Nordstrom 2002 Annual Report Download - page 19

management’s discussion
and analysis
NORDSTROM INC. AND SUBSIDIARIES 17
In November 2001, we issued $300 million of Class A notes
backed by Nordstrom private label receivables. These notes bear
a fixed interest rate of 4.82% and have a maturity of five years.
Both the debt and related assets are included in our consolidated
balance sheets. A portion of the proceeds was used to pay-down
approximately $77 million in medium-term notes and the purchase
of Nordstrom.com, Inc.’s preferred stock for $70 million. The
remaining proceeds will be used for general corporate purposes
and capital expansion.
In October 2000, we issued $300 million of 8.95% senior
notes due in 2005. These proceeds were used to reduce short-term
indebtedness, to fund the acquisition of Façonnable, and for general
corporate purposes.
Interest Rate Swaps
We entered into a variable interest rate swap agreement in the
fourth quarter of 2002. The swap had a $250 million notional
amount and a six-year term. Under the agreement, we received
a fixed rate of 5.63% and paid a variable rate based on LIBOR plus
a margin of 1.31% set at six-month intervals (3.25% at January 31,
2003). The swap agreement qualified as a fair value hedge and
was recorded at fair value in other assets at January 31, 2003.
Subsequent to January 31, 2003, we sold the interest rate swap
and received cash of $2.3 million, which will be recognized as
interest income evenly over the remaining life of the related debt.
In the third quarter of 2002, we sold the interest rate swap that
converted our $300 million, 8.95% fixed-rate debt to variable rate.
We received cash of $4.9 million, which will be recognized as
interest income evenly over the remaining life of the related debt.
Noncash Financing
We own 49% of a limited partnership which constructed a new
corporate office building in which we are the primary occupant.
During the first quarter of 2002, the limited partnership refinanced
its construction loan obligation with an $85 million mortgage
secured by the property, of which $79 million was included in
our balance sheet at January 31, 2003. The obligation has a
fixed interest rate of 7.68% and a term of 18 years.
Available Credit
In November 2001, we entered into a $300 million unsecured
revolving credit facility that expires in November 2004. As of
January 31, 2003, no borrowings have been made against this
revolving credit facility.
Also in November 2001, we issued a variable funding note backed
by Nordstrom private label receivables with a $200 million capacity.
As of January 31, 2003, no borrowings were outstanding against
this note.
Additionally, we have universal shelf registrations on file with
the Securities and Exchange Commission that permit us to offer
an additional $450 million of securities to the public. These
registration statements allow us to issue various types of securities,
including debt, common stock, warrants to purchase common stock,
warrants to purchase debt securities and warrants to purchase or
sell foreign currency.
Contractual Obligations
The following table summarizes our contractual obligations and
the expected effect on liquidity and cash flows.
Less than 1-3 4-5 Over 5
Fiscal Year Total 1 Year Years Years Years
Long-term Debt $1,338.4 $5.2 $407.9 $307.1 $618.2
Capital Leases 16.0 1.1 2.2 2.2 10.5
Operating Leases 780.4 73.2 141.3 123.9 442.0
Construction
Commitments 227.3 165.2 62.1 — —
Total $2,362.1 $244.7 $613.5 $433.2 $1,070.7