Dillard's 2002 Annual Report Download - page 35

Other Assets – Other assets include investments in joint ventures accounted for by the equity method. These joint ventures, which
consist of malls and a general contracting company that constructs Dillard’s stores and other commercial buildings, had carrying
values of $97 million and $203 million at February 1, 2003 and February 2, 2002, respectively. The malls are located in Crestview
Hills, Kentucky; Toledo, Ohio and Denver, Colorado. Earnings from joint ventures was $19.5 million, $11.6 million and $8.2 million
for fiscal 2002, 2001 and 2000, respectively.
Vendor Allowances. The Company receives concessions from its vendors through a variety of programs and arrangements,
including co-operative advertising and markdown reimbursement programs. Co-operative advertising allowances are reported as a
reduction of advertising expense in the period in which the advertising occurred. All other vendor allowances are recognized as a
reduction of cost purchases. Accordingly, a reduction or increase in vendor concessions has an inverse impact on cost of sales
and/or selling and administrative expenses.
Revenue Recognition – The Company recognizes revenue at the “point of sale.” Finance charge revenue earned on customer
accounts, serviced by the Company under its proprietary credit card program, is recognized in the period in which it is earned.
Allowance for sales returns are recorded as a component of net sales in the period in which the related sales are recorded.
Advertising – Advertising and promotional costs, which include newspaper, television, radio and other media advertising, are
expensed as incurred and were $245 million, $245 million and $246 million for fiscal years 2002, 2001 and 2000, respectively.
Income Taxes – In accordance with SFAS No. 109, “Accounting for Income Taxes,” deferred income taxes reflect the future tax
consequences of differences between the tax bases of assets and liabilities and their financial reporting amounts at year-end.
Shipping and Handling – Emerging Issues Task Force (“EITF”) Issue 00-10, “Accounting for Shipping and Handling Fees and
Costs,” requires that all amounts billed to a customer in a sale transaction related to shipping and handling, if any, should be classified
as revenue. As required, the Company adopted this EITF in the fourth quarter of fiscal 2000 and has reclassified shipping and
handling reimbursements to Other Income for all periods. The Company recorded shipping and handling costs in Advertising, Selling,
General and Administrative Expenses for all periods presented.
Comprehensive Income – Comprehensive income is equivalent to the Company’s net income for fiscal years 2001 and 2000.
Stock-Based Compensation – The Company periodically grants stock options to employees. Pursuant to Accounting Principles
Board Opinion No. 25, “Accounting for Stock Issued to Employees,” the Company accounts for stock-based employee compensation
arrangements using the intrinsic value method. Accordingly, no compensation expense has been recorded in the Consolidated
Financial Statements with respect to option grants. The Company has adopted the disclosure only provisions of Financial Accounting
Standards Board Statement No. 123, “Accounting for Stock Based Compensation,” as amended by Financial Accounting Standards
Board Statement No. 148, “Accounting for Stock Based Compensation – Transition and Disclosure, an Amendment of FASB
Statement No. 123”. See Note 11 to the Company’s Consolidated Financial Statements. If compensation cost for the Company’s
stock option plans had been determined in accordance with the fair value method prescribed by SFAS No. 123, the Company’s income
before extraordinary item and accounting change would have been:
(in thousands of dollars, except per share data) Fiscal 2002 Fiscal 2001 Fiscal 2000
Income before extraordinary item and accounting change
As reported $136,300 $65,786 $96,830
Deduct: Total stock based employee compensation expense
determined under fair value based method, net of taxes 9,261 5,667 7,334
Pro forma 127,039 60,119 89,496
Basic earnings per share:
As reported $1.61 $0.78 $1.06
Pro forma 1.50 0.71 0.98
Diluted earnings per share:
As reported $1.60 $0.78 $1.06
Pro forma 1.49 0.72 0.98
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