Dillard's 2008 Annual Report Download - page 34

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Fiscal 2007
Asset impairment and store closing charges for fiscal 2007 consisted of a write-off of goodwill on one store
of $2.6 million that was closed during the year, an accrual for future rent, property tax and utility payments on
two stores of $1.0 million that were also closed during the year and a write-down of property and equipment on
14 stores of $16.9 million that were closed, scheduled to close or impaired based on the inability of the stores’
estimated future cash flows to sustain their carrying value. A breakdown of the asset impairment and store
closing charges for fiscal 2007 follows:
Number of
Locations
Impairment
Amount
(in thousands of dollars)
Store closed in prior year ......................................... 1 $ 687
Stores closed in fiscal 2007 ....................................... 4 3,647
Stores to close in fiscal 2008 ...................................... 5 5,083
Stores impaired based on cash flows ................................ 6 9,113
Non-operating facility ........................................... 1 1,970
Total ..................................................... 17 $20,500
Fiscal 2006
There were no asset and impairment charges for fiscal 2006.
Income Taxes
The Company’s estimated federal and state income tax rate, inclusive of equity in earnings of joint ventures
and exclusive of the effect of nondeductible goodwill write-off, was 40.2% in fiscal 2008, 18.8% in fiscal 2007
and 7.7% in fiscal 2006.
Fiscal 2008
During the year ended January 31, 2009, the Company recorded an income tax expense relating to a net
increase in FIN 48 liabilities and other tax reserves of approximately $2.5 million, and a recognition of tax
benefits of approximately $10.5 million for the change in a capital loss valuation allowance due to capital gain
income and approximately $4.1 million due to federal tax credits. During fiscal 2008, the Internal Revenue
Service (“IRS”) completed its examination of the Company’s federal income tax returns for the fiscal years 2003
through 2005. Certain issues relating to this examination are currently under appeal. The Company is also under
examination by various state and local taxing jurisdictions for various fiscal years. At this time, the Company
does not expect the results from any income tax audit to have a material impact on the Company’s financial
statements.
Fiscal 2007
During the year ended February 2, 2008, the Company recorded an income tax benefit relating to a net
decrease in FIN 48 liabilities of approximately $5.9 million, and a recognition of tax benefits of approximately
$1.7 million for the change in a capital loss valuation allowance due to capital gain income, approximately $1.3
million for a reduction in state tax liabilities due to a restructuring that occurred during this period and
approximately $3.3 million due to federal tax credits.
Fiscal 2006
During the year ended February 3, 2007, the Company recorded an income tax benefit relating to a $57.2
million reduction of reserves for various federal and state tax contingencies, a $3.5 million increase in deferred
28