10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark One)

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended August 3, 2013

or

oTRANSITION 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 jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification No.)

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 check mark 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. 

x Yes  o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  

xYes  o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x	Accelerated filer ¨
Non-accelerated filer ¨   (Do not check if a smaller reporting company)	Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 

o 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 27, 2013      41,806,487

CLASS B COMMON STOCK as of August 27, 2013        4,010,929

Index

DILLARD’S, INC.

		Page
		Number
PART I.  FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited):
	Condensed Consolidated Balance Sheets as of August 3, 2013, February 2, 2013 and  July 28, 2012	3
	Condensed Consolidated Statements of Income and Retained Earnings for the Three and Six Months Ended August 3, 2013 and July 28, 2012	4
	Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended August 3, 2013 and July 28, 2012	5
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended August 3, 2013 and July 28, 2012	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27
PART II.  OTHER INFORMATION
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 6.	Exhibits	29
SIGNATURES		29

2

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

DILLARD’S, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In Thousands)

	August 3,			February 2,			July 28,
	2013			2013			2012
Assets
Current assets:
Cash and cash equivalents	$	113,735		$	124,060		$	162,533
Accounts receivable	26,239			31,519			33,414
Merchandise inventories	1,459,284			1,294,581			1,362,077
Other current assets	50,067			41,820			44,525
Total current assets	1,649,325			1,491,980			1,602,549
Property and equipment (net of accumulated depreciation and amortization of $2,288,603, $2,167,477 and $2,352,658)	2,198,693			2,287,015			2,388,107
Other assets	259,445			269,749			270,806
Total assets	$	4,107,463		$	4,048,744		$	4,261,462
Liabilities and stockholders’ equity
Current liabilities:
Trade accounts payable and accrued expenses	$	713,103		$	653,769		$	699,026
Current portion of long-term debt	—			—			75,857
Current portion of capital lease obligations	918			1,710			2,369
Other short-term borrowings	—			—			24,000
Federal and state income taxes including current deferred taxes	83,512			111,637			74,342
Total current liabilities	797,533			767,116			875,594
Long-term debt	614,785			614,785			614,785
Capital lease obligations	7,150			7,524			7,997
Other liabilities	229,155			233,492			246,620
Deferred income taxes	248,002			255,652			294,989
Subordinated debentures	200,000			200,000			200,000
Commitments and contingencies
Stockholders’ equity:
Common stock	1,237			1,237			1,227
Additional paid-in capital	933,264			932,495			837,401
Accumulated other comprehensive loss	(25,785		)	(31,275		)	(37,198		)
Retained earnings	3,248,620			3,099,566			3,228,474
Less treasury stock, at cost	(2,146,498		)	(2,031,848		)	(2,008,427		)
Total stockholders’ equity	2,010,838			1,970,175			2,021,477
Total liabilities and stockholders’ equity	$	4,107,463		$	4,048,744		$	4,261,462

See notes to condensed consolidated financial statements.

3

DILLARD’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS

(Unaudited)

(In Thousands, Except Per Share Data)

	Three Months Ended						Six Months Ended
	August 3,			July 28,			August 3,			July 28,
	2013			2012			2013			2012
Net sales	$	1,479,852		$	1,487,925		$	3,028,988		$	3,037,244
Service charges and other income	36,944			37,257			77,189			73,950
	1,516,796			1,525,182			3,106,177			3,111,194
Cost of sales	976,822			987,802			1,914,607			1,944,715
Selling, general and administrative expenses	398,218			398,788			788,414			792,026
Depreciation and amortization	64,244			64,215			129,360			128,235
Rentals	5,532			8,641			11,103			16,906
Interest and debt expense, net	16,246			17,673			32,556			35,128
Gain on disposal of assets	(24		)	(142		)	(12,369		)	(1,139		)
Asset impairment and store closing charges	—			—			6,527			—
Income before income taxes and income on and equity in losses of joint ventures	55,758			48,205			235,979			195,323
Income taxes	19,675			17,330			83,095			70,300
Income on and equity in losses of joint ventures	408			147			817			982
Net income	36,491			31,022			153,701			126,005
Retained earnings at beginning of period	3,214,446			3,199,848			3,099,566			3,107,344
Cash dividends declared	(2,317		)	(2,396		)	(4,647		)	(4,875		)
Retained earnings at end of period	$	3,248,620		$	3,228,474		$	3,248,620		$	3,228,474
Earnings per share:
Basic	$	0.79		$	0.64		$	3.30		$	2.58
Diluted	$	0.79		$	0.63		$	3.30		$	2.53
Cash dividends declared per common share	$	0.05		$	0.05		$	0.10		$	0.10

See notes to condensed consolidated financial statements.

4

DILLARD’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In Thousands)

	Three Months Ended				Six Months Ended
	August 3,		July 28,		August 3,		July 28,
	2013		2012		2013		2012
Net income	$	36,491	$	31,022	$	153,701	$	126,005
Other comprehensive income:
Amortization of retirement plan and other retiree benefit adjustments (net of tax of $297, $522, $3,395 and $1,044)	480		918		5,490		1,836
Comprehensive income	$	36,971	$	31,940	$	159,191	$	127,841

See notes to condensed consolidated financial statements.

5

DILLARD’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In Thousands)

	Six Months Ended
	August 3,			July 28,
	2013			2012
Operating activities:
Net income	$	153,701		$	126,005
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and deferred financing costs	130,343			129,197
Gain on disposal of assets	(12,369		)	(1,139		)
Excess tax benefits from share-based compensation	—			(2,028		)
Asset impairment and store closing charges	6,527			—
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable	5,280			(4,706		)
Increase in merchandise inventories	(164,703		)	(57,953		)
Increase in other current assets	(7,478		)	(9,900		)
Decrease in other assets	1,324			7,777
Increase in trade accounts payable and accrued expenses and other liabilities	54,870			44,417
Decrease in income taxes payable	(35,775		)	(78,849		)
Net cash provided by operating activities	131,720			152,821
Investing activities:
Purchases of property and equipment	(40,868		)	(86,740		)
Proceeds from disposal of assets	18,269			7,883
Net cash used in investing activities	(22,599		)	(78,857		)
Financing activities:
Principal payments on long-term debt and capital lease obligations	(1,166		)	(2,031		)
Issuance cost of line of credit	(1,300		)	(5,350		)
Increase in short-term borrowings	—			24,000
Cash dividends paid	(2,330		)	(4,983		)
Purchase of treasury stock	(114,650		)	(153,099		)
Proceeds from stock issuance	—			3,732
Excess tax benefits from share-based compensation	—			2,028
Net cash used in financing activities	(119,446		)	(135,703		)
Decrease in cash and cash equivalents	(10,325		)	(61,739		)
Cash and cash equivalents, beginning of period	124,060			224,272
Cash and cash equivalents, end of period	$	113,735		$	162,533
Non-cash transactions:
Accrued capital expenditures	$	3,300		$	3,408
Stock awards	769			2,847
Accrued treasury stock purchase	—			9,016

See notes to condensed consolidated financial statements.

6

DILLARD’S, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1.Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements of Dillard’s, Inc. (the “Company”) have been prepared in accordance with the rules of the Securities and Exchange Commission (“SEC”).  Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) 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 and six months ended August 3, 2013 are not necessarily indicative of the results that may be expected for the fiscal year ending February 1, 2014 due to the seasonal nature of the business.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2013 filed with the SEC on March 28, 2013.

Note 2.  Business Segments

The Company operates in two reportable segments:  the operation of retail department stores (“retail operations”) and a general contracting construction company (“construction”).

For the Company’s retail operations, the Company determined its operating segments on a store by store basis.  Each store’s operating performance has been aggregated into one reportable segment.  The Company’s operating segments are aggregated for financial reporting purposes because they are similar in each of the following areas: economic characteristics, class of consumer, nature of products and distribution methods. Revenues from external customers are derived from merchandise sales, and the Company does not rely on any major customers as a source of revenue. Across all stores, the Company operates one store format under the Dillard’s name where each store offers the same general mix of merchandise with similar categories and similar customers.  The Company believes that disaggregating its operating segments would not provide meaningful additional information.

7

The following tables summarize certain segment information, including the reconciliation of those items to the Company’s consolidated operations:

(in thousands of dollars)	Retail Operations		Construction			Consolidated
Three Months Ended August 3, 2013:
Net sales from external customers	$	1,458,778	$	21,074		$	1,479,852
Gross profit	501,417		1,613			503,030
Depreciation and amortization	64,186		58			64,244
Interest and debt expense (income), net	16,262		(16		)	16,246
Income before income taxes and income on and equity in losses of joint ventures	55,282		476			55,758
Income on and equity in losses of joint ventures	408		—			408
Total assets	4,074,433		33,030			4,107,463
Three Months Ended July 28, 2012:
Net sales from external customers	$	1,456,025	$	31,900		$	1,487,925
Gross profit	498,717		1,406			500,123
Depreciation and amortization	64,164		51			64,215
Interest and debt expense (income), net	17,708		(35		)	17,673
Income before income taxes and income on and equity in losses of joint ventures	48,028		177			48,205
Income on and equity in losses of joint ventures	147		—			147
Total assets	4,215,718		45,744			4,261,462
Six Months Ended August 3, 2013:
Net sales from external customers	$	2,988,778	$	40,210		$	3,028,988
Gross profit	1,111,306		3,075			1,114,381
Depreciation and amortization	129,243		117			129,360
Interest and debt expense (income), net	32,592		(36		)	32,556
Income before income taxes and income on and equity in losses of joint ventures	235,181		798			235,979
Income on and equity in losses of joint ventures	817		—			817
Total assets	4,074,433		33,030			4,107,463
Six Months Ended July 28, 2012:
Net sales from external customers	$	2,978,000	$	59,244		$	3,037,244
Gross profit	1,089,780		2,749			1,092,529
Depreciation and amortization	128,139		96			128,235
Interest and debt expense (income), net	35,199		(71		)	35,128
Income before income taxes and income on and equity in losses of joint ventures	194,996		327			195,323
Income on and equity in losses of joint ventures	982		—			982
Total assets	4,215,718		45,744			4,261,462

Intersegment construction revenues of $10.6 million and $12.4 million for the three and six months ended August 3, 2013, respectively, and intersegment construction revenues of $9.9 million and $17.8 million for the three and six months ended July 28, 2012, respectively, were eliminated during consolidation and have been excluded from net sales for the respective periods.

Note 3.  Stock-Based Compensation

The Company has various stock option plans that provide for the granting of options to purchase shares of Class A Common Stock to certain key employees of the Company.  Exercise and vesting terms for options granted under the plans are determined at each grant date.  No stock options were granted during the three and six months ended August 3, 2013 and July 28, 2012, and no stock options were outstanding at August 3, 2013.  The intrinsic value of stock options exercised during the quarter ended July 28, 2012 was $2.0 million.

8

Note 4.  Asset Impairment and Store Closing Charges

There were no asset impairment and store closing charges recorded during the three months ended August 3, 2013 and during the three and six months ended July 28, 2012.

During the six months ended August 3, 2013, the Company recorded a pretax charge of $6.5 million for asset impairment and store closing costs.  The charge was for the write-down of an operating property and certain cost method investments.

Following is a summary of the activity in the reserve established for store closing charges for the six months ended August 3, 2013:

(in thousands)	Balance Beginning of Period		Adjustments and Charges*		Cash Payments		Balance End of Period
Rent, property taxes and utilities	$	251	$	101	$	224	$	128

* included in rentals

Reserve amounts are included in trade accounts payable and accrued expenses and other liabilities.

Note 5. Earnings Per Share Data

The following table sets forth the computation of basic and diluted earnings per share for the periods indicated (in thousands, except per share data).

	Three Months Ended				Six Months Ended
	August 3,		July 28,		August 3,		July 28,
	2013		2012		2013		2012
Basic:
Net income	$	36,491	$	31,022	$	153,701	$	126,005
Weighted average shares of common stock outstanding	46,327		48,288		46,632		48,834
Basic earnings per share	$	0.79	$	0.64	$	3.30	$	2.58

	Three Months Ended				Six Months Ended
	August 3,		July 28,		August 3,		July 28,
	2013		2012		2013		2012
Diluted:
Net income	$	36,491	$	31,022	$	153,701	$	126,005
Weighted average shares of common stock outstanding	46,327		48,288		46,632		48,834
Dilutive effect of stock-based compensation	—		944		—		937
Total weighted average equivalent shares	46,327		49,232		46,632		49,771
Diluted earnings per share	$	0.79	$	0.63	$	3.30	$	2.53

No stock options were outstanding at August 3, 2013, and total stock options outstanding were 2,100,000 at July 28, 2012.

Note 6.  Commitments and Contingencies

Various legal proceedings, in the form of lawsuits and claims, which occur in the normal course of business, are pending against the Company and its subsidiaries.  In the opinion of management, disposition of these matters is not expected to have a material adverse effect on the Company’s financial position, cash flows or results of operations.

At August 3, 2013, letters of credit totaling $47.2 million were issued under the Company’s revolving credit facility.

9

Note 7.  Benefit Plans

The Company has an unfunded, nonqualified defined benefit plan (“Pension Plan”) for its officers.  The Pension Plan is noncontributory and provides benefits based on years of service and compensation during employment.  Pension expense is determined using various actuarial cost methods to estimate the total benefits ultimately payable to officers and allocates this cost to service periods.  The actuarial assumptions used to calculate pension costs are reviewed annually.  The Company made contributions to the Pension Plan of $0.7 million and $1.4 million during the three and six months ended August 3, 2013, respectively.  The Company expects to make contributions to the Pension Plan of approximately $1.3 million for the remainder of fiscal 2013.

The components of net periodic benefit costs are as follows (in thousands):

	Three Months Ended				Six Months Ended
	August 3,		July 28,		August 3,			July 28,
	2013		2012		2013			2012
Components of net periodic benefit costs:
Service cost	$	1,059	$	817	$	2,118		$	1,634
Interest cost	1,695		1,823		3,391			3,647
Net actuarial loss	753		1,283		1,506			2,566
Amortization of prior service cost	24		157		48			313
Plan curtailment gain	—		—		(1,480		)	—
Net periodic benefit costs	$	3,531	$	4,080	$	5,583		$	8,160

Net periodic benefit costs are included in selling, general and administrative expenses.

Note 8.  Revolving Credit Agreement

At August 3, 2013, the Company maintained a $1.0 billion revolving credit facility (“credit agreement”) with J. P. Morgan Securities LLC (“JPMorgan”) and Wells Fargo Capital Finance, LLC as the lead agents for various banks, secured by the inventory of Dillard’s, Inc. operating subsidiaries.  The credit agreement expires July 1, 2018.

Borrowings under the credit agreement accrue interest at either JPMorgan’s Base Rate or LIBOR plus 1.5% (1.69% at August 3, 2013) subject to certain availability thresholds as defined in the credit agreement.

Limited to 90% of the inventory of certain Company subsidiaries, availability for borrowings and letter of credit obligations under the credit agreement was $982.3 million at August 3, 2013.  No borrowings were outstanding at August 3, 2013.  Letters of credit totaling $47.2 million were issued under this credit agreement leaving unutilized availability under the facility of approximately $935 million at August 3, 2013.  There are no financial covenant requirements under the credit agreement provided availability exceeds $100 million.  The Company pays an annual commitment fee to the banks of 0.25% of the committed amount less outstanding borrowings and letters of credit.

Note 9.  Stock Repurchase Programs

All repurchases of the Company’s Class A Common Stock were made at the market price at the trade date.  Accordingly, all amounts paid to reacquire these shares were allocated to Treasury Stock.

2013 Stock Plan

In March 2013, the Company’s Board of Directors authorized the repurchase of up to $250 million of the Company’s Class A Common Stock under an open-ended stock plan (“2013 Stock Plan”).  This authorization permits the Company to repurchase its Class A Common Stock in the open market, pursuant to preset trading plans meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934 (“Exchange Act”) or through privately negotiated transactions.  No repurchases were made during the three months ended August 3, 2013.  During the six months ended August 3, 2013, the Company repurchased 0.3 million shares for $22.7 million at an average price of $79.04 per share.  At August 3, 2013, $227.3 million of authorization remained under the 2013 Stock Plan.

10

2012 Stock Plan

In February 2012, the Company’s Board of Directors authorized the repurchase of up to $250 million of the Company’s Class A Common Stock under an open-ended stock plan (“2012 Stock Plan”).  This authorization permitted the Company to repurchase its Class A Common Stock in the open market, pursuant to preset trading plans meeting the requirements of Rule 10b5-1 under the Exchange Act or through privately negotiated transactions.  During the three months ended July 28, 2012, the Company repurchased 2.1 million shares for $134.6 million at an average price of $64.52 per share.  During the six months ended August 3, 2013, the Company repurchased 1.2 million shares for $92.0 million at an average price of $79.14 per share, which completed the authorization under the 2012 Stock Plan.

May 2011 Stock Plan

In May 2011, the Company’s Board of Directors authorized the Company to repurchase up to $250 million of the Company’s Class A Common Stock under an open-ended stock plan (“May 2011 Stock Plan”).  This authorization permitted the Company to repurchase its Class A Common Stock in the open market, pursuant to preset trading plans meeting the requirements of Rule 10b5-1 under the Exchange Act or through privately negotiated transactions.  During the six months ended July 28, 2012, the Company repurchased 439 thousand shares for $27.5 million at an average price of $62.71 per share, which completed the authorization under the May 2011 Stock Plan.

Note 10.  Income Taxes

During the three months ended August 3, 2013, income tax expense differed from what would be computed using the statutory federal tax rate primarily due to the effect of state and local income taxes partially offset by tax benefits recognized for federal tax credits.  During the three months ended July 28, 2012, income tax expense differed from what would be computed using the statutory federal tax rate primarily due to the effect of state and local income taxes.

During the six months ended August 3, 2013, income tax expense differed from what would be computed using the statutory federal tax rate primarily due to the effect of state and local income taxes partially offset by tax benefits recognized for federal tax credits.  During the six months ended July 28, 2012, income tax expense differed from what would be computed using the statutory federal tax rate primarily due to the effect of state and local income taxes partially offset by a benefit due to net decreases in unrecognized tax benefits primarily related to statute lapses.

11

Note 11.Reclassifications from Accumulated Other Comprehensive Loss (“AOCL”)

Reclassifications from AOCL are summarized as follows (in thousands):

	Amount Reclassified from AOCL
	Three Months		Six Months		Affected Line Item in
	Ended		Ended		the Statement Where
Details about AOCL Components	August 3, 2013		August 3, 2013		Net Income is Presented
Defined benefit pension plan items
Amortization of prior service costs	$	24	$	48	(1)
Amortization of actuarial losses	753		1,506		(1)
Plan curtailment gain	—		7,331		(2)
	777		8,885		Total before tax
	297		3,395		Income tax expense
	$	480	$	5,490	Total net of tax

(1)These items are included in the computation of net periodic pension cost.  See Note 7, Benefit Plans, for additional information.

(2)The excess of the pension liability for the curtailed plan over the amount shown here is included in the computation of net periodic pension cost.  See Note 7, Benefit Plans, for additional information.

Note 12.Changes in Accumulated Other Comprehensive Loss

Changes in AOCL by component (net of tax) are summarized as follows (in thousands):

	Defined Benefit Pension Plan Items
	Three Months			Six Months
	Ended			Ended
	August 3, 2013			August 3, 2013
Beginning balance	$	26,265		$	31,275
Other comprehensive income before reclassifications	—			—
Amounts reclassified from AOCL	(480		)	(5,490		)
Net other comprehensive income	(480		)	(5,490		)
Ending balance	$	25,785		$	25,785

Note 13.  Gain on Disposal of Assets

During the six months ended August 3, 2013, the Company received proceeds of $15.7 million from the sale of its investment in Acumen Brands, an eCommerce company based in Fayetteville, Arkansas.  The sale resulted in a gain of $11.7 million that was recorded in gain on disposal of assets.

During the six months ended August 3, 2013, the Company also received proceeds of $1.7 million from the sale of two former retail stores located in Oklahoma City, Oklahoma and Pasadena, Texas that were held for sale, resulting in a gain of $0.6 million that was recorded in gain on disposal of assets.

During the six months ended July 28, 2012, the Company received proceeds of $7.8 million from the sales of two former retail stores located in Cincinnati, Ohio and Antioch, Tennessee that were held for sale and one building that was formerly a portion of a currently operating retail location, resulting in a net gain of $0.9 million.

12

Note 14.  Fair Value Disclosures

The estimated fair values of financial instruments which are presented herein have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of amounts the Company could realize in a current market exchange.

The fair value of the Company’s long-term debt and subordinated debentures is based on market prices or dealer quotes.

The fair value of the Company’s cash and cash equivalents and trade accounts receivable approximates their carrying values at August 3, 2013 due to the short-term maturities of these instruments.  The fair value of the Company’s long-term debt at August 3, 2013 was approximately $669 million.  The carrying value of the Company’s long-term debt at August 3, 2013 was $615 million.  The fair value of the Company’s subordinated debentures at August 3, 2013 was approximately $204 million.  The carrying value of the Company’s subordinated debentures at August 3, 2013 was $200 million.

During the six months ended August 3, 2013, the Company recognized an impairment charge of $5.4 million on certain cost method investments.  The Company evaluated all factors and determined that an other-than-temporary impairment charge was necessary.  These investments are recorded in other assets on the balance sheet.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The FASB’s accounting guidance utilizes a fair value hierarchy that prioritizes the inputs to the valuation techniques used to measure fair value into three broad levels:

·Level 1:  Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities

·Level 2:  Inputs, other than quoted prices, that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active

·Level 3:  Unobservable inputs that reflect the reporting entity’s own assumptions

			Basis of Fair Value Measurements
			Quoted Prices		Significant
			In Active		Other		Significant
	Fair Value		Markets for		Observable		Unobservable
	of Assets		Identical Items		Inputs		Inputs
(in thousands)	(Liabilities)		(Level 1)		(Level 2)		(Level 3)
Long-lived assets held for use As of August 3, 2013	$	3,000	$	—	$	3,000	$	—

Long-lived assets held for use

During the six months ended August 3, 2013, an additional long-lived asset group held for use was written down to its fair value of $3.0 million, resulting in an impairment charge of $1.2 million, which was included in earnings for the period.  The inputs used to calculate the fair value of these long-lived assets held for use was based upon an offer to purchase the property.

13

Note 15.  Recently Issued Accounting Standards

Presentation of Comprehensive Income

In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, which requires the Company to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income on the Company’s consolidated statement of comprehensive income if the amount being reclassified is required under U.S. GAAP to be reclassified in its entirety to net income.  This update does not change the current requirements for reporting net income or other comprehensive income in the consolidated financial statements of the Company, but does require the Company to provide information about the amounts reclassified out of accumulated other comprehensive income by component.  The provisions in this update were effective prospectively beginning with the Company’s first quarter of 2013. The adoption of this update affected the format and presentation of the Company’s consolidated financial statements and the footnotes thereto but did not have any other impact on the Company’s financial statements.

Guidance on Financial Statement Presentation of Unrecognized Tax Benefit

In July 2013, the FASB issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which provides explicit presentation guidelines.  Under this ASU, an unrecognized tax benefit, or portion thereof, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward except when specific conditions are met as outlined in the ASU.  When these specific conditions are met, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets.  This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013, and should be applied prospectively to all unrecognized tax benefits that exist at the effective date.  The adoption of this update is not expected to have a material impact on our consolidated financial statements.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the condensed consolidated financial statements and the footnotes thereto included elsewhere in this report, as well as the financial and other information included in our Annual Report on Form 10-K for the year ended February 2, 2013.

EXECUTIVE OVERVIEW

For the second quarter of fiscal 2013, Dillard’s operating results improved over its prior year performance.  Comparable store sales were up for the twelfth consecutive quarter, and gross profit from retail operations improved 10 basis points of sales.  Selling, general and administrative expenses were down in total dollars but increased 10 basis points of sales.  Net income increased to $36.5 million, or $0.79 per share — our highest historical second fiscal quarter earnings per share — compared to $31.0 million, or $0.63 per share, for the second quarter of last year.

Highlights of the quarter ended August 3, 2013 as compared to the quarter ended July 28, 2012 included:

·a 1% increase in comparable store sales,

·gross margin from retail operations improvement of 10 basis points of sales, and

·record second quarter earnings per share of $0.79 per share, a 25% increase over the prior year second quarter.

As of August 3, 2013, we had working capital of $851.8 million, cash and cash equivalents of $113.7 million and $814.8 million of total debt outstanding, excluding capital lease obligations.  Cash flows from operating activities were $131.7 million for the six months ended August 3, 2013.  We operated 300 total stores, including 18 clearance centers, and one internet store as of August 3, 2013, a decrease of three stores from the same period last year.

Key Performance Indicators

We use a number of key indicators of financial condition and operating performance to evaluate our business, including the following:

	Three Months Ended
	August 3, 2013			July 28, 2012
Net sales (in millions)	$	1,479.9		$	1,487.9
Retail stores sales trend	0		%	2		%
Comparable retail stores sales trend	1		%	3		%
Gross profit (in millions)	$	503.0		$	500.1
Gross profit as a percentage of net sales	34.0		%	33.6		%
Retail gross profit as a percentage of net sales	34.4		%	34.3		%
Selling, general and administrative expenses as a percentage of net sales	26.9		%	26.8		%
Cash flow from operations (in millions)*	$	131.7		$	152.8
Total retail store count at end of period	300			303
Retail sales per square foot	$	29		$	29
Comparable retail store inventory trend	8		%	0		%
Retail merchandise inventory turnover	2.6			2.7

*Cash flow from operations data is for the six months ended August 3, 2013 and July 28, 2012.

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General

Net sales.  Net sales include merchandise sales of comparable and non-comparable stores and revenue recognized on contracts of CDI Contractors, LLC (“CDI”), the Company’s general contracting construction company.  Comparable store sales include sales for those stores which were in operation for a full period in both the current month and the corresponding month for the prior year.  Comparable store sales exclude the change in the allowance for sales returns.  Non-comparable store sales include:  sales in the current fiscal year from stores opened during the previous fiscal year before they are considered comparable stores; sales from new stores opened during the current fiscal year; sales in the previous fiscal year for stores closed during the current or previous fiscal year that are no longer considered comparable stores; sales in clearance centers; and changes in the allowance for sales returns.

Service charges and other income.  Service charges and other income include income generated through the long-term marketing and servicing alliance (“Alliance”) with GE Consumer Finance (“GE”), which owns and manages the Dillard’s branded proprietary cards.  Other income includes rental income, shipping and handling fees, gift card breakage and lease income on leased departments.

Cost of sales.  Cost of sales includes the cost of merchandise sold (net of purchase discounts and non-specific margin maintenance allowances), bankcard fees, freight to the distribution centers, employee and promotional discounts, and direct payroll for salon personnel.  Cost of sales also includes CDI contract costs, which comprise all direct material and labor costs, subcontract costs and those indirect costs related to contract performance, such as indirect labor, employee benefits and insurance program costs.

Selling, general and administrative expenses.  Selling, general and administrative expenses include buying, occupancy, selling, distribution, warehousing, store and corporate expenses (including payroll and employee benefits), insurance, employment taxes, advertising, management information systems, legal and other corporate level expenses.  Buying expenses consist of payroll, employee benefits and travel for design, buying and merchandising personnel.

Depreciation and amortization.  Depreciation and amortization expenses include depreciation and amortization on property and equipment.

Rentals.  Rentals include expenses for store leases, including contingent rent, and data processing and other equipment rentals.

Interest and debt expense, net.  Interest and debt expense includes interest, net of interest income, relating to the Company’s unsecured notes, mortgage note, term note, subordinated debentures and borrowings under the Company’s credit facility.  Interest and debt expense also includes gains and losses on note repurchases, if any, amortization of financing costs and interest on capital lease obligations.

Gain on disposal of assets.  Gain on disposal of assets includes the net gain or loss on the sale or disposal of property and equipment and the gain on the sale of an investment.

Asset impairment and store closing charges.  Asset impairment and store closing charges consist of (a) write-downs to fair value of under-performing or held for sale properties and of cost method investments and (b) exit costs associated with the closure of certain stores.  Exit costs include future rent, taxes and common area maintenance expenses from the time the stores are closed.

Income on and equity in losses of joint ventures.  Income on and equity in losses of joint ventures includes the Company’s portion of the income or loss of the Company’s unconsolidated joint ventures.

Seasonality and Inflation

Our business, like many other retailers, is subject to seasonal influences, with a significant portion of sales and income typically realized during the last quarter of our fiscal year due to the holiday season.  Because of the seasonality of our business, results from any quarter are not necessarily indicative of the results that may be achieved for a full fiscal year.

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We do not believe that inflation has had a material effect on our results during the periods presented; however, our business could be affected by such in the future.

RESULTS OF OPERATIONS

The following table sets forth the results of operations as a percentage of net sales for the periods indicated (percentages may not foot due to rounding):

	Three Months Ended				Six Months Ended
	August 3,		July 28,		August 3,		July 28,
	2013		2012		2013		2012
Net sales	100.0	%	100.0	%	100.0	%	100.0	%
Service charges and other income	2.5		2.5		2.5		2.4
	102.5		102.5		102.5		102.4
Cost of sales	66.0		66.4		63.2		64.0
Selling, general and administrative expenses	26.9		26.8		26.0		26.1
Depreciation and amortization	4.3		4.3		4.3		4.2
Rentals	0.4		0.6		0.4		0.6
Interest and debt expense, net	1.1		1.2		1.1		1.1
Gain on disposal of assets	(0.0	)	(0.0	)	(0.4	)	(0.0	)
Asset impairment and store closing charges	0.0		0.0		0.2		0.0
Income before income taxes and income on and equity in losses of joint ventures	3.8		3.2		7.8		6.4
Income taxes	1.3		1.1		2.7		2.3
Income on and equity in losses of joint ventures	0.0		0.0		0.0		0.0
Net income	2.5	%	2.1	%	5.1	%	4.1	%

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Net Sales (Three-Month Comparison)

	Three Months Ended
	August 3,		July 28,
(in thousands of dollars)	2013		2012		$ Change
Net sales:
Retail operations segment	$	1,458,778	$	1,456,025	$	2,753
Construction segment	21,074		31,900		(10,826		)
Total net sales	$	1,479,852	$	1,487,925	$	(8,073	)

The percent change in the Company’s sales by segment and product category for the three months ended August 3, 2013 compared to the three months ended July 28, 2012 as well as the sales percentage by segment and product category to total net sales for the three months ended August 3, 2013 is as follows:

	Three Months
	% Change 2013-2012		% of Net Sales
Retail operations segment
Cosmetics	(2.4	)%	14	%
Ladies’ apparel	(2.6	)	25
Ladies’ accessories and lingerie	6.9		16
Juniors’ and children’s apparel	3.1		8
Men’s apparel and accessories	0.2		17
Shoes	0.5		14
Home and furniture	(4.4	)	5
			99
Construction segment	(33.9	)	1
Total			100	%

Net sales from the retail operations segment increased $2.8 million or 0% during the three months ended August 3, 2013 compared to the three months ended July 28, 2012 while sales in comparable stores increased 1% between the same periods.  Sales of ladies’ accessories and lingerie increased significantly over the prior year period, and sales of juniors’ and children’s apparel increased moderately.  Sales of shoes increased slightly over the prior year period while sales of men’s apparel and accessories remained essentially flat.  Sales of cosmetics, ladies’ apparel and home and furniture decreased moderately between the periods.

We believe that we may continue to see some sales growth in the retail operations segment during fiscal 2013 as compared to fiscal 2012; however, there is no guarantee of improved sales performance.

The number of sales transactions decreased 4% for the three months ended August 3, 2013 over the comparable prior year period while the average dollars per sales transaction increased 4%.  We recorded an allowance for sales returns of $6.7 million and $7.6 million as of August 3, 2013 and July 28, 2012, respectively.

During the three months ended August 3, 2013, net sales from the construction segment decreased $10.8 million or 34% compared to the three months ended July 28, 2012 due to a shift in the timing of certain construction projects.  We believe that sales in the construction segment for fiscal 2013 will be similar to fiscal 2012; however, there is no guarantee of this sales performance.  The backlog of awarded construction contracts at August 3, 2013 totaled $64.3 million.

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Net Sales (Six-Month Comparison)

	Six Months Ended
	August 3,		July 28,
(in thousands of dollars)	2013		2012		$ Change
Net sales:
Retail operations segment	$	2,988,778	$	2,978,000	$	10,778
Construction segment	40,210		59,244		(19,034		)
Total net sales	$	3,028,988	$	3,037,244	$	(8,256	)

The percent change in the Company’s sales by segment and product category for the six months ended August 3, 2013 compared to the six months ended July 28, 2012 as well as the sales percentage by segment and product category to total net sales for the six months ended August 3, 2013 is as follows:

	Six Months
	% Change 2013-2012		% of Net Sales
Retail operations segment
Cosmetics	(0.8	)%	15	%
Ladies’ apparel	(2.5	)	24
Ladies’ accessories and lingerie	7.9		15
Juniors’ and children’s apparel	2.8		9
Men’s apparel and accessories	(0.8	)	17
Shoes	1.2		15
Home and furniture	(6.5	)	4
			99
Construction segment	(32.1	)	1
Total			100	%

Net sales from the retail operations segment increased $10.8 million or 0% during the six months ended August 3, 2013 compared to the six months ended July 28, 2012 while sales in comparable stores increased 1% between the same periods.  Sales of ladies’ accessories and lingerie increased significantly over the prior year period, and sales of juniors’ and children’s apparel increased moderately.  Sales of shoes increased slightly over the prior year period while sales of cosmetics and men’s apparel and accessories decreased slightly.  Sales of ladies’ apparel decreased moderately over the prior year period, and sales of home and furniture decreased significantly.

The number of sales transactions decreased 3% for the six months ended August 3, 2013 compared to the six months ended July 28, 2012 while the average dollars per sales transaction increased 3%.

Storewide sales penetration of exclusive brand merchandise for the six months ended August 3, 2013 was 21.4% compared to 21.9% during the six months ended July 28, 2012.

During the six months ended August 3, 2013, net sales from the construction segment decreased $19.0 million or 32% compared to the six months ended July 28, 2012 due to a shift in the timing of certain construction projects.

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Service Charges and Other Income

	Three Months Ended				Six Months Ended				Three Months			SixMonths
(in thousands of dollars)	August 3, 2013		July 28, 2012		August 3, 2013		July 28, 2012		$ Change 2013-2012			$ Change 2013-2012
Service charges and other income:
Retail operations segment
Leased department income	$	2,159	$	2,370	$	4,404	$	4,858	$	(211	)	$	(454	)
Income from GE marketing and servicing alliance	27,628		26,243		55,036		51,430		1,385			3,606
Shipping and handling income	4,674		4,355		9,457		8,707		319			750
Other	2,476		4,254		8,279		8,901		(1,778		)	(622		)
	36,937		37,222		77,176		73,896		(285		)	3,280
Construction segment	7		35		13		54		(28		)	(41		)
Total service charges and other income	$	36,944	$	37,257	$	77,189	$	73,950	$	(313	)	$	3,239

Service charges and other income is composed primarily of income from the Alliance with GE.  Income from the Alliance increased during the three months ended August 3, 2013 primarily due to increases in finance charge income.  Income from the Alliance increased during the six months ended August 3, 2013 primarily due to increases in finance charges and decreased credit losses.

Gross Profit

(in thousands of dollars)	August 3, 2013		July 28, 2012		$ Change		% Change
Gross profit:
Three months ended
Retail operations segment	$	501,417	$	498,717	$	2,700	0.5	%
Construction segment	1,613		1,406		207		14.7
Total gross profit	$	503,030	$	500,123	$	2,907	0.6	%
Six months ended
Retail operations segment	$	1,111,306	$	1,089,780	$	21,526	2.0	%
Construction segment	3,075		2,749		326		11.9
Total gross profit	$	1,114,381	$	1,092,529	$	21,852	2.0	%

	Three Months Ended				Six Months Ended
	August 3, 2013		July 28, 2012		August 3, 2013		July 28, 2012
Gross profit as a percentage of segment net sales:
Retail operations segment	34.4	%	34.3	%	37.2	%	36.6	%
Construction segment	7.7		4.4		7.6		4.6
Total gross profit as a percentage of net sales	34.0		33.6		36.8		36.0

Gross profit improved 40 basis points of sales during the three months ended August 3, 2013 compared to the three months ended July 28, 2012, and gross profit improved 80 basis points during the six months ended August 3, 2013 compared to the six months ended July 28, 2012.

During the three months ended August 3, 2013 compared to the three months ended July 28, 2012, gross profit from retail operations improved 10 basis points of sales as a result of decreased markdowns partially offset by decreased markups.  Gross margin improved moderately in men’s apparel and accessories and improved slightly in juniors’ and children’s apparel while gross margin in ladies’ apparel remained essentially flat.  Gross margin declined slightly in shoes and cosmetics and declined moderately in ladies’ accessories and lingerie and home and furniture.

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During the six months ended August 3, 2013 compared to the six months ended July 28, 2012, gross profit from retail operations improved 60 basis points of sales as a result of decreased markdowns partially offset by decreased markups.  Gross margin improved moderately in men’s apparel and accessories and home and furniture and improved slightly in juniors’ and children’s apparel while gross margin remained essentially flat in ladies’ apparel and ladies’ accessories and lingerie.  Gross margin declined slightly in cosmetics and shoes.

Inventory in total and comparable stores increased 7% and 8%, respectively, as of August 3, 2013 compared to July 28, 2012.  A 1% change in the dollar amount of markdowns would have impacted net income by approximately $3 million and $4 million for the three and six months ended August 3, 2013, respectively.

We believe that gross profit from retail operations will improve slightly during fiscal 2013 as compared to fiscal 2012; however, there is no guarantee of improved gross profit performance.

Selling, General and Administrative Expenses (“SG&A”)

(in thousands of dollars)	August 3, 2013		July 28, 2012		$ Change			% Change
SG&A:
Three months ended
Retail operations segment	$	397,125	$	397,551	$	(426	)	(0.1	)%
Construction segment	1,093		1,237		(144		)	(11.6	)
Total SG&A	$	398,218	$	398,788	$	(570	)	(0.1	)%
Six months ended
Retail operations segment	$	786,220	$	789,600	$	(3,380	)	(0.4	)%
Construction segment	2,194		2,426		(232		)	(9.6	)
Total SG&A	$	788,414	$	792,026	$	(3,612	)	(0.5	)%

	Three Months Ended				Six Months Ended
	August 3, 2013		July 28, 2012		August 3, 2013		July 28, 2012
SG&A as a percentage of segment net sales:
Retail operations segment	27.2	%	27.3	%	26.3	%	26.5	%
Construction segment	5.2		3.9		5.5		4.1
Total SG&A as a percentage of net sales	26.9		26.8		26.0		26.1

SG&A increased 10 basis points of sales during the three months ended August 3, 2013 compared to the three months ended July 28, 2012 while total SG&A dollars decreased $0.6 million.  The decrease in SG&A dollars is primarily due to a decrease in services purchased ($2.3 million) and advertising expenses ($2.2 million) partially offset by increases in payroll ($2.2 million), primarily of selling payroll.

SG&A decreased $3.6 million or 10 basis points of sales during the six months ended August 3, 2013 compared to the six months ended July 28, 2012.  The dollar decrease was most noted in advertising expense ($5.2 million) and insurance ($1.8 million) partially offset by increases in payroll ($6.0 million), primarily of selling payroll.  During the six months ended August 3, 2013, the Company also recorded a $1.5 million pretax credit to pension expense for a gain from a pension plan curtailment.

We believe that SG&A will improve slightly as a percentage of sales during fiscal 2013 as compared to fiscal 2012; however, there is no guarantee of improved SG&A performance.

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Rentals

(in thousands of dollars)	August 3, 2013		July 28, 2012		$ Change			% Change
Rentals:
Three months ended
Retail operations segment	$	5,523	$	8,629	$	(3,106	)	(36.0	)%
Construction segment	9		12		(3		)	(25.0	)
Total rentals	$	5,532	$	8,641	$	(3,109	)	(36.0	)%
Six months ended
Retail operations segment	$	11,081	$	16,880	$	(5,799	)	(34.4	)%
Construction segment	22		26		(4		)	(15.4	)
Total rentals	$	11,103	$	16,906	$	(5,803	)	(34.3	)%

The decrease in rental expense for the three and six months ended August 3, 2013 compared to the three and six months ended July 28, 2012 was primarily due to a reduction in the amount of equipment leased by the Company.

We believe that rental expense will decline during fiscal 2013, with a current projected reduction of $8 million from fiscal 2012, primarily as a result of the expiration of certain equipment leases.

Interest and Debt Expense, Net

(in thousands of dollars)	August 3, 2013			July 28, 2012			$ Change			% Change
Interest and debt expense (income), net:
Three months ended
Retail operations segment	$	16,262		$	17,708		$	(1,446	)	(8.2	)%
Construction segment	(16		)	(35		)	19			54.3
Total interest and debt expense, net	$	16,246		$	17,673		$	(1,427	)	(8.1	)%
Six months ended
Retail operations segment	$	32,592		$	35,199		$	(2,607	)	(7.4	)%
Construction segment	(36		)	(71		)	35			49.3
Total interest and debt expense, net	$	32,556		$	35,128		$	(2,572	)	(7.3	)%

The decrease in net interest and debt expense for the three and six months ended August 3, 2013 compared to the three and six months ended July 28, 2012 was primarily attributable to lower average debt levels.  Total weighted average debt decreased approximately $49.1 million and $61.8 million for the three and six months ended August 3, 2013 compared to the three and six months ended July 28, 2012, respectively.

Gain on Disposal of Assets

(in thousands of dollars)	August 3, 2013		July 28, 2012		$ Change
Gain on disposal of assets:
Three months ended
Retail operations segment	$	24	$	141	$	(117	)
Construction segment	—		1		(1		)
Total gain on disposal of assets	$	24	$	142	$	(118	)
Six months ended
Retail operations segment	$	12,362	$	1,138	$	11,224
Construction segment	7		1		6
Total gain on disposal of assets	$	12,369	$	1,139	$	11,230

During the six months ended August 3, 2013, the Company received proceeds of $15.7 million from the sale of its investment in Acumen Brands, an eCommerce company based in Fayetteville, Arkansas.  The sale resulted in a gain of $11.7 million that was recorded in gain on disposal of assets.

22

During the six months ended August 3, 2013, the Company also received proceeds of $1.7 million from the sale of two former retail stores located in Oklahoma City, Oklahoma and Pasadena, Texas that were held for sale, resulting in a gain of $0.6 million that was recorded in gain on disposal of assets.

During the six months ended July 28, 2012, the Company received proceeds of $7.8 million from the sales of two former retail stores located in Cincinnati, Ohio and Antioch, Tennessee that were held for sale and one building that was formerly a portion of a currently operating retail location, resulting in a net gain of $0.9 million.

Asset Impairment and Store Closing Charges

(in thousands of dollars)	August 3, 2013		July 28, 2012		$ Change
Asset impairment and store closing charges:
Six months ended
Retail operations segment	$	6,527	$	—	$	6,527
Construction segment	—		—		—
Total asset impairment and store closing charges	$	6,527	$	—	$	6,527

There were no asset impairment and store closing charges recorded during the three months ended August 3, 2013 and during the three and six months ended July 28, 2012.

During the six months ended August 3, 2013, the Company recorded a pretax charge of $6.5 million for asset impairment and store closing costs.  The charge was for the write-down of an operating property and certain cost method investments.

Income Taxes

The Company’s estimated federal and state income tax rate, inclusive of income on and equity in losses of joint ventures, was approximately 35.0% and 35.8% for the three months ended August 3, 2013 and July 28, 2012, respectively.  During the three months ended August 3, 2013, income tax expense differed from what would be computed using the statutory federal tax rate primarily due to the effect of state and local income taxes partially offset by tax benefits recognized for federal tax credits.  During the three months ended July 28, 2012, income tax expense differed from what would be computed using the statutory federal tax rate primarily due to the effect of state and local income taxes.

The Company’s estimated federal and state income tax rate, inclusive of income on and equity in losses of joint ventures, was approximately 35.1% and 35.8% for the six months ended August 3, 2013 and July 28, 2012, respectively.  During the six months ended August 3, 2013, income tax expense differed from what would be computed using the statutory federal tax rate primarily due to the effect of state and local income taxes partially offset by tax benefits recognized for federal tax credits.  During the six months ended July 28, 2012, income tax expense differed from what would be computed using the statutory federal tax rate primarily due to the effect of state and local income taxes partially offset by a benefit due to net decreases in unrecognized tax benefits primarily related to statute lapses.

The Company expects the fiscal 2013 federal and state effective income tax rate to approximate 35%.  This rate may change if results of operations for fiscal 2013 differ from management’s current expectations.  Changes in the Company’s assumptions and judgments can materially affect amounts recognized in the condensed consolidated balance sheets and statements of income.

23

FINANCIAL CONDITION

A summary of net cash flows for the six months ended August 3, 2013 and July 28, 2012 follows:

	Six Months Ended
(in thousands of dollars)	August 3, 2013			July 28, 2012			$ Change
Operating Activities	$	131,720		$	152,821		$	(21,101	)
Investing Activities	(22,599		)	(78,857		)	56,258
Financing Activities	(119,446		)	(135,703		)	16,257
Total Cash Used	$	(10,325	)	$	(61,739	)	$	51,414

Net cash flows from operations decreased $21.1 million during the six months ended August 3, 2013 compared to the six months ended July 28, 2012.  This decline was primarily attributable to a decrease of $47.3 million related to changes in working capital items, primarily of increases of inventories partially offset by decreases in income taxes payable.  This decline was partially offset by an increase in net income, as adjusted for non-cash items, of $26.2 million.

GE owns and manages Dillard’s branded proprietary credit card business under the Alliance that expires in late fiscal 2014.  The Alliance provides for certain payments to be made by GE to the Company, including a revenue sharing and marketing reimbursement.  The Company received income of approximately $55.0 million and $51.4 million from GE during the six months ended August 3, 2013 and July 28, 2012, respectively.  While future cash flows under this Alliance are difficult to predict, the Company expects income from the Alliance to improve moderately during fiscal 2013 compared to fiscal 2012.  The amount the Company receives is dependent on the level of sales on GE accounts, the level of balances carried on the GE accounts by GE customers, payment rates on GE accounts, finance charge rates and other fees on GE accounts, the level of credit losses for the GE accounts as well as GE’s funding costs.

During the six months ended August 3, 2013, the Company received proceeds of $15.7 million from the sale of its investment in Acumen Brands, an eCommerce company based in Fayetteville, Arkansas.  The sale resulted in a gain of $11.7 million that was recorded in gain on disposal of assets.

During the six months ended August 3, 2013, the Company also received proceeds of $1.7 million from the sale of two former retail stores located in Oklahoma City, Oklahoma and Pasadena, Texas that were held for sale, resulting in a gain of $0.6 million that was recorded in gain on disposal of assets.

During the six months ended July 28, 2012, the Company received proceeds of $7.8 million from the sales of two former retail stores located in Cincinnati, Ohio and Antioch, Tennessee that were held for sale and one building that was formerly a portion of a currently operating retail location, resulting in a net gain of $0.9 million.

Capital expenditures were $40.9 million and $86.7 million for the six months ended August 3, 2013 and July 28, 2012, respectively.  The current year expenditures were primarily for the remodeling of existing stores.  Capital expenditures for fiscal 2013 are expected to be approximately $125 million compared to actual expenditures of $137 million during fiscal 2012.  While there are no planned store openings for fiscal 2013, we expect to begin construction of two new stores later this year at the The Mall at University Town Center in Sarasota, Florida (180,000 square feet) and The Shops at Summerlin in Las Vegas, Nevada (200,000 square feet), both of which are expected to open during the third quarter of fiscal 2014.

During the six months ended August 3, 2013, we closed our Cache Valley Mall location in Logan, Utah (94,000 square feet) and our Randolph Mall location in Asheboro, North Carolina (60,000 square feet).  We have also announced the upcoming closure of our Euclid Square Mall location in Euclid, Ohio (50,000 square feet), which is expected to close during the third quarter of fiscal 2013 with minimal closing costs.  We remain committed to closing under-performing stores where appropriate and may incur future closing costs related to these stores when they close.

The Company had cash on hand of approximately $113.7 million as of August 3, 2013.  As part of our overall liquidity management strategy and for peak working capital requirements, the Company maintains a $1.0 billion credit facility.  During the six months ended August 3, 2013, the Company amended and extended this credit facility, reducing the unused commitment fee from the previous agreement and extending the facility’s expiration to July 1, 2018.

24

Limited to 90% of the inventory of certain Company subsidiaries, availability for borrowings and letter of credit obligations under the credit agreement was $982.3 million at August 3, 2013.  No borrowings were outstanding at August 3, 2013.  Letters of credit totaling $47.2 million were issued under this credit agreement leaving unutilized availability under the facility of approximately $935 million at August 3, 2013.  Borrowings of $24.0 million were outstanding at July 28, 2012.

During the six months ended August 3, 2013, the Company repurchased 1.4 million shares of stock for $114.7 million at an average price of $79.12 per share under the Company’s 2013 and 2012 Stock Plans.  During the six months ended July 28, 2012, the Company repurchased 2.5 million shares of stock for $162.1 million (including the accrual of $9.0 million of share repurchases that had not settled as of July 28, 2012) at an average price of $64.21 per share under its 2012 and May 2011 Stock Plans.  At August 3, 2013, no authorization remained under the 2012 and May 2011 Stock Plans, and $227.3 million of authorization remained under the Company’s 2013 Stock Plan.  The ultimate disposition of the repurchased stock has not been determined.

The Company paid dividends of $2.3 million and $5.0 million during the six months ended August 3, 2013 and July 28, 2012, respectively.  Historically, our dividends declared during the fourth quarter of a fiscal year were paid during the first quarter of the following fiscal year; however, the dividends declared during the fourth quarter of fiscal 2012 were expedited and paid during that same quarter.

During fiscal 2013, the Company expects to finance its capital expenditures and its working capital requirements, including stock repurchases, from cash on hand, cash flows generated from operations and utilization of the credit facility.  The Company expects peak borrowings for fiscal 2013 to be at similar levels as fiscal 2012.  Depending on conditions in the capital markets and other factors, the Company will from time to time consider other possible financing transactions, the proceeds of which could be used to refinance current indebtedness or for other corporate purposes.

There have been no material changes in the information set forth under caption “Contractual Obligations and Commercial Commitments” in Item 7,  Management’s Discussion and Analysis of Financial Condition and Results of Operations, in the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2013.

OFF-BALANCE-SHEET ARRANGEMENTS

The Company has not created, and is not party to, any special-purpose entities or off-balance-sheet arrangements for the purpose of raising capital, incurring debt or operating the Company’s business.  The Company does not have any off-balance-sheet arrangements or relationships that are reasonably likely to materially affect the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or the availability of capital resources.

NEW ACCOUNTING STANDARDS

Presentation of Comprehensive Income

In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, which requires the Company to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income on the Company’s consolidated statement of comprehensive income if the amount being reclassified is required under U.S. GAAP to be reclassified in its entirety to net income.  This update does not change the current requirements for reporting net income or other comprehensive income in the consolidated financial statements of the Company, but does require the Company to provide information about the amounts reclassified out of accumulated other comprehensive income by component.  The provisions in this update were effective prospectively beginning with the Company’s first quarter of 2013. The adoption of this update affected the format and presentation of the Company’s consolidated financial statements and the footnotes thereto but did not have any other impact on the Company’s financial statements.

25

Guidance on Financial Statement Presentation of Unrecognized Tax Benefit

In July 2013, the FASB issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which provides explicit presentation guidelines.  Under this ASU, an unrecognized tax benefit, or portion thereof, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward except when specific conditions are met as outlined in the ASU.  When these specific conditions are met, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets.  This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013, and should be applied prospectively to all unrecognized tax benefits that exist at the effective date.  The adoption of this update is not expected to have a material impact on our consolidated financial statements.

FORWARD-LOOKING INFORMATION

This report contains certain forward-looking statements.  The following are or may constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995:  (a) statements including words such as “may,” “will,” “could,”, “should,” “believe,” “expect,” “future,” “potential,” “anticipate,” “intend,” “plan,” “estimate,” “continue,” or the negative or other variations thereof; (b) statements regarding matters that are not historical facts; and (c) statements about the Company’s future occurrences, plans and objectives, including statements regarding management’s expectations and forecasts for the remainder of fiscal 2013 and fiscal 2014.  The Company cautions that forward-looking statements contained in this report are based on estimates, projections, beliefs and assumptions of management and information available to management at the time of such statements and are not guarantees of future performance.  The Company disclaims any obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information, or otherwise. Forward-looking statements of the Company involve risks and uncertainties and are subject to change based on various important factors. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements made by the Company and its management as a result of a number of risks, uncertainties and assumptions.   Representative examples of those factors include (without limitation) general retail industry conditions and macro-economic conditions; economic and weather conditions for regions in which the Company’s stores are located and the effect of these factors on the buying patterns of the Company’s customers, including the effect of changes in prices and availability of oil and natural gas; the availability of consumer credit; the impact of competitive pressures in the department store industry and other retail channels including specialty, off-price, discount and Internet retailers; changes in consumer spending patterns, debt levels and their ability to meet credit obligations; changes in legislation, affecting such matters as the cost of employee benefits or credit card income; adequate and stable availability of materials, production facilities and labor from which the Company sources its merchandise at acceptable pricing; changes in operating expenses, including employee wages, commission structures and related benefits; system failures or data security breaches; possible future acquisitions of store properties from other department store operators; the continued availability of financing in amounts and at the terms necessary to support the Company’s future business; fluctuations in LIBOR and other base borrowing rates; potential disruption from terrorist activity and the effect on ongoing consumer confidence; epidemic, pandemic or other public health issues; potential disruption of international trade and supply chain efficiencies; world conflict and the possible impact on consumer spending patterns and other economic and demographic changes of similar or dissimilar  nature.   The Company’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended February 2, 2013, contain other information on factors that may affect financial results or cause actual results to differ materially from forward-looking statements.

26

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in the information set forth under caption “Item 7A-Quantitative and Qualitative Disclosures About Market Risk” in the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2013.

Item 4.  Controls and Procedures

The Company has established and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934).  The Company’s management, with the participation of our CEO and CFO, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the fiscal quarter covered by this quarterly report, and based on that evaluation, the Company’s CEO and CFO have concluded that these disclosure controls and procedures were effective.

There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended August 3, 2013 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

27

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

From time to time, the Company is involved in litigation relating to claims arising out of the Company’s operations in the normal course of business.  This may include litigation with customers, employment related lawsuits, class action lawsuits, purported class action lawsuits and actions brought by governmental authorities.  As of September 3, 2013, the Company is not a party to any legal proceedings that, individually or in the aggregate, are reasonably expected to have a material adverse effect on the Company’s business, results of operations, financial condition or cash flows.

Item 1A.  Risk Factors

There have been no material changes in the information set forth under caption “Item 1A-Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2013.

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Item 6.  Exhibits

Number	Description
*3	By-Laws of Dillard’s, Inc., as amended, as currently in effect (previously filed as Exhibit 3 to Current Report on Form 8-K dated as of August 20, 2013 in File No. 1-6140).
*10.1	First Amendment to Second Amended and Restated Credit Agreement between Dillard’s, Inc. and JPMorgan Chase Bank, N.A. as agent for a syndicate of lenders (previously filed as Exhibit 10.1 to Current Report on Form 8-K dated as of July 3, 2013 in File No. 1-6140).
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
32.2	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Incorporated by reference as indicated.

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 3, 2013	/s/ James I. Freeman
		James I. Freeman
		Senior Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)

29

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, William Dillard, II, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Dillard’s, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 3, 2013
	/s/ William Dillard, II
	William Dillard, II
	Chairman of the Board and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, James I. Freeman, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Dillard’s, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 3, 2013
	/s/ James I. Freeman
	James I. Freeman
	Senior Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Dillard’s, Inc. (the “Company”) on Form 10-Q for the period ended August 3, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William Dillard, II, Chairman of the Board and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) and 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: September 3, 2013
	/s/ William Dillard, II
	William Dillard, II
	Chairman of the Board and
	Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Dillard’s, Inc. (the “Company”) on Form 10-Q for the period ended August 3, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James I. Freeman, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) and 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: September 3, 2013
	/s/ James I. Freeman
	James I. Freeman
	Senior Vice President and
	Chief Financial Officer

XML

Income Taxes

6 Months Ended

Aug. 03, 2013

Income Taxes

Income Taxes

Note 10.  Income Taxes

During the three months ended August 3, 2013, income tax expense differed from what would be computed using the statutory federal tax rate primarily due to the effect of state and local income taxes partially offset by tax benefits recognized for federal tax credits.  During the three months ended July 28, 2012, income tax expense differed from what would be computed using the statutory federal tax rate primarily due to the effect of state and local income taxes.

During the six months ended August 3, 2013, income tax expense differed from what would be computed using the statutory federal tax rate primarily due to the effect of state and local income taxes partially offset by tax benefits recognized for federal tax credits.  During the six months ended July 28, 2012, income tax expense differed from what would be computed using the statutory federal tax rate primarily due to the effect of state and local income taxes partially offset by a benefit due to net decreases in unrecognized tax benefits primarily related to statute lapses.

XML

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Aug. 03, 2013	Jul. 28, 2012	Aug. 03, 2013	Jul. 28, 2012
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
Net sales	$ 1,479,852	$ 1,487,925	$ 3,028,988	$ 3,037,244
Service charges and other income	36,944	37,257	77,189	73,950
Total net sales, service charges and other income	1,516,796	1,525,182	3,106,177	3,111,194
Cost of sales	976,822	987,802	1,914,607	1,944,715
Selling, general and administrative expenses	398,218	398,788	788,414	792,026
Depreciation and amortization	64,244	64,215	129,360	128,235
Rentals	5,532	8,641	11,103	16,906
Interest and debt expense, net	16,246	17,673	32,556	35,128
Gain on disposal of assets	(24)	(142)	(12,369)	(1,139)
Asset impairment and store closing charges			6,527
Income before income taxes and income on and equity in losses of joint ventures	55,758	48,205	235,979	195,323
Income taxes	19,675	17,330	83,095	70,300
Income on and equity in losses of joint ventures	408	147	817	982
Net income	36,491	31,022	153,701	126,005
Retained earnings at beginning of period	3,214,446	3,199,848	3,099,566	3,107,344
Cash dividends declared	(2,317)	(2,396)	(4,647)	(4,875)
Retained earnings at end of period	$ 3,248,620	$ 3,228,474	$ 3,248,620	$ 3,228,474
Earnings per share:
Basic (in dollars per share)	$ 0.79	$ 0.64	$ 3.30	$ 2.58
Diluted (in dollars per share)	$ 0.79	$ 0.63	$ 3.30	$ 2.53
Cash dividends declared per common share (in dollars per share)	$ 0.05	$ 0.05	$ 0.10	$ 0.10

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Stock-Based Compensation

6 Months Ended

Aug. 03, 2013

Stock-Based Compensation

Stock-Based Compensation

Note 3.  Stock-Based Compensation

The Company has various stock option plans that provide for the granting of options to purchase shares of Class A Common Stock to certain key employees of the Company.  Exercise and vesting terms for options granted under the plans are determined at each grant date.  No stock options were granted during the three and six months ended August 3, 2013 and July 28, 2012, and no stock options were outstanding at August 3, 2013.  The intrinsic value of stock options exercised during the quarter ended July 28, 2012 was $2.0 million.

XML

Asset Impairment and Store Closing Charges (Tables)

6 Months Ended

Aug. 03, 2013

Asset Impairment and Store Closing Charges

Summary of activity in reserve established for store closing charges

(in thousands)	Balance Beginning of Period		Adjustments and Charges*		Cash Payments		Balance End of Period
Rent, property taxes and utilities	$	251	$	101	$	224	$	128

* included in rentals

XML

Reclassifications from Accumulated Other Comprehensive Loss ("AOCL")

6 Months Ended

Aug. 03, 2013

Reclassifications from Accumulated Other Comprehensive Loss ("AOCL")

Reclassifications from Accumulated Other Comprehensive Loss ("AOCL")

Note 11. Reclassifications from Accumulated Other Comprehensive Loss (“AOCL”)

Reclassifications from AOCL are summarized as follows (in thousands):

	Amount Reclassified from AOCL
	Three Months		Six Months		Affected Line Item in
	Ended		Ended		the Statement Where
Details about AOCL Components	August 3, 2013		August 3, 2013		Net Income is Presented
Defined benefit pension plan items
Amortization of prior service costs	$	24	$	48	(1)
Amortization of actuarial losses	753		1,506		(1)
Plan curtailment gain	—		7,331		(2)
	777		8,885		Total before tax
	297		3,395		Income tax expense
	$	480	$	5,490	Total net of tax

(1) These items are included in the computation of net periodic pension cost.  See Note 7, Benefit Plans, for additional information.

(2) The excess of the pension liability for the curtailed plan over the amount shown here is included in the computation of net periodic pension cost.  See Note 7, Benefit Plans, for additional information.

XML

Reclassifications from Accumulated Other Comprehensive Loss ("AOCL") (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Aug. 03, 2013	Jul. 28, 2012	Aug. 03, 2013	Jul. 28, 2012
Reclassifications from accumulated other comprehensive loss
Income before income taxes and income on and equity in losses of joint ventures	$ 55,758	$ 48,205	$ 235,979	$ 195,323
Income tax expense	19,675	17,330	83,095	70,300
Net income	36,491	31,022	153,701	126,005
Defined benefit pension plan | Amount Reclassified from AOCL
Reclassifications from accumulated other comprehensive loss
Amortization of prior service costs	24		48
Amortization of actuarial losses	753		1,506
Plan curtailment gain			7,331
Income before income taxes and income on and equity in losses of joint ventures	777		8,885
Income tax expense	297		3,395
Net income	$ 480		$ 5,490

XML

Reclassifications from Accumulated Other Comprehensive Loss ("AOCL") (Tables)

6 Months Ended

Aug. 03, 2013

Reclassifications from Accumulated Other Comprehensive Loss ("AOCL")

Summary of reclassifications from AOCL

Reclassifications from AOCL are summarized as follows (in thousands):

	Amount Reclassified from AOCL
	Three Months		Six Months		Affected Line Item in
	Ended		Ended		the Statement Where
Details about AOCL Components	August 3, 2013		August 3, 2013		Net Income is Presented
Defined benefit pension plan items
Amortization of prior service costs	$	24	$	48	(1)
Amortization of actuarial losses	753		1,506		(1)
Plan curtailment gain	—		7,331		(2)
	777		8,885		Total before tax
	297		3,395		Income tax expense
	$	480	$	5,490	Total net of tax

(1) These items are included in the computation of net periodic pension cost.  See Note 7, Benefit Plans, for additional information.

(2) The excess of the pension liability for the curtailed plan over the amount shown here is included in the computation of net periodic pension cost.  See Note 7, Benefit Plans, for additional information.

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Benefit Plans (Tables)

6 Months Ended

Aug. 03, 2013

Benefit Plans

Schedule of components of net periodic benefit costs

The components of net periodic benefit costs are as follows (in thousands):

	Three Months Ended				Six Months Ended
	August 3,		July 28,		August 3,			July 28,
	2013		2012		2013			2012
Components of net periodic benefit costs:
Service cost	$	1,059	$	817	$	2,118		$	1,634
Interest cost	1,695		1,823		3,391			3,647
Net actuarial loss	753		1,283		1,506			2,566
Amortization of prior service cost	24		157		48			313
Plan curtailment gain	—		—		(1,480		)	—
Net periodic benefit costs	$	3,531	$	4,080	$	5,583		$	8,160

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Commitments and Contingencies (Details) (USD $) In Millions, unless otherwise specified	Aug. 03, 2013
Commitments and Contingencies
Outstanding letters of credit under the Company's revolving credit facility	$ 47.2

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Gain on Disposal of Assets (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Aug. 03, 2013	Jul. 28, 2012	Aug. 03, 2013	Jul. 28, 2012
Gain on disposal of assets
Proceeds from disposal of assets			$ 18,269	$ 7,883
Gain on disposal of assets	24	142	12,369	1,139
Sale of investment
Gain on disposal of assets
Proceeds from disposal of assets			15,700
Gain on disposal of assets			11,700
Sale of retail store location
Gain on disposal of assets
Proceeds from disposal of assets			1,700	7,800
Gain on disposal of assets			$ 600	$ 900
Number of former retail stores sold			2	2
Number of buildings sold				1

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Stock-Based Compensation (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Aug. 03, 2013	Jul. 28, 2012	Aug. 03, 2013	Jul. 28, 2012
Stock-Based Compensation
Stock options granted during period (in shares)	0	0	0	0
Total stock options outstanding (in shares)	0	2,100,000	0	2,100,000
Intrinsic value of stock options exercised		$ 2.0

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Earnings Per Share Data (Tables)

6 Months Ended

Aug. 03, 2013

Earnings Per Share Data

Schedule of computation of basic and diluted earnings per share

The following table sets forth the computation of basic and diluted earnings per share for the periods indicated (in thousands, except per share data).

	Three Months Ended				Six Months Ended
	August 3,		July 28,		August 3,		July 28,
	2013		2012		2013		2012
Basic:
Net income	$	36,491	$	31,022	$	153,701	$	126,005
Weighted average shares of common stock outstanding	46,327		48,288		46,632		48,834
Basic earnings per share	$	0.79	$	0.64	$	3.30	$	2.58

	Three Months Ended				Six Months Ended
	August 3,		July 28,		August 3,		July 28,
	2013		2012		2013		2012
Diluted:
Net income	$	36,491	$	31,022	$	153,701	$	126,005
Weighted average shares of common stock outstanding	46,327		48,288		46,632		48,834
Dilutive effect of stock-based compensation	—		944		—		937
Total weighted average equivalent shares	46,327		49,232		46,632		49,771
Diluted earnings per share	$	0.79	$	0.63	$	3.30	$	2.53

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Aug. 03, 2013	Jul. 28, 2012	Aug. 03, 2013	Jul. 28, 2012
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Amortization of retirement plan and other retiree benefit adjustments, tax	$ 297	$ 522	$ 3,395	$ 1,044

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Basis of Presentation

6 Months Ended

Aug. 03, 2013

Basis of Presentation

Basis of Presentation

Note 1. Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements of Dillard’s, Inc. (the “Company”) have been prepared in accordance with the rules of the Securities and Exchange Commission (“SEC”).  Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) 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 and six months ended August 3, 2013 are not necessarily indicative of the results that may be expected for the fiscal year ending February 1, 2014 due to the seasonal nature of the business.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2013 filed with the SEC on March 28, 2013.

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Asset Impairment and Store Closing Charges

6 Months Ended

Aug. 03, 2013

Asset Impairment and Store Closing Charges

Asset Impairment and Store Closing Charges

Note 4.  Asset Impairment and Store Closing Charges

There were no asset impairment and store closing charges recorded during the three months ended August 3, 2013 and during the three and six months ended July 28, 2012.

During the six months ended August 3, 2013, the Company recorded a pretax charge of $6.5 million for asset impairment and store closing costs.  The charge was for the write-down of an operating property and certain cost method investments.

Following is a summary of the activity in the reserve established for store closing charges for the six months ended August 3, 2013:

(in thousands)	Balance Beginning of Period		Adjustments and Charges*		Cash Payments		Balance End of Period
Rent, property taxes and utilities	$	251	$	101	$	224	$	128

* included in rentals

Reserve amounts are included in trade accounts payable and accrued expenses and other liabilities.

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Business Segments

6 Months Ended

Aug. 03, 2013

Business Segments

Business Segments

Note 2.  Business Segments

The Company operates in two reportable segments:  the operation of retail department stores (“retail operations”) and a general contracting construction company (“construction”).

For the Company’s retail operations, the Company determined its operating segments on a store by store basis.  Each store’s operating performance has been aggregated into one reportable segment.  The Company’s operating segments are aggregated for financial reporting purposes because they are similar in each of the following areas: economic characteristics, class of consumer, nature of products and distribution methods. Revenues from external customers are derived from merchandise sales, and the Company does not rely on any major customers as a source of revenue. Across all stores, the Company operates one store format under the Dillard’s name where each store offers the same general mix of merchandise with similar categories and similar customers.  The Company believes that disaggregating its operating segments would not provide meaningful additional information.

The following tables summarize certain segment information, including the reconciliation of those items to the Company’s consolidated operations:

(in thousands of dollars)	Retail Operations		Construction			Consolidated
Three Months Ended August 3, 2013:
Net sales from external customers	$	1,458,778	$	21,074		$	1,479,852
Gross profit	501,417		1,613			503,030
Depreciation and amortization	64,186		58			64,244
Interest and debt expense (income), net	16,262		(16		)	16,246
Income before income taxes and income on and equity in losses of joint ventures	55,282		476			55,758
Income on and equity in losses of joint ventures	408		—			408
Total assets	4,074,433		33,030			4,107,463
Three Months Ended July 28, 2012:
Net sales from external customers	$	1,456,025	$	31,900		$	1,487,925
Gross profit	498,717		1,406			500,123
Depreciation and amortization	64,164		51			64,215
Interest and debt expense (income), net	17,708		(35		)	17,673
Income before income taxes and income on and equity in losses of joint ventures	48,028		177			48,205
Income on and equity in losses of joint ventures	147		—			147
Total assets	4,215,718		45,744			4,261,462
Six Months Ended August 3, 2013:
Net sales from external customers	$	2,988,778	$	40,210		$	3,028,988
Gross profit	1,111,306		3,075			1,114,381
Depreciation and amortization	129,243		117			129,360
Interest and debt expense (income), net	32,592		(36		)	32,556
Income before income taxes and income on and equity in losses of joint ventures	235,181		798			235,979
Income on and equity in losses of joint ventures	817		—			817
Total assets	4,074,433		33,030			4,107,463
Six Months Ended July 28, 2012:
Net sales from external customers	$	2,978,000	$	59,244		$	3,037,244
Gross profit	1,089,780		2,749			1,092,529
Depreciation and amortization	128,139		96			128,235
Interest and debt expense (income), net	35,199		(71		)	35,128
Income before income taxes and income on and equity in losses of joint ventures	194,996		327			195,323
Income on and equity in losses of joint ventures	982		—			982
Total assets	4,215,718		45,744			4,261,462

Intersegment construction revenues of $10.6 million and $12.4 million for the three and six months ended August 3, 2013, respectively, and intersegment construction revenues of $9.9 million and $17.8 million for the three and six months ended July 28, 2012, respectively, were eliminated during consolidation and have been excluded from net sales for the respective periods.

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Fair Value Disclosures (Details) (USD $)	6 Months Ended
	Aug. 03, 2013	Feb. 02, 2013	Jul. 28, 2012
Fair value disclosures
Subordinated debentures	$ 200,000,000	$ 200,000,000	$ 200,000,000
Impairment charge on cost method investments	5,400,000
Nonrecurring
Fair value disclosures
Impairment charge on long-lived assets held for use	1,200,000
Fair Value of Assets
Fair value disclosures
Long-term debt, including current portion, fair value	669,000,000
Subordinated debentures, fair value	204,000,000
Fair Value of Assets | Nonrecurring
Fair value disclosures
Long-lived assets held for use	3,000,000
Significant Other Observable Inputs (Level 2) | Nonrecurring
Fair value disclosures
Long-lived assets held for use	3,000,000
Carrying value
Fair value disclosures
Long-term debt, including current portion	615,000,000
Subordinated debentures	$ 200,000,000

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Changes in Accumulated Other Comprehensive Loss (Tables)

6 Months Ended

Aug. 03, 2013

Changes in Accumulated Other Comprehensive Loss

Summary of changes in AOCL by component (net of tax)

Changes in AOCL by component (net of tax) are summarized as follows (in thousands):

	Defined Benefit Pension Plan Items
	Three Months			Six Months
	Ended			Ended
	August 3, 2013			August 3, 2013
Beginning balance	$	26,265		$	31,275
Other comprehensive income before reclassifications	—			—
Amounts reclassified from AOCL	(480		)	(5,490		)
Net other comprehensive income	(480		)	(5,490		)
Ending balance	$	25,785		$	25,785

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Asset Impairment and Store Closing Charges (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Aug. 03, 2013
Asset Impairment and Store Closing Charges
Asset impairment and store closing charges	$ 6,527
Summary of activity in reserve established for store closing charges
Rentals, property taxes and utilities, Balance Beginning of Period	251
Adjustments and Charges	101
Cash Payments	224
Rentals, property taxes and utilities, Balance End of Period	$ 128

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Stock Repurchase Programs (Details) (USD $) In Millions, except Share data in Thousands, unless otherwise specified	1 Months Ended	3 Months Ended	6 Months Ended	1 Months Ended	3 Months Ended	6 Months Ended	1 Months Ended	6 Months Ended
	Mar. 31, 2013 2013 Stock Plan	Aug. 03, 2013 2013 Stock Plan	Aug. 03, 2013 2013 Stock Plan	Feb. 29, 2012 2012 Stock Plan	Jul. 28, 2012 2012 Stock Plan	Aug. 03, 2013 2012 Stock Plan	May 31, 2011 May 2011 Stock Plan	Jul. 28, 2012 May 2011 Stock Plan
Stock Repurchase Programs
Stock repurchase authorization	$ 250			$ 250			$ 250
Number of shares repurchased		0	300		2,100	1,200		439
Amount of shares repurchased			22.7		134.6	92.0		27.5
Average price of shares repurchased (in dollars per share)			$ 79.04		$ 64.52	$ 79.14		$ 62.71
Repurchase of common stock remaining authorization			$ 227.3

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, unless otherwise specified	Aug. 03, 2013	Feb. 02, 2013	Jul. 28, 2012
CONDENSED CONSOLIDATED BALANCE SHEETS
Property and equipment, accumulated depreciation and amortization	$ 2,288,603	$ 2,167,477	$ 2,352,658

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Benefit Plans

6 Months Ended

Aug. 03, 2013

Benefit Plans

Benefit Plans

Note 7.  Benefit Plans

The Company has an unfunded, nonqualified defined benefit plan (“Pension Plan”) for its officers.  The Pension Plan is noncontributory and provides benefits based on years of service and compensation during employment.  Pension expense is determined using various actuarial cost methods to estimate the total benefits ultimately payable to officers and allocates this cost to service periods.  The actuarial assumptions used to calculate pension costs are reviewed annually.  The Company made contributions to the Pension Plan of $0.7 million and $1.4 million during the three and six months ended August 3, 2013, respectively.  The Company expects to make contributions to the Pension Plan of approximately $1.3 million for the remainder of fiscal 2013.

The components of net periodic benefit costs are as follows (in thousands):

	Three Months Ended				Six Months Ended
	August 3,		July 28,		August 3,			July 28,
	2013		2012		2013			2012
Components of net periodic benefit costs:
Service cost	$	1,059	$	817	$	2,118		$	1,634
Interest cost	1,695		1,823		3,391			3,647
Net actuarial loss	753		1,283		1,506			2,566
Amortization of prior service cost	24		157		48			313
Plan curtailment gain	—		—		(1,480		)	—
Net periodic benefit costs	$	3,531	$	4,080	$	5,583		$	8,160

Net periodic benefit costs are included in selling, general and administrative expenses.

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Aug. 03, 2013	Jul. 28, 2012	Aug. 03, 2013	Jul. 28, 2012
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 36,491	$ 31,022	$ 153,701	$ 126,005
Other comprehensive income:
Amortization of retirement plan and other retiree benefit adjustments (net of tax of $297, $522, $3,395 and $1,044)	480	918	5,490	1,836
Comprehensive income	$ 36,971	$ 31,940	$ 159,191	$ 127,841

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Aug. 03, 2013	Feb. 02, 2013	Jul. 28, 2012
Current assets:
Cash and cash equivalents	$ 113,735	$ 124,060	$ 162,533
Accounts receivable	26,239	31,519	33,414
Merchandise inventories	1,459,284	1,294,581	1,362,077
Other current assets	50,067	41,820	44,525
Total current assets	1,649,325	1,491,980	1,602,549
Property and equipment (net of accumulated depreciation and amortization of $2,288,603, $2,167,477 and $2,352,658)	2,198,693	2,287,015	2,388,107
Other assets	259,445	269,749	270,806
Total assets	4,107,463	4,048,744	4,261,462
Current liabilities:
Trade accounts payable and accrued expenses	713,103	653,769	699,026
Current portion of long-term debt			75,857
Current portion of capital lease obligations	918	1,710	2,369
Other short-term borrowings			24,000
Federal and state income taxes including current deferred taxes	83,512	111,637	74,342
Total current liabilities	797,533	767,116	875,594
Long-term debt	614,785	614,785	614,785
Capital lease obligations	7,150	7,524	7,997
Other liabilities	229,155	233,492	246,620
Deferred income taxes	248,002	255,652	294,989
Subordinated debentures	200,000	200,000	200,000
Commitments and contingencies
Stockholders' equity:
Common stock	1,237	1,237	1,227
Additional paid-in capital	933,264	932,495	837,401
Accumulated other comprehensive loss	(25,785)	(31,275)	(37,198)
Retained earnings	3,248,620	3,099,566	3,228,474
Less treasury stock, at cost	(2,146,498)	(2,031,848)	(2,008,427)
Total stockholders' equity	2,010,838	1,970,175	2,021,477
Total liabilities and stockholders' equity	$ 4,107,463	$ 4,048,744	$ 4,261,462

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Fair Value Disclosures (Tables)

6 Months Ended

Aug. 03, 2013

Fair Value Disclosures

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

			Basis of Fair Value Measurements
			Quoted Prices		Significant
			In Active		Other		Significant
	Fair Value		Markets for		Observable		Unobservable
	of Assets		Identical Items		Inputs		Inputs
(in thousands)	(Liabilities)		(Level 1)		(Level 2)		(Level 3)
Long-lived assets held for use As of August 3, 2013	$	3,000	$	—	$	3,000	$	—

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Business Segments (Tables)

6 Months Ended

Aug. 03, 2013

Business Segments

Schedule of segment information

(in thousands of dollars)	Retail Operations		Construction			Consolidated
Three Months Ended August 3, 2013:
Net sales from external customers	$	1,458,778	$	21,074		$	1,479,852
Gross profit	501,417		1,613			503,030
Depreciation and amortization	64,186		58			64,244
Interest and debt expense (income), net	16,262		(16		)	16,246
Income before income taxes and income on and equity in losses of joint ventures	55,282		476			55,758
Income on and equity in losses of joint ventures	408		—			408
Total assets	4,074,433		33,030			4,107,463
Three Months Ended July 28, 2012:
Net sales from external customers	$	1,456,025	$	31,900		$	1,487,925
Gross profit	498,717		1,406			500,123
Depreciation and amortization	64,164		51			64,215
Interest and debt expense (income), net	17,708		(35		)	17,673
Income before income taxes and income on and equity in losses of joint ventures	48,028		177			48,205
Income on and equity in losses of joint ventures	147		—			147
Total assets	4,215,718		45,744			4,261,462
Six Months Ended August 3, 2013:
Net sales from external customers	$	2,988,778	$	40,210		$	3,028,988
Gross profit	1,111,306		3,075			1,114,381
Depreciation and amortization	129,243		117			129,360
Interest and debt expense (income), net	32,592		(36		)	32,556
Income before income taxes and income on and equity in losses of joint ventures	235,181		798			235,979
Income on and equity in losses of joint ventures	817		—			817
Total assets	4,074,433		33,030			4,107,463
Six Months Ended July 28, 2012:
Net sales from external customers	$	2,978,000	$	59,244		$	3,037,244
Gross profit	1,089,780		2,749			1,092,529
Depreciation and amortization	128,139		96			128,235
Interest and debt expense (income), net	35,199		(71		)	35,128
Income before income taxes and income on and equity in losses of joint ventures	194,996		327			195,323
Income on and equity in losses of joint ventures	982		—			982
Total assets	4,215,718		45,744			4,261,462

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Changes in Accumulated Other Comprehensive Loss (Details) (USD $) In Thousands, unless otherwise specified				3 Months Ended	6 Months Ended
	Aug. 03, 2013	Feb. 02, 2013	Jul. 28, 2012	Aug. 03, 2013 Defined benefit pension plan	Aug. 03, 2013 Defined benefit pension plan
Changes in accumulated other comprehensive loss
Beginning balance	$ (25,785)	$ (31,275)	$ (37,198)	$ 26,265	$ 31,275
Amounts reclassified from AOCL				(480)	(5,490)
Net other comprehensive income				(480)	(5,490)
Ending balance	$ (25,785)	$ (31,275)	$ (37,198)	$ 25,785	$ 25,785

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Benefit Plans (Details) (USD $)	3 Months Ended		6 Months Ended
	Aug. 03, 2013	Jul. 28, 2012	Aug. 03, 2013	Jul. 28, 2012
Benefit Plans
Employer contributions to pension plan	$ 700,000		$ 1,400,000
Expected employer contributions to pension plan for remainder of current fiscal year	1,300,000		1,300,000
Components of net periodic benefit costs:
Service cost	1,059,000	817,000	2,118,000	1,634,000
Interest cost	1,695,000	1,823,000	3,391,000	3,647,000
Net actuarial loss	753,000	1,283,000	1,506,000	2,566,000
Amortization of prior service cost	24,000	157,000	48,000	313,000
Plan curtailment gain			(1,480,000)
Net periodic benefit costs	$ 3,531,000	$ 4,080,000	$ 5,583,000	$ 8,160,000

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Revolving Credit Agreement (Details) (USD $)	6 Months Ended
	Aug. 03, 2013
Credit agreement
Interest rate at end of period (as a percent)	1.69%
Revolving credit facility	$ 1,000,000,000
Limit on availability for borrowings and letter of credit obligations, expressed as a percentage of inventory of certain subsidiaries	90.00%
Availability for borrowings and letter of credit obligations	982,300,000
Outstanding borrowings under the credit facility	0
Letters of credit issued	47,200,000
Unutilized credit facility borrowing capacity	935,000,000
Annual commitment fee (as a percent)	0.25%
Minimum
Credit agreement
Minimum line of credit availability for no financial covenant requirements	$ 100,000,000
JP Morgan's base rate
Credit agreement
Reference rate	JPMorgan's Base Rate
LIBOR
Credit agreement
Reference rate	LIBOR
Percentage points added to reference rate	1.50%

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Commitments and Contingencies

6 Months Ended

Aug. 03, 2013

Commitments and Contingencies

Commitments and Contingencies

Note 6.  Commitments and Contingencies

Various legal proceedings, in the form of lawsuits and claims, which occur in the normal course of business, are pending against the Company and its subsidiaries.  In the opinion of management, disposition of these matters is not expected to have a material adverse effect on the Company’s financial position, cash flows or results of operations.

At August 3, 2013, letters of credit totaling $47.2 million were issued under the Company’s revolving credit facility.

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Business Segments (Details) (USD $)	3 Months Ended		6 Months Ended
	Aug. 03, 2013	Jul. 28, 2012	Aug. 03, 2013 segment	Jul. 28, 2012	Feb. 02, 2013
Business Segments
Number of reportable segments			2
Net sales from external customers	$ 1,479,852,000	$ 1,487,925,000	$ 3,028,988,000	$ 3,037,244,000
Gross profit	503,030,000	500,123,000	1,114,381,000	1,092,529,000
Depreciation and amortization	64,244,000	64,215,000	129,360,000	128,235,000
Interest and debt expense (income), net	16,246,000	17,673,000	32,556,000	35,128,000
Income before income taxes and income on and equity in losses of joint ventures	55,758,000	48,205,000	235,979,000	195,323,000
Income on and equity in losses of joint ventures	408,000	147,000	817,000	982,000
Total assets	4,107,463,000	4,261,462,000	4,107,463,000	4,261,462,000	4,048,744,000
Intersegment revenues	10,600,000	9,900,000	12,400,000	17,800,000
Retail operations
Business Segments
Number of store formats			1
Net sales from external customers	1,458,778,000	1,456,025,000	2,988,778,000	2,978,000,000
Gross profit	501,417,000	498,717,000	1,111,306,000	1,089,780,000
Depreciation and amortization	64,186,000	64,164,000	129,243,000	128,139,000
Interest and debt expense (income), net	16,262,000	17,708,000	32,592,000	35,199,000
Income before income taxes and income on and equity in losses of joint ventures	55,282,000	48,028,000	235,181,000	194,996,000
Income on and equity in losses of joint ventures	408,000	147,000	817,000	982,000
Total assets	4,074,433,000	4,215,718,000	4,074,433,000	4,215,718,000
Construction
Business Segments
Net sales from external customers	21,074,000	31,900,000	40,210,000	59,244,000
Gross profit	1,613,000	1,406,000	3,075,000	2,749,000
Depreciation and amortization	58,000	51,000	117,000	96,000
Interest and debt expense (income), net	(16,000)	(35,000)	(36,000)	(71,000)
Income before income taxes and income on and equity in losses of joint ventures	476,000	177,000	798,000	327,000
Total assets	$ 33,030,000	$ 45,744,000	$ 33,030,000	$ 45,744,000

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Stock Repurchase Programs

6 Months Ended

Aug. 03, 2013

Stock Repurchase Programs

Stock Repurchase Programs

Note 9.  Stock Repurchase Programs

All repurchases of the Company’s Class A Common Stock were made at the market price at the trade date.  Accordingly, all amounts paid to reacquire these shares were allocated to Treasury Stock.

2013 Stock Plan

In March 2013, the Company’s Board of Directors authorized the repurchase of up to $250 million of the Company’s Class A Common Stock under an open-ended stock plan (“2013 Stock Plan”).  This authorization permits the Company to repurchase its Class A Common Stock in the open market, pursuant to preset trading plans meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934 (“Exchange Act”) or through privately negotiated transactions.  No repurchases were made during the three months ended August 3, 2013.  During the six months ended August 3, 2013, the Company repurchased 0.3 million shares for $22.7 million at an average price of $79.04 per share.  At August 3, 2013, $227.3 million of authorization remained under the 2013 Stock Plan.

2012 Stock Plan

In February 2012, the Company’s Board of Directors authorized the repurchase of up to $250 million of the Company’s Class A Common Stock under an open-ended stock plan (“2012 Stock Plan”).  This authorization permitted the Company to repurchase its Class A Common Stock in the open market, pursuant to preset trading plans meeting the requirements of Rule 10b5-1 under the Exchange Act or through privately negotiated transactions.  During the three months ended July 28, 2012, the Company repurchased 2.1 million shares for $134.6 million at an average price of $64.52 per share.  During the six months ended August 3, 2013, the Company repurchased 1.2 million shares for $92.0 million at an average price of $79.14 per share, which completed the authorization under the 2012 Stock Plan.

May 2011 Stock Plan

In May 2011, the Company’s Board of Directors authorized the Company to repurchase up to $250 million of the Company’s Class A Common Stock under an open-ended stock plan (“May 2011 Stock Plan”).  This authorization permitted the Company to repurchase its Class A Common Stock in the open market, pursuant to preset trading plans meeting the requirements of Rule 10b5-1 under the Exchange Act or through privately negotiated transactions.  During the six months ended July 28, 2012, the Company repurchased 439 thousand shares for $27.5 million at an average price of $62.71 per share, which completed the authorization under the May 2011 Stock Plan.

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Earnings Per Share Data

6 Months Ended

Aug. 03, 2013

Earnings Per Share Data

Earnings Per Share Data

Note 5. Earnings Per Share Data

The following table sets forth the computation of basic and diluted earnings per share for the periods indicated (in thousands, except per share data).

	Three Months Ended				Six Months Ended
	August 3,		July 28,		August 3,		July 28,
	2013		2012		2013		2012
Basic:
Net income	$	36,491	$	31,022	$	153,701	$	126,005
Weighted average shares of common stock outstanding	46,327		48,288		46,632		48,834
Basic earnings per share	$	0.79	$	0.64	$	3.30	$	2.58

	Three Months Ended				Six Months Ended
	August 3,		July 28,		August 3,		July 28,
	2013		2012		2013		2012
Diluted:
Net income	$	36,491	$	31,022	$	153,701	$	126,005
Weighted average shares of common stock outstanding	46,327		48,288		46,632		48,834
Dilutive effect of stock-based compensation	—		944		—		937
Total weighted average equivalent shares	46,327		49,232		46,632		49,771
Diluted earnings per share	$	0.79	$	0.63	$	3.30	$	2.53

No stock options were outstanding at August 3, 2013, and total stock options outstanding were 2,100,000 at July 28, 2012.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Aug. 03, 2013	Jul. 28, 2012
Operating activities:
Net income	$ 153,701	$ 126,005
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and deferred financing costs	130,343	129,197
Gain on disposal of assets	(12,369)	(1,139)
Excess tax benefits from share-based compensation		(2,028)
Asset impairment and store closing charges	6,527
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable	5,280	(4,706)
Increase in merchandise inventories	(164,703)	(57,953)
Increase in other current assets	(7,478)	(9,900)
Decrease in other assets	1,324	7,777
Increase in trade accounts payable and accrued expenses and other liabilities	54,870	44,417
Decrease in income taxes payable	(35,775)	(78,849)
Net cash provided by operating activities	131,720	152,821
Investing activities:
Purchases of property and equipment	(40,868)	(86,740)
Proceeds from disposal of assets	18,269	7,883
Net cash used in investing activities	(22,599)	(78,857)
Financing activities:
Principal payments on long-term debt and capital lease obligations	(1,166)	(2,031)
Issuance cost of line of credit	(1,300)	(5,350)
Increase in short-term borrowings		24,000
Cash dividends paid	(2,330)	(4,983)
Purchase of treasury stock	(114,650)	(153,099)
Proceeds from stock issuance		3,732
Excess tax benefits from share-based compensation		2,028
Net cash used in financing activities	(119,446)	(135,703)
Decrease in cash and cash equivalents	(10,325)	(61,739)
Cash and cash equivalents, beginning of period	124,060	224,272
Cash and cash equivalents, end of period	113,735	162,533
Non-cash transactions:
Accrued capital expenditures	3,300	3,408
Stock awards	769	2,847
Accrued treasury stock purchase		$ 9,016

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Earnings Per Share Data (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Aug. 03, 2013	Jul. 28, 2012	Aug. 03, 2013	Jul. 28, 2012
Basic:
Net income	$ 36,491	$ 31,022	$ 153,701	$ 126,005
Weighted average shares of common stock outstanding	46,327,000	48,288,000	46,632,000	48,834,000
Basic earnings per share (in dollars per share)	$ 0.79	$ 0.64	$ 3.30	$ 2.58
Diluted:
Net income	$ 36,491	$ 31,022	$ 153,701	$ 126,005
Weighted average shares of common stock outstanding	46,327,000	48,288,000	46,632,000	48,834,000
Dilutive effect of stock-based compensation (in shares)		944,000		937,000
Total weighted average equivalent shares	46,327,000	49,232,000	46,632,000	49,771,000
Diluted earnings per share (in dollars per share)	$ 0.79	$ 0.63	$ 3.30	$ 2.53
Total stock options outstanding (in shares)	0	2,100,000	0	2,100,000

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Changes in Accumulated Other Comprehensive Loss

6 Months Ended

Aug. 03, 2013

Changes in Accumulated Other Comprehensive Loss

Changes in Accumulated Other Comprehensive Loss

Note 12. Changes in Accumulated Other Comprehensive Loss

Changes in AOCL by component (net of tax) are summarized as follows (in thousands):

	Defined Benefit Pension Plan Items
	Three Months			Six Months
	Ended			Ended
	August 3, 2013			August 3, 2013
Beginning balance	$	26,265		$	31,275
Other comprehensive income before reclassifications	—			—
Amounts reclassified from AOCL	(480		)	(5,490		)
Net other comprehensive income	(480		)	(5,490		)
Ending balance	$	25,785		$	25,785

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Revolving Credit Agreement

6 Months Ended

Aug. 03, 2013

Revolving Credit Agreement

Revolving Credit Agreement

Note 8.  Revolving Credit Agreement

At August 3, 2013, the Company maintained a $1.0 billion revolving credit facility (“credit agreement”) with J. P. Morgan Securities LLC (“JPMorgan”) and Wells Fargo Capital Finance, LLC as the lead agents for various banks, secured by the inventory of Dillard’s, Inc. operating subsidiaries.  The credit agreement expires July 1, 2018.

Borrowings under the credit agreement accrue interest at either JPMorgan’s Base Rate or LIBOR plus 1.5% (1.69% at August 3, 2013) subject to certain availability thresholds as defined in the credit agreement.

Limited to 90% of the inventory of certain Company subsidiaries, availability for borrowings and letter of credit obligations under the credit agreement was $982.3 million at August 3, 2013.  No borrowings were outstanding at August 3, 2013.  Letters of credit totaling $47.2 million were issued under this credit agreement leaving unutilized availability under the facility of approximately $935 million at August 3, 2013.  There are no financial covenant requirements under the credit agreement provided availability exceeds $100 million.  The Company pays an annual commitment fee to the banks of 0.25% of the committed amount less outstanding borrowings and letters of credit.

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Recently Issued Accounting Standards

6 Months Ended

Aug. 03, 2013

Recently Issued Accounting Standards

Recently Issued Accounting Standards

Note 15.  Recently Issued Accounting Standards

Presentation of Comprehensive Income

In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, which requires the Company to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income on the Company’s consolidated statement of comprehensive income if the amount being reclassified is required under U.S. GAAP to be reclassified in its entirety to net income.  This update does not change the current requirements for reporting net income or other comprehensive income in the consolidated financial statements of the Company, but does require the Company to provide information about the amounts reclassified out of accumulated other comprehensive income by component.  The provisions in this update were effective prospectively beginning with the Company’s first quarter of 2013. The adoption of this update affected the format and presentation of the Company’s consolidated financial statements and the footnotes thereto but did not have any other impact on the Company’s financial statements.

Guidance on Financial Statement Presentation of Unrecognized Tax Benefit

In July 2013, the FASB issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which provides explicit presentation guidelines.  Under this ASU, an unrecognized tax benefit, or portion thereof, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward except when specific conditions are met as outlined in the ASU.  When these specific conditions are met, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets.  This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013, and should be applied prospectively to all unrecognized tax benefits that exist at the effective date.  The adoption of this update is not expected to have a material impact on our consolidated financial statements.

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Gain on Disposal of Assets

6 Months Ended

Aug. 03, 2013

Gain on Disposal of Assets

Gain on Disposal of Assets

Note 13.  Gain on Disposal of Assets

During the six months ended August 3, 2013, the Company received proceeds of $15.7 million from the sale of its investment in Acumen Brands, an eCommerce company based in Fayetteville, Arkansas.  The sale resulted in a gain of $11.7 million that was recorded in gain on disposal of assets.

During the six months ended August 3, 2013, the Company also received proceeds of $1.7 million from the sale of two former retail stores located in Oklahoma City, Oklahoma and Pasadena, Texas that were held for sale, resulting in a gain of $0.6 million that was recorded in gain on disposal of assets.

During the six months ended July 28, 2012, the Company received proceeds of $7.8 million from the sales of two former retail stores located in Cincinnati, Ohio and Antioch, Tennessee that were held for sale and one building that was formerly a portion of a currently operating retail location, resulting in a net gain of $0.9 million.

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Document and Entity Information	6 Months Ended
	Aug. 03, 2013	Aug. 27, 2013 Common Stock Class A	Aug. 27, 2013 Common Stock Class B
Entity Registrant Name	DILLARDS INC
Entity Central Index Key	0000028917
Document Type	10-Q
Document Period End Date	Aug. 03, 2013
Amendment Flag	false
Current Fiscal Year End Date	--02-01
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		41,806,487	4,010,929
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2

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Fair Value Disclosures

6 Months Ended

Aug. 03, 2013

Fair Value Disclosures

Fair Value Disclosures

Note 14.  Fair Value Disclosures

The estimated fair values of financial instruments which are presented herein have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of amounts the Company could realize in a current market exchange.

The fair value of the Company’s long-term debt and subordinated debentures is based on market prices or dealer quotes.

The fair value of the Company’s cash and cash equivalents and trade accounts receivable approximates their carrying values at August 3, 2013 due to the short-term maturities of these instruments.  The fair value of the Company’s long-term debt at August 3, 2013 was approximately $669 million.  The carrying value of the Company’s long-term debt at August 3, 2013 was $615 million.  The fair value of the Company’s subordinated debentures at August 3, 2013 was approximately $204 million.  The carrying value of the Company’s subordinated debentures at August 3, 2013 was $200 million.

During the six months ended August 3, 2013, the Company recognized an impairment charge of $5.4 million on certain cost method investments.  The Company evaluated all factors and determined that an other-than-temporary impairment charge was necessary.  These investments are recorded in other assets on the balance sheet.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The FASB’s accounting guidance utilizes a fair value hierarchy that prioritizes the inputs to the valuation techniques used to measure fair value into three broad levels:

· Level 1:  Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities

· Level 2:  Inputs, other than quoted prices, that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active

· Level 3:  Unobservable inputs that reflect the reporting entity’s own assumptions

			Basis of Fair Value Measurements
			Quoted Prices		Significant
			In Active		Other		Significant
	Fair Value		Markets for		Observable		Unobservable
	of Assets		Identical Items		Inputs		Inputs
(in thousands)	(Liabilities)		(Level 1)		(Level 2)		(Level 3)
Long-lived assets held for use As of August 3, 2013	$	3,000	$	—	$	3,000	$	—

Long-lived assets held for use

During the six months ended August 3, 2013, an additional long-lived asset group held for use was written down to its fair value of $3.0 million, resulting in an impairment charge of $1.2 million, which was included in earnings for the period.  The inputs used to calculate the fair value of these long-lived assets held for use was based upon an offer to purchase the property.