Dillard's 2005 Annual Report Download - page 14

ITEM 2. PROPERTIES.
All of our stores are owned or leased from third parties. Our third-party store leases typically provide for
rental payments based on a percentage of net sales with a guaranteed minimum annual rent. In general, the
Company pays the cost of insurance, maintenance and real estate taxes related to the leases.
The following table summarizes the number of retail stores owned or operated by us and the percentage of
total store area represented by each listed category at January 28, 2006:
Number of
stores
% of total
store square
footage
Owned stores .......................................... 227 70.2%
Leased stores .......................................... 62 16.4%
Owned building on leased land ............................ 18 5.8%
Partly owned and partly leased ............................ 23 7.6%
330 100%
At January 28, 2006, we have eight regional distribution facilities located throughout the United States of
which we own seven and lease one from a third party. Our principal executive offices are approximately 300,000
square feet located in Little Rock, Arkansas. Additional information is contained in Notes 1, 3, 13 and 14 of
“Notes to Consolidated Financial Statements,” in Item 8 hereof, and reference is made to information contained
under the heading “Number of stores,” under item 6 hereof.
ITEM 3. LEGAL PROCEEDINGS.
On July 29, 2002, a Class Action Complaint (followed on December 13, 2004 by a Second Amended Class
Action Complaint) was filed in the United States District Court for the Southern District of Ohio against the
Company, the Mercantile Stores Pension Plan (the “Plan”) and the Mercantile Stores Pension Committee (the
“Committee”) on behalf of a putative class of former Plan participants. The complaint alleges that certain actions
by the Plan and the Committee violated the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), as a result of amendments made to the Plan that allegedly were either improper and/or ineffective
and as a result of certain payments made to certain beneficiaries of the Plan that allegedly were improperly
calculated and/or discriminatory on account of age. The Second Amended Complaint does not specify any
liquidated amount of damages sought and seeks recalculation of certain benefits paid to putative class members.
No trial date has been set.
The Company is defending the litigation vigorously and has named the Plan’s actuarial firm as a cross
defendant. While it is not feasible to predict or determine the ultimate outcome of the pending litigation,
management believes after consultation with counsel, that its outcome, after consideration of the provisions
recorded in the Company’s consolidated financial statements, would not have a material adverse effect upon its
consolidated cash flow or financial position. However, it is possible that an adverse outcome could have a
material adverse effect on the Company’s consolidated net income in a particular quarterly or annual period.
From time to time, we are involved in other litigation relating to claims arising out of our operations in the
normal course of business. Such issues may relate to litigation with customers, employment related lawsuits,
class action lawsuits, purported class action lawsuits and actions brought by governmental authorities. As of
March 31, 2006, we are not a party to any legal proceedings that, individually or in the aggregate, are reasonably
expected to have a material adverse effect on our business, results of operations, financial condition or cash
flows. However, the results of these matters cannot be predicted with certainty, and an unfavorable resolution of
one or more of these matters could have a material adverse effect on our business, results of operations, financial
condition or cash flows.
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