T
|
QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
£
|
TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
DELAWARE
|
71-0388071
|
|
(State or other
jurisdiction of incorporation or organization)
|
(IRS
Employer Identification Number)
|
Large
accelerated filer þ
|
Accelerated
filer ¨
|
Non-accelerated
filer ¨ (Do
not check if a smaller reporting company)
|
Smaller
reporting company ¨
|
Page
|
||
PART
I. FINANCIAL INFORMATION
|
Number
|
|
Item
1.
|
||
3
|
||
4
|
||
5
|
||
6
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||
Item
2.
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11
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|
Item
3.
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21
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|
Item
4.
|
21
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|
PART
II. OTHER INFORMATION
|
||
Item
1.
|
23
|
|
Item
1A.
|
23
|
|
Item
2.
|
23
|
|
Item
3.
|
23
|
|
Item
4.
|
23
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|
Item
5.
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24
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|
Item
6.
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24
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|
24
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DILLARD'S, INC.
|
||||||||||||
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
||||||||||||
(Unaudited)
|
||||||||||||
(In
Thousands)
|
||||||||||||
May
3,
|
February
2,
|
May
5,
|
||||||||||
2008
|
2008
|
2007
|
||||||||||
Assets
|
(As
restated. See Note 1)
|
|||||||||||
Current
assets:
|
||||||||||||
Cash
and cash equivalents
|
$ | 84,043 | $ | 88,912 | $ | 137,915 | ||||||
Accounts
receivable
|
9,034 | 10,880 | 9,932 | |||||||||
Merchandise
inventories
|
2,018,406 | 1,779,279 | 2,032,711 | |||||||||
Other
current assets
|
64,658 | 66,117 | 42,143 | |||||||||
Total
current assets
|
2,176,141 | 1,945,188 | 2,222,701 | |||||||||
Property
and equipment, net
|
3,182,271 | 3,190,444 | 3,197,530 | |||||||||
Goodwill
|
31,912 | 31,912 | 34,511 | |||||||||
Other
assets
|
166,459 | 170,585 | 170,959 | |||||||||
Total
assets
|
$ | 5,556,783 | $ | 5,338,129 | $ | 5,625,701 | ||||||
Liabilities
and stockholders' equity
|
||||||||||||
Current
liabilities:
|
||||||||||||
Trade
accounts payable and accrued expenses
|
$ | 957,545 | $ | 753,309 | $ | 1,013,659 | ||||||
Current
portion of long-term debt
|
100,712 | 196,446 | 196,399 | |||||||||
Current
portion of capital lease obligations
|
2,295 | 2,613 | 3,027 | |||||||||
Other
short-term borrowings
|
300,000 | 195,000 | - | |||||||||
Federal
and state income taxes
|
39,471 | 36,802 | 55,696 | |||||||||
Total
current liabilities
|
1,400,023 | 1,184,170 | 1,268,781 | |||||||||
Long-term
debt
|
759,981 | 760,165 | 860,693 | |||||||||
Capital
lease obligations
|
25,339 | 25,739 | 27,633 | |||||||||
Other
liabilities
|
219,817 | 217,403 | 208,596 | |||||||||
Deferred
income taxes
|
435,633 | 436,541 | 435,835 | |||||||||
Guaranteed
preferred beneficial interests in the
|
||||||||||||
Company’s
subordinated debentures
|
200,000 | 200,000 | 200,000 | |||||||||
Stockholders’
equity:
|
||||||||||||
Common
stock
|
1,206 | 1,205 | 1,204 | |||||||||
Additional
paid-in capital
|
780,757 | 778,987 | 777,628 | |||||||||
Accumulated
other comprehensive loss
|
(21,786 | ) | (22,211 | ) | (20,836 | ) | ||||||
Retained
earnings
|
2,680,373 | 2,680,690 | 2,679,135 | |||||||||
Less
treasury stock, at cost
|
(924,560 | ) | (924,560 | ) | (812,968 | ) | ||||||
Total
stockholders' equity
|
2,515,990 | 2,514,111 | 2,624,163 | |||||||||
Total
liabilities and stockholders' equity
|
$ | 5,556,783 | $ | 5,338,129 | $ | 5,625,701 |
DILLARD'S, INC.
|
||||||||
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
|
||||||||
(Unaudited)
|
||||||||
(In
Thousands, Except Per Share Data)
|
||||||||
Three
Months Ended
|
||||||||
May
3,
|
May
5,
|
|||||||
2008
|
2007
|
|||||||
Net
sales
|
$ | 1,675,554 | $ | 1,762,954 | ||||
Service
charges and other income
|
38,044 | 36,500 | ||||||
1,713,598 | 1,799,454 | |||||||
Cost
of sales
|
1,118,302 | 1,126,091 | ||||||
Advertising,
selling, administrative and general expenses
|
480,921 | 498,687 | ||||||
Depreciation
and amortization
|
72,075 | 74,932 | ||||||
Rentals
|
15,677 | 13,198 | ||||||
Interest
and debt expense, net
|
22,113 | 20,736 | ||||||
Gain
on disposal of assets
|
(99 | ) | –– | |||||
Asset
impairment and store closing charges
|
925 | 688 | ||||||
Income
before income taxes and equity in earnings of joint
ventures
|
3,684 | 65,122 | ||||||
Income
taxes
|
1,610 | 25,390 | ||||||
Equity
in earnings of joint ventures
|
619 | 3,192 | ||||||
Net
income
|
2,693 | 42,924 | ||||||
Retained
earnings at beginning of period
|
2,680,690 | 2,640,224 | ||||||
Cash
dividends declared
|
(3,010 | ) | (3,210 | ) | ||||
Cumulative
effect of accounting change related to adoption of FIN 48
|
- | (803 | ) | |||||
Retained
earnings at end of period (as restated)
|
$ | 2,680,373 | $ | 2,679,135 | ||||
Earnings
per share:
|
||||||||
Basic
|
$ | 0.04 | $ | 0.54 | ||||
Diluted
|
$ | 0.04 | $ | 0.53 | ||||
Cash
dividends declared per common share
|
$ | 0.04 | $ | 0.04 |
DILLARD'S, INC.
|
||||||||
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
(Unaudited)
|
||||||||
(In
Thousands)
|
||||||||
Three
Months Ended
|
||||||||
May
3,
|
May
5,
|
|||||||
2008
|
2007
|
|||||||
Operating
activities:
|
||||||||
Net
income
|
$ | 2,693 | $ | 42,924 | ||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation
and amortization of property and deferred financing
|
72,536 | 75,410 | ||||||
Share-based
compensation
|
15 | 31 | ||||||
Excess
tax benefits from share-based compensation
|
–– | (433 | ) | |||||
(Gain)
loss on disposal of property and equipment
|
(99 | ) | 16 | |||||
Asset
impairment and store closing charges
|
925 | 688 | ||||||
Gain
from hurricane insurance proceeds
|
–– | (4,072 | ) | |||||
Proceeds
from hurricane insurance
|
–– | 5,881 | ||||||
Changes
in operating assets and liabilities:
|
||||||||
Decrease
in accounts receivable
|
1,846 | 576 | ||||||
Increase
in merchandise inventories and other current assets
|
(246,925 | ) | (253,210 | ) | ||||
Decrease
(increase) in other assets
|
3,665 | (3,235 | ) | |||||
Increase
in trade accounts payable and accrued expenses, other liabilities
and income taxes
|
201,877 | 172,472 | ||||||
Net
cash provided by operating activities
|
36,533 | 37,048 | ||||||
Investing
activities:
|
||||||||
Purchases
of property and equipment
|
(46,759 | ) | (109,106 | ) | ||||
Proceeds
from hurricane insurance
|
–– | 16,101 | ||||||
Proceeds
from sale of property and equipment
|
2 | –– | ||||||
Net
cash used in investing activities
|
(46,757 | ) | (93,005 | ) | ||||
Financing
activities:
|
||||||||
Principal
payments on long-term debt and capital lease obligations
|
(96,635 | ) | (1,501 | ) | ||||
Proceeds
from issuance of common stock
|
–– | 4,606 | ||||||
Payment
of line of credit fees and expenses
|
–– | (450 | ) | |||||
Excess
tax benefits from share-based compensation
|
–– | 433 | ||||||
Cash
dividends paid
|
(3,010 | ) | (3,210 | ) | ||||
Increase
in short-term borrowings
|
105,000 | –– | ||||||
Net
cash provided by (used in) financing activities
|
5,355 | (122 | ) | |||||
Decrease
in cash and cash equivalents
|
(4,869 | ) | (56,079 | ) | ||||
Cash
and cash equivalents, beginning of period
|
88,912 | 193,994 | ||||||
Cash
and cash equivalents, end of period
|
$ | 84,043 | $ | 137,915 | ||||
Non-cash
transactions:
|
||||||||
Accrued
capital expenditures
|
$ | 17,020 | $ | 2,635 | ||||
Stock
bonus awards
|
1,756 | 1,418 |
Note
1.
|
Basis
of Presentation
|
As Previously
Reported
|
Restatement
Adjustments
|
As
Restated
|
||||||||||
Property and equipment, net
|
$ | 3,208,810 | $ | (11,280 | ) | $ | 3,197,530 | |||||
Total assets
|
5,636,981 | (11,280 | ) | 5,625,701 | ||||||||
Deferred income
taxes
|
439,951 | (4,116 | ) | 435,835 | ||||||||
Retained earnings
|
2,686,299 | (7,164 | ) | 2,679,135 | ||||||||
Total stockholders’
equity
|
2,631,327 | (7,164 | ) | 2,624,163 | ||||||||
Total liabilities
and stockholders’ equity
|
5,636,981 | (11,280 | ) | 5,625,701 |
Note
2.
|
Stock-Based
Compensation
|
Weighted-Average
|
||||||||
Fixed
Options
|
Shares
|
Exercise
Price
|
||||||
Outstanding,
beginning of period
|
5,376,375 | $ | 25.92 | |||||
Granted
|
- | - | ||||||
Exercised
|
- | - | ||||||
Forfeited
|
(40,000 | ) | 25.74 | |||||
Outstanding,
end of period
|
5,336,375 | $ | 25.92 | |||||
Options
exercisable at period end
|
5,316,375 | $ | 25.92 |
Note
3.
|
Asset
Impairment and Store Closing
Charges
|
(in
thousands)
|
Balance,
Beginning
of
Quarter
|
Charges
|
Cash Payments
|
Balance,
End
of Quarter
|
||||||||||||
Rentals,
property taxes and utilities
|
$ | 4,355 | $ | 1,159 | $ | 959 | $ | 4,555 |
Note
4.
|
Earnings
Per Share Data
|
Three
Months Ended
|
||||||||
May
3,
|
May
5,
|
|||||||
2008
|
2007
|
|||||||
Basic:
|
||||||||
Net
income
|
$ | 2,693 | $ | 42,924 | ||||
Weighted
average shares of common stock outstanding
|
75,200 | 80,197 | ||||||
Basic
earnings per share
|
$ | 0.04 | $ | 0.54 |
Three
Months Ended
|
||||||||
May
3,
|
May
5,
|
|||||||
2008
|
2007
|
|||||||
Diluted:
|
||||||||
Net
income
|
$ | 2,693 | $ | 42,924 | ||||
Weighted
average shares of common stock outstanding
|
75,200 | 80,197 | ||||||
Stock
options
|
- | 1,360 | ||||||
Total
weighted average equivalent shares
|
75,200 | 81,557 | ||||||
Diluted
earnings per share
|
$ | 0.04 | $ | 0.53 |
Note
5.
|
Comprehensive
Income
|
Three
Months Ended
|
||||||||
May
3,
|
May
5,
|
|||||||
2008
|
2007
|
|||||||
Net
income
|
$ | 2,693 | $ | 42,924 | ||||
Other
comprehensive loss:
|
||||||||
Amortization
of minimum pension liability adjustment, net of taxes
|
425 | 393 | ||||||
Total
comprehensive income
|
$ | 3,118 | $ | 43,317 |
Note
6.
|
Commitments
and Contingencies
|
Note 7.
|
Benefit
Plans
|
Three
Months Ended
|
||||||||
May
3, 2008
|
May
5, 2007
|
|||||||
Components
of net periodic benefit costs:
|
||||||||
Service
cost
|
$ | 626 | $ | 517 | ||||
Interest
cost
|
1,764 | 1,500 | ||||||
Net
actuarial loss
|
513 | 518 | ||||||
Amortization
of prior service cost
|
157 | 157 | ||||||
Net
periodic benefit costs
|
$ | 3,060 | $ | 2,692 |
Note
8.
|
Recently
Issued Accounting Standards
|
Note
9.
|
Revolving
Credit Agreement
|
Note
10.
|
Share
Repurchase Program
|
Note
11.
|
Income
Taxes
|
|
·
|
Cash
flow – Cash from operating activities is a primary source of liquidity
that is adversely affected when the industry faces market driven
challenges and new and existing competitors seek areas of growth to expand
their businesses.
|
|
·
|
Pricing
– If our customers do not purchase our merchandise offerings in sufficient
quantities, we respond by taking markdowns. If we have to
reduce our prices, the cost of goods sold on our income statement will
correspondingly rise, thus reducing our
income.
|
|
·
|
Success
of brand – The success of
our exclusive brand merchandise is dependent upon customer fashion
preferences.
|
|
·
|
Store
growth – Our growth is dependent on a number of factors which could
prevent the opening of new stores, such as identifying suitable markets
and locations.
|
|
·
|
Sourcing –
Store merchandise is dependent upon adequate and stable availability of
materials and production facilities from which the Company sources its
merchandise.
|
(in
millions of dollars)
|
2008
|
2007
|
||||||
Estimated
|
Actual
|
|||||||
Depreciation
and amortization
|
$ | 290 | $ | 299 | ||||
Rental
expense
|
62 | 60 | ||||||
Interest
and debt expense, net
|
92 | 92 | ||||||
Capital
expenditures
|
204 | 396 |
|
·
|
Significant
changes in the manner of our use of assets or the strategy for the overall
business;
|
|
·
|
Significant
negative industry or economic trends;
or
|
|
·
|
Store
closings.
|
Three Months
Ended
|
||||||||
May 3,
|
May 5,
|
|||||||
2008
|
2007
|
|||||||
Net sales
|
100.0 | % | 100.0 | % | ||||
Service charges and other
income
|
2.2 | 2.1 | ||||||
102.2 | 102.1 | |||||||
Cost of
sales
|
66.7 | 63.9 | ||||||
Advertising, selling,
administrative
and general
expenses
|
28.7 | 28.3 | ||||||
Depreciation and
amortization
|
4.3 | 4.3 | ||||||
Rentals
|
0.9 | 0.7 | ||||||
Interest and debt expense,
net
|
1.3 | 1.2 | ||||||
Gain on disposal of assets
|
- | - | ||||||
Asset impairment and store closing
charges
|
0.1 | - | ||||||
Income before income taxes and
equity in earnings of
joint
ventures
|
0.2 | 3.7 | ||||||
Income
taxes
|
- | 1.5 | ||||||
Equity in earnings of joint
ventures
|
- | 0.2 | ||||||
Net
income
|
0.2 | % | 2.4 | % |
%
Change
|
||||
08-07 | ||||
Cosmetics
|
-2.9 | % | ||
Ladies’
apparel and accessories
|
-2.8 | % | ||
Juniors’
and children’s apparel
|
-7.9 | % | ||
Men’s
apparel and accessories
|
-4.7 | % | ||
Shoes
|
-5.5 | % | ||
Home
and furniture
|
-12.4 | % |
%
Change
|
||||
08-07 | ||||
Eastern
|
-6.0 | % | ||
Central
|
-3.7 | % | ||
Western
|
-4.4 | % |
Three
Months Ended
|
||||||||||||||||
May
3, 2008
|
May
5, 2007
|
Dollar
Change
|
Percent
Change
|
|||||||||||||
Leased
department income
|
$ | 3.3 | $ | 2.6 | $ | 0.7 | 26.9 | % | ||||||||
Income
from GE marketing and servicing alliance
|
26.4 | 27.8 | (1.4 | ) | (5.0 | ) | ||||||||||
Other
|
8.3 | 6.1 | 2.2 | 36.1 | ||||||||||||
Total
|
$ | 38.0 | $ | 36.5 | $ | 1.5 | 4.1 | % |
(in thousands of
dollars)
|
May
3, 2008
|
February
2, 2008
|
$
Change
|
%
Change
|
||||||||||||
Cash
and cash equivalents
|
$ | 84,043 | $ | 88,912 | (4,869 | ) | (5.5 | ) | ||||||||
Other
short-term borrowings
|
300,000 | 195,000 | 105,000 | 53.8 | ||||||||||||
Current
portion of long-term debt
|
100,712 | 196,446 | (95,734 | ) | (48.7 | ) | ||||||||||
Long-term
debt
|
759,981 | 760,165 | (184 | ) | - | |||||||||||
Guaranteed
beneficial interests
|
200,000 | 200,000 | - | - | ||||||||||||
Stockholders’
equity
|
2,515,990 | 2,514,111 | 1,879 | 0.1 | ||||||||||||
Current
ratio
|
1.55 | 1.64 | ||||||||||||||
Debt
to capitalization
|
35.1 | % | 35.0 | % |
(in
thousands of dollars)
|
May
3, 2008
|
May
5, 2007
|
$
Change
|
%
Change
|
||||||||||||
Cash
and cash equivalents
|
$ | 84,043 | $ | 137,915 | (53,872 | ) | (39.1 | ) | ||||||||
Other
short-term borrowings
|
300,000 | - | 300,000 | - | ||||||||||||
Current
portion of long-term debt
|
100,712 | 196,399 | (95,687 | ) | (48.7 | ) | ||||||||||
Long-term
debt
|
759,981 | 860,693 | (100,712 | ) | (11.7 | ) | ||||||||||
Guaranteed
beneficial interests
|
200,000 | 200,000 | - | - | ||||||||||||
Stockholders’
equity
|
2,515,990 | 2,624,163 | (108,173 | ) | (4.1 | ) | ||||||||||
Current
ratio
|
1.55 | 1.75 | ||||||||||||||
Debt
to capitalization
|
35.1 | % | 32.4 | % |
New
Locations
|
City
|
Square
Feet
|
|||
Market
Street at Heath Brook
|
Ocala,
Florida
|
126,000 | |||
Shops
at Lake Havasu
|
Lake
Havasu, Arizona
|
98,000 | |||
Shoppes
at River Crossing
|
Macon,
Georgia
|
162,000 | |||
Pier
Park
|
Panama
City, Florida
|
126,000 | |||
Uptown
Village at Cedar Hill
|
Cedar
Hill, Texas
|
145,000 | |||
Edgewater
Mall*
|
Biloxi,
Mississippi
|
180,000 | |||
Total
new square footage
|
837,000 |
Locations
to Close
|
City
|
Square
Feet
|
|||
Turfland
Mall
|
Lexington,
Kentucky
|
214,000 | |||
Chesterfield
Town Center
|
Richmond,
Virginia
|
110,000 | |||
Greeley
Mall
|
Greeley,
Colorado
|
124,000 | |||
McFarland
Mall
|
Tuscaloosa,
Alabama
|
180,000 | |||
Pine
Ridge Mall
|
Pocatello,
Idaho
|
120,000 | |||
Towne
Mall
|
Franklin,
Ohio
|
113,000 | |||
Knoxville
Center
|
Knoxville,
Tennessee
|
200,000 | |||
Hickory
Hollow Mall
|
Antioch,
Tennessee
|
115,000 | |||
Rivercenter
|
San
Antonio, Texas
|
120,000 | |||
Eastland
Mall (clearance center)
|
Charlotte,
North Carolina
|
162,000 | |||
Total
square footage to close
|
1,458,000 |
Period
|
(a)
Total Number of Shares Purchased
|
(b)
Average Price Paid per Share
|
(c)Total
Number of Shares Purchased as Part of Publicly Announced Plans or
Programs
|
(d)
Approximate Dollar Value that May Yet Be Purchased Under the Plans or
Programs
|
February
3, 2008 through March 1, 2008
|
-
|
$-
|
-
|
$200,000,000
|
March
2, 2008 through April 5, 2008
|
-
|
-
|
-
|
200,000,000
|
April
6, 2008 through May 3, 2008
|
-
|
-
|
-
|
200,000,000
|
Total
|
-
|
$-
|
-
|
$200,000,000
|
Three
Months Ended
|
Fiscal
Years Ended
|
|||||||||||
May
3,
|
May
5,
|
February
2,
|
February
3,
|
January
28,
|
January
29,
|
January
31,
|
||||||
2008
|
2007
|
2008
|
2007*
|
2006
|
2005
|
2004
|
||||||
1.14
|
3.42
|
1.54
|
3.34
|
2.01
|
2.12
|
1.05
|
Number
|
Description
|
|
Statement
re: Computation of Earnings to Fixed
Charges.
|
||
Certification
of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
||
Certification
of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
||
Certification
of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (18 U.S.C. 1350).
|
||
Certification
of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (18 U.S.C. 1350).
|
DILLARD'S,
INC.
|
|
(Registrant)
|
|
Date: June 10,
2008
|
/s/ James I.
Freeman
|
James
I. Freeman
|
|
Senior
Vice-President & Chief Financial Officer
|
|
(Principal
Financial and Accounting Officer)
|