Nordstrom 2002 Annual Report Download - page 43

notes to consolidated
financial statements
NORDSTROM INC. AND SUBSIDIARIES 41
Note 20: Restructurings, Impairments and Other One-Time Charges
The following table provides a summary of restructuring, impairments
and other charges:
Year ended January 31, 2003 2002 2001
Restructuring – employee
severance $ — $1,791 $ —
Management severance —— 13,000
Asset impairment 15,570 — 10,227
Total charges $15,570 $1,791 $23,227
In July 2002, we recognized a charge of $15,570 to write-down
an IT investment in a supply chain tool intended to support our
manufacturing division. Due to changes in business strategy,
we determined that this asset was impaired. This charge to the
Retail Stores segment reduced this asset to its estimated market
value. The charge was recorded in selling, general and
administrative expense.
During the year ended January 31, 2002, we streamlined our
operations through a reduction in workforce of approximately 2,600
employees. As a result, we 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, we 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, we 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. We also accrued $13,000 for certain severance and other
costs related to a change in management.
During the year ended January 31, 2000, we recorded a $10,000
charge in selling, general and administrative expenses primarily
associated with the restructuring of our 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,
we recorded $2,056 related to settlement costs for two lawsuits.
The restructuring included the termination of 50 employees in the
information technology department. At January 31, 2000, $1,452
of the charge remained unpaid.
The following table presents the activity and balances of the reserves
established in connection with the restructuring charges:
Year ended January 31, 2003 2002 2001
Beginning balance $ — $178 $1,452
Additions —1,791 —
Payments —(1,890) (1,220)
Adjustments —(79) (54)
Ending balance $ — $ — $178
Note 21: Nordstrom.com
In May 2002, we paid $70,000 for the outstanding shares of
Nordstrom.com, Inc. series C preferred stock in fulfillment of our
put agreement with the minority interest holders of Nordstrom.com
LLC. The excess of the purchase price over the fair market value
of the preferred stock and professional fees resulted in a one-time
charge of $42,736. No tax benefit was recognized, as we do not
believe it is probable that this benefit will be realized. Purchase
of the minority interest of Nordstrom.com also resulted in additional
goodwill of $24,057.
In July 2002, we purchased 3,608,322 Nordstrom.com options
and 470,000 warrants for $11,802. We recognized $10,432 of
expense related to the purchase of these options and warrants.
The following table presents the charges associated with the minority
interest purchase and reintegration costs.
Year ended January 31, 2003
Excess of the purchase price over the fair market
value of the preferred stock $40,389
Nordstrom.com option/warrant buyback expense 10,432
Professional fees incurred 2,347
Total $53,168