Nordstrom 2001 Annual Report Download - page 36

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20200324 NORDSTROM
2001 Annual Report • VERSION
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Notes to Consolidated Financial Statements
34 NORDSTROM INC. AND SUBSIDIARIES
Note 20: Nordstrom.com Put Agreement
The holders of the minority interest of Nordstrom.com LLC,
through their ownership interests in its managing member,
Nordstrom.com, Inc., have the right to sell their shares of
Nordstrom.com, Inc. to the Company for effectively $80 million
in the event that certain events do not occur. This right would
terminate if the Company provides at least $100 million in
additional funding to Nordstrom.com, Inc. prior to July 1, 2002
or if Nordstrom.com, Inc. completes an initial public offering of its
common stock prior to September 1, 2002. It is possible that the
Company will choose not to provide the $100 million in additional
funding and that Nordstrom.com, Inc. will not complete an initial
public offering on or before September 1, 2002. If and when
the Company determines that neither of those events is likely to
occur and that the purchase of the minority interest shares is
probable, the Company will begin to accrete, over the period
remaining prior to the purchase, the difference between that $80
million and the fair value of the shares. Based on current values
for similar businesses, management of the Company believes
that the amount of that difference could range from $55,000
to $65,000.
Note 21: Contingent Liabilities
The Company has been named in various lawsuits and intends to
vigorously defend itself in those cases. The Company is not in
a position at this time to quantify the amount or range of any
possible losses related to those claims. While no assurance can
be given as to the ultimate outcome of these lawsuits, based on
preliminary investigations, management currently believes that
resolving these matters will not have a material adverse effect
on the Company's financial position, results of operations or
cash flows.
Cosmetics. The Company was originally named as a defendant along
with other department store and specialty retailers in nine separate
but virtually identical class action lawsuits filed in various Superior
Courts of the State of California in May, June and July 1998 that
have now been consolidated in Marin County state court. In May
2000, plaintiffs filed an amended complaint naming a number of
manufacturers of cosmetics and fragrances and two other retailers
as additional defendants. Plaintiffs' amended complaint alleges
that the retail price of the "prestige" cosmetics sold in department
and specialty stores was collusively controlled by the retailer and
manufacturer defendants in violation of the Cartwright Act and
the California Unfair Competition Act.
Plaintiffs seek treble damages and restitution in an unspecified
amount, attorneys' fees and prejudgment interest, on behalf of
a class of all California residents who purchased cosmetics and
fragrances for personal use from any of the defendants during
the period four years prior to the filing of the amended complaint.
Defendants, including the Company, have answered the amended
complaint denying the allegations. The Company and the other
retail defendants have produced documents and responded to
plaintiffs' other discovery requests, including providing witnesses
for depositions. Plaintiffs have not yet moved for class
certification. Pursuant to an order of the court, plaintiffs
and defendants participated in mediation sessions in May
and September 2001.