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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2000
[ ] 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 offices) (Zip code)
Registrant's telephone number, including area code: 303-397-4700
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_____
On June 9, 2000 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 H(1)(a) and (b) of Form 10-Q and is therefore filing
this form with the reduced disclosure format.
page 1 of 8
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NORDSTROM CREDIT, INC.
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INDEX
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<TABLE>
<CAPTION>
Page
Number
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<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Statements of Earnings
Three months ended April 30, 2000
and 1999 3
Balance Sheets
April 30, 2000 and 1999
and January 31, 2000 4
Statements of Cash Flows
Three months ended April 30, 2000
and 1999 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 7
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page 2 of 8
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NORDSTROM CREDIT, INC.
STATEMENTS OF EARNINGS
(Dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months
Ended April 30,
------------------
2000 1999
-------- --------
<S> <C> <C>
Service charge income $24,791 $24,864
Rental income from affiliates 334 334
-------- --------
Total revenue 25,125 25,198
Expenses:
Interest, net 6,309 6,624
Servicing and marketing fees paid to
Nordstrom fsb 9,199 6,183
Other general and administrative 3,722 278
-------- --------
Total expenses 19,230 13,085
-------- --------
Earnings before income taxes 5,895 12,113
Income taxes 2,200 4,400
-------- --------
Net earnings $ 3,695 $ 7,713
======== ========
Ratio of earnings available for
fixed charges to fixed charges 1.93 2.83
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<FN>
These statements should be read in conjunction with the Notes to
Financial Statements contained herein.
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NORDSTROM CREDIT, INC.
BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
April 30, January 31, April 30,
2000 2000 1999
(unaudited) (unaudited)
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
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Cash and cash equivalents $ 257 $ 224 $ 69
Customer accounts receivable, net
of allowance for doubtful accounts
of $15,418, $15,838 and $21,753 548,072 558,691 516,298
Other receivables 53 2,092 118
Land, buildings and
equipment, net (at cost) 4,257 4,296 4,465
Deferred taxes and other assets 7,403 7,082 9,281
-------- ----------- --------
$560,042 $572,385 $530,231
======== =========== ========
LIABILITIES AND INVESTMENT OF NORDSTROM, INC.
---------------------------------------------
Note payable to Nordstrom, Inc. $182,055 $169,080 $ 81,940
Accrued interest, taxes and other 18,352 5,365 6,914
Long-term debt 203,350 245,350 303,350
-------- ----------- --------
Total liabilities 403,757 419,795 392,204
Investment of Nordstrom, Inc. 156,285 152,590 138,027
-------- ----------- --------
$560,042 $572,385 $530,231
======== =========== ========
<FN>
These statements should be read in conjunction with the Notes to
Financial Statements contained herein.
</TABLE>
page 4 of 8
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NORDSTROM CREDIT, INC.
STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months
Ended April 30,
----------------------
2000 1999
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES:
Net earnings $ 3,695 $ 7,713
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 150 164
Change in:
Other receivables 2,039 2,591
Deferred taxes and other assets (386) 1,325
Accrued interest, taxes and other 12,987 (3,116)
-------- --------
Net cash provided by operating activities 18,485 8,677
-------- --------
INVESTING ACTIVITIES:
Decrease in customer
accounts receivable, net 10,619 50,145
Additions to property and equipment, net (46) -
-------- --------
Net cash provided by investing activities 10,573 50,145
-------- --------
FINANCING ACTIVITIES:
Borrowings under note payable
to Nordstrom, Inc., net 12,975 19,940
Payments of commercial paper, net - (78,784)
Principal payments on long-term debt (42,000) -
-------- --------
Net cash used in financing activities (29,025) (58,844)
-------- --------
Net increase (decrease) in cash
and cash equivalents 33 (22)
Cash and cash equivalents
at beginning of period 224 91
-------- --------
Cash and cash equivalents at end of period $ 257 $ 69
======== ========
<FN>
These statements should be read in conjunction with the Notes to
Financial Statements contained herein.
</TABLE>
page 5 of 8
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NORDSTROM CREDIT, INC.
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands)
(unaudited)
Note 1 - Basis of Presentation
The balance sheets of Nordstrom Credit, Inc. (the "Company"), a wholly owned
subsidiary of Nordstrom, Inc. ("Nordstrom"), as of April 30, 2000 and 1999,
and the related statements of earnings and cash flows for the periods then
ended, have been prepared from the accounts without audit.
The financial information is applicable to interim periods and is not
necessarily indicative of the results to be expected for the year ending
January 31, 2001.
The financial statements should be read in conjunction with the Notes
to Financial Statements contained in the Nordstrom Credit, Inc. Annual
Report on Form 10-K for the year ended January 31, 2000.
In the opinion of management, the financial information includes all
adjustments (consisting only of normal, recurring adjustments) necessary
to present fairly the financial position of the Company as of
April 30, 2000 and 1999, and the results of its operations and cash
flows for the periods then ended, in accordance with generally accepted
accounting principles applied on a consistent basis.
Note 2 - Recent Accounting Pronouncements
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting
for Derivative Instruments and Hedging Activities", as amended by SFAS No.
137, requires an entity to recognize all derivatives as either assets or
liabilities in the balance sheet and measure those instruments at fair
value. Adoption of this standard, on February 1, 2001, is not expected to
have a material impact on the Company's financial statements.
page 6 of 8
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Service charge income decreased for the quarter ended April 30, 2000,
compared to the same period in 1999, primarily due to a reduction in the
accounts receivable balances on which the Company earns service fees. The
decrease was partially offset by an increase in income generated from the
Company's investment in the VISA master trust as compared to the same period
in 1999.
Interest expense decreased for the quarter, compared to the same period in
1999, due primarily to lower levels of debt outstanding.
Servicing and marketing fees paid to Nordstrom fsb (formerly known as
Nordstrom National Credit Bank, "the Bank") increased primarily due to
increased marketing costs associated with a new company-wide program, the
"Reinvent" program, designed to stimulate credit card usage and generate new
accounts.
Other general and administrative expenses increased for the quarter,
compared to the same period in 1999, as a result of charges associated with
the credit card rewards program wherein customers earn points from purchases
at Nordstrom which are redeemable for merchandise at Nordstrom stores upon
the accumulation of a specified number of points.
The Company does not own any significant information technology systems or
related software. All significant systems utilized by the Company are owned
by Nordstrom and the Bank, which services the customer accounts receivable
of the Company. Nordstrom and the Bank transitioned into the Year 2000
without any material negative effects on their business, operations or
financial condition.
PART II - OTHER INFORMATION
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Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
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(27.1) Financial Data Schedule is filed herein as an Exhibit.
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the quarter for which this
report is filed.
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SIGNATURES
Pursuant to the requirements 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)
/s/ Michael G. Koppel
------------------------------------------
Michael G. Koppel
Vice President and Corporate Controller
(Principal Accounting Officer)
Date: June 12, 2000
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EXHIBIT INDEX
EXHIBIT METHOD OF FILING
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27.1 Financial Data Schedule Filed herewith electronically
