Nordstrom 2004 Annual Report Download - page 16

auditors’ report on consolidated financial statements consolidated statements of earnings
Consolidated Statements of Earnings
Amounts in thousands except per share amounts
Fiscal year 2004 2003 2002
Net sales $7,131,388 $6,448,678 $5,944,656
Cost of sales and related buying and occupancy costs (4,559,388) (4,215,546) (3,970,022)
Gross profit 2,572,000 2,233,132 1,974,634
Selling, general and administrative expenses (2,020,233) (1,899,129) (1,783,210)
Operating income 551,767 334,003 191,424
Interest expense, net (77,428) (90,952) (81,921)
Minority interest purchase and reintegration costs —— (53,168)
Other income including finance charges, net 172,942 155,090 139,289
Earnings before income taxes and cumulative
effect of accounting change 647,281 398,141 195,624
Income tax expense (253,831) (155,300) (92,041)
Earnings before cumulative effect of accounting change 393,450 242,841 103,583
Cumulative effect of accounting change (net of tax of $8,541) —— (13,359)
Net earnings $393,450 $242,841 $90,224
Basic earnings per share $2.82 $1.78 $0.67
Diluted earnings per share $2.77 $1.76 $0.66
Basic shares 139,497 136,329 135,107
Diluted shares 142,267 137,739 135,724
Cash dividends paid per share of common stock outstanding $0.48 $0.41 $0.38
Consolidated Statements of Earnings (% of sales)
Fiscal year 2004 2003 2002
Net sales 100.0% 100.0% 100.0%
Cost of sales and related buying and occupancy costs (63.9) (65.4) (66.8)
Gross profit 36.1 34.6 33.2
Selling, general and administrative expenses (28.3) (29.4) (30.0)
Operating income 7.8 5.2 3.2
Interest expense, net (1.1) (1.4) (1.4)
Minority interest purchase and reintegration costs —— (0.9)
Other income including finance charges, net 2.4 2.4 2.4
Earnings before income taxes and cumulative
effect of accounting change 9.1 6.2 3.3
Income tax expense (3.6) (2.4) (1.6)
Earnings before cumulative effect of accounting change 5.5 3.8 1.7
Cumulative effect of accounting change —— (0.2)
Net earnings 5.5% 3.8% 1.5%
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Nordstrom, Inc.
We have audited the accompanying consolidated balance sheets of
Nordstrom, Inc. and subsidiaries (the “Company”) as of January 29,
2005 and January 31, 2004, and the related consolidated statements
of earnings, shareholders’ equity, and cash flows for each of the
three years in the period ended January 29, 2005. These financial
statements are the responsibility of the Company’s management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of Nordstrom, Inc.
and subsidiaries as of January 29, 2005 and January 31, 2004,
and the results of their operations and their cash flows for each
of the three years in the period ended January 29, 2005, in conformity
with accounting principles generally accepted in the United States
of America.
The Company changed its method of accounting for goodwill and other
intangible assets upon adoption of Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets, for the year
ended January 31, 2003, as discussed in Note 2 to the consolidated
financial statements.
We have also audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the effectiveness
of the Company’s internal control over financial reporting as of January
29, 2005, based on the criteria established in Internal Control—
Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated April 7,
2005 expressed an unqualified opinion on management’s assessment of
the effectiveness of the Company’s internal control over financial
reporting and an unqualified opinion on the effectiveness of the
Company’s internal control over financial reporting.
Deloitte & Touche LLP
Seattle, Washington
April 7, 2005