Dillard's 2010 Annual Report Download - page 71

Notes to Consolidated Financial Statements (Continued)
13. Commitments and Contingencies (Continued)
Renewal options from three to 25 years exist on the majority of leased properties. At January 29,
2011, the Company is committed to incur costs of approximately $12 million to acquire, complete and
furnish certain stores and equipment.
We were a member of a class of a settled lawsuit against Visa U.S.A. Inc. (‘‘Visa’’) and
MasterCard International Incorporated (‘‘MasterCard’’). The Visa Check/MasterMoney Antitrust
litigation settlement became final on June 1, 2005. The settlement provided $3.05 billion in
compensatory relief by Visa and MasterCard to be funded over a fixed period of time to respective
Settlement Funds. We received and recorded $0.4 million, $5.7 million and $0.4 million as part of our
share of the proceeds from the settlement during fiscal 2010, 2009 and 2008 respectively. This amount
was recorded in service charges and other income.
At January 29, 2011, letters of credit totaling $90.8 million were issued under the Company’s
$1.0 billion revolving credit facility.
On May 27, 2009, a lawsuit was filed in the United States District Court for the Eastern District of
Arkansas styled Steven Harben, Derivatively on Behalf of Nominal Defendant Dillard’s, Inc. v. William
Dillard II et al, Case Number 4:09-IV-395. The lawsuit generally seeks return of monies and alleges that
certain officers and directors of the Company have been overcompensated and/or received improper
benefits at the expense of the Company and its shareholders. On September 30, 2010, the court
dismissed the lawsuit in its entirety. It is not known whether plaintiff intends to file an appeal. If so,
the named officers and directors intend to contest these allegations vigorously.
On June 10, 2009, a lawsuit was filed in the Circuit Court of Pulaski County, Arkansas styled
Billy K. Berry, Derivatively on behalf of Dillard’s, Inc. v. William Dillard II et al, Case
Number CV-09-4227-2. The lawsuit generally seeks return of monies and alleges that certain officers
and directors of the Company have been overcompensated and/or received improper benefits at the
expense of the Company and its shareholders. On February 18, 2010, the Circuit Court entered an
‘‘Order of Dismissal with Prejudice and Final Judgment’’ dismissing the case as to all parties defendant.
Plaintiff has appealed the Court’s Order. The named officers and directors will continue to contest
these allegations vigorously.
Various other legal proceedings, in the form of lawsuits and claims, which occur in the normal
course of business, are pending against the Company and its subsidiaries. In the opinion of
management, disposition of these matters is not expected to materially affect the Company’s financial
position, cash flows or results of operations.
14. Asset Impairment and Store Closing Charges
During fiscal 2010, the Company recorded a pretax charge of $2.2 million for asset impairment and
store closing costs. The charge was for the write-down of one property currently held for sale.
During fiscal 2009, the Company recorded a pretax charge of $3.1 million for asset impairment and
store closing costs. The charge consists of the write-down of property of $3.9 million on two stores
closed in a prior year partially offset by the renegotiation of a future rent accrual of $0.8 million on a
store closed in a prior year.
During fiscal 2008, the Company recorded a pretax charge of $197.9 million for asset impairment
and store closing costs. The charge consists of (1) the write-off of $31.9 million of goodwill on seven
stores and a write-down of $58.8 million of investment in two mall joint ventures where the estimated
future cash flows were unable to sustain the amount of goodwill and investment; (2) an accrual of
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