UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1998
[ ] 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 0-6074
Nordstrom, Inc.
______________________________________________________
(Exact name of Registrant as specified in its charter)
Washington 91-0515058
_______________________________ ___________________
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1501 Fifth Avenue, Seattle, Washington 98101
____________________________________________________
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (206) 628-2111
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
_____ _____
Common stock outstanding as of May 26, 1998: 74,392,513 shares of
common stock.
1 of 10
NORDSTROM, INC. AND SUBSIDIARIES
--------------------------------
INDEX
-----
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Statements of Earnings
Three months ended April 30, 1998
and 1997 3
Consolidated Balance Sheets
April 30, 1998 and 1997 and
January 31, 1998 4
Consolidated Statements of Cash Flows
Three months ended April 30, 1998
and 1997 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 6. Exhibits and Reports on Form 8-K 10
2 of 10
NORDSTROM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(dollars in thousands except per share amounts)
(unaudited)
Three Months
Ended April 30,
---------------------
1998 1997
---------- --------
Net sales $1,040,215 $953,747
Costs and expenses:
Cost of sales and related buying
and occupancy 698,300 646,512
Selling, general and administrative 309,263 274,287
Interest, net 10,232 7,510
Service charge income and other, net (30,417) (27,911)
---------- --------
Total costs and expenses 987,378 900,398
---------- --------
Earnings before income taxes 52,837 53,349
Income taxes 20,500 21,000
---------- --------
Net earnings $ 32,337 $ 32,349
========== ========
Basic earnings per share $ .43 $ .41
========== ========
Diluted earnings per share $ .43 $ .41
========== ========
Cash dividends paid per share of
common stock outstanding $ .14 $ .125
========== ========
These statements should be read in conjunction with the Notes to
Consolidated Financial Statements contained herein and in the Nordstrom
1997 Annual Report to Shareholders.
3 of 10
NORDSTROM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
(unaudited)
April 30, January 31, April 30,
1998 1998 1997
---------- ---------- ----------
ASSETS
Current Assets:
Cash and cash equivalents $ 19,728 $ 24,794 $ 49,066
Accounts receivable, net 596,741 664,448 661,284
Merchandise inventories 907,322 826,045 823,609
Prepaid income taxes and other 83,382 79,710 68,612
---------- ---------- ----------
Total current assets 1,607,173 1,594,997 1,602,571
Property, buildings and
equipment, net 1,261,539 1,252,513 1,184,278
Other assets 23,342 17,653 18,010
---------- ---------- ----------
TOTAL ASSETS $2,892,054 $2,865,163 $2,804,859
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 103,252 $ 263,767 $ 194,040
Accounts payable 382,322 321,311 398,748
Accrued salaries, wages
and taxes 157,621 205,273 150,610
Accrued expenses 37,674 37,884 34,847
Accrued income taxes 24,117 13,242 21,489
Current portion
of long-term debt 51,129 101,129 101,303
---------- ---------- ----------
Total current liabilities 756,115 942,606 901,037
Long-term debt 619,505 319,736 371,469
Deferred lease credits and
other liabilities 132,285 127,763 130,422
Shareholders' Equity:
Common stock, no par:
250,000,000 shares authorized;
74,360,740, 76,259,052 and
77,145,937 shares issued
and outstanding 206,321 201,050 184,607
Retained earnings 1,177,828 1,274,008 1,217,324
---------- ---------- ----------
Total shareholders' equity 1,384,149 1,475,058 1,401,931
---------- ---------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $2,892,054 $2,865,163 $2,804,859
========== ========== ==========
These statements should be read in conjunction with the Notes to
Consolidated Financial Statements contained herein and in the Nordstrom
1997 Annual Report to Shareholders.
4 of 10
NORDSTROM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
Three Months
Ended April 30,
---------------------
1998 1997
-------- --------
OPERATING ACTIVITIES:
Net earnings $ 32,337 $ 32,349
Adjustments to reconcile net earnings
to net cash provided by
operating activities:
Depreciation and amortization 41,076 36,646
Change in:
Accounts receivable, net 67,707 53,305
Merchandise inventories (81,277) (103,690)
Prepaid income taxes and other (3,672) 995
Accounts payable 61,011 88,318
Accrued salaries, wages and taxes (47,652) (39,087)
Accrued expenses (210) (6,296)
Income tax liabilities 10,712 8,368
Deferred lease credits and other
liabilities 4,685 (100)
-------- --------
Net cash provided by operating activities 84,717 70,808
-------- --------
INVESTING ACTIVITIES:
Additions to property, buildings
and equipment, net (49,929) (68,307)
Other (3,112) (5)
-------- --------
Net cash used in investing activities (53,041) (68,312)
-------- --------
FINANCING ACTIVITIES:
(Decrease) increase in notes payable (160,515) 30,270
Proceeds from issuance of long-term debt, net 297,175 91,836
Principal payments on long-term debt (50,156) (210)
Proceeds from issuance of common stock 5,271 1,209
Cash dividends paid (10,629) (9,908)
Purchase and retirement of common stock (117,888) (94,911)
-------- --------
Net cash (used in) provided by financing
activities (36,742) 18,286
-------- --------
Net (decrease)increase in cash and cash
equivalents (5,066) 20,782
Cash and cash equivalents at
beginning of period 24,794 28,284
-------- --------
Cash and cash equivalents at end of period $ 19,728 $ 49,066
======== ========
These statements should be read in conjunction with the Notes to
Consolidated Financial Statements contained herein and in the Nordstrom
1997 Annual Report to Shareholders.
5 of 10
NORDSTROM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED APRIL 30, 1998 AND 1997
(dollars in thousands)
(unaudited)
Note 1 - Basis of Presentation
The consolidated balance sheets of Nordstrom, Inc. and subsidiaries (the
"Company") as of April 30, 1998 and 1997, and the related consolidated
statements of earnings and cash flows for the periods then ended, have
been prepared from the accounts without audit.
The consolidated financial information is applicable to interim periods
and is not necessarily indicative of the results to be expected for the
year ending January 31, 1999.
It is not considered necessary to include detailed footnote information
as of April 30, 1998 and 1997. The financial information should be read
in conjunction with the Notes to Consolidated Financial Statements
contained in the Nordstrom 1997 Annual Report to Shareholders.
In the opinion of management, the consolidated financial information
includes all adjustments (consisting only of normal, recurring
adjustments) necessary to present fairly the financial position of
Nordstrom, Inc. and subsidiaries as of April 30, 1998 and 1997, and the
results of their operations and cash flows for the periods then ended,
in accordance with generally accepted accounting principles applied on a
consistent basis.
Certain reclassifications of prior year balances have been made for consistent
presentation with the current year.
Note 2 - Earnings Per Share
Basic earnings per share are computed on the basis of the weighted average
number of common shares outstanding during the period. Average shares
outstanding for the first quarter were 75,110,335 and 78,579,511 in 1998 and
1997.
Diluted earnings per share are computed on the basis of the weighted average
number of common shares outstanding during the period plus dilutive common
stock equivalents consisting of shares subject to stock options. Average
shares outstanding including dilutive shares for the first quarter were
75,379,272 and 78,640,743 in 1998 and 1997.
Options with an exercise price greater than the average market price are not
included in the computation of diluted earnings per share. For the first
quarter in 1998 and 1997 there were 146,971 and 1,037,038 options with an
exercise price greater than the average price.
6 of 10
NORDSTROM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED APRIL 30, 1998 AND 1997
(dollars in thousands)
(unaudited)
Note 3 - New Accounting Rules
In March, 1998 the Accounting Standards Executive Committee of the AICPA
issued Statement of Position 98-1 ("SOP 98-1"), "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use", which requires that
certain software costs be capitalized and amortized over the period of use.
The Company adopted SOP 98-1 during the quarter ended April 30, 1998, which
resulted in an increase in earnings after taxes of $1.7 million ($.02 per
share).
As of February 1, 1998, the Company has adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income," which
establishes standards for the reporting and display of comprehensive income
and its components. Adoption of this standard had no material effect on the
Company's consolidated financial position, results of operations or cash
flows.
The Financial Accounting Standards Board has issued SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information," which establishes
reporting and disclosure standards for an enterprise's operating segments and
SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement
Benefits," which revises employers' disclosures about pension and other
postretirement benefit plans. Both statements are effective for the Company's
fiscal year ending January 31, 1999. Adoption of these standards will not
impact the Company's consolidated financial position, results of operations or
cash flows, and any effect will be limited to the form and content of its
disclosures.
Note 4 - Credit Card and Financing Subsidiaries
The summarized combined results of operations of Nordstrom Credit, Inc. and
Nordstrom National Credit Bank are as follows:
Three Months Ended April 30, 1998 1997
------- -------
Total revenue $32,462 $31,806
Earnings before income taxes 13,798 11,643
Net earnings 8,782 7,373
Note 5 - Stockholders' Equity
During the quarters ended April 30, 1998 and 1997, the Company issued 112,988
and 35,292 shares of common stock, primarily due to the exercise of employee
stock options. The Company also repurchased 2,011,300 and 2,524,332
outstanding shares of its common stock during the quarters ended April 30,
1998 and 1997.
7 of 10
NORDSTROM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED APRIL 30, 1998 AND 1997
(dollars in thousands)
(unaudited)
Note 6 - Subsequent Event
On May 19, 1998, the Company's Board of Directors approved a two-for-one stock
split on the Company's common stock. One additional share will be issued for
each share of common stock held by shareholders of record as of the close of
business on June 8, 1998. New shares will be distributed on June 30, 1998.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Management
Discussion and Analysis section of the Nordstrom 1997 Annual Report to
Shareholders.
Results of Operations:
- ----------------------
During the first quarter of 1998, sales increased 9.1% when compared with the
same quarter in 1997. Sales for comparable stores increased 0.2% during the
quarter, with the remainder of the increase coming from new units and from the
Company's direct sales catalog division. Early in the quarter, comparable
store sales were negatively affected by heavy rains in California. Comparable
store sales showed improvement in April, partially due to Easter falling in the
month of April in the current year compared to March in the prior year.
Cost of sales and related buying and occupancy costs decreased as a percentage
of sales for the quarter as compared to the corresponding period in 1997.
The decrease was due primarily to higher merchandise margins resulting from
an improvement in the mix of merchandise styles and sizes in the full-line
stores. Buying costs also decreased due to efficiencies gained through
restructuring of certain buying responsibilities.
Selling, general and administrative expenses increased as a percentage of
sales when compared to the same quarter in 1997 due to several factors.
There were two full-line store openings during the quarter, compared to no
store openings in the first quarter of 1997. Expenses increased due to
spending on system development projects and computer equipment, and higher
sales promotion costs for the Company's direct sales catalog division than in
the corresponding period of 1997. Additionally, the Company incurred
higher expenses to support implementation of the Company's value-based
management program. These increases were partially offset by decreased
employee benefit costs and credit expenses.
Interest expense increased as a percentage of sales when compared to the same
quarter in 1997 due primarily to higher levels of long-term debt outstanding
during the quarter.
8 of 10
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)
Financial Condition:
- --------------------
The Company's working capital increased at April 30, 1998 when compared to
April 30, 1997 due primarily to a decrease in notes payable and the current
portion of long-term debt.
In March 1998, the Company issued $300 million of 6.95% Senior Debentures
due 2028. Proceeds from the issue were used to repay short-term debt and
repurchase the Company's common stock.
In February 1998, the Company completed a repurchase of $100 million of its
outstanding common stock as approved by the Board of Directors at its February
1997 meeting. Also, the Company purchased $100.6 million during the quarter
of a $400 million stock repurchase program authorized in February, 1998.
During the quarter ended April 30, 1998, the Company opened full-line stores
at Perimeter Mall in Atlanta, Georgia and Oak Park Mall in Overland Park,
Kansas. The Company also opened a Rack at Tanasbourne Towne Center in
Hillsboro, Oregon. On May 8, 1998, a new Rack was opened at the Mall of
America in Bloomington, Minnesota. Construction is progressing as planned on
new stores scheduled to open later this year and in 1999.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
- --------------------------
Fatemah Azizian v. Macy's California, Inc.; Federated Department Stores;
Bullocks, Inc.; Nordstrom, Inc.; May Department Stores Co.; Nieman-Marcus,
Inc.; Saks & Co.; Gottschalks, Inc.; Bloomingdales, Inc.; and Does 1 through
200, inclusive Superior Court of the State of California, County of Marin,
Case No. 174049 (filed May 29, 1998); Regina Callan v. Macy's California,
Inc.; Federated Department Stores; Bullocks, Inc.; Nordstrom, Inc.; May
Department Stores Co.; Nieman-Marcus, Inc.; Saks & Co.; Gottschalks, Inc.;
Bloomingdales, Inc.; and Does 1 through 200, inclusive Superior Court of the
State of California, City and County of San Francisco, Case No. 995468 (filed
June 1, 1998); and Lee R. Bright v. Macy's California, Inc.; Federated
Department Stores; Bullocks, Inc.; Nordstrom, Inc.; May Department Stores Co.;
Nieman-Marcus, Inc.; Saks & Co; Gottschalks, Inc.; Bloomingdales, Inc.; and
Does 1 through 200, inclusive Superior Court of the State of California, City
and County of San Francisco, Case No. 995556 (filed June 4, 1998) are
substantially identical lawsuits seeking class certification that were filed
on behalf of customers of cosmetics for personal use and not for resale who
are resident in the State of California, alleging that the Company and other
department stores collusively controlled the sales price of cosmetics by
charging identical prices, agreeing not to discount cosmetics and petitioning
cosmetic manufacturers to stop selling to stores that discount cosmetics.
9 of 10
Item 1. Legal Proceeding (Cont.)
- ---------------------------------
In these actions, plaintiffs seek damages (trebled) according to proof at
trial, attorneys' fees and prejudgment interest on their price-fixing claims
and restitution on their unfair competition claims. Since the Company has not
yet been served with these class action complaints, no further action has been
taken.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits
--------
(4.1) Indenture between Registrant and Norwest Bank Colorado, N.A.,
as trustee, dated March 11, 1998 is hereby incorporated by
reference from Registration No. 333-47035, Exhibit 4.1.
(27.1) Financial Data Schedule is filed herein as an Exhibit.
(b) Reports on Form 8-K
-------------------
The Company filed a Form 8-K on March 13, 1998 to file an exhibit
related to a $300 million debt offering in March 1998.
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, INC.
(Registrant)
/s/ John A. Goesling
------------------------------------------
John A. Goesling
Vice President and Treasurer
(Principal Financial and Accounting Officer)
Date: June 9, 1998
- --------------------
10 of 10
NORDSTROM, INC. AND SUBSIDIARIES
Exhibit Index
Exhibit Method of Filing
- ------- ----------------
4.1 Indenture between Registrant and Incorporated by reference from
Norwest Bank Colorado, N.A., Registration No. 333-47035,
as trustee, dated March 11, 1998 Exhibit 4.1
27.1 Financial Data Schedule Filed herewith electronically
5
1,000
3-MOS
JAN-31-1999
APR-30-1998
19,728
0
624,263
27,522
907,322
1,607,173
1,261,539
0
2,892,054
756,115
619,505
0
0
206,321
1,177,828
2,892,054
1,040,215
1,040,215
698,300
977,146
0
0
10,232
52,837
20,500
32,337
0
0
0
32,337
.43
.43
