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, 2001
[ ] 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 May 31, 2001, 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.
----------------------
INDEX
-----
Page
Number
------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Statements of Earnings
Three months ended April 30, 2001
and 2000 3
Balance Sheets
April 30, 2001 and 2000
and January 31, 2001 4
Statements of Cash Flows
Three months ended April 30, 2001
and 2000 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
Ended April 30,
------------------
2001 2000
-------- --------
Revenue:
Service charge income $28,807 $24,791
Rental income from affiliates 510 334
-------- ---------
Total revenue 29,317 25,125
Expenses:
Interest, net 6,626 6,309
Servicing and marketing fees
paid to Nordstrom fsb 8,176 9,199
Other general and administrative 5,905 3,722
-------- --------
Total expenses 20,707 19,230
-------- --------
Earnings before income taxes 8,610 5,895
Income taxes 3,200 2,200
-------- --------
Net earnings $ 5,410 $ 3,695
======== ========
Ratio of earnings available for fixed
charges to fixed charges 2.30 1.93
======== ========
<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)
April 30, January 31, April 30,
2001 2001 2000
----------- ----------- -----------
ASSETS
- ------
Cash and cash equivalents $ 611 $ 152 $ 257
Customer accounts receivable, net
of allowance for doubtful accounts
of $17,232, $16,531 and $15,418 612,467 645,124 548,072
Other receivables 121 7,236 53
Land, buildings and
equipment, net (at cost) 4,894 4,471 4,257
Deferred taxes and other assets 5,864 5,918 7,403
-------- -------- --------
$623,957 $662,901 $560,042
======== ======== ========
LIABILITIES AND INVESTMENT OF NORDSTROM, INC.
- ---------------------------------------------
Note payable to Nordstrom, Inc. $256,680 $301,430 $182,055
Accrued interest, taxes and other 11,962 11,566 18,352
Long-term debt 187,750 187,750 203,350
-------- ----------- --------
Total liabilities 456,392 500,746 403,757
Investment of Nordstrom, Inc. 167,565 162,155 156,285
-------- ----------- --------
$623,957 $662,901 $560,042
======== =========== ========
<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)
Three Months
Ended April 30,
----------------------
2001 2000
-------- --------
OPERATING ACTIVITIES:
Net earnings $ 5,410 $ 3,695
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 302 150
Change in:
Other receivables 7,115 2,039
Deferred taxes and other assets - (386)
Accrued interest, taxes and other 396 12,987
-------- --------
Net cash provided by operating activities 13,223 18,485
-------- --------
INVESTING ACTIVITIES:
Decrease in customer
accounts receivable, net 32,657 10,619
Additions to property and equipment, net (671) (46)
-------- --------
Net cash provided by investing activities 31,986 10,573
-------- --------
FINANCING ACTIVITIES:
(Payment) borrowings under note payable
to Nordstrom, Inc., net (44,750) 12,975
Principal payments on long-term debt - (42,000)
-------- --------
Net cash used in financing activities (44,750) (29,025)
-------- --------
Net increase in cash and cash equivalents 459 33
Cash and cash equivalents
at beginning of period 152 224
-------- --------
Cash and cash equivalents at end of period $ 611 $ 257
======== ========
<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 April 30, 2001 and
2000, 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 fiscal year.
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, 2001.
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, 2001 and 2000, 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, did not 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 SFAS No. 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. Adoption of the accounting
provisions of this standard did not have a material impact on the Company's
financial statements.
The Emerging Issues Task Force has reached a consensus on EITF Issue No.
99-20, "Recognition of Interest Income and Impairment on Purchased and
Retained Beneficial Interests in Securitized Financial Assets," which
provides guidance on how a transferor that retains an interest in
securitized financial assets, or an enterprise that purchases a beneficial
interest in securitized financial assets, should account for interest
income and impairment. Adoption of this accounting issue for the quarter
ending July 31, 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 April 30, 2001
compared to the same period in 2000, primarily due to an increase in the
accounts receivable balances on which the Company earns service fees.
Net interest expense increased slightly for the quarter ended April 30,
2001 compared to the same period in 2000, primarily due to an increase in
the short-term debt outstanding, partially offset by lower interest rates
during first quarter 2001.
Servicing and marketing fees paid to Nordstrom fsb (formerly known as
Nordstrom National Credit Bank) decreased primarily due to decreased
marketing costs associated with the termination of the company-wide brand
campaign which was in existence during the first quarter of 2000.
Other general and administrative expenses increased for the quarter ended
April 30, 2001 compared to the same period in 2000, primarily as a result
of charges associated with the Nordstrom credit card rewards program in
which 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 increase was also attributed to a change in the
Company's policy effective February 1, 2001, pursuant to which the Company
now incurs bad debt expense related to returned checks instead of Nordstrom,
provided the store followed proper check acceptance procedures.
PART II - OTHER INFORMATION
---------------------------
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
--------
None
(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 Chief Financial Officer
(Principal Accounting and Financial Officer)
Date: June 8, 2001
- -------------------------
page 8 of 8