabilities and Shareholders' Equity
Current Liabilities:
Notes payable $ 163,770 $ 232,501
Accounts payable 310,430 277,584
Accrued salaries, wages, and taxes 192,750 185,540
Accrued expenses 56,080 47,834
Accrued income taxes 13,045 14,644
Current portion of long-term debt 51,302 74,210
-----------------------------------
Total Current Liabilities 787,377 832,313
Long-term debt 329,330 365,733
Deferred lease credits and other
deferred items 112,608 111,601
Shareholders' Equity 1,473,192 1,422,972
-----------------------------------
Total Liabilities and Shareholders' Equity $2,702,507 $2,732,619
===================================
<FN>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
</TABLE>
Nordstrom, Inc. and Subsidiaries Page 15
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Dollars in thousands except per share amounts
Year ended January 31, 1997 1996 1995
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock
Authorized 250,000,000 shares; issued and
outstanding 79,634,977, 81,113,144 and
82,244,098 shares
Balance at beginning of year $ 168,440 $ 163,334 $ 157,374
Issuance of common stock 14,958 5,106 5,960
--------------------------------------
Balance at end of year 183,398 168,440 163,334
--------------------------------------
Retained Earnings
Balance at beginning of year 1,254,532 1,180,466 1,009,130
Net earnings 147,505 165,112 202,958
Cash dividends paid ($.50, $.50, and $.385
per share) (40,472) (41,001) (31,622)
Purchase and retirement of common stock (71,771) (50,045) -
--------------------------------------
Balance at end of year 1,289,794 1,254,532 1,180,466
--------------------------------------
Total Shareholders' Equity $1,473,192 $1,422,972 $1,343,800
======================================
<FN>
The accompany Notes to Consolidated Financial Statements are an integral part
of these statements.
</TABLE>
Page 16 Nordstrom, Inc. and Subsidiaries
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Dollars in thousands
Year ended January 31, 1997 1996 1995
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities
Net earnings $147,505 $165,112 $202,958
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization 156,122 134,347 110,789
Change in:
Accounts receivable, net (7,262) (218,036) (89,450)
Merchandise inventories (93,616) 1,627 (42,328)
Prepaid income taxes and other (1,578) (6,634) (9,746)
Accounts payable 32,846 4,500 9,029
Accrued salaries, wages, and taxes 7,210 (4,961) 33,554
Accrued expenses 8,246 6,844 4,996
Income tax liabilities (12,216) (12,621) (4,518)
Deferred lease credits 11,624 51,756 16,558
----------------------------------------
Net cash provided by operating activities 248,881 121,934 231,842
----------------------------------------
Investing Activities
Additions to property, buildings and
equipment, net (204,278) (252,876) (248,608)
Other, net (1,838) (1,103) 1,660
----------------------------------------
Net cash used in investing activities (206,116) (253,979) (246,948)
----------------------------------------
Financing Activities
Proceeds from accounts receivable
securitization 186,660 - -
(Decrease) increase in notes payable (68,731) 145,113 47,051
Proceeds from issuance of long-term debt 57,729 140,859 49,656
Principal payments on long-term debt (117,311) (75,967) (114,664)
Proceeds from issuance of common stock 14,958 5,106 5,960
Cash dividends paid (40,472) (41,001) (31,622)
Purchase and retirement of common stock (71,771) (50,045) -
----------------------------------------
Net cash (used in) provided by financing
activities (38,998) 124,065 (43,619)
----------------------------------------
Net increase (decrease) in cash
and cash equivalents 3,767 (7,980) (58,725)
Cash and cash equivalents at beginning of year 24,517 32,497 91,222
----------------------------------------
Cash and cash equivalents at end of year $ 28,284 $ 24,517 $ 32,497
========================================
<FN>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
</TABLE>
Nordstrom, Inc. and Subsidiaries Page 17`
<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 62 large specialty stores and 20 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 $55,183 at January 31, 1997.
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 80,848,984, 81,919,625, and 82,144,079 in 1996, 1995
and 1994.
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.
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.
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, 1997 and 1996 include $14,414 and $16,760 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, 1997 and 1996 is not material.
Fair Value of Financial Instruments: The carrying amount of cash equivalents
and notes payable approximates fair value because of the short maturity of
these instruments. 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 $374,000 and $478,000 at January 31, 1997 and 1996.
Page 18 Nordstrom, Inc. and Subsidiaries
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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
of the plan, 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 $36,000, $40,000, and $44,000
in 1996, 1995, and 1994.
NOTE 3: INTEREST EXPENSE
The components of interest expense are as follows:
<TABLE>
<CAPTION>
Year ended January 31, 1997 1996 1995
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Nordstrom, Inc.
Short-term debt $ 432 $ 69 $ 69
Long-term debt 4,247 8,635 10,780
Nordstrom Credit, Inc.
Short-term debt 12,703 10,184 5,085
Long -term debt 28,236 27,788 23,161
-----------------------------------
Total interest incurred 45,618 46,676 39,095
Less: Interest income (1,395) (2,204) (2,416)
Capitalized interest (4,823) (5,177) (6,015)
-----------------------------------
Interest, net $39,400 $39,295 $30,664
===================================
</TABLE>
NOTE 4: INCOME TAXES
Income taxes consist of the following:
<TABLE>
<CAPTION>
Year ended January 31, 1997 1996 1995
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Current income taxes:
Federal $ 88,414 $ 94,855 $118,558
State and local 18,150 19,649 23,986
------------------------------------
Total current income taxes 106,564 114,504 142,544
------------------------------------
Deferred income taxes:
Current (1,471) (3,339) (10,113)
Non-current (9,093) (3,965) 169
------------------------------------
Total deferred income taxes (10,564) (7,304) (9,944)
------------------------------------
Total income taxes $ 96,000 $107,200 $132,600
====================================
</TABLE>
A reconciliation of the statutory Federal income tax rate with the effective
tax rate is as follows:
<TABLE>
<CAPTION>
Year ended January 31, 1997 1996 1995
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory rate 35.00% 35.00% 35.00%
State and local income taxes,
net of Federal income taxes 4.32 4.39 4.39
Other, net 0.10 (0.03) 0.11
---------------------------------
Effective tax rate 39.42% 39.36% 39.50%
==================================
</TABLE>
Deferred income taxes result from temporary differences in the timing of
recognition of revenue and expenses for tax and financial statement reporting
as follows:
<TABLE>
<CAPTION>
Year ended January 31, 1997 1996 1995
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Tax basis depreciation ($ 6,018) ($2,620) $ 521
Accrued expenses (3,084) (4,833) (4,416)
Other (1,462) 149 (6,049)
-----------------------------------
Total deferred income taxes ($10,564) ($7,304) ($9,944)
===================================
</TABLE>
These items comprise substantially all of the deferred tax asset and liability
balances.
Nordstrom, Inc. and Subsidiaries Page 19
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5: ACCOUNTS RECEIVABLE
The components of accounts receivable are as follows:
<TABLE>
<CAPTION>
January 31, 1997 1996
- ----------------------------------------------------------------------------
<S> <C> <C>
Customers $719,916 $903,496
Other 21,466 19,824
Allowance for doubtful accounts (26,793) (29,393)
----------------------
Accounts receivable, net $714,589 $893,927
======================
</TABLE>
Credit risk with respect to accounts receivable is concentrated in the
geographic regions in which the Company operates stores. At January 31, 1997
and 1996, approximately 43% and 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 $51,352, $39,589 and $20,219 in 1996, 1995, and 1994.
On August 15, 1996, the Company transferred substantially all of its VISA
credit card receivables (approximately $203,000) to a trust in exchange for
certificates representing undivided interests in the trust. A Class A
certificate with a market value of $186,600 was sold to a third party, and a
Class B certificate, which is subordinated to the Class A certificate, was
retained by the Company. The Company owns the remaining undivided interests
in the trust not represented by the Class A and Class B certificates (the
"Seller's Interest"). These transactions had no significant impact on the
Company's earnings in 1996
Cash flows generated from the receivables in the trust are, to the extent
allocable to the investors, applied to the payment of interest on the Class A
and Class B certificates, absorption of credit losses, and payment of servicing
fees to the Company, which will continue to service the receivables for the
trust. Excess cash flows revert to the Company. The Company's investment in
the Class B certificate and the Seller's Interest totals $32,516 at January 31,
1997, and is included in customer accounts receivable.
Pursuant to the terms of operative documents of the trust, in certain events
the Company may be required to fund certain amounts pursuant to a recourse
obligation for credit losses. Based on current cash flow projections, the
Company does not believe any additional funding will be required.
Statement of Financial Accounting Standards No. 125, which is effective for
transfers of financial assets beginning in 1997, will not have a significant
impact on the Company's financial position or results of operations.
NOTE 6: PROPERTY, BUILDINGS AND EQUIPMENT
Property, buildings and equipment consist of the following (at cost):
<TABLE>
<CAPTION>
January 31, 1997 1996
- ----------------------------------------------------------------------------
<S> <C> <C>
Land and land improvements $ 50,542 $ 42,814
Buildings 450,227 448,596
Leasehold improvements 740,802 642,295
Store fixtures and equipment 746,152 672,887
------------------------
$1,987,723 $1,806,592
Less accumulated depreciation
and amortization (944,470) (838,812)
------------------------
1,043,253 967,780
Construction in progress 109,201 135,518
------------------------
Property, buildings and
equipment, net $1,152,454 $1,103,298
========================
</TABLE>
At January 31, 1997, the Company has contractual commitments of approximately
$84,738 for construction of new stores.
At January 31, 1997, the net book value of property located in California is
approximately $320,000. The Company does not carry earthquake insurance in
California because of its high cost.
Page 20 Nordstrom, Inc. and Subsidiaries
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7: NOTES PAYABLE
A summary of notes payable is as follows:
<TABLE>
<CAPTION>
Year ended January 31, 1997 1996 1995
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Average daily short-term borrowings $242,033 $173,343 $106,092
Maximum amount outstanding 345,738 303,072 209,605
Weighted average interest rate:
During the year 5.4% 5.9% 4.9%
At year-end 5.3% 5.5% 6.0%
</TABLE>
At January 31, 1997, 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 2001. Nordstrom
Credit, Inc. pays commitment fees for the line in lieu of compensating
balance requirements.
NOTE 8: LONG-TERM DEBT
A summary of long-term debt is as follows:
<TABLE>
<CAPTION>
January 31, 1997 1996
- ----------------------------------------------------------------------------
<S> <C> <C>
Senior notes, 8.875%, due 1998 $ 50,000 $ 50,000
Medium-term notes,
Nordstrom Credit, Inc.,
6.875%-9.6%, due 1997-2001 211,000 226,000
Notes payable,
Nordstrom Credit, Inc.,
6.7%, due 2005 100,000 100,000
Sinking fund debentures,
Nordstrom Credit, Inc.,
9.375% - 43,100
Other 19,632 20,843
----------------------
Total long-term debt 380,632 439,943
Less current portion (51,302) (74,210)
----------------------
Total due beyond one year $329,330 $365,733
======================
</TABLE>
The senior note agreements contain restrictive covenants which, among other
things, restrict dividends to shareholders to a formula amount. At
January 31, 1997, approximately $774,391 of retained earnings is not
restricted.
Aggregate principal payments on long-term debt are as follows: 1997-$51,302;
1998-$101,433; 1999-$59,326; 2000-$43,273; and 2001-$11,529.
NOTE 9: LEASES
The Company leases land, buildings and equipment under noncancelable lease
agreements with expiration dates ranging from 1997 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, 1997 are as follows:
1997-$30,782; 1998-$30,103; 1999-$29,654; 2000-$28,303; 2001-$27,061; and
thereafter-$205,756.
The following is a schedule of rent expense:
<TABLE>
<CAPTION>
Year ended January 31, 1997 1996 1995
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Minimum rent:
Store locations $15,468 $15,864 $16,022
Office, warehouses and equipment 17,815 17,309 18,336
Contingent rent:
Store location percentage rent 13,673 13,741 14,078
Common area costs, taxes and other 9,504 9,831 9,032
-----------------------------------
Total rent expense $56,460 $56,745 $57,468
===================================
</TABLE>
Nordstrom, Inc. and Subsidiaries Page 21
NOTE 10: STOCK OPTIONS
The Company provides a non-qualified stock option plan for certain key
employees. Options are issued at market value at the date of grant and become
exercisable over a four-year period. The number of shares reserved for future
stock option grants is 301,917 at January 31, 1997.
The Company has elected to follow the measurement provisions of Accounting
Principles Board (APB) Opinion No. 25, under which no recognition of expense is
required in accounting for its stock options. If the Company had elected to
follow the measurement provisions of Statement of Financial Accounting
Standards No. 123 ("SFAS 123") in accounting for its stock options,
compensation expense would be recognized based on the fair value of the options
at the date of grant. To estimate compensation expense which would be
recognized under SFAS 123, the Company used the modified Black-Scholes
option-pricing model with the following weighted-average assumptions for
options granted in 1996 and 1995, respectively: risk-free interest rates of
6.4% and 5.5%; expected volatility factors of .33 and .34; and expected
dividend yield of 1% and expected life of 7 for both years.
If SFAS 123 were used to account for the Company's stock option plan, the pro
forma effect on net earnings and earnings per share would be as follows:
<TABLE>
<CAPTION>
Year ended January 31, 1997 1996
- --------------------------------------------------------------
<S> <C> <C>
Pro forma net earnings $145,603 $164,078
Pro forma net earnings per
average share of common
stock outstanding $1.80 $2.00
</TABLE>
The effects of applying SFAS 123 in this pro forma disclosure are not
indicative of future amounts as awards prior to 1995 are not included, and
additional awards in future years are anticipated.
A summary of stock option activity follows:
<TABLE>
<CAPTION>
Weighted-
Average
Exercise
Shares Price
- -------------------------------------------------------------------------
<S> <C> <C>
Outstanding,
February 1, 1994 1,732,464 $31
Granted 345,770 46
Exercised (182,662) 27
Forfeited (17,322) 34
--------------------------------
Outstanding,
January 31, 1995 1,878,250 35
Granted 419,080 41
Exercised (154,366) 28
Forfeited (41,625) 39
--------------------------------
Outstanding,
January 31, 1996 2,101,339 36
Granted 372,122 46
Exercised (429,419) 31
Forfeited (184,289) 40
--------------------------------
Outstanding,
January 31, 1997 1,859,753 $39
================================
</TABLE>
<TABLE>
<CAPTION>
Weighted-
Average
Exercise
Shares Price
- -------------------------------------------------------------------------
<S> <C> <C>
Exercisable, January 31, 1995 964,023 $31
Exercisable, January 31, 1996 1,139,638 33
Exercisable, January 31, 1997 995,372 36
</TABLE>
At January 31, 1997, the weighted-average remaining contractual life of options
outstanding is 7 years, with an exercise price of $22 to $51.
Of the 1,859,753 stock options outstanding at January 31, 1997, 802,388 were
below the quoted market price of the Company's stock of $37 and are exercisable
over the next 7 years.
Page 22 Nordstrom, Inc. and Subsidiaries
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11: SUPPLEMENTARY CASH FLOW INFORMATION
Supplementary cash flow information includes the following:
<TABLE>
<CAPTION>
Year ended January 31, 1997 1996 1995
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Cash paid during the year for:
Interest (net of capitalized
interest) $ 43,356 $ 42,248 $ 34,520
Income taxes 106,982 121,212 146,590
</TABLE>
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 the proprietary credit card, and
until August 15, 1996, the VISA card. On August 15, 1996, substantially all
of the outstanding VISA receivables were transferred to a trust in connection
with a securitization of the receivables. As a result of this transaction,
Nordstrom Credit, Inc. no longer purchases and finances receivables generated
through the use of the Bank's VISA card, and the Bank securitizes all new VISA
receivables through the trust. Net VISA receivables totaled $204,736 at
January 31, 1996.
Condensed combined financial information of these subsidiaries is as follows:
<TABLE>
<CAPTION>
Year ended January 31, 1997 1996 1995
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Service charge income $128,240 $122,973 $92,591
Other income 17,823 14,799 12,525
------------------------------------
Total revenue $146,063 $137,772 $105,116
====================================
Net earnings $ 31,518 $ 23,835 $ 23,019
====================================
</TABLE>
<TABLE>
<CAPTION>
January 31, 1997 1996
- ----------------------------------------------------------------------------
<S> <C> <C>
Assets:
Cash and cash equivalents $ 24,374 $ 23,190
Accounts receivable, net 693,124 873,893
Other assets 7,846 8,126
----------------------
Total assets $725,344 $905,209
======================
Liabilities and investment of Nordstrom, Inc.:
Notes payable:
Nordstrom, Inc. $ 54,000 $ 86,000
Other 163,770 232,501
Accounts payable and
accrued liabilities 65,576 14,988
Long-term debt 311,000 369,100
Investment of Nordstrom, Inc. 130,998 202,620
----------------------
Total liabilities and investment
of Nordstrom, Inc. $725,344 $905,209
======================
</TABLE>
Nordstrom, Inc. and Subsidiaries Page 23
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13: SELECTED QUARTERLY DATA (UNAUDITED)
<TABLE>
<CAPTION>
Year ended January 31, 1997 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $905,962 $1,241,464 $984,440 $1,321,197 $4,453,063
Gross profit 288,850 379,576 319,062 383,538 1,371,026
Earnings before income taxes 42,897 74,081 55,736 70,791 243,505
Net earnings 25,897 44,781 34,036 42,791 147,505
Earnings per share .32 .55 .42 .53 1.82
Dividends per share .125 .125 .125 .125 .50
Year ended January 31, 1996 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total
- ------------------------------------------------------------------------------------------
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 .125 .125 .125 .125 .50
</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
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying consolidated balance sheets of Nordstrom,
Inc. and subsidiaries as of January 31, 1997 and 1996, and the related
consolidated statements of earnings, shareholders' equity and cash flows for
each of the three years in the period ended January 31, 1997. 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, 1997 and 1996, and the results of their operations and their
cash flows for each of the three years in the period ended January 31, 1997,
in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Seattle, Washington; March 10, 1997
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, 1997 1996 1995 1994 1993 1992
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Financial Position
Customer accounts
receivable, net $ 693,123 $ 874,103 $ 655,715 $ 565,151 $ 584,379 $ 585,490
Merchandise inventories 719,919 626,303 627,930 585,602 536,739 506,632
Current assets 1,532,399 1,612,776 1,397,713 1,314,914 1,219,844 1,177,638
Current liabilities 787,377 832,313 690,454 627,485 511,196 553,903
Working capital 745,022 780,463 707,259 687,429 708,648 623,735
Working capital ratio 1.95 1.94 2.02 2.10 2.39 2.13
Property, buildings and
equipment, net 1,152,454 1,103,298 984,195 845,596 824,142 856,404
Long-term debt 380,632 439,943 373,910 438,574 481,945 511,000
Debt/capital ratio 26.98 32.09 25.56 29.11 33.09 40.74
Shareholders' Equity 1,473,192 1,422,972 1,343,800 1,166,504 1,052,031 939,231
Shares outstanding 79,634,977 81,113,144 82,244,098 82,059,128 81,974,797 81,844,227
Book value per share 18.50 17.54 16.34 14.22 12.83 11.48
Total assets 2,702,507 2,732,619 2,396,783 2,177,481 2,053,170 2,041,875
Operations
Net sales 4,453,063 4,113,517 3,894,478 3,589,938 3,421,979 3,179,820
Costs and expenses:
Cost of sales and
related buying and
occupancy 3,082,037 2,806,250 2,599,553 2,469,304 2,339,107 2,169,437
Selling, general and
administrative 1,217,590 1,120,790 1,023,347 940,579 902,083 831,505
Interest, net 39,400 39,295 30,664 37,646 44,810 49,106
Service charge income
and other, net (129,469) (125,130) (94,644) (88,509) (86,140) (87,443)
Total costs and expenses 4,209,558 3,841,205 3,558,920 3,359,020 3,199,860 2,962,605
Earnings before income
taxes 243,505 272,312 335,558 230,918 222,119 217,215
Income taxes 96,000 107,200 132,600 90,500 85,500 81,400
Net earnings 147,505 165,112 202,958 140,418 136,619 135,815
Earnings per share 1.82 2.02 2.47 1.71 1.67 1.66
Dividends per share .50 .50 .385 .34 .32 .31
Net earnings as a percent
of net sales 3.31% 4.01% 5.21% 3.91% 3.99% 4.27%
Return on average
shareholders' equity 10.19% 11.94% 16.17% 12.66% 13.72% 15.38%
Sales per square foot
for Company-operated
stores 377 382 395 383 381 388
Stores and Facilities
Company-operated stores 83 78 76 74 72 68
Total square footage 11,754,000 10,713,000 9,998,000 9,282,000 9,224,000 8,590,000
</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, 1991 1990 1989 1988
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Financial Position
Customer accounts
receivable, net $ 558,573 $ 519,656 $ 465,929 $ 391,387
Merchandise inventories 448,344 419,976 403,795 312,696
Current assets 1,090,379 1,011,148 913,986 730,182
Current liabilities 551,835 489,888 448,165 394,699
Working capital 538,544 521,260 465,821 335,483
Working capital ratio 1.98 2.06 2.04 1.85
Property, buildings and
equipment, net 806,191 691,937 594,038 502,661
Long-term debt 489,172 468,412 389,216 260,343
Debt/capital ratio 43.59 43.78 43.12 39.57
Shareholders' Equity 826,410 733,250 639,941 533,209
Shares outstanding 81,737,910 81,584,710 81,465,027 81,371,106
Book value per share 10.11 8.99 7.86 6.55
Total assets 1,902,589 1,707,420 1,511,703 1,234,267
Operations
Net sales 2,893,904 2,671,114 2,327,946 1,920,231
Costs and expenses:
Cost of sales and
related buying and
occupancy 2,000,250 1,829,383 1,563,832 1,300,720
Selling, general and
administrative 747,770 669,159 582,973 477,488
Interest, net 52,228 49,121 39,977 32,952
Service charge income
and other, net (84,660) (55,958) (57,268) (53,662)
Total costs and expenses 2,715,588 2,491,705 2,129,514 1,757,498
Earnings before income
taxes 178,316 179,409 198,432 162,733
Income taxes 62,500 64,500 75,100 70,000
Net earnings 115,816 114,909 123,332 92,733
Earnings per share 1.42 1.41 1.51 1.13
Dividends per share .30 .28 .22 .18
Net earnings as a percent
of net sales 4.00% 4.30% 5.30% 4.83%
Return on average
shareholders' equity 14.85% 16.74% 21.03% 18.84%
Sales per square foot
for Company-operated
stores 391 398 380 349
Stores and Facilities
Company-operated stores 63 59 58 56
Total square footage 7,655,000 6,898,000 6,374,000 5,527,000
</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 Park Meadows 1996 245,000
Salem Centre 1980 71,000
Clackamas Town Center 1981 121,000 CAPITAL GROUP
Clackamas Rack 1983 28,000 Tysons Corner Center 1988 253,000
Downtown Portland Rack 1986 19,000 The Fashion Centre at
Pentagon City 1989 241,000
SOUTHERN CALIFORNIA GROUP Potomac Mills Rack 1990 46,000
South Coast Plaza 1978 235,000 Montgomery Mall 1991 225,000
Brea Mall 1979 195,000 City Place Rack 1992 37,000
Los Cerritos Center 1981 122,000 Towson Town Center 1992 205,000
Fashion Valley Mall 1981 156,000 Towson Rack 1992 31,000
Glendale Galleria 1983 147,000 Franklin Mills Factory
Santa Ana Rack 1983 22,000 Direct 1993 43,000
Topanga Plaza 1984 154,000 Annapolis Mall 1994 162,000
University Towne Centre 1984 130,000 King of Prussia 1996 238,000
Woodland Hills Rack 1984 48,000
The Galleria at South Bay 1985 161,000 NORTHEAST GROUP
Westside Pavilion 1985 150,000 Garden State Plaza 1990 282,000
Horton Plaza 1985 151,000 Menlo Park Mall 1991 266,000
Mission Valley Rack 1985 27,000 Freehold Raceway Mall 1992 174,000
Montclair Plaza 1986 134,000 Faconnable 1993 10,000
North County Fair 1986 156,000 The Westchester 1995 219,000
MainPlace Mall 1987 169,000 The Mall at Short Hills 1995 188,000
Chino Town Square Rack 1987 30,000
Paseo Nuevo 1990 186,000 MIDWEST GROUP
The Galleria at Tyler 1991 164,000 Oakbrook Center 1991 249,000
Santa Anita 1994 151,000 Mall of America 1992 240,000
Woodfield Rack 1994 45,000
ALASKA GROUP Old Orchard 1994 209,000
Anchorage 1975 97,000 Woodfield Shopping Center 1995 215,000
Circle Centre Mall 1995 216,000
SOUTHWEST GROUP Somerset Collection North 1996 258,000
Dallas Galleria 1996 249,000 Villiage Square Rack 1996 40,000
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 1996 Sales by Merchandise Category 11
Investing and Operating Cash Flows 12
Square Footage by Market Area at end of 1996 13
</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-31-1997
<PERIOD-END> JAN-31-1997
<CASH> 28,284
<SECURITIES> 0
<RECEIVABLES> 741,382
<ALLOWANCES> 26,793
<INVENTORY> 719,919
<CURRENT-ASSETS> 1,532,399
<PP&E> 2,096,924
<DEPRECIATION> 944,470
<TOTAL-ASSETS> 2,702,507
<CURRENT-LIABILITIES> 787,377
<BONDS> 329,330
0
0
<COMMON> 183,398
<OTHER-SE> 1,289,794
<TOTAL-LIABILITY-AND-EQUITY> 2,702,507
<SALES> 4,453,063
<TOTAL-REVENUES> 4,453,063
<CGS> 3,082,037
<TOTAL-COSTS> 4,209,558
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 51,352
<INTEREST-EXPENSE> 39,400
<INCOME-PRETAX> 243,505
<INCOME-TAX> 96,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 147,505
<EPS-PRIMARY> 1.82
<EPS-DILUTED> 1.82
</TABLE>
