Dillard's 2009 Annual Report Download - page 59

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. Description of Business and Summary of Significant Accounting Policies (Continued)
• to add an additional reconsideration event for determining whether an entity is a variable
interest entity when any changes in facts and circumstances occur such that holders of the equity
investment at risk, as a group, lose the power from voting rights or similar rights of those
investments to direct the activities of the entity that most significantly impact the entity’s
economic performance; and
• to require enhanced disclosures that will provide users of financial statements with more
transparent information about an enterprise’s involvement in a variable interest entity.
This guidance becomes effective for the Company for its fiscal year beginning on January 31, 2010.
The Company adopted this guidance on January 31, 2010, and the adoption did not have a material
impact on the Company’s consolidated financial statements.
2. Acquisition
On August 29, 2008, the Company purchased the remaining interest in CDI, a former 50% equity
method joint venture investment of the Company, for a cash purchase price of $9.8 million. CDI is a
general contractor that also constructs and remodels stores for the Company. This acquisition was
accounted for under the purchase method and, accordingly, the purchase price has been allocated to
CDI’s assets and liabilities based on their estimated fair values as of the date of purchase
(‘‘consolidation date’’), and CDI’s results of operations have been included in the Company’s results of
operations since the consolidation date. The assets acquired of $92.0 million primarily related to cash
of $14.1 million and accounts receivable of $72.9 million, and the liabilities assumed of $82.2 million
consisted of accounts payable.
3. Business Segments
Before the acquisition of CDI in August 2008, the Company operated in one reportable segment:
the operation of retail department stores. Following the acquisition, the Company operates in two
reportable segments: the operation of retail department stores and a general contracting construction
company.
For the Company’s retail operations reportable segment, the Company determined its operating
segments on a store by store basis. Each stores’ operating performance has been aggregated into one
reportable segment. The Company’s operating segments are aggregated for financial reporting purposes
because they are similar in each of the following areas: economic characteristics, class of consumer,
nature of products and distribution methods. Revenues from external customers are derived from
merchandise sales, and the Company does not rely on any major customers as a source of revenue.
Across all stores, the Company operates one store format under the Dillard’s name where each store
offers the same general mix of merchandise with similar categories and similar customers. The
Company believes that disaggregating its operating segments would not provide meaningful additional
information.
F-14