Dillard's 2005 Annual Report Download - page 62

The future minimum rental commitments as of January 28, 2006 for all noncancelable leases for buildings
and equipment are as follows:
(in thousands of dollars)
Fiscal Year
Operating
Leases
Capital
Leases
2006 .......................................................... $ 49,250 $ 8,545
2007 .......................................................... 38,371 6,039
2008 .......................................................... 30,725 4,684
2009 .......................................................... 23,389 3,628
2010 .......................................................... 19,555 3,569
After 2010 ..................................................... 81,722 29,341
Total minimum lease payments ..................................... $243,012 55,806
Less amount representing interest ................................... (18,071)
Present value of net minimum lease payments (of which $5,929 is currently
payable) ..................................................... $37,735
Renewal options from three to 25 years exist on the majority of leased properties. At January 28, 2006, the
Company is committed to incur costs of approximately $145 million to acquire, complete and furnish certain
stores and equipment.
During 2005, the Company sold and leased back certain corporate aircraft resulting in proceeds of $59.4
million. These leases, which are accounted for under SFAS 13, “Accounting for Leases”, are classified as either
operating or capital, as appropriate. The leases have seven-year terms. The Company recorded a capital lease
obligation of $17.2 million related to certain aircraft noted above. The remaining leases were recorded as
operating leases and included in rent expense.
During 2005, the Company completed the disposition of all of the outstanding capital stock of an indirect
wholly-owned subsidiary of the Company. The proceeds from the sale consist of $14 million in cash and a $3
million promissory note. In connection with the transaction, various subsidiaries of the Company entered into an
operating lease agreement with the purchaser whereby they agreed to lease each of the properties for a term of 20
years. The minimum future payments under the lease are $176,664 per month.
The Company is a 50% guarantor on a $54.3 million loan commitment for a joint venture as of January 28,
2006. At January 28, 2006, the joint venture had $45.3 million outstanding on the loan. The loan is collateralized
by a mall in Yuma, Arizona with a book value of $55.4 million at January 28, 2006.
The Company is a guarantor on a $185 million loan commitment with another joint venture as of January 28,
2006. The Company is a guarantor on up to 50% of the loan balance with the joint venture partner guaranteeing the
remaining 50% of the loan balance. A mall currently under construction in Bonita Springs, Florida provides
collateral for the loan. The loan had an outstanding balance of $64.8 million as of January 28, 2006.
During the year ended January 28, 2006, Hurricane Katrina, Hurricane Rita and Hurricane Wilma
interrupted operations in approximately 60 of the Company’s stores for varying amounts of time. Ten stores
suffered damage to either merchandise or property related to the hurricanes. Three stores remain closed as a
result of Hurricane Katrina. These stores are located in the New Orleans area (two stores) and Biloxi,
Mississippi. The Company’s Port Arthur, Texas store remains closed as a result of Hurricane Rita. The Company
expects these four stores in the Gulf area to remain closed for at least the first half of fiscal year 2006. Property
and merchandise losses in the affected stores are covered by insurance. Insurance proceeds of $110 million were
received during the year, and the Company recorded a $29.7 million gain in Cost of Sales related to insurance
settlements received covering losses related to the hurricanes. The Company expects additional insurance
recoveries in fiscal 2006 as construction is completed on damaged stores and a final settlement is reached with
the insurance carrier.
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