<PAGE>
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 July 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)
or organization)
1600 CANTRELL ROAD, LITTLE ROCK, ARKANSAS 72201
(Address of principal executive offices)
(Zip Code)
(501) 376-5200
(Registrant's telephone number, including area code)
Indicate by checkmark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
CLASS A COMMON STOCK as of July 30, 1994 108,987,158
CLASS B COMMON STOCK as of July 30, 1994 4,017,061
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1 Financial Statements
CONSOLIDATED BALANCE SHEETS
DILLARD DEPARTMENT STORES, INC.
(Unaudited)
(Thousands)
<TABLE>
<CAPTION>
July 30 January 29 July 31
<S> <C> <C> <C>
1994 1994 1993
ASSETS
CURRENT ASSETS
Cash and cash equivalents $49,502 $51,244 $41,744
Trade accounts receivable 986,112 1,096,530 987,007
Merchandise inventories 1,361,721 1,299,944 1,262,492
Other current assets 11,258 8,976 11,124
TOTAL CURRENT ASSETS 2,408,593 2,456,694 2,302,367
INVESTMENTS AND OTHER ASSETS 69,690 52,110 53,354
PROPERTY AND EQUIPMENT, NET 1,879,245 1,878,077 1,783,751
CONSTRUCTION IN PROGRESS 43,690 13,977 29,988
BUILDINGS UNDER CAPITAL LEASES 24,266 29,416 30,563
$4,425,484 $4,430,274 $4,200,023
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable and accrued expenses $525,591 $529,475 $522,909
Commercial paper 115,947 145,276 88,174
Federal and state income taxes 15,980 54,011 22,307
Current portion of long-term debt 115,501 65,061 54,648
Current portion of capital lease obligations 2,102 2,242 2,153
TOTAL CURRENT LIABILITIES 775,121 796,065 690,191
LONG-TERM DEBT 1,184,768 1,238,293 1,307,634
CAPITAL LEASE OBLIGATIONS 23,380 31,621 32,765
DEFERRED INCOME TAXES 282,648 242,648 245,682
STOCKHOLDERS' EQUITY
Preferred Stock 440 440 440
Common Stock 1,130 1,130 1,128
Additional paid-in capital 623,024 622,634 613,934
Retained earnings 1,534,973 1,457,443 1,308,249
2,159,567 2,081,647 1,923,751
$4,425,484 $4,390,274 $4,200,023
See notes to consolidated financial statements.
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
DILLARD DEPARTMENT STORES, INC.
(Unaudited)
(Thousands, except per share data)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Three Months Ended Six Months Ended Twelve Months Ended
July 30 July 31 July 30 July 31 July 30 July 31
1994 1993 1994 1993 1994 1993
Net sales (including leased
departments) $1,184,316 $1,104,718 $2,468,257 $2,267,897 $5,331,008 $4,973,104
Service charges, interest, and other 45,548 45,470 93,570 92,845 182,471 178,470
1,229,864 1,150,188 2,561,827 2,360,742 5,513,479 5,151,574
Cost and expenses:
Cost of sales 774,798 709,877 1,627,877 1,463,827 3,470,807 3,212,659
Advertising, selling, administrative
and general expenses 309,827 291,973 621,037 585,604 1,274,482 1,212,279
Depreciation and amortization 46,013 40,255 91,729 81,211 181,699 148,388
Rentals 12,612 12,369 26,007 25,235 65,730 63,898
Interest and debt expense 32,169 33,424 62,821 66,427 127,309 130,025
1,175,419 1,087,898 2,429,471 2,222,304 5,120,027 4,767,249
INCOME BEFORE INCOME TAXES 54,445 62,290 132,356 138,438 393,452 384,325
Federal and state income taxes 20,690 23,050 50,295 51,025 157,670 142,035
NET INCOME 33,755 39,240 82,061 87,413 235,782 242,290
Retained earnings at beginning
of period 1,503,488 1,271,275 1,457,443 1,225,353 1,308,249 1,084,343
1,537,243 1,310,515 1,539,504 1,312,766 1,544,031 1,326,633
Cash dividends declared (2,270) (2,266) (4,531) (4,517) (9,058) (9,014)
Shares issued under stock option, employee
savings and stock bonus plans (net of
shares canceled) (9,370)
RETAINED EARNINGS AT END
OF PERIOD $1,534,973 $1,308,249 $1,534,973 $1,308,249 $1,534,973 $1,308,249
Net income per common share $0.30 $0.35 $0.73 $0.78 $2.09 $2.15
Cash dividends declared per common share $0.02 $0.02 $0.04 $0.04 $0.08 $0.08
Average shares outstanding 113,042 112,723 113,022 112,703 112,968 112,572
See notes to consolidated financial statements.
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
DILLARD DEPARTMENT STORES, INC.
(Unaudited)
(Thousands)
Six Months Ended
July 30 July 31
1994 1993
<TABLE>
<CAPTION>
<S> <C> <C>
OPERATING ACTIVITITES
Net income $82,061 $87,413
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 92,533 82,005
Changes in operating assets and liabilities:
Decrease in trade accounts receivable 110,418 103,213
Increase in merchandise inventories and
other current assets (64,059) (89,541)
Increase in investments and other assets (18,384) (2,689)
Decrease in trade accounts payable and
accrued expenses and income taxes (39,655) (38,933)
NET CASH PROVIDED BY OPERATING ACTIVITIES 162,914 141,468
INVESTING ACTIVITIES
Purchase of property and equipment (117,460) (149,557)
NET CASH USED IN INVESTING ACTIVITIES (117,460) (149,557)
FINANCING ACTIVITIES
Net (decrease) increase in commercial paper (29,329) 31,553
Principal payments on long-term debt and
capital lease obligations (11,466) (76,364)
Dividends paid (6,791) (6,777)
Common stock sold 390 8,837
NET CASH (USED IN) FINANCING ACTIVITES (47,196) (42,751)
DECREASE IN CASH AND CASH EQUIVALENTS (1,742) (50,840)
Cash and cash equivalents at beginning of period 51,244 92,584
CASH AND CASH EQUIVALENTS AT END OF PERIOD $49,502 $41,744
See notes to consolidated financial statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
the six month period ended July 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 July 30, 1994 and
July 31, 1993, the LIFO cost of merchandise inventories was approximately
$15,500,000 and $15,600,000, respectively, less than current cost. At
January 29, 1994, the LIFO cost of merchandise inventories was approximately
$13,200,000 less than current cost.
3. Net sales include leased department sales of $10,035,000 and $15,553,000
for the quarters ending July 30, 1994 and July 31, 1993, respectively.
Leased department sales for the six months ended July 30, 1994 and July 31,
1993 were $18,893,000 and $29,766,000, respectively. Leased department sales
for the twelve months ended July 30, 1994 and July 31, 1993 were $55,650,000
and $85,795,000, respectively.
4. The effective income tax rate was 38% for the first six months of 1994
and 37% for the first six months 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.
<PAGE>
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:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Twelve Months Ended
July 30 July 31 July 30 July 31 July 30 July 31
1994 1993 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales 65.4 64.3 66.0 64.5 65.1 64.6
Gross profit 34.6 35.7 34.0 35.5 34.9 35.4
Advertising, selling, administrative
and general expenses 26.1 26.4 25.2 25.8 23.9 24.4
Depreciation and amortization 3.9 3.7 3.7 3.6 3.4 3.0
Rentals 1.1 1.1 1.1 1.1 1.2 1.3
Interest and debt expense 2.7 3.0 2.5 3.0 2.4 2.6
Total operating expenses 33.8 34.2 32.5 33.5 30.9 31.3
Other income 3.8 4.1 3.8 4.1 3.4 3.6
Income before income taxes 4.6 5.6 5.3 6.1 7.4 7.7
Federal and state income taxes 1.7 2.1 2.0 2.2 3.0 2.8
Net income 2.9 3.5 3.3 3.9 4.4 4.9
</TABLE>
<PAGE>
Net income for the three months ended July 30, 1994 was $33,755,000 as
compared to $39,240,000 for the three months ended July 31, 1993. This was
a decrease of 14%. For the six months ended July 30, 1994, net income
decreased 6% to $82,061,000 as compared to $87,413,000 for the same period in
1993. For the twelve month period ended July 30, 1994, the decrease was 3%
from the prior period.
Sales for the second quarter of 1994 were $1,184,316,000 as compared to
$1,104,718,000 for the second quarter of 1993. This is an increase of 7%.
The sales increase for comparable stores was 4%. The six month sales
increase for 1994 over 1993 was 9%. The year to date comparable stores sales
increase was 6%. The twelve month sales increase for 1994 over 1993 was 7%;
for comparable stores the increase was 4%.
Cost of sales increased from 64.3% of net sales for the second quarter of
1993 to 65.4% for the second quarter of 1994. For the six months ended July
30, 1994 the cost of sales as a percent of net sales increased to 66.0% from
64.5% for the same period in 1993. For the twelve months ended July 30, 1994
and July 31, 1993, the increase was from 64.6% to 65.1%. This increase in
cost of sales was caused by a higher level of markdowns in the current year
than in the prior year.
Advertising, selling, administrative and general expenses decreased from
26.4% of net sales for the second quarter of 1993 to 26.1% for the second
quarter of 1994. For the six months ended July 30, 1994 and July 31, 1993
advertising, selling, administration and general expenses as a percentage of
net sales decreased from 25.8% to 25.2%. For the twelve months ended July
30, 1994 and July 31, 1993 advertising, selling, administration and general
expenses as a percentage of net sales decreased from 24.4% to 23.9%. The
Company continues to control these expenses as sales grow.
Depreciation and amortization expense increased as a percentage of net sales
from 3.7% in the second quarter of 1993 to 3.9% in the second quarter of
1994. For the six months ended July 30, 1994 and July 31, 1993 depreciation
and amortization expense as a percentage of net sales increased from 3.6% to
3.7%. For the twelve months ended July 30, 1994 and July 31, 1993 the
depreciation and amortization as a percentage of net sales increased from
3.0% to 3.4%. This was due to a higher proportion of the Company's
properties being owned rather than leased.
Rental expense remained constant at 1.1% of net sales for the three and six
months ended July 30, 1994 and July 31, 1993. For the twelve months ended
July 30, 1994 rental expense as a percent of net sales decreased from 1.3% of
net sales to 1.2% of net sales in 1994. This was due to a higher proportion
of the Company's properties being owned rather than leased.
Interest and debt expense decreased from 3.0% of net sales for the second
quarter of 1993 to 2.7% for the second quarter of 1994 . For the six months
ended July 30, 1994 and July 31, 1993 interest and debt expense as a
percentage of net sales decreased from 3.0% to 2.5%. For the twelve months
ended July 30, 1994 and July 31,1993 interest and debt expense decreased from
2.6% of net sales to 2.4% of net sales. This was due to a lower level of
debt this year compared to last year.
Service charges, interest and other income decreased from 4.1% of net sales
in the three and six months of 1993 to 3.8% of net sales in 1994. For the
twelve months ended July 30, 1994 and July 31, 1993 service charges, interest
and other income as a percentage of net sales decreased from 3.6% to 3.4%.
This decline was 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 second
quarter of 1994 and 37% for the second quarter of 1993.
<PAGE>
Financial Condition
The Company's working capital was $1,633,472,000 at July 30, 1994,
$1,660,629,000 at January 29, 1994, and $1,612,176,000 at July 31, 1993. The
current ratio for these periods was 3.1, 3.1 and 3.3, respectively. The
ratio of long-term debt and capitalized lease obligations as a percentage of
equity was 55.9%, 61.0% and 69.7% at July 30, 1994, January 29, 1994, and
July 31, 1993, respectively. This ratio decreased due to a lower level of
long-term debt as well as growth in stockholders' equity.
The Company invested $117,460,000 in capital expenditures for the six months
ended July 30, 1994 as compared to $149,557,000 for the six months ended
July 31, 1993. In 1994, the Company plans to build eight new stores, one
replacement store and to significantly remodel four additional stores. In
1993, the Company opened ten new stores and significantly remodeled twelve
stores.
Merchandise inventories increased by 8% from $1,262,492,000 at July 31, 1993
to $1,361,721,000 at July 30, 1994. This increase was due to the opening of
ten new stores in 1993 and two stores in 1994. On a comparable store basis,
the rate of increase in merchandise inventories was slightly lower than the
rate of increase for comparable stores sales.
Fluctuations in certain other balance sheet accounts between January 29, 1994
and July 30, 1994 reflect normal seasonal variations within the retail
industry.
<PAGE>
PART II OTHER INFORMATION
ITEM 5 Other Information
Ratio of Earnings to Fixed Charges
The Company has calculated the ratio of earnings to fixed charges pursuant to
Item 503 of Regulation S-K of the Securities and Exchange Commission as
follows:
Six Months Ended Fiscal Year Ended
July 30 July 31 January 29 January 30 February 1 February 2 February 3
1994 1993 1994 1993 1992 1991 1990*
2.81 2.81 3.57 3.59 3.40 3.38 3.07
*53 weeks
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
Exhibit (27): Financial Data Schedule
(b)Reports on Form 8-K filed during the second quarter:
None.
<PAGE>
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: September 12, 1994 /s/ James I. Freeman
James I. Freeman
Senior Vice President & Chief Financial Officer
(Principal Financial & Accounting Officer)
<PAGE>
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
27 Financial Data Schedule
EXHIBIT 11 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Twelve Months Ended
July 30 July 31 July 30 July 31 July 30 July 31
1994 1993 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C>
Average shares outstanding 112,993,367 112,682,763 112,992,543 112,618,618 112,936,886 112,345,287
Net effect of dilutive stock options based
on the treasury stock method using
average market price 48,652 40,454 29,184 84,158 30,852 226,465
Total 113,042,019 112,723,217 113,021,727 112,702,776 112,967,738 112,571,752
Net Income $33,755,000 $39,240,000 $82,061,000 $87,413,000 $235,782,000 $242,290,000
Less preferred dividends (5,500) (5,500) (11,000) (11,000) (22,000) (22,000)
Net income available to common shares $33,749,500 $39,234,500 $82,050,000 $87,402,000 $235,760,000 $242,268,000
Per share $0.30 $0.35 $0.73 $0.78 $2.09 $2.15
</TABLE>
EXHIBIT 12 - STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED
CHARGES
(Unaudited)
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Six Months Ended Fiscal Year Ended
July 30 July 31 January 29 January 30 February 1 February 2 February 3
1994 1993 1994 1993 1992 1991 1990 *
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated pretax income $132,356 $138,438 $399,534 $375,330 $322,157 $280,778 $227,892
Fixed charges (less capitalized
interest) 71,508 74,856 152,604 142,892 128,925 115,125 107,782
EARNINGS $203,864 $213,294 $552,138 $518,222 $451,082 $395,903 $335,674
Interest $62,821 $66,427 $130,915 $121,940 $109,386 $97,032 $91,836
Preferred stock dividends 18 17 36 35 34 34 34
Capitalized interest 1,008 984 1,882 1,646 3,574 1,928 1,504
Interest factor in rent expense 8,669 8,412 21,653 20,917 19,505 18,059 15,912
FIXED CHARGES $72,516 $75,840 $154,486 $144,538 $132,499 $117,053 $109,286
Ratio of earnings to fixed charges 2.81 2.81 3.57 3.59 3.40 3.38 3.07
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-28-1995
<PERIOD-END> JUL-30-1994
<CASH> 49,502
<SECURITIES> 0
<RECEIVABLES> 986,112
<ALLOWANCES> 12,900
<INVENTORY> 1,361,721
<CURRENT-ASSETS> 2,408,593
<PP&E> 2,880,267
<DEPRECIATION> 1,001,022
<TOTAL-ASSETS> 4,425,484
<CURRENT-LIABILITIES> 775,121
<BONDS> 1,184,768
<COMMON> 1,130
0
440
<OTHER-SE> 2,157,997
<TOTAL-LIABILITY-AND-EQUITY> 4,425,484
<SALES> 2,468,257
<TOTAL-REVENUES> 2,561,827
<CGS> 1,627,877
<TOTAL-COSTS> 2,429,471
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 17,801
<INTEREST-EXPENSE> 62,821
<INCOME-PRETAX> 132,356
<INCOME-TAX> 50,295
<INCOME-CONTINUING> 82,061
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 82,061
<EPS-PRIMARY> .73
<EPS-DILUTED> .73
</TABLE>
