Nordstrom 2002 Annual Report Download - page 44

notes to consolidated
financial statements
42 NORDSTROM INC. AND SUBSIDIARIES
Note 22: Vulnerability Due to Certain Concentrations
Approximately 30% of our retail square footage is located in the
state of California. At January 31, 2003, the net book value of
property located in California was approximately $263,000.
We carry earthquake insurance in all states with a $50,000
deductible and a $50,000 payout limit per occurrence.
At January 31, 2003 and 2002, approximately 38% and 40% of
our receivables were obligations of customers residing in California.
Concentration of the remaining receivables is considered to be
limited due to their geographical dispersion.
Note 23: Contingent Liabilities
We have been named in various lawsuits and intend to vigorously
defend ourself. While we cannot predict the outcome of these
lawsuits, we believe these matters will not have a material adverse
effect on our financial position, results of operations or cash flows.
Cosmetics. Nordstrom 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 us, have answered the amended complaint
denying the allegations. The 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 have participated in mediation sessions. The
California state court has set a status conference for June 2003.
Washington Public Trust Advocates. In early 2002, we were named
as one of 30 defendants in Washington Public Trust Advocates,
ex rel., et al. v. City of Spokane, et al., filed in the Spokane County
Superior Court, State of Washington. Plaintiff is a not-for-profit
corporation bringing claims on behalf of the City of Spokane and
the Spokane Parking Public Development Authority. The claims
relate to the River Park Square Mall and Garage Project in Spokane,
Washington (the "Project"), which includes a Nordstrom store.
The portion of the complaint applicable to us seeks to recover from
us the amount of a Department of Housing and Urban Development
loan made to the developer of the Project. Damages are sought in
the amount of $22.75 million, or a lesser amount to the extent that
the HUD loan proceeds were used for the construction of the store
and not as tenant improvements. Other portions of the complaint
seek to invalidate bonds issued to finance the public parking garage
serving the Project, terminate the lease of the parking garage by the
City of Spokane, and rescind other agreements between the City of
Spokane and the developer of the Project, as well as damages from
the developer of the Project in unspecified amounts. The Complaint
also alleges breach of fiduciary duties by various defendants,
including us, to the people of the City of Spokane regarding lack
of disclosures concerning the developer and the Project. By order
dated August 9, 2002, the court granted our motion to dismiss
us from that lawsuit. Plaintiff attempted to obtain direct review
by the Washington Supreme Court which declined to hear the case
and referred it to the Washington Court of Appeals. The Washington
Court of Appeals has scheduled a hearing on the appeal for
April 25, 2003.
Other. We are subject to routine litigation incidental to our business.
No material liability is expected.