Nordstrom 2002 Annual Report Download - page 32

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notes to consolidated
financial statements
30 NORDSTROM INC. AND SUBSIDIARIES
Note 5: Postretirement Benefits
We have an unfunded Supplemental Executive Retirement Plan
(“SERP”), which provides retirement benefits to certain officers
and select employees. Effective February 2003, the SERP was
amended to change the target benefit, eliminate the offset of
our contributions to the 401k and profit sharing plans and make
additional participants eligible. Certain grandfathered participants
will remain under the previous plan provisions.
The following provides a reconciliation of benefit obligations
and funded status of the SERP:
January 31, 2003 2002
Change in benefit obligation:
Benefit obligation at beginning of year $34,411 $23,543
Service cost 1,447 1,092
Interest cost 3,537 2,668
Amortization of adjustments 2,941 1,821
Change in additional minimum liability 7,760 7,308
Distributions (2,523) (2,021)
Benefit obligations at end of year $47,573 $34,411
Funded status of plan:
Under funded status $(50,125) $(39,547)
Unrecognized transitional obligation —324
Unrecognized prior service cost 3,805 6,396
Unrecognized loss 15,074 6,983
Accrued pension cost $(31,246) $(25,844)
Balance sheet amounts:
Additional minimum liability $(16,327) $(8,567)
Intangible asset 3,805 6,720
The components of SERP expense and a summary of significant
assumptions are as follows:
Year ended January 31, 2003 2002 2001
Service cost $1,447 $1,092 $630
Interest cost 3,537 2,668 2,044
Amortization of adjustments 2,941 1,821 688
Total SERP expense $7,925 $5,581 $3,362
Assumption percentages:
Discount rate 7.00% 7.25% 7.50%
Rate of compensation increase 4.00% 5.00% 5.00%
Note 6: Interest Expense, Net
The components of interest expense, net are as follows:
Year ended January 31, 2003 2002 2001
Short-term debt $677 $3,741 $12,682
Long-term debt 89,850 83,225 58,988
Total interest expense 90,527 86,966 71,670
Less:
Interest income (4,254) (1,545) (1,330)
Capitalized interest (4,352) (10,383) (7,642)
Interest expense, net $81,921 $75,038 $62,698
Note 7: Investment
In September 1998, we made an investment in Streamline.com,
Inc., an Internet grocery and consumer goods delivery company.
Streamline ceased its operations effective November 2000, after
failing to obtain additional capital to fund its operations. During
2000, we wrote-off our entire investment in Streamline, for a total
pre-tax loss on the investment of $32,857.