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 May 3,November 1, 2003

[ ] 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 001-15059

                               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.)

                1617 Sixth Avenue, Seattle, Washington  98101
            ____________________________________________________
            (Address of principal executive offices)  (Zip code)

     Registrant's telephone number, including area code: (206) 628-2111


     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 whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act 12b-2)Act). YES  X     NO
                                                   _____     _____


Common stock outstanding as of May 31,November 29, 2003: 135,832,136137,435,231 shares of
common stock.









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                       NORDSTROM, INC. AND SUBSIDIARIES
                       --------------------------------
                                    INDEX
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Page Number PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) Condensed Consolidated Statements of Earnings Quarter and Year to Date ended May 3,November 1, 2003 and April 30,October 31, 2002 3 Condensed Consolidated Balance Sheets May 3,November 1, 2003, January 31, 2003 and April 30,October 31, 2002 4 Condensed Consolidated Statements of Cash Flows QuarterYear to Date ended May 3,November 1, 2003 and April 30,October 31, 2002 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3. Quantitative and Qualitative Disclosures About Market Risk 1311 Item 4. Controls and Procedures 1317 PART II. OTHER INFORMATION Item 1. Legal Proceedings 1417 Item 6. Exhibits and Reports on Form 8-K 1417 SIGNATURES 15 CERTIFICATIONS 1618
2 of 1718 NORDSTROM, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (dollars in thousands except per share amounts) (unaudited)
Quarter Ended Year to Date Ended ---------------------- May 3, April 30,---------------------- November 1, October 31, November 1, October 31, 2003 2002 2003 2002 ---------- ---------- ---------- ---------- Net sales $1,343,539 $1,245,761$1,420,610 $1,323,201 $4,559,124 $4,224,490 Cost of sales and related buying and occupancy (888,458) (823,088)(911,314) (872,154) (2,991,967) (2,799,277) ---------- ---------- ---------- ---------- Gross profit 455,081 422,673509,296 451,047 1,567,157 1,425,213 Selling, general and administrative expenses (426,030) (386,084)(450,622) (434,921) (1,381,308) (1,317,920) ---------- ---------- ---------- ---------- Operating income 29,051 36,58958,674 16,126 185,849 107,293 Interest expense, net (20,228) (20,049)(26,681) (20,832) (73,043) (60,486) Minority interest purchase and reintegration costs - (42,047)- - (53,168) Service charge income and other, net 35,632 33,30442,576 35,006 114,289 103,651 ---------- ---------- ---------- ---------- Earnings before income taxes and cumulative effect of accounting change 44,455 7,79774,569 30,300 227,095 97,290 Income tax expense (17,300) (19,010)(29,100) (11,873) (88,600) (53,741) ---------- ---------- ---------- ---------- Earnings (loss) before cumulative effect of accounting change 27,155 (11,213)45,469 18,427 138,495 43,549 Cumulative effect of accounting change (net of tax of $8,541) - - - (13,359) ---------- ---------- ---------- ---------- Net earnings (loss) $ 27,15545,469 $ (24,572)18,427 $ 138,495 $ 30,190 ========== ========== ========== ========== Basic and Diluted earnings (loss) per share $ .20.33 $ (.18).14 $ 1.02 $ .22 ========== ========== ========== ========== Diluted earnings per share $ .33 $ .14 $ 1.01 $ .22 ========== ========== ========== ========== Cash dividends paid per share of common stock outstanding $ .10 $ .09.10 $ .30 $ .28 ========== ========== ========== ========== The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of these statements.
3 of 1718 NORDSTROM, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (dollars in thousands)
May 3,November 1, January 31, April 30,October 31, 2003 2003 2002 ---------- ---------- ---------- (Unaudited) (Audited) (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 173,434154,490 $ 219,344 $ 216,28253,658 Accounts receivable, net 748,592 762,129 670,786606,172 639,630 623,421 Retained interest in accounts receivable 227,340 124,543 97,936 Merchandise inventories 1,078,2321,189,996 953,112 994,1361,278,932 Prepaid expenses 46,61350,083 40,261 36,22346,860 Other current assets 110,286 111,654 108,707111,965 111,138 102,829 ---------- ---------- ---------- Total current assets 2,157,157 2,086,500 2,026,1342,340,046 2,088,028 2,203,636 Land, buildings and equipment (net of accumulated depreciation of $1,942,989,$2,051,968, $1,882,976, and $1,716,616) 1,762,039$1,825,759) 1,736,617 1,761,544 1,791,6761,754,288 Goodwill, net 56,609 56,609 32,43156,609 Tradename, net 84,000 84,000 84,000 Other assets 115,036155,767 121,726 101,062123,239 ---------- ---------- ---------- TOTAL ASSETS $4,174,841 $4,110,379 $4,035,303$4,373,039 $4,111,907 $4,221,772 ========== ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Notes payable $ 726486 $ 244 $ 679571 Accounts payable 547,745 429,087 565,996647,708 429,808 702,181 Accrued salaries, wages and related benefits 207,477261,200 260,562 186,041226,840 Income taxes and other accruals 152,006200,133 188,986 182,566158,095 Current portion of long-term debt 5,6156,198 5,545 3,9964,386 ---------- ---------- ---------- Total current liabilities 913,569 884,424 939,2781,115,725 885,145 1,092,073 Long-term debt 1,341,2621,236,287 1,341,826 1,346,9391,343,423 Deferred lease credits 393,576376,007 383,100 369,401360,116 Other liabilities 135,055143,726 128,972 97,623101,093 Shareholders' Equity: Common stock, no par: 500,000,000 shares authorized; 135,809,649,136,970,748, 135,444,041 and 134,997,563135,427,913 shares issued and outstanding 363,258384,193 358,069 349,593357,567 Unearned stock compensation (1,843)(671) (2,010) (2,513)(2,177) Retained earnings 1,027,7131,111,864 1,014,105 938,520967,614 Accumulated other comprehensive earnings (loss) 2,251 1,893 (3,538)5,908 2,700 2,063 ---------- ---------- ---------- Total shareholders' equity 1,391,379 1,372,057 1,282,0621,501,294 1,372,864 1,325,067 ---------- ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,174,841 $4,110,379 $4,035,303$4,373,039 $4,111,907 $4,221,772 ========== ========== ========== The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of these statements.
4 of 1718 NORDSTROM, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) (unaudited)
QuarterYear to Date Ended ---------------------- May 3, April 30,------------------------ November 1, October 31, 2003 2002 -------- ------------------ ---------- OPERATING ACTIVITIES: Net earnings $138,495 $30,190 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 185,163 169,851 Amortization of deferred lease credits and other, net (20,316) (14,623) Stock-based compensation expense 9,548 3,442 Deferred income taxes, net 3,325 8,097 Cumulative effect of accounting change, net of tax - 13,359 Impairment of IT investment - 15,570 Minority interest purchase expense - 40,389 Change in operating assets and liabilities: Accounts receivable, net 42,221 22,117 Retained interest in accounts receivable (100,814) (36,498) Merchandise inventories (234,246) (372,605) Prepaid expenses (4,003) (5,895) Other assets (6,437) 4,693 Accounts payable 206,355 189,212 Accrued salaries, wages and related benefits (9,015) (12,268) Income taxes and other accruals 6,478 13,185 Other liabilities 8,913 4,006 ---------- ---------- Net cash provided by operating activities 225,667 72,222 ---------- ---------- INVESTING ACTIVITIES: Capital expenditures (204,536) (263,855) Additions to deferred lease credits 37,157 83,021 Minority interest purchase - (70,000) Other, net (1,037) (4,661) ---------- ---------- Net cash used for investing activities (168,416) (255,495) ---------- ---------- FINANCING ACTIVITIES: Proceeds from notes payable 226 423 Proceeds from long-term borrowings - 432 Principal payments on long-term debt (109,374) (84,593) Proceeds from sale of interest rate swap 2,341 4,931 Proceeds from issuance of common stock 25,438 15,662 Cash dividends paid (40,736) (37,779) ---------- ---------- Net cash used for financing activities (122,105) (100,924) ---------- ---------- Net decrease in cash and cash equivalents (64,854) (284,197) Cash and cash equivalents at beginning of period 219,344 337,855 ---------- ---------- Cash and cash equivalents at end of period $154,490 $53,658 ========== ========== The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of these statements.
5 of 1718 NORDSTROM, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands) (unaudited) Note 1 - Summary of Significant Accounting Policies Basis of Presentation - --------------------- The accompanying condensed consolidated financial statements should be read in conjunction with the Notes to Consolidated Financial Statements contained in our 2002 Annual Report. The same accounting policies are followed for preparing quarterly and annual financial data. All adjustments necessary for the fair presentation of the results of operations, financial position and cash flows have been included and are of a normal, recurring nature. Due to the seasonal nature of the retail industry, quarterly results are not necessarily indicative of the results for the full fiscal year. Reclassification - ---------------- We reclassified certain prior year amounts to conform to the current year presentation. Change in Fiscal Year - --------------------- On February 1, 2003, our fiscal year-end changed from January 31 to the Saturday closest to January 31. Each fiscal year consists of four 13 week quarters, with an extra week added onto the fourth quarter every five to six years. A one-day transition period is included in our first quarter 2003 results. Stock Compensation - ------------------ We apply APB No. 25, "Accounting for Stock Issued to Employees," in measuring compensation costs under our stock-based compensation programs, which are described more fully in our 2002 Annual Report. If we had elected to recognize compensation cost based on the fair value of the options and shares at grant date, net earnings and earnings per share would have been as follows:
Three MonthsQuarter Ended ------------------------ May 3, April 30,Year to Date Ended ---------------------- ---------------------- November 1, October 31, November 1, October 31, 2003 2002 ----------- -----------2003 2002 ---------- ---------- ---------- ---------- Net earnings, (loss), as reported $27,155 $(24,572) Incremental$45,469 $18,427 $138,495 $30,190 Add: stock-based compensation expense included in reported net income, net of tax 4,615 580 5,483 1,740 Deduct: stock-based compensation expense determined under fair value, net of tax (6,223) (5,600) ----------- -----------(7,390) (5,499) (17,878) (17,870) ---------- ---------- ---------- ---------- Pro forma net earnings (loss) $20,932 $(30,172) =========== ===========$42,694 $13,508 $126,100 $14,060 ========== ========== ========== ========== Earnings (loss) per share: Basic and- as reported $0.33 $0.14 $1.02 $0.22 Diluted - as reported $0.20 $(0.18)$0.33 $0.14 $1.01 $0.22 Basic and- pro forma $0.31 $0.10 $0.93 $0.10 Diluted - pro forma $0.15 $(0.22)$0.31 $0.10 $0.92 $0.10
Recent Accounting Pronouncements - -------------------------------- In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." SFAS No. 149 amends SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" for certain decisions made by the FASB as part of the Derivatives Implementation Group process. SFAS No. 149 also amends SFAS No. 133 to incorporate clarifications of the definition of a derivative. SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003, and should be applied prospectively. We do not believe the adoption of SFAS No. 149 will have a material impact on our earnings and financial position. 6 of 1718 NORDSTROM, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands) (unaudited) Note 1 - Summary of Significant Accounting Policies (Cont.) Recent Accounting Pronouncements - -------------------------------- In January 2003, the FASB issued Interpretation No. 46 (FIN 46) "Consolidation of Variable Interest Entities", which requires the consolidation of variable interest entities (VIEs). An entity is considered to be a VIE when its equity investors lack controlling financial interest or the entity has insufficient capital to finance its activities without additional subordinated financial support. Consolidation of a VIE by an investor is required when it is determined that the majority of the entity's expected losses or residual returns will be absorbed by that investor. FIN 46 is effective for variable interest entities created or acquired after January 31, 2003. For variable interest entities created before February 1, 2003, FIN 46 must be applied for the first interim or annual period ending after December 15, 2003. We do not believe the adoption of FIN 46 will have an impact on our financial statements. Note 2 - Goodwill and Other Intangible Assets The carrying amounts of our intangible assets are as follows:
Catalog/ Retail Stores Internet segment segment Total --------------------- -------- --------- Goodwill Tradename Goodwill -------- --------- -------- Balance as of February 1, 2003 and May 3,November 1, 2003 $ 40,893 $ 84,000 $ 15,716 $ 140,609
The purchase of the minority interest of Nordstrom.com in the first quarter of 2002 resulted in additional goodwill of $24,178, of which $8,462 was allocated to the Retail Stores reporting unit and $15,716 to the Catalog/Internet reporting unit. Goodwill of $32,431 and Tradename of $84,000 are assigned to the Faconnable reporting unit. We tested all of our intangible assets during the first quarter of 2003 and determined that these assets were not impaired. We expect to perform these impairment tests annually during our first quarter or when other circumstances indicate we need to do so. Note 3 - Earnings Per Share
Three MonthsQuarter Ended Year to Date Ended ------------------------ May 3, April 30,------------------------ November 1, October 31, November 1, October 31, 2003 2002 2003 2002 ----------- ----------- ----------- ----------- Net earnings (loss) $27,155 $(24,572)$45,469 $18,427 $138,495 $30,190 Basic shares 135,578,266 134,702,331136,303,837 135,207,627 135,907,488 134,995,245 Basic earnings (loss) per share $0.20 $(0.18)$0.33 $0.14 $1.02 $0.22 Dilutive effect of stock options and performance share units 219,525 -1,799,263 558,141 751,286 724,165 Diluted shares 135,797,791 134,702,331138,103,100 135,765,768 136,658,774 135,719,410 Diluted earnings (loss) per share $0.20 $(0.18)$0.33 $0.14 $1.01 $0.22 Antidilutive stock options 13,798,089 12,711,744
Note 4 - Accounts Receivable The components of accounts receivable are as follows:
May 3, January 31, April 30, 2003 2003 2002 ----------- ----------- ----------- Private label trade receivables: Unrestricted $19,809 $15,599 $20,777 Restricted 574,592 613,647 592,908 Allowance for doubtful accounts (22,354) (22,385) (22,786) ----------- ----------- ----------- Private label trade receivables, net 572,047 606,861 590,899 VISA securitization master trust certificates 152,327 123,220 55,591 Other 24,218 32,048 24,296 ----------- ----------- ----------- Accounts receivable, net $748,592 $762,129 $670,786 =========== =========== ===========2,974,349 8,692,657 7,578,056 6,546,645
7 of 1718 NORDSTROM, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands) (unaudited) Note 4 - Accounts Receivable (Cont.)The components of accounts receivable are as follows:
November 1, January 31, October 31, 2003 2003 2002 ----------- ----------- ----------- Trade receivables: Unrestricted $29,728 $15,599 $19,895 Restricted 567,396 613,647 601,535 Allowance for doubtful accounts (20,746) (22,385) (22,381) ----------- ----------- ----------- Trade receivables, net 576,378 606,861 599,049 Other 29,794 32,769 24,372 ----------- ----------- ----------- Accounts receivable, net $606,172 $639,630 $623,421 =========== =========== ===========
The restricted private label receivables back the $300 million Class A notes and the $200 million variable funding note issued by us in November 2001. Other accounts receivable consist primarily of vendor receivables and cosmetic rebates receivable. As all vendor receivables are fully earned at period end, no allowance for doubtful vendor receivables has been recorded. Note 5 - Debt In Februarythe third quarter, we purchased $62,405 of our 8.95% senior notes for a total cash payment of $72,925. Approximately $7,880 of expense was recognized in the third quarter of 2003 related to this purchase. Year to date we soldhave purchased $103,230 of our 8.95% senior notes and $2,500 of our 6.7% medium-term notes for a total cash payment of $122,979. Approximately $14,303 of expense has been recognized during the year related to these purchases. We entered into a variable interest rate swap that converted our $250 million, 5.63% fixed-rate debt to variable rate. We received cashagreement in the second quarter of $2.3 million, which will be recognized2003. The swap qualifies as income evenly over the remaining lifea fair value hedge and is recorded at its market value of the related debt.($10,884) in other liabilities. 8 of 18 NORDSTROM, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands) (unaudited) Note 6 - Segment Reporting The following tables set forth the information for our reportable segments and a reconciliation to the consolidated totals:
Quarter ended Retail Credit Catalog/ Corporate May 3,November 1, 2003 Stores Operations Internet and Other Eliminations Total - --------------------------------------------------------------------------------------------------- Revenues from external customers $1,277,398$1,352,542 - $66,141$68,068 - - $1,343,539$1,420,610 Service charge income - $33,932$35,837 - - - 33,93235,837 Intersegment revenues 6,251 6,8486,245 6,942 - - $(13,099)$(13,187) - Interest expense, net 94 5,373 (16) $14,777390 5,549 (62) $20,804 - 20,22826,681 Earnings before taxes 95,796 6,380 (2,459) (55,262)121,136 3,853 (482) (49,938) - 44,45574,569 Net earnings (loss) 58,516 3,897 (1,502) (33,756)73,864 2,350 (295) (30,450) - 27,15545,469 Quarter ended Retail Credit Catalog/ Corporate April 30,October 31, 2002 Stores Operations Internet and Other Eliminations Total - --------------------------------------------------------------------------------------------------- Revenues from external customers $1,182,709$1,261,124 - $63,052$62,077 - - $1,245,761$1,323,201 Service charge income - $31,421$33,311 - - - 31,42133,311 Intersegment revenues 3,818 6,5259,492 7,157 - - $(10,343)$(16,649) - Interest expense, net 184 6,439 185 $13,241119 6,054 382 $14,277 - 20,04920,832 Earnings before taxes and cumulative effect of accounting change 96,628 6,618 (308) (95,141)86,274 4,963 (4,051) (56,886) - 7,79730,300 Net earnings (loss) 45,662 4,042 (188) (74,088)52,506 3,020 (2,463) (34,636) - (24,572)18,427 Year to date ended Retail Credit Catalog/ Corporate November 1, 2003 Stores Operations Internet and Other Eliminations Total - --------------------------------------------------------------------------------------------------- Revenues from external customers $4,353,627 - $205,497 - - $4,559,124 Service charge income - $104,506 - - - 104,506 Intersegment revenues 20,766 24,180 - - $(44,946) - Interest expense, net 508 16,364 (74) $56,245 - 73,043 Earnings before taxes 379,128 15,559 (1,967) (165,625) - 227,095 Net earnings (loss) 231,213 9,489 (1,200) (101,007) - 138,495 Assets 2,940,898 810,184 103,433 518,524 - 4,373,039 Year to date ended Retail Credit Catalog/ Corporate October 31, 2002 Stores Operations Internet and Other Eliminations Total - --------------------------------------------------------------------------------------------------- Revenues from external customers $4,040,382 - $184,108 - - $4,224,490 Service charge income - $97,773 - - - 97,773 Intersegment revenues 22,731 23,265 - - $(45,996) - Interest expense, net 120 17,967 719 $41,680 - 60,486 Earnings before taxes and cumulative effect of accounting change 300,673 18,431 (20,074) (201,740) - 97,290 Net earnings (loss) 169,950 11,237 (12,238) (138,759) - 30,190 Assets 2,981,671 710,215 97,497 432,389 - 4,221,772
Note 7 - Nordstrom.com On May 31,During 2002, we purchased the outstanding shares of Nordstrom.com, Inc. series C preferred stock for $70,000. The excess of the purchase price over the fair market value of the preferred stock and professional fees resulted in a one-timeone- time charge of $42,047, which was recorded in the first quarter of 2002.$42,736. No tax benefit was recognized on the share purchase, as we do not believe it is probable that this benefit will be realized. The purchaseimpact of not recognizing this income tax benefit increased our prior year to date effective tax rate to 55.2% before the minority interestcumulative effect of Nordstrom.com resulted in additional goodwillaccounting change. 9 of $24,178. Note 8 - Subsequent Event In June 2003, we purchased $39,170 of our 8.95% senior notes for a total cash payment of $45,402. Approximately $6,000 of expense will be recognized in the second quarter of 2003 related to this purchase. 8 of 1718 NORDSTROM, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands) (unaudited) Note 97 - Nordstrom.com (Cont.) Also in 2002, $10,432 of expense was recognized related to the purchase of the outstanding Nordstrom.com options and warrants. The following table presents the charges resulting from the minority interest purchase and reintegration of Nordstrom.com.
Nine Months Ended October 31, 2002 ---------------- Excess of the purchase price over the fair market value of the preferred stock $40,389 Nordstrom.com option/warrant buyback expense 10,432 Professional fees incurred 2,347 ---------------- Total minority interest purchase and reintegration costs $53,168 ================
Note 8 - Litigation Cosmetics - --------- We were originally named as a defendant along with other department store and specialty retailers in nine separate but virtually identical class action lawsuits filed in various Superior Courts of the State of California in May, June and July 1998 that have now been consolidated in Marin County state court.Superior Court. In May 2000, plaintiffs filed an amended complaint naming a number of manufacturers of cosmetics and fragrances and two other retailers as additional defendants. Plaintiffs' amended complaint alleges that the retail price of the "prestige" or "Department Store" cosmetics sold in department and specialty stores was collusively controlled by the retailer and manufacturer defendants in violation of the Cartwright Act and the California Unfair Competition Act. Plaintiffs seek treble damages and restitution in an unspecified amount, attorneys' fees and prejudgment interest, on behalf of a class of all California residents who purchased cosmetics and fragrances for personal use from any of the defendants during the period four years prior to the filing of the amended complaint. Defendants, including us, have answered the amended complaint denying the allegations. The defendants have produced documents and responded to plaintiffs' other discovery requests, including providing witnesses for depositions. Plaintiffs have not yet moved for class certification. Pursuant to an orderWe entered into a settlement agreement with the plaintiffs and the other defendants on July 16, 2003. In furtherance of the court, plaintiffssettlement agreement, the case was refiled in the United States District Court for the Northern District of California on behalf of a class of all persons who currently reside in the United States and who purchased "Department Store" cosmetics from the defendants participated in mediation sessions.during the period May 29, 1994 through July 16, 2003. The California state courtCourt has set a status conferencegiven preliminary approval to the settlement. A summary notice of class certification and the terms of the settlement will be disseminated to class members. A hearing on whether the Court will grant final approval of the settlement is scheduled for June 2003. Washington Public Trust Advocates - --------------------------------- By order dated August 9, 2002, the court granted our motion to dismiss us from Washington Public Trust Advocates, ex rel., et al. v. City of Spokane, et al., as previously described, and dismissed us from that lawsuit. Plaintiff attempted to obtain direct review8, 2004. If approved by the Washington Supreme Court, which declinedthe settlement will result in the plaintiffs' claims and the claims of all class members being dismissed, with prejudice, in their entirety. In connection with the settlement agreement, the defendants will provide class members with certain free products and pay the plaintiffs' attorneys' fees. Our share of the cost of the settlement will not have a material adverse effect on our financial condition. 10 of 18 NORDSTROM, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands) (unaudited) Note 8 - Litigation (Cont.) We have entered into the settlement agreement solely to hear the caseavoid protracted and referred it to the Washington Courtcostly litigation. There has been no finding or admission of Appeals. On May 20, 2003, the Washington Court of Appeals affirmed our dismissal.any wrongdoing by us in this lawsuit. Other - ----- We are subject to routine litigation incidental to our business. No material liability is expected. 9 of 17 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Dollars in Thousands The following discussion should be read in conjunction with the Management's Discussion and Analysis section of the 2002 Annual Report. RESULTS OF OPERATIONS: - ---------------------- Overview - -------- Earnings for the firstthird quarter of 2003 increased to $27,155$45,469 or $0.20$0.33 per diluted share from $18,427 or $0.14 per diluted share for the same period in 2002. This increase was driven by a net loss of $24,5725.0% increase in same store sales, improved margin due to lower markdowns, leveraging on buying and occupancy expenses as well as selling, general and administrative expenses and overall expense control. Earnings for the year to date period ended November 1, 2003 increased to $138,495 or $0.18$1.01 per diluted share from $30,190 or $0.22 per diluted share for the same period in 2002. The net loss inincrease for the first quarter of 2002year to date period was partially attributable to two one-time charges relatedtaken in 2002 to write-off an IT investment, acquire and reintegrate the minority interest purchase of Nordstrom.com Inc. and the adoption ofto adopt a new accounting pronouncement. Excluding these one-timethe nonrecurring and impairment charges taken in 2002, year to date earnings for the first quarter of 2003 decreased $3,290increased $37,264 or 10.8%36.8% when compared to the same period last year. This decreaseincrease was primarily the result of negative comparablea 2.6% increase in same store sales, higher markdowns taken to liquidate merchandiseleveraging on buying and higheroccupancy expenses as well as selling, general and administrative expenses and overall expense related to new stores.control. 11 of 18 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.) Year-over-year net income before and after one-timenonrecurring and impairment charges are as follows:
QuarterYear to Date Ended ------------------------------------------- May 3,November 1, 2003 April 30,October 31, 2002 -------------------- -------------------- Diluted Diluted Dollars EPS Dollars EPS --------- --------- --------- --------- Reported net income (loss) $27,155 $0.20 $(24,572) $(0.18) One-time$138,495 $1.01 $30,190 $0.22 Nonrecurring and impairment charges, net of tax: Minority interest purchase and reintegration costs - - 42,047 0.3048,184 0.36 Cumulative effect of accounting change - - 13,359 0.10 Write-off of IT investment - - 9,498 0.07 --------- --------- --------- --------- Net income before one-timenonrecurring and impairment charges $27,155 $0.20 $30,834 $0.22$138,495 $1.01 $101,231 $0.75 ========= ========= ========= =========
Sales - ----- Total sales for the quarter and year to date on a 4-5-4 comparable basis increased 3.5% primarily9.8% and 7.2% due to same store sales increases and store openings. Since May 1, 2002, we have opened six full- line stores and two Nordstrom Rack stores. Same store sales on a 4-5-4 comparable basis decreased 1.4%increased 5.0% for the quarter and 2.6% year to date due to a combination ofseveral factors, including a slowing economy,strong merchandise offering and an improved retail climate. Year to date sales also benefited from strong sales events. For the war in Iraqtwelve months ended November 1, 2003, we have opened four full-line stores and poor weather in the eastern and midwestern United States.two Nordstrom Rack stores. See our GAAP sales reconciliation on page 14. Our strongest performing merchandise divisions for the quarter were cosmetics,women's designer apparel, accessories, and the designer and casual contemporary segments of women's apparel, followed by shoes, men's apparel,cosmetics, women's active wear intimate apparel, junior women's and women's bridge apparel.men's wear. Our weakest divisions were women's betterspecial sizes and special sizes.children's apparel. Gross Profit - ------------
QTD 2003 QTD 2002 YTD 2003 YTD 2002 -------- -------- -------- -------- Gross profit as a percent of sales 35.9% 34.1% 34.4% 33.7%
Gross profit as a percentage of sales remained flatimproved 176 basis points for the quarter and 64 basis points for the year to date period ended May 3,November 1, 2003, compared to the same periodperiods last year. HigherThe quarter perfomance was due to lower markdowns, takenwhich resulted from better inventory management, and leveraging of buying and occupancy expenses. Year to liquidate excessdate perfomance was driven by the leveraging of buying and occupancy expenses. Inventory levels continued to show favorable trends as overall inventory drive sales and deliver competitive pricing were partially offset bycontrol resulted in a lower provision for inventory shrinkage and lower buying expenses. Total10.8% decrease in our inventory per square foot increased 1.9% due to lower than expected sales. We expect higher markdowns to continue through the endfoot. 12 of the second quarter as we liquidate our remaining excess inventory. 10 of 1718 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.) Selling, General and Administrative - -----------------------------------
QTD 2003 QTD 2002 YTD 2003 YTD 2002 -------- -------- -------- -------- Selling, general and administrative expense as a percent of sales 31.8% 32.9% 30.3% 31.1%
The year to date 2002 selling, general and administrative expense includes an impairment charge of $15,570 related to the write-down of an information technology investment in a supply chain tool at our manufacturing division. Without this charge, 2002 selling, general and administrative expenses as a percentpercentage of sales increased 70on a year to date basis pointswould have been 30.8%. Excluding the effects of the impairment charge, the quarter and year to 31.7% due to negativedate decreases resulted from leverage from the loweron better than expected sales. Selling, generalsame store sales and administrativeoverall expense increased $40 million due to planned incremental spending related to new stores, employee benefitscontrol. We saw the most significant improvements in information technology expenses, selling expenses and sales promotion offset by lower technology expenses.distribution costs. Interest Expense - ---------------- Interest expense, net remained flatincreased $5,849 for the quarter ended May 3,November 1, 2003 when compared to the same period in 2002 due to a decline$7,880 in additional expense resulting from the volumerepurchase of long- term$62,405 in debt during the quarter. The additional expense was partially offset by a slight increaselower interest expense resulting from the reduced debt balance outstanding. Year to date we have repurchased $105,730 in long-term rates. Also, less interest income was earneddebt resulting in the quarter as average short-term investments decreased.additional expense of $14,303. Service Charge Income and Other - ------------------------------- Service charge income and other, net increased for the quarter and year to date periods ended May 3,November 1, 2003 primarily due to gains recorded from our VISA securitization. Securitization gains continued as increased sales on our VISA cards generatedhave resulted in higher receivable balances and related revenues, while the cost of funds declined and bad debt write-offs stabilized. Nordstrom.comremained stable. Additionally, during the quarter we recorded approximately $4,048 in gains resulting from the relocation of two of our stores. Minority Interest Purchase and Reintegration Costs - -------------- On May 31,-------------------------------------------------- During 2002, we purchased the outstanding shares of Nordstrom.com, Inc. series C preferred stock for $70,000. The excess of the purchase price over the fair market value of the preferred stock and professional fees resulted in a one-timeone- time charge of $42,047, which was recorded in the first quarter of 2002.$42,736. No tax benefit was recognized on the share purchase, as we do not believe it is probable that this benefit will be realized. The impact of not recognizing this income tax benefit increased our prior year to date effective tax rate to 55.2% before the cumulative effect of accounting change. Also in 2002, $10,432 of expense was recognized related to the purchase of the outstanding Nordstrom.com options and warrants. 13 of 18 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.) The following table presents the charges resulting from the minority interest purchase and reintegration of Nordstrom.com resulted in additional goodwill of $24,178.Nordstrom.com:
Nine Months Ended October 31, 2002 ---------------- Excess of the purchase price over the fair market value of the preferred stock $40,389 Nordstrom.com option/warrant buyback expense 10,432 Professional fees incurred 2,347 ---------------- Total minority interest purchase and reintegration costs $53,168 ================
Cumulative Effect of Accounting Change - -------------------------------------- During the first quarter of 2002, we completed the initial review required by SFAS No. 142 "Goodwill and Other Intangible Assets." As a result of our review, we recorded a cumulative effect of accounting change of $13,359, net of tax, or $0.10 per share on a diluted basis. Seasonality - ------------ Our business, like that of other retailers, is subject to seasonal fluctuations. Our anniversary sale in July and the holidays in December result in higher sales in the second and fourth quarters of the fiscal year. Accordingly, results for any quarter are not necessarily indicative of the results that may be achieved for a full fiscal year. GAAP Sales Reconciliation (Dollars in millions) - ----------------------------------------------- We converted to a 4-5-4 Retail Calendar at the beginning of 2003. This change in our fiscal calendar has resulted in three additional daysone less day of sales being included in our firstsecond quarter versus the same period in the prior year and one additional day of sales for the current year to date versus the same period last year. Sales performance numbers included in this document have been calculated on a comparative 4-5-4 basis. We believe that adjusting for the three additionaldifference in days provides a more comparable basis (4-5-4 vs 4-5-4) from which to evaluate sales performance in the first quarter.performance. The following reconciliation bridges the reported GAAP sales to the 4-5-4 comparable sales. 11
% Change % Change Dollar Total Comp Sales Reconciliation ($M) QTD 2003 QTD 2002 Increase Sales Sales - ---------------------------- --------- --------- -------- --------- -------- Number of Days Reported GAAP 91 92 Reported GAAP Sales $1,420.6 $1,323.2 $97.4 7.4% 2.5% Less Aug. 1-3, 2002 sales - ($72.9) Plus Nov 1-2, 2002 sales - $43.2 --------- --------- Reported 4-5-4 sales $1,420.6 $1,293.5 $127.1 9.8% 5.0% --------- --------- 4-5-4 Adjusted Days 91 91
14 of 1718 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)
1Q03 1Q02 4-5-4 Gregorian% Change % Change Dollar Total Comp calendar calendarSales Reconciliation ($M) YTD 2003 YTD 2002 Increase Sales Sales - ---------------------------- --------- --------- -------- --------- -------- ----- ----- Number of Days Reported GAAP 92 89274 273 Reported GAAP Sales $1,343.5 $1,245.8 $97.7 7.8% 2.7%$4,559.1 $4,224.5 $334.6 7.9% 2.9% Less FebFeb. 1, 2003 ($18.2) - Less Feb. 1-2, 2002 sales - ($31.0)30.4) Plus May 1-4,Nov. 1-2, 2002 sales $65.6 Less Feb 1, 2003 sales ($18.2) ------- -------- $43.2 --------- --------- Reported 4-5-4 sales $1,325.3 $1,280.4 $44.9 3.5% (1.4%) ------- -------$4,540.9 $4,237.3 $303.6 7.2% 2.6% --------- --------- 4-5-4 Adjusted Days 91 91273 273
LIQUIDITY AND CAPITAL RESOURCES: - -------------------------------- We finance our working capital needs and capital expenditures with cash provided by operations and borrowings. Cash Flow from Operations - ------------------------- Net cash provided by operating activities for the quarteryear to date period ended May 3,November 1, 2003 decreasedincreased compared to the same period last year. This decreaseincrease was primarily a result of differencesa decrease in inventory due to overall inventory control, partially offset by an increase in the timingretained interest of income tax payments between years.our VISA securitization. The increase in the retained interest was a result of increased sales on our VISA card. Capital Expenditures - -------------------- For the quarteryear to date period ended May 3,November 1, 2003, net cash used in investing activities decreased compared to the same period in 2002, primarily due to a decreasethe $70,000 payment for the acquisition of the outstanding shares of Nordstrom.com, Inc. series C preferred stock in 2002. In addition, net capital expenditures resultingdecreased from a planned reduction in new store openings. During the first quarter of fiscal 2003, weWe opened one full-line store in Houston, TX. Throughout the remainder of the year ending January 31, 2004, we expect to open threetwo full-line stores in Richmond, VA, Austin, TX and Wellington Green, FL; relocate our Lynnwood, WA full-line store and openRichmond, VA during the third quarter of 2003 as well as two Nordstrom Rack stores in Chicago, IL and Sunrise, FL. For the entire year, grossYear to date, we have opened a total of three full-line stores and two Nordstrom Rack stores. Additionally, in November 2003, we opened a full-line store in Wellington Green, FL. No other stores are scheduled to open in 2003. Gross square footage is expectedfor the year increased approximately 4% from 18,428,000 to increase 4%. Total square footage of our stores was 18,613,000 as of the end of first quarter 2003, a 6.5% increase over the same period last year.19,131,000. Financing - --------- For the quarteryear to date period ended May 3,November 1, 2003, cash used by financing activities decreasedincreased primarily due to our current year debt repurchase partially offset by the scheduled retirement of $76,750 in medium-term notes in the prior year. 15 of 18 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.) Debt Buyback - ------------ In the third quarter, we purchased $62,405 of our 8.95% senior notes for a total cash payment of $72,925. Approximately $7,880 of expense was recognized in the third quarter of 2003 related to this purchase. Year to date we have purchased $103,230 of our 8.95% senior notes and $2,500 of our 6.7% medium-term notes for a total cash payment of $122,979. Approximately $14,303 of expense has been recognized during the year related to these purchases. CRITICAL ACCOUNTING POLICIES: - ----------------------------- The preparation of our financial statements requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. We regularly evaluate our estimates including those related to doubtful accounts, inventory valuation, intangible assets, sales return, income taxes, self-insurance liabilities, post-retirement benefits, contingent liabilities and litigation. We base our estimates on historical experience and other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates. No changes to our methodologies have occurred since our disclosures in the 2002 Annual Report. 12 of 17 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.) Recent Accounting Pronouncements - -------------------------------- In AprilJanuary 2003, the FASB issued SFASInterpretation No. 149, "Amendment46 (FIN 46) "Consolidation of Statement 133 on Derivative Instruments and Hedging Activities." SFAS No. 149 amends SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" for certain decisions madeVariable Interest Entities", which requires the consolidation of variable interest entities (VIEs). An entity is considered to be a VIE when its equity investors lack controlling financial interest or the entity has insufficient capital to finance its activities without additional subordinated financial support. Consolidation of a VIE by an investor is required when it is determined that the FASB as partmajority of the Derivatives Implementation Group process. SFAS No. 149 also amends SFAS No. 133 to incorporate clarifications of the definition of a derivative. SFAS No. 149entity's expected losses or residual returns will be absorbed by that investor. FIN 46 is effective for contracts entered intovariable interest entities created or modifiedacquired after June 30,January 31, 2003. For variable interest entities created before February 1, 2003, and shouldFIN 46 must be applied prospectively.for the first interim or annual period ending after December 15, 2003. We do not believe the adoption of SFAS No. 149FIN 46 will have a materialan impact on our earnings and financial position.statements. FORWARD-LOOKING INFORMATION CAUTIONARY STATEMENT: - ------------------------------------------------- The preceding disclosures included forward-looking statements regarding our performance, liquidity and adequacy of capital resources. These statements are based on our current assumptions and expectations and are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Forward-looking statements are qualified by the risks and challenges posed by increased competition, shifting consumer demand, changing consumer credit markets, changing capital markets, changing interest rates and general economic conditions, hiring and retaining effective team members, sourcing merchandise from domestic and international vendors, investing in new business strategies, achieving our growth objectives and the impact of economic and competitive market forces, including the impact of terrorist activity or the impact of war. As a result, while we believe there is a reasonable basis for the forward-looking statements, you should not place undue reliance on those statements. This discussion and analysis should be read in conjunction with the condensed consolidated financial statements. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK In February 2003, we sold the interest rate swap that converted our $250 million, 5.63% fixed-rate debt to variable rate. We received cash16 of $2.3 million, which will be recognized as income evenly over the remaining life of the related debt.18 Item 4. CONTROLS AND PROCEDURES "Disclosure controls" are controls and other procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported, withinAs of the time periods specified inend of the SEC's rules and forms. Disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to our management, including our President and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. "Internal controls" are procedures that are designed to provide reasonable assurance that our transactions are properly authorized, our assets are safeguarded against unauthorized or improper use and our transactions are properly recorded and reported, all to permit the preparation of our financial statements in conformity with generally accepted accounting principles. Within the 90-day period prior to the filing ofcovered by this report,Quarterly Report on Form 10-Q, we performed an evaluation under the supervision and with the participation of management, including our President and Chief Financial Officer, of our disclosure controls and procedures.procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities and Exchange Act of 1934 (the "Exchange Act")). Based upon that evaluation, theour President and theour Chief Financial Officer concluded that our disclosure controls and procedures are effective in the timely recording, processing, summarizing and reporting of material financial and non-financial information. We reviewed our internal controls for effectiveness periodically during the period covered by this report. No significantThere have been no changes were made in our internal controlscontrol over financial reporting (as defined in Rules 13a-15(f) or in other factors15d-15(f) of the Exchange Act) during our most recently completed fiscal quarter that could significantlyhas materially affected, or is reasonably likely to materially affect, our internal controls subsequent to the date of their last evaluation. 13 of 17 control over financial reporting. PART II - OTHER INFORMATION Item 1. Legal Proceedings - ------------------------- The information required under this item is included in the following section of Part I, Item 1 of this report: Note 98 in Notes to Condensed Consolidated Financial Statements Item 6. Exhibits and Reports on Form 8-K - ----------------------------------------- (a) Exhibits -------- 3.13.2 Bylaws, of the Registrant, as amended and restated on May 20,November 18, 2003. 99.110.1 Nordstrom Supplemental Executive Retirement Plan (2003 Restatement). 31.1 Certification of President required by Section 302(a) of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Chief ExecutiveFinancial Officer required by Section 302(a) of the Sarbanes-Oxley Act of 2002. 32.1 Certification of President regarding periodic report containing financial statements. 99.2statements as required by Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of Chief Financial Officer regarding periodic report containing financial statements.statements as required by Section 906 of the Sarbanes-Oxley Act of 2002. (b) Reports on Form 8-K ------------------- We filed a Form 8-K on February 6,August 7, 2003 attaching a press release to announce our preliminary JanuaryJuly 2003 sales results. We filed a Form 8-K on FebruaryAugust 21, 2003 attaching a press release relating to announce our results of operations for the quarter and year ended January 31,August 2, 2003. We filed a Form 8-K on March 5,September 4, 2003 attaching a press release to announce our preliminary FebruaryAugust 2003 sales results. We filed a Form 8-K on March 31, 2003 attaching a press release to announce the retirement of Joel Stinson, Chief Administrative Officer. We filed a Form 8-K on March 31, 2003 attaching a press release to announce our first quarter earnings were expected to be lower than the previously guided range. We filed a Form 8-K on April 10,October 9, 2003 attaching a press release to announce our preliminary MarchSeptember 2003 sales results. 1417 of 1718 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, INC. (Registrant) /s/ Michael G. Koppel ---------------------------------------------------- Michael G. Koppel Executive Vice President and Chief Financial Officer (Principal Accounting and Financial Officer) Date: June 9,December 8, 2003 ------------------ 1518 of 1718 NORDSTROM INC. AND SUBSIDIARIES Exhibit Index Exhibit Method of Filing - ------- ---------------- 3.1 Bylaws, as amended and restated on Filed herewith electronically November 18, 2003 10.1 Nordstrom Supplemental Executive Filed herewith electronically Retirement Plan (2003 Restatement) 31.1 Certification of President Filed herewith electronically required by Section 302(a) of the Sarbanes-Oxley Act of 2002 I, Blake W. Nordstrom, certify that: 1. I have reviewed this quarterly report on Form 10-Q31.2 Certification of Nordstrom, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: June 9, 2003 /s/ Blake W. Nordstrom ------------------ ---------------------- Blake W. Nordstrom President 16 of 17 CertificationChief Financial Filed herewith electronically Officer required by Section 302(a) of the Sarbanes-Oxley Act of 2002 I, Michael G. Koppel, certify that: 1. I have reviewed this quarterly32.1 Certification of President Filed herewith electronically regarding periodic report on Form 10-Q of Nordstrom, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thecontaining financial statements made, in lightas required by Section 906 of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, resultsSarbanes-Oxley Act of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: June 9, 2003 /s/ Michael G. Koppel ------------------ ---------------------- Michael G. Koppel Executive Vice President and Chief Financial Officer 17 of 17 NORDSTROM INC. AND SUBSIDIARIES Exhibit Index
Exhibit Method of Filing - ------- ---------------- 3.1 By-laws of the Registrant, as Filed herewith electronically amended and restated on May 20, 2003 99.1 Certification of Chief Executive Filed herewith electronically Officer regarding periodic report containing financial statements 99.22002 32.2 Certification of Chief Financial Filed herewith electronically Officer regarding periodic report containing financial statements
as required by Section 906 of the Sarbanes-Oxley Act of 2002