Dillard's 2012 Annual Report Download - page 30

fiscal tax years 2009 and forward. At this time, the Company does not expect the results from any
income tax audit to have a material impact on the Company’s consolidated financial statements.
The Company has taken positions in certain taxing jurisdictions for which it is reasonably possible
that the total amounts of unrecognized tax benefits may decrease within the next twelve months. The
possible decrease could result from the finalization of the Company’s various state income tax audits
and lapse of statutes of limitation. The Company does not expect a material change in unrecognized
tax benefits in the next twelve months.
Pension obligations. The discount rate that the Company utilizes for determining future pension
obligations is based on the Citigroup Above Median Pension Index Curve on its annual measurement
date and is matched to the future expected cash flows of the benefit plans by annual periods. The
discount rate decreased to 4.0% as of February 2, 2013 from 4.3% as of January 28, 2012. We believe
that these assumptions have been appropriate and that, based on these assumptions, the pension
liability of $176 million is appropriately stated as of February 2, 2013; however, actual results may differ
materially from those estimated and could have a material impact on our consolidated financial
statements. A further 50 basis point change in the discount rate would increase or decrease the pension
liability by approximately $11.1 million. The Company expects to make a contribution to the pension
plan of approximately $4.8 million in fiscal 2013. The Company expects pension expense to be
approximately $15.7 million in fiscal 2013 with a liability of $186.5 million at February 1, 2014.
RESULTS OF OPERATIONS
The following table sets forth the results of operations and percentage of net sales, for the periods
indicated:
For the years ended
February 2, 2013 January 28, 2012 January 29, 2011
% of % of % of
Net Net Net
(in thousands of dollars) Amount Sales Amount Sales Amount Sales
Net sales ....................... $6,593,169 100.0% $6,263,600 100.0% $6,120,961 100.0%
Service charges and other income ...... 158,426 2.4 141,884 2.3 137,384 2.2
6,751,595 102.4 6,405,484 102.3 6,258,345 102.2
Cost of sales ..................... 4,247,108 64.4 4,047,269 64.6 3,980,873 65.0
Selling, general and administrative
expenses ...................... 1,671,526 25.4 1,630,907 26.0 1,625,793 26.6
Depreciation and amortization ........ 259,621 3.9 257,685 4.1 261,550 4.3
Rentals ......................... 34,838 0.5 48,110 0.8 51,045 0.8
Interest and debt expense, net ........ 69,596 1.1 72,059 1.2 73,792 1.2
Gain on litigation settlement ......... — 0.0 (44,460) (0.7) — 0.0
Gain on disposal of assets ........... (12,435) (0.2) (3,955) 0.0 (5,632) (0.1)
Asset impairment and store closing
charges ....................... 1,591 0.0 1,200 0.0 2,208 0.0
Income before income taxes and income
on (equity in losses of) joint ventures . 479,750 7.3 396,669 6.3 268,716 4.4
Income taxes (benefit) .............. 145,060 2.2 (62,518) (1.0) 84,450 1.4
Income on (equity in losses of) joint
ventures ...................... 1,272 0.0 4,722 0.1 (4,646) (0.1)
Net income ...................... $ 335,962 5.1% $ 463,909 7.4% $ 179,620 2.9%
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