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, 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 December 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.
----------------------
INDEX
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Page
Number
------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Statements of Earnings
Three and nine months ended October 31, 1997
and 1996 3
Balance Sheets
October 31, 1997 and 1996
and January 31, 1997 4
Statements of Cash Flows
Nine months ended October 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 Nine Months
Ended October 31, Ended October 31,
------------------ ------------------
1997 1996 1997 1996
-------- -------- -------- --------
Service charge income $25,956 $28,510 $80,163 $ 99,447
Rental income from Nordstrom
National Credit Bank 321 322 964 904
-------- -------- -------- --------
Total revenue 26,277 28,832 81,127 100,351
Expenses:
Interest, net 9,136 9,354 27,081 31,288
Service fees paid to
Nordstrom National
Credit Bank 6,329 6,609 20,754 21,870
Bad debts - - - 7,520
Other general and
administrative 373 387 1,143 1,169
-------- -------- -------- --------
Total expenses 15,838 16,350 48,978 61,847
-------- -------- -------- --------
Earnings before income
taxes and extraordinary
item 10,439 12,482 32,149 38,504
Income taxes 3,900 4,300 11,900 13,900
-------- -------- -------- --------
Earnings before
extraordinary item 6,539 8,182 20,249 24,604
Extraordinary charge related
to the early extinguishment
of debt, net of income
taxes of $900 - - - 1,452
-------- -------- -------- --------
Net earnings $ 6,539 $ 8,182 $20,249 $ 23,152
======== ======== ======== ========
Ratio of earnings
available for fixed
charges to fixed charges 2.14 2.33 2.19 2.14
======== ======== ======== ========
<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)
October 31, January 31, October 31,
1997 1997 1996
----------- ----------- -----------
ASSETS
- ------
Cash and cash equivalents $ 3,167 $ 105 $ 639
Customer accounts receivable
net of holdback allowance
of $27,450, $26,793 and
$22,075 618,651 689,550 659,920
Other accounts receivable 1,074 13,874 2,668
Property and equipment, net 4,854 5,071 5,155
Other assets 1,773 1,506 1,611
---------- ---------- ----------
$629,519 $710,106 $669,993
========== ========== ==========
LIABILITIES AND INVESTMENT OF NORDSTROM, INC.
- ---------------------------------------------
Note payable to bank $ 50,000 $ 50,000 $ 50,000
Commercial paper 22,918 113,770 95,890
Notes payable to
Nordstrom, Inc. - 54,000 14,000
Accrued interest, taxes
and other 10,219 8,553 9,292
Dividend payable to
Nordstrom, Inc. - 50,000 -
Long-term debt 403,350 311,000 335,000
---------- ---------- ----------
Total liabilities 486,487 587,323 504,182
Investment of
Nordstrom, Inc. 143,032 122,783 165,811
---------- ---------- ----------
$629,519 $710,106 $669,993
========== ========== ==========
<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)
Nine Months
Ended October 31,
------------------
1997 1996
-------- --------
OPERATING ACTIVITIES:
Earnings before extraordinary item $ 20,249 $ 24,604
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 659 995
Change in:
Other accounts receivable 12,800 4,549
Accrued interest, taxes and other 1,666 (132)
-------- --------
Net cash provided by operating activities 35,374 28,564
-------- --------
INVESTING ACTIVITIES:
Decrease in investment in
customer accounts receivable, net 70,899 12,050
Additions to property and equipment, net (6) (2)
-------- --------
Net cash provided by investing activities 70,893 12,048
-------- --------
FINANCING ACTIVITIES:
Decrease in commercial paper (90,852) (86,611)
Decrease in notes payable to
Nordstrom, Inc. (54,000) (72,000)
Sale of customer accounts
receivable to Nordstrom, Inc. - 202,888
Proceeds from issuance of long-term
debt, net 91,647 57,759
Principal payments on long-term debt - (92,100)
Cash dividend paid to Nordstrom, Inc. (50,000) (50,000)
-------- --------
Net cash used in financing activities (103,205) (40,064)
-------- --------
Net increase in cash and cash equivalents 3,062 548
Cash and cash equivalents
at beginning of period 105 91
-------- --------
Cash and cash equivalents at end of period $ 3,167 $ 639
======== ========
<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
(unaudited)
Note 1:
The balance sheets of Nordstrom Credit, Inc. (the "Company") as of October 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 October 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
October 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 nine month period when
compared to the same periods in 1996, primarily due to a reduction in
revenues from the Company's VISA card program as a result of the securitiza-
tion of these receivables in August 1996.
Interest expense decreased for the nine month period when compared to the
same period 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 nine month period compared to the same period 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 nine month period when compared to the same
period 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) Loan Agreement dated July 17, 1997 between Registrant and
Nordstrom, Inc. is filed herein as an Exhibit.
(10.2) Amendment to the Loan Agreement dated July 17, 1997 between
Registrant and Nordstrom, Inc., dated September 3, 1997, is
filed herein as an Exhibit.
(10.3) Amendment to the Loan Agreement dated June 10, 1985, as
amended May 16, 1994, between Registrant and Morgan
Guaranty Trust Company of New York, dated September 3, 1997,
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: December 9, 1997
___________________
page 8 of 8
EXHIBIT INDEX
EXHIBIT METHOD OF FILING
- --------------------------------- ------------------------------
10.1 Loan Agreement dated July 17, Filed herewith electronically.
1997, between Registrant and
Nordstrom, Inc.
10.2 Amendment to the Loan Agreement Filed herewith electronically.
dated July 17, 1997, between
Registrant and Nordstrom, Inc.,
dated September 3, 1997
10.3 Amendment to the Loan Agreement Filed herewith electronically.
dated June 10, 1985, as amended
May 16, 1994, between Registrant
and Morgan Guaranty Trust Company of
New York, dated September 3, 1997
27.1 Financial Data Schedule Filed herewith electronically.