Dillard's 2003 Annual Report Download - page 22

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Service Charges, Interest and Other Income
(in millions of dollars) $ Change % Change
2003 2002 2001 03-02 02-01 03-02 02-01
Joint venture income $ 8.1 $ 19.5 $ 11.6 $(11.4) $ 7.9 -58.5
%
68.1%
Gain on sale of joint venture and
property and equipment 24.3 65.4 2.1 (41.1) 63.3 -62.8 *
Service charge income 207.9 225.7 210.4 (17.8) 15.3 -7.9 7.3
Other 24.4 12.3 20.7 12.1 (8.4) 98.4 -40.6
Total $ 264.7 $ 322.9 $ 244.8 $(58.2) $ 78.1 -18.0
%
31.9%
Average accounts receivable $1,231.4 $1,330.9 $1,260.8 $(99.5) $ 70.1 -7.5
%
5.6%
* percent change greater than 100%
2003 Compared to 2002
Included in other income in fiscal 2003 is a gain of $15.6 million relating the sale of the Company’s interest in Sunrise
Mall and its associated center in Brownsville, Texas. Included in other income in fiscal 2002 is a $64.3 million gain
pertaining to the Company’s sale of its interest in the FlatIron Crossing joint venture located in Broomfield, Colorado.
Service charge income decreased due to a $99 million decrease in the average amount of outstanding accounts receivable
during 2003 compared to 2002. The decrease in accounts receivable was due to a 140 basis point decline in sales
penetration on the Company’s proprietary credit card coupled with a 4% decline in overall retail sales during fiscal 2003
compared to the prior year. Sales on the Company’s proprietary credit cards as a percent of total sales were 26.8%,
28.2% and 28.8% for fiscal 2003, 2002 and 2001, respectively. Also included in other income are realized gains on the
sale of property and equipment of $8.7 million and $1.1 million for fiscal 2003 and fiscal 2002, respectively. Earnings
from joint ventures declined due to the Company’s sale of FlatIron Crossing in fiscal 2002 and the sale of Sunrise Mall
in the first quarter of fiscal 2003.
2002 Compared to 2001
Service charge income was $226 million in 2002 compared to $210 million in 2001. This increase is due to a $70
million increase in the average amount of outstanding accounts receivable during 2002 compared to 2001. Earnings
from FlatIron Crossing for fiscal 2002 were $13.6 million.
Income Taxes
The Company’s actual federal and state income tax rate (exclusive of the effect of nondeductible goodwill amortization)
was 36% in fiscal 2003, 2002 and 2001.
LIQUIDITY AND CAPITAL RESOURCES
Financial Position Summary
(in thousands of dollars) 2003 2002 $ Change % Change
Cash and cash equivalents $ 160,873 $ 142,356 18,517 13.0
Short-term debt 50,000 - 50,000 -
Current portion of long-term debt 166,041 138,814 27,227 19.6
Current portion of Guaranteed Beneficial Interests 331,579 - 331,579 -
Long-term debt 1,855,065 2,193,006 (337,941) -15.4
Guaranteed Beneficial Interests 200,000 531,579 (331,579) -62.4
Stockholders’ equity 2,237,097 2,264,196 (27,099) -1.2
Current ratio 2.26% 3.53%
Debt to capitalization 53.8% 55.8%
The Company's current priorities for its use of cash are:
• Investment in high-return capital projects, in particular investments in technology to improve merchandising
and distribution, reduce costs, improve efficiencies or help the Company better serve its customers;
• Strategic investments to enhance the value of existing properties;
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