UNITED STATES SECURITIES and EXCHANGE COMMISSION Washington, DC 20549

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UNITED STATES SECURITIES and EXCHANGE COMMISSION Washington, DC 20549 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 31, 1998 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission File Number 0-6074 Nordstrom, Inc. ______________________________________________________ (Exact name of Registrant as specified in its charter) Washington 91-0515058 _______________________________ ___________________ (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 1617 Sixth Avenue, Suite 500, Seattle, Washington 98101 ________________________________________________________________ (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (206) 628-2111 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO _____ _____ Common stock outstanding as of November 30, 1998: 142,069,092 shares of common stock. 1 of 12 NORDSTROM, INC. AND SUBSIDIARIES -------------------------------- INDEX ----- Page Number PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) Consolidated Statements of Earnings Three and nine months ended October 31, 1998 and 1997 3 Consolidated Balance Sheets October 31, 1998 and 1997 and January 31, 1998 4 Consolidated Statements of Cash Flows Nine months ended October 31, 1998 and 1997 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II. OTHER INFORMATION Item 1. Legal Proceedings 11 Item 6. Exhibits and Reports on Form 8-K 12 2 of 12 NORDSTROM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (dollars in thousands except per share amounts) (unaudited) Three Months Nine Months Ended October 31, Ended October 31, --------------------- --------------------- 1998 1997 1998 1997 ---------- ---------- ---------- ---------- Net sales $1,094,349 $1,089,784 $3,581,848 $3,396,876 Costs and expenses: Cost of sales and related buying and occupancy 717,100 724,081 2,386,643 2,294,946 Selling, general and administrative 328,235 326,193 1,017,008 950,843 Interest, net 12,715 7,659 34,001 23,572 Service charge income and other, net (26,876) (27,794) (84,878) (82,165) ---------- ---------- ---------- ---------- Total costs and expenses 1,031,174 1,030,139 3,352,774 3,187,196 ---------- ---------- ---------- ---------- Earnings before income taxes 63,175 59,645 229,074 209,680 Income taxes 24,500 23,500 88,900 82,600 ---------- ---------- ---------- ---------- Net earnings $ 38,675 $ 36,145 $ 140,174 $ 127,080 ========== ========== ========== ========== Basic earnings per share $ .27 $ .23 $ .95 $ .82 ========== ========== ========== ========== Diluted earnings per share $ .27 $ .23 $ .95 $ .82 ========== ========== ========== ========== Cash dividends paid per share of common stock outstanding $ .08 $ .07 $ .22 $ .195 ========== ========== ========== ========== <FN> These statements should be read in conjunction with the Notes to Consolidated Financial Statements contained herein. 3 of 12 NORDSTROM, INC. AND SUBSIDIARIES NORDSTROM, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (dollars in thousands) October 31, January 31, October 31, 1998 1998 1997 (unaudited) (unaudited) ----------- ---------- ----------- ASSETS Current Assets: Cash and cash equivalents $ 20,269 $ 24,794 $ 19,239 Accounts receivable, net 570,920 664,448 648,802 Merchandise inventories 1,048,386 826,045 1,134,212 Prepaid income taxes and other 88,317 79,710 76,538 ---------- ---------- ---------- Total current assets 1,727,892 1,594,997 1,878,791 Land, buildings and equipment, net 1,352,345 1,252,513 1,229,354 Other assets 65,243 17,653 18,163 ---------- ---------- ---------- TOTAL ASSETS $3,145,480 $2,865,163 $3,126,308 ========== ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Notes payable $ 344,483 $ 263,767 $ 241,348 Accounts payable 495,875 321,311 555,042 Accrued salaries, wages and taxes 207,353 205,273 199,158 Accrued expenses 37,872 37,884 34,003 Accrued income taxes 372 13,242 10,992 Current portion of long-term debt 59,113 101,129 151,343 ---------- ---------- ---------- Total current liabilities 1,145,068 942,606 1,191,886 Long-term debt 560,285 319,736 320,701 Deferred lease credits 132,194 77,091 79,013 Other liabilities 59,864 50,672 50,679 Shareholders' Equity: Common stock, no par: 250,000,000 shares authorized; 141,968,889, 152,518,104 and 154,628,398 shares issued and outstanding 217,625 201,050 200,241 Unearned compensation (4,953) --- --- Retained earnings 1,035,397 1,274,008 1,283,788 ---------- ---------- ---------- Total shareholders' equity 1,248,069 1,475,058 1,484,029 ---------- ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,145,480 $2,865,163 $3,126,308 ========== ========== ========== <FN> These statements should be read in conjunction with the Notes to Consolidated Financial Statements contained herein. 4 of 12 NORDSTROM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) (unaudited) Nine Months Ended October 31, ------------------ 1998 1997 -------- -------- OPERATING ACTIVITIES: Net earnings $140,174 $127,080 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 129,729 115,797 Amortization of deferred lease credits and other, net (1,496) (1,569) Change in: Accounts receivable, net 93,528 65,787 Merchandise inventories (222,341) (414,293) Prepaid income taxes and other (8,607) (6,931) Accounts payable 174,564 244,612 Accrued salaries, wages and taxes 2,080 9,461 Accrued expenses (12) (7,140) Income tax liabilities (10,074) (4,093) Other liabilities 6,396 2,060 -------- -------- Net cash provided by operating activities 303,941 130,771 -------- -------- INVESTING ACTIVITIES: Additions to land, buildings and equipment, net (230,150) (192,697) Additions to deferred lease credits 57,238 1,210 Investments in unconsolidated affiliates (32,857) --- Other, net (12,550) (373) -------- -------- Net cash used in investing activities (218,319) (191,860) -------- -------- FINANCING ACTIVITIES: Borrowings under notes payable, net 80,716 77,578 Proceeds from issuance of common stock 11,579 16,843 Proceeds from issuance of long-term debt, net 297,146 91,647 Principal payments on long-term debt (100,804) (938) Cash dividends paid (32,707) (30,344) Purchase and retirement of common stock (346,077) (102,742) -------- -------- Net cash (used in) provided by financing activities (90,147) 52,044 -------- -------- Net decrease in cash and cash equivalents (4,525) (9,045) Cash and cash equivalents at beginning of period 24,794 28,284 -------- -------- Cash and cash equivalents at end of period $ 20,269 $ 19,239 ======== ======== <FN> These statements should be read in conjunction with the Notes to Consolidated Financial Statements contained herein. 5 of 12 NORDSTROM, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands) (unaudited) Note 1 - Basis of Presentation The consolidated balance sheets of Nordstrom, Inc. and subsidiaries (the "Company") as of October 31, 1998 and 1997, and the related consolidated statements of earnings and cash flows for the periods then ended, have been prepared from the accounts without audit. The consolidated financial information is applicable to interim periods and is not necessarily indicative of the results to be expected for the year ending January 31, 1999. The financial information should be read in conjunction with the Notes to Consolidated Financial Statements contained in the Nordstrom 1997 Annual Report to Shareholders. In the opinion of management, the consolidated financial information includes all adjustments (consisting only of normal, recurring adjustments) necessary to present fairly the financial position of Nordstrom, Inc. and subsidiaries as of October 31, 1998 and 1997, and the results of their operations and cash flows for the periods then ended, in accordance with generally accepted accounting principles applied on a consistent basis. Certain reclassifications of prior year balances have been made for presentation consistent with the current year. Note 2 - Earnings Per Share The following table sets forth the weighted-average number of shares used in the computation of earnings per share: Three Months Nine Months Ended October 31, Ended October 31, ------------------------ ------------------------ 1998 1997 1998 1997 ----------- ----------- ----------- ----------- Basic shares 144,489,687 154,502,586 147,712,059 155,223,630 Dilutive effect of stock options and restricted stock 463,509 621,694 569,379 313,856 ----------- ----------- ----------- ----------- Diluted shares 144,953,196 155,124,280 148,281,438 155,537,486 Antidilutive options 685,327 0 397,663 284,462 <FN> Antidilutive options consist of stock options outstanding at October 31, 1998 and 1997, that had an exercise price greater than the average market price during the period. 6 of 12 NORDSTROM, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands)
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