Dillard's 2003 Annual Report Download - page 27

forward-looking statements. The Company cautions that forward-looking statements, as such term is defined in the
Private Securities Litigation Reform Act of 1995, contained in this report are based on estimates, projections, beliefs and
assumptions of management at the time of such statements and are not guarantees of future performance. The Company
disclaims any obligation to update or revise any forward-looking statements based on the occurrence of future events, the
receipt of new information, or otherwise. Forward-looking statements of the Company involve risks and uncertainties
and are subject to change based on various important factors. Actual future performance, outcomes and results may differ
materially from those expressed in forward-looking statements made by the Company and its management as a result of a
number of risks, uncertainties and assumptions. Representative examples of those factors (without limitation) include
general retail industry conditions and macro-economic conditions; economic and weather conditions for regions in which
the Company’s stores are located and the effect of these factors on the buying patterns of the Company’s customers; the
impact of competitive pressures in the department store industry and other retail channels including specialty, off-price,
discount, internet, and mail-order retailers; trends in personal bankruptcies and charge-off trends in the credit card
receivables portfolio; changes in consumer spending patterns and debt levels; adequate and stable availability of
materials and production facilities from which the Company sources its merchandise; changes in operating expenses,
including employee wages, commission structures and related benefits; possible future acquisitions of store properties
from other department store operators and the continued availability of financing in amounts and at the terms necessary
to support the Company’s future business; fluctuations in LIBOR and other base borrowing rates; potential disruption
from terrorist activity and the effect on ongoing consumer confidence; potential disruption of international trade and
supply chain efficiencies; world conflict and the possible impact on consumer spending patterns and other economic and
demographic changes of similar or dissimilar nature.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
The table below provides information about the Company’s obligations that are sensitive to changes in interest rates. The
table presents maturities of the Company’s long-term debt and Guaranteed Beneficial Interests in the Company’s
Subordinated Debentures along with the related weighted-average interest rates by expected maturity dates.
(in thousands of dollars)
Expected Maturity Date
(fiscal year) 2004 2005 2006 2007 2008 Thereafter Total Fair Value
Long-term debt (including
receivables financing
facilities) $166,041 $291,633 $298,483 $200,640 $200,701 $863,608
$2,021,106 $2,059,118
Average interest rate 6.5% 3.1% 5.0% 6.9% 6.5% 7.5% 6.3%
Guaranteed Beneficial
Interests in the Company’s
Subordinated Debentures $331,579 $- $- $- $- $200,000 $ 531,579 $ 525,579
Average interest rate 2.7% -% -% -% -% 7.5% 4.5%
During the year ended January 31, 2004, the Company repurchased $6.0 million of its outstanding unsecured notes prior
to their related maturity dates. During the year ended January 31, 2004, the Company also retired $125.9 million of its
6.39% Reset Put Securities (“REPS”) due August 1, 2013 prior to their maturity dates. Interest rates on the repurchased
securities ranged from 6.39% to 6.88%. Maturity dates ranged from 2004 to 2013.
The Company is exposed to market risk from changes in the interest rates on certain receivable financing facilities and
$331.6 million of the Guaranteed Beneficial Interests in the Company’s Subordinated Debentures. Outstanding balances
under these facilities bear interest at a variable rate based on a spread over LIBOR. Based on the amount outstanding as
of January 31, 2004, a 100 basis point change in interest rates would result in an approximate $5.8 million annual change
to interest expense.
In fiscal 2003, the Company announced its intention to redeem its $331.6 million Preferred Securities included in
Guaranteed Preferred Beneficial Interests in the Company’s Subordinated Debentures anticipating that such redemption
would occur on February 2, 2004. Accordingly, $331.6 million of Guaranteed Preferred Beneficial Interests in
Company’s Subordinated Debentures is included in current liabilities on the Company’s consolidated balance sheet at
January 31, 2004. The Company redeemed the $331.6 million Preferred Securities on February 2, 2004 as planned.
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