Nordstrom 2000 Annual Report Download - page 27

Cyan Mag Yelo Blk
20100444 Nordstrom
2001 Annual Report • 44pgs. + 4 covers pg. 25
8.375 x 10.875 • PDF • 150 lpi
PMS
5773
PMS
5503
25
NORDSTROM, INC. AND SUBSIDIARIES
on a straight-line basis primarily over the life of the
applicable lease.
Fair Value of Financial Instruments: The carrying amount of
cash equivalents and notes payable approximates fair value
because of the short maturity of these instruments. The fair
value of the Company’s investment in marketable equity
securities is based upon the quoted market price and was
approximately $60,778 at January 31, 2000. The fair value
of long-term debt (including current maturities), using
quoted market prices of the same or similar issues with the
same remaining term to maturity, is approximately
$1,031,000 and $715,500 at January 31, 2001 and 2000.
Derivatives Policy: The Company limits its use of derivative
financial instruments to the management of 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 material off-balance sheet
credit risk, and the fair value of derivative financial
instruments at January 31, 2001 and 2000 is not material.
Statement of Financial Accounting Standards (“SFAS”) No.
133, “Accounting for Derivative Instruments and Hedging
Activities,” as amended by SFAS No. 137 and No. 138,
requires an entity to recognize all derivatives as either assets
or liabilities in the statement of financial position and to
measure those instruments at fair value. Adoption of this
standard, in the fiscal year beginning February 1, 2001, did
not have a material impact on the Company’s consolidated
financial statements.
Recent Accounting Pronouncements: In July 2000, the
Company adopted Financial Accounting Standards Board
Interpretation No. 44, “Accounting for Certain Transactions
Involving Stock Compensation” (“FIN No. 44”), which
provides guidance for certain issues that arose in applying
Accounting Principles Board Opinion No. 25, “Accounting
for Stock Issued to Employees” (“APB No. 25”). Adoption
of this Interpretation did not have a material impact on the
Company’s consolidated financial statements for the fiscal
year ended January 31, 2001.
In September 2000, the FASB issued SFAS No. 140
“Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities” (“SFAS No. 140”), a
replacement of SFAS No. 125 with the same title. It revises
the standards for securitizations and other transfers of
financial assets and collateral and requires certain additional
disclosures, but otherwise retains most of SFAS No. 125’s
provisions. SFAS No. 140 is effective for transfers after
March 31, 2001. Adoption of the accounting provisions of
this standard will not have a material impact on the
Company’s consolidated financial statements. The Company
has complied with all SFAS No. 140 disclosure
requirements.
Reclassifications: Certain reclassifications of prior year and
quarterly balances have been made for consistent
presentation with the current year.
Note 2: Acquisition
On October 24, 2000, the Company acquired 100% of
Façonnable, S.A., of Nice, France, a designer, wholesaler
and retailer of high quality men’s and women’s apparel and
accessories. The Company paid $87,685 in cash and issued
5,074,000 shares of common stock of the Company for a
total consideration, including expenses, of $169,380. The
acquisition is being accounted for under the purchase
method of accounting, and, accordingly, Façonnable’s results
of operations have been included in the Company’s results of
operations since October 24, 2000. The purchase price has
been allocated to Façonnable’s assets and liabilities based
on their estimated fair values as of the date of acquisition.
The purchase also provides for contingent payments that may
be paid in fiscal 2006 based on the performance of the
subsidiary and the continued active involvement of the
principals in Façonnable, S.A. The contingent payments will
be recorded as compensation expense when it becomes
probable that the performance targets will be met.