Exhibit 99
Dillard's, Inc. Reports Fourth Quarter and Fiscal Year Results
LITTLE ROCK, Ark.--(BUSINESS WIRE)--March 10, 2004--Dillard's,
Inc. (NYSE:DDS) (the "Company" or "Dillard's") today announced
operating results for its fourth quarter ended January 31, 2004. This
release contains certain forward-looking statements. Please refer to
the Company's cautionary statement regarding forward-looking
information included below under "Forward-Looking Information".
Net income for the 13 weeks ended January 31, 2004 was $51.2
million ($0.61 per fully diluted share) compared to a net income of
$72.3 million ($0.85 per fully diluted share) for the 13 weeks ended
February 1, 2003.
Included in net income for the 13 weeks ended January 31, 2004
were after-tax net charges of $11.3 million ($0.13 per fully diluted
share) resulting from after-tax charges totaling $16.8 million ($0.20
per fully diluted share) consisting of asset impairment and store
closing charges, partially offset by an after-tax gain of $5.5 million
($0.07 per fully diluted share) relating to the sale of three store
properties.
Included in net income for the 13 weeks ended February 1, 2003 was
an after-tax net gain of $7.1 million ($0.08 per fully diluted share)
resulting from an after-tax gain of $41.1 million ($0.48 per fully
diluted share) pertaining to the Company's sale of its interest in
FlatIron Crossing, a Broomfield, Colorado shopping center, partially
offset by after-tax charges totaling $34.0 million ($0.40 per fully
diluted share) consisting of asset impairment and store closing
charges.
Highlights of the fourth quarter and fiscal year ended January 31,
2004 include the following.
-- During the 13 weeks ended January 31, 2004, Dillard's achieved
improved gross margin improvement of 20 basis points of sales.
-- The Company effectively reduced advertising, selling,
administrative and general expenses $10.3 million and $66.1
million, respectively, during the 13 and 52-week periods ended
January 31, 2004.
-- The Company further strengthened its balance sheet through
reducing indebtedness during the 52 weeks ended January 31,
2004 by $261.3 million. The Company announced its intention to
redeem its $331.6 million Preferred Securities on February 2,
2004.
-- Dillard's continued expansion of its exclusive brand
merchandise as a means to provide customers with superior
fashion and value choices, while driving differentiation in
the marketplace. Sales penetration of exclusive brand
merchandise increased storewide from 18.2% to 20.9% during the
52 weeks ended January 31, 2004.
Sales
Sales for the 13 weeks ended January 31, 2004 were $2.299 billion
compared to sales for the 13 weeks ended February 1, 2003 of $2.388
billion, a decrease of 4%. Sales in comparable stores for the 13-week
period decreased 4%.
Sales for the 52 weeks ended January 31, 2004 were $7.599 billion
compared to sales for the 52 weeks ended February 1, 2003 of $7.911
billion, a decrease of 4%. Sales in comparable stores for the 52-week
period decreased 4%.
Gross Margin/Merchandise Initiatives
Gross margin performance for the 13 weeks ended January 31, 2004
increased 20 basis points as a percentage of sales. Inventory position
at January 31, 2004 in comparable stores increased 1% compared to
inventory position at February 1, 2003.
Dillard's management reiterates their strong belief that
merchandise differentiation by the Company is crucial to its future
success in the marketplace. Dillard's will continue its strategy of
refining its merchandise mix to feature a greater selection of
exclusive brand merchandise while presenting new and unique
presentations of assortments from national vendor sources, with a
special emphasis on presenting new product in the "better" (more
upscale) categories. The Company will seek to build exclusive
relationships with promising vendors and designers where appropriate.
Penetrations of exclusive brand merchandise as a percent of sales
for the 26-week and 52-week periods ended January 31, 2004 and
February 1, 2003 are as follows:
26 Weeks Ended 52 Weeks Ended
January 31, February 1, January 31, February 1,
2004 2003 2004 2003
----------- ----------- ----------- -----------
In merchandise
categories in which
exclusive brands are
presented 27.4% 23.7% 24.9% 21.6%
Storewide (all
categories) 22.8% 19.8% 20.9% 18.2%
Gross margins of Dillard's exclusive brand merchandise exceeded
gross margins of national brand merchandise during the 26 and 52 weeks
ended January 31, 2004. During those periods, Dillard's achieved
particularly strong exclusive brand gross margin performances (in
comparison to national brand performance) in the Juniors', Shoes and
Home areas.
During the 52 weeks ended January 31, 2004, Dillard's continued
its strategy of expanding its exclusive brand merchandise portfolio,
with the ongoing objective of building Dillard's brands as nationally
recognized and revered destination brands. Each new merchandise line
has been developed specifically to meet the demands of targeted
demographics of discerning Dillard's shoppers.
Dillard's continues its efforts to improve and expand its Internet
website at www.dillards.com not only as a means to offer customers the
convenience of online shopping, but also as an effective way to create
excitement about Dillard's and to drive traffic into the Company's 328
Dillard's locations. During fiscal 2003, Dillard's launched
brand-specific websites to promote recognition and online shopping of
its exclusive Antonio Melani, Gianni Bini and Michelle D merchandise
lines under the names www.antoniomelani.com, www.giannibini.com and
www.michelled.com. Other brand-specific website locations are being
developed for other exclusive brand names and will be launched in
fiscal 2004.
Advertising, Selling, Administrative and General Expenses
Advertising, selling, administrative and general ("SG&A") expenses
declined $10.3 million to $563.3 million for the 13 weeks ended
January 31, 2004 from $573.6 million for the comparable period ended
February 1, 2003. The Company noted improvement in bad debt expense
($15.3 million) related to the Company's proprietary credit card
partially offset by small increases in other expense areas.
Management is pleased with the progress regarding the quality of
its accounts receivable portfolio and with the resulting reduction in
bad debt expense during the 13 weeks ended January 31, 2004. The
Company believes the improvement in the accounts receivable portfolio
resulted primarily from its implementation of certain new initiatives
in credit granting operations.
Debt/Interest Expense
Interest and debt expense declined to $41.0 million during
thirteen weeks ended January 31, 2004 from $46.4 million for the
thirteen weeks ended February 1, 2003. During the thirteen weeks ended
January 31, 2004, the Company retired the remaining $130.0 million
6.13% notes maturing Saturday, November 1, 2003.
At January 31, 2004, the Company had $50.0 million outstanding in
short-term borrowings under its accounts receivable conduit
facilities. Peak borrowings under the Company's accounts receivable
facility during the thirteen weeks ended January 31, 2004 were $381.5
million. Remaining available short-term borrowings under these conduit
facilities at January 31, 2004 were $450.0 million.
In December 2003, the Company amended and extended its senior
secured revolving credit facility. The amendments included an increase
in the amount of the facility from $400 million to $1 billion. In
addition, the facility was extended to a five-year maturity and now
expires in December 2008. There are no financial covenant requirements
under the amended credit facility provided that availability under the
agreement exceeds $100 million. At January 31, 2004, letters of credit
totaling $75.5 million were outstanding under this facility. There was
no funded debt outstanding under the revolving credit agreement at
January 31, 2004.
In December 2003, the Company announced its intention to redeem
its $331.6 million Preferred Securities included in Guaranteed
Preferred Beneficial Interests in the Company's Subordinated
Debentures anticipating that such redemption would occur on February
2, 2004. Accordingly, $331.6 million of Guaranteed Preferred
Beneficial Interests in the Company's Subordinated Debentures is
included in current liabilities on the Company's consolidated balance
sheet at January 31, 2004.
The Company redeemed the $331.6 million Preferred Securities on
February 2, 2004 as planned, with $100 million borrowed under its
amended revolving credit facility and the balance borrowed under the
Company's accounts receivable securitization conduit facilities.
Short-term borrowings under both the credit facility and accounts
receivable securitization conduit facilities were $376.5 million at
February 2, 2004. Subsequently, the Company has paid down
substantially all of these borrowings from cash from operations during
the first quarter of 2004. As of March 9, 2004, total short-term
borrowings under both the revolving credit facility and accounts
receivable conduit facilities were $40.0 million. Dillard's expects to
fund its ongoing cyclical working capital needs through short-term
borrowings from its accounts receivable securitization conduit
facilities.
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 52 weeks ended
February 1, 2003 as a result of adopting SFAS No. 145, the Company has
reclassified a pretax loss of $6.8 million (after tax $4.4 million or
$0.05 per basic and fully diluted share) to interest and debt expense
from extraordinary loss on early extinguishment of debt.
Income - 52 Weeks
Net income for the 52 weeks ended January 31, 2004 was $9.3
million ($0.11 per fully diluted share) compared to a net loss of
$398.4 million ($4.67 per fully diluted share) for the 52 weeks ended
February 1, 2003.
Included in net income for the 52 weeks ended January 31, 2004
were after-tax net charges of $12.9 million ($0.15 per fully diluted
share) resulting from after-tax charges totaling $38.9 million ($0.46
per fully diluted share) partially offset by after-tax gains totaling
$26.0 million ($0.31 per fully diluted share). The charges for the
year consisted of asset impairment and store closing charges and call
premiums related to early debt reduction. The gains for the year
consisted of gains on sale of certain properties, a credit recorded
due to resolution of certain liabilities and a credit received from
the Internal Revenue Service.
Included in net income for the 52 weeks ended February 1, 2003
were after-tax net charges of $1.2 million ($0.02 per fully diluted
share) resulting from after-tax charges totaling $44.3 million ($0.52
per fully diluted share) partially offset by after-tax gains totaling
$43.1 million ($0.50 per fully diluted share). The charges for the
year consisted of asset impairment and store closing charges and call
premiums paid related to early debt reduction and amortization of
accounts receivable securitization gains. The gains consisted of a
gain on sale of a mall property and a distribution received related to
an investee partnership.
The Company adopted Statement of Financial Accounting Standards
No. 142, ("SFAS No. 142") "Goodwill and Other Intangible Assets"
effective February 3, 2002. The application of SFAS No. 142 resulted
in a non-cash goodwill impairment charge of $530.3 million ($6.22 per
fully diluted share) that was reflected as a cumulative effect of a
change in accounting principle for the 52 weeks ended February 1,
2003.
Presented in tabular form below are certain non-routine items
noted above for the 52-week periods ended January 31, 2004 and
February 1, 2003. For expanded discussion of these items, please see
Supplemental Information.
52 Weeks Ended 52 Weeks Ended
January 31, 2004 February 1, 2003
------------------- -------------------
After- Per After- Per
tax in diluted tax in diluted
Charges: millions share millions share
--------- --------- --------- ---------
Impairment charges and store
closing expenses $(28.9) $(0.34) $(33.4) $(0.39)
Call premium paid related to
early debt reduction (10.0) (0.12) (7.4) (0.09)
Amortization of accounts
receivable securitization - - (3.5) (0.04)
--------- --------- --------- ---------
Total Charges $(38.9) $(0.46) $(44.3) $(0.52)
Gains:
Gain on sale of three stores 5.5 0.07 - -
Gain on sale of mall
properties 10.0 0.12 41.1 0.48
Credit recorded due to
resolution of liabilities 7.9 0.09
Credit received from Internal
Revenue Service 2.6 0.03
Investee partnership
distribution received 2.0 0.02
--------- --------- --------- ---------
Total Gains $26.0 $0.31 $43.1 $0.50
--------- --------- --------- ---------
Net Charges ($12.9) $(0.15) $(1.2) $(0.02)
========= ========= ========= =========
Share Repurchase
The Company's board of directors authorized a stock repurchase
program in May of 2000. During the 52 weeks ended January 31, 2004,
the Company repurchased approximately 1.5 million shares of Class A
common stock for $18.9 million. Approximately $56 million in share
repurchase authorization remained under this open-ended plan at
January 31, 2004.
Store Openings/Closings - 2003
During the fourth quarter of 2003, the Company completed the
closure of its Pinellas Parkside location in Pinellas Park, Florida
and its Coliseum Mall location in Hampton, Virginia.
During the 52 weeks ended January 31, 2004, Dillard's opened five
new locations in Olmstead, Ohio; Davenport, Iowa; Richmond, Virginia
(2) and Houston, Texas (replacement store).
During the 52 weeks ended January 31, 2004, the Company closed
nine Dillard's locations. Since announcing its policy in late 2000 to
close under-performing stores as conditions permit, the Company has
closed 36 Dillard's stores.
Store Opening Schedule - 2004
Scheduled store openings for the year ended January 29, 2005:
Open
Dillard's at: City Month Sq. Feet
- ------------------- ----------------------------------------- --------
The Shoppes at East
Chase(a) Montgomery, Alabama March 155,000
Coastal Grand Myrtle Beach, South Carolina March 155,000
Colonial University
Village(a) Auburn, Alabama April 126,000
Greenbrier Mall(a) Chesapeake, Virginia April 160,000
Jordan Creek Town
Center West Des Moines, Iowa August 200,000
Yuma Palms(a) Yuma, Arizona October 98,000
South Park Mall Moline, Illinois October 127,000
Eastern Shore(a) Spanish Fort, Alabama October 126,000
(a) Replacement store
At January 31, 2004, the Company operated 328 stores spanning 29
states - all operating with one name - Dillard's.
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In Millions, Except Per Share Data)
Thirteen-Week Period Ended
------------------------------------
January 31, 2004 February 1, 2003
------------------------------------
% of % of
Net Net
Amount Sales Amount Sales
----------- ------ ---------- ------
(Unaudited) (Unaudited)
Net sales $2,299.0 - $2,387.9 -
Total revenues 2,371.6 103.2% 2,516.3 105.4%
Cost of sales 1,571.7 68.4 1,638.9 68.6
Advertising, selling,
administrative and general
expenses 563.3 24.5 573.6 24.0
Depreciation and amortization 67.9 3.0 70.2 2.9
Rentals 21.4 0.9 23.0 1.0
Interest and debt expense 41.0 1.8 46.4 2.0
Asset impairment and store
closing charges 24.9 1.1 53.1 2.2
----------- ---------
Total costs and expenses 2,290.2 2,405.2
----------- ---------
Income before income taxes 81.4 3.5 111.1 4.7
Income taxes 30.2 38.8
----------- ------ --------- ------
Net Income $51.2 2.2% $72.3 3.0%
=========== ====== ========= ======
Earnings per share:
Basic $0.61 $0.85
=========== =========
Diluted $0.61 $0.85
=========== =========
Weighted average shares:
Basic 83.4 84.7
=========== =========
Diluted 83.7 85.0
=========== =========
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In Millions, Except Per Share Data)
Fifty-Two Week Period Ended
-----------------------------------
January 31, 2004 February 1, 2003
-----------------------------------
% of % of
Net Net
Amount Sales Amount Sales
---------- ------ ------ -------
(Unaudited) (Unaudited)
Net sales $7,598.9 - $7,911.0 -
Total revenues 7,863.7 103.4% 8,233.9 104.1%
Cost of sales 5,170.2 68.0 5,254.1 66.4
Advertising, selling, administrative
and general expenses 2,097.9 27.6 2,164.0 27.3
Depreciation and amortization 290.7 3.8 301.4 3.8
Rentals 64.1 0.8 68.1 0.9
Interest and debt expense 181.1 2.4 189.8 2.4
Asset impairment and store
closing charges 43.7 0.6 52.2 0.7
-------- ---------
Total costs and expenses 7,847.7 8,029.6
-------- ---------
Income before income taxes 16.0 0.2 204.3 2.6
Income taxes 6.7 72.4
-------- ---------
Income before accounting change 9.3 0.1 131.9 1.7
Cumulative effect of accounting
change - - (530.3) (6.7)
-------- ------ --------- ------
Net income (loss) $9.3 0.1% $(398.4) (5.0)%
======== ====== ========= ======
Basic earnings (loss) per share:
Income before accounting
change $0.11 $1.56
Cumulative effect of
accounting change - (6.27)
-------- ---------
Net income (loss) $0.11 $(4.71)
======== =========
Diluted earnings (loss) per share:
Income before accounting change $0.11 $1.55
Cumulative effect of accounting
change - (6.22)
-------- ---------
Net income (loss) $0.11 $(4.67)
======== =========
Weighted average shares:
Basic 83.6 84.5
======== =========
Diluted 83.9 85.3
======== =========
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In Millions)
January 31, February 1,
2004 2003
------------ ------------
Assets (Unaudited)
Current Assets:
Cash and cash equivalents $160.9 $142.4
Accounts receivable (net of allowance for
doubtful accounts of $40.9 and $49.8) 1,191.5 1,338.1
Merchandise inventories 1,632.4 1,594.3
Other current assets 38.9 55.5
------------ ------------
Total current assets 3,023.7 3,130.3
Property and equipment, net 3,197.5 3,370.5
Goodwill 36.7 39.2
Other assets 153.2 136.0
------------ ------------
Total Assets $6,411.1 $6,676.0
============ ============
Liabilities and Stockholders' Equity
Current Liabilities:
Trade accounts payable and accrued
expenses $679.9 $676.0
Other short-term borrowings 50.0 -
Guaranteed preferred beneficial interests
in the Company's subordinated debentures 331.6 -
Current portion of long-term debt and
capital leases 168.3 140.7
Federal and state income taxes 106.5 69.8
------------ ------------
Total current liabilities 1,336.3 886.5
Long-term debt and capital leases 1,872.6 2,211.6
Other liabilities 147.9 137.1
Deferred income taxes 617.2 645.0
Guaranteed preferred beneficial interests in
the Company's subordinated debentures 200.0 531.6
Stockholders' equity 2,237.1 2,264.2
------------ ------------
Total Liabilities and Stockholders'
Equity $6,411.1 $6,676.0
============ ============
Other Financial Information
(In Millions)
(Unaudited)
January 31, February 1,
2004 2003
------------ ------------
Square footage 56.0 56.7
============ ============
Capital expenditures:
13 weeks ended $55.6 $39.8
52 weeks ended 227.4 233.3
Supplemental Information
Sales by Month
Sales performance by month for the fourth quarter and fiscal year
occurred as follows:
Total Comparable
----------- ------------
November -6% -6%
December -5% -4%
January +2% +2%
Quarter 4 -4% -4%
Fiscal 2003 -4% -4%
Sales by Category
During the thirteen weeks ended January 31, 2004, sales in
accessories, shoes, lingerie and cosmetics were strongest and exceeded
the Company's average sales performance for the period. Sales in the
home categories were in line with the average performance. Sales in
women's and juniors and men's categories were slightly below trend.
Sales in the children's area were significantly below trend.
Sales by Region
During the thirteen weeks ended January 31, 2004, sales in the
Western region of the Company were significantly stronger that the
Company's average sales performance for the period. Sales in the
Eastern region were in line with Company trend. Sales in the Central
region of the Company were slightly below trend.
Discussion of Non-Routine Items - 52 Weeks
Following is detailed discussion of items noted in the table
provided under Income - 52 Weeks:
Charges:
During the 52 weeks ended January 31, 2004, the Company recorded
$43.7 million ($28.9 million after tax, or $0.34 per fully diluted
share) for asset impairment and store closing charges related to
certain stores. During the 52 weeks ended February 1, 2003, the
Company recorded pretax asset impairment and store closing charges of
$52.2 million ($33.4 million after tax or $0.39 per fully diluted
share).
Additionally, during the 52 weeks ended January 31, 2004, the
Company recorded a call premium resulting in additional interest
expense of $15.6 million ($10.0 million after tax or $0.12 per fully
diluted share) associated with a $125.9 million call of debt. During
the 52 weeks ended February 1, 2003, the Company recorded a call
premium resulting in additional interest expense of $11.6 million
($7.4 million after tax $0.09 per fully diluted share) associated with
a $143.0 million call of debt.
During the 52 weeks ended February 1, 2003, the Company amortized
the off-balance-sheet accounts receivable securitization and recorded
a charge of $5.4 million ($3.5 million after tax or $0.04 per fully
diluted share).
Gains:
Included in total revenues for the 52 weeks ended January 31, 2004
is an $8.5 million gain ($5.5 million after tax or $0.07 per fully
diluted share) related to the sale of three store properties.
Net income for the 52 weeks ended January 31, 2004 includes 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. Net
income for the 52 weeks ended February 1, 2003 includes a pretax gain
of $64.3 million ($41.1 million after tax or $0.48 per fully diluted
share) pertaining to the Company's sale of its interest in FlatIron
Crossing, a Broomfield, Colorado shopping center.
Net income for the 52 weeks ended January 31, 2004 includes a
pretax gain of $12.3 million ($7.9 million after tax or $0.09 per
fully diluted share) recorded due to the resolution of certain
liabilities originally recorded in conjunction with the purchase of
Mercantile Stores Company, Inc.
Interest and debt expense for the 52 weeks ended January 31, 2004
includes $4.1 million ($2.6 million after tax or $0.03 per fully
diluted share) received from the Internal Revenue Service as a result
of the Company's filing of an interest netting claim related to
previously settled tax years.
During the 52 weeks ended February 1, 2003, an investee
partnership of the Company received an unusual distribution in the
settlement of a receivable. As a result, the Company received a
non-recurring distribution and recognized a gain of $3.1 million ($2.0
million after tax or $0.02 per fully diluted share).
Estimates for 2004
The Company is updating the following estimates for certain income
statement items for the fiscal year ended January 29, 2005 based upon
current conditions. Actual results may differ significantly from these
estimates as conditions and factors change - See "Forward Looking
Information".
In Millions
2004 2003
Estimated Actual
Depreciation and amortization $ 290 $ 291
Rental expense 64 64
Interest and debt expense 155 181
Capital expenditures 240 227
Forward-Looking Information
The foregoing contains certain "forward-looking statements" within
the definition of federal securities laws. Statements made in this
release regarding the Company's merchandise strategies, funding of
cyclical working capital needs, store opening schedule and estimates
of depreciation and amortization, rental expense, interest and debt
expense and capital expenditures for fiscal year 2004 are forward
looking statements. 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 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;
fluctuations in LIBOR and other base borrowing rates; 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.
CONTACT: Dillard's Inc., Little Rock
Julie J. Bull, 501-376-5965