SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 2, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission file number 1-6140
DILLARD'S, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 71-0388071
(State or other (IRS Employer
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 August 2, 1997 106,587,489
CLASS B COMMON STOCK as of August 2, 1997 4,016,929
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PART I FINANCIAL INFORMATION
ITEM 1 Financial Statements
CONSOLIDATED BALANCE SHEETS
DILLARD'S, INC.
(Unaudited)
(Thousands)
August 2 February 1 August 3
1997 1997 1996
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ASSETS
CURRENT ASSETS
Cash and cash equivalents $73,225 $64,094 $68,768
Trade accounts receivable 1,031,524 1,130,504 1,008,554
Merchandise inventories 1,750,239 1,556,958 1,618,252
Other current assets 9,281 9,080 13,415
TOTAL CURRENT ASSETS 2,864,269 2,760,636 2,708,989
INVESTMENTS AND OTHER ASSETS 90,403 107,157 88,903
PROPERTY AND EQUIPMENT, NET 2,256,011 2,131,843 2,025,875
CONSTRUCTION IN PROGRESS 131,816 55,024 77,053
BUILDINGS UNDER CAPITAL LEASES 4,581 5,066 5,766
$5,347,080 $5,059,726 $4,906,586
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable and accrued expenses $629,502 $536,695 $589,538
Commercial paper 234,829 128,738 129,952
Federal and state income taxes 18,513 46,220 2,429
Current portion of long-term debt 156,564 181,564 81,089
Current portion of capital lease obligations 1,589 1,529 1,596
TOTAL CURRENT LIABILITIES 1,040,997 894,746 804,604
LONG-TERM DEBT 1,319,758 1,173,018 1,279,648
CAPITAL LEASE OBLIGATIONS 12,963 13,690 14,789
DEFERRED INCOME TAXES 261,094 261,094 226,689
STOCKHOLDERS' EQUITY
Preferred Stock 440 440 440
Common Stock 1,138 1,136 1,136
Additional paid-in capital 643,987 641,388 638,663
Retained earnings 2,167,838 2,074,214 1,940,617
Less Treasury Stock (101,135)
2,712,268 2,717,178 2,580,856
$5,347,080 $5,059,726 $4,906,586
See notes to consolidated financial statements.
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CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
DILLARD'S, INC.
(Unaudited)
(Thousands, except per share data)
Three Months Ended Six Months Ended Twelve Months Ended
August 2 August 3 August 2 August 3 August 2 August 3
1997 1996 1997 1996 1997 1996
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Net sales $1,453,152 $1,340,326 $2,968,496 $2,793,628 $6,402,453 $6,119,846
Service charges, interest, and other 46,188 46,503 93,401 94,954 182,922 181,706
1,499,340 1,386,829 3,061,897 2,888,582 6,585,375 6,301,552
Cost and expenses:
Cost of sales 946,119 871,804 1,941,322 1,827,601 4,238,486 4,014,513
Advertising, selling, administrative
and general expenses 387,191 360,917 769,781 727,270 1,580,961 1,505,295
Depreciation and amortization 51,326 50,243 102,528 100,577 195,670 194,212
Rentals 10,837 10,905 21,467 22,063 55,170 58,084
Interest and debt expense 33,480 30,224 63,939 58,809 125,729 121,316
Impairment charges 0 0 0 0 0 126,559
1,428,953 1,324,093 2,899,037 2,736,320 6,196,016 6,019,979
INCOME BEFORE INCOME TAXES 70,387 62,736 162,860 152,262 389,359 281,573
Income taxes 26,045 23,210 60,260 56,335 144,065 105,475
NET INCOME 44,342 39,526 102,600 95,927 245,294 176,098
Retained earnings at beginning
of period 2,127,980 1,904,508 2,074,214 1,851,507 1,940,617 1,778,129
2,172,322 1,944,034 2,176,814 1,947,434 2,185,911 1,954,227
Cash dividends declared (4,484) (3,417) (8,976) (6,817) (18,073) (13,610)
RETAINED EARNINGS AT END
OF PERIOD $2,167,838 $1,940,617 $2,167,838 $1,940,617 $2,167,838 $1,940,617
Net income per common share $0.40 $0.35 $0.91 $0.84 $2.17 $1.55
Cash dividends declared per common share $0.04 $0.03 $0.08 $0.06 $0.16 $0.12
Average shares outstanding 111,669 114,361 112,332 114,077 113,116 113,645
See notes to consolidated financial statements.
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CONSOLIDATED STATEMENTS OF CASH FLOWS
DILLARD'S, INC.
(Unaudited)
(Thousands)
Six Months Ended
August 2 August 3
1997 1996
OPERATING ACTIVITITES
Net income $102,600 $95,927
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 103,284 101,326
Changes in operating assets and liabilities:
Decrease in trade accounts receivable 98,980 95,021
Increase in merchandise inventories and
other current assets (193,482) (135,459)
Decrease (Increase) in investments and other assets 15,998 (4,880)
Increase (Decrease) in trade accounts payable and
accrued expenses and income taxes 69,654 (44,690)
NET CASH PROVIDED BY OPERATING ACTIVITIES 197,034 107,245
INVESTING ACTIVITIES
Purchase of property and equipment (303,003) (173,733)
NET CASH USED IN INVESTING ACTIVITIES (303,003) (173,733)
FINANCING ACTIVITIES
Net increase in commercial paper 106,091 4,642
Proceeds from long-term borrowings 200,000 200,000
Principal payments on long-term debt and
capital lease obligations (78,927) (134,430)
Dividends paid (13,530) (6,817)
Common stock sold 2,601 13,419
Purchase of treasury stock (101,135)
NET CASH PROVIDED BY FINIANCING ACTIVITIES 115,100 76,814
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 9,131 10,326
Cash and cash equivalents at beginning of period 64,094 58,442
CASH AND CASH EQUIVALENTS AT END OF PERIOD $73,225 $68,768
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
six month period ended August 2, 1997 are not necessarily
indicative of the results that may be expected for the fiscal
year ending January 31, 1998 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
February 1, 1997.
2. On May 19, 1997, the Company amended its Certificate of
Incorporation in order to change its name to Dillard's, Inc.
3. On February 4, 1997, the Company issued $100 million aggregate
principal amount of its 7.15% notes due February 1, 2007. On
May 15, 1997, the Company issued $100 million aggregate
principal amount of its 7.75% notes due May 15, 2027. The
notes were sold in underwritten public offerings.
4. On February 21, 1997, the Board of Directors authorized the
implementation of a Class A common stock repurchase program of
up to $300 million. For the six months ended August 2, 1997,
a total of 3.2 million shares were purchased for a total of
$101.1 million.
5. In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 131,
Disclosures about Segments of an Enterprise and Related
Information, which will be effective for financial statements
beginning after December 15, 1997. SFAS No. 131 redefines how
operating segments are determined and requires expanded
quantitative and qualitative disclosures relating to a
company's operating segments. The Company has not yet
completed its analysis of how its financial statements will be
affected by SFAS No. 131.
<PAGE>
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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 Six Months Ended Twelve Months Ended
August 2 August 3 August 2 August 3 August 2 August 3
1997 1996 1997 1996 1997 1996
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Net sales 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales 65.1% 65.0% 65.4% 65.5% 66.2% 65.6%
Gross profit 34.9% 35.0% 34.6% 34.5% 33.8% 34.4%
Advertising, selling, administrative
and general expenses 26.6% 26.9% 25.9% 26.0% 24.7% 24.6%
Depreciation and amortization 3.5% 3.8% 3.5% 3.6% 3.1% 3.2%
Rentals 0.8% 0.8% 0.7% 0.8% 0.8% 0.9%
Interest and debt expense 2.3% 2.3% 2.2% 2.1% 2.0% 2.0%
Impairment charges 2.1%
Total operating expenses 33.2% 33.8% 32.3% 32.5% 30.6% 32.8%
Other income 3.2% 3.5% 3.2% 3.4% 2.9% 3.0%
Income before income taxes 4.9% 4.7% 5.5% 5.4% 6.1% 4.6%
Income taxes 1.8% 1.7% 2.0% 2.0% 2.3% 1.7%
Net income 3.1% 3.0% 3.5% 3.4% 3.8% 2.9%
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<PAGE>
Sales for the second quarter of 1997 were $1,453.2 million as
compared to $1,340.3 million for the second quarter of 1996. This
was an increase of 8%. The sales increase for comparable stores
was 5%. For the six month period ended August 2, 1997 sales
increased 6% over the first six months of 1996. The comparable
stores increase for this period was 2%. For the twelve month
period ended August 2, 1997 sales increased 5% over the same period
for 1996. The comparable stores increase for this period was 1%.
The majority of the increase in sales on a comparable store basis
was attributable to an increase in the volume of goods sold rather
than an increase in the price of goods.
Cost of sales increased only slightly from 65.0% of net sales for
the second quarter of 1996 to 65.1% for the second quarter of 1997.
For the six months ended August 2, 1997 and August 3, 1996, the
cost of sales decreased only slightly from 65.5% of net sales in
1996 to 65.4% of net sales in 1997. For the twelve months ended
August 2, 1997 and August 3, 1996, the cost of sales increased from
65.6% of net sales in 1996 to 66.2% of net sales in 1997. The
increase for this twelve month period was caused by a higher level
of markdowns in the current year versus the prior year.
Advertising, selling, administrative and general (SG&A) expenses
decreased from 26.9% of net sales for the second quarter of 1996 to
26.6% of net sales for the second quarter of 1997. The Company saw
improvement in payroll expense and bad debt expense components of
SG&A expense as a percentage of sales compared to the prior year.
For the six months ended August 2, 1997 and August 3, 1996, SG&A
expense decreased slightly from 26.0% of net sales in 1996 to 25.9%
of net sales in 1997. For the twelve months ended August 2, 1997
and August 3, 1996, SG&A expense increased slightly from 24.6% of
net sales in 1996 to 24.7% of net sales in 1997.
Depreciation and amortization expense decreased slightly as a
percentage of sales from 1996 in the three, six and twelve month
periods ended August 2, 1997. This decrease was due to the write
down of certain impaired assets in the fourth quarter of 1995,
somewhat offset by the fact that a higher proportion of the
Company's properties are owned rather than leased.
Rental expense was constant at .8% of net sales for the three
months ended August 2, 1997 and August 3, 1996. For the six months
ended August 2, 1997 and August 3, 1996 rental expense decreased
from .8% of net sales in 1996 to .7% of net sales in 1997. For the
twelve months ended August 2, 1997 and August 3, 1996, the decrease
was from .9% to .8% of net sales. This was due to a higher
proportion of the Company's properties being owned rather than
leased.
Interest and debt expense was constant as a percentage of net sales
for the three and twelve months ended August 2, 1997 compared to
the three and twelve months ended August 3, 1996. For the six
months ended August 2, 1997 and August 3, 1996 interest and debt
expense as a percentage of net sales increased only slightly from
2.1% in 1996 to 2.2% in 1997.
Service charges, interest and other income decreased from 3.5% of
net sales for the second quarter of 1996 to 3.2% of net sales for
the second quarter of 1997. For the six months ended August 2,
1997 and August 3, 1996 the decrease was from 3.4% of net sales in
1996 to 3.2% of net sales in 1997. For the twelve months ended
August 2, 1997 and August 3, 1996 this decrease was from 3.0% to
2.9%. The primary cause for this decrease was a decline in
proprietary credit card sales as a percentage of total sales.
The effective federal and state income tax rate was 37% for the
second quarter of 1997 and 1996.
<PAGE>
Financial Condition
The Company's working capital was $1.8 billion at August 2, 1997,
$1.9 billion at February 1, 1997, and $1.9 billion at August 3,
1996. The current ratio for each of these periods was 2.8, 3.1 and
3.4, respectively. The changes in working capital and current
ratio were caused by a higher level of inventory and an increase in
trade accounts payable and commercial paper at August 2, 1997
compared to February 1, 1997 and August 3, 1996.
The long-term debt to capitalization ratio was 33.0%, 30.4% and
33.4% at August 2, 1997, February 1, 1997, and August 3, 1996,
respectively. The ratio of long-term debt to capitalization is
calculated by dividing the total amount of long-term debt and
capitalized lease obligations by the sum of the total amount of
long-term debt and capitalized lease obligations plus total equity.
This ratio has increased due to the issuance of long-term debt as
described below as well as the repurchase of $101.1 million of the
Company's Class A common stock during 1997.
On February 4, 1997, the Company issued $100 million 7.15% notes
due February 1, 2007. On May 15, 1997, the Company issued $100
million 7.75% notes due May 15, 2027. The proceeds were used to
reduce commercial paper borrowings.
The Company invested $303 million in capital expenditures for the
six months ended August 2, 1997 as compared to $173.7 million for
the six months ended August 3, 1996. In the first half of 1997,
the Company opened five new stores and completed the acquisition of
seven stores in Virginia from Proffitt's, Inc., ten Mervyn's stores
in Florida and three Macy's stores in Houston. Of these acquired
stores, only two of the Proffitt's stores were opened prior to
August 2, 1997. For the balance of the year, the Company plans to
open seven new stores. Additionally, the Company plans to remodel
and open the balance of the Proffitt's stores, the Macy's stores
and seven of the Mervyn's stores. Also, the Company will expand
and remodel two stores and close two stores. In 1996, the Company
opened sixteen new stores (one of which was a replacement store),
expanded six stores and closed three stores.
Merchandise inventories increased by 8% from $1.6 billion at August
3, 1996 to $1.8 billion at August 2, 1997. The Company operated 11
more stores at August 2, 1997 versus August 3, 1996. This was the
primary reason for the increase in inventory. On a comparable
store basis, the rate of increase in merchandise inventories was
1.9%.
At August 2, 1997, the Company had an outstanding shelf
registration for unsecured notes in the amount of $400 million.
Fluctuations in certain other balance sheet accounts between
February 1, 1997 and August 2, 1997 reflect normal seasonal
variations within the retail industry. The levels of merchandise
inventories and accounts receivable fluctuate due to the seasonal
nature of the retail business. Along with the fluctuations in
these current assets, there is also a corresponding fluctuation in
trade accounts payable and commercial paper.
ITEM 3 Quantitative and Qualitative Disclosure About Market Risk.
Interim information is not required until after the first fiscal
year end in which this item is applicable.
<PAGE>
Part II OTHER INFORMATION
ITEM 4 Submission of matters to a Vote of Security Holders
The annual meeting of the stockholders of the Company was held on
May 17, 1997. The matters submitted to a vote of the stockholders
were as follows: election of directors, proposal to change the name
of the Company to Dillard's, Inc., proposal to amend the 1990
Incentive and Nonqualified Stock Option Plan, proposal requesting
the preparation of an employment practices report, proposal
concerning child/convict labor and proposal concerning Class A
independent directors.
Election of Directors
Nominee For Against Abstain
Class A Nominees
Robert C. Connor 96,199,728 2,996,850 0
Will D. Davis 95,510,250 3,686,328 0
John Paul Hammerschmidt 94,202,666 4,993,912 0
William B. Harrison, Jr. 76,142,556 23,054,022 0
Jackson T. Stephens 96,208,223 2,988,355 0
Class B Nominees
William Dillard 4,007,760 0 0
Calvin N. Clyde, Jr. 4,007,760 0 0
Drue Corbusier 4,007,760 0 0
Alex Dillard 4,007,760 0 0
William Dillard, II 4,007,760 0 0
Mike Dillard 4,007,760 0 0
James I. Freeman 4,007,760 0 0
John H. Johnson 4,007,760 0 0
E. Ray Kemp 4,007,760 0 0
William H. Sutton 4,007,760 0 0
Other Proposals
Company Name Change 102,644,765 264,918 294,654
Amend 1990 Incentive & Nonqualified
Stock Option Plan 100,414,795 2,251,808 537,733
Employment Practices
Report 10,671,833 76,532,656 8,969,289
Child/Convict Labor 3,854,812 81,456,017 10,862,900
Class A independent
directors 41,241,623 48,834,892 2,089,504
<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:
Six Months Ended Fiscal Year Ended
Aug. 2 Aug. 3 Feb.1 Feb. 3 Jan. 28 Jan. 29 Jan. 30
1997 1996 1997 1996 1995 1994 1993
3.21 3.20 3.61 2.86 3.72 3.57 3.59
ITEM 6 Exhibits and Reports on Form 8-K
(a) Exhibit (10): 1990 Incentive and NonQualified Stock Option Plan
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 second quarter:
The Company filed a report on May 13, 1997 relating to the
issuance of $100 million aggregate principal amount of 7.75%
Notes maturing on May 15, 2027.
<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'S, INC.
(Registrant)
DATE: September 12, 1997 /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
10 1990 Incentive and NonQualified Stock Option Plan
11 Statement re: Computation of Per Share Earnings
12 Statement re: Computation of Ratio of Earnings
to Fixed Charges
DILLARD'S, INC.
1990 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN,
AS AMENDED ON MAY 25, 1991, JUNE 12, 1992,
MARCH 29, 1996, AND MAY 17, 1997
_______________________________
WHEREAS, the Board of Directors of the Company deems it in the
best interest of the Company that key employees employed by the
Company be given an opportunity to acquire a stake in the growth of
the Company as a means of assuring their maximum effort and
continued association and employment with the Company; and
WHEREAS, the Board of Directors believes that the Company can
best obtain these and other benefits by granting stock options to
such key employees;
NOW, THEREFORE, BE IT RESOLVED:
That the Dillard's, Inc. Incentive and Nonqualified Stock
Option Plan be adopted, and that it be effective commencing March
17, 1990.
1. Purpose. The purpose of the Dillard's, Inc. 1990
Incentive and Nonqualified Stock Option Plan is to encourage
ownership of stock in the Company by key employees, and thereby
cause such key employees to increase their efforts in behalf of the
Company, to effect savings, and to otherwise promote the best
interests of the Company. It is intended that options granted
under this Plan will qualify as "incentive stock options" under the
Internal Revenue Code of 1986, as may be amended from time to time;
provided, however, that nonqualified stock options may also be
granted which do not qualify as incentive stock options.
2. Definitions. As used herein, the following definitions
shall apply.
a. "Board" shall mean the Board of Directors of the Company.
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b. "Common Stock" shall mean Common Stock, Class A,
$.01 par value per share, of the Company.
c. "Code" shall mean the Internal Revenue Code of 1986,
as amended.
d. "Committee" shall mean the Stock Option Committee
appointed by the Board in accordance with paragraph 4(a) of the
Plan.
e. "Company" shall mean Dillard's, Inc.
f. "Continuous Employment" or "Continuous Status as an
Employee" shall mean the absence of any interruption or termination
of employment by the Company. Employment shall not be considered
interrupted in the case of sick leave, military leave, or any other
leave of absence approved by the Company.
g. "Effective Date" shall mean March 17, 1990.
h. "Employee" shall mean any person employed on a
full-time basis by the Company or of any subsidiaries of the
Company (as defined in Sec.425(f) of the Code).
i. "Incentive Stock Option" means an Option which meets
the requirements of Sec.422A(b) of the Code.
j. "Nonqualified Stock Option" means an Option which
is taxed pursuant to Sec.83 of the Code and does not receive the
special tax treatment received by an Incentive Stock Option.
k. "Option" shall mean a right to acquire Common Stock
which is granted pursuant to this Plan.
l. "Optioned Stock" shall mean Common Stock subject to
an Option granted pursuant to this Plan.
<PAGE>
m. "Optionee" shall mean an Employee who receives an
Option.
n. "Plan" shall mean the Dillard's, Inc. 1990 Incentive
and Nonqualified Stock Option Plan.
o. "Share" shall mean one share of the Common Stock.
3. Shares Subject to the Plan. Except as otherwise required
by the provisions of paragraph 13 hereof, the aggregate number of
Shares of Common Stock deliverable upon the exercise of Options
pursuant to the Plan shall not exceed twelve million (12,000,000)
Shares. Such Shares may either be authorized but unissued or
treasury shares. If an Option should expire or become
unexercisable for any reason without having been exercised in full,
the unpurchased Shares which were subject thereto shall, unless the
Plan shall have been terminated, be available for the grant of
other Options under the Plan. No Optionee may receive options
covering more than one million (1,000,000) shares in any single
fiscal year under the Plan.
4. Administration of the Plan.
a. Composition of Stock Option Committee. The Plan
shall be administered by a Stock Option Committee (the "Committee")
consisting of at least two (2) directors of the Company appointed
by the Board. All persons designated as members of the Committee
shall be "non-employee directors" within the meaning of Rule 16b-3,
or any successor to such Rule, of the Securities Exchange
Commission, and "outside directors" within the meaning of
applicable Treasury Regulations, or any successor to such
Regulations, promulgated under the Internal Revenue Code of 1986,
as amended, or any successor to such Code.
b. Powers of the Stock Option Committee. The Committee
is authorized (but only to the extent not contrary to the express
provisions of the Plan or to resolutions adopted by
<PAGE>
the Board) to interpret the Plan, to prescribe, amend, and rescind
rules and regulations relating to the Plan, to determine the form
and content of Options to be issued under the Plan, and to make
such other determinations necessary or advisable for the
administration of the Plan, and shall have and may exercise such
other power and authority as may be delegated to it by the Board
from time to time. A majority of the entire Committee shall
constitute a quorum, and the action of a majority of the members
present at any meeting at which a quorum is present shall be deemed
the action of the Committee.
The Stock Option Committee shall, from time to time, have
the power to designate from among the key Employees, the persons to
whom stock Options will be granted. Such designation shall be in
the absolute discretion of the Committee, and shall be final
without approval of the stockholders. On the occasion of the
designation of the Optionees, the Committee may grant additional
Options to Optionees then holding Options, to some of them, or may
grant Options solely or partially to new Optionees. As of the date
of grant, the Committee shall fix the number of Shares to be
optioned and whether the Option shall be treated as an Incentive
Stock Option or as a Nonqualified Stock Option; however, no Option
shall be treated as an Incentive Stock Option ten (10) years from
the date this Plan is adopted by the Board or the date the Plan is
approved by the stockholders of the Company, whichever is earlier.
In addition, to the extent the aggregate fair market value
(determined at the time the Option is granted) of Shares treated as
acquired pursuant to Incentive Stock Options which are exercisable
by the Optionee for the first time during any calendar year (under
all incentive stock option plans of the Company or subsidiaries
thereof (as defined in Sec.425(f) of the Code)) exceeds $100,000, such
Options (taking them into account in the order in which they were
granted)
<PAGE>
cannot be treated as Incentive Stock Options. In making
the determination as to whom Options shall be granted, and as to
the number of Shares to be covered by such Options, the Committee
shall take into account the duties and responsibilities of the
proposed Optionees, their present and potential contribution to the
success of the Company, their past record, and such other factors
as the Stock Option Committee shall deem relevant in connection
with accomplishing the purposes of this Plan.
Certain officers of the Company as designated by the
Committee are hereby authorized to execute instruments evidencing
Options on behalf of the Company and to cause them to be delivered
to the Optionees or other participants.
c. Effect of Option Committee's Decision. All
decisions, determinations, and interpretations of the Committee
shall be final and conclusive on all persons affected thereby.
5. Option Price. The exercise price of Incentive Stock
Options granted under the Plan shall not be less than one hundred
percent (100%) of the fair market value of a Share on the date the
Option is granted, or, if the Optionee owns (within the meaning of
Sec.425(d) of the Code) ten percent (10%)or more of the total combined
voting power of all classes of stock of the Company, one hundred
ten percent (110%) of the fair market value of a Share on the date
the Option is granted. The exercise price of Nonqualified Stock
Options granted under the Plan shall be determined by the Committee
in its complete discretion, but in no event shall the exercise
price of Nonqualified Stock Options be less than fifty percent
(50%) of the fair market value of a Share on the date the Option is
granted. The fair market value of a Share on a particular date
shall be deemed to be the mean between the highest and lowest sales
prices per share of the Common
<PAGE>
Stock on the principal national
securities exchange on which the Common Stock may be listed from
time to time on that date or, in either case, if there shall have
been no sale on that date on the last preceding date on which such
sale or sales were effected on such exchange. In the event that
the method just described for determining the fair market value of
the Shares shall not remain consistent with the provisions of the
Code or the regulations of the Secretary of the Treasury
promulgated thereunder, then the fair market value per Share shall
be determined by such other method consistent with the Code or
regulations as the Committee shall in its discretion select and
apply at the time of grant of the Options concerned.
6. Term of Option and Limitations on Exercise. Subject to
the terms of the Plan, the Committee shall, in its discretion,
establish the term of each Option granted pursuant to the Plan.
Notwithstanding the foregoing, an Incentive Stock Option granted
under the Plan by its terms shall not be exercisable after the
expiration of ten (10) years from the date such Option is granted,
or, five (5) years if the Optionee owns (within the meaning of
Sec.425(d) of the Code) ten percent (10%) or more of the total
combined voting power of all classes of stock of the Company. The
Committee may also, in its discretion, establish a period or
periods during which an Option may not be exercised in whole or in
part or any other limitation or restriction, subject to the terms
of the Plan, which the Committee may determine as a condition
precedent to exercising an Option, including such provisions as
deemed advisable to permit qualification of Options as Incentive
Stock Options.
7. Procedures for Exercise. Any Option granted hereunder
shall be exercisable at such times and under such conditions as
shall be permissible under the terms of the Plan and of the Option
granted to an Optionee. An Option may not be exercised for a
fractional Share. An Option granted pursuant to the Plan may be
exercised, subject to provisions relating to its termination and
<PAGE>
limitations on its exercise, only by (a) written notice to exercise
the Option with respect to a specified number of Shares, and (b)(i)
payment to the Company (contemporaneously with delivery of each
such notice), in cash or Common Stock, of the amount of the Option
price of the number of Shares with respect to which the Option is
then being exercised, or (ii) causing the Company to receive from
a broker funds to pay for the option upon the broker's receipt of
stock certificates from the Company. Each such notice and payment
shall be delivered, or mailed by prepaid registered or certified
mail, addressed to the Treasurer of the Company at the Company's
executive offices.
8. Reload Options. If payment for Shares upon the
exercise of an Option ("Original Option") is made in the form of
Common Stock, the Optionee shall be granted on the date of exercise
an Option ("Reload Option") to purchase the number of Shares that
equals the number of Shares tendered to the Company. The price per
Share at which each Reload Option may be exercised shall be equal
to the fair market value of the Shares on the date of grant of the
Reload Option. The term of each Reload Option shall expire on the
same date as that of the Original Option.
9. Exercise During Employment or Following Death. Unless
otherwise provided in the terms of an Option, an Option may be
exercised by an Optionee only while the Optionee is an Employee and
has maintained Continuous Status as an Employee since the date of
the grant of the Option, or after the termination of the Optionee's
status as an Employee within one (1) year after such termination if
the Optionee becomes Disabled, as determined by the Committee, or
for any other termination within three (3) months after such
termination (but not later than the date on which the Option would
otherwise expire), except if the Optionee would have been entitled
<PAGE>
to exercise the Option immediately prior to death, such Option of
the deceased Optionee may be exercised within twelve (12) months
(but not later than the date on which the Option would otherwise
expire) from the date of death by the personal representatives of
the Optionee's estate, or person or persons to whom the Optionee's
rights under such Option shall have passed by will or by laws of
descent and distribution.
The Committee's determination whether an Optionee's
employment has ceased, and the effective date thereof, shall be
final and conclusive on all persons affected thereby.
10. Form of Stock Certificates. Stock certificates to be
issued or transferred pursuant to Options granted under this Plan
shall be made in favor of the Optionee, or the Optionee and
Optionee's spouse as joint tenants. In the discretion of the
Committee, the stock certificates so issued or transferred may have
noted thereon that same have been issued or transferred pursuant to
an Option granted under this Plan.
11. Optionee's Agreement. If the underlying Shares are not
registered under the Securities Act of 1933 and applicable state
securities laws at the time of exercise of an Option, then the
Optionee shall agree that the Optionee will purchase the Shares
under such Option for investment and not with any present intention
to re-sell the same, and shall agree to sign a certificate to such
effect at the time of exercising the Option.
12. Non-Transferability of Options. Options granted under
the Plan may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by
the laws of descent and distribution. An Option may be exercised,
during the lifetime of the Optionee, only by the Optionee.
<PAGE>
13. Effect of Change in Stock Subject to the Plan. In the
event that each of the outstanding Shares of Common Stock (other
than Shares held by dissenting shareholders) shall be changed into
or exchanged for a different number or kind of Shares of stock of
the Company or another corporation (whether by reason of merger,
consolidation, recapitalization, reclassification, stock dividend,
split-up, combination of Shares, or otherwise), then, in the sole
discretion of the Committee, there shall be substituted for each
Share of Common Stock then under Option or available for Option the
number and kind of Shares of stock into which each outstanding
Share of Common Stock (other than Shares held by dissenting
shareholders) shall be so changed or for which each such Share
shall be so exchanged, together with an appropriate adjustment of
the Option Price.
In the event there shall be any other change in the number of,
or kind of, issued Shares of Common Stock, or of any stock or other
securities into which such Common Stock shall have been changed, or
for which it shall have been exchanged, then if the Committee
shall, in its sole discretion, determine that such change equitably
requires an adjustment in the number, or kind, or Option price of
Shares then subject to an Option or available for Option, such
adjustment shall be made by the Board and shall be effective and
binding for all purposes of this Plan.
14. Time of Granting Options. The date of grant of an Option
under the Plan shall, for all purposes, be the date reflected on
the written grant of the Option to the Optionee. Notice of the
determination shall be given to each Employee to whom an Option is
so granted within a reasonable time after the date of such grant.
15. Modification of Options. At any time and from time to
time the Committee may modify any outstanding Option, provided no
such modification shall impair the Option without the consent of
<PAGE>
the holder of the Option. Any Incentive Stock Options outstanding
under the Plan may be amended, if necessary, in order to retain
such qualification.
16. Amendment and Termination of the Plan. The Board may
amend, alter or discontinue the Plan, but no amendment or
alteration shall be made without the approval of the stockholders
of the Company which would:
(i) materially increase the benefits accruing to
participants under the Plan; or
(ii) increase the number of Shares which may be issued
under the Plan; or
(iii) modify the requirements as to eligibility for
participation in the Plan.
No amendment, alteration or discontinuation of the Plan shall
adversely affect any Options granted prior to the time of such
amendment, alteration or discontinuation.
17. Conditions Upon Issuance of Shares. Shares must not be
issued with respect to any Option granted under the Plan unless the
issuance and delivery of such Shares shall comply with all relevant
provisions of law, including, without limitation, the Securities
Act of 1933, as amended, the rules and regulations promulgated
thereunder, any applicable state securities law, and the
requirements of any stock exchange upon which the Shares may then
be listed. Inability of the Company to obtain from any regulatory
body or authority deemed by the Company's counsel to be necessary
to the lawful issuance and sale of any Shares hereunder shall
relieve the Company of any liability in respect of the non-issuance
or sale of such Shares. As a condition to the exercise of an
Option, the Company may require the person exercising an Option to
make such representations or warranties as may be necessary to
assure the availability of an exemption from the registration
requirements of federal or state securities law.
<PAGE>
18. Reservation of Shares. The Company, during the term of
this Plan, will reserve and keep available a number of Shares
sufficient to satisfy the requirements of the Plan.
<TABLE>
EXHIBIT 11 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(Unaudited)
Three Months Ended Six Months Ended Twelve Months Ended
August 2 August 3 August 2 August 3 August 2 August 3
1997 1996 1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C>
Average shares outstanding 111,027,591 113,560,187 111,911,101 113,389,882 112,741,768 113,218,732
Net effect of dilutive stock options based
on the treasury stock method using
average market price 641,069 800,716 421,283 687,574 373,329 425,826
Total 111,668,660 114,360,903 112,332,384 114,077,456 113,115,097 113,644,558
Net Income $44,342,000 $39,526,000 $102,600,000 $95,927,000 $245,294,000 $176,098,000
Less preferred dividends (5,500) (5,500) (11,000) (11,000) (22,000) (22,000)
Net income available to common shares $44,336,500 $39,520,500 $102,589,000 $95,916,000 $245,272,000 $176,076,000
Per share $0.40 $0.35 $0.91 $0.84 $2.17 $1.55
</TABLE>
<TABLE>
EXHIBIT 12 - STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
(Dollar amounts in thousands)
Six Months Ended Fiscal Year Ended
August 2 August 3 February 1 February 3 January 28 January 29 January 30
1997 1996 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated pretax income $162,860 $152,262 $378,761 $269,653 $406,110 $399,534 $375,330
Fixed charges (less capitalized
interest) 71,095 66,163 139,188 139,666 145,921 152,568 142,857
EARNINGS $233,955 $218,425 $517,949 $409,319 $552,031 $552,102 $518,187
Interest $63,939 $58,809 $120,599 $120,054 $124,282 $130,915 $121,940
Capitalized interest 1,786 2,041 4,420 3,567 2,545 1,882 1,646
Interest factor in rent expense 7,156 7,354 18,589 19,612 21,639 21,653 20,917
FIXED CHARGES $72,881 $68,204 $143,608 $143,233 $148,466 $154,450 $144,503
Ratio of earnings to fixed charges 3.21 3.20 3.61 2.86 3.72 3.57 3.59
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> AUG-2-1997
<CASH> 73,225
<SECURITIES> 0
<RECEIVABLES> 1,031,524
<ALLOWANCES> 26,751
<INVENTORY> 1,750,239
<CURRENT-ASSETS> 2,864,269
<PP&E> 3,811,712
<DEPRECIATION> 1,419,304
<TOTAL-ASSETS> 5,347,080
<CURRENT-LIABILITIES> 1,040,997
<BONDS> 1,332,721
0
440
<COMMON> 1,138
<OTHER-SE> 2,710,690
<TOTAL-LIABILITY-AND-EQUITY> 5,347,080
<SALES> 2,968,496
<TOTAL-REVENUES> 3,061,897
<CGS> 1,941,322
<TOTAL-COSTS> 1,941,322
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 28,057
<INTEREST-EXPENSE> 63,939
<INCOME-PRETAX> 162,860
<INCOME-TAX> 60,260
<INCOME-CONTINUING> 102,600
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 102,600
<EPS-PRIMARY> .91
<EPS-DILUTED> .91
</TABLE>
