Dillard's 2002 Annual Report Download - page 41

Deferred tax assets and liabilities are presented as follows in the accompanying consolidated balance sheets:
(in thousands of dollars) February 1, 2003 February 2, 2002
Net deferred tax liabilities-noncurrent $645,020 $643,965
Net deferred tax liabilities-current 15,179 -
Net deferred tax liabilities $660,199 $643,965
Income taxes paid during fiscal 2002, 2001 and 2000 were approximately $0, $22.9 million and $40.5 million, respectively.
7. Guaranteed Preferred Beneficial Interests in the Company’s Subordinated Debentures
Guaranteed Preferred Beneficial Interests in the Company’s Subordinated Debentures are comprised of $200 million liquidation
amount of 7.5% Capital Securities, due August 1, 2038 (the “Capital Securities”) representing beneficial ownership interest in the
assets of Dillard’s Capital Trust I, a wholly owned subsidiary of the Company, and $331.6 million liquidation amount of LIBOR plus
1.56% Preferred Securities, due January 29, 2009 (the “Preferred Securities”) by Horatio Finance V.O.F., a wholly owned subsidiary
of the Company.
Holders of the Capital Securities are entitled to receive cumulative cash distributions, payable quarterly, at the annual rate of 7.5% of
the liquidation amount of $25 per Capital Security. The subordinated debentures are the sole assets of the Trust, and the Capital
Securities are subject to mandatory redemption upon repayment of the subordinated debentures. Holders of the Preferred Securities are
entitled to receive quarterly dividends at LIBOR plus 1.56%. The Preferred Securities are subject to mandatory redemption upon
repayment of the debentures. The Company’s obligations under the debentures and related agreements, taken together, provide a full
and unconditional guarantee of payments due on the Capital and Preferred Securities. The $331.6 million of the Guaranteed Beneficial
Interests in the Company’s Subordinated Debentures are subject to mandatory remarketing on January 29, 2004 if a financing
extension agreement has not been reached. Solicited bids are subject to maximum applicable rates in effect immediately prior to the
remarketing date.
8. Benefit Plans
The Company has a retirement plan with a 401(k)-salary deferral feature for eligible employees. Under the terms of the plan, eligible
employees may contribute up to 20% of eligible pay. Eligible employees with one year of service may elect to make a Basic
Contribution of up to 5% of eligible pay which will be matched 100% only if invested in the Company’s common stock. The
Company contributions are used to purchase Class A Common Stock of the Company for the account of the employee. The terms of
the plan provide a six-year graduated-vesting schedule for the Company contribution portion of the plan. The Company incurred
expense of $18 million, $19 million and $19 million for fiscal 2002, 2001 and 2000, respectively, for the plan.
The Company has a nonqualified defined benefit plan for certain officers. The plan is noncontributory and provides benefits based on
years of service and compensation during employment. Pension expense is determined using various actuarial cost methods to
estimate the total benefits ultimately payable to officers and allocates this cost to service periods. The pension plan is unfunded. The
actuarial assumptions used to calculate pension costs are reviewed annually.
The accumulated benefit obligations (“ABO”), change in projected benefit obligation (“PBO”), change in plan assets, funded status,
and reconciliation to amounts recognized in the consolidated balance sheets are as follows:
(in thousands of dollars) February 1, 2003 February 2, 2002
Change in projected benefit obligation:
PBO at beginning of year $45,163 $46,682
Service cost 1,416 1,255
Interest cost 3,592 3,287
Plan amendments 6,360 -
Actuarial loss (gain) 10,988 (3,252)
Benefits paid (3,159) (2,809)
PBO at end of year $64,360 $45,163
ABO at end of year $64,126 $39,961
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