Dillard's 2015 Annual Report Download - page 55

F-13
Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements
In August 2015, the FASB issued ASU No. 2015-15, Interest-Imputation of Interest (Subtopic 835-30): Presentation and
Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, to provide authoritative
guidance related to line-of-credit arrangements, which were not addressed in ASU No. 2015-03. An entity may defer and
present debt issuance costs related to line-of-credit arrangements as an asset. Subsequently, the debt issuance costs may be
amortized as interest expense ratably over the term of the line-of-credit arrangement, regardless of whether there are any
outstanding borrowings on the line-of-credit arrangement. This update will be effective for the Company beginning in the first
quarter of fiscal 2016. The adoption of this guidance is not expected to have a significant impact on the Company's
consolidated financial statements.
Simplifying the Measurement of Inventory
In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, to
simplify the measurement of inventory using the first-in, first out (FIFO) or average cost methods. Under this amendment,
inventory under the FIFO or average cost methods should be measured at the lower of cost and net realizable value. Net
realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of
completion, disposal and transportation. This update will be effective for the Company beginning in the first quarter of fiscal
2017. Approximately 96% of the Company's merchandise inventories are valued using the retail inventory method, which is
outside the scope of ASU No. 2015-11. The remaining 4% of the Company's merchandise inventories are valued at the lower of
cost or market using the average cost or specific identified cost methods, and the Company is evaluating the effect of this
update on these inventory values. The adoption of this guidance is not expected to have a significant impact on the Company's
consolidated financial statements.
Balance Sheet Classification of Deferred Taxes
In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred
Taxes, to simplify the presentation of deferred taxes in the balance sheet. Under this amendment, entities will no longer be required
to separate deferred income tax liabilities and assets into current and noncurrent amounts in the balance sheet. Rather, the amendment
requires deferred tax liabilities and assets be classified as noncurrent in the balance sheet. The amendments in this update are
effective for financial statements issued for annual periods beginning after December 15, 2016, and early adoption is permitted
as of the beginning of an interim or annual reporting period. The Company elected to adopt the accounting standard in the beginning
of the fourth quarter of fiscal 2015. Prior periods in our consolidated financial statements were retrospectively adjusted (refer to
Note 6).
Leases: Amendments to the FASB Accounting Standards Codification
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842): Amendments to the FASB Accounting Standards
Codification, to increase transparency and comparability among organizations by recognizing lease assets and liabilities on the
balance sheet and disclosing key information about leasing arrangements. Under these amendments, lessees are required to
recognize lease assets and lease liabilities for leases classified as operating leases under ASC 840. ASU No. 2016-02 is effective
for financial statements issued for fiscal years beginning after December 15, 2018, and early adoption is permitted. The Company
is currently assessing the impact of this update on its consolidated financial statements.
2. Business Segments
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 store's 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.