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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 October 31, 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 November 30, 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.
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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)
Condensed Statements of Earnings
Three and Nine months ended October 31, 2001
and 2000 3
Condensed Balance Sheets
October 31, 2001 and 2000
and January 31, 2000 4
Condensed Statements of Cash Flows
Nine months ended October 31, 2001
and 2000 5
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 7
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NORDSTROM CREDIT, INC.
CONDENSED STATEMENTS OF EARNINGS
(Dollars in thousands)
(unaudited)
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Three Months Nine Months
Ended October 31, Ended October 31,
------------------ ------------------
2001 2000 2001 2000
-------- -------- -------- --------
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Revenue:
Service charge income $24,279 $26,885 $79,164 $76,784
Rental income from
affiliates 510 336 1,530 1,009
-------- -------- -------- --------
Total revenue 24,789 27,221 80,694 77,793
Expenses:
Interest, net 5,352 7,492 18,002 20,714
Servicing and marketing fees
paid to Nordstrom fsb 7,686 9,995 26,747 31,059
Selling, general and
administrative 7,076 5,396 21,113 13,048
-------- -------- -------- --------
Total expenses 20,114 22,883 65,862 64,821
-------- -------- -------- --------
Earnings before income taxes 4,675 4,338 14,832 12,972
Income taxes 1,740 1,600 5,510 4,800
-------- -------- -------- --------
Net earnings $ 2,935 $ 2,738 $ 9,322 $ 8,172
======== ======== ======== ========
Ratio of earnings
available for fixed
charges to fixed charges 1.87 1.58 1.82 1.63
======== ======== ======== ========
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These statements should be read in conjunction with the Notes to Condensed
Financial Statements contained herein.
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NORDSTROM CREDIT, INC.
CONDENSED BALANCE SHEETS
(Dollars in thousands)
(unaudited)
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October 31, January 31, October 31,
2001 2001 2000
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ASSETS
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Cash and cash equivalents $ 662 $ 152 $ 1,230
Customer accounts receivable, net
of allowance for doubtful accounts
of $20,692, $16,531 and $15,239 602,418 645,124 587,795
Other receivables 1,684 7,236 1,552
Land, buildings and
equipment, net (at cost) 5,352 4,471 4,482
Deferred taxes and other assets 5,760 5,918 7,998
-------- ----------- --------
$615,876 $662,901 $603,057
======== =========== ========
LIABILITIES AND INVESTMENT OF NORDSTROM, INC.
- ---------------------------------------------
Note payable to Nordstrom, Inc. $260,630 $301,430 $245,580
Accrued interest, taxes and other 7,019 11,566 8,965
Long-term debt 176,750 187,750 187,750
-------- ----------- --------
Total liabilities 444,399 500,746 442,295
Investment of Nordstrom, Inc. 171,477 162,155 160,762
-------- ----------- --------
$615,876 $662,901 $603,057
======== =========== ========
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These statements should be read in conjunction with the Notes to Condensed
Financial Statements contained herein.
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NORDSTROM CREDIT, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
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Nine Months
Ended October 31,
----------------------
2001 2000
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OPERATING ACTIVITIES:
Net earnings $ 9,322 $ 8,172
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 683 417
Change in:
Other receivables 5,552 540
Other assets (7) (1,091)
Accrued interest, taxes and other (4,547) 3,600
-------- --------
Net cash provided by operating activities 11,003 11,638
-------- --------
INVESTING ACTIVITIES:
Decrease (increase) in customer
accounts receivable, net 42,706 (29,104)
Additions to property and equipment, net (1,399) (428)
-------- --------
Net cash provided by/(used in) investing
activities 41,307 (29,532)
-------- --------
FINANCING ACTIVITIES:
(Payments on) borrowings under note
payable to Nordstrom, Inc., net (40,800) 76,500
Principal payments on long-term debt (11,000) (57,600)
-------- --------
Net cash (used in)/provided by financing
activities (51,800) 18,900
-------- --------
Net increase in cash and cash equivalents 510 1,006
Cash and cash equivalents
at beginning of period 152 224
-------- --------
Cash and cash equivalents at end of period $ 662 $ 1,230
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These statements should be read in conjunction with the Notes to Condensed
Financial Statements contained herein.
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NORDSTROM CREDIT, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(dollars in thousands)
(unaudited)
Note 1 - Summary of Significant Accounting Policies
Basis of Presentation
- ---------------------
The accompanying 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. The same accounting policies
are followed in preparing quarterly financial data as are
followed in preparing annual data. In the opinion of
management, all adjustments necessary for a fair presentation
of the results of operations, financial position and cash flows
have been included and are of a normal, recurring nature.
Certain prior year amounts have been reclassified to conform
to the current year presentation.
The financial information is applicable to interim periods
and is not necessarily indicative of the results to be
expected for the fiscal year.
Note 2 - Subsequent Events
Subsequent to the third quarter of 2001, the Company issued
$300 million of Class A notes backed by Nordstrom Private
Label Receivables ("PL Term"). The PL Term bears a fixed
interest rate of 4.82% and has an expected maturity of five
years. In addition, the Company issued a variable funding
note backed by Nordstrom Private Label Receivables ("PL VFN")
with a $200 million capacity. Interest on the PL VFN varies
based on 30-day commercial paper rated at A1/P1. At this time,
there have been no borrowings. Proceeds will be used by
Nordstrom, Inc. for general corporate purposes, capital
expansion and to pay down short-term debt.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Service charge income decreased for the quarter ended October
31, 2001, compared to the same period in 2000, primarily due to
a decrease in the finance charge rate, partially offset by an
increase in the outstanding balance of accounts receivables.
For the nine months ended October 31, 2001, service charge income
increased, due to the increase in the accounts receivable
balances on which the Company earns service fees, and partially
offset by the decrease in the average finance charge rate.
Net interest expense decreased for the quarter and the nine-month
period ended October 31, 2001, compared to the same periods in
2000, as a result of a decrease in short-term interest rates,
partially offset by an increase in the volume of short-term debt
outstanding.
Servicing and marketing fees paid to Nordstrom fsb decreased for
the quarter and the nine-month period ended October 31, 2001,
primarily due to decreased marketing costs associated with the
termination of the company-wide program, the "Reinvent" campaign,
which was in existence during 2000.
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Cont.)
Selling, general and administrative expenses increased for the
nine-month period ended October 31, 2001, compared to the same
period in 2000, primarily as a result of promotions related to
the Nordstrom credit card rewards program for the half-yearly
sales held during the second quarter. Selling, general and
administrative expenses also increased for the quarter and the
nine-month period ended October 31, 2001 due 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, Inc., provided the store
followed proper check acceptance procedures.
PART II - OTHER INFORMATION
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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.
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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
Executive Vice President and Chief Financial Officer
(Principal Accounting and Financial Officer)
Date: December 10, 2001
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