Exhibit 99
Dillard's, Inc. Reports First Quarter Results
LITTLE ROCK, Ark.--(BUSINESS WIRE)--May 20, 2003--Dillard's, Inc.
(NYSE:DDS) (the "Company" or "Dillard's") today announced operating
results for its first quarter ended May 3, 2003. The Company will host
a conference call to discuss these results today at 10:30 a.m.
Eastern. The live call is available to all interested parties on the
Internet at the Investor Relations site at www.dillards.com. Click on
'Investor Relations'. A replay of the call will be available at that
same location beginning at approximately 12:30 p.m. Eastern. An
alternate website is www.shareholder.com/dillards.
Net Income for the 13 weeks ended May 3, 2003 was $24.3 million
($0.29 per fully diluted share) compared to a loss of $472.2 million
($5.56 per fully diluted share) for the thirteen weeks ended May 4,
2002.
First quarter 2003 earnings include a gain of $10.0 million after
tax ($0.12 per fully diluted share) pertaining to the Company's sale
of its interest in Sunrise Mall and its associated center in
Brownsville, Texas and a $7.9 million after tax ($0.09 per fully
diluted share) credit recorded due to the resolution of certain
liabilities originally recorded in conjunction with the purchase of
Mercantile Stores Company, Inc.
Sales
Sales for the 13 weeks ended May 3, 2003 were $1.8 billion
compared to sales for the 13 weeks ended May 4, 2002 of $1.9 billion,
a decrease of 5%. Sales in comparable stores for the 13-week period
decreased 5%. Sales were pressured during the quarter by continuing
weakness in the overall retail sales environment.
Income
Income before accounting change for the 13 weeks ended May 3, 2003
was $24.3 million ($0.29 per fully diluted share) compared to $58.1
million ($0.68 per fully diluted share) for the 13 weeks ended May 4,
2002.
Included in total revenues for the 13 weeks ended May 3, 2003 is a
pretax gain of $15.6 million ($10.0 million after tax or $0.12 per
fully diluted share) pertaining to the Company's sale of its interest
in Sunrise Mall and its associated center in Brownsville, Texas. As
previously announced, Dillard's sold its interest in the property for
$80.7 million including the assumption of $40.0 million of long-term
debt during the first quarter of 2003.
The Company adopted Statement of Financial Accounting Standards
No. 142, ("SFAS No. 142") "Goodwill and Other Intangible Assets"
effective February 3, 2002. SFAS No. 142 states that goodwill and
intangible assets deemed to have indefinite lives are no longer
subject to amortization but are to be tested for impairment at least
annually. As required by the SFAS No. 142, the Company tested its
goodwill for impairment using the two-step process. This testing
resulted in a non-cash goodwill impairment charge of $530.3 million
($6.24 per fully diluted share) that was reflected as a cumulative
effect of a change in accounting principle at February 3, 2002.
Gross Margin/Inventory
Gross Margin for the 13 weeks ended May 3, 2003 declined 265 basis
points of sales. Management attributes the decline to significantly
higher markdown levels during the quarter as the Company worked to
control inventory levels in a challenging retail environment marked by
weak consumer demand.
Inventory at May 3, 2003 increased 5% compared to May 4, 2002.
This follows an 11% inventory decline at May 4, 2002 compared to May
5, 2001.
Advertising, Selling, Administrative and General Expenses
Advertising, selling, administrative and general ("SG&A") expenses
were $509.7 million for the 13 weeks ended May 3, 2003 and $519.7
million for the comparable period ended May 4, 2002. SG&A expenses for
the 13 weeks ended May 3, 2003 include a $12.3 million pretax credit
recorded due to the resolution of certain liabilities originally
recorded in conjunction with the purchase of Mercantile Stores
Company, Inc. In addition, savings in payroll expense was offset by
increases in other expense areas including a $6.7 million increase in
bad debt expense.
Debt/Interest Expense
As a result of Dillard's continued focus on decreasing debt levels
and lower variable interest rates on the Company's receivable conduit,
interest and debt expense for the 13 weeks ended May 3, 2003 declined
to $43.4 million from $44.8 million for the 13 weeks ended May 4,
2002.
During the 13 weeks ended May 3, 2003 and May 4, 2002, the Company
repurchased $6.0 million and $6.1 million, respectively, of its
outstanding unsecured notes prior to their maturity dates. The Company
has adopted SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and
64, Amendment of FASB Statement No. 13, and Technical Corrections"
("SFAS No. 145"). SFAS No. 145 rescinds SFAS No. 4 and 64, which
required gains and losses from extinguishments of debt to be
classified as extraordinary items. For the 13 weeks ended May 4, 2002,
as a result of adopting SFAS No. 145, the Company has reclassified
$544,000 (after-tax $348,000 or $0.00 per fully diluted share) to
interest and debt expense from extraordinary gain. No gain or loss
resulted from the repurchase of $6.0 million unsecured notes during
the 13 weeks ended May 3, 2003.
The Company utilizes securitizations of its credit card receivable
portfolio as a financing vehicle. The Company has historically
accounted for these transactions as off-balance-sheet financing.
However, in early May 2002, the Company amended its conduit financing
agreement in a manner that prevented future transfers of accounts
receivable from qualifying as a sale and thus receiving
off-balance-sheet treatment. As a result of this decision, the Company
records all financing through this facility on the balance sheet at
May 3, 2003 of which $400 million is classified in long-term debt. At
May 4, 2002, the Company had $400 million of off-balance-sheet
financing associated with its securitizations. The Company has
reclassified $1.4 million related to its receivable financing from
other revenue to interest expense for the 13 weeks ended May 4, 2002.
Share Repurchase
During the 13 weeks ended May 3, 2003, Dillard's repurchased $15.3
million, or approximately 1.2 million shares, of its Class A Common
Stock under the existing $200 million share repurchase program. The
program was authorized by the Company's board of directors in May of
2000. Approximately $60.0 million in share repurchase authorization
remained under this open-ended plan at May 3, 2003. At May 3, 2003,
the Company had 83.6 million shares of its Class A Common Stock and
Class B shares outstanding.
Store Openings/Closings - 2003
During the 13 weeks ended May 3, 2003, Dillard's opened its new
location at Great Northern Mall in North Olmstead, Ohio, near
Cleveland. The store measures 220,000 square feet.
During the first quarter of 2003, the Company completed the
closures of three stores under its existing plan to close
under-performing locations as conditions permit. These stores were
Springdale Mall in Mobile, Alabama; Randall Park Mall in North
Randall, Ohio; and Richland Fashion Mall in Columbia, South Carolina.
Scheduled store openings for the remainder of the year ended
January 31, 2004 are as follows:
Open
Dillard's at: City Month Sq. Feet
- -------------------------- --------------------- ----------- --------
NorthPark Mall Davenport, Iowa July 126,000
Stony Point Fashion Park Richmond, Virginia September 200,000
Short Pump Town Center Richmond, Virginia September 200,000
Memorial City Mall(a) Houston, Texas October 250,000
(a) Replacement store
At May 3, 2003, the Company operated 331 stores spanning 29 states
- - all operating under one name - Dillard's.
Supplemental Information
Additional information regarding sales for the quarter is
provided:
Sales by Month
Sales performance by month for the first quarter occurred as
follows:
Total Comparable
----------------------------
February 2% 3%
March -13% -12%
April -2% -2%
Quarter 1 -5% -5%
Sales by Category
Sales performance was strongest in accessories, shoes and lingerie
during the first quarter of 2003. Sales in accessories, shoes and
lingerie were well above the Company average sales trend for the
period. Sales in children's and cosmetics were slightly above the
average trend, while sales in women's and juniors and home were
slightly below trend. Sales in the men's area were below average.
Sales by Region
During the first quarter of 2003, sales in the western region were
well above the average sales trend for the Company. Sales in the
central region were in line with average performance while sales in
the east were slightly below trend.
Estimates for 2003
The Company is updating the following estimates for certain income
statement items for the fiscal year ended January 31, 2004 based upon
current conditions. Actual results may differ significantly from these
estimates as conditions and factors change - See "Forward Looking
Information".
In Millions
-----------
2003 2002
Estimated Actual
------------------------
Depreciation and amortization $ 295 $ 301
Rental expense 65 68
Interest and debt expense 170 183
Capital expenditures 250 233
Forward-Looking Information
The Estimates for 2003 included in this release include certain
"forward-looking statements" within the definition of federal
securities laws. The Company cautions that forward-looking statements,
as such term is defined in the Private Securities Litigation Reform
Act of 1995, contained in this report or made by management in the
conference call pertaining to this report are based on estimates,
projections, beliefs and assumptions of management at the time of such
statements and are not guarantees of future performance. The Company
disclaims any obligation to update or revise any forward-looking
statements based on the occurrence of future events, the receipt of
new information, or otherwise. Forward-looking statements of the
Company involve risks and uncertainties and are subject to change
based on various important factors. Actual future performance,
outcomes and results may differ materially from those expressed in
forward-looking statements made by the Company and its management as a
result of a number of risks, uncertainties and assumptions.
Representative examples of those factors (without limitation) include
general retail industry conditions and macro-economic conditions;
economic and weather conditions for regions in which the Company's
stores are located and the effect of these factors on the buying
patterns of the Company's customers; the impact of competitive
pressures in the department store industry and other retail channels
including specialty, off-price, discount, internet, and mail-order
retailers; trends in personal bankruptcies and charge-off trends in
the credit card receivables portfolio; changes in consumer spending
patterns and debt levels; adequate and stable availability of
materials and production facilities from which the Company sources its
merchandise; changes in operating expenses, including employee wages,
commission structures and related benefits; possible future
acquisitions of store properties from other department store operators
and the continued availability of financing in amounts and at the
terms necessary to support the Company's future business; potential
disruption from terrorist activity and the effect on ongoing consumer
confidence; potential disruption of international trade and supply
chain efficiencies; world conflict and the possible impact on consumer
spending patterns and other economic and demographic changes of
similar or dissimilar nature.
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Amounts in Millions, Except Per Share Data)
Thirteen-Week Period Ended
----------------------------------
May 3, 2003 May 4, 2002
----------------------------------
% of % of
Net Net
Amount Sales Amount Sales
--------- ------ --------- ------
(Unaudited) (Unaudited)
Net sales $1,813.9 - $1,910.9 -
Total revenues 1,891.3 104.3% 1,974.3 103.3%
Cost of sales 1,212.0 66.8 1,226.4 64.2
Advertising, selling,
administrative and general
expenses 509.7 28.1 519.7 27.2
Depreciation and amortization 74.0 4.1 77.4 4.1
Rentals 14.2 0.8 15.2 0.8
Interest and debt expense 43.4 2.4 44.8 2.3
--------- ---------
Total costs and expenses 1,853.3 1,883.5
--------- ---------
Income before income taxes 38.0 2.1 90.8 4.7
Income taxes 13.7 32.7
--------- ---------
Income before accounting change 24.3 1.3 58.1 3.0
Cumulative effect of accounting
change - - (530.3) (27.7)
--------- ------ --------- -------
Net income (loss) $ 24.3 1.3% $ (472.2) (24.7)%
========= ====== ========= =======
Basic earnings per share:
Income before accounting change $ 0.29 $ 0.69
Cumulative effect of accounting
change (6.30)
--------- ---------
Net income (loss) $ 0.29 $ (5.61)
========= =========
Diluted earnings per share:
Income before accounting change $ 0.29 $ 0.68
Cumulative effect of accounting
change (6.24)
--------- ---------
Net income (loss) $ 0.29 $ (5.56)
========= =========
Weighted average shares:
Basic 84.5 84.1
========= =========
Diluted 84.7 85.0
========= =========
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Amounts in Millions, Except Per Share Data)
Fifty-Two Week Period Ended
----------------------------------
May 3, 2003 May 4, 2002
----------------------------------
% of % of
Net Net
Amount Sales Amount Sales
--------- ------ --------- ------
(Unaudited) (Unaudited)
Net sales $7,814.0 - $8,145.5 -
Total revenues 8,151.0 104.3% 8,393.4 103.0%
Cost of sales 5,239.7 67.0 5,481.1 67.3
Advertising, selling,
administrative and general
expenses 2,154.0 27.6 2,169.6 26.6
Depreciation and amortization 298.1 3.8 310.9 3.8
Rentals 67.0 0.9 72.2 0.9
Interest and debt expense 188.5 2.4 190.9 2.4
Asset impairment and store
closing charges 52.2 0.7 3.7 -
-------- --------
Total costs and expenses 7,999.5 8,228.4
-------- --------
Income before income taxes 151.5 1.9 165.0 2.0
Income taxes 53.3 64.1
-------- --------
Income before accounting change 98.2 1.3 100.9 1.2
Cumulative effect of accounting
change - - (530.3) (6.5)
-------- ----- -------- ------
Net income (loss) $ 98.2 1.3% $ (429.4) (5.3)%
======== ===== ======== ======
Basic earnings per share:
Income before accounting change $ 1.16 $ 1.20
Cumulative effect of accounting
change - (6.32)
-------- --------
Net income (loss) $ 1.16 $ (5.12)
======== ========
Diluted earnings per share:
Income before accounting change $ 1.15 $ 1.20
Cumulative effect of accounting
change - (6.29)
-------- --------
Net income (loss) $ 1.15 $ (5.09)
======== ========
Weighted average shares:
Basic 84.6 83.8
======== ========
Diluted 85.2 84.4
======== ========
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Amounts in Millions)
May 3, May 4,
2003 2002
---------- --------
Assets (Unaudited)
Current Assets:
Cash and cash equivalents $ 248.2 $ 327.1
Trade accounts receivable 1,211.1 890.1
Merchandise inventories 2,005.5 1,903.2
Other current assets 37.4 23.9
--------- ---------
Total current assets 3,502.2 3,144.3
Property and equipment, net 3,287.0 3,428.5
Goodwill 39.2 39.2
Other assets 159.3 228.6
--------- ---------
Total Assets $6,987.7 $6,840.6
========= =========
Liabilities and Stockholders' Equity
Current Liabilities:
Trade accounts payable and accrued expenses $1,040.7 $1,012.6
Current portion of long-term debt and capital
leases 138.9 101.7
Federal and state income taxes 40.0 22.9
--------- ---------
Total current liabilities 1,219.6 1,137.2
Long-term debt and capital leases 2,164.2 2,175.3
Other liabilities 128.8 153.1
Deferred income taxes 673.6 647.7
Guaranteed preferred beneficial interests in the
Company's subordinated debentures 531.6 531.6
Stockholders' equity 2,269.9 2,195.7
--------- ---------
Total Liabilities and Stockholders' Equity $6,987.7 $6,840.6
========= =========
Other Financial Information
(Amounts in Millions)
(Unaudited)
May 3, May 4,
2003 2002
---------- --------
Square footage 56.2 56.9
========== ========
Capital expenditures:
13 weeks ended $ 41.5 $ 50.1
52 weeks ended 224.6 263.5
CONTACT: Dillard's Inc., Little Rock
Julie J. Bull, 501/376-5965
www.dillards.com