Dillard's 2012 Annual Report Download - page 64

Notes to Consolidated Financial Statements (Continued)
1. Description of Business and Summary of Significant Accounting Policies (Continued)
$33.8 million and $41.3 million for fiscal years 2012, 2011 and 2010, respectively. The Company records
net advertising expenses in selling, general and administrative expenses.
Income Taxes—Income taxes are recognized for the amount of taxes payable for the current year
and deferred tax assets and liabilities for the future tax consequence of events that have been
recognized differently in the financial statements than for tax purposes. Deferred tax assets and
liabilities are established using statutory tax rates and are adjusted for tax rate changes. Tax positions
are analyzed to determine whether it is ‘‘more likely than not’’ that a tax position will be sustained
upon examination by the appropriate taxing authorities before any part of the benefit can be recorded
in the financial statements. For those tax positions where it is not ‘‘more likely than not’’ that a tax
benefit will be sustained, no tax benefit is recognized. Where applicable, associated interest and
penalties are also recorded.
Shipping and Handling—The Company records shipping and handling reimbursements in service
charges and other income. The Company records shipping and handling costs in cost of sales.
Defined Benefit Retirement Plans—The Company’s defined benefit retirement plan costs are
accounted for using actuarial valuations. The Company recognizes the funded status of its defined
benefit pension plans on the balance sheet and recognizes changes in the funded status that arise
during the period but that are not recognized as components of net periodic benefit cost, within other
comprehensive income, net of income taxes.
Income on (Equity in Losses of) Joint Ventures—Income on (equity in losses of) joint ventures
includes the Company’s portion of the income or loss of the Company’s unconsolidated joint ventures
as well as a distribution of excess cash from one of the Company’s mall joint ventures.
Comprehensive Income—Comprehensive income is defined as the change in equity (net assets) of
a business enterprise during a period from transactions and other events and circumstances from non-
owner sources. It consists of the net income or loss and other gains and losses affecting stockholders’
equity that, under GAAP, are excluded from net income or loss. One such exclusion is the amortization
of retirement plan and other retiree benefit adjustments, which is the only item impacting our
accumulated other comprehensive loss.
Supply Concentration—The Company purchases merchandise from many sources and does not
believe that the Company was dependent on any one supplier during fiscal 2012.
Reclassifications—Certain items have been reclassified from their prior year classifications to
conform to the current year presentation. These reclassifications had no effect on net income or
stockholders’ equity as previously reported.
New Accounting Pronouncements
Fair Value Measurements and Disclosure
In May 2011, the Financial Accounting Standards Board (‘‘FASB’’) issued Accounting Standards
Update (‘‘ASU’’) No. 2011-04, Fair Value Measurement (Topic 820)—Amendments to Achieve Common
Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The amendments in this
update change the wording used to describe the requirements in U.S. GAAP for measuring fair value
and for disclosing information about fair value measurements to ensure consistency between
U.S. GAAP and IFRS. This update was effective for interim and annual periods beginning after
December 15, 2011 and was to be applied prospectively. The adoption of this standard did not have a
significant impact on the Company’s financial statements.
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