10-Q 1 dds-20211030.htm 10-Q dds-20211030
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM 10-Q
 
(Mark One)
 
  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended October 30, 2021
 
or
 
        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from                      to                     .
 
Commission File Number:  1-6140

DILLARD’S, INC.
(Exact name of registrant as specified in its charter)
 
DELAWARE 71-0388071
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
 
1600 CANTRELL ROAD, LITTLE ROCK, ARKANSAS  72201
(Address of principal executive offices)
(Zip Code)
 
(501) 376-5200
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common StockDDSNew York Stock Exchange

 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 
ý Yes  ☐ No
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  
ý Yes  ☐ No
 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filerý
Non-accelerated filer   
Smaller reporting companyEmerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 
Yes  ý No
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
 
CLASS A COMMON STOCK as of November 27, 2021     15,447,941
CLASS B COMMON STOCK as of November 27, 2021       3,986,233



Index
 
DILLARD’S, INC.
 
  Page
  Number
 
 
 
 
 
 
 

2

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements.

DILLARD’S, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands)
October 30,
2021
January 30,
2021
October 31,
2020
Assets   
Current assets:   
Cash and cash equivalents$619,721 $360,339 $61,124 
Accounts receivable28,472 36,693 28,406 
Merchandise inventories1,525,860 1,087,763 1,545,264 
Federal and state income taxes99,764 118,439 126,973 
Other current assets102,981 58,706 65,631 
Total current assets2,376,798 1,661,940 1,827,398 
Property and equipment (net of accumulated depreciation and amortization of $2,586,059, $2,466,000 and $2,471,565, respectively)
1,218,840 1,289,302 1,348,799 
Operating lease assets41,189 47,612 40,471 
Deferred income taxes34,809 23,453 14,740 
Other assets68,560 70,208 74,581 
Total assets$3,740,196 $3,092,515 $3,305,989 
Liabilities and stockholders’ equity   
Current liabilities:   
Trade accounts payable and accrued expenses$1,285,786 $758,363 $1,031,806 
Current portion of finance lease liabilities180 695 849 
Current portion of operating lease liabilities11,432 13,819 12,775 
Other short-term borrowings  15,000 
Total current liabilities1,297,398 772,877 1,060,430 
Long-term debt365,982 365,849 365,814 
Finance lease liabilities  180 
Operating lease liabilities29,293 33,392 27,412 
Other liabilities283,323 279,389 271,324 
Subordinated debentures200,000 200,000 200,000 
Commitments and contingencies
Stockholders’ equity:   
Common stock1,240 1,240 1,240 
Additional paid-in capital955,198 954,131 952,522 
Accumulated other comprehensive loss(33,350)(34,935)(29,768)
Retained earnings5,002,074 4,471,269 4,407,532 
Less treasury stock, at cost(4,360,962)(3,950,697)(3,950,697)
Total stockholders’ equity1,564,200 1,441,008 1,380,829 
Total liabilities and stockholders’ equity$3,740,196 $3,092,515 $3,305,989 

See notes to condensed consolidated financial statements.
3

DILLARD’S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In Thousands, Except Per Share Data)
 
 Three Months EndedNine Months Ended
 October 30,
2021
October 31,
2020
October 30,
2021
October 31,
2020
Net sales$1,480,999 $1,024,899 $4,379,920 $2,730,598 
Service charges and other income30,913 27,213 90,959 88,273 
 1,511,912 1,052,112 4,470,879 2,818,871 
Cost of sales796,276 658,684 2,497,575 1,987,000 
Selling, general and administrative expenses393,191 318,218 1,095,673 875,726 
Depreciation and amortization50,188 53,377 146,639 155,229 
Rentals4,947 5,115 15,157 16,304 
Interest and debt expense, net10,550 12,162 32,856 37,305 
Other expense2,134 2,105 9,232 6,313 
(Gain) loss on disposal of assets(4)2,221 (24,686)2,235 
Income (loss) before income taxes 254,630 230 698,433 (261,241)
Income taxes (benefit)57,300 (31,620)157,200 (122,550)
Net income (loss)$197,330 $31,850 $541,233 $(138,691)
Earnings (loss) per share:    
Basic and diluted$9.81 $1.43 $25.76 $(6.05)
 
See notes to condensed consolidated financial statements.
4

DILLARD’S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(In Thousands)
 
 Three Months EndedNine Months Ended
 October 30,
2021
October 31,
2020
October 30,
2021
October 31,
2020
Net income (loss)$197,330 $31,850 $541,233 $(138,691)
Other comprehensive income:    
Amortization of retirement plan and other retiree benefit adjustments (net of tax of $168, $138, $505 and $414, respectively)
528 430 1,585 1,291 
Comprehensive income (loss)$197,858 $32,280 $542,818 $(137,400)

See notes to condensed consolidated financial statements.

5

DILLARD’S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
(In Thousands, Except Share and Per Share Data)
Three Months Ended October 30, 2021
  Accumulated
Other
Comprehensive
Loss
   
 Common StockAdditional
Paid-in
Capital
Retained
Earnings
Treasury
Stock
 
 Total
Balance, July 31, 2021$1,240 $955,198 $(33,878)$4,808,737 $(4,121,718)$1,609,579 
Net income— — — 197,330 — 197,330 
Other comprehensive income— — 528 — — 528 
Purchase of 1,230,705 shares of treasury stock
— — — — (239,244)(239,244)
Cash dividends declared:
     Common stock, $0.20 per share
— — — (3,993)— (3,993)
Balance, October 30, 2021$1,240 $955,198 $(33,350)$5,002,074 $(4,360,962)$1,564,200 

Three Months Ended October 31, 2020
  Accumulated
Other
Comprehensive
Loss
   
 Common StockAdditional
Paid-in
Capital
Retained
Earnings
Treasury
Stock
 
 Total
Balance, August 1, 2020$1,240 $952,522 $(30,198)$4,378,988 $(3,931,238)$1,371,314 
Net income— — — 31,850 — 31,850 
Other comprehensive income— — 430 — — 430 
Purchase of 645,284 shares of treasury stock
— — — — (19,459)(19,459)
Cash dividends declared:
     Common stock, $0.15 per share
— — — (3,306)— (3,306)
Balance, October 31, 2020$1,240 $952,522 $(29,768)$4,407,532 $(3,950,697)$1,380,829 

Nine Months Ended October 30, 2021
  Accumulated
Other
Comprehensive
Loss
   
 Common StockAdditional
Paid-in
Capital
Retained
Earnings
Treasury
Stock
 
 Total
Balance, January 30, 2021$1,240 $954,131 $(34,935)$4,471,269 $(3,950,697)$1,441,008 
Net income— — — 541,233 — 541,233 
Other comprehensive income— — 1,585 — — 1,585 
Issuance of 9,000 shares under equity plans
 1,067 — — — 1,067 
Purchase of 2,590,065 shares of treasury stock
— — — — (410,265)(410,265)
Cash dividends declared:
     Common stock, $0.50 per share
— — — (10,428)— (10,428)
Balance, October 30, 2021$1,240 $955,198 $(33,350)$5,002,074 $(4,360,962)$1,564,200 

6

Nine Months Ended October 31, 2020
  Accumulated
Other
Comprehensive
Loss
   
 Common StockAdditional
Paid-in
Capital
Retained
Earnings
Treasury
Stock
 
 Total
Balance, February 1, 2020$1,239 $951,726 $(31,059)$4,556,494 $(3,855,141)$1,623,259 
Net loss— — — (138,691)— (138,691)
Other comprehensive income— — 1,291 — — 1,291 
Issuance of 32,000 shares under equity plans
1 796 — — — 797 
Purchase of 2,230,877 shares of treasury stock
— — — — (95,556)(95,556)
Cash dividends declared:
     Common stock, $0.45 per share
— — — (10,271)— (10,271)
Balance, October 31, 2020$1,240 $952,522 $(29,768)$4,407,532 $(3,950,697)$1,380,829 

See notes to condensed consolidated financial statements.



7

DILLARD’S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
 
 Nine Months Ended
 October 30,
2021
October 31,
2020
Operating activities:  
Net income (loss)$541,233 $(138,691)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:  
Depreciation and amortization of property and other deferred cost148,319 157,335 
(Gain) loss on disposal of assets(24,686)2,235 
Proceeds from insurance2,902 8,659 
Loss on early extinguishment of debt2,830  
Changes in operating assets and liabilities:  
Decrease in accounts receivable8,221 17,754 
Increase in merchandise inventories(438,097)(80,257)
Increase in other current assets(49,214)(13,680)
(Increase) decrease in other assets(2,492)456 
Increase in trade accounts payable and accrued expenses and other liabilities528,087 145,745 
Increase (decrease) in income taxes 10,980 (162,494)
Net cash provided by (used in) operating activities728,083 (62,938)
Investing activities:  
Purchase of property and equipment and capitalized software(79,748)(52,100)
Proceeds from disposal of assets29,293 1,533 
Proceeds from insurance3,801  
Distribution from joint venture1,475 215 
Net cash used in investing activities(45,179)(50,352)
Financing activities:  
Principal payments on long-term debt and finance lease liabilities(515)(885)
Issuance cost of line of credit(3,008)(3,230)
Increase in short-term borrowings 15,000 
Cash dividends paid(9,734)(10,669)
Purchase of treasury stock(410,265)(102,879)
Net cash used in financing activities(423,522)(102,663)
Increase (decrease) in cash and cash equivalents259,382 (215,953)
Cash and cash equivalents, beginning of period360,339 277,077 
Cash and cash equivalents, end of period$619,721 $61,124 
Non-cash transactions:  
Accrued capital expenditures$7,168 $6,038 
Stock awards1,067 797 
Lease assets obtained in exchange for new operating lease liabilities4,536 4,084 

See notes to condensed consolidated financial statements.
8

DILLARD’S, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) 
Note 1. Basis of Presentation
 
The accompanying unaudited interim condensed consolidated financial statements of Dillard’s, Inc. (the “Company”) have been prepared in accordance with the rules of the Securities and Exchange Commission (“SEC”).  Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for the three and nine months ended October 30, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending January 29, 2022 due to, among other factors, the seasonal nature of the business and the ongoing effect of the COVID-19 pandemic.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2021 filed with the SEC on March 29, 2021.

COVID-19

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic, which continues to impact the United States and global economies. The COVID-19 pandemic has had and may continue to have a significant impact on the Company's business, results of operations and financial position. The Company began closing stores on March 19, 2020 as mandated by state and local governments, and by April 9, 2020, all brick-and-mortar store locations were temporarily closed to the public. Our eCommerce capabilities allowed us to use our closed store locations (with limited staffing) to fill orders from our Internet store.

During the month ended May 30, 2020 (fiscal May), we re-opened most of our full-line stores, and by June 2, 2020 all Dillard's store locations had been re-opened. Following our re-opening, a very small number of our locations were temporarily closed to in-store shopping due to government mandate.

All stores are currently open and are operating at reduced hours from fiscal 2019 operating hours. While the availability of vaccinations has led to re-openings across the country and the easing of restrictions, the continuing financial impact of COVID-19 to fiscal 2021 cannot be reasonably estimated at this time.


Note 2.  Accounting Standards
 
Recently Adopted Accounting Pronouncements

Simplifying the Accounting for Income Taxes

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, as part of its initiative to reduce complexity in accounting standards. The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The amendments within ASU No. 2019-12 are effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, and early adoption is permitted. The adoption of this update did not have a material impact on the Company's consolidated financial statements.

Facilitation of the Effects of Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference the London Inter-Bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. This guidance is optional for a limited period of time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting. More specifically, the amendments in ASU 2020-04 provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. This guidance is effective from March 12, 2020 through
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December 31, 2022. Entities may elect to adopt the amendments for contract modifications as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. The adoption of this update did not have a material impact on the Company's consolidated financial statements.

Recently Issued Accounting Pronouncements

Management believes there is no other accounting guidance issued but not yet effective that would be relevant to the Company's current financial statements.


Note 3.  Business Segments
 
The Company operates in two reportable segments: the operation of retail department stores (“retail operations”) and a general contracting construction company (“construction”).
 
For the Company’s retail operations, 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.
The following table summarizes the percentage of net sales by segment and major product line:
 Three Months EndedNine Months Ended
 October 30,
2021
October 31,
2020
October 30,
2021
October 31,
2020
Retail operations segment  
Cosmetics13 %14 %13 %14 %
Ladies’ apparel22 20 23 21 
Ladies’ accessories and lingerie14 15 15 15 
Juniors’ and children’s apparel11 10 10 10 
Men’s apparel and accessories20 18 19 18 
Shoes16 16 15 15 
Home and furniture3 4 3 4 
 99 97 98 97 
Construction segment1 3 2 3 
Total100 %100 %100 %100 %


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The following tables summarize certain segment information, including the reconciliation of those items to the Company’s consolidated operations: 
(in thousands of dollars)Retail
Operations
ConstructionConsolidated
Three Months Ended October 30, 2021   
Net sales from external customers$1,460,184 $20,815 $1,480,999 
Gross profit 682,317 2,406 684,723 
Depreciation and amortization50,122 66 50,188 
Interest and debt expense (income), net10,557 (7)10,550 
Income before income taxes 254,152 478 254,630 
Total assets3,703,257 36,939 3,740,196 
Three Months Ended October 31, 2020
Net sales from external customers$994,588 $30,311 $1,024,899 
Gross profit364,232 1,983 366,215 
Depreciation and amortization53,290 87 53,377 
Interest and debt expense (income), net12,167 (5)12,162 
(Loss) income before income taxes (232)462 230 
Total assets3,279,241 26,748 3,305,989 
Nine Months Ended October 30, 2021
Net sales from external customers$4,296,316 $83,604 $4,379,920 
Gross profit1,876,558 5,787 1,882,345 
Depreciation and amortization146,441 198 146,639 
Interest and debt expense (income), net32,889 (33)32,856 
Income before income taxes697,140 1,293 698,433 
Total assets3,703,257 36,939 3,740,196 
Nine Months Ended October 31, 2020
Net sales from external customers$2,638,831 $91,767 $2,730,598 
Gross profit737,673 5,925 743,598 
Depreciation and amortization154,806 423 155,229 
Interest and debt expense (income), net37,343 (38)37,305 
(Loss) income before income taxes (262,598)1,357 (261,241)
Total assets3,279,241 26,748 3,305,989 
 
Intersegment construction revenues of $12.0 million and $4.1 million for the three months ended October 30, 2021 and October 31, 2020, respectively, and $28.6 million and $22.3 million for the nine months ended October 30, 2021 and October 31, 2020, respectively, were eliminated during consolidation and have been excluded from net sales for the respective periods.

The retail operations segment gives rise to contract liabilities through the customer loyalty program associated with Dillard's private label cards and through the issuances of gift cards. The loyalty program liability and a portion of the gift card liability is included in trade accounts payable and accrued expenses, and a portion of the gift card liability is included in other liabilities on the condensed consolidated balance sheets. Our retail operations segment contract liabilities are as follows:
Retail
(in thousands of dollars)October 30,
2021
January 30,
2021
October 31,
2020
February 1,
2020
Contract liabilities$59,718 $68,021 $54,684 $75,229 


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During the nine months ended October 30, 2021 and October 31, 2020, the Company recorded $35.4 million and $39.7 million, respectively, in revenue that was previously included in the retail operations contract liability balances of $68.0 million and $75.2 million at January 30, 2021 and February 1, 2020, respectively.
Construction contracts give rise to accounts receivable, contract assets and contract liabilities. We record accounts receivable based on amounts expected to be collected from customers. We also record costs and estimated earnings in excess of billings on uncompleted contracts (contract assets) and billings in excess of costs and estimated earnings on uncompleted contracts (contract liabilities) in other current assets and trade accounts payable and accrued expenses in the condensed consolidated balance sheets, respectively. The amounts included in the condensed consolidated balance sheets are as follows:
Construction
(in thousands of dollars)October 30,
2021
January 30,
2021
October 31,
2020
February 1,
2020
Accounts receivable$18,586 $25,094 $18,689 $28,522 
Costs and estimated earnings in excess of billings on uncompleted contracts2,333 450 781 2,179 
Billings in excess of costs and estimated earnings on uncompleted contracts6,521 4,685 5,808 5,737 
During the nine months ended October 30, 2021 and October 31, 2020, the Company recorded $4.1 million and $4.9 million, respectively, in revenue that was previously included in billings in excess of costs and estimated earnings on uncompleted contracts of $4.7 million and $5.7 million at January 30, 2021 and February 1, 2020, respectively.
The remaining performance obligations related to executed construction contracts totaled $84.2 million, $76.2 million and $97.2 million at October 30, 2021, January 30, 2021 and October 31, 2020, respectively.


Note 4. Earnings (Loss) Per Share Data
 
The following table sets forth the computation of basic and diluted earnings (loss) per share for the periods indicated (in thousands, except per share data). 
 Three Months EndedNine Months Ended
 October 30,
2021
October 31,
2020
October 30,
2021
October 31,
2020
Net income (loss) $197,330 $31,850 $541,233 $(138,691)
Weighted average shares of common stock outstanding20,109 22,264 21,009 22,930 
Basic and diluted earnings (loss) per share$9.81 $1.43 $25.76 $(6.05)
 
The Company maintains a capital structure in which common stock is the only equity security issued and outstanding, and there were no shares of preferred stock, stock options, other dilutive securities or potentially dilutive securities issued or outstanding during the three and nine months ended October 30, 2021 and October 31, 2020.


Note 5.  Commitments and Contingencies
 
Various legal proceedings, in the form of lawsuits and claims, which occur in the normal course of business, are pending against the Company and its subsidiaries.  In the opinion of management, disposition of these matters, individually or in the aggregate, is not expected to have a material adverse effect on the Company’s financial position, cash flows or results of operations.
 
At October 30, 2021, letters of credit totaling $20.1 million were issued under the Company’s revolving credit facility. See Note 7, Revolving Credit Agreement, for additional information.


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Note 6.  Benefit Plans
 
The Company has an unfunded, nonqualified defined benefit plan (“Pension Plan”) for its officers.  The Pension Plan is noncontributory and provides benefits based on years of service and compensation during employment.  The Company determines pension expense using an actuarial cost method to estimate the total benefits ultimately payable to officers and allocates this cost to service periods.  The actuarial assumptions used to calculate pension costs are reviewed annually.  The Company contributed $1.6 million and $4.8 million to the Pension Plan during the three and nine months ended October 30, 2021, respectively, and expects to make additional contributions to the Pension Plan of approximately $1.6 million during the remainder of fiscal 2021.
 
The components of net periodic benefit costs are as follows (in thousands): 
 Three Months EndedNine Months Ended
 October 30,
2021
October 31,
2020
October 30,
2021
October 31,
2020
Components of net periodic benefit costs:    
Service cost$1,067 $1,090 $3,201 $3,270 
Interest cost1,438 1,536 4,312 4,608 
Net actuarial loss696 568 2,090 1,705 
Net periodic benefit costs$3,201 $3,194 $9,603 $9,583 
The service cost component of net periodic benefit costs is included in selling, general and administrative expenses, and the interest cost and net actuarial loss components are included in other expense. 


Note 7.  Revolving Credit Agreement
 
The Company maintained an unsecured credit facility that provided a borrowing capacity of $800 million with a $200 million expansion option ("credit agreement") until the credit agreement was amended in April 2020 (the "2020 amended credit agreement"). After giving effect to the amendment, the 2020 amended credit agreement became secured by certain deposit accounts of the Company and certain inventory of certain subsidiaries.

In April 2021, the Company further amended its secured credit agreement (the "2021 amended credit agreement"). The borrowing capacity remained at $800 million, subject to certain limitations as outlined in the 2021 amended credit agreement, with a $200 million expansion option. The 2021 amended credit agreement is available to the Company for general corporate purposes including, among other uses, working capital financing, the issuance of letters of credit, capital expenditures and, subject to certain restrictions, the repayment of existing indebtedness and share repurchases. The Company pays a variable rate of interest on borrowings under the 2021 amended credit agreement and a commitment fee to the participating banks. The rate of interest on borrowings under the 2021 amended credit agreement is LIBOR plus 1.75% if average quarterly availability is less than 50% of the total commitment, as defined in the 2021 amended credit agreement ("total commitment"), and the rate of interest on borrowings is LIBOR plus 1.50% if average quarterly availability is greater than or equal to 50% of the total commitment. The commitment fee for unused borrowings is 0.30% per annum if average borrowings are less than 35% of the total commitment and 0.25% if average borrowings are greater than or equal to 35% of the total commitment. As long as availability exceeds $80 million and certain events of default have not occurred and are not continuing, there are no financial covenant requirements under the 2021 amended credit agreement. The 2021 amended credit agreement matures on April 28, 2026.

At October 30, 2021, no borrowings were outstanding, and letters of credit totaling $20.1 million were issued under the 2021 amended credit agreement leaving unutilized availability under the credit facility of $779.9 million.


Note 8.  Stock Repurchase Programs
 
In March 2018, the Company's Board of Directors authorized the repurchase of up to $500 million of the Company’s Class A Common Stock under an open-ended stock repurchase plan ("March 2018 Plan"). The March 2018 Plan permitted the Company to repurchase its Class A Common Stock in the open market, pursuant to preset trading plans meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934 or through privately negotiated transactions and had no
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expiration date. During the nine months ended October 30, 2021, the Company completed the authorized purchases under the March 2018 Plan.

In May 2021, the Company's Board of Directors authorized the repurchase of up to $500 million of the Company’s Class A Common Stock under a new open-ended stock repurchase plan ("May 2021 Plan"). The May 2021 Plan permits the Company to repurchase its Class A Common Stock in the open market, pursuant to preset trading plans meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934 or through privately negotiated transactions and has no expiration date. As of October 30, 2021, $262.9 million of authorization remained under the May 2021 Plan.

The following is a summary of share repurchase activity for the periods indicated (in thousands, except per share data):
 Three Months EndedNine Months Ended
 October 30,
2021
October 31,
2020
October 30,
2021
October 31,
2020
Cost of shares repurchased$239,244 $19,459 $410,265 $95,556 
Number of shares repurchased1,231 645 2,590 2,231 
Average price per share$194.40 $30.16 $158.40 $42.83 

All repurchases of the Company’s Class A Common Stock above were made at the market price at the trade date.  All amounts paid to reacquire these shares were allocated to treasury stock.


Note 9.  Income Taxes

During the three and nine months ended October 30, 2021, income tax expense differed from what would be computed using the statutory federal income tax rate primarily due to the effects of state and local income taxes.

The Company was in a net operating loss position for the fiscal year ended January 30, 2021. The Coronavirus Aid, Relief and Economic Security (“CARES”) Act, signed into law on March 27, 2020, allows for net operating loss carryback to years in which the statutory federal income tax rate was 35% rather than the current 21%. During the three and nine months ended October 31, 2020, income tax benefit differed from what would be computed using the current statutory federal income tax rate of 21% primarily due to the recognition of a net tax benefit of $32.4 million and $64.6 million, respectively, related to the rate differential in the carryback year. Income tax benefit for the three and nine months also included the effects of state and local income taxes.


Note 10. Reclassifications from Accumulated Other Comprehensive Loss (“AOCL”)
 
Reclassifications from AOCL are summarized as follows (in thousands): 
 Amount Reclassified from AOCL 
 Three Months EndedNine Months EndedAffected Line Item in the Statement Where Net Income Is Presented
Details about AOCL ComponentsOctober 30,
2021
October 31,
2020
October 30,
2021
October 31,
2020
Defined benefit pension plan items     
Amortization of actuarial losses$696 $568 $2,090 $1,705 Total before tax (1)
 168 138 505 414 Income tax expense
 $528 $430 $1,585 $1,291 Total net of tax
_______________________________
(1)        This item is included in the computation of net periodic pension cost.  See Note 6, Benefit Plans, for additional information. 



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Note 11. Changes in Accumulated Other Comprehensive Loss
 
Changes in AOCL by component (net of tax) are summarized as follows (in thousands): 
 Defined Benefit Pension Plan Items
 Three Months EndedNine Months Ended
October 30,
2021
October 31,
2020
October 30,
2021
October 31,
2020
Beginning balance$33,878 $30,198 $34,935 $31,059 
Amounts reclassified from AOCL(528)(430)(1,585)(1,291)
Ending balance$33,350 $29,768 $33,350 $29,768 
 

Note 12. Leases

The Company leases retail stores, office space and equipment under operating leases. As of October 30, 2021, January 30, 2021 and October 31, 2020, right-of-use operating lease assets, which are recorded in operating lease assets in the condensed consolidated balance sheets, totaled $41.2 million, $47.6 million and $40.5 million, respectively, and operating lease liabilities, which are recorded in current portion of operating lease liabilities and operating lease liabilities, totaled $40.7 million, $47.2 million and $40.2 million, respectively.
In determining our operating lease assets and operating lease liabilities, we apply an incremental borrowing rate to the minimum lease payments within each lease agreement. GAAP requires the use of the rate implicit in the lease whenever that rate is readily determinable; furthermore, if the implicit rate is not readily determinable, a lessee may use its incremental borrowing rate. The incremental borrowing rate is the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. To estimate our specific incremental borrowing rates that align with applicable lease terms, we utilize a model consistent with the credit quality of our outstanding debt instruments.
Renewal options of five or 10 years exist on the majority of leased properties. The Company has sole discretion in exercising the lease renewal options. We do not recognize operating lease assets or operating lease liabilities at lease inception for renewal periods unless we are reasonably certain of exercising the renewal options. The depreciable life of operating lease assets and related leasehold improvements is limited by the expected lease term.
Contingent rentals on certain leases are based on a percentage of annual sales in excess of specified amounts. Other contingent rentals are based entirely on a percentage of sales. The Company's operating lease agreements do not contain any material residual value guarantees or material restrictive covenants.

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The following table summarizes the Company's operating and finance leases:
(in thousands of dollars)Classification - Condensed Consolidated Balance Sheets October 30,
2021
January 30,
2021
October 31,
2020
Assets
Finance lease assets
Property and equipment, net (a)
$62 $247 $353 
Operating lease assetsOperating lease assets41,189 47,612 40,471 
Total leased assets$41,251 $47,859 $40,824 
Liabilities
Current
     Finance Current portion of finance lease liabilities$180 $695 $849 
     Operating Current portion of operating lease liabilities11,432 13,819 12,775 
Noncurrent
     Finance Finance lease liabilities  180 
     Operating Operating lease liabilities29,293 33,392 27,412 
Total lease liabilities$40,905 $47,906 $41,216 
(a) Finance lease assets are recorded net of accumulated amortization of $14.5 million, $14.3 million and $14.2 million as of October 30, 2021, January 30, 2021 and October 31, 2020, respectively.
Lease CostThree Months EndedNine Months Ended
(in thousands of dollars)Classification - Condensed Consolidated Statements of OperationsOctober 30,
2021
October 31,
2020
October 30,
2021
October 31,
2020
Operating lease cost (a)
Rentals$4,947 $5,115 $15,157 $16,304 
Finance lease cost
     Amortization of leased assetsDepreciation and amortization61 106 185 317 
     Interest on lease liabilitiesInterest and debt expense, net5 44 29 186 
Net lease cost$5,013 $5,265 $15,371 $16,807 

(a) Includes short term lease costs of $0.5 million and $0.5 million for the three months and $1.4 million and $1.5 million for the nine months ended October 30, 2021 and October 31, 2020, respectively, and variable lease costs, including contingent rent, of $0.3 million and $0.4 million for the three months and $1.0 million and $1.1 million for the nine months ended October 30, 2021 and October 31, 2020, respectively.

Maturities of Lease Liabilities
(in thousands of dollars)
Fiscal Year
Operating
Leases
Finance
Leases
Total
2021 (excluding the nine months ended October 30, 2021)$3,153 $181 $3,334 
202213,174  13,174 
2023