<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 October 28, 1995
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 October 28, 1995 109,028,727
CLASS B COMMON STOCK as of October 28, 1995 4,016,929
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1 Financial Statements
CONSOLIDATED BALANCE SHEETS
DILLARD DEPARTMENT STORES, INC.
(Unaudited)
(Thousands)
<TABLE>
October 28 January 28 October 29
1995 1995 1994
<C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $59,351 $51,095 $46,318
Trade accounts receivable 1,017,268 1,102,104 999,248
Merchandise inventories 1,892,616 1,362,756 1,742,353
Other current assets 20,631 8,847 18,807
TOTAL CURRENT ASSETS 2,989,866 2,524,802 2,806,726
INVESTMENTS AND OTHER ASSETS 79,189 68,810 66,741
PROPERTY AND EQUIPMENT, NET 2,056,578 1,911,453 1,918,933
CONSTRUCTION IN PROGRESS 23,611 49,469 28,931
BUILDINGS UNDER CAPITAL LEASES 21,617 23,223 23,745
$5,170,861 $4,577,757 $4,845,076
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable and accrued expenses $900,455 $545,522 $853,510
Commercial paper 192,848 89,906 150,107
Federal and state income taxes 25,606 65,454 31,524
Current portion of long-term debt 132,029 55,903 115,742
Current portion of capital lease obligations 2,154 2,173 2,146
TOTAL CURRENT LIABILITIES 1,253,092 758,958 1,153,029
LONG-TERM DEBT 1,151,204 1,178,503 1,179,593
CAPITAL LEASE OBLIGATIONS 20,696 22,279 22,827
DEFERRED INCOME TAXES 294,450 294,450 282,648
STOCKHOLDERS' EQUITY
Preferred stock 440 440 440
Common stock 1,130 1,130 1,130
Additional paid-in capital 624,086 624,086 623,024
Retained earnings 1,825,763 1,697,911 1,582,385
2,451,419 2,323,567 2,206,979
$5,170,861 $4,577,757 $4,845,076
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>
Three Months Ended Nine Months Ended Twelve Mo
October 28 October 29 October 28 October 29 October 28
1995 1994 1995 1994 1995
<S> <C> <C> <C> <C> <C>
Net sales (including leased
departments) $1,405,626 $1,333,630 $3,997,446 $3,801,887 $5,741,362
Service charges, interest, and other 45,967 44,775 138,315 138,345 182,755
1,451,593 1,378,405 4,135,761 3,940,232 5,924,117
Cost and expenses:
Cost of sales 915,525 866,249 2,622,399 2,494,126 3,742,901
Advertising, selling, administrative
and general expenses 359,743 336,329 1,018,164 957,366 1,389,151
Depreciation and amortization 53,496 50,966 151,666 142,695 199,270
Rentals 11,101 12,176 33,915 38,183 60,648
Interest and debt expense 29,433 30,748 86,980 93,569 117,693
1,369,298 1,296,468 3,913,124 3,725,939 5,509,663
INCOME BEFORE INCOME TAXES 82,295 81,937 222,637 214,293 414,454
Federal and state income taxes 31,270 31,135 84,600 81,430 157,490
NET INCOME 51,025 50,802 138,037 132,863 256,964
Retained earnings at beginning
of period 1,778,129 1,534,973 1,697,911 1,457,443 1,582,385
Cash dividends declared (3,391) (3,390) (10,185) (7,921) (13,586)
RETAINED EARNINGS AT END
OF PERIOD $1,825,763 $1,582,385 $1,825,763 $1,582,385 $1,825,763
Net income per common share $0.45 $0.45 $1.22 $1.18 $2.27
Cash dividends declared per common share $0.03 $0.03 $0.07 $0.07 $0.12
Average shares outstanding 113,264 113,004 113,139 113,016 113,106
See notes to consolidated financial statements.
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
DILLARD DEPARTMENT STORES, INC.
(Unaudited)
(Thousands)
Nine Months Ended
October 28 October 29
1995 1994
OPERATING ACTIVITITES
Net income $138,037 $132,863
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 152,789 143,868
Changes in operating assets and liabilities:
Decrease in trade accounts receivable 84,836 97,282
Increase in merchandise inventories and
other current assets (541,644) (452,240)
Decrease in investments and other assets (11,502) (15,804)
Increase in trade accounts payable and
accrued expenses and income taxes 315,095 300,429
NET CASH PROVIDED BY OPERATING ACTIVITIES 137,611 206,398
INVESTING ACTIVITIES
Purchase of property and equipment (269,327) (192,834)
NET CASH USED IN INVESTING ACTIVITIES (269,327) (192,834)
FINANCING ACTIVITIES
Net increase in commercial paper 102,942 4,831
Proceeds from long-term borrowings 109,150
Principal payments on long-term debt and
capital lease obligations (61,925) (16,909)
Dividends paid (10,195) (6,802)
Common stock sold 390
NET CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES 139,972 (18,490)
DECREASE IN CASH AND CASH EQUIVALENTS 8,256 (4,926)
Cash and cash equivalents at beginning of period 51,095 51,244
CASH AND CASH EQUIVALENTS AT END OF PERIOD $59,351 $46,318
See notes to consolidated financial statements.
<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. 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 nine month period
ended October 28, 1995 are not necessarily indicative of the results that may
be expected for the fiscal year ended February 3, 1996 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 28, 1995.
2. The retail last-in, first-out (LIFO) inventory method is used to value
merchandise inventories. Under this method, at October 28, 1995, and October
29, 1994, the LIFO cost of merchandise inventories was approximately $1.8
million and $16.3 million, respectively, less than the first-in, first-out
(FIFO) cost. At January 28, 1995, the LIFO cost of merchandise inventories
was approximately equal to FIFO cost. At January 29, 1994 the LIFO cost of
merchandise inventories was approximately $13.2 million less than FIFO cost.
3. Net sales include leased department sales of $7.3 million and $8.9
million for the quarters ended October 28, 1995 and October 29, 1994,
respectively. Leased department sales for the nine months ended October 28,
1995 and October 29, 1994 were $23.2 million and $27.9 million, respectively.
Leased department sales for the twelve months ended October 28, 1995 and
October 29, 1994 were $41.6 million and $51.3 million, respectively.
4. On June 1, 1995, the Company issued $100 million aggregate principal
amount of its 6.875%, notes (6.99% yield to maturity) due June 1, 2005. The
notes were sold in an underwritten public offering and the proceeds were used
to reduce short-term borrowings.
5. On July 13, 1995, the Company announced it had entered into an agreement
for the acquisition of Gonzalez Padin Co., Inc., a San Juan, Puerto Rico,
based retailer, including the location of a new facility in the Plaza Las
Americas Mall in San Juan. The transaction was subject to negotiation and/or
satisfaction of various conditions. On September 15, 1995, the Company
announced that a final agreement among the various parties had not been
achieved and that, accordingly, negotiations had been terminated.
6. On December 7, 1995 the Company filed Amendment No. 1 to a registration
statement on Form S-3 for the purpose of registering $300 million of debt
securities. These securities will be in addition to the $100 million of debt
securities that the Company currently has available which are covered by an
effective registration statement.
<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>
Three Months Ended Nine Months Ended Twelve Months Ended
October 28 October 29 October 28 October 29 October 28 October 29
1995 1994 1995 1994 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales 65.1 65.0 65.6 65.6 65.2 65.3
Gross Profit 34.9 35.0 34.4 34.4 34.8 34.7
Advertising, selling, administrative
and general expenses 25.6 25.2 25.5 25.2 24.2 23.9
Depreciation and amortization 3.8 3.8 3.8 3.7 3.5 3.4
Rentals 0.8 0.9 0.8 1.0 1.1 1.2
Interest and debt expense 2.1 2.3 2.2 2.5 2.0 2.3
Total operating expenses 32.3 32.2 32.3 32.4 30.8 30.8
Other income 3.3 3.3 3.5 3.6 3.2 3.4
Income before income taxes 5.9 6.1 5.6 5.6 7.2 7.3
Federal and state income taxes 2.3 2.3 2.1 2.1 2.7 2.8
Net income 3.6 3.8 3.5 3.5 4.5 4.5
</TABLE>
<PAGE>
Sales for the third quarter of 1995 were $1,405.6 million as compared to
$1,333.6 million for the third quarter of 1994. This is an increase of 5%.
The sales increase for comparable stores was 2%. The nine month sales
increase for 1995 over 1994 was 5%. The year to date comparable stores sales
increase was 2%. The twelve month sales increase for 1995 over 1994 was 6%,
for comparable stores the increase was 3%.
Cost of sales increased slightly from 65.0% of net sales for the third
quarter of 1994 to 65.1% for the third quarter of 1995. For the nine months
ended October 28, 1995 the cost of sales as a percent of net sales remained
constant at 65.6%. For the twelve months ended October 28, 1995 and October
29, 1994, there was a slight decrease from 65.3% to 65.2%.
Advertising, selling, administrative and general expenses increased to 25.6%
of net sales for the third quarter of 1995 compared to 25.2% for the third
quarter of 1994. For the nine months ended October 28, 1995 and October 29,
1994 these expenses increased as a percentage of net sales from 25.2% to
25.6%. For the twelve months ended October 28, 1995 and October 29, 1994
they increased from 23.9% to 24.2%. These increases were primarily due to an
increase in payroll expense in the selling area.
Depreciation and amortization expense as a percentage of net sales remained
constant at 3.8% in the third quarter of 1995 and 1994. For the nine months
ended October 28, 1995 and October 29, 1994 these expenses increased as a
percentage of net sales from 3.7% to 3.8%. For the twelve months ended
October 28, 1995 and October 29, 1994 the increase was from 3.4% to 3.5%.
This was due to a higher proportion of the Company's properties being owned
rather than leased.
Rental expense decreased slightly from .9% of net sales for the third quarter
of 1994 to .8% for the third quarter of 1995. For the nine months ended
October 28, 1995 and October 29, 1994 these expenses decreased as a percent
of net sales from 1.0% to .8%. For the twelve months ended October 28, 1995
and October 29, 1994 the decrease was from 1.2% to 1.1%. This was due to a
higher proportion of the Company's properties being owned rather than leased.
Interest and debt expense decreased from 2.3% of net sales for the third
quarter of 1994 to 2.1% for the third quarter of 1995. For the nine months
ended October 28, 1995 and October 29, 1994 this income decreased as a
percentage of net sales from 2.5% to 2.2%. For the twelve months ended
October 28, 1995 and October 29, 1994 the decrease was from 2.3% to 2.0%.
Interest and debt expense declined as a percentage of net sales due to an
overall lower level of debt expense partially offset by higher interest rates
on short-term debt.
Service charges, interest and other income remained constant at 3.3% of net
sales for the third quarter in 1995 and 1994. For the nine months ended
October 28, 1995 and October 29, 1994 these expenses decreased as a
percentage of sales from 3.6% to 3.5%. For the twelve months ended October
28, 1995 and October 29, 1994 the decrease was from 3.4% to 3.2%. The
primary cause for this decrease was a decline in proprietary credit card
sales as a percentage of total sales.
The effective federal and state income tax rate was 38% for the third quarter
of 1995 and 1994.
<PAGE>
Financial Condition
The Company's working capital was $1,736.8 million at October 28, 1995,
$1,765.8 million at January 28, 1995, and $1,653.7 million at October 29,
1994. The current ratio for these periods was 2.4, 3.3 and 2.4,
respectively. The ratio of long-term debt to capitalization was 32.3%, 34.1%
and 35.3% at October 28, 1995, January 28, 1995, and October 29, 1994,
respectively.
On June 1, 1995, the Company issued $100 million 6.875% notes due June 1,
2005. The proceeds were used to reduce short-term borrowings. At October
28, 1995, the Company had available for issuance $100 million aggregate
principal amount of unsecured debt covered by an effective registration
statement. On December 7, 1995, the Company filed Amendment No. 1 to a
registration statement on Form S-3 for the purpose of registering $300
million of debt securities.
The Company invested $269.3 million in capital expenditures for the nine
months ended October 28, 1995 as compared to $192.8 million for the nine
months ended October 29, 1994. In 1995, the Company has built eleven new
stores, two of which were replacement stores, and remodeled and expanded
eight additional stores. In 1994, the Company opened nine new stores, two of
which were replacement stores, and significantly remodeled and expanded two
additional stores.
Merchandise inventories increased by 9% from $1,742.4 million at October 29,
1994 to $1,892.6 million at October 28, 1995. This increase was primarily
due to the opening of one new store in the fourth quarter of 1994 and nine
stores in the first three quarters of 1995. In addition, merchandise
increased by 4.3% on a comparable store basis.
Fluctuations in certain other balance sheet accounts between January 28, 1995
and October 28, 1995 reflect normal seasonal variations within the retail
industry.
<PAGE>
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:
Nine Months Ended Fiscal Year Ended
Oct. 28, Oct. 29, Jan. 28, Jan. 29, Jan. 30, Feb. 1, Feb. 2,
1995 1994 1995 1994 1993 1992 1991
3.18 2.97 3.72 3.57 3.59 3.41 3.38
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 third 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: December 8, 1995 /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
<PAGE>
<TABLE>
EXHIBIT 11 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(Unaudited)
Three Months Ended Nine Months Ended Twelve Months Ended
October 28 October 29 October 28 October 29 October 28 October 29
1995 1994 1995 1994 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Average shares outstanding 113,045,656 113,004,219 113,045,656 112,996,435 113,036,321 112,984,329
Net effect of dilutive stock options based
on the treasury stock method using
average market price 217,961 0 92,899 19,456 69,674 24,488
Total 113,263,617 113,004,219 113,138,555 113,015,891 113,105,995 113,008,817
Net Income $51,025,000 $50,802,000 $138,037,000 $132,863,000 $256,964,000 $244,207,000
Less preferred dividends (5,500) (5,500) (16,500) (16,500) (22,000) (22,000)
Net income available to common shares $51,019,500 $50,796,500 $138,020,500 $132,846,500 $256,942,000 $244,185,000
Per share $0.45 $0.45 $1.22 $1.18 $2.27 $2.16
</TABLE>
<TABLE>
EXHIBIT 12 - STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
(Dollar amounts in thousands)
Nine Months Ended Fiscal Year Ended
October 28 October 29 January 28 January 29 January 30 February 1 February 2
1995 1994 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated pretax income $222,637 $214,293 $406,110 $399,534 $375,330 $322,157 $280,778
Fixed charges (less capitalized
interest) 98,285 106,297 145,921 152,568 142,857 128,891 115,091
EARNINGS $320,922 $320,590 $552,031 $552,102 $518,187 $451,048 $395,869
Interest $86,980 $93,569 $124,282 $130,915 $121,940 $109,386 $97,032
Capitalized interest 2,781 1,764 2,545 1,882 1,646 3,574 1,928
Interest factor in rent expense 11,305 12,728 21,639 21,653 20,917 19,505 18,059
FIXED CHARGES $101,066 $108,061 $148,466 $154,450 $144,503 $132,465 $117,019
Ratio of earnings to fixed charges 3.18 2.97 3.72 3.57 3.59 3.41 3.38
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-3-1996
<PERIOD-END> OCT-28-1995
<CASH> 59,351
<SECURITIES> 0
<RECEIVABLES> 1,017,268
<ALLOWANCES> 17,099
<INVENTORY> 1,892,616
<CURRENT-ASSETS> 2,989,866
<PP&E> 3,324,055
<DEPRECIATION> 1,222,249
<TOTAL-ASSETS> 5,170,861
<CURRENT-LIABILITIES> 1,253,092
<BONDS> 1,171,900
<COMMON> 1,130
0
440
<OTHER-SE> 2,449,849
<TOTAL-LIABILITY-AND-EQUITY> 5,170,861
<SALES> 3,997,446
<TOTAL-REVENUES> 4,135,761
<CGS> 2,622,399
<TOTAL-COSTS> 2,622,399
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 35,198
<INTEREST-EXPENSE> 86,980
<INCOME-PRETAX> 222,637
<INCOME-TAX> 84,600
<INCOME-CONTINUING> 138,037
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 138,037
<EPS-PRIMARY> 1.22
<EPS-DILUTED> 1.22
</TABLE>
