Dillard's 2004 Annual Report Download - page 49

(in thousands of dollars) January 29, 2005 January 31, 2004
Property and equipment
bases and depreciation
differences $ 504,253 $ 505,581
State income taxes 64,903 68,021
Joint venture basis differences 23,997 24,849
Differences between
book and tax bases of inventory 46,001 49,095
Other 12,604 112,550
Total deferred tax liabilities 651,758 760,096
Accruals not currently deductible (63,410) (45,813)
NOL carryforwards (82,058) (79,324)
State income taxes (12,625) (12,558)
Total deferred tax assets (158,093) (137,695)
State NOL valuation allowance 53,148 47,603
Net deferred tax assets (104,945) (90,092)
Net deferred tax liabilities $ 546,813 $ 670,004
At January 29, 2005, the Company had $1.8 million of federal rehabilitation credit carryovers that could be utilized to
reduce the tax liabilities of future years. These credit carryovers will expire between 2005 and 2007.
At January 29, 2005, the Company had a deferred tax asset related to state net operating loss carryovers of $82 million
that could be utilized to reduce the tax liabilities of future years. These carryovers will expire between 2005 and 2025.
A portion of the deferred asset attributable to state net operating loss carryovers was reduced by a valuation allowance of
$53 million for the losses of various members of the affiliated group in states that require separate company filings.
Deferred tax assets and liabilities are presented as follows in the accompanying consolidated balance sheets:
(in thousands of dollars) January 29, 2005 January 31, 2004
Net deferred tax liabilities-noncurrent $509,589 $617,236
Net deferred tax liabilities-current 37,224 52,768
Net deferred tax liabilities $546,813 $670,004
The Company’s income tax returns are periodically audited by various state and local jurisdictions. Additionally, the
Internal Revenue Service audits the Company’s federal income tax return annually. The Company reserves for tax
contingencies when it is probable that a liability has been incurred and the contingent amount is reasonably estimable.
These reserves are based upon the Company's best estimates of the potential exposures associated with the timing and
amount of deductions as well as various tax filing positions. Due to the complexity of these examination issues, for
which reserves have been recorded, it may be several years before the final resolution is achieved.
Income taxes paid during fiscal 2004, 2003 and 2002 were approximately $36.2, $0 and $0 million, respectively.
8. 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 consolidated entity 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.
The Company’s obligations under the debentures and related agreements, taken together, provides a full and
unconditional guarantee of payments due on the Capital Securities.
F-17