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 July 31, 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 September 8, 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
NORDSTROM CREDIT, INC.
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INDEX
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Page
Number
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Statements of Earnings
Three and Six months ended July 31, 2000
and 1999 3
Balance Sheets
July 31, 2000 and 1999
and January 31, 2000 4
Statements of Cash Flows
Six months ended July 31, 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
page 2 of 8
NORDSTROM CREDIT, INC.
STATEMENTS OF EARNINGS
(Dollars in thousands)
(unaudited)
Three Months Six Months
Ended July 31, Ended July 31,
------------------ ------------------
2000 1999 2000 1999
-------- -------- -------- --------
Service charge income $25,108 $23,639 $49,899 $48,503
Rental income from
affiliates 339 334 673 668
-------- -------- -------- --------
Total revenue 25,447 23,973 50,572 49,171
Expenses:
Interest, net 6,913 6,609 13,222 13,233
Servicing and marketing fees
paid to Nordstrom fsb 11,865 12,324 21,064 18,507
Other general and
administrative 3,930 470 7,652 748
-------- -------- -------- --------
Total expenses 22,708 19,403 41,938 32,488
-------- -------- -------- --------
Earnings before income taxes 2,739 4,570 8,634 16,683
Income taxes 1,000 1,600 3,200 6,000
-------- -------- -------- --------
Net earnings $ 1,739 $ 2,970 $ 5,434 $10,683
======== ======== ======== ========
Ratio of earnings
available for fixed
charges to fixed charges 1.40 1.69 1.65 2.26
======== ======== ======== ========
<FN>
These statements should be read in conjunction with the Notes to
Financial Statements contained herein.
page 3 of 8
NORDSTROM CREDIT, INC.
BALANCE SHEETS
(Dollars in thousands)
(unaudited)
July 31, January 31, July 31,
2000 2000 1999
----------- ----------- -----------
ASSETS
- ------
Cash and cash equivalents $ 1,335 $ 224 $ 87
Customer accounts receivable, net
of allowance for doubtful accounts
of $15,364, $15,838 and $21,498 608,382 558,691 570,917
Other receivables 60 2,092 55
Land, buildings and
equipment, net (at cost) 4,402 4,296 4,403
Deferred taxes and other assets 7,671 7,082 9,476
-------- ----------- --------
$621,850 $572,385 $584,938
======== =========== ========
LIABILITIES AND INVESTMENT OF NORDSTROM, INC.
- ---------------------------------------------
Note payable to Nordstrom, Inc. $256,880 $169,080 $127,080
Payable to affiliates 13,713 - 7,444
Accrued interest, taxes and other 5,483 5,365 6,067
Long-term debt 187,750 245,350 303,350
-------- ----------- --------
Total liabilities 463,826 419,795 443,941
Investment of Nordstrom, Inc. 158,024 152,590 140,997
-------- ----------- --------
$621,850 $572,385 $584,938
======== =========== ========
<FN>
These statements should be read in conjunction with the Notes to
Financial Statements contained herein.
page 4 of 8
NORDSTROM CREDIT, INC.
STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
Six Months
Ended July 31,
----------------------
2000 1999
-------- --------
OPERATING ACTIVITIES:
Net earnings $ 5,434 $ 10,683
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 283 325
Change in:
Other receivables 2,032 2,654
Deferred taxes and other assets (708) 1,032
Other liabilities 13,831 3,481
-------- --------
Net cash provided by operating activities 20,872 18,175
-------- --------
INVESTING ACTIVITIES:
Decrease in customer
accounts receivable, net (49,691) (4,474)
Additions to property and equipment, net (270) (1)
-------- --------
Net cash used in investing activities (49,961) (4,475)
-------- --------
FINANCING ACTIVITIES:
Borrowings under note payable
to Nordstrom, Inc., net 87,800 65,080
Payments of commercial paper, net - (78,784)
Principal payments on long-term debt (57,600) -
-------- --------
Net cash provided by (used
in) financing activities 30,200 (13,704)
-------- --------
Net increase (decrease) in cash
and cash equivalents 1,111 (4)
Cash and cash equivalents
at beginning of period 224 91
-------- --------
Cash and cash equivalents at end of period $ 1,335 $ 87
======== ========
<FN>
These statements should be read in conjunction with the Notes to
Financial Statements contained herein.
page 5 of 8
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 July 31, 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
July 31, 2000 and 1999, and the results of its operations and cash
flows for the periods then ended, in accordance with accounting principles
generally accepted in the United States of America 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
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Service charge income increased for the quarter ended July 31, 2000,
compared to the same period in 1999, primarily due to an increase in the
accounts receivable balances on which the Company earns service fees.
Service charge income increased for the six-month period ended July 31,
2000, compared to the same period in 1999, primarily due to an increase in
finance charge rates. The increase for the quarter and the six-month period
was also due to an increase in income generated from the Company's
investment in the VISA master trust as compared to the same periods in 1999.
Servicing and marketing fees paid to Nordstrom fsb (formerly known as
Nordstrom National Credit Bank) increased for the six-month
period ended July 31, 2000, 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 and the
six-month period ended July 31, 2000, compared to the same periods in 1999,
as a result of charges associated with the Nordstrom 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.
PART II - OTHER INFORMATION
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Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
--------
(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.
Page 7 of 8
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: September 13, 2000
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page 8 of 8
EXHIBIT INDEX
EXHIBIT METHOD OF FILING
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27.1 Financial Data Schedule Filed herewith electronically