Dillard's 2013 Annual Report Download - page 58

F-12
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 and Equity in Losses of Joint Ventures—Income on and 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 2013.
New Accounting Pronouncements
Presentation of Comprehensive Income
In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other
Comprehensive Income, which requires the Company to report the effect of significant reclassifications out of accumulated
other comprehensive income on the respective line items in net income on the Company’s consolidated statement of
comprehensive income if the amount being reclassified is required under U.S. GAAP to be reclassified in its entirety to net
income. This update does not change the current requirements for reporting net income or other comprehensive income in the
consolidated financial statements of the Company, but does require the Company to provide information about the amounts
reclassified out of accumulated other comprehensive income by component. The provisions in this update were effective
prospectively beginning with the Company’s first quarter of 2013. The adoption of this update affected the format and
presentation of the Company’s consolidated financial statements and the footnotes thereto but did not have any other impact on
the Company’s consolidated financial statements.
Guidance on Financial Statement Presentation of Unrecognized Tax Benefit
In July 2013, the FASB issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating
Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which provides explicit presentation guidelines.
Under this ASU, an unrecognized tax benefit, or portion thereof, should be presented in the financial statements as a reduction
to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward except when specific
conditions are met as outlined in the ASU. When these specific conditions are met, the unrecognized tax benefit should be
presented in the financial statements as a liability and should not be combined with deferred tax assets. This ASU is effective
for fiscal years, and interim periods within those years, beginning after December 15, 2013, and should be applied
prospectively to all unrecognized tax benefits that exist at the effective date. Early adoption is permitted. The Company has
early adopted this update for fiscal 2013. This adoption did not have a material impact on the Company's consolidated
financial statements.