10-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES For the fiscal year ended January 31, 1995 / / 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 office) (Zip code) Registrant's telephone number, including area code: 206-628-2111 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, without par value ____________________________________ (Title of class) 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 / / Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. /X/ 1 of 13 On March 21, 1995, 82,251,665 shares of common stock were outstanding, and the aggregate market value of those shares (based upon the closing price as reported by NASDAQ) held by non-affiliates was approximately $2 billion. Documents Incorporated by Reference: Portions of Nordstrom, Inc. 1994 Annual Report to Shareholders (Parts I and II) Portions of Proxy Statement for 1995 Annual Meeting of Shareholders (Part III) 2 of 13 PART I Item 1. Business. ------------------ Nordstrom, Inc. (the "Company") was incorporated in the State of Washington in 1946 as successor to a retail shoe business started in 1901. As of January 31, 1995, the Company operates 55 large specialty stores in Washington, Oregon, California, Utah, Alaska, Virginia, New Jersey, Illinois, Maryland and Minnesota, selling a wide selection of apparel, shoes and accessories for women, men and children. In March 1995, the Company opened two new large specialty stores in Schaumburg, Illinois and White Plains, New York in accordance with the Company's planned new store opening schedule. The Company also operates eighteen stores under the name "Nordstrom Rack", and one clearance store which serve as outlets for clearance merchandise from the Company's large specialty stores. The Racks also purchase merchandise directly from manufacturers. The Racks are located in Washington, Oregon, California, Utah, Virginia, Maryland, Pennsylvania and Illinois. The Company also operates a men's specialty store in New York, a men's and women's specialty store in Washington and leased shoe departments in twelve department stores in Hawaii and Guam. In addition, the Company operates a Direct Sales Division which commenced operations at the end of 1993 with the mailing of its first catalog. The Company is also involved in tests of interactive television shopping. The Company regularly employs on a full or part-time basis an average of approximately 35,000 employees. Due to the seasonal nature of the Company's business, the number increased to approximately 42,000 employees in December. The Company's business is highly competitive. Its stores compete with other national, regional and local retail establishments within its operating areas which carry similar lines of merchandise, including department stores, specialty stores and boutiques. The Company believes the principal methods of competing in its industry include customer service, value, fashion, advertising, store location and depth of selection. Certain other information required under Item 1 is contained within the following sections of the Company's 1994 Annual Report to Shareholders, which sections are incorporated by reference herein from Exhibit 13.1 of this report: About the Company Message to our Shareholders Management Discussion and Analysis Note 12 in Notes to Consolidated Financial Statements 3 of 13 Executive Officers of the Registrant ------------------------------------
Officer Name Age Title Since Family Relationship -------------------- --- ------------------ ------- ------------------- Jammie Baugh 41 Executive Vice 1990 None President Gail A. Cottle 43 Executive Vice 1985 None President Joseph V. Demarte 43 Vice President 1990 None John A. Goesling 49 Executive Vice 1980 None President and Treasurer Jack F. Irving 50 Executive Vice 1980 None President Raymond A. Johnson 53 Co-President 1976 None John A. McMillan 63 Co-Chairman of the 1969 Cousin by marriage of Board of Directors Bruce A., James F., and John N. Nordstrom Blake W. Nordstrom 34 Vice President 1991 Son of Bruce A. Nordstrom Bruce A. Nordstrom 61 Co-Chairman of the 1966 Cousin of James F. Board of Directors and John N. Nordstrom James A. Nordstrom 33 Vice President 1991 Son of John N. Nordstrom James F. Nordstrom 55 Co-Chairman of the 1969 Brother of John N. Board of Directors Nordstrom John N. Nordstrom 57 Co-Chairman of the 1966 Brother of James F. Board of Directors Nordstrom Robert T. Nunn 55 Executive Vice 1983 None President Cynthia C. Paur 44 Executive Vice 1983 None President John C. Walgamott 49 President of 1991 None Nordstrom Credit, Inc. and Nordstrom National Credit Bank John J. Whitacre 42 Co-President 1989 None All of the above people that have not been officers for the past five years have been full-time employees of the Company during that period. The officers are re-elected annually by the Board of Directors following each year's Annual Meeting. Each officer is elected for a term of one year and until a successor is elected and qualifies.
4 of 13 Item 2. Properties. -------------------- The following table summarizes at January 31, 1995 the number of stores owned or operated by the Company and the percentage of total store area represented by each listed category:
Number of % of total store stores square footage --------- ---------------- Owned Stores 20 28% Leased Stores 30 21 Owned on leased land 23 46 Partly owned & partly leased 3 5 --------- ---------------- 76 100% ========= ================
The Company also operates seven merchandise distribution centers, five of which are owned and two of which are leased. The Company leases its principal offices in Seattle, Washington, and owns an office building in the Denver, Colorado metropolitan area which serves as the principal offices of Nordstrom Credit, Inc. and Nordstrom National Credit Bank. The Company operates 26 large specialty stores, six Rack stores and two distribution centers in California. Because of its high cost, the Company does not carry earthquake insurance. Certain other information required under this item is included in the following section of the Company's 1994 Annual Report to Shareholders, which section is incorporated by reference herein from Exhibit 13.1 of this report: Retail Store Facilities Item 3. Legal Proceedings. --------------------------- The Company is not involved in any material pending legal proceedings, other than routine litigation in the ordinary course of business. Item 4. Submission of Matters to a Vote of Security Holders ------------------------------------------------------------ None 5 of 13 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters. ---------------------------------------------------------------------- The Company's Common Stock, without par value, is traded in the over-the- counter market and is quoted daily by NASDAQ. The approximate number of holders of Common Stock as of March 21, 1995 was 75,000. Certain other information required under this Item with respect to stock prices and dividends is included in the following sections of the Company's 1994 Annual Report to Shareholders, which sections are incorporated by reference herein from Exhibit 13.1 of this report: Financial Highlights - Stock Trading Consolidated Statements of Shareholders' Equity Note 8 in Notes to Consolidated Financial Statements Note 13 in Notes to Consolidated Financial Statements Item 6. Selected Financial Data. --------------------------------- The information required under this item is included in the following section of the Company's 1994 Annual Report to Shareholders, which section is incorporated by reference herein from Exhibit 13.1 of this report: Ten-Year Statistical Summary Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. ------------------------------------------------------------------------ The information required under this item is included in the following section of the Company's 1994 Annual Report to Shareholders, which section is incorporated by reference herein from Exhibit 13.1 of this report: Management Discussion and Analysis Item 8. Financial Statements and Supplementary Data. ----------------------------------------------------- The information required under this item is included in the following sections of the Company's 1994 Annual Report to Shareholders, which sections are incorporated by reference herein from Exhibit 13.1 of this report: Consolidated Statements of Earnings Consolidated Balance Sheets Consolidated Statements of Shareholders' Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Independent Auditors' Report 6 of 13 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. ------------------------------------------------------------------------ None PART III Item 10. Directors and Executive Officers of the Registrant. ------------------------------------------------------------ The information required under this item with respect to the Company's Directors and compliance with Section 16(a) of the Exchange Act is included in the following sections of the Company's Proxy Statement for its 1995 Annual Meeting of Shareholders, which sections are incorporated by reference herein and will be filed within 120 days after the end of the Company's fiscal year: Election of Directors Compliance with Section 16(a) of the Exchange Act of 1934 The information required under this item with respect to the Company's Executive Officers is incorporated by reference from Part I, Item 1 of this report under "Executive Officers of the Registrant". Item 11. Executive Compensation. -------------------------------- The information required under this item is included in the following sections of the Company's Proxy Statement for its 1995 Annual Meeting of Shareholders, which sections are incorporated by reference herein and will be filed within 120 days after the end of the Company's fiscal year: Compensation of Executive Officers in the Year Ended January 31, 1995 Compensation and Stock Option Committee Report on Fiscal Year 1994 Executive Compensation Stock Price Performance Compensation of Directors Compensation Committee Interlocks and Insider Participation Item 12. Security Ownership of Certain Beneficial Owners and Management. ------------------------------------------------------------------------ The information required under this item is included in the following section of the Company's Proxy Statement for its 1995 Annual Meeting of Shareholders, which sections are incorporated by reference herein and will be filed within 120 days after the end of the Company's fiscal year: Principal Shareholders 7 of 13 Item 13. Certain Relationships and Related Transactions. -------------------------------------------------------- The information required under this item is included in the following sections of the Company's Proxy Statement for its 1995 Annual Meeting of Shareholders, which sections are incorporated by reference herein and will be filed within 120 days after the end of the Company's fiscal year: Election of Directors Transactions with Management Compensation Committee Interlocks and Insider Participation PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. -------------------------------------------------------------------------- (a)1. Financial Statements -------------------- The following consolidated financial information and statements of Nordstrom, Inc. and its subsidiaries and the Independent Auditors' Report are incorporated by reference herein from Exhibit 13.1 of this report: Consolidated Statements of Earnings Consolidated Balance Sheets Consolidated Statements of Shareholders' Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Independent Auditors' Report (a)2. Financial Statement Schedules ----------------------------- Page ---- Independent Auditors' Consent and Report on Schedule 12 II - Valuation and Qualifying Accounts 13 Other schedules for which provision is made in Regulation S-X are not required, are inapplicable, or the information is included in the Company's 1994 Annual Report to Shareholders as incorporated by reference herein from Exhibit 13.1 of this report. 8 of 13 (a)3. Exhibits -------- (3.1) Articles of Incorporation of the Registrant are hereby incorporated by reference from the Registrant's Form 10-K for the year ended January 31, 1990, Exhibit A. (3.2) By-laws of the Registrant, as amended, are filed herein as an Exhibit. (4.1) The Indenture between Nordstrom Credit, Inc. (a wholly-owned subsidiary of the Registrant) and First Interstate Bank of Denver, N.A., as successor trustee, dated November 15, 1984, the First Supplement thereto dated January 15, 1988, the Second Supplement thereto dated June 1, 1989 and the Third Supplement thereto dated October 19, 1990 are hereby incorporated by reference from Registration No. 33-3765, Exhibit 4.2; Registration No. 33-19743, Exhibit 4.2; Registration No. 33-29193, Exhibit 4.3; and the Nordstrom Credit, Inc. Annual Report on Form 10-K (SEC File No. 0-12994) for the year ended January 31, 1991, Exhibit 4.2, respectively. Securities authorized under each of any other long-term debt instruments of the Company or its subsidiaries do not exceed 10% of the consolidated total assets of the Company and its subsidiaries. The Company will furnish a copy of any such long- term debt instrument or agreement to the Commission upon request. (4.2) Trustee Resignation of First Interstate Bank of Washington, N.A. dated March 13, 1995 is filed herein as an Exhibit. (4.3) Trustee Acceptance of First Interstate Bank of Denver, N.A. dated March 13, 1995 is filed herein as an Exhibit. (10.1) Operating Agreement dated August 30, 1991 between Nordstrom Credit, Inc. and Nordstrom National Credit Bank is hereby incorporated by reference from the Nordstrom Credit, Inc. Quarterly Report on Form 10-Q (SEC File No. 0-12994) for the quarter ended July 31, 1991, Exhibit 10.1, as amended. (10.2) Merchant Agreement dated August 30, 1991 between Registrant and Nordstrom National Credit Bank is hereby incorporated by reference from the Registrant's Quarterly Report on Form 10-Q for the quarter ended July 31, 1991, Exhibit 10.1. (10.3) The 1987 Nordstrom Stock Option Plan is hereby incorporated by reference from the Registrant's Proxy Statement for the 1987 Annual Meeting of Shareholders. (10.4) The Nordstrom Supplemental Retirement Plan is hereby incorporated by reference from the Registrant's Form 10-K for the year ended January 31, 1992, Exhibit 10.3. (10.5) The 1993 Non-Employee Director Stock Incentive Plan is hereby incorporated by reference from the Registrant's Form 10-K for the year ended January 31, 1994, Exhibit 10.4. 9 of 13 (10.6) Investment Agreement dated October 8, 1984 between the Registrant and Nordstrom Credit, Inc. is hereby incorporated by reference from the Nordstrom Credit, Inc. Form 10, Exhibit 10.1. (10.7) Operating Agreement for VISA Accounts and Receivables dated May 1, 1994 between Nordstrom Credit, Inc. and Nordstrom National Credit Bank is hereby incorporated by reference from Registration No. 33-55905, Exhibit 10.1. (13.1) The Company's 1994 Annual Report to Shareholders is filed herein as an Exhibit. (21.1) List of the Registrant's Subsidiaries is filed herein as an Exhibit. (23.1) Independent Auditors' Consent and Report on Schedule is on page 12 of this report. (27.1) Financial Data Schedule is filed herein as an Exhibit. All other exhibits are omitted because they are not applicable, not required, or because the required information is included in the Company's 1994 Annual Report to Shareholders. (b) Reports on Form 8-K ------------------- No reports on Form 8-K were filed during the last quarter of the period for which this report is filed. Signatures Pursuant to the requirements of Section 13 or 15(d) 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 Date March 31, 1995 by __________________________________________ ____________________ John A. Goesling Executive Vice President and Treasurer (Principal Accounting and Financial Officer) 10 of 13 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated. Principal Executive Officers: Principal Accounting and Financial Officer: /s/ Raymond A. Johnson /s/ John A. Goesling _______________________________ ________________________________ Raymond A. Johnson John A. Goesling Co-President Executive Vice President and Treasurer /s/ John Whitacre _______________________________ John Whitacre Co-President Directors: /s/ Philip M. Condit /s/ James F. Nordstrom _______________________________ ________________________________ Philip M. Condit James F. Nordstrom Director Co-Chairman /s/ D. Wayne Gittinger /s/ John N. Nordstrom _______________________________ ________________________________ D. Wayne Gittinger John N. Nordstrom Director Co-Chairman /s/ John F. Harrigan /s/ Alfred E. Osborne Jr. _______________________________ ________________________________ John F. Harrigan Alfred E. Osborne Jr. Director Director /s/ Charles A. Lynch _______________________________ ________________________________ Charles A. Lynch William D. Ruckelshaus Director Director /s/ Ann D. McLaughlin /s/ Malcolm T. Stamper _______________________________ ________________________________ Ann D. McLaughlin Malcolm T. Stamper Director Director /s/ John A. McMillan /s/ Elizabeth Crownhart Vaughan _______________________________ ________________________________ John A. McMillan Elizabeth Crownhart Vaughan Co-Chairman Director /s/ Bruce A. Nordstrom _______________________________ Bruce A. Nordstrom Co-Chairman Date March 31, 1995 ___________________________ 11 of 13 Exhibit 23.1 INDEPENDENT AUDITORS' CONSENT AND REPORT ON SCHEDULE Shareholders and Board of Directors Nordstrom, Inc. We consent to the incorporation by reference in Registration Statements Nos. 33-18321 and 2-81695 of Nordstrom, Inc. on Form S-8 of our reports dated March 10, 1995 appearing in and incorporated by reference in this Annual Report on Form 10-K of Nordstrom, Inc. and subsidiaries for the year ended January 31, 1995. We have audited the consolidated financial statements of Nordstrom, Inc. and subsidiaries as of January 31, 1995 and 1994, and for each of the three years in the period ended January 31, 1995, and have issued our report thereon dated March 10, 1995; such financial statements and report are included in your 1994 Annual Report to Shareholders and are incorporated herein by reference. Our audits also included the consolidated financial statement schedule of Nordstrom, Inc. and subsidiaries, listed in Item 14(a)2. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein. Deloitte & Touche LLP March 31, 1995 Seattle, Washington 12 of 13 NORDSTROM, INC. AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Dollars in thousands)
Column A Column B Column C Column D Column E ---------- ---------- ---------- ---------- ---------- Additions Deductions ---------- ---------- Account Balance at Charged to write-offs Balance beginning costs and net of at end of Description of period expenses recoveries period ----------- ---------- ---------- ---------- ---------- Allowance for doubtful accounts: Year ended: January 31, 1995 $23,145 $20,219 $20,406 $22,958 January 31, 1994 $23,969 $25,713 $26,537 $23,145 January 31, 1993 $24,192 $29,469 $29,692 $23,969
13 of 13 NORDSTROM INC. AND SUBSIDIARIES Exhibit Index
Exhibit Method of Filing ------- ---------------- 3.1 Articles of Incorporation Incorporated by reference from the Registrant's Form 10-K for the year ended January 31, 1990, Exhibit A. 3.2 By-laws Filed herewith electronically 4.1 Indenture between Nordstrom Credit, Incorporated by reference Inc. and First Interstate Bank of from Registration Denver, N.A., as successor trustee, No. 33-3765, Exhibit 4.2; dated November 15, 1984, the First Registration No. 33-19743, Supplement thereto dated January 15, Exhibit 4.2; Registration 1988, the Second Supplement thereto No. 33-29193, Exhibit 4.3; dated June 1, 1989 and the Third and the Nordstrom Credit, Supplement thereto dated October 19, Inc. Annual Report on Form 1990 10-K (SEC File No. 0-12994) for the year ended January 31, 1991, Exhibit 4.2, respectively. 4.2 Trustee Resignation of First Interstate Filed herewith electronically Bank of Washington, N.A. dated March 13, 1995 4.3 Trustee Acceptance of First Interstate Filed herewith electronically Bank of Denver, N.A. dated March 13, 1995 10.1 Operating Agreement dated August 30, 1991 Incorporated by reference between Nordstrom, Credit, Inc. and from the Nordstrom Credit, Nordstrom National Credit Bank Inc. Quarterly Report on Form 10-Q (SEC File No. 0-12994) for the quarter ended July 31, 1991, Exhibit 10.1, as amended. 10.2 Merchant Agreement dated August 30, 1991 Incorporated by reference between Registrant and Nordstrom from the Registrant's National Credit Bank Quarterly Report on Form 10-Q for the quarter ended July 31, 1991, Exhibit 10.1. 10.3 1987 Nordstrom Stock Option Plan Incorporated by reference from the Registrant's Proxy Statement for the 1987 Annual Meeting of Shareholders. Exhibit Index (continued) 10.4 Nordstrom Supplemental Retirement Plan Incorporated by reference from the Registrant's Form 10-K for the year ended January 31, 1992, Exhibit 10.3. 10.5 1993 Non-Employee Director Stock Incorporated by reference Incentive Plan from the Registrant's Form 10-K for the year ended January 31, 1994, Exhibit 10.4. 10.6 Investment Agreement dated October 8, Incorporated by reference 1984 between the Registrant and from the Nordstrom Credit, Nordstrom Credit, Inc. Inc. Form 10, Exhibit 10.1. 10.7 Operating Agreement for VISA Accounts Incorporated by reference and Receivables dated May 1, 1994 from Registration No. 33- between Nordstrom Credit, Inc. and 55905, Exhibit 10.1. Nordstrom National Credit Bank 13.1 1994 Annual Report to Shareholders Filed herewith electronically 21.1 Subsidiaries of the Registrant Filed herewith electronically 23.1 Independent Auditors' Consent and Report on Schedule Filed herewith electronically 27.1 Financial Data Schedule Filed herewith electronically
EX-4 2 Exhibit 4.2 TRUSTEE RESIGNATION TO: Nordstrom Credit, Inc. In connection with the appointment of First Interstate Bank of Denver, N.A. as successor trustee under the Indenture (defined below), First Interstate Bank of Washington, N.A. (the "Resigning Trustee"), hereby resigns as trustee under that certain indenture by and between the Company and the Resigning Trustee dated as of November 15, 1984, as supplemented by the First Supplemental Indenture dated as of January 15, 1988, the Second Supplemental Indenture dated as of June 1, 1989 and the Third Supplemental Indenture dated as of October 19, 1990 (as supplemented, the "Indenture"), providing for the issuance from time to time of unsecured debentures, notes or other evidences of indebtedness of the Company (the "Securities") to be issued in one or more series under such Indenture. This resignation is provided pursuant to Section 610(b) of the Indenture, and shall be applicable with respect to all series of Securities heretofore issued under the Indenture. DATED: March 13, 1995 FIRST INTERSTATE BANK OF WASHINGTON, N.A. By /s/Perry R. Tobe ---------------- Perry R. Tobe, Trust Officer EX-4 3 Exhibit 4.3 TRUSTEE ACCEPTANCE TO: First Interstate Bank of Washington, N.A. Nordstrom Credit, Inc. First Interstate Bank of Denver, N.A. (the "Successor Trustee"), hereby accepts its appointment by Nordstrom Credit, Inc. (the "Company") as successor trustee under that certain indenture by and between the Company and First Interstate Bank of Washington, N.A. (the "Resigning Trustee"), dated as of November 15, 1984, as supplemented by the First Supplemental Indenture dated as of January 15, 1988, the Second Supplemental Indenture dated as of June 1, 1989 and the Third Supplemental Indenture dated as of October 19, 1990 (as supplemented, the "Indenture"), providing for the issuance from time to time of unsecured debentures, notes or other evidences of indebtedness of the Company (the "Securities") to be issued in one or more series under such Indenture. This acceptance is given pursuant to Section 611 of the Indenture, and shall be applicable with respect to all series of Securities heretofore issued under the Indenture. DATED: March 13, 1995. FIRST INTERSTATE BANK OF DENVER, N.A. By /s/ Laura Rivera ---------------- Laura Rivera, Banking Officer The Company hereby confirms that First Interstate Bank of Denver, N.A. is vested with all the rights, powers, trusts and duties of the Resigning Trustee under the Indenture. DATED: March 13, 1995 NORDSTROM CREDIT, INC. By /s/ John C. Walgamott ---------------------- John C. Walgamott, President STATE OF COLORADO ) )ss. COUNTY OF DENVER ) I certify that I know or have satisfactory evidence that Laura Rivera is the person who appeared before me, and she acknowledged that she signed this instrument, on oath stated that she was authorized to execute the instrument and acknowledged it as a Banking Officer of First Interstate Bank of Denver, N.A., to be the free and voluntary act of such parties for the uses and purposes mentioned in this instrument. DATED: March 13, 1995 /s/Lynn E. Taylor --------------------- (Notary Signature) Lynn E. Taylor Notary Public for the State of Colorado My commission expires: 8/2/97 EX-3 4 Exhibit 3.2 BYLAWS OF (Amended and Restated as of May 17, 1994) ARTICLE I Offices The principal office of the corporation in the State of Washington shall be located in the city of Seattle. The corporation may have such other offices, either within or without the State of Washington, as the Board of Directors may designate or as the business of the corporation may require from time to time. The registered office of the corporation required by the Washington Business Corporation Act to be maintained in the State of Washington may be, but need not be, identical with the principal office in the State of Washington, and the address of the registered office may be changed from time to time by the Board of Directors or by officers designated by the Board of Directors. ARTICLE II Shareholders Section 1. Annual Meetings. The annual meeting of the shareholders shall be held on the third Tuesday in the month of May each year, at the hour of 11:00 a.m., unless the Board of Directors shall have designated a different hour and day in the month of May to hold said meeting. The meeting shall be for the purpose of electing directors and the transaction of such other business as may come before the meeting. If the day fixed for the annual meeting shall be a legal holiday in the State of Washington, and if the Board of Directors has not designated some other day in the month of May for such meeting, such meeting shall be held at the same hour and place on the next succeeding business day not a holiday. The failure to hold an annual meeting at the time stated in these Bylaws does not affect the validity of any corporate action. If the election of directors shall not be held on the day designated herein or by the Board of Directors for any annual meeting of the shareholders, or at any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of the shareholders as soon thereafter as conveniently may be. Section 2. Special Meetings. Special meetings of the shareholders may be called for any purpose or purposes, unless otherwise prescribed by statute, at any time by the Chairman (or any Co-Chairman), by the President (or any Co-President), or by the Board of Directors, and shall be called by the President (or any Co-President) at the request of holders of not less than 10% of all outstanding shares of the corporation entitled to vote on any issue proposed to be considered at the meeting. Only business within the purpose or purposes described in the meeting notice may be conducted at a special shareholder's meeting. Section 3. Place of Meeting. The Board of Directors may designate any place, either within or without the State of Washington, as the place of meeting for any annual meeting or for any special meeting of the corporation. If no such designation is made, the place of meeting shall be the principal offices of the corporation in the State of Washington. Section 4. Notice of Meetings. Written notice of annual or special meetings of shareholders stating the place, day, and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given by the Secretary, or persons authorized to call the meeting, to each shareholder of record entitled to vote at the meeting, not less than ten (10) nor more than sixty (60) days prior to the date of the meeting, unless otherwise prescribed by statute. Section 5. Waiver of Notice. Notice of the time, place, and purpose of any meeting may be waived in writing (either before or after such meeting) and will be waived by any shareholder by attendance of the shareholder in person or by proxy, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting. Any shareholder waiving notice of a meeting shall be bound by the proceedings of the meeting in all respects as if due notice thereof had been given. Section 6. Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders, or any adjournment thereof, or shareholders entitled to receive payment of any dividend, or to make a determination of shareholders for any other proper purpose, the Board of Directors may fix in advance a record date for any such determination of shareholders, such date to be not more than seventy (70) days and, in the case of a meeting of shareholders, not less than ten (10) days, prior to the date on which the particular action requiring such determination of shareholders is to be taken. If no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the day before the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this Section, the determination shall apply to any adjournment thereof, unless the Board of Directors fixes a new record date, which it must do if the meeting is adjourned more than one hundred twenty (120) days after the date fixed for the original meeting. Section 7. Voting Lists. After fixing a record date for a shareholders' meeting, the corporation shall prepare an alphabetical list of the names of all shareholders on the record date who are entitled to notice of the shareholders' meeting. The list shall show the address of and number of shares held by each shareholder. A shareholder, shareholder's agent, or a shareholder's attorney may inspect the shareholder list, at the shareholder's expense, beginning ten days prior to the shareholders' meeting and continuing through the meeting, at the corporation's principal office or at a place identified in the meeting notice in the city where the meeting will be held during regular business hours. The shareholder list shall be kept open for inspection at the time and place of such meeting or any adjournment. Section 8. Quorum and Adjourned Meetings. Unless the Articles of Incorporation or applicable law provide otherwise, a majority of the outstanding shares of the corporation entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders. Once a share is represented at a meeting, other than to object to holding the meeting or transacting business, it is deemed to be present for the remainder of the meeting and any adjournment thereof unless a new record date is set or is required to be set for the adjourned meeting. A majority of the shares represented at a meeting, even if less than a quorum, may adjourn the meeting from time to time without further notice. At a reconvened meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the original meeting. Business may continue to be conducted at a duly organized meeting and at any adjournment of such meeting (unless a new record date is or must be set for the adjourned meeting), notwithstanding the withdrawal of enough shares from either meeting to leave less than a quorum. Section 9. Proxies. At all meetings of shareholders, a shareholder may vote by proxy executed in writing by the shareholder or by the shareholder's duly authorized attorney in fact. Such proxy shall be filed with the Secretary of the corporation before or at the time of the meeting. No proxy shall be valid after eleven (11) months from the date of its execution, unless otherwise provided in the proxy. Section 10. Voting of Shares. Every shareholder of record shall have the right at every shareholders' meeting to one vote for every share standing in the shareholder's name on the books of the corporation. If a quorum exists, action on a matter, other than election of directors, is approved by the shareholders if the votes cast favoring the action exceed the votes cast opposing the action, unless the Articles of Incorporation or applicable law require a greater number of affirmative votes. Notwithstanding the foregoing, shares of the corporation may not be voted if they are owned, directly or indirectly, by another corporation, and the corporation owns, directly or indirectly, a majority of shares of the other corporation entitled to vote for directors of the other corporation. Section 11. Acceptance of Votes. If the name signed on a vote, consent, waiver or proxy appointment does not correspond to the name of a shareholder of the corporation, the corporation may accept the vote, consent, waiver or proxy appointment, and give effect to it as the act of the shareholder if: (i) the shareholder is an entity and the name signed purports to be that of an officer, partner or agent of the entity; (ii) the name signed purports to be that of an administrator, executor, guardian or conservator representing the shareholder; (iii) the name signed purports to be that of a receiver or trustee in bankruptcy of the shareholder; (iv) the name signed purports to be that of a pledgee, beneficial owner or attorney-in-fact of the shareholder; or (v) two or more persons are the shareholder as co-tenants or fiduciaries and the name signed purports to be the name of at least one of the co-owners and the person signing appears to be acting on behalf of all co-owners. ARTICLE III Board of Directors Section 1. General Powers. The business and affairs of the corporation shall be managed by its Board of Directors. Section 2. Number, Tenure and Qualifications. The number of directors of the corporation shall be thirteen. Each director shall hold office until the next annual meeting of shareholders and until his successors shall have been elected and qualified. Directors need not be residents of the State of Washington or shareholders of the corporation. Section 3. Regular Meeting. A regular meeting of the Board of Directors shall be held without other notice than this Bylaw immediately after, and at the same place as, the annual meeting of shareholders. Regular meetings of the Board of Directors shall be held at such place and on such day and hour as shall from time to time be fixed by the Chairman (or any Co-Chairman), the President (or any Co-President) or the Board of Directors. No other notice of regular meeting of the Board of Directors shall be necessary. Section 4. Special Meetings. Special meetings of the Board of Director may be called by or at the request of the Chairman (or any Co- Chairman), the President (or any Co-President) or any two Directors. The person or persons authorized to call special meetings of the Board of Directors may fix any place, either within or without the State of Washington, as the place for holding any special meeting of the Board of Directors called by them. Section 5. Notice. Notice of any special meeting shall be given at least two days previously thereto by either oral or written notice. Any Director may waive notice of any meeting. The attendance of a Director at a meeting shall constitute a waiver of notice of such meeting, except where a Director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. Section 6. Quorum. A majority of the number of Directors fixed by Section 2 of this Article III shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but if less than such majority is present at a meeting, a majority of the Directors present may adjourn the meeting from time to time without further notice. Section 7. Manner of Acting. The act of the majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. Section 8. Vacancies. Any vacancy occurring in the Board of Directors may be filled by the affirmative vote of a majority of the remaining Directors though less than a quorum of the Board of Directors. A Director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office. A vacancy on the Board of Directors created by reason of an increase in the number of Directors may be filled by election by the Board of Directors for a term of the office continuing only until the next election of Directors by the shareholders. Section 9. Compensation. By resolution of the Board of Directors, each Director may be paid his expenses, if any, of attendance at each meeting of the Board of Directors and at each meeting of a committee of the Board of Directors, and may be paid a stated salary as director, a fixed sum for attendance at each such meeting, or both. No such payment shall preclude any Director from serving the corporation in any other capacity and receiving compensation therefor. Section 10. Presumption of Assent. A Director of the corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting, or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof, or shall forward such dissent by registered mail to the Secretary of the corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action. ARTICLE IV Special Measures Applying to Both Shareholder and Director Meetings Section 1. Actions by Written Consent. Any corporate action required or permitted by the Articles of Incorporation, Bylaws, or the laws under which the corporation is formed, to be voted upon or approved at a duly called meeting of the Directors, committee of Directors, or shareholders may be accomplished without a meeting if one or more unanimous written consents of the respective Directors or shareholders, setting forth the actions so taken, shall be signed, either before or after the action taken, by all the Directors, committee members or shareholders, as the case may be. Action taken by unanimous written consent of the Directors or a committee of the Board of Directors is effective when the last Director or committee member signs the consent, unless the consent specifies a later effective date. Action taken by unanimous written consent of the shareholders is effective when all consents have been delivered to the corporation, unless the consent specifies a later effective date. Section 2. Meetings by Conference Telephone. Members of the Board of Directors, members of a committee of Directors, or shareholders may participate in their respective meetings by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time; participation in a meeting by such means shall constitute presence in person at such meeting. Section 3. Written or Oral Notice. Oral notice may be communicated in person, or by telephone, wire or wireless equipment, which does not transmit a facsimile of the notice. Oral notice is effective when communicated. Written notice may be transmitted by mail, private carrier, or personal delivery; telegraph or teletype; or telephone, wire or wireless equipment which transmits a facsimile of the notice. Written notice to a shareholder is effective when mailed, if mailed with first class postage prepaid and correctly addressed to the shareholder's address shown in the corporation's current record of shareholders. In all other instances, written notice is effective on the earliest of the following: (a) when dispatched to the person's address, telephone number, or other number appearing on the records of the corporation by telegraph, teletype or facsimile equipment; (b) when received; (c) five days after deposit in the United States mail, as evidenced by the postmark, if mailed with first class postage, prepaid and correctly addressed; or (d) on the date shown on the return receipt, if sent by registered or certified mail, return receipt requested, and the receipt is signed by or on behalf of the addressee. In addition, notice may be given in any manner not inconsistent with the foregoing provisions and applicable law. ARTICLE V Officers Section 1. Number. The offices and officers of the corporation shall be as designated from time to time by the Board of Directors. Such offices may include a Chairman of the Board of Directors or two or more Co-Chairmen of the Board of Directors, a Vice Chairman or two or more Vice Chairmen, a President or two or more Co-Presidents, one or more Vice Presidents, a Secretary, a Treasurer and a Controller, Such other officers and assistant officers as may be deemed necessary may be elected or appointed by the Board of Directors. Any two or more offices may be held by the same persons. Section 2. Election and Term of Office. The officers of the corporation to be elected by the Board of Directors shall be elected annually by the Board of Directors at the first meeting of the Board of Directors held after each annual meeting of shareholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as conveniently may be. Each officer shall hold office until a successor shall have been duly elected and qualified, or until the officer's death or resignation, or the officer has been removed in the manner hereinafter provided. Section 3. Removal. Any officer or agent may be removed by the Board of Directors whenever in its judgment, the best interests of the corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create contract rights. Section 4. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the Board of Directors for the unexpired portion of the term. Section 5. Chairman of the Board of Directors. The Chairman or Co-Chairmen of the Board of Directors, subject to the authority of the Board of Directors, shall preside at meetings of shareholders, directors, and executive committee, and, together with the President and Co-Presidents, shall have general supervision and control over the business and affairs of the corporation. The Chairman or a Co-Chairman may sign any and all documents, deeds, mortgages, bonds, contracts, leases, or other instruments in the ordinary course of business with or without the signature of a second corporate officer, may sign certificates for shares of the corporation with the Secretary or Assistant Secretary of the corporation and may sign any documents which the Board of Directors has authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the corporation, or shall be required by law to be otherwise signed or executed; and in general may perform all duties which are normally incident to the office of Chairman or President and such other duties, authority, and responsibilities as may be prescribed by the Board of Directors from time to time. Section 6. President. The President or Co-Presidents, together with the Chairman or Co-Chairmen of the Board of Directors, shall have general supervision and control over the business and affairs of the corporation subject to the authority of the Board of Directors. The President or a Co-President may sign any and all documents, mortgages, bonds, contracts, leases, or other instruments in the ordinary course of business with or without the signature of a second corporate officer, may sign certificates for shares of the corporation with the Secretary or Assistant Secretary of the corporation, and may sign any documents which the Board of Directors has authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of President and such other duties, authority, and responsibilities as may be prescribed by the Board of Directors from time to time. Section 7. Vice Chairman. In the absence of the Chairman and any Co-Chairman of the Board of Directors, or in the event of their death, inability or refusal to act, the Vice Chairmen, if any are designated, in the order indicated at the time of their appointment or, in the absence of any such indication, in the order of their appointment, shall perform the duties of the Chairman of the Board of Directors and, when so acting, shall have all the powers and be subject to all the restrictions upon the Chairman of the Board of Directors. The Vice Chairman may sign, with the Secretary or an Assistant Secretary, certificates for shares of the corporation and shall perform such other duties as, from time to time, may be assigned to the Vice Chairman by the Chairman or any Co-Chairman of the Board of Directors. Section 8. The Vice President. In the absence of the President and all Co-Presidents, or in the event of their death, inability or refusal to act, the Executive Vice President, if one is designated, and otherwise the Vice Presidents in the order designated at the time of their election or in the absence of any designation, then in the order of their election, shall perform the duties of the President and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Any Vice President may sign, with the Secretary or an Assistant Secretary, certificates for shares of the corporation; and shall perform such other duties as from time to time may be assigned to the Vice President by the President or any Co- President, or by the Board of Directors. Section 9. The Secretary. The Secretary shall: (a) keep the minutes of the proceedings of the shareholders and of the Board of Directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the corporation and see that the seal of the corporation is affixed to all documents and the execution of which on behalf of the corporation under its seal is duly authorized; (d) keep a register of the post office address of each shareholder which shall be furnished to the Secretary by such shareholders; (e) sign with the President or a Co-President, or with a Vice President, certificates for shares of the corporation, or contracts, deeds or mortgages the issuance or execution of which shall have been authorized by resolution of the Board of Directors; (f) have general charge of the stock transfer books of the corporation subject to the authority delegated to a transfer agent or registrar if appointed; and (g) in general perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to the Secretary by the President or any Co- President, or by the Board of Directors. Section 10. The Treasurer. The Treasurer shall: (a) have charge and custody of and be responsible for all funds and securities of the corporation; (b) receive and give receipts for monies due and payable to the corporation from any source whatsoever, and deposit all such monies in the name of the corporation in such banks, trust companies or other depositories as shall be selected in accordance with the provisions of Article VII of these Bylaws; and (c) in general perform all of the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to the Treasurer by the President or any Co-President, or by the Board of Directors. If required by the Board of Directors, the Treasurer shall give a bond for the faithful discharge of his duties in such sum and with such surety or sureties as the Board of Directors shall determine. Section 11. Assistant Secretaries and Assistant Treasurers. The Assistant Secretaries, when authorized by the Board of Directors, may sign with the President or a Co-President, or with a Vice President, certificates for shares of the corporation or contracts, deeds or mortgages, the issuance or execution of which shall have been authorized by a resolution of the Board of Directors. The Assistant Treasurers shall respectively, if required by the Board of Directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine. The Assistant Secretaries and Assistant Treasurers, in general, shall perform such duties as shall be assigned to them by the Secretary or the Treasurer, respectively, or by the President or any Co-President, or by the Board of Directors. Section 12. The Controller. The Controller shall report to the Treasurer and shall supervise and be responsible for daily operations of the Financial Department, accounts and account books of the corporation, all in the ordinary course of business. The Controller shall also perform such other duties as may from time to time be assigned by the Treasurer, by the Chairman or Co-Chairman, by the President or any Co- President, or by the Board of Directors. ARTICLE VI Executive Committee Section 1. Appointment. The Board of Directors by resolution adopted by a majority of the full Board, may designate two or more of its members to constitute an Executive Committee. The designation of such committee and the delegation thereto of authority shall not operate to relieve the Board of Directors, or any member thereof, of any responsibility imposed by law. Section 2. Authority. The Executive Committee, when the Board of Directors is not in session, shall have and may exercise all of the authority of the Board of Directors except to the extent, if any, that such authority shall be limited by the resolution appointing the Executive Committee and except also that the Executive Committee shall not have the authority of the Board of Directors in reference to amending the Articles of Incorporation, adopting a plan of merger or consolidation, recommending to the shareholders the sale, lease or other disposition of all or substantially all of the property and assets of the corporation otherwise than in the usual and regular course of its business, recommending to the shareholders voluntary dissolution of the corporation or a revocation thereof, amending the Bylaws of the corporation or any other action prohibited by applicable law. Section 3. Tenure and Qualifications. Each member of the Executive Committee shall hold office until the next regular annual meeting of the Board of Directors following his designation and until his successor is designated as a member of the Executive Committee and is elected and qualified. Section 4. Meetings. Regular meetings of the Executive Committee may be held without notice at such times and places as the Executive Committee may fix from time to time by resolution. Special meetings of the Executive Committee may be called by any member thereof upon not less than one day's notice stating the place, date and hour of the meeting, which notice may be written or oral. Any member of the Executive Committee may waive notice of any meeting and no notice of any meeting need be given to any member thereof who attends in person. The notice of a meeting of the Executive Committee need not state the business proposed to be transacted at the meeting. Section 5. Quorum. A majority of the members of the Executive Committee shall constitute a quorum for the transaction of business at any meeting thereof and action of the Executive Committee must be authorized by the affirmative vote of a majority of the members present at a meeting at which a quorum is present. Section 6. Vacancies. Any vacancy in the Executive Committee may be filled by a resolution adopted by a majority of the full Board of Directors. Section 7. Resignations and Removal. Any member of the Executive Committee may be removed at any time with or without cause by resolution adopted by a majority of the full Board of Directors. Any member of the Executive Committee may resign from the Executive Committee at any time by giving written notice to the Chairman (or any Co-Chairman), the President (or any Co-President), or to the Secretary, of the corporation, and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 8. Procedure. The Executive Committee shall elect a presiding officer from its members and may fix its own rules of procedure which shall not be inconsistent with these Bylaw. It shall keep regular minutes of its proceedings and report the same to the Board of Directors for its information at the meeting thereof held next after the proceedings shall have been taken. ARTICLE VII Contracts, Loans, Checks and Deposits Section 1. Contracts. The Board of Directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances. Section 2. Loans. No loans shall be contracted on behalf of the corporation and no evidences of indebtedness shall be issued in its name unless authorized by the Board of Directors. Such authority may be general or confined to specific instances. Section 3. Checks. Drafts. etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation, shall be signed by such officers, agent or agents of the corporation and in such manner as shall from time to time be determined by the Board of Directors. Section 4. Deposits. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositories as the Board of Directors may select. ARTICLE VIII Certificates for Shares and Their Transfer Section 1. Certificates for Shares. Certificates representing shares of the corporation shall be in such form as shall be determined by the Board of Directors. Such certificates shall be signed by the Chairman (or any Co-Chairman), the President (or any Co-President) or a Vice President, and by the Secretary or an Assistant Secretary, and sealed with the corporate seal or a facsimile thereof. The signatures of such officers upon a certificate may be facsimiles if the certificate is countersigned by a transfer agent, or registered by a registrar, other than the corporation itself or one of its employees. If any officer who signed a certificate, either manually or in facsimile, no longer holds such office when the certificate is issued, the certificate is nevertheless valid. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the corporation. All certificates surrendered to the corporation for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except that in case of a lost, destroyed or mutilated certificate a new one may be issued therefor upon such terms and indemnity to the corporation as the Board of Directors may prescribe. Section 2. Transfer of Shares. Transfer of shares of the corporation shall be made only on the stock transfer books of the corporation by the holder of record thereof or by his legal representative, who shall furnish proper evidence of authority to transfer or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the corporation, or with its transfer agent, if any, and on surrender for cancellation of the certificate for such shares. The person in whose name shares stand on the books of the corporation shall be deemed by the corporation to be the owner thereof for all purposes. ARTICLE IX Fiscal Year The fiscal year of the corporation shall begin on the first day of February and end on the thirty-first day of January in each year. ARTICLE X Dividends The Board of Directors may, from time to time, declare and the corporation may pay dividends on its outstanding shares in the manner, and upon the terms and conditions provided by law and its articles of incorporation. ARTICLE XI Corporate Seal The Board of Directors shall provide a corporate seal which shall be circular in form and shall have inscribed thereon the name of the corporation and the state of incorporation and the words, "Corporate Seal." ARTICLE XII Indemnification of Directors, Officers, and Others Section 1. Right to Indemnification. Each person (including a person's personal representative) who was or is made a party or is threatened to be made a party to or is otherwise involved (including, without limitation, as a witness) in any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative, investigative or by or in the right of the corporation, or otherwise (hereinafter a "proceeding") by reason of the fact that he or she (or a person of whom he or she is a personal representative) is or was a director or officer of the corporation or, being or having been such a director or officer, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee, agent or in any other relationship or capacity whatsoever, of any other foreign or domestic corporation, partnership, joint venture, employee benefit plan or trust or other trust, enterprise or other private or governmental entity, agency, board, commission, body or other unit whatsoever (hereinafter an "indemnitee"), whether the basis of such proceeding is alleged action or inaction in an official capacity as a director, officer, partner, trustee, employee, agent or in any other relationship or capacity whatsoever, shall be indemnified and held harmless by the corporation to the fullest extent not prohibited by the Washington Business Corporation Act, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment does not prohibit the corporation from providing broader indemnification rights than prior to the amendment), against all expenses, liabilities, and losses (including but not limited to attorneys' fees, judgments, claims, fines, ERISA and other excise and other taxes and penalties, and other adverse effects and amounts paid in settlement), reasonably incurred or suffered by the indemnitee; provided, however, that no such indemnity shall indemnify any person from or on account of acts or omissions of such person finally adjudged to be intentional misconduct or a knowing violation of law, or from or on account of conduct of a director finally adjudged to be in violation of RCW 23B.08.310, or from or on account of any transaction with respect to which it was finally adjudged that such person personally received a benefit in money, property, or services to which the person was not legally entitled; and further provided, however, that except as provided in Section 2 of this Article with respect to suits relating to rights to indemnification, the corporation shall indemnify any indemnitee in connection with a proceeding (or part thereof) initiated by the indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors of the corporation. The right to indemnification granted in this Article is a contract right and includes the right to payment by, and the right to receive reimbursement from, the corporation of all expenses as they are incurred in connection with any proceeding in advance of its final disposition (hereinafter an "advance of expenses"); provided, however, that an advance of expenses received by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee unless required by the Board of Directors) shall be made only upon (i) receipt by the corporation of a written undertaking (hereinafter an "undertaking") by or on behalf of such indemnitee, to repay advances of expenses if and to the extent it shall ultimately be determined by order of a court having jurisdiction (which determination shall become final upon expiration of all rights to appeal), hereinafter a "final adjudication", that the indemnitee is not entitled to be indemnified for such expenses under this Article, and (ii) receipt by the corporation of written affirmation by the indemnitee of his or her good faith belief that he or she has met the standard of conduct applicable (if any) under the Washington Business Corporation Act necessary for indemnification by the corporation under this Article. Section 2. Right of Indemnitee to Bring Suit. If any claim for indemnification under Section 1 of this Article is not paid in full by the corporation within sixty days after a written claim has been received by the corporation, except in the case of a claim for an advance of expenses, in which case the applicable period shall be twenty days, the indemnitee may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim. If the indemnitee is successful in whole or in part in any such suit, or in any suit in which the corporation seeks to recover an advance of expenses, the corporation shall also pay to the indemnitee all the indemnitee's expenses in connection with such suit. The indemnitee shall be presumed to be entitled to indemnification under this Article upon the corporation's receipt of indemnitee's written claim (and in any suits relating to rights to indemnification where the required undertaking and affirmation have been received by the corporation), and thereafter the corporation shall have the burden of proof to overcome that presumption. Neither the failure of the corporation (including its Board of Directors, independent legal counsel, or shareholders) to have made a determination prior to other commencement of such suit that the indemnitee is entitled to indemnification, nor an actual determination by the corporation (including its Board of Directors, independent legal counsel or shareholders) that the indemnitee is not entitled to indemnification, shall be a defense to the suit or create a presumption that the indemnitee is not so entitled. It shall be a defense to a claim for an amount of indemnification under this Article (other than a claim for advances of expenses prior to final disposition of a proceeding where the required undertaking and affirmation have been received by the corporation) that the claimant has not met the standards of conduct applicable (if any) under the Washington Business Corporation Act to entitle the claimant to the amount claimed, but the corporation shall have the burden of proving such defense. If requested by the indemnitee, determination of the right to indemnity and amount of indemnity shall be made by final adjudication (as defined above) and such final adjudication shall supersede any determination made in accordance with RCW 23B.08.550. Section 3. Non-Exclusivity of Rights. The rights to indemnification (including, but not limited to, payment, reimbursement and advances of expenses) granted in this Article shall not be exclusive of any other powers or obligations of the corporation or of any other rights which any person may have or hereafter acquire under any statute, the common law, the corporation's Articles of Incorporation or Bylaws, agreement, vote of shareholders or disinterested directors, or otherwise. Notwithstanding any amendment to or repeal of this Article, any indemnitee shall be entitled to indemnification in accordance with the provisions hereof with respect to any acts or omissions of such indemnitee occurring prior to such amendment or repeal. Section 4. Insurance, Contracts and Funding. The corporation may purchase and maintain insurance, at its expense, to protect itself and any person (including a person's personal representative) who is or was a director, officer, employee or agent of the corporation or who is or was a director, officer, partner, trustee, employee, agent, or in any other relationship or capacity whatsoever, of any other foreign or domestic corporation, partnership, joint venture, employee benefit plan or trust or other trust, enterprise or other private or governmental entity, agency, board, commission, body or other unit whatsoever, against any expense, liability or loss, whether or not the power to indemnify such person against such expense, liability or loss is now or hereafter granted to the corporation under the Washington Business Corporation Act. The corporation may enter into contracts granting indemnity, to any such person whether or not in furtherance of the provisions of this Article, and may create trust funds, grant security interests and use other means (including, without limitation, letters of credit) to secure and ensure the payment of indemnification amounts. Section 5. Indemnification of Employees and Agents. The corporation may, by action of the Board of Directors, provide indemnification and pay expenses in advance of the final disposition of a proceeding to employees and agent of the corporation with the same scope and effect as the provisions of this Article with respect to the indemnification and advancement of expenses of directors and officers of the corporation or pursuant to rights granted under, or provided by, the Washington Business Corporation Act or otherwise. Section 6. Separability of Provisions. If any provision or provisions of this Article shall be held to be invalid, illegal or unenforceable for any reason whatsoever (i) the validity, legality and enforceability of the remaining provisions of this Article (including without limitation, all portions of any sections of this Article containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby, and (ii) to the fullest extent possible, the provisions of this Article (including, without limitation, all portions of any paragraph of this Article containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable. Section 7. Partial Indemnification. If an indemnitee is entitled to indemnification by the corporation for some or a portion of expenses, liabilities or losses, but not for the total amount thereof, the corporation shall nevertheless indemnify the indemnitee for the portion of such expenses, liabilities and losses to which the indemnitee is entitled. Section 8. Successors and Assigns. All obligations of the corporation to indemnify any indemnitee: (i) shall be binding upon all successors and assigns of the corporation (including any transferee of all or substantially all of its assets and any successor by merger or otherwise by operation of law), (ii) shall be binding on and inure to the benefit of the spouse, heirs, personal representatives and estate of the indemnitee, and (iii) shall continue as to any indemnitee who has ceased to be a director, officer, partner, trustee, employee or agent (or other relationship or capacity). ARTICLE XIII Books and Records Section 1. Books of Accounts, Minutes and Share Register. The corporation shall keep as permanent records minutes of all meetings of its shareholders and Board of Directors, a record of all actions taken by the shareholders or Board of Directors without a meeting, and a record of all actions taken by a committee of the Board of Directors exercising the authority of the Board of Directors on behalf of the corporation. The corporation shall maintain appropriate accounting records. The corporation or its agent shall maintain a record of its shareholders, in a form that permits preparation of a list of the names and addresses of all shareholders, in alphabetical order showing the number and class of shares held by each. The corporation shall keep a copy of the following records at its principal office: the Articles or Restated Articles of Incorporation and all amendments currently in effect; the Bylaws or Restated Bylaws and all amendments currently in effect; the minutes of all shareholders' meetings, and records of all actions taken by shareholders without a meeting, for the past three years; its financial statements for the past three years, including balance sheets showing in reasonable detail the financial condition of the corporation as of the close of each fiscal year, and an income statement showing the results of its operations during each fiscal year prepared on the basis of generally accepted accounting principles or, if not, prepared on a basis explained therein; all written communications to shareholders generally within the past three years; a list of the names and business addresses of its current directors and officers; and its most recent annual report delivered to the Secretary of State of Washington. Section 2. Copies of Resolutions. Any person dealing with the corporation may rely upon a copy of any of the records of the proceedings, resolutions, or votes of the Board of Directors or shareholders, when certified by the Chairman (or any Co-Chairman), President (or any Co-President) or Secretary. ARTICLE XIV Amendment of Bylaws These Bylaws may be amended, altered, or repealed by the affirmative vote of a majority of the full Board of Directors at any regular or special meeting of the Board of Directors. EX-21 5 EXHIBIT 21.1 NORDSTROM, INC. AND SUBSIDIARIES SUBSIDIARIES OF THE REGISTRANT
Name of Subsidiary State of Incorporation ------------------ ---------------------- Nordstrom Credit, Inc. Colorado Nordstrom National Credit Bank Colorado
EX-27 6
5 1000 12-MOS JAN-31-1995 JAN-31-1995 32,497 0 698,849 22,958 627,930 1,397,713 1,730,907 746,712 2,396,783 690,454 297,943 163,334 0 0 1,180,466 2,396,783 3,894,478 3,894,478 2,599,553 3,558,920 0 20,219 30,664 335,558 132,600 0 0 0 0 202,958 2.47 2.47
EX-13 7 Exhibit 13.1 1 NORDSTROM, INC. AND SUBSIDIARIES Table of Contents 2 Financial Highlights 3 Message to our Shareholders 4 Management Discussion & Analysis 8 Consolidated Statements of Earnings 9 Consolidated Balance Sheets 10 Consolidated Statements of Shareholders' Equity 11 Consolidated Statements of Cash Flows 12 Notes to Consolidated Financial Statements 21 Report of Management 22 Independent Auditors' Report 23 Ten-Year Statistical Summary 25 Officers, Directors and Committees 29 Retail Store Facilities About the Company Nordstrom has grown from its origins as a small shoe store to become one of the nation's leading fashion specialty retailers, offering a wide variety of fine quality apparel, shoes and accessories for women, men and children. Now in its 94th year, Nordstrom operates 55 large specialty stores in Washington, Oregon, California, Utah, Alaska, Virginia, Maryland, New Jersey, Illinois and Minnesota, plus one smaller specialty store, 19 clearance and off-price stores, a men's wear boutique in New York City, and leased shoe departments in 12 department stores in Hawaii and Guam. Currently led by the third generation of the Nordstrom family, the Company remains committed to its founding principles of quality, value, selection and service. NORDSTROM, INC. AND SUBSIDIARIES 2 Financial Highlights Dollars in thousands except per share amounts
Fiscal Year 1994 1993 % Change ------------------------------------------------------------------------------ Net sales $3,894,478 $3,589,938 +8.5 Earnings before income taxes 335,558 230,918 +45.3 Net earnings 202,958 140,418 +44.5 Net earnings per share 2.47 1.71 +44.4 Cash dividends paid per share .385 .34 +13.2
Stock Trading
Fiscal Year 1994 Fiscal Year 1993 -------------------------------------------------------------------------- High Low High Low 1st Quarter 44 1/2 34 43 1/2 27 3/4 2nd Quarter 45 3/4 38 3/4 32 1/4 25 1/4 3rd Quarter 49 3/4 37 35 3/4 26 1/4 4th Quarter 49 1/2 39 1/2 36 1/2 31
Nordstrom, Inc. common stock is traded over-the-counter and quoted daily in leading financial publications. NASDAQ Symbol -- Nobe. Graph - Net Sales The vertical bar graph compares net sales for the past ten years. Beginning with the most recent fiscal year on the left, net sales (dollars are in millions) were as follows: 1994-$3,894; 1993-$3,590; 1992-$3,422; 1991-$3,180; 1990-$2,894; 1989-$2,671; 1988-$2,328; 1987-$1,920; 1986-$1,630; and 1985- $1,302. Graph - Net Earnings The vertical bar graph compares net earnings for the past ten years. Beginning with the most recent fiscal year on the left, net earnings (dollars in millions) were as follows: 1994-$203.0; 1993-$140.4; 1992-$136.6; 1991- $135.8; 1990-$115.8; 1989-$114.9; 1988-$123.3; 1987-$92.7; 1986-$72.9; and 1985-$50.1. 3 NORDSTROM, INC. AND SUBSIDIARIES Message to our Shareholders Reviewing the 1994 year should be encouraging to people who are interested in the Nordstrom company. The raw numbers tend to speak for themselves. Sales rose to $3,894,478,000, representing an 8.5% increase, while profits set a notable all-time high by rising to $202,958,000, a 44.5% increase. Part of the vitality that we experienced in 1994 was due to the opening of successful new stores at Annapolis Mall in Annapolis, MD; Santa Anita Fashion Park in Arcadia, CA; and Old Orchard Center in Skokie, IL. In addition, we significantly expanded two of our older units at Washington Square in Portland, OR and Bellevue Square in Bellevue, WA. Most of the credit for the results should go to the people who make up our staff and management. They are the ones who have been implementing our Inventory Management System that helped us achieve a much more efficient and responsive stock of merchandise. We also had an aggressive expense control effort that was supported by everyone. Finally, almost all of our merchandise divisions lowered their markdowns which allowed us to improve our gross margins. Our buyers operated with somewhat leaner inventories by effectively targeting our customer base. We note that the women's apparel segment of the retailing industry has not been doing well, but we are happy to report that our women's apparel departments had significant increases in both sales and profit margins. We expect 1994 to be a good base from which to grow in 1995. The cost controls and the merchandise disciplines that we enjoyed this past year should be improved upon. While consumer demand is not rising in a major way, we think we can capture a larger share of the market. New stores will once again be the catalyst for our increased sales and the growth of our culture. Here is the schedule for stores opening in 1995: * March 3: Woodfield Shopping Center, Schaumburg, IL (215,000 sq. ft.) * March 17: The Westchester, White Plains, NY (219,000 sq. ft.) * August 18: The Mall at Short Hills, Millburn, NJ (188,000 sq. ft.) * September 8: Circle Centre, Indianapolis, IN (216,000 sq. ft.) * August 25: Auburn Super Mall Rack, Auburn, WA (51,000 sq. ft.) We feel we are uniquely positioned to grow and prosper. The retail industry is, as always, changing and it would appear that we have the financial resources, outstanding human resources, desire and opportunities to become the leading retailer of our type of merchandise in the country. John A. McMillan Bruce A. Nordstrom James F. Nordstrom John N. Nordstrom NORDSTROM, INC. AND SUBSIDIARIES 4 Management Discussion and Analysis The following discussion and analysis gives a more detailed review of the past three years, as well as additional information on future commitments and trends. This discussion and analysis should be read in conjunction with the basic consolidated financial statements and the Ten-Year Statistical Summary. Sales Sales have increased to record levels in each of the past three years.
Fiscal Year 1994 1993 1992 -------------------------------------------------------------------------- Additional sales in comparable stores (open at least fourteen months) 4.4% 2.7% 1.4% Sales in new stores 4.1% 2.2% 6.2% ---- ---- ---- Total percentage increase 8.5% 4.9% 7.6% ==== ==== ====
During the past three years, the rate of growth of comparable store sales has increased as the overall economic climate has improved. This trend has been most noticeable in California where many of the Company's stores are located. New stores are generally not as productive as the Company's average store, due to the established customer base and traffic patterns which develop over time. As a result, sales growth from new stores has grown at a lower rate than average square footage over the past several years. While management believes that some portion of the increase in merchandise sales is due to inflation, it is difficult to measure because of changes in merchandise styles and selections. The change in the retail prices of apparel, shoes and accessories as measured by the Bureau of Labor Statistics on an overall basis was 1% for 1992, 1% for 1993 and -1% for 1994. These statistics indicate that inflation has been very low over the past several years, and management believes that they are the best available measure of the effect of inflation on the Company's selling prices. Graph - Percentage of 1994 Sales by Merchandise Category The pie chart depicts each merchandise category and its percent of total sales. Clockwise: Shoes - 20%; Men's Apparel and Furnishings - 16%; Children's Apparel and Accessories - 4%; Other - 2%; Women's Apparel - 38% and Women's Accessories - 20%. The caption below the graph reads, "Sales by major merchandise category have changed only slightly over the past several years." 5 NORDSTROM, INC. AND SUBSIDIARIES Management Discussion and Analysis Costs and Expenses As a result of increased sales, the total amount of costs and expenses has increased in each year. As a percentage of sales, total costs and expenses were 93.5% in 1992, 93.6% in 1993 and 91.4% in 1994. Unless otherwise indicated, the changes discussed below are stated as a percentage of sales as shown on page 8. Cost of sales and related buying and occupancy costs fluctuate as a percentage of sales primarily because of changes in the cost of sales component. With the changes in merchandise styles and selections from season to season, cost of sales, and therefore the merchandise gross margin, can fluctuate up and down. In 1993, the merchandise gross margin decreased because of the softness in demand for women's apparel. During 1994, the merchandise margin improved dramatically because of higher than anticipated sales increases and implementation of a new inventory management system. Nearly all categories of merchandise had higher margins, but women's apparel showed the greatest improvement following the low level in 1993. Buying costs increased during the period, as the Company spent more to develop its own merchandise brands and to develop and implement a new inventory management system. Selling, general and administrative expenses increased by .2% of sales in 1992 as sales growth slowed. Salaries, wages, workers' compensation claims and medical plan benefits increased in comparable stores at a faster rate than sales. In 1992, management implemented programs to control these expenses, and as a result, the rate of growth of these expenses slowed in 1993. At the same time the growth in comparable store sales increased. Selling, general and administrative expenses decreased by .2% of sales in 1993 primarily because of a reduction in bad debts. Bad debts continued to decline in 1994. Medical plan benefits also decreased in 1994 as a result of changes to the plan implemented by the Company. These decreases were offset by higher sales promotion costs for the Company's direct sales division and a higher contribution to the Company's profit sharing plan. In 1992 and 1993, interest expense decreased because of lower short-term interest rates and reductions in debt outstanding. During 1994, interest expense decreased as more interest was capitalized on projects under construction. Other income in the fourth quarter of 1992 was reduced by a charge of $6.6 million ($.05 per share after income taxes) for plaintiffs' legal fees in connection with the settlement of a class action lawsuit. The Company had previously established a reserve for potential wage claims alleged in that same lawsuit. The Company paid substantially all the claims by the end of 1993 and the resulting adjustment of the reserve amount increased other income in the fourth quarter of 1993 by $4.5 million ($.03 per share after income taxes). Also, in the fourth quarter of 1993, other income was reduced by $5 million ($.04 per share after income taxes) for expenses and property losses resulting from an earthquake in Southern California. The Company does not carry earthquake insurance because of its high cost. NORDSTROM, INC. AND SUBSIDIARIES 6 Management Discussion and Analysis Income Taxes The provision for income taxes increased in 1992 as a percentage of earnings before income taxes because of a reduction in deferred tax credits. In 1993, the provision increased because of the increase in the Federal income tax rate. Liquidity and Capital Resources During 1992 and 1993, cash provided by operating activities exceeded cash used in investing activities as shown on page 11. The Company used this excess cash flow to reduce total debt outstanding. This situation reversed in 1994 as the Company increased its spending on new store construction and customer accounts receivable increased. The Company's operating working capital (net working capital less short-term investments plus notes payable and the current portion of long-term debt) has fluctuated as shown below:
Fiscal year 1994 1993 1992 ----------------------------------------------------------------------------- Operating working capital (in thousands) $843,924 $745,040 $765,893 Percentage change from prior year 13.3% (2.7%) 1.0% -------- -------- -------- Net sales/average operating working capital 4.6 4.8 4.5 ======== ======== ========
The Company believes that operating working capital is a more appropriate measure of the Company's on-going working capital requirements than net working capital because it eliminates the effect of changes in the levels of short-term investments and borrowings. These levels can vary each year depending on financing activities. Operating working capital increased at a slower rate than sales in 1992, and decreased in 1993, because of reduced customer accounts receivable. Credit sales on the Company's credit card decreased, reflecting more cautious use of credit by consumers in general and increased competition from third-party cards. In 1994, customer accounts receivable increased because the Company commenced its own Visa credit card program. The increase in customer accounts receivable, along with higher merchandise inventories, caused operating working capital to increase. 7 NORDSTROM, INC. AND SUBSIDIARIES Management Discussion and Analysis Graph - Investing and Operating Cash Flows The vertical bar graph compares cash provided by operating activities and cash used in investing activities for each year, for the past ten years. Dollars are in millions.
Investing Operating Year activities activities ---- ---------- ---------- 1994 $230.4 $215.3 1993 $132.7 $262.1 1992 $ 71.9 $235.6 1991 $147.2 $154.0 1990 $200.7 $148.1 1989 $168.7 $122.2 1988 $153.4 $ 46.0 1987 $128.3 $ 87.7 1986 $ 69.8 $115.0 1985 $120.9 $ (3.5)
Liquidity and Capital Resources The Company has spent $436 million during the last three years to add new stores and facilities and to improve existing stores and facilities. Over 1.4 million square feet of selling space has been added during this time period, representing an increase of 16%. Most of the new stores have been constructed by the Company on land that it owns or leases under long-term agreements, thus providing a strong basis for future operations. The Company plans to spend over $750 million on capital projects during the next three years, with over $100 million allocated to the refurbishment of existing stores. Although the Company has made commitments for stores to be opening in 1995 and beyond, it is possible that some stores may not be opened as scheduled because of environmental and land use regulations and the difficulties encountered by shopping center developers in securing financing. The anticipated growth of the Company's operations will require some external capital in the next three years. Most of these external capital requirements will be funded with additional long- and short-term debt issued by the Company's captive finance subsidiary. The Company's capital base has expanded over the last three years. At the end of 1994, the Company's capital totaled $1,805 million. Because the Company has experienced strong positive cash flows, total debt outstanding has decreased over the past three years both in total and as a percentage of total capital. The percentage of debt to total capital is lower than it has been in over 10 years. Management believes that the expansion of the Company's operations over the next several years will not significantly increase its debt to capital percentage. Management also believes that the Company's current financial strength provides the resources necessary to maintain its existing stores and the flexibility to take advantage of new store opportunities. Graph - Square Footage by Market Area at end of 1994 The pie chart shows the percent of total square feet in each region and also gives the number of square feet for that region. Clockwise: Northern California, 19.2%, 1,922,000; Washington, 13.8%, 1,374,000; Capital, 12.3%, 1,229,000; Oregon, 8.2%, 823,000; Northeast, 7.2%, 722,000; Midwest, 7.4%, 743,000; Utah, 3.6%, 357,000; Place Two and Clearance, .4%, 44,000; Alaska, 1.0%, 97,000 and Southern California, 26.9%, 2,687,000. NORDSTROM, INC. AND SUBSIDIARIES 8 Consolidated Statements of Earnings Dollars in thousands except per share amounts
% of % of % of Year ended January 31, 1995 Sales 1994 Sales 1993 Sales ---------------------------------------------------------------------------------------------------- Net sales $3,894,478 100.0 $3,589,938 100.0 $3,421,979 100.0 ---------- ----- ---------- ----- ---------- ----- Costs and expenses: Cost of sales and related buying and occupancy 2,599,553 66.7 2,469,304 68.8 2,339,107 68.3 Selling, general and administrative 1,023,347 26.3 940,579 26.2 902,083 26.4 Interest, net 30,664 .8 37,646 1.1 44,810 1.3 Service charge income and other, net (94,644) (2.4) (88,509) (2.5) (86,140) (2.5) ---------- ----- ---------- ----- ---------- ----- Total costs and expenses 3,558,920 91.4 3,359,020 93.6 3,199,860 93.5 ---------- ----- ---------- ----- ---------- ----- Earnings before income taxes 335,558 8.6 230,918 6.4 222,119 6.5 Income taxes 132,600 3.4 90,500 2.5 85,500 2.5 ---------- ----- ---------- ----- ---------- ----- Net earnings $ 202,958 5.2 $ 140,418 3.9 $ 136,619 4.0 ========== ===== ========== ===== ========== ===== Net earnings per share $ 2.47 $ 1.71 $ 1.67 ========== ========== ========== Cash dividends paid per share $ .385 $ .34 $ .32 ========== ========== ========== The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
9 NORDSTROM, INC. AND SUBSIDIARIES Consolidated Balance Sheets
Dollars in thousands January 31, 1995 1994 ----------------------------------------------------------------------------------------------------- Assets Current assets: Cash and cash equivalents $ 32,497 $ 91,222 Accounts receivable, net 675,891 586,441 Merchandise inventories 627,930 585,602 Prepaid income taxes and other 61,395 51,649 ---------- ---------- Total current assets 1,397,713 1,314,914 Property, buildings and equipment, net 984,195 845,596 Other assets 14,875 16,971 ---------- ---------- Total assets $2,396,783 $2,177,481 ========== ========== Liabilities and Shareholders' Equity Current liabilities: Notes payable $ 87,388 $ 40,337 Accounts payable 273,084 264,055 Accrued salaries, wages and taxes 190,501 156,947 Accrued expenses 40,990 35,994 Accrued income taxes 22,524 27,988 Current portion of long-term debt 75,967 102,164 ---------- ---------- Total current liabilities 690,454 627,485 Long-term debt 297,943 336,410 Deferred income taxes and other 64,586 47,082 Shareholders' equity 1,343,800 1,166,504 ---------- ---------- Total liabilities and shareholders' equity $2,396,783 $2,177,481 ========== ========== The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
NORDSTROM, INC. AND SUBSIDIARIES 10 Consolidated Statements of Shareholders' Equity
Dollars in thousands except per share amounts Year ended January 31, 1995 1994 1993 ------------------------------------------------------------------------------------------------------ Common Stock Authorized 250,000,000 shares; issued and outstanding 82,244,098, 82,059,128 and 81,974,797 shares Balance at beginning of year $ 157,374 $ 155,439 $ 153,055 Issuance of common stock 5,960 1,935 2,384 ---------- ---------- ---------- Balance at end of year 163,334 157,374 155,439 ---------- ---------- ---------- Retained Earnings Balance at beginning of year 1,009,130 896,592 786,176 Net earnings 202,958 140,418 136,619 Cash dividends paid ($.385, $.34, and $.32 per share) (31,622) (27,880) (26,203) ---------- ---------- ---------- Balance at end of year 1,180,466 1,009,130 896,592 ---------- ---------- ---------- Total shareholders' equity $1,343,800 $1,166,504 $1,052,031 ========== ========== ========== The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
11 NORDSTROM, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows
Dollars in thousands Year ended January 31, 1995 1994 1993 ----------------------------------------------------------------------------------------------------------- Operating Activities Net earnings $202,958 $140,418 $136,619 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 110,789 103,466 102,763 Change in: Accounts receivable, net (89,450) 16,757 5,029 Merchandise inventories (42,328) (48,863) (30,107) Prepaid income taxes and other (9,746) (878) (2,643) Accounts payable 9,029 43,879 3,744 Accrued salaries, wages and taxes 33,554 (1,081) 12,236 Accrued expenses 4,996 4,853 (600) Income tax liabilities (4,518) 3,540 8,586 -------- -------- -------- Net cash provided by operating activities 215,284 262,091 235,627 -------- -------- -------- Investing Activities Additions to property, buildings and equipment, net (232,050) (124,401) (69,982) Other, net 1,660 (8,306) (1,870) -------- -------- -------- Net cash used in investing activities (230,390) (132,707) (71,852) -------- -------- -------- Financing Activities Increase (decrease) in notes payable 47,051 2,018 (96,416) Proceeds from issuance of long-term debt, net 49,656 - - Principal payments on long-term debt (114,664) (43,371) (29,055) Proceeds from issuance of common stock 5,960 1,935 2,384 Cash dividends paid (31,622) (27,880) (26,203) -------- -------- -------- Net cash used in financing activities (43,619) (67,298) (149,290) -------- -------- -------- Net (decrease) increase in cash and cash equivalents (58,725) 62,086 14,485 Cash and cash equivalents at beginning of year 91,222 29,136 14,651 -------- -------- -------- Cash and cash equivalents at end of year $ 32,497 $ 91,222 $ 29,136 ======== ======== ======== The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
NORDSTROM, INC. AND SUBSIDIARIES 12 Notes to Consolidated Financial Statements Dollars in thousands except per share amounts NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation: The Consolidated Financial Statements include the accounts of Nordstrom, Inc. and its subsidiaries. All significant intercompany transactions and accounts are eliminated in consolidation. Merchandise Inventories: Merchandise inventories are stated at the lower of cost (first-in, first-out basis) or market, using the retail method. Property, Buildings and Equipment: Straight-line and accelerated methods are applied in the calculation of depreciation and amortization. Lives used for calculating depreciation and amortization rates for the principal asset classifications are as follows: buildings, 10 to 50 years; store fixtures and equipment, three to 15 years; leasehold improvements, life of lease or applicable shorter period. Store Preopening Costs: Store opening and preopening costs are charged to expense when incurred. Capitalization of Interest: The interest carrying costs of facilities being constructed are capitalized during their construction period based on the Company's weighted average borrowing rate. Earnings per Share: Earnings per share are computed on the basis of the weighted average number of common shares outstanding during the year. Average shares outstanding were 82,144,079, 82,003,407 and 81,892,829 in 1994, 1993 and 1992. Cash Equivalents: The Company considers all short-term investments with a maturity at date of purchase of three months or less to be cash equivalents. The carrying amount approximates fair value because of the short maturity of these instruments. Customer Accounts Receivable: In accordance with trade practices, installments maturing in more than one year or deferred payment accounts receivable are included in current assets. Cash Management: The Company's cash management system provides for the reimbursement of all major bank disbursement accounts on a daily basis. Accounts payable at January 31, 1995 and 1994 include $29,223 and $15,817 of checks drawn in excess of cash balances not yet presented for payment. 13 NORDSTROM, INC. AND SUBSIDIARIES Derivatives: The Company limits its use of derivative financial instruments to the management of well-defined foreign currency and interest rate risks. The effect of these activities is not material to the Company's financial condition or results of operations. The Company has no off-balance sheet credit risk, and the fair value of derivative financial instruments at January 31, 1995 and 1994 is not material. NOTE 2: EMPLOYEE BENEFITS The Company provides a profit sharing plan for employees. The plan is fully funded by the Company and is non-contributory except for employee contributions made under Section 401(k) of the Internal Revenue Code. Under this provision, the Company provides matching contributions up to a stipulated percentage of employee contributions. The Company contribution is established each year by the Board of Directors and totaled $44,000, $35,500 and $34,000 for 1994, 1993 and 1992. NOTE 3: INTEREST EXPENSE The components of interest expense are as follows:
Year ended January 31, 1995 1994 1993 ------------------------------------------------------------------------ Nordstrom, Inc. Short-term debt $ 69 $ 46 $ 799 Long-term debt 10,780 12,830 14,084 Nordstrom Credit, Inc. Short-term debt 5,085 2,361 4,474 Long-term debt 23,161 25,543 28,906 ------- ------- ------- Total interest incurred 39,095 40,780 48,263 Less: Interest income (2,416) (1,624) (1,161) Capitalized interest (6,015) (1,510) (2,292) ------- ------- ------- Interest, net $30,664 $37,646 $44,810 ======= ======= =======
NORDSTROM, INC. AND SUBSIDIARIES 14 NOTE 4: INCOME TAXES Income taxes consist of the following:
Year ended January 31, 1995 1994 1993 ------------------------------------------------------------------------- Current income taxes: Federal $118,558 $77,231 $71,181 State and local 23,986 16,149 14,931 -------- ------- ------- Total current income taxes 142,544 93,380 86,112 -------- ------- ------- Deferred income taxes: Current (10,113) (648) (3,588) Non-current 169 (2,232) 2,976 -------- ------- ------- Total deferred income taxes (9,944) (2,880) (612) -------- ------- ------- Total income taxes $132,600 $90,500 $85,500 ======== ======= =======
A reconciliation of the statutory Federal income tax rate with the effective tax rate is as follows:
Year ended January 31, 1995 1994 1993 ------------------------------------------------------------------------ Statutory rate 35.00% 35.00% 34.00% State and local income taxes, net of Federal income taxes 4.39 4.41 4.38 Other, net .11 (0.21) 0.11 ------- ------- ------- Effective tax rate 39.50% 39.20% 38.49% ======= ======= =======
Deferred income taxes result from temporary differences in the timing of recognition of revenue and expenses for tax and financial statement reporting as follows:
Year ended January 31, 1995 1994 1993 ------------------------------------------------------------------------ Excess tax basis depreciation $ 521 $ 740 $2,342 Accrued expenses (4,416) (2,850) (3,039) Other (6,049) (770) 85 ------- ------- ------- Total deferred income taxes ($9,944) ($2,880) ($ 612) ======= ======= =======
These items comprise substantially all of the deferred tax asset and liability balances. 15 NORDSTROM, INC. AND SUBSIDIARIES NOTE 5: ACCOUNTS RECEIVABLE The components of accounts receivable are as follows:
January 31, 1995 1994 ------------------------------------------------------------------------ Customers $678,673 $588,296 Other 20,176 21,290 Allowance for doubtful accounts (22,958) (23,145) -------- -------- Accounts receivable, net $675,891 $586,441 ======== ========
Credit risk with respect to accounts receivable is concentrated in the geographic regions in which the Company operates stores. At January 31, 1995 and 1994, approximately 50% of the Company's receivables were concentrated in California. Concentration of the remaining receivables is considered to be limited due to their geographical dispersion. Bad debt expense totaled $20,219, $25,713 and $29,469 for 1994, 1993 and 1992. NOTE 6: PROPERTY, BUILDINGS AND EQUIPMENT Property, buildings and equipment consist of the following (at cost):
January 31, 1995 1994 ------------------------------------------------------------------------ Land and land improvements $ 42,355 $ 41,810 Buildings 423,342 404,910 Leasehold improvements 520,729 471,293 Store fixtures and equipment 595,288 510,789 ---------- ---------- 1,581,714 1,428,802 Less accumulated depreciation and amortization (746,712) (654,026) ---------- ---------- 835,002 774,776 Construction in progress 149,193 70,820 ---------- ---------- Property, buildings and equipment, net $ 984,195 $ 845,596 ========== ==========
At January 31, 1995 the Company had contractual commitments of approximately $125,366 for construction of new stores. NORDSTROM, INC. AND SUBSIDIARIES 16 NOTE 7: NOTES PAYABLE A summary of notes payable is as follows:
Year ended January 31, 1995 1994 1993 ------------------------------------------------------------------------ Average daily short-term borrowings $106,092 $ 76,779 $141,979 Maximum amount outstanding 209,605 117,023 186,038 Weighted average interest rate: During the year 4.9% 3.1% 3.7% At year-end 6.0% 3.1% 3.1%
The carrying amount of notes payable approximates fair value because of the short maturity of these instruments. At January 31, 1995, Nordstrom Credit, Inc. had unsecured lines of credit with commercial banks totaling $225,000 which are available as liquidity support for short-term debt, and expire in June 1995 and January 1998. Nordstrom Credit, Inc. pays commitment fees for the lines in lieu of compensating balance requirements. NOTE 8: LONG-TERM DEBT A summary of long-term debt is as follows:
January 31, 1995 1994 ------------------------------------------------------------------------ Senior notes, 8.875%-9%, due 1995-1998 $100,000 $150,000 Medium-term notes, Nordstrom Credit, Inc., 7.83%-9.6%, due 1995-2001 209,000 210,000 Sinking fund debentures, Nordstrom Credit, Inc., 9.375%, due 2016, payable in annual installments of $3,750 beginning in 1997 43,100 55,600 Other 21,810 22,974 -------- -------- Total long-term debt 373,910 438,574 Less current portion (75,967) (102,164) -------- -------- Total due beyond one year $297,943 $336,410 ======== ========
17 NORDSTROM, INC. AND SUBSIDIARIES The senior note agreements contain restrictive covenants which, among other things, restrict dividends to shareholders to a formula amount. At January 31, 1995, approximately $664,290 of retained earnings was not restricted. Aggregate principal payments on long-term debt are as follows: 1995-$75,967; 1996-$74,210; 1997-$55,053; 1998-$105,183 and 1999-$5,076. The fair value of long-term debt, estimated using quoted market prices of the same or similar issues with the same remaining maturity, was approximately $381,000 and $478,000 at January 31, 1995 and 1994. NOTE 9: LEASES The Company leases land, buildings and equipment under non-cancelable lease agreements with expiration dates ranging from 1995 to 2080. Certain of the leases include renewal provisions at the Company's option. Most of the leases provide for additional rentals based upon specific percentages of sales and require the Company to pay for certain other costs. Future minimum lease payments as of January 31, 1995 are as follows: 1995- $27,972; 1996-$27,116; 1997-$26,358; 1998-$25,298; 1999-$24,324; and thereafter -$201,418. The following is a schedule of rent expense:
Year ended January 31, 1995 1994 1993 ------------------------------------------------------------------------ Minimum rent: Store locations $16,467 $14,899 $14,719 Offices, warehouses and equipment 18,336 19,390 17,660 Contingent rent: Store location percentage rent 14,078 13,964 13,398 Common area costs, taxes and other 8,860 8,692 8,105 ------- ------- ------- Total rent expense $57,741 $56,945 $53,882 ======= ======= =======
NOTE 10: STOCK OPTION PLAN The Company provides a stock option plan for certain key employees. Options are issued at market value on the date of grant and become exercisable over a five-year period. The number of shares reserved for future stock option grants is 869,334. NORDSTROM, INC. AND SUBSIDIARIES 18 A summary of stock option activity follows:
Range of prices Shares per share ------------------------------------------------------------------------ Outstanding, February 1, 1994 1,732,464 $ 7.44-$43.25 Granted 345,770 43.88- 48.25 Exercised (182,662) 7.44- 43.25 Cancelled (17,322) 22.00- 43.88 --------- ------------- Outstanding, January 31, 1995 1,878,250 $12.88-$48.25 ========= ============= Exercisable, January 31, 1995 964,023 $12.88-$43.25 ========= =============
NOTE 11: SUPPLEMENTARY CASH FLOW INFORMATION Supplementary cash flow information includes the following:
Year ended January 31, 1995 1994 1993 ------------------------------------------------------------------------ Cash paid during the year for: Interest (net of capitalized interest) $ 34,520 $41,122 $47,994 Income taxes 146,590 86,485 79,740
NOTE 12: CREDIT CARD AND FINANCING SUBSIDIARIES Nordstrom National Credit Bank (the Bank), a wholly owned subsidiary, issues a credit card for use in Company stores, and in 1994 introduced a VISA card. Nordstrom Credit, Inc., a wholly owned subsidiary, finances all receivables generated through the use of these credit cards. Servicing of the receivables is performed by the Bank. At January 31, 1995, net VISA receivables totaled $85,211. 19 NORDSTROM, INC. AND SUBSIDIARIES Condensed combined financial information of the subsidiaries is as follows:
Year ended January 31, 1995 1994 1993 ------------------------------------------------------------------------ Service charge income $ 92,591 $91,026 $92,553 Other income 12,525 5,086 4,121 -------- ------- ------- Total revenue $105,116 $96,112 $96,674 ======== ======= ======= Net earnings $ 23,019 $22,209 $19,699 ======== ======= =======
January 31, 1995 1994 ------------------------------------------------------------------------ Assets: Cash and cash equivalents $ 24,286 $ 21,972 Accounts receivable, net 655,427 564,605 Other assets 7,650 8,527 -------- -------- Total assets $687,363 $595,104 ======== ======== Liabilities and investment of Nordstrom, Inc.: Notes Payable: Nordstrom, Inc. $148,000 $112,500 Other 87,388 40,337 Accounts payable and accrued liabilities 21,091 20,902 Long-term debt 252,100 265,600 Investment of Nordstrom, Inc. 178,784 155,765 -------- -------- Total liabilities and investment of Nordstrom, Inc. $687,363 $595,104 ======== ========
20 NORDSTROM, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements NOTE 13: SELECTED QUARTERLY DATA (UNAUDITED)
Year ended January 31, 1995 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total -------------------------------------------------------------------------------------------------------- Net sales $762,062 $1,079,501 $861,968 $1,190,947 $3,894,478 Gross profit 251,927 355,841 292,656 394,501 1,294,925 Earnings before income taxes 52,773 104,223 63,079 115,483 335,558 Net earnings 31,973 63,023 38,079 69,883 202,958 Earnings per share .39 .77 .46 .85 2.47 Dividends per share .085 .10 .10 .10 .385 Year ended January 31, 1994 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total -------------------------------------------------------------------------------------------------------- Net sales $695,559 $1,017,582 $769,373 $1,107,424 $3,589,938 Gross profit 212,971 306,565 245,057 356,041 1,120,634 Earnings before income taxes 18,395 70,151 42,056 100,316 230,918 Net earnings 11,295 42,651 25,456 61,016 140,418 Earnings per share .14 .52 .31 .74 1.71 Dividends per share .085 .085 .085 .085 .34 21 NORDSTROM, INC. AND SUBSIDIARIES Management and Independent Auditors' Reports REPORT OF MANAGEMENT The accompanying consolidated financial statements, including the notes thereto, and the other financial information presented in this Annual Report have been prepared by management. The financial statements have been prepared in accordance with generally accepted accounting principles and include amounts that are based upon our best estimates and judgments. Management is responsible for the consolidated financial statements, as well as the other financial information in this Annual Report. The Company maintains an effective system of internal accounting control. We believe that this system provides reasonable assurance that transactions are executed in accordance with management authorization, and that they are appropriately recorded, in order to permit preparation of financial statements in conformity with generally accepted accounting principles and to adequately safeguard, verify and maintain accountability of assets. The concept of reasonable assurance is based on the recognition that the cost of a system of internal control should not exceed the benefits derived. The consolidated financial statements and related notes have been audited by Deloitte & Touche LLP, independent certified public accountants. The accompanying auditors' report expresses an independent professional opinion on the fairness of presentation of management's financial statements. The Audit Committee of the Board of Directors is composed of the outside directors, and is responsible for recommending the independent certified public accounting firm to be retained for the coming year, subject to shareholder approval. The Audit Committee meets periodically with the independent auditors, as well as with management and internal auditors, to review accounting, auditing, internal accounting controls and financial reporting matters. The independent auditors and the internal auditors also meet privately with the Audit Committee. John A. Goesling Executive Vice President and Chief Financial Officer NORDSTROM, INC. AND SUBSIDIARIES 22 INDEPENDENT AUDITORS' REPORT We have audited the accompanying consolidated balance sheets of Nordstrom, Inc. and subsidiaries as of January 31, 1995 and 1994, and the related consolidated statements of earnings, shareholders' equity and cash flows for each of the three years in the period ended January 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Nordstrom, Inc. and subsidiaries as of January 31, 1995 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended January 31, 1995, in conformity with generally accepted accounting principles. Deloitte & Touche LLP Seattle, Washington; March 10, 1995 23 NORDSTROM, INC. AND SUBSIDIARIES Ten-Year Statistical Summary Dollars in thousands except square footage and per share amounts
Year ended January 31, 1995 1994 1993 1992 1991 ------------------------------------------------------------------------------------------------------------ Financial Position Customer accounts receivable, net $ 655,715 $ 565,151 $ 584,379 $ 585,490 $558,573 Merchandise inventories 627,930 585,602 536,739 506,632 448,344 Current assets 1,397,713 1,314,914 1,219,844 1,177,638 1,090,379 Current liabilities 690,454 627,485 511,196 553,903 551,835 Working capital 707,259 687,429 708,648 623,735 538,544 Working capital ratio 2.02 2.10 2.39 2.13 1.98 Property, buildings and equipment, net 984,195 845,596 824,142 856,404 806,191 Long-term debt 373,910 438,574 481,945 511,000 489,172 Debt/capital ratio 25.56 29.11 33.09 40.74 43.59 Shareholders' equity 1,343,800 1,166,504 1,052,031 939,231 826,410 Shares outstanding 82,244,098 82,059,128 81,974,797 81,844,227 81,737,910 Book value per share 16.34 14.22 12.83 11.48 10.11 Total assets 2,396,783 2,177,481 2,053,170 2,041,875 1,902,589 Operations Net sales 3,894,478 3,589,938 3,421,979 3,179,820 2,893,904 Costs and expenses: Cost of sales and related buying and occupancy 2,599,553 2,469,304 2,339,107 2,169,437 2,000,250 Selling, general and administrative 1,023,347 940,579 902,083 831,505 747,770 Interest, net 30,664 37,646 44,810 49,106 52,228 Service charge income and other, net (94,644) (88,509) (86,140) (87,443) (84,660) Total costs and expenses 3,558,920 3,359,020 3,199,860 2,962,605 2,715,588 Earnings before income taxes 335,558 230,918 222,119 217,215 178,316 Income taxes 132,600 90,500 85,500 81,400 62,500 Net earnings 202,958 140,418 136,619 135,815 115,816 Earnings per share 2.47 1.71 1.67 1.66 1.42 Dividends per share .385 .34 .32 .31 .30 Net earnings as a percent of net sales 5.21% 3.91% 3.99% 4.27% 4.00% Return on average shareholders' equity 16.17% 12.66% 13.72% 15.38% 14.85% Sales per square foot for Company- operated stores 395 383 381 388 391 Stores and Facilities Company-operated stores 76 74 72 68 63 Total square footage 9,998,000 9,282,000 9,224,000 8,590,000 7,655,000
24 NORDSTROM INC. AND SUBSIDIARIES Ten-Year Statistical Summary (continued)
Dollars in thousands except square footage and per share amounts ----------------------------------------------------------------------------------------------------------- Year ended January 31, 1990 1989 1988 1987 1986 ----------------------------------------------------------------------------------------------------------- Financial Position Customer accounts receivable, net $ 519,656 $ 465,929 $ 391,387 $ 344,045 $ 296,030 Merchandise inventories 419,976 403,795 312,696 257,334 226,017 Current assets 1,011,148 913,986 730,182 645,326 546,756 Current liabilities 489,888 448,165 394,699 324,697 339,503 Working capital 521,260 465,821 335,483 320,629 207,253 Working capital ratio 2.06 2.04 1.85 1.99 1.61 Property, buildings and equipment, net 691,937 594,038 502,661 424,228 397,380 Long-term debt 468,412 389,216 260,343 271,054 276,419 Debt/capital ratio 43.78 43.12 39.57 41.57 56.41 Shareholders' equity 733,250 639,941 533,209 451,196 314,119 Shares outstanding 81,584,710 81,465,027 81,371,106 80,981,722 74,504,392 Book value per share 8.99 7.86 6.55 5.57 4.22 Total assets 1,707,420 1,511,703 1,234,267 1,071,124 945,880 Operations Net sales 2,671,114 2,327,946 1,920,231 1,629,918 1,301,857 Costs and expenses: Cost of sales and related buying and occupancy 1,829,383 1,563,832 1,300,720 1,095,584 893,874 Selling, general and administrative 669,159 582,973 477,488 408,664 326,758 Interest, net 49,121 39,977 32,952 34,910 30,482 Service charge income and other, net (55,958) (57,268) (53,662) (49,479) (36,636) Total costs and expenses 2,491,705 2,129,514 1,757,498 1,489,679 1,214,478 Earnings before income taxes 179,409 198,432 162,733 140,239 87,379 Income taxes 64,500 75,100 70,000 67,300 37,300 Net earnings 114,909 123,332 92,733 72,939 50,079 Earnings per share 1.41 1.51 1.13 .91 .65 Dividends per share .28 .22 .18 .13 .11 Net earnings as a percent of net sales 4.30% 5.30% 4.83% 4.48% 3.85% Return on average shareholders' equity 16.74% 21.03% 18.84% 19.06% 17.10% Sales per square foot for Company- operated stores 398 380 349 322 293 Stores and Facilities Company-operated stores 59 58 56 53 52 Total square footage 6,898,000 6,374,000 5,527,000 5,098,000 4,727,000
25 NORDSTROM INC. AND SUBSIDIARIES Officers, Directors and Committees
Officers Jammie Baugh 41 Executive Vice President Southern California General Manager Gail A. Cottle 43 Executive Vice President Product Development Dale C. Crichton 46 Vice President Cosmetics and Gift Gallery Merchandise Manager Joseph V. Demarte 43 Vice President Personnel Annette S. Dresser 34 Vice President Individualist and Petite Focus Merchandise Manager Charles L. Dudley 44 Vice President Human Resources John A. Goesling 49 Executive Vice President Finance and Treasurer Tamela J. Hickel 34 Vice President Oregon General Manager Darrel J. Hume 47 Vice President Men's Sportswear Merchandise Manager Jack F. Irving 50 Executive Vice President Men's Wear Merchandise Manager Raymond A. Johnson 53 Co-President Cody K. Kondo 39 Vice President Northeast General Manager David P. Lindsey 45 Vice President Store Planning David L. Mackie 46 Vice President Real Estate Robert J. Middlemas 38 Vice President Midwest General Manager Blake W. Nordstrom 34 Vice President Washington and Alaska General Manager James A. Nordstrom 33 Vice President Northern California General Manager
NORDSTROM, INC. AND SUBSIDIARIES 26 Robert T. Nunn 55 Executive Vice President Shoe Merchandise Manager Cynthia C. Paur 44 Executive Vice President Better Apparel Merchandise Manger Karen E. Purpur 51 Secretary John J. Whitacre 42 Co-President Martha S. Wikstrom 38 Vice President Capital General Manager
27 NORDSTROM, INC. AND SUBSIDIARIES
Directors Philip M. Condit 53 Director President, The Boeing Company, Seattle, WA D. Wayne Gittinger 62 Director Partner, Lane Powell Spears Lubersky, Seattle, WA John F. Harrigan 69 Director Retired Chairman, Union Bank, Los Angeles, CA Charles A. Lynch 67 Director Chairman, Market Value Partners Company, Menlo Park, CA Ann D. McLaughlin 53 Director President, Federal City Council, Washington, D.C. and Vice Chairman, The Aspen Institute, Aspen, CO John A. McMillan 63 Co-Chairman of the Board of Directors Bruce A. Nordstrom 61 Co-Chairman of the Board of Directors James F. Nordstrom 55 Co-Chairman of the Board of Directors John N. Nordstrom 57 Co-Chairman of the Board of Directors Alfred E. Osborne, Jr. 50 Director Director, Entrepreneurial Studies Center and Associate Professor of Business Economics, The John E. Anderson Graduate School of Management, University of California, Los Angeles, CA William D. Ruckelshaus 62 Director Chairman of the Board and Chief Executive Officer, Browning-Ferris Industries, Inc., Houston, TX Malcolm T. Stamper 69 Director Publisher, Chairman and Chief Executive Officer, Storytellers, Ink., Seattle, WA Elizabeth Crownhart Vaughan 66 Director President, Salar Enterprises, Portland, OR
NORDSTROM, INC. AND SUBSIDIARIES 28 Committees EXECUTIVE John A. McMillan Bruce A. Nordstrom, Co-Chair James F. Nordstrom John N. Nordstrom, Co-Chair AUDIT Philip M. Condit John F. Harrigan Charles A. Lynch Ann D. McLaughlin Alfred E. Osborne, Jr. William D. Ruckelshaus, Chair Elizabeth Crownhart Vaughan COMPENSATION AND STOCK OPTION D. Wayne Gittinger John F. Harrigan Ann D. McLaughlin Alfred E. Osborne, Jr. William D. Ruckelshaus Elizabeth Crownhart Vaughan, Chair CONTRIBUTIONS Anne E. Gittinger, Secretary-ex officio Bruce A. Nordstrom James F. Nordstrom, Chair John N. Nordstrom William D. Ruckelshaus Malcolm T. Stamper FINANCE Philip M. Condit John A. Goesling-ex officio John F. Harrigan, Chair Charles A. Lynch Alfred E. Osborne, Jr. Malcolm T. Stamper ORGANIZATION AND NOMINATING D. Wayne Gittinger Charles A. Lynch Malcolm T. Stamper, Chair Elizabeth Crownhart Vaughan PROFIT SHARING AND BENEFITS Joseph V. Demarte-ex officio D. Wayne Gittinger Raymond A. Johnson-ex officio Bruce A. Nordstrom, Chair John N. Nordstrom NORDSTROM, INC. AND SUBSIDIARIES 29 Retail Store Facilities The following table sets forth certain information with respect to each of the stores operated by the Company. The Company also operates leased shoe departments in 12 department stores in Hawaii and Guam. In addition, the Company operates seven distribution centers and leases other space for administrative functions.
Present Year Present Year opened total store opened or total store Location or acquired area/sq. ft. Location acquired area/sq. ft. ------------------------------------------------ ------------------------------------------------- WASHINGTON GROUP NORTHERN CALIFORNIA GROUP Downtown Seattle(1) 1963 245,000 Hillsdale Shopping Center 1982 149,000 Northgate Mall 1965 122,000 Broadway Plaza 1984 193,000 Tacoma Mall 1966 134,000 Stanford Shopping Center 1984 187,000 Bellevue Square 1967 285,000 The Village at Corte Madera 1985 116,000 Southcenter Mall 1968 170,000 Oakridge Mall 1985 150,000 Yakima 1972 44,000 Valley Fair 1987 165,000 Spokane 1974 121,000 280 Metro Center Rack 1987 31,000 Alderwood Mall 1979 127,000 Stonestown Galleria 1988 174,000 Pavilion Rack 1985 39,000 Downtown San Francisco 1988 350,000 Alderwood Rack 1985 25,000 Arden Fair 1989 190,000 Downtown Seattle Rack 1987 42,000 Stoneridge Mall 1990 173,000 Bellis Fair Rack 1990 20,000 Marina Square Rack 1990 44,000 OREGON GROUP UTAH GROUP Lloyd Center 1963 150,000 Crossroads Plaza 1980 140,000 Downtown Portland 1966 174,000 Fashion Place Mall 1981 110,000 Washington Square 1974 189,000 Ogden City Mall 1982 76,000 Vancouver Mall 1977 71,000 Sugarhouse Center Rack 1991 31,000 Salem Centre 1980 71,000 Clackamas Town Center 1981 121,000 CAPITAL GROUP Clackamas Rack 1983 28,000 Tysons Corner Center 1988 239,000 Downtown Portland Rack 1986 19,000 The Fashion Centre at Pentagon City 1989 241,000 31 NORDSTROM, INC. AND SUBSIDIARIES SOUTHERN CALIFORNIA GROUP Potomac Mills Rack 1990 46,000 South Coast Plaza 1978 235,000 Montgomery Mall 1991 225,000 Brea Mall 1979 195,000 City Place Rack 1992 37,000 Los Cerritos Center 1981 122,000 Towson Town Center 1992 205,000 Fashion Valley Mall 1981 156,000 Towson Rack 1992 31,000 Glendale Galleria 1983 147,000 Franklin Mills Rack 1993 43,000 Santa Ana Rack 1983 22,000 Annapolis Mall 1994 162,000 Topanga Plaza 1984 154,000 University Towne Centre 1984 130,000 NORTHEAST GROUP Woodland Hills Rack 1984 48,000 Garden State Plaza 1990 272,000 The Galleria at South Bay 1985 161,000 Menlo Park Mall 1991 266,000 Westside Pavilion 1985 150,000 Freehold Raceway Mall 1992 174,000 Horton Plaza 1985 151,000 Faconnable 1993 10,000 Mission Valley Rack 1985 27,000 Montclair Plaza 1986 133,000 MIDWEST GROUP North County Fair 1986 156,000 Oakbrook Center 1991 249,000 MainPlace Mall 1987 169,000 Mall of America 1992 240,000 Chino Town Square Rack 1987 30,000 Old Orchard 1994 209,000 Paseo Nuevo 1990 186,000 Woodfield Rack 1994 45,000 The Galleria at Tyler 1991 164,000 Santa Anita 1994 151,000 PLACE TWO AND CLEARANCE STORES ALASKA GROUP Washington and Arizona(2) 44,000 Anchorage 1975 97,000 (1) Excludes approximately 23,000 square feet of corporate and administrative offices. (2) Includes one Place Two store and one clearance store.
Shareholder Information Independent Auditors Deloitte & Touche LLP Counsel Lane Powell Spears Lubersky Transfer Agent and Registrar First Interstate Bank of California Telephone (800) 522-6645 General Offices 1501 Fifth Avenue, Seattle, WA 98101-1603 Telephone (206) 628-2111 Annual Meeting May 16, 1995 at 11:00 a.m. Pacific Time Sheraton Seattle Hotel and Towers Seattle, Washington Form 10-K The Company's Annual Report to the Securities and Exchange Commission on Form 10-K for the year ended January 31, 1995 will be provided to shareholders upon written request to: Investors Relations, Nordstrom, Inc., P.O. Box 2737, Seattle, WA 98111 or by calling (206) 233-6301. Shareholder Information Line In order to provide our shareholders with information about the Company in a more timely manner, as well as to reduce paper use, we will be establishing a shareholder information line. We will no longer be mailing quarterly shareholder reports. Effective April 14, 1995, shareholders will be able to obtain the latest financial releases and updates as soon as they are available, by dialing 1-800-667-3920. NORDSTROM, INC. AND SUBSIDIARIES Appendix
Graph Page ------------------------------------------------ ---- Net Sales 2 Net Earnings 2 Percentage of 1994 Sales by Merchandise Category 4 Investing and Operating Cash Flows 7 Square Footage by Market Area at end of 1994 7