Nordstrom 2001 Annual Report Download - page 35

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2001 Annual Report • VERSION
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Notes to Consolidated Financial Statements
NORDSTROM INC. AND SUBSIDIARIES 33
Note 18: Restructurings, Impairments, and Other One-Time Charges
The following table provides a summary of restructuring,
impairments and other charges:
Year ended January 31, 2002 2001 2000
Employee severance $1,791 — $2,685
Other expenses —— 1,206
Restructuring subtotal 1,791 — 3,891
Management severance —$13,000 —
Asset impairment —10,227 4,053
Litigation settlement costs —— 2,056
Total charges $1,791 $23,227 $10,000
During the year ended January 31, 2002, the Company
streamlined its operations through a reduction in workforce
of approximately 2,600 employees. As a result, the Company
recorded a restructuring charge of $1,791 in selling, general
and administrative expenses relating to severance for
approximately 195 employees. Personnel affected were
primarily located in the corporate center and in full-line stores.
During the year ended January 31, 2001, the Company
recorded an impairment charge of $10,227, consisting of
$9,627 recorded in selling, general and administrative
expenses and $600 in interest expense. Due to changes
in business strategy, the Company determined that several
software projects under development were either impaired or
obsolete. The charges consisted of $6,542 primarily related
to the disposition of transportation management software.
Additionally, merchandise software was written down $3,685
to its estimated fair value. During the same year, the Company
accrued and paid $13,000 for certain severance and other
costs related to a change in management.
During the year ended January 31, 2000, the Company recorded
a charge of $10,000 in selling, general and administrative expenses
primarily associated with the restructuring of the Company’s
information technology services area. The charge consisted of
$4,053 in the disposition of several software projects under
development, $2,685 in employee severance and $1,206 in other
miscellaneous costs. Additionally, the Company recorded $2,056
related to settlement costs for two lawsuits. The restructuring
included the termination of 50 employees in the information
technology department.
The following table presents the activity and balances of the
reserves established in connection with the restructuring charges:
Year ended January 31, 2002 2001 2000
Beginning balance $178 $1,452 —
Additions 1,7 91 — $3,891
Payments (1,890) (1,220) (2,122)
Adjustments (79) (54) (317)
Ending balance $— $178 $1,452
Note 19: Vulnerability Due to Certain Concentrations
Approximately 31% of the Company’s retail square footage is
located in the state of California. At January 31, 2002, the net
book value of property located in California was approximately
$276,000. Accordingly, the Company carries earthquake insurance
in California with a $50,000 deductible and a $50,000 coverage
limit per occurrence.
At January 31, 2002 and 2001, approximately 40% and 41% of
the Company’s receivables were obligations of customers residing
in California. Concentration of the remaining receivables is
considered to be limited due to their geographical dispersion.