SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1994
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
Commission file number 1-6140
DILLARD DEPARTMENT STORES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 71-0388071
(State or other (IRS Employer
jurisdiction of incorporation Identification Number)
organization)
1600 CANTRELL ROAD, LITTLE ROCK, ARKANSAS 72201
(Address of principal executive offices)
(Zip Code)
(501) 376-5200
(Registrant's telephone number, including area code)
Indicate by checkmark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes x No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
CLASS A COMMON STOCK as of April 30, 1994 108,974,658
CLASS B COMMON STOCK as of April 30, 1994 4,017,061
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PART I FINANCIAL INFORMATION
ITEM 1 Financial Statements
CONSOLIDATED BALANCE SHEETS
DILLARD DEPARTMENT STORES, INC.
(Unaudited)
(Thousands)
April 30 January 29 May 1
1994 1994 1993
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ASSETS
CURRENT ASSETS
Cash and cash equivalents $49,619 $51,244 $50,803
Trade accounts receivable 1,031,967 1,096,530 1,020,853
Merchandise inventories 1,480,884 1,299,944 1,378,940
Other current assets 5,086 8,976 2,841
TOTAL CURRENT ASSETS 2,567,556 2,456,694 2,453,437
INVESTMENTS AND OTHER ASSETS 68,038 52,110 57,735
PROPERTY AND EQUIPMENT, NET 1,874,578 1,878,077 1,753,583
CONSTRUCTION IN PROGRESS 19,293 13,977 16,900
BUILDINGS UNDER CAPITAL LEASES 24,788 29,416 31,189
$4,554,253 $4,430,274 $4,312,844
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable and
accrued expenses $633,105 $529,475 $569,766
Commercial paper 137,124 145,276 160,035
Federal and state income taxes 46,036 54,011 45,129
Current portion of long-term debt 65,082 65,061 55,517
Current portion of capital lease
obligations 2,060 2,242 2,110
TOTAL CURRENT LIABILITIES 883,407 796,065 832,557
LONG-TERM DEBT 1,236,616 1,238,293 1,319,514
CAPITAL LEASE OBLIGATIONS 23,890 31,621 33,320
DEFERRED INCOME TAXES 282,648 282,648 245,682
STOCKHOLDERS' EQUITY
Preferred Stock 440 440 440
Common Stock 1,130 1,130 1,126
Additional paid-in capital 622,634 622,634 608,930
Retained earnings 1,503,488 1,457,443 1,271,275
2,127,692 2,081,647 1,881,771
$4,554,253 $4,430,274 $4,312,844
See notes to consolidated financial statements.
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CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
DILLARD DEPARTMENT STORES, INC.
(Unaudited)
(Thousands, except per share data)
Three Months Ended Twelve Months Ended
April 30 May 1 April 30 May 1
1994 1993 1994 1993
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Net sales (including leased
departments) $1,283,941 $1,163,179 $5,251,410 $4,843,258
Service charges, interest,
and other 48,022 47,375 182,393 174,417
1,331,963 1,210,554 5,433,803 5,017,675
Cost and expenses:
Cost of sales 853,079 753,950 3,405,886 3,130,181
Advertising, selling,
administrative and general
expenses 311,210 293,631 1,256,628 1,176,681
Depreciation and amortization 45,716 40,956 175,941 141,546
Rentals 13,395 12,866 65,487 63,373
Interest and debt expense 30,652 33,003 128,564 125,945
1,254,052 1,134,406 5,032,506 4,637,726
INCOME BEFORE INCOME TAXES 77,911 76,148 401,297 379,949
Federal and state income taxes 29,605 27,975 160,030 140,415
NET INCOME 48,306 48,173 241,267 239,534
Retained earnings at beginning
of period 1,457,443 1,225,353 1,271,275 1,050,105
1,505,749 1,273,526 1,512,542 1,289,639
Cash dividends declared (2,261) (2,251) (9,054) (8,994)
Shares issued under stock option,
employee savings and stock bonus
plans (net of shares canceled) (9,370)
RETAINED EARNINGS AT END
OF PERIOD $1,503,488 $1,271,275 $1,503,488 $1,271,275
Net income per common share $0.43 $0.43 $2.14 $2.13
Cash dividends declared
per common share $0.02 $0.02 $0.08 $0.08
Average shares outstanding 113,001 112,682 112,888 112,426
See notes to consolidated financial statements.
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CONSOLIDATED STATEMENTS OF CASH FLOWS
DILLARD DEPARTMENT STORES, INC.
(Unaudited)
(Thousands)
Three Months Ended
April 30 May 1
1994 1993
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OPERATING ACTIVITITES
Net income $48,306 $48,173
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 46,118 41,342
Changes in operating assets and liabilities:
Decrease in trade accounts receivable 64,563 69,367
Increase in merchandise inventories and
other current assets (177,050) (197,706)
(Increase) decrease in investments
and other assets (16,330) (6,662)
Increase in trade accounts payable and
accrued expenses and income taxes 95,644 30,746
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 61,251 (14,740)
INVESTING ACTIVITIES
Purchase of property and equipment (42,905) (66,672)
NET CASH USED IN INVESTING ACTIVITIES (42,905) (66,672)
FINANCING ACTIVITIES
Net (decrease) increase in commercial paper (8,152) 103,414
Principal payments on long-term debt and
capital lease obligations (9,569) (63,103)
Dividends paid (2,250) (4,511)
Common stock sold 0 3,831
NET CASH PROVIDED BY FINANCING ACTIVITIES (19,971) 39,631
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (1,625) (41,781)
Cash and cash equivalents at beginning of period 51,244 92,584
CASH AND CASH EQUIVALENTS AT END OF PERIOD $49,619 $50,803
See notes to consolidated financial statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying unaudited consolidated financial statements
have been prepared in accordance with generally accepted
accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the
three month period ended April 30, 1994 are not necessarily
indicative of the results that may be expected for the fiscal
year ended January 28, 1995 due to the seasonal nature of the
business. For further information, refer to the consolidated
financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the fiscal year ended
January 29, 1994.
2. The retail last-in, first-out (LIFO) inventory method is used
to value merchandise inventories, with such LIFO merchandise
inventories not being carried in excess of current cost.
Under this method, at April 30, 1994, and May 1, 1993, the
LIFO cost of merchandise inventories was approximately $14.5
million less than current cost. At January 29, 1994, the LIFO
cost of merchandise inventories was approximately $13.2
million less than current cost.
3. Net sales include leased department sales of $8.9 million and
$14.2 million for the quarters ending April 30, 1994 and May
1, 1993, respectively. Leased department sales for the twelve
months ending April 30, 1994 and May 1, 1993 were $61.2
million and $89.5 million respectively.
4. The effective income tax rate was 38% for the first quarter of
1994 and 37% for the first quarter of 1993. No allocation
between current and deferred income taxes was made during the
interim periods as such amounts would not be material to the
consolidated balance sheets. The provision for income taxes
is based on an estimated annual effective tax rate. Net
income for the three months ended April 30, 1994 was $48.3
million as compared to $48.2 million for the three months
ended May 1, 1993. For the twelve month period ended April
30, 1994, the increase was 1% over the prior period.
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ITEM 2 Management's Discussion And Analysis Of
Financial Condition And Results Of Operations
Results of Operations
The following table sets forth operating results expressed as a
percentage of net sales for the periods indicated:
Three Months Ended Twelve Months Ended
April 30 May 1 April 30 May 1
1994 1993 1994 1993
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Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 66.4 64.8 64.9 64.6
Gross Profit 33.6 35.2 35.1 35.4
Advertising, selling, administrative
and general expenses 24.2 25.2 23.9 24.3
Depreciation and amortization 3.6 3.6 3.4 3.0
Rentals 1.0 1.1 1.2 1.3
Interest and debt expense 2.4 2.8 2.4 2.6
Total operating expenses 31.2 32.7 30.9 31.2
Other income 3.7 4.1 3.5 3.6
Income before income taxes 6.1 6.6 7.7 7.8
Federal and state income taxes 2.3 2.4 3.1 2.9
Net income 3.8 4.2 4.6 4.9
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Net income for the three months ended April 30, 1994 was $48.3
million as compared to $48.2 million for the three months
ended May 1, 1993. For the twelve month period ended April
30, 1994, the increase was 1% over the prior period.
Sales for the first quarter of 1994 were $1,283.9 million as
compared to $1,163.2 million for the first quarter of 1993.
This is an increase of 10%. The sales increase for comparable
stores was 7%. The twelve month sales increase for 1994 over
1993 was 8%, for comparable stores the increase was 4%.
Cost of sales increased from 64.8% of net sales for the first
quarter of 1993 to 66.4% for the first quarter of 1994. This
increase was caused by lower initial markups on merchandise
purchases and by a higher level of markdowns taken to clear
seasonal merchandise. For the twelve months ended
April 30, 1994 and May 1, 1993, the increase was from 64.6% to 64.9%.
Advertising, selling, administrative and general expenses
decreased from 25.2% of net sales for the first quarter of
1993 to 24.2% for the first quarter of 1994. For the twelve
months ended April 30, 1994 and May 1, 1993 the percent to net
sales decreased from 24.3% to 23.9%. The Company continues to
control these expenses as sales grow.
Depreciation and amortization expense remained constant as a
percentage of sales for the first quarter of 1994 compared to
the first quarter of 1993. For the twelve months ended April
30, 1994 and May 1, 1993 the depreciation and amortization
expense as a percentage of sales increased from 3.0% to 3.4%.
This is due to a higher proportion of the Company's properties
being owned rather than leased.
Rental expense decreased from 1.1% of net sales for the first
quarter of 1993 to 1.0% of net sales in the three months ended
April 30, 1994. For the twelve months ended April 30, 1994
and May 1, 1993 rental expense as a percent of net sales
decreased slightly from 1.3% of net sales to 1.2% of net
sales. This is due to a higher proportion of the Company's
properties being owned rather than leased.
Interest and debt expense decreased from 2.8% of net sales for
the first quarter of 1993 to 2.4% of net sales for the first
quarter of 1994. For the twelve months ended April 30, 1994
interest and debt expense decreased slightly from 2.6% of net
sales in 1993 to 2.4% of net sales in 1994. This is due to a
lower level of debt this year compared to last year.
Service charges, interest and other income decreased to 3.7%
of net sales in the first quarter of 1994 from 4.1% of net
sales in 1993. For the twelve months ended April 30, 1994
this decreased to 3.5% of net sales from 3.6% of net sales in
1993. This decline is caused by a decline in credit sales as
a percentage of total sales.
The effective federal and state income tax rate was 38% for
the first quarter of 1994 and 37% for the first quarter of
1993.
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Financial Condition
The Company's working capital was $1,684.1 million at April
30, 1994, $1,660.6 million at January 29, 1994, and $1,620.9
million at May 1, 1993. The current ratio for these periods
was 2.9, 3.1 and 2.9, respectively. The ratio of long-term
debt and capitalized lease obligations as a percentage of
equity was 59.2%, 61.0% and 71.9% at April 30, 1994, January
29, 1994, and May 1, 1993, respectively. This ratio has
decreased due to a lower level of long-term debt as well as
growth in stockholders' equity.
The Company invested $42.9 million in capital expenditures for
the three months ended April 30, 1994 as compared to $66.7
million for the three months ended May 1, 1993. In 1994, the
Company plans to build eight new stores, one replacement store
and to remodel significantly four additional stores. In
1993, the Company opened ten new stores and remodeled
significantly and expanded three stores.
Merchandise inventories increased by 7% from $1,378.9 million
at May 1, 1993 to $1,480.9 million at April 30, 1994. This
increase is due to the opening of ten new stores in 1993 and
two stores in the first quarter of 1994. On a comparable
store basis, the rate of increase in merchandise inventories
was lower than the rate of increase for comparable stores
sales.
Fluctuations in certain other balance sheet accounts between
January 29, 1994 and April 30, 1994 reflect normal seasonal
variations within the retail industry.
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PART II OTHER INFORMATION
ITEM 4 Submission of Matters to a Vote of Security Holders
The annual meeting of stockholders of the Company was held on May
21, 1994. The matters submitted to a vote of the stockholders were
the election of directors and a proposal to approve the Senior
Management Cash Bonus Plan. The holders of Class A Common Stock
elected five directors and the holders of Class B Common Stock
elected ten directors. The individuals elected as directors and
the votes received were as follows:
Nominee For Against
Class A Nominees
Robert C. Connor 89,221,277 1,812,543
Will D. Davis 89,120,887 1,912,933
John Paul Hammerschmidt 89,163,783 1,870,037
William B. Harrison 89,223,493 1,810,327
J.M. Hessels 88,130,608 2,903,212
Class B Nominees
William Dillard 3,998,568 0
Calvin N. Clyde 3,998,568 0
Drue Corbusier 3,998,568 0
Alex Dillard 3,998,568 0
Mike Dillard 3,998,568 0
William Dillard 3,998,568 0
William Dillard II 3,998,568 0
James I. Freeman 3,998,568 0
John H. Johnson 3,998,568 0
E. Ray Kemp 3,998,568 0
William H. Sutton 3,998,568 0
The voting for the proposal to approve the Senior Management Cash
Bonus Plan was as follows:
For 93,423,262,445 Against 10,234,335,322 Abstain 1,609,125,555
ITEM 5 Other Information
Ratio of Earnings to Fixed Charges
The Company has calculated the ratio of earnings to fixed charges pursuant to
Item 503 of Regulation S-K of the Securities and Exchange Commission as
follows:
Three Months Ended Fiscal Year Ended
April 30, May 1, January 29 January 30 February 1 February 2 February 3
1994 1993 1994 1993 1993 1991 1990
3.19 3.00 3.57 3.59 3.40 3.38 3.07
ITEM 6 Exhibits and Reports on Form 8-K
(a) Exhibit (11): Statement re: Computation of Per Share Earnings
Exhibit (12): Statement re: Computation of Ratio of Earnings to
Fixed Charges
(b) Reports on Form 8-K filed during the first quarter:
None.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DILLARD DEPARTMENT STORES, INC.
(Registrant)
DATE: June 10, 1994
/s/ James I. Freeman
James I. Freeman
Vice President, Chief Financial Officer
(Principal Financial & Accounting Officer)
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EXHIBIT INDEX
Exhibits to Form 10-Q
Exhibit Number Exhibit
11 Statement re: Computation of Per Share Earnings
12 Statement re: Computation of Ratio of Earnings
to Fixed Charges
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EXHIBIT 11 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
Three Months Ended Twelve Months Ended
April 30 May 1 April 30 May 1
1994 1993 1994 1993
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Average shares outstanding 112,991,719 112,554,472 112,859,235 112,106,152
Net effect of dilutive
stock options based on
the treasury stock method
using average market price 9,716 127,862 28,802 319,920
Total 113,001,435 112,682,334 112,888,037 112,426,072
Net Income $48,306,000 $48,173,000 $241,267,000 $239,534,000
Less preferred dividends (5,500) (5,500) (22,000) (22,000)
Net income available to
common shares $48,300,500 $48,167,500 $241,245,000 $239,512,000
Per share $0.43 $0.43 $2.14 $2.13
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EXHIBIT 12 - STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
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Three Months Ended Fiscal Year Ended
April 30 May 1 January 29 January 30 February 1 February 2 February 3
1994 1993 1994 1993 1992 1991 1990 *
Consolidated
pretax income $77,911 $76,148 $399,534 $375,330 $322,157 $280,778 $227,892
Fixed charges (less
capitalized interest) 35,126 37,301 152,604 142,892 128,925 115,125 107,782
EARNINGS $113,037 $113,449 $552,138 $518,222 $451,082 $395,903 $335,674
Interest $30,652 $33,003 $130,915 $121,940 $109,386 $97,032 $91,836
Preferred stock
dividends 9 9 36 35 34 34 34
Capitalized interest 301 459 1,882 1,646 3,574 1,928 1,504
Interest factor in rent
expense 4,465 4,289 21,653 20,917 19,505 18,059 15,912
FIXED CHARGES $35,427 $37,760 $154,486 $144,538 $132,499 $117,053 $109,286
Ratio of earnings to
fixed charges 3.19 3.00 3.57 3.59 3.40 3.38 3.07
* 53 Weeks
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