PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED APRIL 25, 1997
$92,350,000
[LOGO]
NORDSTROM CREDIT, INC.
MEDIUM-TERM NOTES, SERIES E
DUE 9 MONTHS OR MORE FROM DATE OF ISSUE
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Nordstrom Credit, Inc. (the "Company") may offer from time to time up to
$92,350,000 aggregate principal amount of its Medium-Term Notes, Series E due 9
months or more from the date of issue. The specific interest rates and range of
maturities will be set forth in Pricing Supplements to this Prospectus
Supplement. Unless otherwise specified in an applicable Pricing Supplement,
interest on the Notes will be payable each April 15 and October 15 and at
maturity. Notes will be issued only in registered form in denominations of
$100,000 and in any greater amount that is an integral multiple of $1,000. See
"Description of Notes."
The Notes will be represented by one or more global securities registered in
the name of a nominee of The Depository Trust Company, as Depositary. Beneficial
interests in the Notes will be shown on, and transfers thereof will be effected
only through, records maintained by the Depositary and its Participants. Except
as described in "Description of Notes -- Book-Entry System," owners of
beneficial interests in the global securities will not be entitled to receive
Notes in definitive form and will not be considered the Holders thereof.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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PRICE TO AGENTS' PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(2)(3)
----------------------- ------------------------ --------------------------------
Per Note...................... 100% 0.125%-0.750% 99.875%-99.250%
Total......................... $92,350,000 $115,438-$692,625 $92,234,563-$91,657,375
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(1) Unless otherwise specified in an applicable Pricing Supplement, the Notes
will be issued at 100% of their principal amount.
(2) The Company will pay the Agents a commission of from 0.125% to 0.750%,
depending on maturity, of the principal amount of any Note sold through them
as agents (or sold to such Agents as principal in circumstances in which no
other discount is agreed). The Company has agreed to indemnify the Agents
against certain liabilities, including liabilities under the Securities Act
of 1933. See "Supplemental Plan of Distribution."
(3) Before deducting estimated expenses of $125,000 payable by the Company.
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Offers to purchase Notes are being solicited, on a reasonable efforts basis,
from time to time by the Agents on behalf of the Company. Notes may be sold to
the Agents as principal at negotiated discounts. The Company reserves the right
to sell the Notes directly on its own behalf. The Company also reserves the
right to withdraw, cancel or modify the offering contemplated hereby without
notice. The Company or the Agents may reject any order as a whole or in part.
See "Supplemental Plan of Distribution."
GOLDMAN, SACHS & CO. CREDIT SUISSE FIRST BOSTON
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The date of this Prospectus Supplement is April 25, 1997.
CERTAIN PERSONS PARTICIPATING IN OFFERINGS OF NOTES MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE
OFFERED NOTES, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING
TRANSACTIONS IN SUCH NOTES, AND THE IMPOSITION OF PENALTY BIDS, DURING AND AFTER
SUCH OFFERINGS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "SUPPLEMENTAL PLAN OF
DISTRIBUTION."
SELECTED FINANCIAL DATA OF THE COMPANY
The following table summarizes selected financial data of the Company and is
qualified in its entirety by reference to the detailed information and financial
statements included in the documents incorporated in the Prospectus by
reference.
FISCAL YEAR ENDED JANUARY 31,
------------------------------------------------
1993 1994 1995 1996 1997
-------- -------- -------- -------- --------
(DOLLAR AMOUNTS IN THOUSANDS)
EARNINGS STATEMENT DATA:
Service charge income on investment in customer
accounts receivable, and other.................. $ 93,597 $ 92,070 $ 93,636 $124,017 $129,465
Expenses:
Interest, net................................... 33,593 29,465 31,074 42,157 40,649
Service fees paid to Nordstrom National Credit
Bank.......................................... 28,848 28,551 28,056 32,558 30,381
Bad debts....................................... -- -- 940 12,752 7,520
General and administrative...................... 1,835 1,682 1,521 1,464 1,539
-------- -------- -------- -------- --------
Total expenses.............................. 64,276 59,698 61,591 88,931 80,089
-------- -------- -------- -------- --------
Earnings before income taxes and extraordinary
item............................................ 29,321 32,372 32,045 35,086 49,376
Income taxes...................................... 10,400 11,700 11,600 12,600 17,800
-------- -------- -------- -------- --------
Earnings before extraordinary item................ 18,921 20,672 20,445 22,486 31,576
Extraordinary charge related to the early
extinguishment of debt, net of taxes of $900.... -- -- -- -- 1,452
-------- -------- -------- -------- --------
Net earnings...................................... $ 18,921 $ 20,672 $ 20,445 $ 22,486 $ 30,124
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratio of earnings to fixed charges(1)............. 1.87x 2.09x 2.03x 1.83x 2.14x
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
BALANCE SHEET DATA (AT PERIOD END):
Liabilities:
Short-term debt
Note payable to bank(2)....................... $ 25,000 $ 25,000 $ 50,000 $ 50,000 $ 50,000
Notes payable to Nordstrom, Inc.(3)........... 112,500 112,500 148,000 86,000 54,000
Commercial paper(4)........................... 13,319 15,337 37,388 182,501 113,770
Accrued interest, taxes and other............... 9,969 9,665 10,963 9,424 8,553
Dividend payable to Nordstrom, Inc.............. -- -- -- -- 50,000
Long-term debt(5)............................... 305,600 265,600 252,100 369,100 311,000
-------- -------- -------- -------- --------
Total liabilities........................... 466,388 428,102 498,451 697,025 587,323
Investment of Nordstrom, Inc...................... 129,056 149,728 170,173 192,659 122,783
-------- -------- -------- -------- --------
Total liabilities and investment of
Nordstrom, Inc............................ $595,444 $577,830 $668,624 $889,684 $710,106
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
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(1) For the purpose of this ratio, earnings consist of earnings before income
taxes plus fixed charges. Fixed charges consist of interest expense. During
the first quarter of 1996, the Company elected to prepay $43,100,000 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 $1,452,000,
net of applicable income
(FOOTNOTES CONTINUED ON NEXT PAGE)
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taxes of $900,000. 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.
(2) The note payable to bank represents borrowings from a commercial bank which
bear interest at a floating rate based on published discount rates (5.34% at
January 31, 1997), and mature up to six months from the date of borrowing,
or on demand.
(3) Notes payable to Nordstrom, Inc. ("Nordstrom") bear interest at floating
rates based on published discount rates (5.34% at January 31, 1997), and
mature up to six months from the date of borrowing, or on demand.
(4) Commercial paper outstanding at January 31, 1997 matures in 5 to 73 days
from date of issue at interest rates ranging from 5.27% to 5.45% per annum.
The Company has a $300,000,000 unsecured line of credit with a group of
commercial banks with Wells Fargo Bank (Colorado), N.A., as agent, which
expires on June 30, 2001. Under the terms of this line of credit, the
Company must, among other things, comply with the terms of the Investment
Agreement and Operating Agreement and maintain a ratio of total debt to
tangible net worth at the end of each quarter of no greater than 7 to 1.
This line of credit serves as liquidity support for the Company's short-term
debt. Amounts due to Nordstrom, Nordstrom National Credit Bank and other
affiliates are subordinated to borrowings under the line of credit
agreement.
(5) Long-term debt as of January 31, 1997 consists of unsecured notes maturing
between 1997 and 2005, bearing rates of interest between 6.7% and 9.6% per
annum.
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SELECTED CONSOLIDATED FINANCIAL DATA OF NORDSTROM
The Company's results of operations and financial condition are primarily
dependent upon the amount of accounts receivable generated through sales in
Nordstrom stores. Commencing in May 1994 and continuing until August 14, 1996,
the Company also financed accounts receivable generated through purchases
utilizing the Nordstrom National Credit Bank Visa card in Nordstrom stores and
elsewhere. The following table provides certain consolidated information with
respect to Nordstrom for the periods indicated.
FISCAL YEAR ENDED JANUARY 31,
----------------------------------------------------------------
1993 1994 1995 1996 1997
---------- ---------- ---------- ----------- -----------
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SQUARE FOOT AMOUNTS)
EARNINGS STATEMENT DATA:
Net sales....................................... $3,421,979 $3,589,938 $3,894,478 $4,113,517 $4,453,063
Net earnings.................................... 136,619 140,418 202,958 165,112 147,505
BALANCE SHEET DATA (AT PERIOD END):
Long-term obligations, including current
portion....................................... $ 481,945 $ 438,574 $ 373,910 $ 439,943 $ 380,632
Shareholders' equity............................ 1,052,031 1,166,504 1,343,800 1,422,972 1,473,192
OTHER DATA:
Percentage of net sales resulting in Accounts... 48.78% 45.86% 43.07% 39.69% 34.55%
Customer accounts receivable, net of allowance
for doubtful accounts at period end(1)........ $584,379 $565,151 $655,715 $874,103 $693,123
Net write-offs as a percentage of average
customer accounts receivable(2)............... 5.26% 4.77% 3.51% 4.37% 6.85%
Ratio of earnings to fixed charges(3)........... 4.41x 4.95x 6.79x 5.14x 4.99x
Number of stores (at period end)................ 72 74 76 78 83
Total square footage (at period end)............ 9,224,000 9,282,000 9,998,000 10,713,000 11,754,000
Net sales per square foot....................... $381 $383 $395 $382 $377
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(1) Customer accounts receivable at January 31, 1997 includes Master Trust
Certificates of $32,516,000. Due to the seasonality of Nordstrom's business,
the balance of customer accounts receivable fluctuates during the year.
(2) These percentages were derived by dividing net write-offs of customer
accounts receivable (gross write-offs less recoveries) by the average of the
sum of customer accounts (excluding the Master Trust Certificates and less
allowances for doubtful accounts) at the beginning of the period and at the
end of each quarter during the period.
(3) For the purpose of this ratio, earnings consist of earnings before income
taxes plus fixed charges less capitalized interest. Fixed charges consist of
interest expense, capitalized interest and the estimated interest portion of
rent expense.
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DESCRIPTION OF NOTES
THE FOLLOWING DESCRIPTION OF THE PARTICULAR TERMS OF THE MEDIUM-TERM NOTES,
SERIES E (THE "NOTES") OFFERED HEREBY SUPPLEMENTS AND, TO THE EXTENT
INCONSISTENT THEREWITH, REPLACES THE DESCRIPTION OF THE GENERAL TERMS AND
PROVISIONS OF DEBT SECURITIES SET FORTH IN THE PROSPECTUS, TO WHICH DESCRIPTION
REFERENCE IS HEREBY MADE.
GENERAL
The Notes will be unsecured obligations of the Company, will be offered on a
continuous basis and will mature on any business day nine months or more from
the date of issue, as selected by the initial purchaser and agreed to by the
Company. Notes are issuable only in fully registered form in denominations of
$100,000 or any amount in excess thereof which is an integral multiple of
$1,000.
Each Note will bear interest from its date of issue at the annual rate
stated on the face thereof, and, unless otherwise specified in an applicable
Pricing Supplement, interest will be payable semiannually on April 15 and
October 15 of each year and at maturity. Interest will be computed on the basis
of a 360-day year of twelve 30-day months. Interest will be payable generally to
the person in whose name a Note is registered at the close of business on the
April 1 or October 1 record date next preceding the April 15 or October 15
interest payment date, provided, however, that interest payable on a maturity
date which is not a April 15 or October 15 will be payable to the person to whom
principal is payable. In the case of a Note issued between a record date and the
interest payment date relating to such record date (a "Long Period Note"), the
first payment of interest on such Note shall be made on the interest payment
date following the next succeeding record date to the registered owner on such
next succeeding record date.
Payments of principal and interest at maturity will be made in immediately
available funds against presentation and surrender of the Note. The Depositary
(as defined below) shall be entitled to receive payments of interest by wire
transfer of immediately available funds.
Interest rates on the Notes are subject to change by the Company from time
to time, but no such change will affect any Notes theretofore issued or as to
which an offer has been accepted by the Company. In the case where any interest
payment date or stated maturity date of any Note shall not be a business day,
then payment of interest or principal need not be made on such day but may be
made on the next succeeding business day with the same force and effect as if
made on such interest payment date or stated maturity date, and no interest
shall accrue with respect to such payment for the period from and after such
interest payment date or stated maturity date, as the case may be. The Notes
will not be redeemable prior to maturity.
The Notes offered hereby constitute part of a single series for purposes of
the Indenture under which the Notes will be issued, which series is limited
initially to $92,350,000 in aggregate principal amount (which limit may be
increased by action of the Board of Directors of the Company and such action may
change other terms of additional securities of the series). The Notes will rank
equally with all unsecured and unsubordinated indebtedness of the Company. For a
description of the rights of the holders of securities under the Indenture,
including the Notes, see "Description of Debt Securities" in the Prospectus
attached hereto.
BOOK-ENTRY SYSTEM
Upon issuance, all Notes having the same original issuance date, interest
rate and stated maturity will be represented by a single global security (a
"Global Note"). Each Global Note representing one or more Notes will be
deposited with, or on behalf of, The Depository Trust Company, New York, New
York (the "Depositary") and registered in the name of the Depositary's nominee.
Except as set forth below, Global Notes may be transferred, in whole and not in
part, only to the Depositary or another nominee of the Depositary or to a
successor depositary or nominee of such successor.
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The Depositary has advised as follows: It is a limited-purpose trust company
organized under the New York Banking Law, a "banking organization" within the
meaning of the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended. The Depositary holds
securities that its participants ("Participants") deposit with the Depositary.
The Depositary also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. "Direct
Participants" include securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations. The Depositary is owned
by a number of its Direct Participants and by the New York Stock Exchange, Inc.,
the American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to the Depositary's system is also available to others such
as securities brokers and dealers, banks, and trust companies that clear through
or maintain a custodial relationship with a Direct Participant, either directly
or indirectly ("Indirect Participants"). The Rules applicable to the Depositary
and its Participants are on file with the Securities and Exchange Commission.
Purchases of interests in the Global Note under the Depositary's system must
be made by or through Direct Participants, which will receive a credit for such
interests on the Depositary's records. The ownership interest of each actual
purchaser of interests in the Global Note ("Beneficial Owner") is in turn to be
recorded on the Direct and Indirect Participants' records. Beneficial Owners
will not receive written confirmation from the Depositary of their purchase, but
Beneficial Owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their holdings,
from the Direct or Indirect Participant through which the Beneficial Owner
entered into the transaction. Transfers of ownership interests in the Global
Note are to be accomplished by entries made on the books of Participants acting
on behalf of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in the Global Note, except as described
below.
To facilitate subsequent transfers, all Global Notes deposited by
Participants with the Depositary are registered in the name of the Depositary's
partnership nominee, Cede & Co. The deposit of Global Securities with the
Depositary and their registration in the name of Cede & Co. effect no change in
beneficial ownership. The Depositary has no knowledge of the actual Beneficial
Owners of the interests in the Global Note; the Depositary's records reflect
only the identity of the Direct Participants to whose accounts interests in the
Global Securities are credited, which may or may not be the Beneficial Owners.
The Participants will remain responsible for keeping account of their holdings
on behalf of their customers.
Conveyance of notices and other communications by the Depositary to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Neither the Depositary nor Cede & Co. will consent or vote with respect to
the Global Note. Under its usual procedures, the Depositary mails an Omnibus
Proxy to the issuer as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct Participants to
whose accounts interests in the Global Note are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
Principal and interest payments on the Global Note will be made to the
Depositary. The Depositary's practice is to credit Direct Participants' accounts
on the payment date in accordance with their respective holdings shown on the
Depositary's records unless the Depositary has reason to believe that it will
not receive payment on the payment date. Payments by Participants to Beneficial
Owners will be governed by standing instructions and customary practices, as is
the case with securities held for the
S-6
accounts of customers in bearer form or registered in "street name," and will be
the responsibility of such Participant and not of the Depositary, the Paying
Agent, or the Company, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of principal and interest to the
Depositary is the responsibility of the Company or the Paying Agent,
disbursement of such payments to Direct Participants shall be the responsibility
of the Depositary, and disbursement of such payments to the Beneficial Owners
shall be the responsibility of Direct and Indirect Participants.
The Depositary may discontinue providing its services as depository with
respect to the Notes at any time by giving reasonable notice to the Company or
the Paying Agent. Under such circumstances, in the event that a successor
depository is not obtained, definitive Note certificates are required to be
printed and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through the Depositary (or a successor depository).
None of the Company, the Trustee or any Paying Agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in any Global Note,
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
Global Notes representing all but not part of the Notes of the series being
offered hereby are exchangeable for Notes in definitive form of like tenor and
terms if (i) the Depositary notifies the Company that it is unwilling or unable
to continue as Depositary for such Global Notes or if at any time such
Depositary ceases to be a clearing agency registered as such under the
Securities Exchange Act of 1934, as amended; (ii) the Company executes and
delivers to the Trustee a Company Order that all such Global Notes shall be
exchangeable; or (iii) there shall have occurred and be continuing an Event of
Default or an event which, with the giving of notice or lapse of time, or both,
would constitute an Event of Default with respect to the Notes. A Global Note
that is exchangeable pursuant to the preceding sentence shall be exchangeable
for Notes issuable in denominations of $1,000 and any integral multiple thereof
and registered in such names as the Depositary holding such Global Note shall
direct. Subject to the foregoing, a Global Note shall not be exchangeable,
except for a Global Note of like denomination to be registered in the name of
such Depositary or its nominee.
The information in this section concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that the Company
believes to be reliable, but the Company takes no responsibility for the
accuracy thereof.
SUPPLEMENTAL PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in the Distribution Agreement,
the Notes are being offered on a continuing basis by the Company through
Goldman, Sachs & Co. and Credit Suisse First Boston Corporation (the "Agents"),
who have agreed to use reasonable efforts to solicit purchases of the Notes. The
Company will have the sole right to accept offers to purchase Notes and may
reject any proposed purchase of Notes in whole or in part. The Agents shall have
the right, in their discretion reasonably exercised, to reject any offer to
purchase Notes, in whole or in part. The Company will pay the Agents a
commission of from 0.125% to 0.750% of the principal amount of Notes, depending
upon maturity, for sales made through them as Agents.
The Company also may sell Notes to the Agents acting as principal for their
own accounts at a discount to be agreed upon at the time of sale, or the
purchasing Agents may receive from the Company a commission or discount
equivalent to that set forth on the cover page hereof in the case of any such
principal transaction in which no other discount is agreed. Such Notes may be
resold at prevailing market prices, or at prices related thereto, at the time of
such resale, as determined by the Agents. The
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Company reserves the right to sell Notes directly on its own behalf. No
commission will be payable on any Notes sold directly by the Company.
In addition, the Agents may offer the Notes they have purchased as principal
to other dealers. The Agents may sell Notes to any dealer at a discount and,
unless otherwise specified in the applicable Pricing Supplement, such discount
allowed to any dealer may include all or part of the discount to be received
from the Company. Unless otherwise indicated in an applicable Pricing
Supplement, any Note sold to an Agent as principal will be purchased by such
Agent at a price equal to 100% of the principal amount thereof less a percentage
equal to the commission applicable to any agency sale of a Note of identical
maturity. After the initial public offering of Notes to be resold to investors
and other purchasers on a fixed public offering price basis, the public offering
price, concession and discount may be changed.
The Agents, as agents or principals, may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933 (the "Act"). The Company has
agreed to indemnify the Agents against certain liabilities, including
liabilities under the Act. The Company has agreed to reimburse the Agents for
certain expenses.
The Agents may sell to or through dealers who may resell to investors, and
the Agents may pay all or part of their discount or commission to such dealers.
Such dealers may be deemed to be "underwriters" within the meaning of the Act.
Unless otherwise indicated in an applicable Pricing Supplement, payment of
the purchase price of Notes will be required to be made in immediately available
funds in The City of New York.
The Agents may be customers of, engage in transactions with and perform
services for the Company in the ordinary course of business.
The Notes are a new issue of securities with no established trading market
and will not be listed on any securities exchange. No assurance can be given as
to the existence or liquidity of the secondary market for the Notes.
During and after offerings of Notes, the Agents may purchase and sell the
offered Notes in the open market. These transactions may include overallotment
and stabilizing transactions and purchases to cover short positions created in
connection with such offerings. The Agents also may impose penalty bids, whereby
selling concessions allowed to other broker-dealers in respect of the Notes sold
in such offerings for their account may be reclaimed by the Agents if such
securities are repurchased by the Agents in stabilizing or covering
transactions. These activities may stabilize, maintain or otherwise affect the
market prices of such Notes, which may be higher than the prices that might
otherwise prevail in the open market. These transactions may be effected in the
over-the-counter market or otherwise, and these activities, if commenced, may be
discontinued at any time.
LEGAL OPINIONS
The legality of the Notes will be passed upon for the Company by Lane Powell
Spears Lubersky LLP, 1420 Fifth Avenue, Suite 4100, Seattle, Washington 98101,
and for the Agents by Orrick, Herrington & Sutcliffe LLP, 400 Sansome Street,
San Francisco, California 94111. D. Wayne Gittinger, a director of Nordstrom, is
a partner in the firm of Lane Powell Spears Lubersky LLP. At January 31, 1997,
members of that firm owned directly or indirectly an aggregate of approximately
5,300,000 shares of common stock of Nordstrom.
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NORDSTROM CREDIT, INC.
DEBT SECURITIES
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Nordstrom Credit, Inc., a Colorado corporation (the "Company"), may offer
from time to time up to $250,000,000 aggregate principal amount of its unsecured
Debt Securities consisting of notes, debentures and other evidences of
indebtedness. The Debt Securities may be issued in one or more series of
issuances. The specific title, aggregate principal amounts, maturity, rate or
method of calculation of interest, purchase price, any sinking fund terms, any
terms for redemption and other special terms applicable to the Debt Securities
being offered will be set forth in a supplement to this Prospectus. The Debt
Securities are solely the obligation of the Company and are not guaranteed by
Nordstrom, Inc.
The Debt Securities may be sold directly by the Company or through agents or
to underwriters for public offering pursuant to the plan of distribution
described in the Prospectus and the Prospectus Supplement. If any underwriters
or agents are involved in the sale of the offered Debt Securities, their names
and any applicable fee, commission or discount arrangements with them will be
set forth in the Prospectus Supplement. See "Plan of Distribution."
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is April 25, 1997.
AVAILABLE INFORMATION
The Company and Nordstrom, Inc. ("Nordstrom"), a Washington corporation
which owns 100% of the outstanding shares of the Company's common stock, are
subject to the informational requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and, in accordance therewith, file
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information may be inspected and copied at the public reference room of the
Commission at Room 1024, 450 Fifth Street N.W., Washington, D.C. 20549, and the
public reference facilities in the Northeast Regional Office, Seven World Trade
Center, 13th Floor, New York, New York 10048 and the Midwest Regional Office,
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material can be obtained at prescribed rates by writing to the
Commission, Public Reference Section, Washington, D.C. The Commission maintains
a Web site (http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission.
The Company has filed with the Commission a registration statement on Form
S-3 under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Debt Securities offered hereby (the "Registration Statement").
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. Reference is made to the
Registration Statement and to the exhibits relating thereto for further
information with respect to the Company and the Debt Securities offered hereby.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended January
31, 1997, which has been filed with the Commission by the Company, is
incorporated into this Prospectus by reference.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Debt Securities shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
date of filing such documents.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of any such
person, a copy of any or all of the documents incorporated by reference herein,
other than exhibits to such documents which are not specifically incorporated by
reference in the information that this Prospectus incorporates. Requests for
such copies should be directed to: Nordstrom Credit, Inc., 13531 East Caley
Avenue, Englewood, Colorado 80111, Attention: Carol R. Simonson, telephone (303)
397-4780.
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THE COMPANY AND NORDSTROM
The principal executive offices of the Company are located at 13531 East
Caley Avenue, Englewood, Colorado 80111, telephone number (303) 397-4700.
BUSINESS OF THE COMPANY
The Company is a wholly owned subsidiary of Nordstrom. The Company was
incorporated in the state of Washington in 1982 and reincorporated in the state
of Colorado in 1990. The primary business of the Company is to finance customer
accounts receivable arising under revolving charge accounts, contract accounts
and 30-day accounts generated through sales of merchandise in Nordstrom stores
("Accounts") and, until August 15, 1996, under revolving charge accounts
generated through purchases by customers utilizing Nordstrom National Credit
Bank Visa cards ("Visa Accounts"). Accounts consist primarily of balances due
under revolving charge accounts. The contract accounts for major purchases and
30-day accounts represent less than 1% of Accounts. Visa Accounts consist of
balances due under revolving charge accounts.
Nordstrom and Nordstrom National Credit Bank, a national banking association
and a wholly owned subsidiary of Nordstrom (the "Bank"), are parties to a
Merchant Agreement which governs the relationship between the Bank and
Nordstrom, including the origination of Accounts by the Bank. See "Relationship
with Nordstrom." The Company and the Bank are parties to an Operating Agreement
which governs the purchase by the Company of Accounts originated by the Bank and
the servicing of Accounts by the Bank. See "Relationship with Nordstrom."
The Company and Nordstrom are parties to an Investment Agreement which,
among other things, governs ownership of Company stock and the financial
relationships between Nordstrom and the Company. Because Nordstrom owns all of
the Company's common stock, Nordstrom controls the management and policies of
the Company. See "Relationship with Nordstrom."
On August 15, 1996, the Company sold substantially all of its outstanding
VISA receivables to Nordstrom in connection with a securitization of the
receivables. Nordstrom then transferred the receivables to the Bank, which
transferred the receivables to the Nordstrom Credit Card Master Trust (the
"Trust") in return for certificates representing undivided interests in the
Trust. A Class A certificate with a market value of $186.6 million was sold to a
third party, and a Class B certificate was purchased by the Company at an
approximate market value of $9.0 million. The Class B certificate has a stated
principal amount of $9.9 million, bears interest at 6.5% per annum, and is
subordinated to the Class A certificate. The Company also purchased from the
Bank a portion of its investment in the Trust (the "Seller's Interest") at an
approximate market value of $4.1 million. The Bank retains the remaining
Seller's Interest, and will continue to service all of the receivables on behalf
of the Trust.
As a result of the securitization of the receivables, the Company no longer
purchases and finances VISA receivables generated through the use of the Bank's
VISA card, except to the extent of its investment in the Class B certificate and
the Seller's Interest. The Bank securitizes all new VISA receivables through the
Trust, and from time to time sells to the Company additional portions of the
Seller's Interest, depending on its cash flow needs.
Pursuant to the terms of operative documents of the Trust, in certain events
the Company may be required to fund certain amounts pursuant to a recourse
obligation for credit losses. Based on current cash flow projections, the
Company does not believe any additional funding will be required.
BUSINESS OF NORDSTROM
Nordstrom is a specialty retailer selling a wide selection of apparel, shoes
and accessories for women, men and children. Most of Nordstrom's merchandise
categories are offered in each of its 62
3
large fashion specialty stores currently located in Alaska, California,
Colorado, Illinois, Indiana, Maryland, Michigan, Minnesota, New Jersey, New
York, Oregon, Pennsylvania, Texas, Utah, Virginia and Washington. In addition,
Nordstrom operates 19 clearance stores in California, Illinois, Maryland,
Oregon, Pennsylvania, Utah, Virginia and Washington under the name "Nordstrom
Rack," one clearance store in Arizona under the name "Last Chance Shoes and
Apparel," one specialty store in New York under the name "Faconnable," and
leased shoe departments in twelve department stores in Hawaii and Guam.
Nordstrom's marketing philosophy is to offer a wide selection of merchandise, to
create customer loyalty by providing a high level of customer service and to
respond rapidly to local market conditions and fashion trends through
decentralized buying and merchandise selection.
The following table sets forth the total store area (exclusive of corporate
and administrative offices in Seattle, Washington) as of January 31, 1997 of all
stores currently operated by Nordstrom:
TOTAL STORE NUMBER OF
DESCRIPTION AREA STORES
- ---------------------------------------- -------------- ----------------
Southern California Group............... 2,688,000 20
Northern California Group............... 1,772,000 11
Capital Group (Washington D.C. area).... 1,481,000 10
Midwest Group........................... 1,472,000 8
Washington Group........................ 1,383,000 12
Northeast Group......................... 1,139,000 6
Oregon Group............................ 823,000 8
Utah/Colorado Group..................... 602,000 5
Southwest Group......................... 249,000 1
Alaska Group............................ 97,000 1
Arizona Group........................... 48,000 1
--
--------------
Total................................. 11,754,000 83
--
--
--------------
--------------
Nordstrom currently anticipates opening three large specialty stores in 1997
in Long Island, New York, West Hartford, Connecticut, and Cleveland, Ohio. These
stores will contain a total of approximately 661,000 square feet.
Nordstrom currently anticipates opening three specialty stores in 1998 in
Atlanta, Georgia, Overland Park, Kansas, and Scottsdale, Arizona. These stores
will contain a total of approximately 687,000 square feet. In 1998, Nordstrom
also plans to open a new flagship store in downtown Seattle, Washington, and to
remodel a store in San Diego, California.
Nordstrom is also considering other locations in Texas and the Southwest,
the Midwest, and the Eastern United States for potential store openings. With
respect to any proposed store, it is possible that in one or more instances
store site negotiations may be terminated and the store may not be built, or
delays may occur. Furthermore, environmental and land use regulations and the
difficulties encountered by shopping center developers in securing financing
could make future development of stores more difficult, time-consuming and
expensive.
RELATIONSHIP WITH NORDSTROM
MERCHANT AGREEMENT
Nordstrom and the Bank are parties to a Merchant Agreement and Operating
Procedures dated August 30, 1991 (the "Merchant Agreement") whereby the Bank
issues Accounts through Nordstrom credit cards issued by the Bank for use in
Nordstrom stores. Pursuant to the Merchant Agreement, the Bank pays to Nordstrom
on a daily basis the amount of all charges on Accounts for each such day, less
4
the amounts of any sales adjustments and less an allowance for amounts to be
written off. The Merchant Agreement requires that Nordstrom pay a servicing fee
to the Bank which may change from time to time but is currently .25% of the net
face amount of each sale, less any sales adjustments.
OPERATING AGREEMENTS
OPERATING AGREEMENT. Nordstrom Account servicing arrangements are governed
by an Operating Agreement dated August 30, 1991 (the "Operating Agreement")
between the Company and the Bank pursuant to which the Company purchases
Accounts from the Bank for a price equal to the amount of Accounts originated
less an allowance for amounts to be written off. Under the Operating Agreement,
the Bank performs the servicing functions for the Accounts and the Company pays
the Bank a servicing fee which may change from time to time but is currently
2.0% of the amount of the Accounts originated. The Bank's servicing
responsibilities include new account processing, authorizing, billing, payment
processing, collection and customer service activities. The Company has
purchased all Accounts originated by the Bank since the Bank's inception.
Prior to August 15, 1996, the Company and the Bank were also parties to an
Operating Agreement for VISA Accounts and Receivables dated May 1, 1994 (the
"VISA Operating Agreement"), under which the Company purchased VISA Accounts
from the Bank under the same terms and conditions as the Operating Agreement
except for the allowance for the amounts to be written off. Amounts written off
were charged to the Company, except amounts written off with respect to sales
occurring at Nordstrom stores, which were indemnified by Nordstrom. Pursuant to
the terms of the VISA Operating Agreement, the Bank performed the servicing
functions for the VISA Accounts and the Company paid the Bank a servicing fee
which was determined on the same basis as the servicing fee for the Accounts.
INVESTMENT AGREEMENT
The Investment Agreement dated October 8, 1984 (the "Investment Agreement")
imposes certain commitments upon Nordstrom, the most stringent of which is to
maintain the Company's ratio of Income Available for Fixed Charges to Fixed
Charges at not less than 1.25:1. "Fixed Charges" are defined in the Investment
Agreement as the interest charges on the aggregate principal amount of all debt
of the Company outstanding during the period. "Income Available for Fixed
Charges" is defined as the net income of the Company determined in accordance
with generally accepted accounting principles, except that the determination is
to be made before any deduction for Fixed Charges or any provisions for taxes in
respect of income. The Investment Agreement requires that Nordstrom retain
ownership of all of the outstanding shares of stock of the Company, and provides
for the subordination of all debt owed by the Company to Nordstrom and its
affiliated companies to debt owed by the Company to unrelated third parties
("Prior Debt"). The Investment Agreement further provides that Nordstrom will
maintain an aggregate amount of investment (including affiliated debt and
shareholder's equity) in the Company of at least $1.00. The Investment Agreement
provides that it may be modified by Nordstrom and the Company provided that if
any modification adversely affects any holders of Prior Debt, the modification
will be effective only upon the consent of 66 2/3% of the holders of Prior Debt.
The Investment Agreement also provides that it may not be terminated until all
of the Company's debt outstanding on the date of the giving of 30 days' notice
of termination has been paid. The Indenture (as defined below) also imposes
limitations on amendments to or termination of the Investment Agreement. See
"Description of Debt Securities -- Certain Covenants of the Company."
The Company has been included in the consolidated income tax returns of
Nordstrom since its formation. Nordstrom prepares and files federal, state and
local income tax returns for and on behalf of the Company. The Company pays to
Nordstrom the amount of income taxes for which the Company would have been
liable if it had filed its own returns. For any year in which the Company has a
loss that reduces the consolidated income tax liability of Nordstrom, the
Company and Nordstrom's other subsidiaries, Nordstrom will pay the Company the
amount of such reduction in tax liability. In the event
5
any adjustment is made to the federal, state or local tax returns, the liability
of Nordstrom and the Company is to be recomputed and payments will be allocated
accordingly.
INTERCOMPANY SERVICES
Nordstrom presently furnishes the following administrative services to the
Company: officer and director liability insurance, and executive, financial,
legal, tax and other corporate staff functions. Nordstrom charges the Company
for the actual costs incurred or a reasonable allocation of Nordstrom's total
cost for such services.
CREDIT ARRANGEMENTS
The Company and Nordstrom do not have any joint borrowing arrangements and
there are no guarantees by Nordstrom of the payment of any debt of the Company.
FINANCING OF THE COMPANY
To finance the purchase of Accounts, the Company has incurred and will incur
indebtedness, including the Debt Securities issued under this Prospectus. The
nature and amount of such indebtedness of the Company will vary from time to
time, depending upon business requirements, market conditions and other factors
of Nordstrom and the Bank. From time to time, Nordstrom has loaned excess funds
to the Company on a short-term basis. The Company has a $300,000,000 unsecured
line of credit with a group of commercial banks with Wells Fargo Bank, N.A., as
agent, which expires on June 30, 2001. Under the terms of this line of credit,
the Company must, among other things, comply with the terms of the Investment
Agreement and the Operating Agreement and maintain a ratio of consolidated total
debt to consolidated tangible net worth at the end of each fiscal quarter no
greater than 7 to 1. This line of credit serves as liquidity support for the
Company's short-term debt. Amounts due to Nordstrom, the Bank, and other
affiliates are subordinated to borrowings under the line of credit agreement.
The Company pays commitment fees for the line in lieu of compensating balance
requirements.
USE OF PROCEEDS
Except as may be set forth in a Prospectus Supplement, the Company intends
to add the net proceeds from the sale of Debt Securities to the general funds of
the Company to be available primarily for the purchase of Accounts. The Company
may also repay short-term borrowings used to purchase Accounts or refinance
portions of outstanding medium-term notes. Pending such uses, the Company may
invest all or a portion of the proceeds in investment grade short-term
instruments.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of earnings to fixed charges of
the Company and Nordstrom and its subsidiaries for each of the five fiscal years
in the period ended January 31, 1997.
FISCAL YEAR ENDED JANUARY 31,
--------------------------------
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
Company....................... 1.87 2.09 2.03 1.83 2.14
Nordstrom..................... 4.41 4.95 6.79 5.14 4.99
For the purpose of these ratios, earnings consist of earnings before income
taxes plus fixed charges less capitalized interest, as applicable. Fixed charges
consist of interest expense, capitalized interest and the estimated interest
portion of rent expense, as applicable.
6
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions of
the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities offered by any Prospectus Supplement and
the extent, if any, to which such general provisions may not apply to the Debt
Securities offered will be described in the Prospectus Supplement relating to
such Debt Securities.
The notes, debentures and other evidences of indebtedness (the "Debt
Securities") will be issued under an indenture, dated as of April 22, 1997 (the
"Indenture"), between the Company and Norwest Bank Colorado, National
Association, as Trustee (the "Trustee"), and will rank equally with all other
unsecured and unsubordinated indebtedness of the Company. A copy of the
Indenture has been filed as an exhibit to the Registration Statement. The
following description summarizes certain provisions of the Indenture. Whenever
any particular article or section of the Indenture or any term defined therein
is referred to, such article, section or definition is incorporated by
reference, and the statement in connection with which such reference is made is
qualified in its entirety by such reference. Whenever a defined term is
indicated by capital letters, the definition thereof is contained in this
Prospectus or in the Indenture.
GENERAL
The Indenture does not limit the aggregate principal amount of the Debt
Securities which may be issued thereunder and provides that Debt Securities may
be issued from time to time in one or more series. (Section 301) The Debt
Securities will be unsecured obligations of the Company.
A Prospectus Supplement will describe, where applicable, the following terms
of the Debt Securities then being offered: (1) the title of the Debt Securities;
(2) any limit on the aggregate principal amount of the Debt Securities; (3) the
date or dates on which the Debt Securities will mature; (4) the rate or rates or
the method or methods of determining the rate or rates at which the Debt
Securities will bear interest, if any, and the date from which such interest, if
any, will accrue; (5) the dates on which such interest, if any, on the Debt
Securities will be payable and the record dates for such Interest Payment Dates;
(6) the place or places where principal of (and premium, if any) and interest,
if any, on the Debt Securities shall be payable and, if other than as set forth
in the Indenture, the method or methods of payment; (7) any mandatory or
optional sinking fund or analogous provisions; (8) any redemption terms; (9) any
index or formula used to determine the amount of payments of principal of and
premium, if any, and interest; (10) the portion of the principal amount of the
Debt Securities, if other than the principal amount thereof, payable upon
acceleration of maturity thereof; (11) whether the Debt Securities are to be
issued in whole or in part in the form of one or more Global Security or
Securities, and, if so, the identity of the depositary for such Global Security
or Securities and any special provisions with respect to such Global Security or
Securities; (12) the currency or currencies, including composite currencies, in
which payment of the principal of and any premium and interest on the Debt
Securities shall be payable if other than the currency of the United States of
America; (13) additional events of default, if any; (14) any additional
restrictive covenants included for the benefit of the holders of such Debt
Securities; and (15) any other terms of the Debt Securities not inconsistent
with the provisions of the Indenture. (Section 301)
DENOMINATIONS, REGISTRATION AND TRANSFER
Unless otherwise provided in an applicable Prospectus Supplement, Debt
Securities will be issued only in denominations of $1,000 or any integral
multiple thereof without coupons. Debt Securities of any series will be
exchangeable for other Debt Securities of the same series containing identical
terms and provisions and of a like aggregate principal amount and containing
identical terms and provisions of different authorized denominations. Debt
Securities may be issuable under the Indenture in temporary or permanent global
form. See " -- Global Securities." (Sections 302 and 305)
7
Unless otherwise indicated in an applicable Prospectus Supplement, the
principal office of the Trustee in the City of Denver will be designated as the
Company's Paying Agent for payments with respect to Debt Securities. Any other
Paying Agents in the United States initially designated by the Company for the
Debt Securities will be named in the related Prospectus Supplement. The Company
may at any time designate additional Paying Agents or rescind the designation of
any Paying Agents or approve a change in the office through which any Paying
Agent acts, except that the Company will be required to maintain a Paying Agent
in each Place of Payment for such series. All monies paid by the Company to a
Paying Agent for the payment of principal of and premium, if any, and interest,
if any, on any Debt Security which remains unclaimed at the end of three years
after such principal, premium or interest shall have become due and payable will
be repaid to the Company, and the Holder of such Debt Security will thereafter
look only to the Company for payment thereof. (Sections 1002 and 1003)
GLOBAL SECURITIES
If any Debt Securities are issuable in global form, the applicable
Prospectus Supplement will describe the circumstances, if any, under which
beneficial owners of interests in any such global Debt Security may exchange
such interests for definitive Debt Securities of such series and of like tenor
and principal amount in any authorized form and denomination. Principal of and
any premium and interest on a global Debt Security will be payable in the manner
described in the applicable Prospectus Supplement.
CERTAIN COVENANTS OF THE COMPANY
CERTAIN DEFINITIONS APPLICABLE TO COVENANTS. "Subsidiary" of the Company is
defined as a corporation more than 50% of the outstanding voting stock of which
is owned, directly or indirectly, by the Company or by one or more Subsidiaries
of the Company. "Restricted Subsidiary" is defined as a Subsidiary of the
Company substantially all the assets of which are located within, and operating
substantially entirely within, the present 50 states of the United States,
excluding, however, any Subsidiary of the Company designated by the Board of
Directors, provided that at the time of such designation there exists no Event
of Default which has not been cured or waived, and the Company could incur at
least $1.00 of additional Debt secured by a Mortgage, as more fully described
under "Restrictions on Liens and Encumbrances." "Property" is defined as all
tangible and intangible property of the Company and any Restricted Subsidiary,
including all rights in and to any such property and any accounts (including
installment payment accounts and accounts receivable) owned by the Company or
any Restricted Subsidiary. "Consolidated Assets" is defined as the aggregate
amount of assets (less applicable reserves and other properly deductible items)
after deducting therefrom all goodwill, trade names, trademarks, patents,
organizational expenses and other like intangibles, all as set forth on the most
recent balance sheet of the Company and its consolidated Subsidiaries and
computed in accordance with generally accepted accounting principles. (Section
101)
RESTRICTIONS ON LIENS AND ENCUMBRANCES. The Indenture provides that the
Company may not, nor may it permit any Restricted Subsidiary to, create, assume
or guarantee any loan or evidence of indebtedness for money borrowed ("Debt")
secured by a pledge, mortgage or lien on any Property of the Company or any
Restricted Subsidiary, or on any shares of capital stock or Debt of any
Restricted Subsidiary ("Mortgage"), without securing or causing the Restricted
Subsidiary to secure the Debt Securities and all other securities issued under
the Indenture equally and ratably with (or, at the Company's option, prior to)
such secured Debt, unless the aggregate amount of all Debt secured by Mortgages
would not exceed 15% of Consolidated Assets. (Section 1005)
This restriction does not apply to, and there is excluded from Debt secured
by Mortgages in any computation under such restriction, Debt secured by (1)
Mortgages existing as of the date of the Indenture and securing indebtedness for
money borrowed existing as of the date of the Indenture; (2) Mortgages on
property of, or on any shares of capital stock of or Debt of, any corporation
existing at
8
the time such corporation becomes a Restricted Subsidiary; (3) Mortgages in
favor of the Company or a Restricted Subsidiary; (4) Mortgages in favor of
governmental bodies to secure progress, advance or other payments pursuant to
any contract or provision of any statute; (5) Mortgages on property, shares of
stock or Debt existing at the time of acquisition thereof and the related
purchase money and construction Mortgages which are entered into within
specified time limits; (6) Mortgages securing certain tax-free obligations
issued by a State, territory or possession of the United States, or any
political subdivision of any of the foregoing, or the District of Columbia to
finance the acquisition or construction of property; and (7) any extension,
renewal or refunding of any Mortgage referred to in the foregoing clauses (1)
through (6), inclusive. (Section 1005)
INVESTMENT AGREEMENT. The Indenture provides that the Company (1) will
observe and perform in all material respects all covenants or agreements of the
Company contained in the Investment Agreement; (2) will use its best efforts to
cause Nordstrom to observe and perform in all material respects all covenants or
agreements of Nordstrom contained in such agreement; and (3) will not waive
compliance under, amend in any material respect or terminate the Investment
Agreement; provided, however, that the Investment Agreement may be amended if as
a result thereof there is not a downgrading or revocation of any credit ratings
on the Debt Securities or any other securities of the Company. (Section 1006)
CONSOLIDATION, MERGER AND SALE OF ASSETS. The Company, without the consent
of any Holders of Outstanding Debt Securities, may consolidate or merge with or
into any Person, or transfer or lease its assets substantially as an entirety to
any Person, or may acquire or lease the assets of any Person, provided that: (a)
the successor formed by such consolidation or into which the Company is merged
or which acquires or leases the assets of the Company substantially as an
entirety is organized under the laws of any United States jurisdiction and
assumes the Company's obligations on the Debt Securities and under the
Indenture; (b) after giving effect to the transaction, no Event of Default (and
no event which, after notice or lapse of time or both, would become an Event of
Default) shall have happened and be continuing; and (c) certain other conditions
are met. (Section 801)
EVENTS OF DEFAULT
The following are Events of Default under the Indenture with respect to Debt
Securities of any series: (1) default in the payment of principal of or any
premium on any Debt Securities of that series when due; (2) default in the
payment of any interest on any Debt Securities of that series when due,
continued for 30 days; (3) default in the deposit of any sinking fund payment,
when due, in respect of any Debt Securities of that series; (4) default in the
performance of any covenant of the Company in the Indenture (other than a
covenant included in the Indenture solely for the benefit of a series of the
Debt Securities other than that series), continued for 60 days after written
notice as provided in the Indenture; (5) default in payment or acceleration of
the Debt Securities of any other series or any other indebtedness for money
borrowed by the Company or any of its Restricted Subsidiaries in excess of
$5,000,000, or a default under any capitalized lease obligation of the Company
or a Restricted Subsidiary under which the Company or a Restricted Subsidiary is
obligated to pay in excess of $5,000,000, or a default under any mortgage or
indenture under which there may be issued or by which there may be secured or
evidenced any indebtedness for money borrowed in excess of $5,000,000 by the
Company or a Restricted Subsidiary if the default is not cured or such
acceleration is not annulled or such indebtedness is not discharged within 10
days after written notice as provided in the Indenture; (6) the entry against
the Company or a Restricted Subsidiary of a final judgment, decree or order by a
court having jurisdiction in the premises for the payment of money in excess of
$5,000,000 and the continuance of such judgment, decree or order unsatisfied and
in effect for any period of 60 consecutive days without a stay of execution; (7)
any Event of Default under the Indenture dated as of November 15, 1984 as
supplemented by First, Second and Third Supplemental Indentures, dated as of
January 15, 1988, June 1, 1989 and October 19, 1990, respectively, between the
Company and Norwest Bank Colorado National Association, as Successor
9
Trustee; (8) any Event of Default under the Indenture dated December 15, 1983,
as amended or supplemented from time to time, between Nordstrom and Wells Fargo
Bank, N.A., as Trustee; and (9) certain events in bankruptcy, insolvency or
reorganization. No Event of Default with respect to the Debt Securities of a
particular series necessarily constitutes an Event of Default with respect to
the Debt Securities of any other series. (Section 501)
If an Event of Default with respect to the Debt Securities of any series at
the time outstanding occurs and is continuing, either the Trustee or the Holders
of at least 25% in aggregate principal amount of the Outstanding Debt Securities
of that series may declare the principal amount (or, if the Debt Securities of
that series are Original Issue Discount Debt Securities, such portion of the
principal amount as may be specified in the terms of that series) of all the
Debt Securities of that series to be due and payable immediately. At any time
after a declaration of acceleration with respect to Debt Securities of any
series has been made, but before a judgment or decree based on acceleration has
been obtained, the Holders of a majority in principal amount of the Outstanding
Debt Securities of that series may, under certain circumstances, rescind and
annul such acceleration. (Section 502)
The Indenture provides that, subject to the duty of the Trustee during
default to act with the required standard of care, the Trustee is under no
obligation to exercise any of its rights or powers under the Indenture at the
request or direction of any of the Holders, unless such Holders shall have
offered to the Trustee reasonable indemnity. (Section 603) Subject to such
provisions for the indemnification of the Trustee and certain other conditions,
the Holders of a majority in principal amount of the Outstanding Debt Securities
of any series have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred on the Trustee, with respect to the Debt Securities of that
series, and to waive certain defaults. The Trustee, with respect to the
direction of the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee, or the Company, with respect to waiving any default, may set a
record date for any Act of the Holders. (Sections 512 and 513)
The right of a Holder of any Debt Securities to institute a proceeding with
respect to the Indenture is subject to certain conditions precedent, but each
Holder has an absolute right to receive payment of principal or premium and
interest, if any, when due and to institute suit for the enforcement of any such
payment. (Sections 507 and 508) The Indenture provides that the Trustee, within
90 days after the occurrence of a default with respect to the Debt Securities of
any series, is required to give the Holders of such Debt Securities notice of
such default, unless cured or waived; provided that, except in the case of
default in the payment of principal, or premium or interest, if any, or in the
payment of any sinking fund installment, the Trustee may withhold such notice if
it determines it is in the interest of such Holders to do so. (Section 602)
The Company will be required to furnish to the Trustee annually a statement
as to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance. (Section 1007)
MODIFICATION OF THE INDENTURE
Modifications and amendments of the Indenture may be made by the Company and
the Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of all series of the outstanding Debt Securities
issued under the Indenture which are affected by the modification or amendment,
provided that no such modification or amendment may, without the consent of each
Holder of such Debt Securities affected thereby, (1) change the stated maturity
date of the principal of, or any installment of principal of or interest on, any
such Debt Security; (2) reduce the principal amount of, the rate of interest on,
or any premium payable upon redemption of, any such Debt Security or the
principal amount due upon acceleration of an Original Issue Discount Security;
(3) change the place or currency of payment of principal (or premium, if any) or
interest, if any, on any such Debt Security; (4) impair the
10
right to institute suit for the enforcement of any such payment on or with
respect to any such Debt Security; (5) reduce the above-stated percentage of
Holders necessary to modify or amend the Indenture; or (6) modify the foregoing
requirements or reduce the percentage of outstanding Debt Securities necessary
to waive compliance with certain provisions of the Indenture or for waiver of
certain defaults. The Company may set a record date for any Act of the Holders
with respect to consenting to any amendment. (Section 902)
SATISFACTION AND DISCHARGE OF INDENTURES
The Indenture generally provides that the Company may terminate certain of
its obligations under the Debt Securities of any series and under the Indenture
(with respect to such series) if (1) all of the Debt Securities of such series
previously authenticated and delivered (other than lost, destroyed or stolen
Debt Securities that have been replaced or paid or for whose payment money has
been deposited in trust) have been delivered to the Trustee for cancellation and
the Company has paid all sums payable by it thereunder, (2) such Debt Securities
of such series have matured or will mature within one year or all of them are to
be called for redemption within one year under arrangements satisfactory to the
Trustee for giving the notice of redemption and the Company irrevocably deposits
with the Trustee money or U.S. Government Obligations sufficient to pay
principal of, premium, if any, and interest on the Outstanding Debt Securities
of such series that are due or will become due upon redemption or maturity, as
the case may be, and to pay all other sums payable by it thereunder or (3) upon
compliance with certain conditions specified in the Indenture, 123 days after
the Company makes the deposit with the Trustee of money or U.S. Government
Obligations specified in clause (2). In such case, Holders of the Debt
Securities must look to the deposited money for payment. (Section 401)
The Indenture further provides that if the Company has made the election
provided by clause (3) above, it may elect either (a) to defease and be
discharged from any and all obligations with respect to the Debt Securities of
such series, except for the obligations to register the transfer or exchange of
such Debt Securities, to replace temporary or mutilated, destroyed, lost or
stolen Debt Securities, to maintain an office or agency in respect of the Debt
Securities, and to hold moneys for payment in trust ("legal defeasance") or (b)
to be released from its obligations with respect to the Debt Securities of such
series under the covenant default (except with respect to the covenant to pay
principal and interest) and cross-acceleration provisions under "Events of
Default" and from the restrictions described under certain covenants in the
Indenture, including "Restrictions on Liens and Encumbrances" and "Investment
Agreement" ("covenant defeasance"). As a condition to legal defeasance or
covenant defeasance, the Company must deliver to the Trustee an opinion of
counsel (as specified in the Indenture) to the effect that the Holders of the
Debt Securities of such series will not recognize income, gain or loss for
United States Federal income tax purposes as a result of such legal defeasance
or covenant defeasance and will be subject to United States Federal income tax
on the same amounts, in the same manner and at the same times as would have been
the case if such legal defeasance or covenant defeasance had not occurred. In
the case of legal defeasance under clause (a) or covenant defeasance under
clause (b) above, a ruling of the Internal Revenue Service may be delivered in
lieu of such opinion. (Section 401)
Under current United States Federal income tax law, legal defeasance would
likely be treated as a taxable exchange of such Debt Securities for interests in
the defeasance trust. As a consequence, a Holder would recognize gain or loss
equal to the difference between the Holder's tax basis for such Debt Securities
and the value of the Holder's interest in the defeasance trust, and thereafter
would be required to include in income its share of the income, gain and loss of
the defeasance trust. Under current Federal income tax law, covenant defeasance
would likely not be treated as a taxable exchange of such Debt Securities.
Purchasers of such Debt Securities should consult their tax advisors with
respect to the more particular tax consequences to them of such legal defeasance
and covenant defeasance, including the applicability and effect of United States
Federal income and other tax law.
11
The Company may exercise its legal defeasance option with respect to the
Debt Securities of such series, notwithstanding its prior exercise of its
covenant defeasance option. If the Company exercises its legal defeasance
option, payment of such Debt Securities may not be accelerated because of an
Event of Default. If the Company exercises its covenant defeasance option,
payment of such Debt Securities may not be accelerated because of the covenant
default (except with respect to the covenant to pay principal and interest) and
cross-acceleration provisions or certain of the covenants, including those noted
under clause (b) above. However, if such an acceleration were to occur because
of other defaults, the realizable value at the acceleration date of the money
and U.S. Government Obligations in the defeasance trust could be less than the
principal and interest then due on such Debt Securities, because the required
deposit in the defeasance trust is based upon scheduled cash flows rather than
market value, which will vary depending upon interest rates and other factors.
(Section 401)
The term "U.S. Government Obligations" is defined to mean direct obligations
of the United States for the payment of which its full faith and credit is
pledged, or obligations of a person controlled or supervised by and acting as an
agency or instrumentality of the United States and the payment of which is
unconditionally guaranteed by the United States which, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any such U.S. Government
Obligations or a specific payment of principal of or interest on any such U.S.
Government Obligations held by such custodian for the account of the holder of
such depositary receipt, provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depositary receipt from any amount received by the custodian with
respect to the U.S. Government Obligations or the specific payment of principal
of or interest on the U.S. Government Obligations evidenced by such depositary
receipt. (Section 101)
CONCERNING THE TRUSTEE
Under the provisions of the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"), upon the occurrence and continuance of a default under
an indenture, if a trustee has a conflicting interest (as defined in the Trust
Indenture Act) the trustee must, within 90 days, either eliminate such
conflicting interest or resign. Under the provisions of the Trust Indenture Act,
an indenture trustee shall be deemed to have a conflicting interest if, upon the
occurrence of a default under the indenture, the trustee is a creditor of the
obligor. If the trustee fails either to eliminate the conflicting interest or to
resign within 10 days after the expiration of such 90-day period, the trustee is
required to notify security holders to this effect and any security holder who
has been a bona fide holder for at least six months may petition a court to
remove the trustee and to appoint a successor trustee.
PLAN OF DISTRIBUTION
The Company may sell Debt Securities to or through underwriters, and also
may sell Debt Securities directly to other purchasers or through agents. Such
underwriters may include one or more firms, or may be a group of underwriters
represented by firms including one or more of such firms. Such firms may also
act as agents.
The distribution of the Debt Securities may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
In connection with the sale of Debt Securities, underwriters may receive
compensation from the Company or from purchasers of Debt Securities for whom
they may act as agents in the form of discounts, concessions or commissions.
Underwriters may sell Debt Securities to or through dealers, and such dealers
may receive compensation in the form of discounts, concessions or commissions
from
12
the underwriters and/or commissions from the purchasers for whom they may act as
agents. Underwriters, dealers and agents that participate in the distribution of
Debt Securities may be deemed to be underwriters, and any discounts or
commissions received by them from the Company and any profit on the resale of
Debt Securities by them may be deemed to be underwriting discounts and
commissions under the Securities Act. Any such underwriter or agent will be
identified, and any such compensation received from the Company will be
described, in the Prospectus Supplement.
Under agreements which may be entered into by the Company, underwriters and
agents who participate in the distribution of Debt Securities may be entitled to
indemnification by the Company against certain liabilities, including
liabilities under the Securities Act.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters or other persons acting as the Company's agents to solicit offers
by certain institutions to purchase Debt Securities from the Company pursuant to
contracts providing for payment and delivery on a future date. Institutions with
which such contracts may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others, but in all cases such institutions must be approved by
the Company. The obligations of any purchaser under any such contract will be
subject to the condition that the purchase of the offered Debt Securities shall
not at the time of delivery be prohibited under the laws of the jurisdiction to
which such purchaser is subject. The underwriters and such other agents will not
have any responsibilities in respect of the validity or performance of such
contracts.
Each series of Debt Securities will be a new issue of securities with no
established trading market. Any underwriters or agents to or through whom Debt
Securities are sold by the Company for public offering and sale may make a
market in such Debt Securities, but such underwriters or agents will not be
obligated to do so and may discontinue any market making at any time without
notice. No assurance can be given as to the liquidity of the trading market for
any Debt Securities.
LEGAL OPINIONS
The legality of the Debt Securities will be passed upon by Lane Powell
Spears Lubersky LLP, 1420 Fifth Avenue, Suite 4100, Seattle, Washington 98101.
D. Wayne Gittinger, a director of Nordstrom, is a partner in the firm of Lane
Powell Spears Lubersky LLP. At January 31, 1997, members of that firm owned
directly or indirectly an aggregate of approximately 5,300,000 shares of common
stock of Nordstrom.
EXPERTS
The financial statements and related financial statement schedule
incorporated in this Prospectus by reference from the Company's Annual Report on
Form 10-K have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is incorporated herein by reference, and have been
so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT, THE
PROSPECTUS OR ANY PRICING SUPPLEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS SUPPLEMENT, THE PROSPECTUS AND ANY PRICING SUPPLEMENT DO NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS SUPPLEMENT OR AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES
IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT, THE PROSPECTUS OR ANY PRICING SUPPLEMENT, NOR ANY SALE
MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS NOT BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
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Selected Financial Data of the Company........................... S-2
Selected Consolidated Financial Data of Nordstrom................ S-4
Description of Notes............................................. S-5
Supplemental Plan of Distribution................................ S-7
Legal Opinions................................................... S-8
PROSPECTUS
Available Information............................................ 2
Incorporation of Certain Documents by Reference.................. 2
The Company and Nordstrom........................................ 3
Relationship with Nordstrom...................................... 4
Use of Proceeds.................................................. 6
Ratios of Earnings to Fixed Charges.............................. 6
Description of Debt Securities................................... 7
Plan of Distribution............................................. 12
Legal Opinions................................................... 13
Experts.......................................................... 13
$92,350,000
[LOGO]
NORDSTROM CREDIT, INC.
MEDIUM-TERM NOTES
DUE 9 MONTHS OR MORE FROM
DATE OF ISSUE
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PROSPECTUS SUPPLEMENT
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GOLDMAN, SACHS & CO.
CREDIT SUISSE FIRST BOSTON
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