-----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, Iu/fDct1umahAlYj4pE5ELnnoNjjwtT6fYnl9JFEDmzkYRQtfRkDamEn/yA+mJv9 eneESu+SadRsuHbSp84H0g== 0000028917-98-000016.txt : 19980916 0000028917-98-000016.hdr.sgml : 19980916 ACCESSION NUMBER: 0000028917-98-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980801 FILED AS OF DATE: 19980915 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DILLARDS 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: SEC FILE NUMBER: 001-06140 FILM NUMBER: 98709308 BUSINESS ADDRESS: STREET 1: 1600 CANTRELL RD CITY: LITTLE ROCK STATE: AR ZIP: 72201 BUSINESS PHONE: 5013765200 FORMER COMPANY: FORMER CONFORMED NAME: DILLARD DEPARTMENT STORES INC DATE OF NAME CHANGE: 19920703 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 August 1, 1998 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'S, INC. (Exact name of registrant as specified in its charter) DELAWARE 71-0388071 (State or other (IRS Employer Identification Number) jurisdiction of incorporation 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 August 1, 1998 102,800,501 CLASS B COMMON STOCK as of August 1, 1998 4,016,929 PART I FINANCIAL INFORMATION ITEM 1 Financial Statements CONSOLIDATED BALANCE SHEETS DILLARD'S, INC. (Unaudited) (Thousands) August 1 January 31 August 2 1998 1998 1997 ASSETS CURRENT ASSETS Cash and cash equivalents $65,019 $41,833 $73,225 Trade accounts receivable 1,027,344 1,158,682 1,031,524 Merchandise inventories 1,863,459 1,784,765 1,750,239 Other current assets 13,294 12,777 9,281 TOTAL CURRENT ASSETS 2,969,116 2,998,057 2,864,269 INVESTMENTS AND OTHER ASSETS 113,462 92,298 90,403 PROPERTY AND EQUIPMENT, NET 2,470,643 2,463,801 2,260,592 CONSTRUCTION IN PROGRESS 75,309 37,691 131,816 $5,628,530 $5,591,847 $5,347,080 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Trade accounts payable and accrued expenses $696,486 $530,034 $629,502 Commercial paper 229,366 419,136 234,829 Federal and state income taxes 26,782 40,761 18,513 Current portion of long-term debt 157,268 107,268 156,564 Current portion of capital lease obligations 1,596 1,651 1,589 TOTAL CURRENT LIABILITIES 1,111,498 1,098,850 1,040,997 LONG-TERM DEBT 1,362,173 1,365,716 1,319,758 CAPITAL LEASE OBLIGATIONS 11,532 12,205 12,963 DEFERRED INCOME TAXES 322,028 307,138 261,094 STOCKHOLDERS' EQUITY Preferred Stock 440 440 440 Common Stock 1,149 1,143 1,138 Additional paid-in capital 677,708 657,137 643,987 Retained earnings 2,417,176 2,314,709 2,167,838 Less Treasury Stock (275,174) (165,491) (101,135) 2,821,299 2,807,938 2,712,268 $5,628,530 $5,591,847 $5,347,080 See notes to consolidated financial statements. CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS DILLARD'S, INC. (Unaudited) (Thousands, except per share data) Three Months Ended Six Months Ended Twelve Months Ended August 1 August 2 August 1 August 2 August 1 August 2 1998 1997 1998 1997 1998 1997 Net sales $1,504,504 $1,453,152 $3,186,720 $2,968,496 $6,849,976 $6,402,453 Service charges, interest, and other 47,496 46,188 95,165 93,401 186,921 182,922 1,552,000 1,499,340 3,281,885 3,061,897 7,036,897 6,585,375 Cost and expenses: Cost of sales 964,144 946,119 2,081,365 1,941,322 4,533,334 4,238,486 Advertising, selling, administrative and general expenses 412,231 387,191 826,279 769,781 1,686,219 1,580,961 Depreciation and amortization 54,290 51,326 108,844 102,528 206,255 195,670 Rentals 9,892 10,837 20,183 21,467 53,402 55,170 Interest and debt expense 35,342 33,480 68,998 63,939 134,296 125,729 1,475,899 1,428,953 3,105,669 2,899,037 6,613,506 6,196,016 INCOME BEFORE INCOME TAXES 76,101 70,387 176,216 162,860 423,391 389,359 Income taxes 28,155 26,045 65,200 60,260 156,650 144,065 NET INCOME $47,946 $44,342 $111,016 $102,600 $266,741 $245,294 Retained earnings at beginning of period 2,373,513 2,127,980 2,314,709 2,074,214 2,167,838 1,940,617 2,421,459 2,172,322 2,425,725 2,176,814 2,434,579 2,185,911 Cash dividends declared (4,283) (4,484) (8,549) (8,976) (17,403) (18,073) RETAINED EARNINGS AT END OF PERIOD $2,417,176 $2,167,838 $2,417,176 $2,167,838 $2,417,176 $2,167,838 BASIC EARNINGS PER SHARE $0.45 $0.40 $1.03 $0.92 $2.44 $2.18 DILUTED EARNINGS PER SHARE $0.45 $0.40 $1.03 $0.91 $2.43 $2.17 Cash dividends declared per common share $0.04 $0.04 $0.08 $0.08 $0.16 $0.16
See notes to consolidated financial statements. CONSOLIDATED STATEMENTS OF CASH FLOWS DILLARD'S, INC. (Unaudited) (Thousands) Six Months Ended August 1 August 2 1998 1997 OPERATING ACTIVITITES Net income $111,016 $102,600 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 110,030 103,284 Changes in operating assets and liabilities: Decrease in trade accounts receivable 131,338 98,980 Increase in merchandise inventories and other current assets (79,211) (193,482) (Increase) decrease in investments and other assets (22,350) 15,998 Increase in trade accounts payable and accrued expenses and income taxes 167,363 69,654 NET CASH PROVIDED BY OPERATING ACTIVITIES 418,186 197,034 INVESTING ACTIVITIES Purchase of property and equipment (153,304) (303,003) NET CASH USED IN INVESTING ACTIVITIES (153,304) (303,003) FINANCING ACTIVITIES Net (decrease) increase in commercial paper (189,770) 106,091 Proceeds from long-term borrowings 100,000 200,000 Principal payments on long-term debt and capital lease obligations (54,271) (78,927) Dividends paid (8,549) (13,530) Common stock sold 20,577 2,601 Purchase of treasury stock (109,683) (101,135) NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES (241,696) 115,100 INCREASE IN CASH AND CASH EQUIVALENTS 23,186 9,131 Cash and cash equivalents at beginning of period 41,833 64,094 CASH AND CASH EQUIVALENTS AT END OF PERIOD $65,019 $73,225 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 six month period ended August 1, 1998 are not necessarily indicative of the results that may be expected for the fiscal year ending January 30, 1999 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 January 31, 1998. 2. On February 24, 1998, the Company issued $100 million aggregate principal amount of its 6.3% notes due February 15, 2008. The notes were sold in an underwritten public offering. 3. On February 21, 1997, the Board of Directors authorized the implementation of a Class A common stock repurchase program of up to $300 million. For the quarter ended August 1, 1998, a total of 371,900 shares were purchased for a total of $13.7 million. 4. On August 13, 1998, wholly owned subsidiaries of the Company acquired 36,043,339 shares of the common stock of Mercantile Stores Company, Inc. ("Mercantile"), which together with shares already owned by the Company represented approximately 98% of Mercantile's outstanding shares of common stock, for a cash price of $80.00 per share. Mercantile operates 103 predominantly fashion apparel stores and 16 home stores in 17 states. On August 18, 1998, the Company completed the merger of Mercantile Merger Corporation, a wholly owned subsidiary of the Company, with Mercantile. Upon consummation of the merger, Mercantile became a wholly owned subsidiary of the Company, and the shareholders of Mercantile who did not tender their shares became entitled to receive $80.00 per share. The total purchase price for Mercantile was approximately $3 billion plus certain additional amounts to be paid in respect of outstanding stock options and transaction expenses. The funds used to consummate the acquisition were raised through the issuance of $1 billion of long-term debt, the issuance of $200 million of capital securities, the issuance of $385 million of commercial paper and $1.35 billion of receivables financing by the Company. The remainder of the funds came from existing cash of the Company. The Company has entered into two separate agreements to sell 26 department store locations and related property. Proffit's, Inc. has agreed to acquire the real and personal property of 15 former Mercantile store locations along with certain inventory and accounts receivable. The stores are located in several markets which include Nashville, Tennessee, and Orlando, Florida. The transaction, which is subject to normal conditions, is expected to close by the end of the third quarter of 1998. The May Department Stores Company has agreed to acquire 11 former Mercantile locations in certain markets which include Kansas City, Missouri and Colorado. The transaction closed on September 9, 1998. In addition, the Company and Belk, Inc. have signed a letter of intent agreeing to exchange seven former Mercantile stores located in Florida and South Carolina for nine Belk stores located in Virginia and Tennessee. The transaction is expected to close in the third quarter. The following table sets forth the computation of basic and diluted earnings per share. (thousands, except per share data) Three Months Ended Six Months Ended August 1 August 2 August 1 August 2 1998 1997 1998 1997 Basic: Net Income $ 47,946$ 44,342 $111,016 $102,600 Average shares outstanding 106,727 111,028 107,525 111,911 Earnings per shares - basic $.45 $.40 $1.03 $.92 Diluted: Net Income $ 47,946$ 44,342 $111,016 $102,600 Preferred stock dividends (6) (6) (11) (11) Net earnings available for per-share calculations 47,940 44,336 $111,001 $102,589 Average shares outstanding 106,727 111,028 107,525 111,911 Stock options 882 641 755 421 Total average equivalent shares 107,609 111,669 108,280 112,332 Earnings per share - diluted $.45 $ .40 $1.03 $ .91 Twelve Months Ended August 1 August 2 1998 1997 Basic: Net Income $266,111 $245,294 Average shares outstanding 109,110 112,743 Earnings per shares - basic $2.44 $2.18 Diluted: Net Income $266,111 $ 245,294 Preferred stock dividends (22) (22) Net earnings available for per-share calculations 266,089 245,272 Average shares outstanding 109,110 112,743 Stock options 858 373 Total average equivalent shares 109,968 113,116 Earnings per share - diluted $2.43 $ 2.17 Options to purchase 1,695,225 and 3,064,145 shares of Class A common stock at prices ranging from $37.375 to $45.13 per share were outstanding at August 1, 1998 and August 2, 1997, respectively, but were not included in the computation of diluted earnings per share because they would have been antidilutive. 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 Six Months Ended Twelve Months Ended August 1 August 2 August 1 August 2 August 1 August 2 1998 1997 1998 1997 1998 1997 Net sales 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Cost of sales 64.1% 65.1% 65.3% 65.4% 66.2% 66.2% Gross profit 35.9% 34.9% 34.7% 34.6% 33.8% 33.8% Advertising, selling, administrative and general expenses 27.4% 26.6% 25.9% 25.9% 24.6% 24.7% Depreciation and amortization 3.6% 3.5% 3.4% 3.5% 3.0% 3.1% Rentals 0.7% 0.8% 0.7% 0.7% 0.8% 0.8% Interest and debt expense 2.3% 2.3% 2.2% 2.2% 1.9% 2.0% Total operating expenses 34.0% 33.2% 32.2% 32.3% 30.3% 30.6% Other income 3.2% 3.2% 3.0% 3.2% 2.7% 2.9% Income before income taxes 5.1% 4.9% 5.5% 5.5% 6.2% 6.1% Income taxes 1.9% 1.8% 2.0% 2.0% 2.3% 2.3% Net income 3.2% 3.1% 3.5% 3.5% 3.9% 3.8%
Net sales for the second quarter of 1998 were $1,504.5 million as compared to $1,453.2 million for the second quarter of 1997. This is an increase of 4%. The net sales in comparable stores increased 1% for the period versus last year. The six month sales increase for 1998 over 1997 was 7%; for comparable stores the increase was 4%. The twelve month sales increase for 1998 over 1997 was 7%; for comparable stores the increase was 3%. The majority of the increase in sales 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 65.1% of net sales for the second quarter of 1997 to 64.1% for the second quarter of 1998. For the six months ended August 1, 1998 and August 2, 1997, the cost of sales decreased slightly from 65.4% to 65.3% of net sales. This was caused by a lower level of markdowns in the current period versus the prior period. For the twelve months ended August 1, 1998 and August 1, 1997, the cost of sales remained constant at 66.2% of net sales. Advertising, selling, administrative and general expenses increased from 26.6% of net sales for the second quarter of 1997 to 27.4% of net sales for the second quarter of 1998. This increase was primarily caused by an increase in payroll expense in the selling area. For the six months ended August 1, 1998 and August 2, 1997, these expenses were constant at 25.9% of net sales. For the twelve months ended August 1, 1998 and August 2, 1998 these expenses decreased from 24.7% to 24.6% of net sales. Depreciation and amortization expense increased slightly as a percentage of sales for the three months ended August 1, 1998 compared to the three months ended August 2, 1997 and decreased slightly as a percentage of sales from 1997 in the six and twelve month periods ended August 1, 1998. Rental expense decreased slightly from .8% of net sales for the second quarter of 1997 to .7% for the second quarter of 1998. For the six months ended August 1, 1998 and August 2, 1997, rental expense was .7% of net sales. For the twelve months ended August 1, 1998 and August 2, 1997, rental expense was .8% of net sales. Interest and debt expense remained constant at 2.3% of net sales for the second quarter of 1998 and 1997. For the six months ended August 1, 1998 and August 2, 1997 interest and debt expense remained constant at 2.2% of net sales. For the twelve months ended August 1, 1998 and August 2, 1997 it decreased from 2.0% to 1.9% of net sales. Service charges, interest and other income remained constant at 3.2% of net sales for the second quarter of 1998. For the six months ended August 1, 1998 and August 2, 1997 service charges, interest and other income decreased from 3.2% to 3.0% of net sales. For the twelve months ended August 1, 1998 and August 2, 1997 the decrease was from 2.9% to 2.7% of net sales. 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 second quarter of 1998 and 1997. Financial Condition Net cash flows from operations was $418 million for the first six months of fiscal 1998. In addition to the cash flows from operations, the Company borrowed $100 million by issuing notes in an underwritten public offering. These notes mature on February 15, 2008. The Company also reduced its commercial paper borrowings by $190 million during the six months ended August 1, 1998. The Company invested $153.3 million in capital expenditures for the six months ended August 1, 1998 as compared to $303 million for the six months ended August 2, 1997. In the first six months of 1998 the Company opened three new stores. During 1998, the Company plans to build five additional stores (two of which will be replacement stores). During 1997, the Company built twelve new stores, expanded and remodeled four stores, acquired eleven stores and closed three. On February 21, 1997, the Board of Directors authorized the implementation of a Class A common stock repurchase program of up to $300 million. For the six months of 1998, a total of 3.0 million shares were purchased for a total of $109.7 million. Merchandise inventories increased by 6% from $1.75 billion at August 2, 1997 to $1.86 billion at August 1, 1998. The Company operated 15 more stores at August 1, 1998 versus August 2, 1997. This was the primary reason for the increase in inventory. On a comparable store basis, the rate of increase in merchandise inventories was 1%. Fluctuations in certain other balance sheet accounts between January 31, 1998 and August 2, 1998 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. The Company's Registration Statement registering $2.5 billion in securities went effective on July 24, 1998. On August 7, 1998, the Company issued $1 billion in debt securities in an underwritten public offering. On August 12, 1998, the Company issued $200 million in capital securities in an underwritten public offering. As discussed below, the proceeds from the issuance of these securities were used to fund the purchase of Mercantile. After these transactions, the Company has an effective shelf registration for securities in the amount of $1.3 billion. On August 13, 1998, wholly owned subsidiaries of the Company acquired 36,043,339 shares of common stock of Mercantile, which together with shares already owned by the Company represented approximately 98% of Mercantile's outstanding shares of common stock, for a cash price of $80.00 per share. Mercantile operates 103 predominantly fashion apparel stores and 16 home stores in 17 states. On August 18, 1998, the Company completed the merger of Mercantile Merger Corporation, a wholly owned subsidiary of the Company, with Mercantile. Upon consummation of the merger, Mercantile became a wholly owned subsidiary of the Company, and the shareholders of Mercantile who did not tender their shares became entitled to receive $80.00 per share. The total purchase price for Mercantile was approximately $3 billion plus certain additional amounts to be paid in respect of outstanding stock options and transaction expenses. The funds used to consummate the acquisition were raised through the issuance of $1 billion of long-term debt, the issuance of $200 million of capital securities, the issuance of $385 million of commercial paper and $1.35 billion of receivables financing by the Company. The remainder of the funds came from existing cash of the Company. The Company has entered into two separate agreements to sell 26 department store locations and related property. Proffit's, Inc. has agreed to acquire the real and personal property of 15 former Mercantile store locations along with certain inventory and accounts receivable. The stores are located in several markets which include Nashville, Tennessee and Orlando, Florida. The transaction, which is subject to normal conditions, is expected to close by the end of the third quarter of 1998. The May Department Stores Company has agreed to acquire 11 former Mercantile locations in certain markets which include Kansas City, Missouri and Colorado Springs, Colorado. The transaction, which is subject to normal conditions, is expected to close by September 4, 1998. In addition, the Company and Belk, Inc. have signed a letter of intent agreeing to exchange seven former Mercantile stores located in Florida and South Carolina for nine Belk stores located in Virginia and Tennessee. The transaction is expected to close in the third quarter. Year 2000 Compliance Statement All computers systems including embedded processors (such as phone systems, security systems, etc.) have been assessed and work is well underway to remediate the non-year 2000 compliant systems. Approximately 75% of these systems have been remediated or were originally developed as year 2000 compliant. The remaining systems are expected to be remediated no later than the second quarter of 1999. The cost of remediating non-compliant systems will not exceed $2.5 million. The Comapny has obtained letters of certification from most of its vendors stating that their systems are compliant. Due to the significant risks to the Company of mission-critical system failures, management monitors the progress of this effort closely. Also, business resumption contingency plans are in the process of being developed to address how the Company will continue to do business if a mission-critical system were to fail. Forward- Looking Information The Company cautions that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) contained in this quarterly report on Form 10-Q or made by management of the Company involve risks and uncertainties and are subject to change based on various important factors. The following factors, among others, could affect the Company's financial performance and could cause actual results for 1998 and beyond to differ materially from those expressed or implied in any such forward-looking statements: economic and weather conditions in the regions in which the Company's stores are located and their effect on the buying patterns of the Company's customers, changes in consumer spending patterns and debt levels, trends in personal bankruptcies and the impact of competitive market factors. Item 3. Quantitative and Qualitative Disclosure About Market Risk. During the six months ended August 1, 1998, the Company issued $100 million of Notes in an underwritten public offering. These Notes mature in ten years and have an interest rate of 6.3%. The only other activity during the quarter in the Company's debt obligations was the scheduled payments of $3.9 million on the Company's mortgage notes. Item 4. Submission of matters to a Vote of Security Holders The annual meeting of the stockholders of the Company was held on May 16, 1998. The matters submitted to a vote of the stockholders were as follows: election of Directors, proposal to adopt a stock option plan for certain key employees, proposal concerning child/convict labor, and proposal for financial and social accountability in executive compensation. Election of Directors Nominee For Against Abstain Class A Nominees Robert C. Connor 91,997,426 1,126,011 0 Will D. Davis 91,678,095 1,445,342 0 John Paul Hammerschmidt 91,891,371 1,232,066 0 William B. Harrison, Jr. 91,997,365 1,126,072 0 Jackson T. Stephens 91,911,559 1,211,878 0 Class B Nominees William Dillard 4,010,568 0 0 Calvin N. Clyde, Jr. 4,010,568 0 0 Drue Corbusier 4,010,568 0 0 Alex Dillard 4,010,568 0 0 William Dillard, II 4,010,568 0 0 Mike Dillard 4,010,568 0 0 James I. Freeman 4,010,568 0 0 John H. Johnson 4,010,568 0 0 E. Ray Kemp 4,010,568 0 0 William H. Sutton 4,010,568 0 0 Other Proposals Stock Option Plan 78,879,426 8,252,498 195,855 Child/Convict Labor 6,898,585 83,107,332 925,975 Executive Compensation 2,614,669 86,254,444 2,062,777 PART II OTHER INFORMATION 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 August 1 August 2 January 31 February 1 February 3 January 28 January 29 1998 1997 1998 1997 1996 * 1995 1994 3.25 3.21 3.69 3.61 2.86 3.72 3.57 * 53 Weeks ITEM 6 Exhibits and Reports on Form 8-K (a) Exhibit (12): Statement re: Computation of Ratio of Earnings to Fixed Charges (b) Reports on Form 8-K filed during the second quarter: The Company filed a report on May 16, 1998, announcing the purchase of the Mercantile Stores Company, Inc. The Company filed a report dated July 30, 1998, relating to the issue of $1 billion aggregate principal amount. The terms of which are as follows: $200 million in Notes at 6.43% due August 1, 2004 $100 million in Notes at 6.69% due August 1, 2007 $200 million in Debentures at 7.13% due August 1, 2018 $100 million in Reset Put Securities at 6.08% due August 1, 2010 $100 million in Reset Put Securities at 6.17% due August 1, 2011 $150 million in Reset Put Securities at 6.31% due August 1, 2012 $150 million in Reset Put Securities at 6.39% due August 1, 2013 The Company filed a report dated August 5, 1998, relating to the issue of $200 million aggregate principal amount of 7.5% capital securities maturing on August 1, 2038. The Company filed a report on August 27, 1998, announcing the completion of the merger of Mercantile Merger Corporation, a wholly owned subsidiary of the Company, with Mercantile. 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'S, INC. (Registrant) DATE: September 15, 1998 /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 12 Statement re: Computation of Ratio of Earnings to Fixed Charges EX-12 2 EXHIBIT 12 - STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Unaudited) (Dollar amounts in thousands) Six Months Ended Fiscal Year Ended August 1 August 2 January 31 February 1 February 3 January 28 January 29 1998 1997 1998 1997 1996 * 1995 1994 Consolidated pretax income $176,216 $162,860 $410,035 $378,761 $269,653 $406,110 $399,534 Fixed charges (less capitalized interest) 75,726 71,095 147,466 139,188 139,666 145,921 152,568 EARNINGS $251,942 $233,955 557,501 517,949 409,319 552,031 552,102 Interest $68,998 $63,939 129,237 120,599 120,054 124,282 130,915 Capitalized interest 1,876 1,786 3,644 4,420 3,567 2,545 1,882 Interest factor in rent expens 6,728 7,156 18,229 18,589 19,612 21,639 21,653 FIXED CHARGES $77,602 $72,881 151,110 143,608 143,233 148,466 154,450 Ratio of earnings to fixed charges 3.25 3.21 3.69 3.61 2.86 3.72 3.57 * 53 Weeks
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