Nordstrom 2003 Annual Report Download - page 47

NORDSTROM, INC. and SUBSIDIARIES
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Note 19: Restructurings and Impairments
In 2002, we recognized a charge of $15,570 to write-down an IT investment
in a supply chain tool intended to support our private label division. A strategic
decision was made not to expand our private label division to support an
external wholesale business, resulting in impairment to an in-process software
project designed to support this activity. 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.
In 2001, 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.
The following table presents the activity and balances of the reserves
established in connection with the restructuring charges:
Fiscal Year 2003 2002 2001
Beginning balance $ — $ — $178
Additions — — 1,791
Payments — — (1,890)
Adjustments — — (79)
Ending balance $ —$ —$ —
Note 20: 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:
Fiscal Year 2002
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
Note 21: Self Insurance
We are self insured for certain losses related to health and welfare,
workers' compensation and general liability. We record estimates
of the total cost of claims incurred as of the balance sheet date. These
estimates are based on analysis of historical data and independent
actuarial estimates.
Workers Compensation – we have a deductible per claim of $1,000 or less
and no policy limits. Our workers compensation reserve is $57,400 at
January 31, 2004.
General Liability – we have a deductible per claim of $1,000 or less and
a policy limit up to $150,000. Our general liability reserve is $10,300 at
January 31, 2004.
Health and Welfare – We are self insured for our health and welfare
coverage and do not have stop-loss coverage. Participants contribute to
the cost of their coverage and are subject to certain plan limits and
deductibles. Our health and welfare reserve is $10,000 at January 31, 2004.
Note 22: Vulnerability Due to Certain Concentrations
Approximately 29% of our retail square footage is located in the state
of California. At January 31, 2004, the net book value of property located
in California was approximately $284,000. We carry earthquake insurance
in all states with a $50,000 deductible and a $50,000 payout limit
per occurrence.
At January 31, 2004 and 2003, approximately 37% and 38% 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.
notes to consolidated financial statements