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 October 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 December 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 Nine months ended October 31, 2000
and 1999 3
Balance Sheets
October 31, 2000 and 1999
and January 31, 2000 4
Statements of Cash Flows
Nine months ended October 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 Nine Months
Ended October 31, Ended October 31,
------------------ ------------------
2000 1999 2000 1999
-------- -------- -------- --------
Service charge income $26,885 $24,115 $76,784 $72,618
Rental income from
affiliates 336 334 1,009 1,002
-------- -------- -------- --------
Total revenue 27,221 24,449 77,793 73,620
Expenses:
Interest, net 7,492 6,573 20,714 19,806
Servicing and marketing fees
paid to Nordstrom fsb 9,995 6,851 31,059 25,358
Other general and
administrative 5,396 376 13,048 1,124
-------- -------- -------- --------
Total expenses 22,883 13,800 64,821 46,288
-------- -------- -------- --------
Earnings before income taxes 4,338 10,649 12,972 27,332
Income taxes 1,600 3,900 4,800 9,900
-------- -------- -------- --------
Net earnings $ 2,738 $ 6,749 $ 8,172 $17,432
======== ======== ======== ========
Ratio of earnings
available for fixed
charges to fixed charges 1.58 2.62 1.63 2.38
======== ======== ======== ========
<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)
October 31, January 31, October 31,
2000 2000 1999
----------- ----------- -----------
ASSETS
- ------
Cash and cash equivalents $ 1,230 $ 224 $ 1
Customer accounts receivable, net
of allowance for doubtful accounts
of $15,239, $15,838 and $18,303 587,795 558,691 525,483
Other receivables 1,552 2,092 108
Land, buildings and
equipment, net (at cost) 4,482 4,296 4,353
Deferred taxes and other assets 7,998 7,082 9,391
-------- ----------- --------
$603,057 $572,385 $539,336
======== =========== ========
LIABILITIES AND INVESTMENT OF NORDSTROM, INC.
- ---------------------------------------------
Note payable to Nordstrom, Inc. $245,580 $169,080 $134,380
Accrued interest, taxes and other 8,965 5,365 11,860
Long-term debt 187,750 245,350 245,350
-------- ----------- --------
Total liabilities 442,295 419,795 391,590
Investment of Nordstrom, Inc. 160,762 152,590 147,746
-------- ----------- --------
$603,057 $572,385 $539,336
======== =========== ========
<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)
Nine Months
Ended October 31,
----------------------
2000 1999
-------- --------
OPERATING ACTIVITIES:
Net earnings $ 8,172 $ 17,432
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 417 473
Change in:
Other receivables 540 2,601
Deferred taxes and other assets (1,091) 1,031
Other liabilities 3,600 1,830
-------- --------
Net cash provided by operating activities 11,638 23,367
-------- --------
INVESTING ACTIVITIES:
(Increase) decrease in customer
accounts receivable, net (29,104) 40,960
Additions to property and equipment, net (428) (13)
-------- --------
Net cash (used in) provided by
investing activities (29,532) 40,947
-------- --------
FINANCING ACTIVITIES:
Borrowings under note payable
to Nordstrom, Inc., net 76,500 72,380
Payments of commercial paper, net - (78,784)
Principal payments on long-term debt (57,600) (58,000)
-------- --------
Net cash provided by (used
in) financing activities 18,900 (64,404)
-------- --------
Net increase (decrease) in cash
and cash equivalents 1,006 (90)
Cash and cash equivalents
at beginning of period 224 91
-------- --------
Cash and cash equivalents at end of period $ 1,230 $ 1
======== ========
<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 October 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
October 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 and No. 138, requires the Company to recognize all derivatives as either
assets or liabilities in the statement of financial position and measure
those instruments at fair value. Adoption of this standard in the fiscal
year beginning February 1, 2001, is not expected to have a material impact
on the Company's financial statements.
In September 2000, the FASB issued SFAS No. 140 "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities"
("SFAS No. 140"), a replacement of Statement 125 with the same title. It
revises the standards for securitizations and other transfers of financial
assets and collateral and requires certain additional disclosures, but
otherwise retains most of SFAS No. 125's provisions. SFAS No. 140 is
effective for transfers after March 31, 2001 with certain disclosures
required for periods ending on or after December 31, 2000. Adoption of the
accounting provisions of this standard 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 and the nine-month period
ended October 31, 2000, compared to the same periods in 1999, primarily due
to an increase in the accounts receivable balances on which the Company
earns service fees. The increase for the nine-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 period in 1999.
Interest expense increased for the quarter and the nine-month period ended
October 31, 2000, compared to the same periods in 1999, primarily due to an
increase in short-term debt outstanding and the related interest rates.
Servicing and marketing fees paid to Nordstrom fsb (formerly known as
Nordstrom National Credit Bank) increased for the nine-month
period ended October 31, 2000, primarily due to increased marketing costs
associated with a new company-wide program, the "Reinvent" program, which
has resulted in an increase in Nordstrom credit card usage and new accounts.
Other general and administrative expenses increased for the quarter and the
nine-month period ended October 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: December 8, 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