Dillard's 2003 Annual Report Download - page 43

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No. 142 at the store unit level. The fair value of these reporting units was estimated using the expected discounted future cash flows
and market values of related businesses, where appropriate.
Related to the 1998 acquisition of Mercantile Stores Company Inc., the Company had $570 million in goodwill recorded in its
consolidated balance sheet at the beginning of 2002. The Company completed the required impairment tests of goodwill in the second
quarter of 2002 and determined that $530 million of goodwill was impaired under the fair value test. This impairment was the result
of sequential periods of declining profits in certain of these reporting units. In accordance with SFAS No. 142, the impairment loss for
goodwill was reflected as a cumulative effect of a change in accounting principle in the first quarter of 2002.
The changes in the carrying amount of goodwill for the years ended January 31, 2004 and February 1, 2003 are as follows (in
thousands):
Goodwill balance at February 2, 2002 $569,545
Cumulative effect of adopting SFAS No. 142 (530,331)
Goodwill balance at February 1, 2003 39,214
Goodwill written off in fiscal 2003 ( 2,483)
Goodwill balance at January 31, 2004 $ 36,731
The following pro forma financial information is presented as if the statement was adopted at January 30, 2000 (in thousands, except
per share amounts):
Fiscal 2003 Fiscal 2002 Fiscal 2001
Reported net income (loss) $ 9,344 $(398,405) $71,798
Cumulative effect of accounting change - 530,331 -
Net income before the cumulative
effect of accounting change
9,344
131,926
71,798
Add back:
Goodwill amortization
-
-
15,604
Pro forma $ 9,344 $ 131,926 $87,402
Net income (loss) per share reported – basic $0 .11 $(4.71) $0.85
Cumulative effect of accounting change - 6.27 -
Goodwill amortization - - 0.19
Pro forma net income per share – basic $0.11 $ 1.56 $1.04
Net income (loss) per share reported – diluted $0.11 $(4.67) $0.85
Cumulative effect of accounting change - 6.22 -
Goodwill amortization - - 0.18
Pro forma net income per share – diluted $0.11 $ 1.55 $1.03
3. Revolving Credit Agreement
At January 31, 2004, the Company maintained an $835 million revolving credit facility with JPMorgan Chase Bank (“JPMorgan”)
with an additional $165 million becoming available immediately upon the Preferred Security redemption discussed in Note 7.
Borrowings under the credit agreement accrue interest at JPMorgan’s Base Rate or LIBOR plus 1.50% (currently 2.60%) subject to
certain availability thresholds as defined in the credit agreement. Availability for borrowings and letter of credit obligations under the
credit agreement is limited to 75% of the inventory of certain Company subsidiaries (approximately $1.2 billion at January 31, 2004).
There are no financial covenant requirements under the credit agreement provided availability exceeds $100 million. The credit
agreement expires on December 12, 2008. The Company pays an annual commitment fee of 0.375% of the committed amount to the
banks. There were no funds borrowed under the revolving credit facility during fiscal 2003.
F-11