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, 1997
[ ] 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, 1997 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, 1997
and 1996 3
Balance Sheets
July 31, 1997 and 1996
and January 31, 1997 4
Statements of Cash Flows
Six months ended July 31, 1997
and 1996 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,
------------------ ------------------
1997 1996 1997 1996
-------- -------- -------- --------
Service charge income $26,386 $35,221 $54,207 $70,937
Rental income from Nordstrom
National Credit Bank 322 321 643 582
-------- -------- -------- --------
Total revenue 26,708 35,542 54,850 71,519
Expenses:
Interest, net 9,192 11,122 17,945 21,934
Service fees paid to
Nordstrom National
Credit Bank 8,478 8,744 14,425 15,261
Bad debts - 4,249 - 7,520
Other general and
administrative 435 410 770 782
-------- -------- -------- --------
Total expenses 18,105 24,525 33,140 45,497
-------- -------- -------- --------
Earnings before income
taxes and extraordinary
item 8,603 11,017 21,710 26,022
Income taxes 3,200 4,100 8,000 9,600
-------- -------- -------- --------
Earnings before
extraordinary item 5,403 6,917 13,710 16,422
Extraordinary charge related
to the early extinguishment
of debt, net of income
taxes of $900 - - - 1,452
-------- -------- -------- --------
Net earnings $ 5,403 $ 6,917 $13,710 $14,970
======== ======== ======== ========
Ratio of earnings
available for fixed
charges to fixed charges 1.93 1.99 2.21 2.06
======== ======== ======== ========
<FN>
These statements should be read in conjunction with the Notes to Financial
Statements contained herein and in the Nordstrom Credit, Inc. Annual Report
on Form 10-K for the year ended January 31, 1997.
page 3 of 8
NORDSTROM CREDIT, INC.
BALANCE SHEETS
(dollars in thousands)
(unaudited)
July 31, January 31, July 31,
1997 1997 1996
-------- ----------- --------
ASSETS
- ------
Cash and cash equivalents $ 298 $ 105 $ 584
Customer accounts receivable
net of holdback allowance
of $26,234, $26,793 and
$26,347 690,542 689,550 917,181
Other accounts receivable - 13,874 552
Property and equipment, net 4,920 5,071 5,234
Other assets 1,822 1,506 2,856
-------- ----------- --------
$697,582 $710,106 $926,407
======== =========== ========
LIABILITIES AND INVESTMENT OF NORDSTROM, INC.
- ---------------------------------------------
Notes payable to
Nordstrom, Inc. $ 10,000 $ 54,000 $ 88,200
Note payable to bank 50,000 50,000 50,000
Commercial paper 86,260 113,770 245,918
Accrued interest, taxes
and other 11,479 8,553 8,660
Dividend payable to
Nordstrom, Inc. - 50,000 -
Long-term debt 403,350 311,000 326,000
-------- ----------- --------
Total liabilities 561,089 587,323 718,778
Investment of
Nordstrom, Inc. 136,493 122,783 207,629
-------- ----------- --------
$697,582 $710,106 $926,407
======== =========== ========
<FN>
These statements should be read in conjunction with the Notes to Financial
Statements contained herein and in the Nordstrom Credit, Inc. Annual Report
on Form 10-K for the year ended January 31, 1997.
page 4 of 8
NORDSTROM CREDIT, INC.
STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
Six Months
Ended July 31,
----------------------
1997 1996
-------- --------
OPERATING ACTIVITIES:
Earnings before extraordinary item $ 13,710 $ 16,422
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Extraordinary charge related to early
extinguishment of debt, net of
income taxes of $900 - (1,452)
Depreciation and amortization 433 785
Change in:
Other accounts receivable 13,874 6,665
Other assets - (1,357)
Accrued interest, taxes and other 2,926 (764)
-------- --------
Net cash provided by operating activities 30,943 20,299
-------- --------
INVESTING ACTIVITIES:
Increase in investment in
customer accounts receivable, net (992) (42,323)
Additions to property and
equipment, net (6) -
-------- --------
Net cash used in investing activities (998) (42,323)
-------- --------
FINANCING ACTIVITIES:
(Decrease) increase in notes payable
to Nordstrom, Inc. (44,000) 2,200
(Decrease) increase in commercial paper (27,510) 63,417
Proceeds from issuance of
long-term debt, net 91,758 -
Principal payments on long-term debt - (43,100)
Cash dividend paid to Nordstrom, Inc. (50,000) -
-------- --------
Net cash (used in) provided by
financing activities (29,752) 22,517
-------- -------
Net increase in cash
and cash equivalents 193 493
Cash and cash equivalents
at beginning of period 105 91
-------- --------
Cash and cash equivalents at end of period $ 298 $ 584
======== ========
<FN>
These statements should be read in conjunction with the Notes to Financial
Statements contained herein and in the Nordstrom Credit, Inc. Annual Report
on Form 10-K for the year ended January 31, 1997.
page 5 of 8
NORDSTROM CREDIT, INC.
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands)
(unaudited)
Note 1:
The balance sheets of Nordstrom Credit, Inc. as of July 31, 1997 and
1996, 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, 1998.
It is not considered necessary to include detailed footnote information
as of July 31, 1997 and 1996. 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, 1997.
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 Nordstrom Credit, Inc. as of
July 31, 1997 and 1996, and the results of its operations and cash flows
for the periods then ended, in accordance with generally accepted
accounting principles applied on a consistent basis.
Note 2:
During the first quarter of 1996, the Company elected to prepay $43,100
of its 9.375% sinking fund debentures in order to take advantage of lower
short-term interest rates. This resulted in an extraordinary charge of
$1,452, net of applicable income taxes of $900. The premium paid has not
been included as a fixed charge for the calculation of the ratio of
earnings available for fixed charges to fixed charges.
page 6 of 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Service charge income decreased for the quarter and the six month period when
compared to the same periods in 1996, primarily due to a reduction in service
charge income from the Company's VISA card program as a result of the
securitization of these receivables in August 1996.
Interest expense decreased for the quarter and the six month period when
compared to the same periods in 1996, due primarily to lower levels of short-
term debt outstanding.
Service fees paid to Nordstrom National Credit Bank ("the Bank") decreased for
the quarter and six month period compared to the same periods in 1996 due to
the securitization of the VISA receivables. The decrease was partially offset
by an increase in fees paid to the Bank for the Nordstrom Accounts due to an
increase in the service fee rate from 1.65% to 2%, effective August 1996.
Bad debt expense decreased for the quarter and the six month period when
compared to the same periods in 1996, due to the securitization of the VISA
receivables.
During the first quarter of 1997, the Company filed a shelf registration
statement on Form S-3 to register up to $250 million in debt securities, and
issued $92.4 million in medium-term notes under the registration.
PART II - OTHER INFORMATION
---------------------------
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
--------
(10.1) Credit Agreement dated July 24, 1997 between Registrant and a
group of commercial banks is filed herein as an Exhibit.
(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/ John A. Goesling
------------------------------------------
John A. Goesling
Executive Vice President and Treasurer
(Principal Financial and Accounting Officer)
Date: September 9, 1997
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page 8 of 8
EXHIBIT INDEX
EXHIBIT METHOD OF FILING
- --------------------------------------- ---------------------------
10.1 Credit Agreement dated July 24, Filed herewith electronically.
1997 between Registrant and a
group of commercial banks
27.1 Financial Data Schedule Filed herewith electronically.