-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L3mumf432zKkYt8YmEXnskAU7gnpXEhQ6hshGEXp8VxwZXWtBCanCeTffReuRasg kTmJDwPFW3QmUJ7RTxM4wA== 0000028917-96-000008.txt : 19960618 0000028917-96-000008.hdr.sgml : 19960618 ACCESSION NUMBER: 0000028917-96-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960504 FILED AS OF DATE: 19960617 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DILLARD DEPARTMENT STORES INC CENTRAL INDEX KEY: 0000028917 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DEPARTMENT STORES [5311] IRS NUMBER: 710388071 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06140 FILM NUMBER: 96581829 BUSINESS ADDRESS: STREET 1: 1600 CANTRELL RD CITY: LITTLE ROCK STATE: AR ZIP: 72201 BUSINESS PHONE: 5013765200 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 4, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission file number 1-6140 DILLARD DEPARTMENT STORES, INC. (Exact name of registrant as specified in its charter) DELAWARE 71-0388071 (State or other (IRS Employer jurisdiction of incorporation Identification Number) or organization) 1600 CANTRELL ROAD, LITTLE ROCK, ARKANSAS 72201 (Address of principal executive offices) (Zip Code) (501) 376-5200 (Registrant's telephone number, including area code) Indicate by checkmark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. CLASS A COMMON STOCK as of May 4, 1996 109,452,874 CLASS B COMMON STOCK as of May 4, 1996 4,016,929 PART I FINANCIAL INFORMATION ITEM 1 Financial Statements CONSOLIDATED BALANCE SHEETS DILLARD DEPARTMENT STORES, INC. (Unaudited) (Thousands) May 4 February 3 April 29 1996 1996 1995 ASSETS CURRENT ASSETS Cash and cash equivalents $70,696 $58,442 $48,889 Trade accounts receivable 1,038,569 1,103,575 1,034,356 Merchandise inventories 1,750,318 1,486,045 1,584,719 Other current assets 6,237 10,163 9,410 TOTAL CURRENT ASSETS 2,865,820 2,658,225 2,677,374 INVESTMENTS AND OTHER ASSETS 87,803 84,772 75,653 PROPERTY AND EQUIPMENT, NET 2,010,346 1,980,790 1,942,851 CONSTRUCTION IN PROGRESS 38,975 43,552 33,399 BUILDINGS UNDER CAPITAL LEASES 9,347 11,196 22,831 $5,012,291 $4,778,535 $4,752,108 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Trade accounts payable and accrued expenses $700,305 $559,011 $660,364 Commercial paper 165,503 125,310 129,825 Federal and state income taxes 43,805 51,832 44,967 Current portion of long-term debt 206,378 131,378 55,865 Current portion of capital lease obligations 1,835 2,149 2,038 TOTAL CURRENT LIABILITIES 1,117,826 869,680 893,059 LONG-TERM DEBT 1,081,004 1,157,864 1,173,998 CAPITAL LEASE OBLIGATIONS 18,400 20,161 22,046 DEFERRED INCOME TAXES 252,503 252,503 294,450 STOCKHOLDERS' EQUITY Preferred Stock 440 440 440 Common Stock 1,135 1,131 1,130 Additional paid-in capital 636,475 625,249 624,086 Retained earnings 1,904,508 1,851,507 1,742,899 2,542,558 2,478,327 2,368,555 $5,012,291 $4,778,535 $4,752,108 ********** See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS DILLARD DEPARTMENT STORES, INC. (Unaudited) (Thousands, except per share data) Three Months Ended Twelve Months End May 4 April 29 May 4 April 29 1996 1995 1996 1995 Net sales (including leased departments) $1,453,302 $1,326,754 $6,044,586 $5,588,616 ********** Service charges, interest, and 48,451 47,522 180,029 182,285 1,501,753 1,374,276 6,224,615 5,770,901 Cost and expenses: Cost of sales 955,797 881,928 3,967,655 3,643,477 Advertising, selling, administrative and general expenses 366,353 327,460 1,475,339 1,344,603 Depreciation and amortization 50,334 47,816 194,323 192,399 Rentals 11,158 11,629 58,364 63,150 Interest and debt expense 28,585 27,414 121,225 121,044 Impairment charges - - 126,559 - 1,412,227 1,296,247 5,943,465 5,364,673 INCOME BEFORE INCOME TAXES 89,526 78,029 281,150 406,228 Federal and state income taxes 33,125 29,650 105,945 154,365 NET INCOME 56,401 48,379 175,205 251,863 Retained earnings at beginning of period 1,851,507 1,697,911 1,742,899 1,503,488 1,907,908 1,746,290 1,918,104 1,755,351 Cash dividends declared (3,400) (3,391) (13,596) (12,452) RETAINED EARNINGS AT END OF PERIOD $1,904,508 $1,742,899 $1,904,508 $1,742,899 Net income per common share $0.50 $0.43 $1.55 $2.23 Cash dividends declared per com $0.03 $0.03 $0.12 $0.11 Average shares outstanding 113,794 113,046 113,331 113,025 See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS DILLARD DEPARTMENT STORES, INC. (Unaudited) (Thousands) Three Months May 4 April 29 1996 1995 OPERATING ACTIVITITES Net income $56,401 $48,379 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 50,716 48,153 Changes in operating assets and liabilities: Decrease in trade accounts receivable 65,006 67,748 Increase in merchandise inventories and other current assets (260,347) (222,526) Increase in investments and other assets (3,413) (7,180) Increase in trade accounts payable and accrued expenses and income taxes 133,267 94,365 NET CASH PROVIDED BY OPERATING ACTIVITIES 41,630 28,939 INVESTING ACTIVITIES Purchase of property and equipment (73,464) (62,752) NET CASH USED IN INVESTING ACTIVITIES (73,464) (62,752) FINANCING ACTIVITIES Net increase in commercial paper 40,193 39,919 Principal payments on long-term debt and capital lease obligations (3,935) (4,911) Dividends paid (3,400) (3,401) Common stock issued 11,230 - NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 44,088 31,607 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 12,254 (2,206) Cash and cash equivalents at beginning of period 58,442 51,095 CASH AND CASH EQUIVALENTS AT END OF PERIOD $70,696 $48,889 See notes to consolidated financial statements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended May 4, 1996 are not necessarily indicative of the results that may be expected for the fiscal year ending February 1, 1997 due to the seasonal nature of the business. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the fiscal year ended February 3, 1996. 2. The retail last-in, first-out (LIFO) inventory method is used to value merchandise inventories. Under this method, at May 4, 1996 the LIFO cost of merchandise inventories was approximately equal to the first-in, first-out (FIFO) cost. At April 29, 1995, the LIFO cost of merchandise inventories was approximately $500,000 less than the first-in, first-out (FIFO) cost. At February 3, 1996 and January 28, 1995, the LIFO cost of merchandise inventories was approximately equal to FIFO cost. 3. Net sales include leased department sales of $7 million and $7.3 million for the quarters ended May 4, 1996 and April 29, 1995, respectively. Leased department sales for the twelve months ended May 4, 1996 and April 29, 1995 were $38.2 million and $44.6 million, respectively. 4. In October 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation," which is effective for the Company beginning February 4, 1996. SFAS No. 123 requires expanded disclosures of stock-based compensation arrangements with employees and encourages (but does not require) compensation cost to be measured based on fair value of the equity instrument awarded. Companies are permitted, however, to continue to apply APB Opinion No. 25, which recognizes compensation cost based on the intrinsic value of the equity instrument awarded. The Company will continue to apply APB Opinion No. 25 to its stock based compensation awards to employees and will disclose the required pro forma effect on net income and earnings per share. 5. On June 7, 1996, the Company issued $100 million aggregate principal amount of its 7.375% notes due June 1, 2006. The notes were sold in an underwritten public offering. ITEM 2 Management's Discussion And Analysis Of Financial Condition And Results Of Operations Results of Operations The following table sets forth operating results expressed as a percentage of net sales for the periods indicated: Three Months Ended Twelve Months Ended May 4 April 29 May 4 April 29 1996 1995 1996 1995 Net sales 100.0% 100.0% 100.0% 100.0% Cost of sales 65.8 66.5 65.6 65.2 Gross Profit 34.2 33.5 34.4 34.8 Advertising, selling, administrative and general expenses 25.2 24.7 24.4 24.1 Depreciation and amortization 3.4 3.6 3.2 3.4 Rentals 0.8 0.9 1.0 1.1 Interest and debt expense 1.9 2.0 2.0 2.2 Impairment charges 0.0 0.0 2.1 0.0 Total operating expenses 31.3 31.2 32.7 30.8 Other income 3.3 3.6 3.0 3.3 Income before income taxes 6.2 5.9 4.7 7.3 Federal and state income taxes 2.3 2.2 1.8 2.8 Net income 3.9 3.7 2.9 4.5 Sales for the first quarter of 1996 were $1,453.3 million as compared to $1,326.8 million for the first quarter of 1995. This is an increase of 10%. The sales increase for comparable stores was 6%. The twelve month sales increase for 1996 over 1995 was 8%; for comparable stores the increase was 4%. The majority of the increase in sales on a comparable store basis was attributable to an increase in the volume of goods sold rather than an increase in the price of goods. Cost of sales decreased from 66.5% of net sales for the first quarter of 1995 to 65.8% for the first quarter of 1996. This decrease was due to a lower level of markdowns in the first quarter of 1996 than in the first quarter of 1995. For the twelve months ended May 4, 1996 and April 29, 1995, the cost of sales increased from 65.2% to 65.6% of net sales. This increase was due to a slightly higher level of markdowns than in the prior year. Advertising, selling, administrative and general expenses increased from 24.7% of net sales for the first quarter of 1995 to 25.2% for the first quarter of 1996. For the twelve months ended May 4, 1996 and April 29, 1995, these expenses increased from 24.1% to 24.4% of net sales. The Company expensed the preopening costs associated with the seven new stores opened in the first quarter of 1996. In prior years the Company expensed all preopening costs for the year in the fourth quarter. Also, the bad debt expense increased as a percent of sales for the first quarter of 1996 as compared to the first quarter of 1995. Depreciation and amortization expense decreased slightly as a percentage of sales from 1995 in the three and twelve month periods ended May 4, 1996. This decrease was due to the write down of certain impaired assets in the fourth quarter of 1995, somewhat offset by the fact that a higher proportion of the Company's properties are owned rather than leased. Rental expense decreased slightly from .9% of net sales for the first quarter of 1995 to .8% for the first quarter of 1996. For the twelve months ended May 4, 1996 and April 29, 1995 the decrease was from 1.1% to 1.0%. This was due to a higher proportion of the Company's properties being owned rather than leased. Interest and debt expense decreased from 2.0% of net sales for the first quarter of 1995 to 1.9% of net sales for the first quarter of 1996. For the twelve months ended May 4, 1996 and April 29, 1995 the decrease was from 2.2% to 2.0%. Interest and debt expense declined as a percentage of net sales due to a lower level of debt relative to sales, partially offset by higher interest rates on short-term debt. Service charges, interest and other income decreased to 3.3% of net sales in the first quarter of 1996 from 3.6% of net sales in 1995. For the twelve months ended May 4, 1996 and April 29, 1995 this decrease was from 3.3% to 3.0%. The primary cause for this decrease was a decline in proprietary credit card sales as a percentage of total sales. The effective federal and state income tax rate was 37% for the first quarter of 1996 and 38% for the first quarter of 1995. Financial Condition The Company's working capital was $1,747,994,000 at May 4, 1996, $1,788,545,000 at February 3, 1996, and $1,784,315,000 at April 29, 1995. The current ratio for these periods was 2.6, 3.1 and 3.0, respectively. The long-term debt to capitalization ratio was 30.19%, 32.2% and 33.6% at May 4, 1996, February 3, 1996, and April 29, 1995, respectively. The ratio of long-term debt to capitalization is calculated by dividing the total amount of long-term debt and capitalized lease obligations by the sum of the total amount of long- term debt and capitalized lease obligations plus total equity. The changes in the above ratios were primarily caused by the increase in current maturity of long-term debt and the corresponding decrease in long-term debt. On June 7, 1996, the Company issued $100 million 7.375% notes due June 1, 2006. The proceeds were used to reduce short term borrowings. The Company invested $73,464,000 in capital expenditures for the three months ended May 4, 1996 as compared to $62,752,000 for the three months ended April 29, 1995. In 1996, the Company plans to build sixteen new stores, one of which will be a replacement store, and to expand and remodel three existing stores. In 1995, the Company opened eleven new stores, two of which were replacement stores, and expanded six stores. Merchandise inventories increased by 10% from $1,584,719,000 at April 29, 1995 to $1,750,318,000 at May 4, 1996. The Company operated 13 more stores at May 4, 1996 versus April 29, 1995. This was the primary reason for the increase in inventory. On a comparable store basis, the rate of increase in merchandise inventories was 5%. Fluctuations in certain other balance sheet accounts between February 3, 1996 and May 4, 1996 reflect normal seasonal variations within the retail industry. The levels of merchandise inventories and accounts receivable fluctuate due to the seasonal nature of the retail business. Along with the fluctuations in these current assets, there is also a corresponding fluctuation in trade accounts payable and commercial paper. PART II OTHER INFORMATION ITEM 4 Submission of Matters to a Vote of Security Holders The annual meeting of stockholders of the Company was held on May 18, 1996. The matters submitted to a vote of the stockholders were the election of directors and a stockholder proposal requesting preparation of an employment practices report. The holders of Class A Common Stock elected five directors and the holders of Class B Common Stock elected ten directors. The individuals elected as directors and the votes received were as follows: Nominee For Against Class A Nominees Robert C. Connor 94,501,305 2,163,555 Will D. Davis 94,493,359 2,171,501 John Paul Hammerschmidt 92,977,522 3,687,338 William B. Harrison 81,732,108 14,932,752 J.M. Hessels 82,654,913 14,009,947 Class B Nominees William Dillard 4,010,760 0 Calvin N. Clyde 4,010,760 0 Drue Corbusier 4,010,760 0 Alex Dillard 4,010,760 0 Mike Dillard 4,010,760 0 William Dillard II 4,010,760 0 James I. Freeman 4,010,760 0 John H. Johnson 4,010,760 0 E. Ray Kemp 4,010,760 0 William H. Sutton 4,010,760 0 The votes cast in connection with the stockholder proposal were as follows: For 11,640,136.70 Against 72,209,279.65 Abstain 11,906,486.65 ITEM 5 Other Information Ratio of Earnings to Fixed Charges The Company has calculated the ratio of earnings to fixed charges pursuant to Item 503 of Regulation S-K of the Securities and Exchange Commission as follows: Three Months Ended Fiscal Year Ended May 4 April 29 February 3 January 28 January 29 January 30 February 1 1996 1995 1996 1995 1994 1993 1992 3.69 3.37 2.76 3.72 3.57 3.59 3.41 ITEM 6 Exhibits and Reports on Form 8-K (a) Exhibit (11): Statement re: Computation of Per Share Earnings Exhibit (12): Statement re: Computation of Ratio of Earnings to Fixed Charges (b) Reports on Form 8-K filed during the first quarter: The Company filed a report dated June 4, 1996 relating to the issue of $100 million aggregate principal amount of 7.375% Notes maturing on June 1, 2006. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DILLARD DEPARTMENT STORES, INC. (Registrant) DATE: June 17, 1996 /s/ James I. Freeman James I. Freeman Senior Vice President & Chief Financial Officer (Principal Financial & Accounting Officer) EXHIBIT INDEX Exhibits to Form 10-Q Exhibit Number Exhibit 11 Statement re: Computation of Per Share Earnings 12 Statement re: Computation of Ratio of Earnings to Fixed Charges EX-11 2 EXHIBIT 11 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS Three Months Ended Twelve Months Ended May 4 April 29 May 4 April 29 1996 1995 1996 1995 Average shares outstanding 113,219,578 113,045,656 113,090,100 113,012,890 Net effect of dilutive stock options based on the treasury stock method using average market price 574,431 0 240,830 12,163 Total 113,794,009 113,045,656 113,330,930 113,025,053 Net Income $56,401,000 $48,379,000 $175,205,000 $251,863,000 Less preferred dividends (5,500) (5,500) (22,000) (22,000) Net income available to common shares $56,395,500 $48,373,500 $175,183,000 $251,841,000 Per share $0.50 $0.43 $1.55 $2.23
EX-12 3 EXHIBIT 12 - STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED) Three Months Ended Fiscal Year Ended May 4 April 29 February 3 January 28 January 29 January 30 February 1 1996 1995 1996 1995 1994 1993 1992 Consolidated pretax income $89,526 $78,029 $269,653 $406,110 $399,534 $375,330 $322,157 Fixed charges (less capitalized interest) 32,304 31,290 139,666 145,921 152,568 142,857 128,891 EARNINGS $121,830 $109,319 $409,319 $552,031 $552,102 $518,187 $451,048 Interest $28,585 $27,414 $120,054 $124,282 $130,915 $121,940 109,386 Capitalized interest 750 1,195 3,567 2,545 1,882 1,646 3,574 Interest factor in rent expense 3,719 3,876 19,612 21,639 21,653 20,917 19,505 FIXED CHARGES $33,054 $32,485 $143,233 $148,466 $154,450 $144,503 $132,465 Ratio of earnings to fixed charges 3.69 3.37 2.86 3.72 3.57 3.59 3.41
EX-27 4
5 1000 3-MOS FEB-01-1997 MAY-4-1997 70,696 0 1,038,569 18,272 1,750,318 2,865,820 3,266,958 1,208,290 5,012,291 1,117,826 1,099,404 0 440 1,135 2,540,983 5,012,291 1,453,302 1,501,753 955,797 955,797 0 15,710 28,585 89,526 33,125 56,401 0 0 0 56,401 .50 .50
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