-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DruLdDvJsSWRvt7jHKzi4Gp1WVChZnCDGR3X8wGQFta3zAkGI/RKYi13806alhk+ d4Dmp3Z2BCxucdnyZnyC6A== 0000757439-97-000010.txt : 19970403 0000757439-97-000010.hdr.sgml : 19970403 ACCESSION NUMBER: 0000757439-97-000010 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19970131 FILED AS OF DATE: 19970402 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORDSTROM CREDIT INC CENTRAL INDEX KEY: 0000757439 STANDARD INDUSTRIAL CLASSIFICATION: FINANCE SERVICES [6199] IRS NUMBER: 911181301 STATE OF INCORPORATION: CO FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-12994 FILM NUMBER: 97573384 BUSINESS ADDRESS: STREET 1: 13531 E CALEY CITY: ENGLEWOOD STATE: CO ZIP: 80111 BUSINESS PHONE: 3033974700 MAIL ADDRESS: STREET 1: 1321 SECOND AVENUE CITY: SEATTLE STATE: WA ZIP: 98101 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 EXCHANGE ACT OF 1934 For the fiscal year ended January 31, 1997 __________________ / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________to________ Commission file number 0-12994 Nordstrom Credit, Inc. ______________________________________________________ (Exact name of Registrant as specified in its charter) Colorado 91-1181301 ________________________________ ___________________ (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 13531 East Caley, Englewood, Colorado 80111 _______________________________________________________ (Address of principal executive office) (Zip code) Registrant's telephone number, including area code: 303-397-4700 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.50 par value _______________________________ (Title of class) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES /X/ NO / / Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. /X/ On April 2, 1997 Registrant had 10,000 shares of Common stock ($.50 par value) outstanding; all such shares are owned by Registrant's parent, Nordstrom, Inc. The Registrant meets the conditions set forth in General Instruction J(1)(a) and (b) of Form 10-K and is therefore filing this Form with the reduced disclosure format. 1 of 19 PART I Item 1. Business. - ------------------ The information required under this item is included in Note 1 to the Financial Statements on page 14 of this report, which is incorporated herein by reference. Item 2. Properties. - -------------------- The Company owns an office building in Englewood, Colorado where it locates its principal offices. Item 3. Legal Proceedings. - --------------------------- The Company is not a party to any material legal proceedings. Item 4. Submission of Matters to a Vote of Security Holders. - ------------------------------------------------------------- Not required under reduced disclosure format. PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters. - ------------------------------------------------------------------------------- The class of securities registered is the Company's Common Stock, $.50 par value per share. There are 100,000 shares of authorized Common Stock, of which 10,000 shares were issued and outstanding as of March 31, 1997. The Company's common stock is owned entirely by Nordstrom, Inc ("Nordstrom"). The stock has not been traded and, accordingly, no market value has been established. A dividend of $50,000,000 was paid on August 30, 1996 to the holder of record of common stock at the close of business on August 15, 1996. In addition, a dividend of $50,000,000 was declared on January 30, 1997, payable on February 3, 1997 to the holder of record of common stock at the close of business on January 31, 1997. Item 6. Selected Financial Data. - --------------------------------- Not required under reduced disclosure format. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. - ------------------------------------------------------------------------- Service charge income increased in 1996 primarily due to a larger volume of Nordstrom credit card receivables outstanding during the year. This increase was partially offset by a reduction in revenues from the Company's VISA card program as a result of the securitization of these receivables in the third quarter, which is described in Note 1 and Note 5 to the financial statements. Bad debt expense and VISA service fees paid to Nordstrom National Credit Bank decreased in 1996 due to the securitization of the VISA receivables. 2 of 19 On August 30, 1996, a dividend of $50,000,000 was paid to Nordstrom and on January 30, 1997 a dividend of $50,000,000 was declared payable to Nordstrom on February 3, 1997. As a net result of the securitization of the VISA receivables and the dividend payments to Nordstrom, the Company expects service charge income, interest expense, service fees paid to Nordstrom National Credit Bank, bad debt expense, and net earnings to decrease in the future. The Company anticipates that the effect of these decreases will be a slight reduction in the ratio of earnings available for fixed charges to fixed charges. The Company anticipates filing a shelf registration statement to register up to $250 million in debt securities in the first quarter of 1997. Certain other information required under this item is included in Note 1 and Note 5 to the Financial Statements on pages 14 and 15 respectively, of this report, which are incorporated herein by reference. Item 8. Financial Statements and Supplementary Data. - ---------------------------------------------------- A) Financial Statements and Supplementary Data The financial statements listed in the Index to Financial Statements and Schedule on page 8 of this Report are incorporated herein by reference. B) Other Financial Statements and Schedule The schedule required under Regulation S-X is filed pursuant to Item 14 of this Report. 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. - ------------------------------------------------------------ Not required under reduced disclosure format. Item 11. Executive Compensation. - -------------------------------- Not required under reduced disclosure format. Item 12. Security Ownership of Certain Beneficial Owners and Management. - ------------------------------------------------------------ Not required under reduced disclosure format. Item 13. Certain Relationships and Related Transactions. - -------------------------------------------------------- Not required under reduced disclosure format. 3 of 19 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. - -------------------------------------------------------------------------- (a)1. Financial Statements -------------------- The following financial statements of the Company and the Independent Auditors' Report are incorporated by reference in Part II, Item 8: Independent Auditors' Report Statements of Earnings Balance Sheets Statements of Investment of Nordstrom, Inc. Statements of Cash Flows Notes to Financial Statements (a)2. Financial Statement Schedules ----------------------------- The financial statement schedule listed in the Index to Financial Statements and Schedule on page 8 of this Report is incorporated herein by reference. (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, 1991, Exhibit 3.1. (3.2) By-laws of the Registrant are hereby incorporated by reference from the Registrant's Form 10-K for the year ended January 31, 1991, Exhibit 3.2. (3.3) Amendment to the Bylaws of the Registrant dated December 19, 1995, are hereby incorporated by reference from the Registrant's Form 10-K for the year ended January 31, 1996, Exhibit 3.3 (4.1) Indenture between Registrant and Norwest Bank Colorado, 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 Registrant's Annual Report on Form 10-K for the year ended January 31, 1991, Exhibit 4.2, respectively. (4.2) Trustee Resignation of Wells Fargo Bank (Colorado), N.A., (as success- or to First Interstate Bank of Denver, N.A.), dated March 20, 1997 is filed herein as an Exhibit. (4.3) Trustee Acceptance of Norwest Bank Colorado, N.A., dated March 20, 1997 is filed herein as an Exhibit. 4 of 19 (10.1) Investment Agreement dated October 8, 1984 between Registrant and Nordstrom, Inc. is hereby incorporated by reference from the Registrant's Form 10, Exhibit 10.1. (10.2) Operating Agreement dated August 30, 1991 between Registrant and Nordstrom National Credit Bank is hereby incorporated by reference from the Registrant's Form 10-Q for the quarter ended July 31, 1991, Exhibit 10.1, as amended. (10.3) Operating Agreement for VISA Accounts and Receivables dated May 1, 1994 between Registrant and Nordstrom National Credit Bank is hereby incorporated by reference from Registration No. 33-55905, Exhibit 10.1. (10.4) Credit Agreement dated June 23, 1995 between Registrant and a group of commercial banks is hereby incorporated by reference from the Regis- trant's Form 10-Q for the quarter ended July 31,1995, Exhibit 10.1. (10.5) Loan Agreement dated November 24, 1992 between Registrant and Nord- strom, Inc. is hereby incorporated by reference from the Registrant's Form 10-K for the year ended January 31, 1993, Exhibit 10.6. (10.6) Loan Agreement dated June 10, 1985, as amended May 19, 1994, between Registrant and Morgan Guaranty Trust Company of New York is hereby incorporated by reference from the Registrant's Form 10-K for the year ended January 31, 1995, Exhibit 10.10. (10.7) Amendment to the Credit Agreement dated June 23, 1995 between Registrant and a group of commercial banks, dated June 30, 1996 is hereby incorporated by reference from the Registrant's Form 10-Q for the quarter ended October 31, 1996, Exhibit 10.2. (10.8) Series 1996-A Supplement to Master Pooling and Servicing Agreement dated August 14, 1996 between Registrant, Nordstrom National Credit Bank, and Norwest Bank Colorado, N.A.,as trustee, is incorporated by reference from the Registrant's Form 10-Q for the quarter ended October 31, 1996, Exhibit 10.3. (10.9) Agreement to terminate the Operating Agreement for VISA Accounts and Receivables dated May 1, 1994 between Registrant and Nordstrom National Credit Bank, dated August 14, 1996 is hereby incorporated by reference from the Registrant's Form 10-Q for the quarter ended October 31, 1996, Exhibit 10.1. (10.10) Receivables Purchase Agreement dated August 14, 1996 between Registrant and Nordstrom, Inc. is filed herein as an Exhibit. (10.11) Participation Agreement dated August 14, 1996 between Registrant and Nordstrom National Credit Bank is filed herein as an Exhibit. (12.1) Computation of Ratio of Earnings Available for Fixed Charges to Fixed Charges is filed herein as an Exhibit. (27.1) Financial Data Schedule is filed herein as an Exhibit. 5 of 19 All other exhibits are omitted because they are not applicable, or not required, or because the required information is included in the financial statements or notes thereto. (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. 6 of 19 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 CREDIT, INC. (Registrant) Date April 2, 1997 by /s/ John A. Goesling __________________ ____________________________________________ John A. Goesling Executive Vice President and Treasurer (Principal Accounting and Financial Officer) 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 Regis- trant and in the capacities and on the date indicated. /s/ John A. Goesling /s/ John J. Whitacre _____________________________________ _____________________________________ John A. Goesling John J. Whitacre Director, Executive Vice President Director and Treasurer (Principal Accounting and Financial Officer) /s/ John C. Walgamott _____________________________________ John C. Walgamott Director and President (Principal Executive Officer) Date April 2, 1997 ______________________ 7 of 19 NORDSTROM CREDIT, INC. INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
Page Number ------ Independent Auditors' Report 9 Statements of Earnings 10 Balance Sheets 11 Statements of Investment of Nordstrom, Inc. 12 Statements of Cash Flows 13 Notes to Financial Statements 14 Additional financial information required to be furnished - Financial Statement Schedule: II - Valuation and Qualifying Accounts 19 All other schedules have been omitted because they are inapplicable, not required, or the information is included elsewhere in the financial statements or notes thereto.
8 of 19 INDEPENDENT AUDITORS' REPORT Board of Directors Nordstrom Credit, Inc. Englewood, Colorado We have audited the accompanying balance sheets of Nordstrom Credit, Inc. as of January 31, 1997 and 1996, and the related statements of earnings, investment of Nordstrom, Inc. and cash flows for each of the three years in the period ended January 31, 1997. Our audits also included the financial statement schedule listed in Item 14(a)2. These financial statements and the financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule 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 esti- mates 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 financial statements present fairly, in all material respects, the financial position of Nordstrom Credit, Inc. as of January 31, 1997 and 1996, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 1997, in conformity with generally accepted accounting principles. Also, in our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. Deloitte & Touche LLP Seattle, Washington March 7, 1997 9 of 19 NORDSTROM CREDIT, INC. STATEMENTS OF EARNINGS (Dollars in thousands)
Year Ended January 31, 1997 1996 1995 - ---------------------- ------- ------- ------- Revenue: Service charge income $128,240 $122,973 $92,592 Rental income from Nordstrom National Credit Bank 1,225 1,044 1,044 ------- ------- ------- Total revenue 129,465 124,017 93,636 Expenses: Interest, net 40,649 42,157 31,074 Service fees paid to Nordstrom National Credit Bank 30,381 32,558 28,056 Bad debts 7,520 12,752 940 Other general and administrative 1,539 1,464 1,521 ------- ------- ------- Total expenses 80,089 88,931 61,591 ------- ------- ------- Earnings before income taxes and extraordinary item 49,376 35,086 32,045 Income taxes 17,800 12,600 11,600 ------- ------- ------- Earnings before extraordinary item 31,576 22,486 20,445 Extraordinary charge related to the early extinguishment of debt, net of income taxes of $900 1,452 - - ------ ------- ------ Net earnings $ 30,124 $ 22,486 $20,445 ======= ======= ======= Ratio of earnings available for fixed charges to fixed charges 2.14 1.83 2.03 ======= ======= ======= The accompanying Notes to Financial Statements are an integral part of these statements.
10 of 19 NORDSTROM CREDIT, INC. BALANCE SHEETS (Dollars in thousands)
January 31, 1997 1996 - ----------- -------- -------- ASSETS - ------ Cash and cash equivalents $ 105 $ 91 Customer accounts receivable, net 689,550 874,858 Other receivables 13,874 7,217 Property and equipment, net 5,071 5,396 Other assets 1,506 2,122 -------- -------- $710,106 $889,684 ======== ======== LIABILITIES AND INVESTMENT OF NORDSTROM, INC. - --------------------------------------------- Notes payable to Nordstrom, Inc. $ 54,000 $ 86,000 Notes payable to bank 50,000 50,000 Commercial paper 113,770 182,501 Accrued interest, taxes and other 8,553 9,424 Dividend payable to Nordstrom, Inc. 50,000 - Long-term debt 311,000 369,100 -------- -------- Total liabilities 587,323 697,025 Investment of Nordstrom, Inc. 122,783 192,659 -------- -------- $710,106 $889,684 ======== ======== The accompanying Notes to Financial Statements are an integral part of these statements.
11 of 19 NORDSTROM CREDIT, INC. STATEMENTS OF INVESTMENT OF NORDSTROM, INC. (Dollars in thousands except per share amount)
Common Stock, $.50 par value, 100,000 shares authorized ------------------------- Retained Shares Amount Earnings Total ------ ------ -------- ----- Balance at February 1, 1994 10,000 $55,058 $ 94,670 $149,728 Net earnings - - 20,445 20,445 ------ ------- ------- -------- Balance at January 31, 1995 10,000 55,058 115,115 170,173 Net earnings - - 22,486 22,486 ------ ------- ------- -------- Balance at January 31, 1996 10,000 55,058 137,601 192,659 Net earnings - - 30,124 30,124 Dividends declared ($10,000 per share) (100,000) (100,000) ------ ------- ------- -------- Balance at January 31, 1997 10,000 $55,058 $ 67,725 $122,783 ====== ======= ======== ======== The accompanying Notes to Financial Statements are an integral part of these statements.
12 of 19 NORDSTROM CREDIT, INC. STATEMENTS OF CASH FLOWS (Dollars in thousands)
Year Ended January 31, 1997 1996 1995 - ---------------------- ------- ------- ------- OPERATING ACTIVITIES: Earnings before extraordinary item $ 31,576 $ 22,486 $ 20,445 Adjustments to reconcile net earnings to net cash provided by operating activities: Extraordinary charge related to the early extinguishment of debt, net of income taxes of $900 (1,452) - - Depreciation and amortization 1,212 772 924 Change in: Other receivables (6,657) (2,410) (830) Accrued interest, taxes and other (871) (1,539) 1,298 ------- ------- ------- Net cash provided by operating activities 23,808 19,309 21,837 ------- ------- ------- INVESTING ACTIVITIES: Increase in investment in customer accounts receivable, net (17,580) (218,595) (91,768) Sale of customer accounts receivable to Nordstrom, Inc. 202,888 - - Additions to property and equipment, net - (35) (30) ------- ------- ------- Net cash provided by (used in) investing activities 185,308 (218,630) (91,798) ------- ------- ------- FINANCING ACTIVITIES: (Decrease) increase in notes payable to Nordstrom, Inc. (32,000) (62,000) 35,500 Increase in notes payable to bank - - 25,000 (Decrease) increase in commercial paper (68,731) 145,113 22,051 Proceeds from issuance of long-term debt 57,729 140,859 49,656 Principal payments on long-term debt (116,100) (25,000) (63,500) Cash dividends paid to Nordstrom, Inc. (50,000) - - ------- ------- ------- Net cash (used in) provided by financing activities (209,102) 198,972 68,707 ------- ------- ------- Net increase (decrease) in cash and cash equivalents 14 (349) (1,254) Cash and cash equivalents at beginning of year 91 440 1,694 ------- ------- ------- Cash and cash equivalents at end of year $ 105 $ 91 $ 440 ======== ======= ======= The accompanying Notes to Financial Statements are an integral part of these statements.
13 of 19 NORDSTROM CREDIT, INC. NOTES TO FINANCIAL STATEMENTS (Dollars in thousands) NOTE 1 - DESCRIPTION OF BUSINESS Nordstrom Credit, Inc. (the "Company"), a wholly-owned subsidiary of Nordstrom, Inc. ("Nordstrom") was incorporated in the State of Washington in 1982 and reincorporated in the State of Colorado in 1990. The primary business of the Company is to finance customer accounts receivable generated under revolving charge accounts through sales of merchandise in Nordstrom stores ("Accounts") and until August 15, 1996, through purchases by customers using the Nordstrom National Credit Bank (the "Bank") VISA cards ("VISA Accounts"). The Accounts and the VISA Accounts are originated through the use of credit cards issued by the Bank, a national banking association organized as a wholly-owned subsidiary of Nordstrom, effective August 30, 1991. The Company and the Bank are parties to an Operating Agreement dated August 30, 1991 (the "Operating Agreement") pursuant to which the Company purchases Accounts from the Bank for a price equal to the amount of Accounts originated less an allowance for amounts to be written off (the "holdback allowance"). Under the terms of the Operating Agreement, the Bank performs the servicing functions for the Accounts and the Company pays the Bank a servicing fee based on the amount of such Accounts originated. The servicing fee rate averaged 1.59% in 1994, 1.66% in 1995 and 1.83% in 1996, and is currently 2%. Prior to August 15, 1996, the Company and the Bank were also parties to an Operating Agreement for VISA Accounts and Receivables dated May 1, 1994 (the "VISA Operating Agreement"), under which the Company purchased VISA Accounts from the Bank under the same terms and conditions as the Operating Agreement except for the allowance for the amounts to be written off. Amounts written off were charged to the Company, except amounts written off with respect to sales occurring at Nordstrom stores, which were indemnified by Nordstrom. Pursuant to the terms of the VISA Operating Agreement, the Bank performed the servicing functions for the VISA Accounts and the Company paid the Bank a servicing fee which was determined on the same basis as the servicing fee for the Accounts. As described more fully in Note 5, on August 15, 1996, the Company sold substan- tially all of its outstanding VISA receivables to Nordstrom in connection with a securitization of the receivables. As a result of this transaction, the VISA Operating Agreement was terminated. The Company no longer purchases and finances receivables generated through the use of the Bank's VISA card, and the Bank securitizes all new VISA receivables through a trust. The Company and Nordstrom are parties to an Investment Agreement dated October 8, 1984 (the "Investment Agreement") which, among other things, governs owner- ship of Company stock and the financial relationships between Nordstrom and the Company. The Investment Agreement requires that Nordstrom maintain the Company's ratio of earnings available for fixed charges to fixed charges at not less than 1.25:1 and further requires that Nordstrom retain ownership of all the outstanding shares of stock of the Company. This agreement does not, however, represent a guarantee by Nordstrom of the payment of any obligation of the Company. The presentation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses in the accompanying financial statements. Actual results could differ from those estimates. 14 of 19 NOTE 2 - RENTAL INCOME The Company owns an office building in Englewood, Colorado, and leases space in the building to the Bank under a month-to-month agreement. Monthly rent was $87 in 1994 and 1995, and increased to $107 per month in May, 1996. NOTE 3 - INTEREST EXPENSE The components of net interest expense are as follows:
Year ended January 31, 1997 1996 1995 - ---------------------- ------- ------- ------- Notes payable to Nordstrom, Inc. $ 2,115 $ 4,273 $ 2,940 Notes payable to bank 2,705 2,942 1,766 Commercial paper 9,998 7,242 3,320 Long-term debt 25,884 27,788 23,161 ------- ------- ------- Total interest expense 40,702 42,245 31,187 Less: Interest income (53) (88) (113) ------- ------- ------- Interest, net $40,649 $42,157 $31,074 ======= ======= =======
NOTE 4 - INCOME TAXES The Company files consolidated income tax returns with Nordstrom. Income taxes have been provided on a separate return basis, and the difference between the effective tax rate and the statutory Federal income tax rate is due to the provision for state and local income taxes. At January 31, 1997 and 1996, amounts due to Nordstrom for income taxes totaled $1,900 and $1,200. The Company has no significant deferred taxes. NOTE 5 -CUSTOMER ACCOUNTS RECEIVABLE Customer accounts receivable, net, consists of the following:
January 31, 1997 1996 - ----------- -------- -------- Accounts $687,605 $690,756 VISA Accounts - 213,495 Master Trust Certificates 28,738 - -------- -------- 716,343 904,251 Holdback allowance (26,793) (29,393) -------- -------- Customer accounts receivable, net $689,550 $874,858 ======== ======== The Company has no credit risk with respect to the Accounts, as Nordstrom bears the risk of credit loss with respect to these Accounts.
15 of 19 NOTE 5 (continued) On August 15, 1996, the Company sold substantially all of its outstanding VISA receivables to Nordstrom in connection with a securitization of the receivables. Nordstrom then sold the receivables to the Bank, which transferred the receiv- ables to the Nordstrom Credit Card Master Trust (the "Trust") in return for certificates representing undivided interests in the Trust. A Class A certi- ficate with a market value of $186,600 was sold to a third party, and a Class B certificate was purchased by the Company at an approximate market value of $9,000. The Class B certificate has a stated principal amount of $9,900, bears interest at 6.5%, and is subordinated to the Class A certificate. The Company also purchased from the Bank a portion of its investment in the Trust (the "Seller's Interest") at an approximate market value of $4,100. The Bank retains the remaining Seller's Interest, and will continue to service all of the receivables on behalf of the Trust. As a result of the securitization of the receivables, the Company no longer purchases and finances VISA receivables generated through the use of the Bank's VISA card, except to the extent of its investment in the Class B certificate and the Seller's Interest. The Bank securitizes all new VISA receivables through the Trust, and from time to time sells to the Company additional portions of the Seller's Interest, depending on its cash flow needs. The Company's investment in the Class B certificate and the Seller's Interest (the "Master Trust Certificates") is included in customer accounts receivable. Pursuant to the terms of operative documents of the Trust, in certain events the Company may be required to fund certain amounts pursuant to a recourse obligation for credit losses. Based on current cash flow projections, the Company does not believe any additional funding will be required. NOTE 6 - OTHER RECEIVABLES Other receivables consists of amounts due from the Bank for net activity in Accounts, less service fees due the Bank. These amounts are settled on a second business day basis. At January 31, 1997, the amount also includes funds advanced to the Bank totaling $8,684, and bearing interest at 5.4%, which were repaid on February 5, 1997. NOTE 7 - NOTES PAYABLE AND COMMERCIAL PAPER The notes payable to bank represents amounts borrowed from a commercial bank as fiduciary under a master note agreement which provides for borrowings up to $50,000. Borrowings under the Agreement bear interest at floating rates based on a published short-term interest rate composite index (5.3% and 5.4% at January 31, 1997 and 1996) and mature up to six months from the date of borrowing or on demand. The notes payable to Nordstrom, Inc. represents amounts borrowed from Nordstrom under an Agreement dated November 24, 1992 which provides for borrowings from time to time, depending on seasonal cash flow requirements. Borrowings under the Agreement bear interest at floating rates based on a published short-term interest rate composite index (5.3% and 5.4% at January 31, 1997 and 1996) and mature up to six months from the date of borrowing or on demand. 16 of 19 NOTE 7 (continued) Commercial paper outstanding at January 31, 1997 bears interest at 5.3% to 5.5%, and matures from February 3, 1997 to March 31, 1997. A summary of notes payable and commercial paper is as follows:
Year ended January 31, 1997 1996 1995 - ---------------------- -------- -------- -------- Average daily borrowings outstanding: Nordstrom $ 39,090 $ 72,843 $ 60,651 Other 234,191 172,178 104,722 Maximum amount outstanding: Nordstrom 173,000 191,500 204,000 Other 338,597 303,072 209,605 Weighted average interest rate: During the year: Nordstrom 5.4% 5.9% 4.8% Other 5.4% 5.9% 4.9% At year-end: Nordstrom 5.3% 5.4% 6.0% Other 5.3% 5.5% 6.0%
The Company has a $300,000 unsecured line of credit with a group of commercial banks which is available as liquidity support for notes payable to bank and commercial paper issued by the Company, and expires June 30, 2001. Under the terms of the line of credit agreement, the Company must, among other things, comply with the terms of the Investment Agreement between the Company and Nordstrom and the Operating Agreement between the Company and the Bank, and maintain a ratio of total debt to tangible net worth no greater than 7 to 1. Amounts due to Nordstrom, the Bank and other affiliates are subordinated to borrowings under the line of credit agreement. The Company pays commitment fees for the line in lieu of compensating balance requirements. The carrying amount of the notes payable and commercial paper approximates fair value because of the short maturity of these instruments. NOTE 8 - LONG-TERM DEBT Long-term debt consists of the following:
January 31, 1997 1996 - ----------- -------- -------- Medium-term notes, 6.875% - 9.6%, due 1997- 2001 $211,000 $226,000 Notes payable, 6.7%, due 2005 100,000 100,000 Sinking fund debentures, 9.375%, due 2016 - 43,100 -------- -------- Total long-term debt $311,000 $369,100 ======== ========
17 of 19 NOTE 8 (continued) During the first quarter of 1996, the Company elected to prepay $43,100 of its 9.375% sinking fund debentures in order to take advantage of lower short-term interest rates. This resulted in an extraordinary charge of $1,452, net of applicable income taxes of $900. The premium paid has not been included as a fixed charge for the calculation of the ratio of earnings available for fixed charges to fixed charges. Aggregate principal payments on long-term debt for the next five fiscal years are as follows: 1997 - $50,000, 1998 - $50,000, 1999 - $58,000, 2000 - $42,000, and 2001 - $11,000. The fair value of long-term debt at January 31, 1997 and 1996, estimated using quoted market prices of the same or similar issues with the same remaining maturity, was approximately $317,000 and $403,000. NOTE 9 - SUPPLEMENTARY CASH FLOW INFORMATION For purposes of the Statements of Cash Flows, 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. Supplementary cash flow information is as follows:
Year Ended January 31, 1997 1996 1995 - ---------------------- ------- ------- ------- Cash paid during the year for: Interest $43,721 $41,268 $30,005 Income taxes paid to Nordstrom, Inc. 16,200 12,900 11,692
On January 30, 1997, the Company declared a dividend payable to Nordstrom, Inc. of $50,000 which was paid on February 3, 1997. 18 of 19 NORDSTROM CREDIT, INC. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Dollars in thousands)
Column A Column B Column C Column D Column E Additions Deductions - ----------- ---------- -------------------- -------------------- ------- Account Balance Charged to Charged write-offs Balance beginning costs and to other net of end of Description of period expenses accounts recoveries period - ----------- --------- --------- -------- ---------- ------- Holdback allowance - customer accounts receivable Year ended January 31, 1995 $23,145 $ 940 $19,279* $20,406 $22,958 Year ended January 31, 1996 $22,958 $12,752 $26,837* $33,154 $29,393 Year ended January 31, 1997 $29,393 $ 7,520 $43,832* $53,952 $26,793 * The Company purchases Accounts net of this amount which represents the allowance for uncollectible amounts. Bad debt expenses are reflected on the books of Nordstrom for Accounts and VISA Accounts generated through sales at Nordstrom stores.
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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, 1991, Exhibit 3.1. 3.2 By-laws Incorporated by reference from the Registrant's Form 10-K for the year ended January 31, 1991, Exhibit 3.2. 3.3 Amendment to the By-laws dated Incorporated by reference from December 19, 1995 Registrant's Form 10-K for the year ended January 31, 1996, Exhibit 3.3. 4.1 Indenture between Registrant and Incorporated by reference from Norwest Bank Colorado, N.A., Registration No. 33-3765, Exhibit as successor trustee, dated 4.2; Registration No. 33-19743, November 15, 1984, the First Sup- Exhibit 4.2; Registration No. plement thereto dated January 15, 33-29193, Exhibit 4.3; and 1988, the Second Supplement thereto Registrant's Annual Report on Form dated June 1, 1989, and the Third 10-K for the year ended January 31, Supplement thereto dated October 1991, Exhibit 4.2, respectively. 19, 1990 4.2 Trustee Resignation of Wells Fargo Filed herewith electronically. Bank (Colorado), N.A., (as successor to First Interstate Bank of Denver, N.A.), dated March 20, 1997 4.3 Trustee Acceptance of Norwest Bank Filed herewith electronically. Colorado, N.A., dated March 20, 1997 10.1 Investment Agreement dated October Incorporated by reference from 8, 1984 between Registrant and Registrant's Form 10, Exhibit 10.1. Nordstrom, Inc. 10.2 Operating Agreement dated August Incorporated by reference from 30, 1991 between Registrant and Registrant's Form 10-Q for the Nordstrom National Credit Bank quarter ended July 31, 1991, Exhibit 10.1, as amended. 10.3 Operating Agreement for VISA Incorporated by reference from Accounts and Receivables Registration No. 33-55905, Exhibit dated May 1, 1994 between 10.1. Registrant and Nordstrom National Credit Bank 10.4 Credit Agreement dated June 23, 1995 Incorporated by reference from between Registrant and a group of Registrant's Form 10-Q for the commercial banks quarter ended July 31, 1995, Exhibit 10.1.
10.5 Loan Agreement dated November 24, Incorporated by reference from 1992 between Registrant and Registrant's Form 10-K for the Nordstrom, Inc. year ended January 31, 1993, Exhibit 10.6. 10.6 Loan Agreement dated June 10, 1985, Incorporated by reference from as amended May 16, 1994, between Registrant's Form 10-K for the Registrant and Morgan Guaranty year ended January 31, 1995, Trust Company of New York Exhibit 10.10. 10.7 Amendment to the Credit Agreement Incorporated by reference from dated June 23, 1995 between Regis- Registrant's Form 10-Q for the trant and a group of commercial quarter ended October 31, 1996, banks, dated June 30, 1996 Exhibit 10.2. 10.8 Series 1996-A Supplement to Master Incorporated by reference from Pooling and Servicing Agreement Registrant's Form 10-Q for the dated August 14, 1996 between quarter ended October 31, 1996, Registrant, Nordstrom National Exhibit 10.3. Credit Bank and Norwest Bank Colorado, N.A., as trustee 10.9 Agreement to terminate the Oper- Incorporated by reference from ating Agreement for VISA Accounts Registrant's Form 10-Q for the and Receivables dated May 1, 1994 quarter ended October 31, 1996, between Registrant and Nordstrom Exhibit 10.1. National Credit Bank, dated August 14, 1996 10.10 Receivables Purchase Agreement dated Filed herewith electronically. August 14, 1996 between Registrant and Nordstrom, Inc. 10.11 Participation Agreement dated August Filed herewith electronically. 14, 1996 between Registrant and Nordstrom National Credit Bank 12.1 Computation of Ratio of Earnings Filed herewith electronically. Available for Fixed Charges to Fixed Charges 27.1 Financial Data Schedule Filed herewith electronically.
EX-4.2 2 TRUSTEE RESIGNATION TO: Nordstrom Credit, Inc. In connection with the appointment of Norwest Bank Colorado, National Association as successor trustee under the indenture (defined below), Wells Fargo Bank (Colorado), 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. The Resigning Trustee acknowledges that $311,000,000.00 aggregate principal amount of debt securities are outstanding under the Indenture. The 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 20, 1997 WELLS FARGO BANK (COLORADO), N.A. BY /s/ Richard J. Sullivan ------------------------ Richard J. Sullivan, III Vice President EX-4.3 3 TRUSTEE ACCEPTANCE TO: Wells Fargo Bank (Colorado), N.A. Nordstrom Credit, Inc. Norwest Bank Colorado, National Association (the "Successor Trustee"), hereby acknowledges and accepts its appointment by Nordstrom Credit, Inc. (The "Company") as successor trustee under that certain indenture by and between the Company and Wells Fargo Bank (Colorado), N.A., as successor trustee (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 20, 1997 NORWEST BANK COLORADO, NATIONAL ASSOCIATION BY:/s/ Cheryl J. Hanson ---------------------------- Cheryl J. Hanson, Vice President The Company hereby confirms Norwest Bank Colorado, National Association is vested with all the rights, powers, trusts and duties of the Resigning Trustee under the Indenture. Dated: March 20, 1997 NORDSTROM CREDIT, INC. BY:/s/ John C. Walgamott ----------------------------- John C. Walgamott, President EX-10.10 4 RECEIVABLES PURCHASE AGREEMENT This Receivables Purchase Agreement is executed by and between Nordstrom, Inc., a Washington corporation ("Nordstrom") and Nordstrom Credit, Inc., a Colorado corporation and a wholly owned subsidiary of Nordstrom ("Credit"). WHEREAS Credit is the owner and holder of certain amounts owing, from time to time, by a person or persons, including any guarantor thereof, under certain VISA accounts (I) owned by Nordstrom National Credit Bank as of July 31, 1996, other than VISA accounts which are 30 days or more delinquent on a contractual basis as of July 31, 1996, or (ii) originated y Nordstrom National Credit Bank during the period from the close of business on July 31, 1996 to the close of business on August 14, 1996, including in each case without limitation, amounts owing for the purchase of merchandise and services, periodic finance charges, cash advances and cash advance fees, access checks, annual cardholder fees, credit insurance premiums, late fees, overlimit fees, return check fees and all other fees and charges, and all monies due or to become due with respect to any of the foregoing and all proceeds (including "proceeds" as defined in the Uniform Commercial Code (the "UCC") of the State of Colorado) thereof, the aggregate amount of which as of July 31, 1996 was $208,462,983 (the "Receivables"); and WHEREAS Nordstrom desire to purchase from Credit, and Credit desires to sell to Nordstrom, the Receivables; NOW, THEREFORE, the parties hereto hereby agree as follows: 1. Credit hereby sells, transfers, assigns and conveys to Nordstrom all of Credit's right, title and interest in and to the Receivables, and Nordstrom hereby purchases all of such right, title and interest in and to the Receivables for a purchase price of $208,462,983; and 2. Credit agrees to do and perform, from time to time, any and all acts and to execute any and all further instruments required or reasonably requested by Nordstrom more fully to effect the purposes of this Agreement, including, without limitation, a financing statement relating to the transfer of the Receivables pursuant to this Agreement under the provisions of the UCC of the State of Colorado and any other applicable state and any financing statements or continuation statements relating to the Receivables requested by Nordstrom for filing under the provisions of the UCC of the State of Colorado or any other applicable state. This Agreement shall be construed in accordance with the laws of the State of Colorado, without reference to its conflict of law provisions, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws. DATED this 14th day of August, 1996. NORDSTROM, INC., a Washington corporation By /s/ John A. Goesling ------------------------------ John A. Goesling, Executive Vice President NORDSTROM CREDIT, INC. a Colorado corporation By /s/ John A. Goesling ------------------------------ John A. Goesling, Executive Vice President EX-10.11 5 PARTICIPATION AGREEMENT This Participation Agreement dated as of August 14, 1996 is between Nordstrom National Credit Bank ("NNCB"), a national banking association with its charter address in Colorado, and Nordstrom Credit, Inc., a corporation organized and existing under the laws of the State of Colorado ("NCI"). WITNESSETH WHEREAS, NNCB, as Transferor, NNCB, as Servicer, and Norwest Bank Colorado, N.A., as Trustee (the "Trustee") have or will enter into a Master Pooling and Servicing Agreement, dated as of August 14, 1996, and related documents, including any certificate series supplement, (collectively, the "Pooling and Servicing Agreement"), pursuant to which certain Receivables will be conveyed to the Nordstrom Credit Card Master Trust in exchange for (i) certain investor certificates that will be either sold to investors or held by NCI and (ii) an exchangeable transferor certificate (the "Exchangeable Transferor Certificate") that will be held by NNCB, and WHEREAS, NNCB wishes to sell, and NCI wishes to purchase, an undivided participation interest in the Exchangeable Transferor Certificate on the terms and subject to the conditions set forth in this Agreement; NOW, THEREFORE, the parties hereby agree as follows: Section 1. Definitions (a)The following terms, when capitalized in this Agreement and used either in the singular or the plural, shall have the following meanings: "Net Investment" means, as of any day, in respect of the Participation acquired by NCI, an amount equal to the sum of (i) the initial purchase price paid by NCI for its Participation hereunder, less (ii) any payments by NNCB to NCI pursuant to Section 2(c) or (d) with respect to any decrease in the Transferor Amount or NCI's Participation, plus (iii) any payments by NCI to NNCB pursuant to Section 2(b) or credits by NNCB to NCI pursuant to Section 2(c) with respect to any increase in NCI's Participation Percentage. "Participation" means the undivided ownership interest in the Exchangeable Transferor Certificate purchased from time to time by NCI pursuant to Section 2(a) hereof. "Participation Percentage" means, as of any day, in respect of the Participation acquired by NCI in the Exchangeable Transferor Certificate, the percentage interest in the Exchangeable Transferor Certificate then held by NCI which shall equal the percentage equivalent of a fraction, the numerator of which is equal to NCI's Net Investment on such day and the denominator of which is equal to the Transferor Amount on such day. "Purchase Date" shall mean August 14, 1996. "Transferor Interest" shall mean the interest in the Trust represented by the Exchangeable Transferor Certificate, including the right to receive Collections and other amounts to be paid to the Transferor at the times and in the amounts specified from time to time in the Pooling and Servicing Agreement. (b)Capitalized terms used but not otherwise defined in this Agreement shall have the same meanings as used in the Pooling and Servicing Agreement. Section 2. Sale of Participation (a)NNCB hereby agrees to sell to NCI without recourse, representation or warranty whatsoever except as expressly provided herein, and NCI hereby agrees to purchase from NNCB on the Purchase Date, or such other date or dates as the parties may agree, an undivided ownership interest in the Exchangeable Transferor Certificate and the Transferor Interest equal to the Participation Percentage thereof, including all amounts allocated to the holder of the Exchangeable Transferor Certificate pursuant to the Pooling and Servicing Agreement and the benefit of all representations and warranties and agreements made for the benefit of the holder of the Exchangeable Transferor Certificate therein. (b)The initial price to be paid by NCI shall be an amount agreed between the parties at the time such sale occurs pursuant to this Agreement. NCI may from time to time pay to NNCB additional amounts to be determined by the parties in consideration for increasing NCI's Participation Percentage. (c)In consideration of the acquisition by NCI of the Participation hereunder, NNCB agrees to pay or credit to NCI on each day on which NNCB receives a payment in respect of the Exchangeable Transferor Certificate (each such day a "Settlement Date"), an amount equal to the product of (i) NCI's Participation Percentage as of such date and (ii) the amount of any decrease in the Transferor Amount occurring as a result of payments received by NNCB, as the holder of the Exchangeable Transferor Certificate, from the Servicer, the Trustee or any other person in respect of the Exchangeable Transferor Certificate (including any proceeds from the sale of Investor Certificates of any Series issued following the tender of the Exchangeable Transferor Certificate and the reissue thereof as part of any Exchange pursuant to the Pooling and Servicing Agreement) during the period since the immediately preceding Settlement Date. NNCB shall be permitted to engage in any Exchange without obtaining the permission of NCI. (d)NNCB may, from time to time, pay to NCI amounts to be determined by the parties in consideration for decreasing NCI's Participation Percentage; provided, however, that NNCB shall be under no obligation to repurchase any portion of NCI's Participation. (e)NNCB agrees to pay or credit to NCI, on each Settlement Date, an amount equal to the product of NCI's Participation Percentage and the net amount of all Collections and other distributions received by NNCB as the holder of the Exchangeable Transferor Certificate during the period since the immediately preceding Settlement Date. (f)Notwithstanding the foregoing, the parties may agree to settle monthly on each Distribution Date under the Pooling and Servicing Agreement or another date, provided that amounts owed pursuant to Section 2(c) above shall be paid or credited on the day on which NNCB receives such payments referred to in Section 2(c). Section 3. Delivery of Documents. NNCB shall deliver to NCI a Participation Certificate in the form set forth in Annex I hereto, dated as of the Purchase Date, representing an undivided interest, to the extent of the Participation Percentage, in all of NNCB's right, title and interest in and to the Exchangeable Transferor Certificate and the Transferor Interest. On each Settlement Date, NNCB shall deliver a statement (the "Settlement Statement") in the form of Annex II hereof, setting forth the net amount of funds owing by NCI to NNCB or by NNCB to NCI. Such statement shall be appropriately modified if there are settlements occurring more frequently than monthly on Distribution Dates under the Pooling and Servicing Agreement. Section 4. NNCB Required to Furnish Certain Information. NNCB shall submit to NCI upon request a copy of the Pooling and Servicing Agreement and all other documents relating to the transactions contemplated therein. NCI shall have the right from time to time at reasonable intervals to require NNCB to supply such information as NCI may reasonably request respecting the Exchangeable Transferor Certificate and NCI's participation interest therein. NNCB shall deliver to NCI copies of all reports, notices, certificates, or other materials received or delivered by it pursuant to the Pooling and Servicing Agreement. NNCB hereby agrees to consult with NCI prior to exercising any rights as the holder of the Exchangeable Transferor Certificate or as Transferor under the Pooling and Servicing Agreement. Section 5. Termination. This Agreement shall automatically terminate following the surrender of the Exchangeable Transferor Certificate and termination of the Trust pursuant to the Pooling and Servicing Agreement. Either party may terminate this Agreement at any time upon 30 days prior written notice thereof to the other. Following such termination, settlement between the parties shall occur by the payment of any amounts due to NCI on each following Distribution Date until the Participation Percentage shall be equal to zero, or in such other manner as the parties may agree. Section 6. Representation and Warranties of and Agreement By NCI. (a)NCI is a corporation duly organized and validly existing in good standing under the laws of the State of Colorado, and has full corporate power, authority and legal right to execute, deliver and perform its obligations under this Agreement and the transactions contemplated under this Agreement and, in all material respects, to own its properties and conduct its business as such properties are presently owned and such business is presently conducted. (b)The execution and delivery of this Agreement and the consummation of the transactions provided for in this Agreement have been duly authorized by NCI by all necessary corporate action on the part of NCI. (c)This Agreement constitutes a legal, valid and binding obligation of NCI, enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect affecting the enforcement of creditors' rights in general and except as such enforceability may be limited by general principles of equity (whether considered in a proceeding at law or in equity). (d)NCI represents and warrants that it is acquiring the Participation for its own accounts and not with a view toward, or for sale in connection with, any distribution thereof. Section 7. Representations and Warranties of NNCB. (a)NNCB is a national banking association duly organized and validly existing in good standing and has full corporate power, authority and legal right to execute, deliver and perform its obligations under this Agreement and the transactions contemplated under this Agreement and, in all material respects, to own its properties and conduct its business as such properties are presently owned and such business is presently conducted. (b)The execution and delivery of this Agreement and the consummation of the transactions provided for in this Agreement have been duly authorized by NNCB by all necessary corporate action on the part of NNCB. (c)This Agreement constitutes a legal, valid and binding obligation of NNCB, enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect affecting the enforcement of creditors' rights in general and except as such enforceability may be limited by general principles of equity (whether considered in a proceeding at law or in equity). (d)NNCB represents that this Agreement together with the Participation Certificate provided for in Section 3 will vest in NCI an undivided interest, to the extent of the Participation Percentage, in all of its right, title and interest in and to, the Exchangeable Transferor Certificate and in and to the proceeds thereof, including proceeds resulting from any Exchange, free from liens, encumbrances or claims of third parties. Section 8. Maintenance of Records. NNCB agrees to maintain or cause to be maintained accurate and complete records with respect to the Exchangeable Transferor Certificate and to deliver to NCI on demand copies of any records required by NCI in connection with NCI's enforcement of its rights under this Agreement. Section 9. Exculpation. Except as otherwise set forth in this Agreement, NNCB's sole obligation hereunder shall be to distribute, as aforesaid, to NCI the Participation Percentage of any payment received by NNCB relating to the Exchangeable Transferor Certificate as and when received by NNCB. No other obligation or duty is assumed by NNCB beyond the foregoing, nor shall any other obligation or duty be deemed to be implied. NNCB shall not have any fiduciary relationship with generality of the foregoing. Except with respect to representations and warranties set forth in this Agreement, NNCB does not assume, nor shall NNCB or any of its officers, directors, employees or agents have any responsibility or liability, expressed or implied, to NCI for: (i)Any action taken or omitted, whether by the Trustee, the Servicer, or by any other person in connection with any Receivable except for NNCB's own gross negligence or willful misconduct; (ii)The authorization, execution, effectiveness, enforceability, genuineness or validity of any Receivable, the Pooling and Servicing Agreement or any document, instrument or other writing in connection therewith, except with respect to the authorization, execution, effectiveness, enforceability, genuineness or validity by or against NNCB of any such document, instrument or other writing executed by NNCB; (iii)The genuineness, truthfulness or accuracy of any recitals, statements, representations or warranties made in or in connection with any Receivables, or the Pooling and Servicing Agreement or any other document, instrument or other writing in connection therewith, except for any representation and warranty of NNCB made in any such document, instrument or writing executed by NNCB; (iv)The financial condition of any Obligor or for any credit or other information regarding any Obligor or card issuer; or (v)The performance of any of the obligations of any person (including any Obligor) primarily or secondarily liable with respect to any Receivable. Section 10. No Petition. Each party hereto agrees that, prior to the date which is one year and one day after the payment in full of all investor certificates issued pursuant to the Pooling and Servicing Agreement, it shall not institute against, or join any other person in instituting against, the other party hereto any bankruptcy, reorganization, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state thereof. Section 11. Modification; Successors and Assigns. No amendment or modification of this Agreement shall be effective unless in writing and signed by the party against whom enforcement of such amendment or modification is sought. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. NCI may not assign, transfer or participate any of its rights or obligations hereunder or the Participation without the prior written consent of NNCB. Section 12. Notices. Any notice required or permitted by this Agreement shall be deemed to have been duly and properly given when delivered or sent by (i) certified mail, return receipt requested, (ii) hand delivery, or (iii) telecopier (with oral confirmation of receipt) and addressed as follows: If to NCI: Nordstrom Credit, Inc. 13531 E. Caley Avenue Englewood, Colorado 80111 Telephone No.: (303) 397-4785 Telecopier No.: (303) 397-4775 Attention: Michael Karmill with a copy to: Nordstrom Credit, Inc. 13531 E. Caley Avenue Englewood, Colorado 80111 Telephone No.: (303) 397-4690 Telecopier No.: (303) 397-4775 Attention: Mary Jo Miller, Esq. If to NNCB: Nordstrom National Credit Bank 13531 E. Caley Avenue Englewood, Colorado 80111 Telephone No.: (303) 397-4785 Telecopier No.: (303) 397-4775 Attention: Michael Karmill with a copy to: Nordstrom National Credit Bank 13531 E. Caley Avenue Englewood, Colorado 80111 Telephone No.: (303) 397-4690 Telecopier No.: (303) 397-4775 Attention: Mary Jo Miller, Esq. or to such other address as either party hereto may furnish to the other in writing at any time. Section 13. Miscellaneous. This Agreement shall be governed by and construed in accordance with the law of the State of Colorado. Section 14. Entire Agreement. There are no restrictions, promises, warranties, covenants, undertakings or representations other than those expressly set forth herein. Nothing in this Agreement or otherwise shall be construed as making NNCB responsible in any way or to any extent for the payment of any principal, interest or premium on the Exchangeable Transferor Certificate, the Participation or any Receivable or for the fulfillment of any obligation or commitment of the Trustee or the Servicer under the Pooling and Servicing Agreement, or any other person, except to the extent of NNCB's obligations herein. IN WITNESS WHEREOF, the parties hereto have caused this Participation Agreement to be duly executed by their respective officers hereunto authorized, as of the date and year first above written. NORDSTROM NATIONAL CREDIT BANK By: Name: Title: NORDSTROM CREDIT, INC. By: Name: Title: Annex I to the Participation Agreement PARTICIPATION CERTIFICATE Nordstrom National Credit Bank ("NNCB") has transferred and assigned to Nordstrom Credit, Inc., pursuant to and on the terms and conditions set forth in the Participation Agreement dated as of August 14, 1996 (terms capitalized herein being used as defined in said Agreement), an undivided interest equal to the Participation Percentage in all of the right, title and interest of NNCB in and to the Exchangeable Transferor Certificate and the Transferor Interest, and all representations and warranties and agreements made for the benefit of the holder of the Exchangeable Transferor Certificate in the Pooling and Servicing Agreement, and any proceeds of any of the foregoing, issued pursuant to the Pooling and Servicing Agreement. NORDSTROM NATIONAL CREDIT BANK By: Name: Title: Annex II to the Participation Agreement FORM OF SETTLEMENT STATEMENT For Settlement Period Beginning and Ending Settlement Date: Nordstrom National Credit Bank ("NNCB") pursuant to the Participation Agreement (the "Participation Agreement"), dated as of August 14, 1996, between NNCB and Nordstrom Credit, Inc. ("NCI"), hereby states as follows: Capitalized terms used in this Settlement Statement have their respective meanings in the Participation Agreement and, unless otherwise noted, are as of the current Determination Date. This Settlement Statement is being delivered pursuant to Section 3 of the Participation Agreement. Balances 1.NCI's Net Investment as of the last day of the preceding settlement period ............ .....$ 2.Net payments/credits to/from NCI in current settlement period pursuant to Section 2(b), 2(c) or 2(d) of the Participation Agreement increasing (decreasing) NCI's Net Investment $ 3.NCI's Net Investment as of the last day of this settlement period ................$ 4.Transferor Amount as of the last day of the preceding settlement period $ 5.Transferor Amount as of the last day of this settlement period $ 6.Participation Percentage as of the last day of the preceding settlement period $ 7.Participation Percentage as of the last day of this settlement period $ 8.Net Collections and other distributions in respect of the Exchangeable Transferor Certificate since the end of the preceding settlement period $ Settlement 9.Payment/credit due to (from) NCI for settlement period for decreasing (increasing) in NCI's Net Investment pursuant to Sections 2(b), 2(c) and 2(d) of the Participation Agreement $ 10.Payment/credit due to (from) NCI pursuant to Section 2(c) of the Participation Agreement with respect to Collections and other distributions in respect of the Exchangeable Transferor Certificate $ 11.Net payment/credit due to (from) NCI $ IN WITNESS WHEREOF, NNCB has caused this Settlement Statement to be executed by its duly authorized officers this day of 19___. NORDSTROM NATIONAL CREDIT BANK By: Name: Title: Approved: NORDSTROM CREDIT, INC. By: Name: Title: EX-12.1 6 Exhibit 12.1 NORDSTROM CREDIT, INC. Computation of Ratio of Earnings Available for Fixed Charges to Fixed Charges (Dollars in thousands)
Year ended January 31, 1997 1996 1995 1994 1993 - ---------------------- ------- ------- ------- ------- ------- Earnings before income taxes $47,024 $35,086 $32,045 $32,372 $29,321 Fixed charges (gross interest expense) 41,089 42,245 31,187 29,600 33,841 ------- ------- ------- ------- ------- Earnings available for fixed charges $88,113 $77,331 $63,232 $61,972 $63,162 ======= ======= ======= ======= ======= Ratio of earnings available for fixed charges to fixed charges 2.14 1.83 2.03 2.09 1.87 ======= ======= ======= ======= =======
EX-27 7
5 1000 YEAR JAN-31-1997 JAN-31-1997 105 0 716343 26793 0 0 5071 0 710106 0 311000 0 0 0 122783 710106 0 129465 0 80089 0 7520 40649 49376 17800 0 0 1452 0 30124 0 0
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