<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 0-12994
Nordstrom Credit, Inc.
______________________________________________________
(Exact name of Registrant as specified in its charter)
Colorado 91-1181301
________________________________ ___________________
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
13531 East Caley, Englewood, Colorado 80111
_______________________________________________________
(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code: 303-397-4700
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.50 par value
_______________________________
(Title of class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES /X/ NO / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. /X/
On April 2, 1997 Registrant had 10,000 shares of Common stock ($.50 par value)
outstanding; all such shares are owned by Registrant's parent, Nordstrom, Inc.
The Registrant meets the conditions set forth in General Instruction J(1)(a)
and (b) of Form 10-K and is therefore filing this Form with the reduced
disclosure format.
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<PAGE>
PART I
Item 1. Business.
- ------------------
The information required under this item is included in Note 1 to the Financial
Statements on page 14 of this report, which is incorporated herein by
reference.
Item 2. Properties.
- --------------------
The Company owns an office building in Englewood, Colorado where it locates
its principal offices.
Item 3. Legal Proceedings.
- ---------------------------
The Company is not a party to any material legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
- -------------------------------------------------------------
Not required under reduced disclosure format.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
- -------------------------------------------------------------------------------
The class of securities registered is the Company's Common Stock, $.50 par
value per share. There are 100,000 shares of authorized Common Stock, of which
10,000 shares were issued and outstanding as of March 31, 1997. The Company's
common stock is owned entirely by Nordstrom, Inc ("Nordstrom"). The stock has
not been traded and, accordingly, no market value has been established. A
dividend of $50,000,000 was paid on August 30, 1996 to the holder of record of
common stock at the close of business on August 15, 1996. In addition, a
dividend of $50,000,000 was declared on January 30, 1997, payable on February
3, 1997 to the holder of record of common stock at the close of business on
January 31, 1997.
Item 6. Selected Financial Data.
- ---------------------------------
Not required under reduced disclosure format.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
- -------------------------------------------------------------------------
Service charge income increased in 1996 primarily due to a larger volume
of Nordstrom credit card receivables outstanding during the year. This
increase was partially offset by a reduction in revenues from the Company's
VISA card program as a result of the securitization of these receivables in the
third quarter, which is described in Note 1 and Note 5 to the financial
statements.
Bad debt expense and VISA service fees paid to Nordstrom National Credit Bank
decreased in 1996 due to the securitization of the VISA receivables.
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<PAGE>
On August 30, 1996, a dividend of $50,000,000 was paid to Nordstrom and on
January 30, 1997 a dividend of $50,000,000 was declared payable to Nordstrom
on February 3, 1997.
As a net result of the securitization of the VISA receivables and the dividend
payments to Nordstrom, the Company expects service charge income, interest
expense, service fees paid to Nordstrom National Credit Bank, bad debt expense,
and net earnings to decrease in the future. The Company anticipates that the
effect of these decreases will be a slight reduction in the ratio of earnings
available for fixed charges to fixed charges.
The Company anticipates filing a shelf registration statement to register up to
$250 million in debt securities in the first quarter of 1997.
Certain other information required under this item is included in Note 1 and
Note 5 to the Financial Statements on pages 14 and 15 respectively, of this
report, which are incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data.
- ----------------------------------------------------
A) Financial Statements and Supplementary Data
The financial statements listed in the Index to Financial Statements
and Schedule on page 8 of this Report are incorporated herein by
reference.
B) Other Financial Statements and Schedule
The schedule required under Regulation S-X is filed pursuant to Item
14 of this Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
- ------------------------------------------------------------------------
None
PART III
Item 10. Directors and Executive Officers of the Registrant.
- ------------------------------------------------------------
Not required under reduced disclosure format.
Item 11. Executive Compensation.
- --------------------------------
Not required under reduced disclosure format.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
- ------------------------------------------------------------
Not required under reduced disclosure format.
Item 13. Certain Relationships and Related Transactions.
- --------------------------------------------------------
Not required under reduced disclosure format.
3 of 19
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
- --------------------------------------------------------------------------
(a)1. Financial Statements
--------------------
The following financial statements of the Company and the Independent
Auditors' Report are incorporated by reference in Part II, Item 8:
Independent Auditors' Report
Statements of Earnings
Balance Sheets
Statements of Investment of Nordstrom, Inc.
Statements of Cash Flows
Notes to Financial Statements
(a)2. Financial Statement Schedules
-----------------------------
The financial statement schedule listed in the Index to Financial
Statements and Schedule on page 8 of this Report is incorporated
herein by reference.
(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, 1991, Exhibit 3.1.
(3.2) By-laws of the Registrant are hereby incorporated by reference from
the Registrant's Form 10-K for the year ended January 31, 1991,
Exhibit 3.2.
(3.3) Amendment to the Bylaws of the Registrant dated December 19, 1995,
are hereby incorporated by reference from the Registrant's Form 10-K
for the year ended January 31, 1996, Exhibit 3.3
(4.1) Indenture between 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 Registrant's
Annual Report on Form 10-K for the year ended January 31, 1991,
Exhibit 4.2, respectively.
(4.2) Trustee Resignation of Wells Fargo Bank (Colorado), N.A., (as success-
or 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.
4 of 19
<PAGE>
(10.1) Investment Agreement dated October 8, 1984 between Registrant and
Nordstrom, Inc. is hereby incorporated by reference from the
Registrant's Form 10, Exhibit 10.1.
(10.2) Operating Agreement dated August 30, 1991 between Registrant and
Nordstrom National Credit Bank is hereby incorporated by reference
from the Registrant's Form 10-Q for the quarter ended July
31, 1991, Exhibit 10.1, as amended.
(10.3) Operating Agreement for VISA Accounts and Receivables dated May 1,
1994 between Registrant and Nordstrom National Credit Bank is hereby
incorporated by reference from Registration No. 33-55905, Exhibit
10.1.
(10.4) Credit Agreement dated June 23, 1995 between Registrant and a group of
commercial banks is hereby incorporated by reference from the Regis-
trant's Form 10-Q for the quarter ended July 31,1995, Exhibit 10.1.
(10.5) Loan Agreement dated November 24, 1992 between Registrant and Nord-
strom, Inc. is hereby incorporated by reference from the Registrant's
Form 10-K for the year ended January 31, 1993, Exhibit 10.6.
(10.6) Loan Agreement dated June 10, 1985, as amended May 19, 1994, between
Registrant and Morgan Guaranty Trust Company of New York is hereby
incorporated by reference from the Registrant's Form 10-K for the year
ended January 31, 1995, Exhibit 10.10.
(10.7) Amendment to the Credit Agreement dated June 23, 1995 between
Registrant and a group of commercial banks, dated June 30, 1996
is hereby incorporated by reference from the Registrant's Form 10-Q
for the quarter ended October 31, 1996, Exhibit 10.2.
(10.8) Series 1996-A Supplement to Master Pooling and Servicing Agreement
dated August 14, 1996 between Registrant, Nordstrom National Credit
Bank, and Norwest Bank Colorado, N.A.,as trustee, is incorporated by
reference from the Registrant's Form 10-Q for the quarter ended
October 31, 1996, Exhibit 10.3.
(10.9) Agreement to terminate the Operating Agreement for VISA Accounts
and Receivables dated May 1, 1994 between Registrant and Nordstrom
National Credit Bank, dated August 14, 1996 is hereby incorporated by
reference from the Registrant's Form 10-Q for the quarter ended
October 31, 1996, Exhibit 10.1.
(10.10) Receivables Purchase Agreement dated August 14, 1996 between
Registrant and Nordstrom, Inc. is filed herein as an Exhibit.
(10.11) Participation Agreement dated August 14, 1996 between Registrant and
Nordstrom National Credit Bank is filed herein as an Exhibit.
(12.1) Computation of Ratio of Earnings Available for Fixed Charges to
Fixed Charges is filed herein as an Exhibit.
(27.1) Financial Data Schedule is filed herein as an Exhibit.
5 of 19
<PAGE>
All other exhibits are omitted because they are not applicable, or not
required, or because the required information is included in the financial
statements or notes thereto.
(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.
6 of 19
<PAGE>
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 CREDIT, INC.
(Registrant)
Date April 2, 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 Regis-
trant and in the capacities and on the date indicated.
/s/ John A. Goesling /s/ John J. Whitacre
_____________________________________ _____________________________________
John A. Goesling John J. Whitacre
Director, Executive Vice President Director
and Treasurer
(Principal Accounting and Financial
Officer)
/s/ John C. Walgamott
_____________________________________
John C. Walgamott
Director and President
(Principal Executive Officer)
Date April 2, 1997
______________________
7 of 19
<PAGE>
NORDSTROM CREDIT, INC.
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
Independent Auditors' Report 9
Statements of Earnings 10
Balance Sheets 11
Statements of Investment of Nordstrom, Inc. 12
Statements of Cash Flows 13
Notes to Financial Statements 14
Additional financial information required to be furnished -
Financial Statement Schedule:
II - Valuation and Qualifying Accounts 19
<FN>
All other schedules have been omitted because they are inapplicable, not
required, or the information is included elsewhere in the financial statements
or notes thereto.
</TABLE>
8 of 19
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Nordstrom Credit, Inc.
Englewood, Colorado
We have audited the accompanying balance sheets of Nordstrom Credit, Inc. as of
January 31, 1997 and 1996, and the related statements of earnings, investment
of Nordstrom, Inc. and cash flows for each of the three years in the period
ended January 31, 1997. Our audits also included the financial statement
schedule listed in Item 14(a)2. These financial statements and the financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule 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 esti-
mates 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 financial statements present fairly, in all material
respects, the financial position of Nordstrom Credit, Inc. as of January 31,
1997 and 1996, and the results of its operations and its cash flows for each of
the three years in the period ended January 31, 1997, in conformity with
generally accepted accounting principles. Also, in our opinion, such financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
Deloitte & Touche LLP
Seattle, Washington
March 7, 1997
9 of 19
<PAGE>
NORDSTROM CREDIT, INC.
STATEMENTS OF EARNINGS
(Dollars in thousands)
<TABLE>
<CAPTION>
Year Ended January 31, 1997 1996 1995
- ---------------------- ------- ------- -------
<S> <C> <C> <C>
Revenue:
Service charge income $128,240 $122,973 $92,592
Rental income from Nordstrom
National Credit Bank 1,225 1,044 1,044
------- ------- -------
Total revenue 129,465 124,017 93,636
Expenses:
Interest, net 40,649 42,157 31,074
Service fees paid to Nordstrom
National Credit Bank 30,381 32,558 28,056
Bad debts 7,520 12,752 940
Other general and administrative 1,539 1,464 1,521
------- ------- -------
Total expenses 80,089 88,931 61,591
------- ------- -------
Earnings before income taxes and
extraordinary item 49,376 35,086 32,045
Income taxes 17,800 12,600 11,600
------- ------- -------
Earnings before
extraordinary item 31,576 22,486 20,445
Extraordinary charge related to the
early extinguishment of debt, net
of income taxes of $900 1,452 - -
------ ------- ------
Net earnings $ 30,124 $ 22,486 $20,445
======= ======= =======
Ratio of earnings available for
fixed charges to fixed charges 2.14 1.83 2.03
======= ======= =======
<FN>
The accompanying Notes to Financial Statements are an integral part of these
statements.
</TABLE>
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<PAGE>
NORDSTROM CREDIT, INC.
BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
January 31, 1997 1996
- ----------- -------- --------
<S> <C> <C>
ASSETS
- ------
Cash and cash equivalents $ 105 $ 91
Customer accounts receivable, net 689,550 874,858
Other receivables 13,874 7,217
Property and equipment, net 5,071 5,396
Other assets 1,506 2,122
-------- --------
$710,106 $889,684
======== ========
LIABILITIES AND INVESTMENT OF NORDSTROM, INC.
- ---------------------------------------------
Notes payable to Nordstrom, Inc. $ 54,000 $ 86,000
Notes payable to bank 50,000 50,000
Commercial paper 113,770 182,501
Accrued interest, taxes and other 8,553 9,424
Dividend payable to Nordstrom, Inc. 50,000 -
Long-term debt 311,000 369,100
-------- --------
Total liabilities 587,323 697,025
Investment of Nordstrom, Inc. 122,783 192,659
-------- --------
$710,106 $889,684
======== ========
<FN>
The accompanying Notes to Financial Statements are an integral part of these
statements.
</TABLE>
11 of 19
<PAGE>
NORDSTROM CREDIT, INC.
STATEMENTS OF INVESTMENT OF NORDSTROM, INC.
(Dollars in thousands except per share amount)
<TABLE>
<CAPTION>
Common Stock, $.50 par value,
100,000 shares authorized
------------------------- Retained
Shares Amount Earnings Total
------ ------ -------- -----
<S> <C> <C> <C> <C>
Balance at
February 1, 1994 10,000 $55,058 $ 94,670 $149,728
Net earnings - - 20,445 20,445
------ ------- ------- --------
Balance at
January 31, 1995 10,000 55,058 115,115 170,173
Net earnings - - 22,486 22,486
------ ------- ------- --------
Balance at
January 31, 1996 10,000 55,058 137,601 192,659
Net earnings - - 30,124 30,124
Dividends declared
($10,000 per share) (100,000) (100,000)
------ ------- ------- --------
Balance at
January 31, 1997 10,000 $55,058 $ 67,725 $122,783
====== ======= ======== ========
<FN>
The accompanying Notes to Financial Statements are an integral part of these
statements.
</TABLE>
12 of 19
<PAGE>
NORDSTROM CREDIT, INC.
STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
Year Ended January 31, 1997 1996 1995
- ---------------------- ------- ------- -------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Earnings before extraordinary item $ 31,576 $ 22,486 $ 20,445
Adjustments to reconcile net earnings
to net cash provided by
operating activities:
Extraordinary charge related to the
early extinguishment of debt, net of
income taxes of $900 (1,452) - -
Depreciation and amortization 1,212 772 924
Change in:
Other receivables (6,657) (2,410) (830)
Accrued interest, taxes and other (871) (1,539) 1,298
------- ------- -------
Net cash provided by operating activities 23,808 19,309 21,837
------- ------- -------
INVESTING ACTIVITIES:
Increase in investment in
customer accounts receivable, net (17,580) (218,595) (91,768)
Sale of customer accounts
receivable to Nordstrom, Inc. 202,888 - -
Additions to property and equipment, net - (35) (30)
------- ------- -------
Net cash provided by (used in)
investing activities 185,308 (218,630) (91,798)
------- ------- -------
FINANCING ACTIVITIES:
(Decrease) increase in notes payable
to Nordstrom, Inc. (32,000) (62,000) 35,500
Increase in notes payable to bank - - 25,000
(Decrease) increase in commercial paper (68,731) 145,113 22,051
Proceeds from issuance of
long-term debt 57,729 140,859 49,656
Principal payments on long-term debt (116,100) (25,000) (63,500)
Cash dividends paid to Nordstrom, Inc. (50,000) - -
------- ------- -------
Net cash (used in) provided by
financing activities (209,102) 198,972 68,707
------- ------- -------
Net increase (decrease) in cash and
cash equivalents 14 (349) (1,254)
Cash and cash equivalents at beginning
of year 91 440 1,694
------- ------- -------
Cash and cash equivalents at end of year $ 105 $ 91 $ 440
======== ======= =======
<FN>
The accompanying Notes to Financial Statements are an integral part of these
statements.
</TABLE>
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<PAGE>
NORDSTROM CREDIT, INC.
NOTES TO FINANCIAL STATEMENTS
(Dollars in thousands)
NOTE 1 - DESCRIPTION OF BUSINESS
Nordstrom Credit, Inc. (the "Company"), a wholly-owned subsidiary of Nordstrom,
Inc. ("Nordstrom") was incorporated in the State of Washington in 1982 and
reincorporated in the State of Colorado in 1990. The primary business of the
Company is to finance customer accounts receivable generated under revolving
charge accounts through sales of merchandise in Nordstrom stores ("Accounts")
and until August 15, 1996, through purchases by customers using the Nordstrom
National Credit Bank (the "Bank") VISA cards ("VISA Accounts"). The Accounts
and the VISA Accounts are originated through the use of credit cards issued by
the Bank, a national banking association organized as a wholly-owned subsidiary
of Nordstrom, effective August 30, 1991.
The Company and the Bank are parties to an Operating Agreement dated August 30,
1991 (the "Operating Agreement") pursuant to which the Company purchases
Accounts from the Bank for a price equal to the amount of Accounts originated
less an allowance for amounts to be written off (the "holdback allowance").
Under the terms of the Operating Agreement, the Bank performs the servicing
functions for the Accounts and the Company pays the Bank a servicing fee based
on the amount of such Accounts originated. The servicing fee rate averaged
1.59% in 1994, 1.66% in 1995 and 1.83% in 1996, and is currently 2%.
Prior to August 15, 1996, the Company and the Bank were also parties to an
Operating Agreement for VISA Accounts and Receivables dated May 1, 1994 (the
"VISA Operating Agreement"), under which the Company purchased VISA Accounts
from the Bank under the same terms and conditions as the Operating Agreement
except for the allowance for the amounts to be written off. Amounts written
off were charged to the Company, except amounts written off with respect to
sales occurring at Nordstrom stores, which were indemnified by Nordstrom.
Pursuant to the terms of the VISA Operating Agreement, the Bank performed the
servicing functions for the VISA Accounts and the Company paid the Bank a
servicing fee which was determined on the same basis as the servicing fee for
the Accounts.
As described more fully in Note 5, on August 15, 1996, the Company sold substan-
tially all of its outstanding VISA receivables to Nordstrom in connection with
a securitization of the receivables. As a result of this transaction, the VISA
Operating Agreement was terminated. The Company 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 a trust.
The Company and Nordstrom are parties to an Investment Agreement dated October
8, 1984 (the "Investment Agreement") which, among other things, governs owner-
ship of Company stock and the financial relationships between Nordstrom and the
Company. The Investment Agreement requires that Nordstrom maintain the Company's
ratio of earnings available for fixed charges to fixed charges at not less than
1.25:1 and further requires that Nordstrom retain ownership of all the
outstanding shares of stock of the Company. This agreement does not, however,
represent a guarantee by Nordstrom of the payment of any obligation of the
Company.
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.
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<PAGE>
NOTE 2 - RENTAL INCOME
The Company owns an office building in Englewood, Colorado, and leases space in
the building to the Bank under a month-to-month agreement. Monthly rent was
$87 in 1994 and 1995, and increased to $107 per month in May, 1996.
NOTE 3 - INTEREST EXPENSE
The components of net interest expense are as follows:
<TABLE>
<CAPTION>
Year ended January 31, 1997 1996 1995
- ---------------------- ------- ------- -------
<S> <C> <C> <C>
Notes payable to Nordstrom, Inc. $ 2,115 $ 4,273 $ 2,940
Notes payable to bank 2,705 2,942 1,766
Commercial paper 9,998 7,242 3,320
Long-term debt 25,884 27,788 23,161
------- ------- -------
Total interest expense 40,702 42,245 31,187
Less: Interest income (53) (88) (113)
------- ------- -------
Interest, net $40,649 $42,157 $31,074
======= ======= =======
</TABLE>
NOTE 4 - INCOME TAXES
The Company files consolidated income tax returns with Nordstrom. Income taxes
have been provided on a separate return basis, and the difference between the
effective tax rate and the statutory Federal income tax rate is due to the
provision for state and local income taxes. At January 31, 1997 and 1996,
amounts due to Nordstrom for income taxes totaled $1,900 and $1,200. The
Company has no significant deferred taxes.
NOTE 5 -CUSTOMER ACCOUNTS RECEIVABLE
Customer accounts receivable, net, consists of the following:
<TABLE>
<CAPTION>
January 31, 1997 1996
- ----------- -------- --------
<S> <C> <C>
Accounts $687,605 $690,756
VISA Accounts - 213,495
Master Trust Certificates 28,738 -
-------- --------
716,343 904,251
Holdback allowance (26,793) (29,393)
-------- --------
Customer accounts receivable, net $689,550 $874,858
======== ========
<FN>
The Company has no credit risk with respect to the Accounts, as Nordstrom bears
the risk of credit loss with respect to these Accounts.
</TABLE>
15 of 19
<PAGE>
NOTE 5 (continued)
On August 15, 1996, the Company sold substantially all of its outstanding VISA
receivables to Nordstrom in connection with a securitization of the receivables.
Nordstrom then sold the receivables to the Bank, which transferred the receiv-
ables to the Nordstrom Credit Card Master Trust (the "Trust") in return for
certificates representing undivided interests in the Trust. A Class A certi-
ficate with a market value of $186,600 was sold to a third party, and a Class B
certificate was purchased by the Company at an approximate market value of
$9,000. The Class B certificate has a stated principal amount of $9,900, bears
interest at 6.5%, and is subordinated to the Class A certificate. The Company
also purchased from the Bank a portion of its investment in the Trust (the
"Seller's Interest") at an approximate market value of $4,100. The Bank
retains the remaining Seller's Interest, and will continue to service all
of the receivables on behalf of the Trust.
As a result of the securitization of the receivables, the Company no longer
purchases and finances VISA receivables generated through the use of the Bank's
VISA card, except to the extent of its investment in the Class B certificate
and the Seller's Interest. The Bank securitizes all new VISA receivables
through the Trust, and from time to time sells to the Company additional
portions of the Seller's Interest, depending on its cash flow needs. The
Company's investment in the Class B certificate and the Seller's Interest
(the "Master Trust Certificates") 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.
NOTE 6 - OTHER RECEIVABLES
Other receivables consists of amounts due from the Bank for net activity in
Accounts, less service fees due the Bank. These amounts are settled on a
second business day basis. At January 31, 1997, the amount also includes
funds advanced to the Bank totaling $8,684, and bearing interest at 5.4%, which
were repaid on February 5, 1997.
NOTE 7 - NOTES PAYABLE AND COMMERCIAL PAPER
The notes payable to bank represents amounts borrowed from a commercial bank
as fiduciary under a master note agreement which provides for borrowings up to
$50,000. Borrowings under the Agreement bear interest at floating rates based
on a published short-term interest rate composite index (5.3% and 5.4% at
January 31, 1997 and 1996) and mature up to six months from the date of
borrowing or on demand.
The notes payable to Nordstrom, Inc. represents amounts borrowed from Nordstrom
under an Agreement dated November 24, 1992 which provides for borrowings from
time to time, depending on seasonal cash flow requirements. Borrowings under
the Agreement bear interest at floating rates based on a published short-term
interest rate composite index (5.3% and 5.4% at January 31, 1997 and 1996) and
mature up to six months from the date of borrowing or on demand.
16 of 19
<PAGE>
NOTE 7 (continued)
Commercial paper outstanding at January 31, 1997 bears interest at 5.3% to
5.5%, and matures from February 3, 1997 to March 31, 1997.
A summary of notes payable and commercial paper is as follows:
<TABLE>
<CAPTION>
Year ended January 31, 1997 1996 1995
- ---------------------- -------- -------- --------
<S> <C> <C> <C>
Average daily borrowings
outstanding:
Nordstrom $ 39,090 $ 72,843 $ 60,651
Other 234,191 172,178 104,722
Maximum amount outstanding:
Nordstrom 173,000 191,500 204,000
Other 338,597 303,072 209,605
Weighted average interest rate:
During the year:
Nordstrom 5.4% 5.9% 4.8%
Other 5.4% 5.9% 4.9%
At year-end:
Nordstrom 5.3% 5.4% 6.0%
Other 5.3% 5.5% 6.0%
</TABLE>
The Company has a $300,000 unsecured line of credit with a group of commercial
banks which is available as liquidity support for notes payable to bank and
commercial paper issued by the Company, and expires June 30, 2001. Under the
terms of the line of credit agreement, the Company must, among other things,
comply with the terms of the Investment Agreement between the Company and
Nordstrom and the Operating Agreement between the Company and the Bank, and
maintain a ratio of total debt to tangible net worth no greater than 7 to 1.
Amounts due to Nordstrom, the Bank and other affiliates are subordinated to
borrowings under the line of credit agreement. The Company pays commitment
fees for the line in lieu of compensating balance requirements.
The carrying amount of the notes payable and commercial paper approximates fair
value because of the short maturity of these instruments.
NOTE 8 - LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
January 31, 1997 1996
- ----------- -------- --------
<S> <C> <C>
Medium-term notes, 6.875% - 9.6%,
due 1997- 2001 $211,000 $226,000
Notes payable, 6.7%, due 2005 100,000 100,000
Sinking fund debentures, 9.375%,
due 2016 - 43,100
-------- --------
Total long-term debt $311,000 $369,100
======== ========
</TABLE>
17 of 19
<PAGE>
NOTE 8 (continued)
During the first quarter of 1996, the Company elected to prepay $43,100 of its
9.375% sinking fund debentures in order to take advantage of lower short-term
interest rates. This resulted in an extraordinary charge of $1,452, net of
applicable income taxes of $900. The premium paid has not been included as a
fixed charge for the calculation of the ratio of earnings available for fixed
charges to fixed charges.
Aggregate principal payments on long-term debt for the next five fiscal
years are as follows: 1997 - $50,000, 1998 - $50,000, 1999 - $58,000,
2000 - $42,000, and 2001 - $11,000.
The fair value of long-term debt at January 31, 1997 and 1996, estimated using
quoted market prices of the same or similar issues with the same remaining
maturity, was approximately $317,000 and $403,000.
NOTE 9 - SUPPLEMENTARY CASH FLOW INFORMATION
For purposes of the Statements of Cash Flows, the Company considers all
short-term investments with a maturity at date of purchase of three months
or less to be cash equivalents. The carrying amount approximates fair value
because of the short maturity of these instruments.
Supplementary cash flow information is as follows:
<TABLE>
<CAPTION>
Year Ended January 31, 1997 1996 1995
- ---------------------- ------- ------- -------
<S> <C> <C> <C>
Cash paid during the year for:
Interest $43,721 $41,268 $30,005
Income taxes paid to
Nordstrom, Inc. 16,200 12,900 11,692
</TABLE>
On January 30, 1997, the Company declared a dividend payable to Nordstrom, Inc.
of $50,000 which was paid on February 3, 1997.
18 of 19
<PAGE>
NORDSTROM CREDIT, INC.
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 Charged to Charged write-offs Balance
beginning costs and to other net of end of
Description of period expenses accounts recoveries period
- ----------- --------- --------- -------- ---------- -------
<S> <C> <C> <C> <C> <C>
Holdback
allowance -
customer
accounts
receivable
Year ended
January 31, 1995 $23,145 $ 940 $19,279* $20,406 $22,958
Year ended
January 31, 1996 $22,958 $12,752 $26,837* $33,154 $29,393
Year ended
January 31, 1997 $29,393 $ 7,520 $43,832* $53,952 $26,793
<FN>
* The Company purchases Accounts net of this amount which represents the
allowance for uncollectible amounts. Bad debt expenses are reflected on
the books of Nordstrom for Accounts and VISA Accounts generated through sales
at Nordstrom stores.
</TABLE>
19 of 19
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
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, 1991, Exhibit 3.1.
3.2 By-laws Incorporated by reference
from the Registrant's Form
10-K for the year ended January
31, 1991, Exhibit 3.2.
3.3 Amendment to the By-laws dated Incorporated by reference from
December 19, 1995 Registrant's Form 10-K for the year
ended January 31, 1996, Exhibit 3.3.
4.1 Indenture between Registrant and Incorporated by reference from
Norwest Bank Colorado, N.A., Registration No. 33-3765, Exhibit
as successor trustee, dated 4.2; Registration No. 33-19743,
November 15, 1984, the First Sup- Exhibit 4.2; Registration No.
plement thereto dated January 15, 33-29193, Exhibit 4.3; and
1988, the Second Supplement thereto Registrant's Annual Report on Form
dated June 1, 1989, and the Third 10-K for the year ended January 31,
Supplement thereto dated October 1991, Exhibit 4.2, respectively.
19, 1990
4.2 Trustee Resignation of Wells Fargo Filed herewith electronically.
Bank (Colorado), N.A., (as successor
to First Interstate Bank of Denver,
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 Investment Agreement dated October Incorporated by reference from
8, 1984 between Registrant and Registrant's Form 10, Exhibit 10.1.
Nordstrom, Inc.
10.2 Operating Agreement dated August Incorporated by reference from
30, 1991 between Registrant and Registrant's Form 10-Q for the
Nordstrom National Credit Bank quarter ended July 31, 1991,
Exhibit 10.1, as amended.
10.3 Operating Agreement for VISA Incorporated by reference from
Accounts and Receivables Registration No. 33-55905, Exhibit
dated May 1, 1994 between 10.1.
Registrant and Nordstrom
National Credit Bank
10.4 Credit Agreement dated June 23, 1995 Incorporated by reference from
between Registrant and a group of Registrant's Form 10-Q for the
commercial banks quarter ended July 31, 1995,
Exhibit 10.1.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
10.5 Loan Agreement dated November 24, Incorporated by reference from
1992 between Registrant and Registrant's Form 10-K for the
Nordstrom, Inc. year ended January 31, 1993,
Exhibit 10.6.
10.6 Loan Agreement dated June 10, 1985, Incorporated by reference from
as amended May 16, 1994, between Registrant's Form 10-K for the
Registrant and Morgan Guaranty year ended January 31, 1995,
Trust Company of New York Exhibit 10.10.
10.7 Amendment to the Credit Agreement Incorporated by reference from
dated June 23, 1995 between Regis- Registrant's Form 10-Q for the
trant and a group of commercial quarter ended October 31, 1996,
banks, dated June 30, 1996 Exhibit 10.2.
10.8 Series 1996-A Supplement to Master Incorporated by reference from
Pooling and Servicing Agreement Registrant's Form 10-Q for the
dated August 14, 1996 between quarter ended October 31, 1996,
Registrant, Nordstrom National Exhibit 10.3.
Credit Bank and Norwest Bank
Colorado, N.A., as trustee
10.9 Agreement to terminate the Oper- Incorporated by reference from
ating Agreement for VISA Accounts Registrant's Form 10-Q for the
and Receivables dated May 1, 1994 quarter ended October 31, 1996,
between Registrant and Nordstrom Exhibit 10.1.
National Credit Bank, dated August
14, 1996
10.10 Receivables Purchase Agreement dated Filed herewith electronically.
August 14, 1996 between Registrant
and Nordstrom, Inc.
10.11 Participation Agreement dated August Filed herewith electronically.
14, 1996 between Registrant and
Nordstrom National Credit Bank
12.1 Computation of Ratio of Earnings Filed herewith electronically.
Available for Fixed Charges to
Fixed Charges
27.1 Financial Data Schedule Filed herewith electronically.
</TABLE>
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
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
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
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
PARTICIPATION AGREEMENT
This Participation Agreement dated as of August 14, 1996 is between
Nordstrom National Credit Bank ("NNCB"), a national banking association
with its charter address in Colorado, and Nordstrom Credit, Inc., a
corporation organized and existing under the laws of the State of
Colorado ("NCI").
WITNESSETH
WHEREAS, NNCB, as Transferor, NNCB, as Servicer, and Norwest Bank
Colorado, N.A., as Trustee (the "Trustee") have or will enter into a
Master Pooling and Servicing Agreement, dated as of August 14, 1996, and
related documents, including any certificate series supplement,
(collectively, the "Pooling and Servicing Agreement"), pursuant to which
certain Receivables will be conveyed to the Nordstrom Credit Card Master
Trust in exchange for (i) certain investor certificates that will be
either sold to investors or held by NCI and (ii) an exchangeable
transferor certificate (the "Exchangeable Transferor Certificate") that
will be held by NNCB, and
WHEREAS, NNCB wishes to sell, and NCI wishes to purchase, an undivided
participation interest in the Exchangeable Transferor Certificate on the
terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, the parties hereby agree as follows:
Section 1. Definitions
(a)The following terms, when capitalized in this Agreement and used
either in the singular or the plural, shall have the following meanings:
"Net Investment" means, as of any day, in respect of the Participation
acquired by NCI, an amount equal to the sum of (i) the initial purchase
price paid by NCI for its Participation hereunder, less (ii) any
payments by NNCB to NCI pursuant to Section 2(c) or (d) with respect to
any decrease in the Transferor Amount or NCI's Participation, plus (iii)
any payments by NCI to NNCB pursuant to Section 2(b) or credits by NNCB
to NCI pursuant to Section 2(c) with respect to any increase in NCI's
Participation Percentage.
"Participation" means the undivided ownership interest in the
Exchangeable Transferor Certificate purchased from time to time by NCI
pursuant to Section 2(a) hereof.
"Participation Percentage" means, as of any day, in respect of the
Participation acquired by NCI in the Exchangeable Transferor
Certificate, the percentage interest in the Exchangeable Transferor
Certificate then held by NCI which shall equal the percentage equivalent
of a fraction, the numerator of which is equal to NCI's Net Investment
on such day and the denominator of which is equal to the Transferor
Amount on such day.
"Purchase Date" shall mean August 14, 1996.
"Transferor Interest" shall mean the interest in the Trust represented
by the Exchangeable Transferor Certificate, including the right to
receive Collections and other amounts to be paid to the Transferor at
the times and in the amounts specified from time to time in the Pooling
and Servicing Agreement.
(b)Capitalized terms used but not otherwise defined in this Agreement
shall have the same meanings as used in the Pooling and Servicing
Agreement.
Section 2. Sale of Participation
(a)NNCB hereby agrees to sell to NCI without recourse, representation or
warranty whatsoever except as expressly provided herein, and NCI hereby
agrees to purchase from NNCB on the Purchase Date, or such other date or
dates as the parties may agree, an undivided ownership interest in the
Exchangeable Transferor Certificate and the Transferor Interest equal to
the Participation Percentage thereof, including all amounts allocated to
the holder of the Exchangeable Transferor Certificate pursuant to the
Pooling and Servicing Agreement and the benefit of all representations
and warranties and agreements made for the benefit of the holder of the
Exchangeable Transferor Certificate therein.
(b)The initial price to be paid by NCI shall be an amount agreed between
the parties at the time such sale occurs pursuant to this Agreement.
NCI may from time to time pay to NNCB additional amounts to be
determined by the parties in consideration for increasing NCI's
Participation Percentage.
(c)In consideration of the acquisition by NCI of the Participation
hereunder, NNCB agrees to pay or credit to NCI on each day on which NNCB
receives a payment in respect of the Exchangeable Transferor Certificate
(each such day a "Settlement Date"), an amount equal to the product of
(i) NCI's Participation Percentage as of such date and (ii) the amount
of any decrease in the Transferor Amount occurring as a result of
payments received by NNCB, as the holder of the Exchangeable Transferor
Certificate, from the Servicer, the Trustee or any other person in
respect of the Exchangeable Transferor Certificate (including any
proceeds from the sale of Investor Certificates of any Series issued
following the tender of the Exchangeable Transferor Certificate and the
reissue thereof as part of any Exchange pursuant to the Pooling and
Servicing Agreement) during the period since the immediately preceding
Settlement Date. NNCB shall be permitted to engage in any Exchange
without obtaining the permission of NCI.
(d)NNCB may, from time to time, pay to NCI amounts to be determined by
the parties in consideration for decreasing NCI's Participation
Percentage; provided, however, that NNCB shall be under no obligation to
repurchase any portion of NCI's Participation.
(e)NNCB agrees to pay or credit to NCI, on each Settlement Date, an
amount equal to the product of NCI's Participation Percentage and the
net amount of all Collections and other distributions received by NNCB
as the holder of the Exchangeable Transferor Certificate during the
period since the immediately preceding Settlement Date.
(f)Notwithstanding the foregoing, the parties may agree to settle
monthly on each Distribution Date under the Pooling and Servicing
Agreement or another date, provided that amounts owed pursuant to
Section 2(c) above shall be paid or credited on the day on which NNCB
receives such payments referred to in Section 2(c).
Section 3. Delivery of Documents. NNCB shall deliver to NCI a
Participation Certificate in the form set forth in Annex I hereto, dated
as of the Purchase Date, representing an undivided interest, to the
extent of the Participation Percentage, in all of NNCB's right, title
and interest in and to the Exchangeable Transferor Certificate and the
Transferor Interest. On each Settlement Date, NNCB shall deliver a
statement (the "Settlement Statement") in the form of Annex II hereof,
setting forth the net amount of funds owing by NCI to NNCB or by NNCB to
NCI. Such statement shall be appropriately modified if there are
settlements occurring more frequently than monthly on Distribution Dates
under the Pooling and Servicing Agreement.
Section 4. NNCB Required to Furnish Certain Information. NNCB shall
submit to NCI upon request a copy of the Pooling and Servicing Agreement
and all other documents relating to the transactions contemplated
therein. NCI shall have the right from time to time at reasonable
intervals to require NNCB to supply such information as NCI may
reasonably request respecting the Exchangeable Transferor Certificate
and NCI's participation interest therein. NNCB shall deliver to NCI
copies of all reports, notices, certificates, or other materials
received or delivered by it pursuant to the Pooling and Servicing
Agreement. NNCB hereby agrees to consult with NCI prior to exercising
any rights as the holder of the Exchangeable Transferor Certificate or
as Transferor under the Pooling and Servicing Agreement.
Section 5. Termination. This Agreement shall automatically terminate
following the surrender of the Exchangeable Transferor Certificate and
termination of the Trust pursuant to the Pooling and Servicing
Agreement. Either party may terminate this Agreement at any time upon
30 days prior written notice thereof to the other. Following such
termination, settlement between the parties shall occur by the payment
of any amounts due to NCI on each following Distribution Date until the
Participation Percentage shall be equal to zero, or in such other manner
as the parties may agree.
Section 6. Representation and Warranties of and Agreement By NCI.
(a)NCI is a corporation duly organized and validly existing in good
standing under the laws of the State of Colorado, and has full corporate
power, authority and legal right to execute, deliver and perform its
obligations under this Agreement and the transactions contemplated under
this Agreement and, in all material respects, to own its properties and
conduct its business as such properties are presently owned and such
business is presently conducted.
(b)The execution and delivery of this Agreement and the consummation of
the transactions provided for in this Agreement have been duly
authorized by NCI by all necessary corporate action on the part of NCI.
(c)This Agreement constitutes a legal, valid and binding obligation of
NCI, enforceable in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect affecting
the enforcement of creditors' rights in general and except as such
enforceability may be limited by general principles of equity (whether
considered in a proceeding at law or in equity).
(d)NCI represents and warrants that it is acquiring the Participation
for its own accounts and not with a view toward, or for sale in
connection with, any distribution thereof.
Section 7. Representations and Warranties of NNCB.
(a)NNCB is a national banking association duly organized and validly
existing in good standing and has full corporate power, authority and
legal right to execute, deliver and perform its obligations under this
Agreement and the transactions contemplated under this Agreement and, in
all material respects, to own its properties and conduct its business as
such properties are presently owned and such business is presently
conducted.
(b)The execution and delivery of this Agreement and the consummation of
the transactions provided for in this Agreement have been duly
authorized by NNCB by all necessary corporate action on the part of
NNCB.
(c)This Agreement constitutes a legal, valid and binding obligation of
NNCB, enforceable in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect affecting
the enforcement of creditors' rights in general and except as such
enforceability may be limited by general principles of equity (whether
considered in a proceeding at law or in equity).
(d)NNCB represents that this Agreement together with the Participation
Certificate provided for in Section 3 will vest in NCI an undivided
interest, to the extent of the Participation Percentage, in all of its
right, title and interest in and to, the Exchangeable Transferor
Certificate and in and to the proceeds thereof, including proceeds
resulting from any Exchange, free from liens, encumbrances or claims of
third parties.
Section 8. Maintenance of Records. NNCB agrees to maintain or cause to
be maintained accurate and complete records with respect to the
Exchangeable Transferor Certificate and to deliver to NCI on demand
copies of any records required by NCI in connection with NCI's
enforcement of its rights under this Agreement.
Section 9. Exculpation. Except as otherwise set forth in this
Agreement, NNCB's sole obligation hereunder shall be to distribute, as
aforesaid, to NCI the Participation Percentage of any payment received
by NNCB relating to the Exchangeable Transferor Certificate as and when
received by NNCB. No other obligation or duty is assumed by NNCB beyond
the foregoing, nor shall any other obligation or duty be deemed to be
implied. NNCB shall not have any fiduciary relationship with generality
of the foregoing. Except with respect to representations and warranties
set forth in this Agreement, NNCB does not assume, nor shall NNCB or any
of its officers, directors, employees or agents have any responsibility
or liability, expressed or implied, to NCI for:
(i)Any action taken or omitted, whether by the Trustee, the Servicer, or
by any other person in connection with any Receivable except for NNCB's
own gross negligence or willful misconduct;
(ii)The authorization, execution, effectiveness, enforceability,
genuineness or validity of any Receivable, the Pooling and Servicing
Agreement or any document, instrument or other writing in connection
therewith, except with respect to the authorization, execution,
effectiveness, enforceability, genuineness or validity by or against
NNCB of any such document, instrument or other writing executed by NNCB;
(iii)The genuineness, truthfulness or accuracy of any recitals,
statements, representations or warranties made in or in connection with
any Receivables, or the Pooling and Servicing Agreement or any other
document, instrument or other writing in connection therewith, except
for any representation and warranty of NNCB made in any such document,
instrument or writing executed by NNCB;
(iv)The financial condition of any Obligor or for any credit or other
information regarding any Obligor or card issuer; or
(v)The performance of any of the obligations of any person (including
any Obligor) primarily or secondarily liable with respect to any
Receivable.
Section 10. No Petition. Each party hereto agrees that, prior to the
date which is one year and one day after the payment in full of all
investor certificates issued pursuant to the Pooling and Servicing
Agreement, it shall not institute against, or join any other person in
instituting against, the other party hereto any bankruptcy,
reorganization, insolvency or liquidation proceedings or other similar
proceeding under the laws of the United States or any state thereof.
Section 11. Modification; Successors and Assigns. No amendment or
modification of this Agreement shall be effective unless in writing and
signed by the party against whom enforcement of such amendment or
modification is sought. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns. NCI may not assign, transfer or participate any of
its rights or obligations hereunder or the Participation without the
prior written consent of NNCB.
Section 12. Notices. Any notice required or permitted by this
Agreement shall be deemed to have been duly and properly given when
delivered or sent by (i) certified mail, return receipt requested, (ii)
hand delivery, or (iii) telecopier (with oral confirmation of receipt)
and addressed as follows:
If to NCI:
Nordstrom Credit, Inc.
13531 E. Caley Avenue
Englewood, Colorado 80111
Telephone No.: (303) 397-4785
Telecopier No.: (303) 397-4775
Attention: Michael Karmill
with a copy to:
Nordstrom Credit, Inc.
13531 E. Caley Avenue
Englewood, Colorado 80111
Telephone No.: (303) 397-4690
Telecopier No.: (303) 397-4775
Attention: Mary Jo Miller, Esq.
If to NNCB:
Nordstrom National Credit Bank
13531 E. Caley Avenue
Englewood, Colorado 80111
Telephone No.: (303) 397-4785
Telecopier No.: (303) 397-4775
Attention: Michael Karmill
with a copy to:
Nordstrom National Credit Bank
13531 E. Caley Avenue
Englewood, Colorado 80111
Telephone No.: (303) 397-4690
Telecopier No.: (303) 397-4775
Attention: Mary Jo Miller, Esq.
or to such other address as either party hereto may furnish to the other
in writing at any time.
Section 13. Miscellaneous. This Agreement shall be governed by and
construed in accordance with the law of the State of Colorado.
Section 14. Entire Agreement. There are no restrictions, promises,
warranties, covenants, undertakings or representations other than those
expressly set forth herein. Nothing in this Agreement or otherwise
shall be construed as making NNCB responsible in any way or to any
extent for the payment of any principal, interest or premium on the
Exchangeable Transferor Certificate, the Participation or any Receivable
or for the fulfillment of any obligation or commitment of the Trustee or
the Servicer under the Pooling and Servicing Agreement, or any other
person, except to the extent of NNCB's obligations herein.
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be duly executed by their respective officers hereunto
authorized, as of the date and year first above written.
NORDSTROM NATIONAL CREDIT BANK
By:
Name:
Title:
NORDSTROM CREDIT, INC.
By:
Name:
Title:
Annex I to the
Participation Agreement
PARTICIPATION CERTIFICATE
Nordstrom National Credit Bank ("NNCB") has transferred and assigned to
Nordstrom Credit, Inc., pursuant to and on the terms and conditions set
forth in the Participation Agreement dated as of August 14, 1996 (terms
capitalized herein being used as defined in said Agreement), an
undivided interest equal to the Participation Percentage in all of the
right, title and interest of NNCB in and to the Exchangeable Transferor
Certificate and the Transferor Interest, and all representations and
warranties and agreements made for the benefit of the holder of the
Exchangeable Transferor Certificate in the Pooling and Servicing
Agreement, and any proceeds of any of the foregoing, issued pursuant to
the Pooling and Servicing Agreement.
NORDSTROM NATIONAL CREDIT BANK
By:
Name:
Title:
Annex II to the
Participation Agreement
FORM OF SETTLEMENT STATEMENT
For Settlement Period Beginning
and Ending
Settlement Date:
Nordstrom National Credit Bank ("NNCB") pursuant to the Participation
Agreement (the "Participation Agreement"), dated as of August 14, 1996,
between NNCB and Nordstrom Credit, Inc. ("NCI"), hereby states as
follows:
Capitalized terms used in this Settlement Statement have their
respective meanings in the Participation Agreement and, unless otherwise
noted, are as of the current Determination Date. This Settlement
Statement is being delivered pursuant to Section 3 of the Participation
Agreement.
Balances
1.NCI's Net Investment as of the last day of the
preceding settlement period ............ .....$
2.Net payments/credits to/from NCI in current
settlement period pursuant to Section 2(b), 2(c) or 2(d) of the
Participation Agreement increasing (decreasing) NCI's Net
Investment $
3.NCI's Net Investment as of the last day of this
settlement period ................$
4.Transferor Amount as of the last day of the
preceding settlement period $
5.Transferor Amount as of the last day of this
settlement period $
6.Participation Percentage as of the last day of the
preceding settlement period $
7.Participation Percentage as of the last day of this
settlement period $
8.Net Collections and other distributions in respect
of the Exchangeable Transferor Certificate since the end of the
preceding settlement period $
Settlement
9.Payment/credit due to (from) NCI for settlement
period for decreasing (increasing) in NCI's Net Investment
pursuant to Sections 2(b), 2(c) and 2(d) of the Participation
Agreement $
10.Payment/credit due to (from) NCI pursuant to
Section 2(c) of the Participation Agreement with respect to
Collections and other distributions in respect of the
Exchangeable Transferor Certificate $
11.Net payment/credit due to (from) NCI $
IN WITNESS WHEREOF, NNCB has caused this Settlement Statement to be
executed by its duly authorized officers this day of 19___.
NORDSTROM NATIONAL CREDIT BANK
By:
Name:
Title:
Approved:
NORDSTROM CREDIT, INC.
By:
Name:
Title:
<PAGE>
Exhibit 12.1
NORDSTROM CREDIT, INC.
Computation of Ratio of Earnings Available for
Fixed Charges to Fixed Charges
(Dollars in thousands)
<TABLE>
<CAPTION>
Year ended January 31, 1997 1996 1995 1994 1993
- ---------------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Earnings before
income taxes $47,024 $35,086 $32,045 $32,372 $29,321
Fixed charges
(gross interest expense) 41,089 42,245 31,187 29,600 33,841
------- ------- ------- ------- -------
Earnings available for
fixed charges $88,113 $77,331 $63,232 $61,972 $63,162
======= ======= ======= ======= =======
Ratio of earnings available
for fixed charges to fixed
charges 2.14 1.83 2.03 2.09 1.87
======= ======= ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-END> JAN-31-1997
<CASH> 105
<SECURITIES> 0
<RECEIVABLES> 716343
<ALLOWANCES> 26793
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 5071
<DEPRECIATION> 0
<TOTAL-ASSETS> 710106
<CURRENT-LIABILITIES> 0
<BONDS> 311000
0
0
<COMMON> 0
<OTHER-SE> 122783
<TOTAL-LIABILITY-AND-EQUITY> 710106
<SALES> 0
<TOTAL-REVENUES> 129465
<CGS> 0
<TOTAL-COSTS> 80089
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 7520
<INTEREST-EXPENSE> 40649
<INCOME-PRETAX> 49376
<INCOME-TAX> 17800
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 1452
<CHANGES> 0
<NET-INCOME> 30124
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
