Dillard's 2003 Annual Report Download - page 21

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(in thousands of dollars) Number of
Locations
Impairment
Amount
Stores closed during fiscal 2003 3 $ 3,809
Stores to close during fiscal 2004 4 17,115
Store impaired based on cash flows 1 1,293
Non-operating facilities 7 16,030
Joint Venture 1 5,480
Total 16 $43,727
2002 Compared to 2001
Advertising, selling, administrative and general (“SG&A“) expenses increased to 27.3% of sales for fiscal 2002
compared to 26.9% for fiscal 2001. The percentage increase is primarily due to a lack of sales leverage as SG&A
expenses decreased $27.4 million in 2002 compared to 2001. On a dollar basis significant decreases were noted in
payroll, utilities and supplies partially offset by a $23.8 million increase in bad debt expenses, which includes an increase
in the allowance for doubtful accounts of $12.4 million during 2002 compared to 2001.
Depreciation and amortization as a percentage of sales remained flat during fiscal 2002 principally due to lower
amortization expenses during 2002 compared to 2001 as a result of the non-amortization provisions of SFAS No. 142
combined with a lack of sales leverage from the 3% decline in comparable store sales during the year.
Interest and debt expense as a percentage of sales remained flat during fiscal 2002 as a result of the Company’s
continuing focus on reducing its outstanding debt levels and the reduction in variable short-term interest rates combined
with a lack of sales leverage. The Company retired $340 million in long-term debt and issued $40 million in new
mortgage loans and $100 million in additional receivable financing during 2002.
The Company adopted the provisions of SFAS No. 145, “Rescission of FASB Statements No. 4, 44 and 64, Amendment
of FASB Statement No. 13, and Technical Corrections” (“SFAS No. 145”) as of February 1, 2003. For the year ended
February 1, 2003, as a result of adopting SFAS No. 145, the Company has reclassified $6.8 million to interest and debt
expense from extraordinary loss. This amount is comprised of a gain of $4.8 million on debt repurchased, offset by a call
premium of $11.6 million. For the year ended February 2, 2002, the Company has reclassified $9.4 million to interest
and debt expense from extraordinary gain.
The Company has reclassified $11.3 million in interest expense related to its receivable financing from other revenue to
interest expense on its consolidated statements of operations for fiscal 2001.
During fiscal 2002, the Company recorded a pretax charge of $52.2 million for asset impairment and store closing costs.
The charge includes a write down to fair value for certain under-performing properties in the amount of $55.8 million
and exit costs to close four such properties in the amount of $4.4 million, all of which were closed during fiscal 2003,
partially offset by forgiveness of a lease obligation of $8.0 million in connection with the sale of a closed owned store in
Memphis, Tennessee in satisfaction of that obligation. During fiscal 2001, the Company recorded a pretax charge of
$3.8 million for asset impairment and store closing costs. The charge includes a write down to fair value for one under-
performing store in the amount of $1.8 million and lease commitments of $2 million.
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