Dillard's 2003 Annual Report Download - page 46

(in thousands of dollars) January 31, 2004 February 1, 2003
Property and equipment
bases and depreciation
differences $505,581 $524,090
State income taxes 25,787 25,612
Joint venture basis differences 24,849 14,119
Differences between
book and tax bases of inventory 49,095 36,872
Other 112,550 121,303
Total deferred tax liabilities 717,862 721,996
Accruals not currently deductible (45,813) (59,156)
State income taxes (2,045) (2,641)
Total deferred tax assets (47,858) (61,797)
Net deferred tax liabilities $670,004 $660,199
Deferred tax assets and liabilities are presented as follows in the accompanying consolidated balance sheets:
(in thousands of dollars) January 31, 2004 February 1, 2003
Net deferred tax liabilities-noncurrent $617,236 $645,020
Net deferred tax liabilities-current 52,768 15,179
Net deferred tax liabilities $670,004 $660,199
Income taxes paid during fiscal 2003, 2002 and 2001 were approximately $0, $0 and $22.9 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 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
Company has entered into an agreement to redeem the $331.6 million liquidation amount of Preferred Securities of Horatio Finance
V.O.F., effective February 2, 2004. The Company redeemed the $331.6 million Preferred Securities on February 2, 2004 as planned.
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, $18 million and $19 million for fiscal 2003, 2002 and 2001, 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 Company expects to make a contribution to the
pension plan of approximately $3.4 million in fiscal 2004.
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