UNITED STATES
SECURITIES AND
EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
FORM 11-K
FOR ANNUAL REPORTS
OF EMPLOYEE STOCK PURCHASE,
SAVINGS AND SIMILAR
PLANS PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE
ACT OF 1934
x
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For
the fiscal year ended December 31, 2022
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For
the period from ________________ to ____________________.
Commission
file number 01-06140
A.
Full title of the plan and the address of the plan, if different from that of the
issuer named below:
Dillard’s, Inc.
Investment & Employee Stock Ownership Plan
B.
Name of issuer of the securities held pursuant to the plan and the address of its
principal executive office:
Dillard’s, Inc.
1600
Cantrell Road
Little
Rock, Arkansas 72201
REQUIRED INFORMATION
| 1. | An audited Statement of Net Assets Available for Benefits as of December 31, 2022 and December 31, 2021 for the Dillard’s, Inc.
Investment & Employee Stock Ownership Plan, prepared in accordance with the financial reporting requirements of ERISA is attached. |
| 2. | An audited Statement of Changes in Net Assets Available for Benefits for the year ended December 31, 2022 for the Dillard’s, Inc.
Investment & Employee Stock Ownership Plan, prepared in accordance with the financial reporting requirements of ERISA is attached. |
Exhibits
SIGNATURES
The
Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the
employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
Dillard’s, Inc. Investment &
Employee Stock Ownership Plan
| Date: September 7, 2023 |
/s/ Phillip R. Watts |
| |
Phillip R. Watts |
| |
Secretary, Administrative Committee |
DILLARD’S, INC. INVESTMENT &
EMPLOYEE
STOCK OWNERSHIP PLAN
Little Rock, Arkansas
FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULE
December 31, 2022 and 2021
DILLARD’S, INC. INVESTMENT &
EMPLOYEE STOCK OWNERSHIP PLAN
Little Rock, Arkansas
FINANCIAL STATEMENTS
AND SUPPLEMENTAL
SCHEDULE
December 31, 2022 and 2021
CONTENTS
Report of Independent Registered Public Accounting Firm
Plan Administrator
Dillard’s, Inc. Investment & Employee Stock Ownership Plan
Little Rock, AR 72201
Opinion on the Financial Statements
We have audited the accompanying statements
of net assets available for benefits of the Dillard’s, Inc. Investment & Employee Stock Ownership Plan (the “Plan”)
as of December 31, 2022 and 2021, the related statement of changes in net assets available for benefits for the year ended December 31,
2022, and the related notes (collectively, the “financial statements”). In our opinion, the financial statements present fairly,
in all material respects, the net assets available for benefits of the Plan as of December 31, 2022 and 2021, and the changes in net assets
available for benefits for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United
States of America.
Basis for Opinion
These financial statements are the responsibility
of the Plan’s management. Our responsibility is to express an opinion on the Plan’s financial statements based on our audits.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and
are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance
with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement, whether due to error or fraud. The Plan is not required to have, nor were
we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Plan’s
internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures
to assess the risk of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by the Plan’s management,
as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for
our opinion.
Supplemental Information
The supplemental information in the accompanying
schedule H, Part IV, Line 4i – Schedule of Assets (Held at end of year) as of December 31, 2022, has been subjected to audit procedures
performed in conjunction with the audit of the Plan’s financial statements. The supplemental information is presented for the purpose
of additional analysis and is not a required part of the financial statements but included supplemental information required by the Department
of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental
information is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental information
reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test
the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental
information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department
of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our
opinion, the supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole.
We have served as the Plan’s auditor since 2020
Atlanta, Georgia
September 7, 2023
| DILLARD’S, INC. INVESTMENT & EMPLOYEE STOCK OWNERSHIP PLAN |
| STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS |
| DECEMBER 31, 2022 AND 2021 |
| |
| | |
2022 | | |
2021 | |
| ASSETS | |
| | |
| |
| | |
| | |
| |
| Investments, at fair value: | |
| | | |
| | |
| Dillard’s, Inc. common stock | |
$ | 1,669,165,430 | | |
$ | 1,392,580,174 | |
| Mutual funds | |
| 307,952,094 | | |
| 381,901,010 | |
| Collective trust funds | |
| 385,424,459 | | |
| 428,352,027 | |
| Total investments | |
| 2,362,541,983 | | |
| 2,202,833,211 | |
| | |
| | | |
| | |
| Non-interest bearing cash | |
| 5,864 | | |
| - | |
| | |
| | | |
| | |
| Receivables: | |
| | | |
| | |
| Employer contributions | |
| 22,787 | | |
| 28,697 | |
| Participant contributions | |
| 43 | | |
| 192 | |
| Accrued interest & dividends | |
| 78,865,365 | | |
| 1,137,783 | |
| Notes receivable from participants | |
| 7,366,233 | | |
| 7,293,648 | |
| Total receivables | |
| 86,254,428 | | |
| 8,460,320 | |
| | |
| | | |
| | |
| Total assets | |
| 2,448,802,275 | | |
| 2,211,293,531 | |
| | |
| | | |
| | |
| LIABILITIES | |
| | | |
| | |
| | |
| | | |
| | |
| Administrative expenses payable | |
| 144,029 | | |
| 7,388 | |
| Other liabilities | |
| - | | |
| 17,266 | |
| Total liabilities | |
| 144,029 | | |
| 24,654 | |
| | |
| | | |
| | |
| NET ASSETS AVAILABLE FOR BENEFITS | |
$ | 2,448,658,246 | | |
$ | 2,211,268,877 | |
The accompanying notes are an integral part of these financial statements.
| DILLARD’S, INC. INVESTMENT & EMPLOYEE STOCK OWNERSHIP PLAN |
| STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS |
| FOR THE YEAR ENDED DECEMBER 31, 2022 |
| |
| ADDITIONS: | |
| |
| | |
| |
| Investment Income: | |
| | |
| Net appreciation in fair value of investments | |
$ | 292,253,082 | |
| Dividends | |
| 96,332,234 | |
| Other | |
| 925,451 | |
| Total investment income | |
| 389,510,767 | |
| | |
| | |
| Interest income on notes receivable from participants | |
| 360,815 | |
| | |
| | |
| Contributions: | |
| | |
| Participant | |
| 48,077,592 | |
| Employer | |
| 19,288,197 | |
| Total contributions | |
| 67,365,789 | |
| | |
| | |
| Total additions | |
| 457,237,371 | |
| | |
| | |
| DEDUCTIONS: | |
| | |
| | |
| | |
| Distributions to participants | |
| 218,332,079 | |
| Administrative expenses | |
| 1,515,923 | |
| Total deductions | |
| 219,848,002 | |
| | |
| | |
| NET INCREASE IN NET ASSETS AVAILABLE FOR BENEFITS | |
| 237,389,369 | |
| | |
| | |
| NET ASSETS AVAILABLE FOR BENEFITS, BEGINNING OF YEAR | |
| 2,211,268,877 | |
| | |
| | |
| NET ASSETS AVAILABLE FOR BENEFITS, END OF YEAR | |
$ | 2,448,658,246 | |
The accompanying
notes are an integral part of these financial statements.
DILLARD’S, INC. INVESTMENT & EMPLOYEE STOCK
OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
NOTE 1 - DESCRIPTION OF PLAN
The following description of the Dillard’s, Inc.
Investment & Employee Stock Ownership Plan (the “Plan”) provides only general information. For a more complete description
of the Plan’s provisions, participants should refer to the Plan document, which is available from the Plan Administrator.
General: The Plan is a defined contribution
plan covering eligible employees of Dillard’s, Inc. and participating subsidiaries (collectively, the “Company”
or “Plan Sponsor”). The Plan was established under Section 401(a) of the Internal Revenue Code and is subject to
the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).
Newport Trust Company is the trustee for the Dillard’s
Stock Fund. As trustee for the Dillard’s Stock Fund, Newport Trust Company has the exclusive fiduciary authority and responsibility
for deciding whether the Dillard’s Stock Fund should remain as an investment option under the Plan. Newport Trust Company has the
authority to restrict investment in the Dillard’s Stock Fund, or to sell or otherwise dispose of all or any portion of Company common
stock held in the Dillard’s Stock Fund (subject to any practical or legal restrictions). In the event of a sale or other disposition,
Newport Trust Company would designate an alternate investment fund under the Plan for the temporary investment of any proceeds. Newport
Trust Company has no responsibility for any investment fund under the Plan other than the Dillard’s Stock Fund.
Principal Financial Group (“Principal”)
acquired the Wells Fargo Institutional Retirement & Trust (“IRT”) business on July 1, 2019. Effective June 21,
2021, the integration of IRT into Principal was complete and Principal replaced Wells Fargo Bank, N.A. as Plan recordkeeper and trustee
for all investment funds other than the Dillard’s Stock Fund. As a result of this change, there was a brief blackout period in which
Plan participants and beneficiaries temporarily were unable to (1) direct or diversify investments in their individual accounts or
(2) obtain a loan, withdrawal, or distribution from the Plan. This transition period began on June 16, 2021 and ended June 21,
2021. Notice of this transition period met the requirements of ERISA Section 101(i)(1).
The Plan allows participants to diversify all
or a portion of the Dillard’s Stock Fund allocated to the participants’ accounts at any time. The accounts intended to constitute
an employee stock ownership plan (“ESOP”) as described in Section 4975 of the Internal Revenue Code include the portion
of any accounts that are invested in the Dillard’s Stock Fund.
The Plan includes a qualified automatic contribution
arrangement, vesting of Company match contributions made after January 1, 2008 under a two year “cliff vesting” schedule,
and a Company match formula. Under this formula, participants who are eligible for Company matching contributions will receive a matching
contribution equal to 100% on the first 1% of a participant’s eligible earnings contributed to the Plan and 50% on the next 5% of
a participant’s eligible earnings contributed to the Plan, for a maximum Company matching contribution of 3 1/2 %. Participants
may contribute up to 75% (in increments of one percentage point) of their eligible earnings, not to exceed statutory maximums.
Contributions: Plan contributions include
the following:
Basic Salary Deferral Contributions: An
employee is eligible to make Basic Salary Deferral Contributions and receive Company matching contributions no later than the first business
day of the second calendar week next following the calendar week that he or she has both attained age 21 and completed one year of service
for eligibility. The initial one-year eligibility period begins on the date of hire and ends on the first anniversary of that date. Subsequent
one-year eligibility periods are the same as the Plan year (i.e. calendar year) and begin with the start of the next Plan year beginning
after the date of hire. The one year of service for eligibility is completed when the employee has worked at least 1,000 hours during
such period. Participants may elect to make Basic Salary Deferral Contributions, which are salary deferral contributions that participants
invest in the Dillard’s Stock Fund of up to 6% of participants’ eligible earnings. Company matching contributions are also
invested in the Dillard’s Stock Fund.
DILLARD’S, INC. INVESTMENT & EMPLOYEE STOCK
OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
NOTE 1 - DESCRIPTION OF PLAN (Continued)
If an employee does not make an election
regarding participation in the Plan, then after the employee has attained age 21 or older with at least 1,000 hours of service
within twelve months or any calendar year thereafter, the employee will be automatically enrolled into the Plan with a 3% Basic
Salary Deferral Contribution rate which will be in effect until the last day of the Plan year following the Plan year in which the
employee was first automatically enrolled. If the participant does not make an election otherwise, their contribution rate will be
increased by 1% for each of the next three following Plan years to achieve a maximum rate of 6%.
Voluntary Salary Deferral Contributions: Participants
may elect to make Voluntary Salary Deferral Contributions, which are salary deferral contributions that participants make until they have
met the eligibility requirements for Basic Salary Deferral Contributions. Once a participant has met the eligibility requirements for
Basic Salary Deferral Contributions, their Voluntary Salary Deferral Contributions are any deferral contributions in excess of 6% of their
eligible earnings. Voluntary Deferral Contributions are invested in various investment options as directed by the participant. The Company
does not match Voluntary Salary Deferral Contributions. Eligible employees may make Voluntary Salary Deferral Contributions as soon as
administratively feasible without meeting any age or service requirements. If participants do not make an investment direction for their
Voluntary Salary Deferral Contributions, the funds will be invested into the Conservative to Moderate Model Portfolio (see Investment
Options below).
Basic After-Tax and Voluntary After-Tax Contributions:
If Voluntary Salary Deferral Contributions and/or Basic Salary Deferral Contributions exceed the maximum pre-tax contributions statutory
dollar limit, then Voluntary and Basic contributions will continue for the rest of the Plan year on an after-tax basis as Voluntary and
Basic After-Tax Contributions for non-highly compensated employees only. If Basic Salary Deferral Contributions are being made, participants
will continue to receive matching contributions on their Basic After-Tax Contributions for non-highly compensated employees only.
Rollover Contributions: Eligible employees
may make Rollover Contributions to the Plan of funds distributed to them from another qualified retirement plan or from an IRA.
Investment Options: Participants may diversify
both their Basic Pre-Tax and Basic After-Tax contributions and Company matching contributions and may direct the investment of both Voluntary
Pre-Tax and Voluntary After-Tax contributions and Rollover contributions into a variety of investments offered under the Plan.
The Investment Committee of the Plan utilizes
an investment advisor, The Newport Group, Inc. (“The Newport Group”) to serve as the independent investment advisor for
the Plan.
Effective September 3, 2021, the Harbor Capital
Appreciation CIT Class 4 replaced the Harbor Capital Appreciation Inst Fund. There was no blackout period related to this change.
Effective June 15, 2022, the JP Morgan Mid
Cap Equity R6 Fund replaced the JP Morgan Mid Cap Value L Fund and the Hartford Midcap R5 Fund. There was no blackout period related to
this change.
Participant Accounts: Each participant’s
account is credited with the participant’s contributions and with an allocation of the Company’s contribution, if eligible,
and Plan earnings or losses, and is charged with his or her withdrawals and an allocation of administrative expenses. Allocations are
based on participant earnings, account balances, or allocated pro rata per number of participant accounts depending on the type of income
or expense. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested portion
of their accounts.
DILLARD’S, INC. INVESTMENT & EMPLOYEE STOCK
OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
NOTE 1 - DESCRIPTION OF PLAN (Continued)
Vesting: Participants are immediately vested
in their Basic Pre-Tax Accounts, Basic After-Tax Accounts, Voluntary Pre-Tax Accounts, Voluntary After-Tax Accounts, Post-2000 Dividend
Account, PAYSOP/PROF Share Account, Rollover Account, CDI Pre-Tax Account, and Mercantile Pre-Tax Account plus earnings or losses thereon.
Vesting in the Company’s contribution portion of the participant’s accounts plus earnings or losses thereon is based on years
of service, or in the event of death, disability or retirement, the participant is entitled to 100% of his or her account balance. Matching
contributions made after December 31, 2007 vest after a participant completes 2 or more years of service. Nonvested balances are
forfeited upon distribution of a terminated participant’s account and are used to restore previous forfeitures from accounts of
rehired participants and to reduce the amount of the Company’s future contributions to the Plan.
Forfeitures: Forfeitures may be used by
the Plan to reduce future employer contributions. For the year ended December 31, 2022 the amount of forfeitures utilized to reduce
employer contributions was $1,683,148.
Payment of Benefits: Upon termination of
service, a participant may receive a lump-sum payment of their Voluntary, Basic, and Rollover contributions plus the earnings thereon.
The vested portion of the Company matching contributions plus the earnings thereon are available for lump sum payment at the earlier of
the five-year anniversary of termination or upon reaching the normal retirement age of 65. Participants have the right to demand that
benefits be paid in the form of Company stock. Notwithstanding the foregoing, if the participant’s total vested account balances
exceed $1,000 but are not more than $5,000, the participant’s total vested account balances may be distributed as soon as administratively
feasible after the date upon which all distribution elections have been completed. If the participant’s total vested account balance
is $1,000 or less and the participant did not make a distribution election, the participant’s total vested account balance will
be distributed in the form of a cash lump sum distribution. If the participant’s total vested account balance is at least $200 but
less than $1,000, at least 30 days prior to the distribution being made, the participant will be provided a tax notice which summarizes
rules related to rollovers, income tax and penalties, and may elect during the 30-day period to have the distribution rolled over
in a tax-deferred rollover. Amounts allocated to accounts of persons who have elected to withdraw from the Plan but have not yet been
removed from the trust were $44,017 and $664,423 at December 31, 2022 and 2021, respectively. These amounts continue to be included
in investments in the financial statements.
Participant Employee Stock Ownership Plan Dividends:
With respect to dividends paid on Company stock, participants may elect to either receive the dividends as a cash distribution from the
Plan or reinvest the dividends in the Dillard Stock Fund.
Withdrawals Prior to Termination: At any
time, a participant may withdraw all or a portion of their Voluntary After- Tax Account, Match Account related to match contributions
made by Mercantile Company and certain Employee Rollover Accounts, as defined by the Plan. Upon attainment of age 59 ½, participants
may withdraw all or a portion of the balances of their Mercantile Pre-Tax Account and any Employee Rollover Accounts. A participant who
has attained age 65 may request a withdrawal of the balance of their vested accounts at any time.
In March 2020, the World Health Organization
declared the outbreak of a novel coronavirus (“COVID-19”) as a pandemic. The Coronavirus Aid, Relief, and Economic Security
(“CARES”) Act was enacted into law on March 27, 2020. The CARES Act provides for a special distribution for qualified
plan participants. The Administrative Committee of the Plan decided to allow for COVID-19 distributions of up to $30,000 of employee contributions
for qualified Plan participants, and the Plan will be amended accordingly based on the required timing under the CARES Act.
Administrative Expenses: Substantially all administrative costs
are borne by the Plan.
Plan Termination: Although the Company
has not expressed an intention to do so, the Company has the right under the Plan to discontinue its contributions at any time and to
terminate the Plan, subject to the provisions of ERISA. In the event of Plan termination, participants become 100% vested in their employer
contributions and earnings thereon.
DILLARD’S, INC. INVESTMENT & EMPLOYEE STOCK
OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
NOTE 1 - DESCRIPTION OF PLAN (Continued)
Notes Receivable from Participants: In
cases of immediate and heavy financial hardship, participants may borrow from their vested account balance a minimum of $1,000 up to a
maximum of the lesser of $50,000 or 50% of their vested account balance. Loan transactions are treated as transfers between the investment
fund(s) and the loan fund. Loan terms range from one to five years or up to ten years for the purchase of a primary residence. The
loans are secured by the balance in the participant’s account and bear interest at a rate commensurate with prevailing interest
rates charged by persons in the business of lending money for loans that would be made under similar circumstances. Principal and interest
is paid ratably over the length of the loan through weekly payroll deductions or loan payoffs made directly to Principal. At December 31,
2022, the rate of interest for new loans was 8.5%.
The CARES Act also provides for deferral of loan
payments by up to one year for qualified participants. The Administrative Committee of the Plan decided to allow for deferral of loan
payments pursuant to the CARES Act, and the loan terms disregard this one-year period of delay. The Plan will be amended accordingly based
on the required timing under the CARES Act.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting: The financial statements of the Plan are
prepared under the accrual basis of accounting.
Use of Estimates: The preparation of the
Plan’s financial statements, in conformity with U.S. generally accepted accounting principles, requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of additions to and deductions from net assets for the period. Actual results
could differ from those estimates.
Risk and Uncertainties: The Plan holds
various investment securities. Investment securities, in general, are exposed to various risks, such as interest rate, liquidity, credit,
and overall market volatility. Due to the level of risk associated with certain investment securities, and the sensitivity of certain
fair value estimates to changes in valuation assumptions, it is at least reasonably possible that changes in the fair values of investment
securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts
reported in the statements of net assets available for benefits.
Investment Valuation and Income Recognition:
Plan investments are recorded at fair value (see Note 5). Investments in the Dillard’s Stock Fund and mutual funds are presented
at fair value, which is determined to be the quoted market price from a nationally recognized exchange.
Investment in participation units of the Principal/BlackRock
S&P 500 Index CIT N is presented at fair value, which is determined to be the net asset value of the collective trust fund reported
by the fund managers and based on recent transaction prices. The net asset value is used as a practical expedient to estimate fair value.
The Principal/BlackRock S&P 500 Index CIT N is an index fund that invests in the equity securities of companies that compose the Index
and pursues its objective through investment in one or more underlying collective investment funds maintained by BlackRock Institutional
Trust Company, N.A. The Principal/BlackRock S&P 500 Index CIT N provides for daily redemptions by participants at reported net asset
value per unit, with no advance notice requirements.
DILLARD’S, INC. INVESTMENT & EMPLOYEE STOCK
OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
Harbor Capital Appreciation CIT CL 4 generally
values portfolio securities and other assets for which market quotes are readily available at market value for purposes of calculating
the collective trust fund’s net value, which is used as a practical expedient to estimate the fair value of the Plan’s investment
in participation units of this fund. In the case of equity securities, market value is generally determined on the basis of last reported
sales prices, or if no sales are reported, on quotes obtained from a quotation reporting system, established market makers, or independent
pricing vendors. In the case of fixed income securities and non-exchange traded derivative instruments, market value is generally determined
using prices provided by independent pricing vendors. Harbor Capital Appreciation CIT CL 4 invests primarily in equity securities, principally
common and preferred stocks of U.S. companies with market capitalizations of at least $1 billion. The Harbor Capital Appreciation CIT
CL 4 provides for daily redemptions by participants at reported net asset value per unit, with no advance notice requirements.
The fair value of the participation units in the
Galliard Stable Return Fund PI is estimated based on the net asset values of the fund. The net asset value is used as a practical expedient
to estimate fair value. This practical expedient would not be used if it is determined to be probable that the fund will sell the investment
for an amount different from the reported net asset value. The Galliard Stable Return Fund PI invests solely in another collective trust
fund which pursues its objective through the active management of a diversified portfolio of fixed income investments with benefit responsive
investment contracts. The investment contracts are issued by selected high quality insurance companies and financial institutions. The
principal value of these contracts is not expected to fluctuate during the term to maturity. Upon contract maturity, the full principal
amount, plus any unpaid accrued interest is returned to the fund. The Galliard Stable Return Fund PI provides for daily redemptions by
participants at reported net asset values per unit, with no advance notice requirements. Redemptions by the Plan occur at net asset value
following a 12-month notice period. There were no unfunded commitments for these funds as of December 31, 2022 and 2021. Further,
these collective funds are Direct Filing Entities.
Purchases and sales of securities are recorded
on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Net appreciation
includes the Plan’s gains and losses on investments bought and sold as well as held during the year.
Notes Receivable from Participants: Notes
receivable from participants are reported at their unpaid principal balance plus any accrued but unpaid interest. Repayments of principal
and interest are received through weekly payroll deductions or loan payoffs made directly to Principal and the notes are collateralized
by the participants’ account balances.
Payment of Benefits: Benefits are recorded
when paid.
NOTE 3 - PARTY-IN-INTEREST TRANSACTIONS
Parties-in-interest are identified under Department
of Labor regulations as any fiduciary of the Plan, any party rendering service to the Plan, the employer, and certain others. Prior to
June 21, 2021, Wells Fargo Bank, N.A. was the Plan recordkeeper. The Plan held units of collective trusts managed by Wells Fargo
Bank, N.A. Therefore, these transactions and the Plan’s payment of recordkeeping fees to Wells Fargo Bank, N.A. are party-in-interest
transactions. Effective June 21, 2021, Principal became the Plan recordkeeper and a fiduciary of the Plan. The Plan’s payment
of recordkeeping fees to Principal is a party-in-interest transaction.
The Investment Committee of the Plan utilizes
an investment advisor, The Newport Group, to serve as the independent investment advisor for the Plan. The Newport Group (1) recommends
mutual funds and collective trust funds to be included in the Plan’s investment menu, (2) monitors the performance of those
funds against certain pre-determined standards, and (3) recommends the removal of funds from the investment menu and the replacement
of these funds by alternative funds if the advisor determines that the funds to be removed are not performing in accordance with pre-determined
standards. Fees paid by the Plan to the Newport Group are party-in-interest transactions.
DILLARD’S, INC. INVESTMENT & EMPLOYEE STOCK
OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
NOTE 3 - PARTY-IN-INTEREST TRANSACTIONS
(Continued)
Newport Trust Company is the trustee for the
Dillard’s Stock Fund. Fees paid by the Plan to the Newport Trust Company are party-in-interest transactions. The Plan held
5,164,497 and 5,683,537 shares of Dillard’s, Inc. Class A common stock, which represents 68.2% and 63.0% of net
assets available for benefits, at December 31, 2022 and 2021, respectively. The Plan recognized dividend income of $82,070,309
during 2022 from this related-party investment.
Other providers render legal, accounting and administrative
services to the Plan. Fees paid by the Plan to these providers are party-in-interest transactions.
Notes receivable from participants are also considered
party-in-interest transactions.
Certain administrative functions are performed
by officers or employees of the Company. No such officer or employee received compensation from the Plan during 2022.
NOTE 4 - TAX STATUS
The Plan obtained its latest favorable determination
letter dated November 1, 2017, in which the Internal Revenue Service (“IRS”) stated that the Plan, as amended and restated
effective January 1, 2017, was in compliance with the applicable sections of the Internal Revenue Code (“IRC”) and was
determined to be qualified, and therefore, the related trust was exempt from tax. Although the Plan has been amended since receiving the
determination letter, Plan management believes that the Plan is designed and being operated in compliance with the applicable requirements
of the IRC. Therefore, they believe that the Plan was qualified, and the related trust was tax-exempt, as of the financial statement date.
U.S. generally accepted accounting principles
requires plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an
uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan is subject to routine audits
by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.
NOTE 5 - FAIR VALUE MEASUREMENTS
Fair value is the price that would be received
by the Plan for an asset or paid by the Plan to transfer a liability (an exit price) in an orderly transaction between market participants
on the measurement date in the Plan’s principal or most advantageous market for the asset or liability. Fair value measurements
are determined by maximizing the use of observable inputs and minimizing the use of unobservable inputs when measuring fair value. In
accordance with authoritative guidance for fair value measurements of financial assets and liabilities recognized at fair value, the Plan
classifies its investments into Level 1, which refers to securities valued using quoted prices from active markets for identical assets;
Level 2, which refers to securities not traded on an active market but for which observable market inputs such as quoted prices for similar
assets, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market
data are readily available; and Level 3, which refers to securities valued based on significant unobservable inputs that reflect the Plan’s
own assumptions about the assumptions that market participants would use in pricing an asset or liability. In some cases, a valuation
technique used to measure fair value may include inputs from multiple levels of the fair value hierarchy. Assets and liabilities are classified
in their entirety based on the lowest level of input that is significant to the fair value measurement. See Note 2 for the descriptions
of the valuation methods and assumptions used by the Plan to estimate the fair values of investments held directly by the Plan.
The methods described in Note 2 may produce a
fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the
Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies
or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the
reporting date.
DILLARD’S, INC. INVESTMENT & EMPLOYEE STOCK
OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
NOTE 5 - FAIR VALUE MEASUREMENTS
(Continued)
The following table sets forth by level within the fair
value hierarchy a summary of the Plan’s investments measured at fair value on a recurring basis at December 31, 2022 and 2021.
| | |
Fair Value Measurements | |
| | |
At December 31, 2022 | |
| | |
Quoted Prices in | | |
Significant | | |
| | |
| |
| | |
Active Markets | | |
Other | | |
Significant | | |
| |
| | |
For Identical | | |
Observable | | |
Unobservable | | |
| |
| | |
Assets (Level 1) | | |
Inputs (Level 2) | | |
Inputs (Level 3) | | |
Total | |
Company
common stock (1) | |
$ | 1,669,165,430 | | |
$ | - | | |
$ | - | | |
$ | 1,669,165,430 | |
| Mutual funds | |
| 307,952,094 | | |
| - | | |
| - | | |
| 307,952,094 | |
| Total assets in the fair value hierarchy | |
$ | 1,977,117,524 | | |
| - | | |
| - | | |
| 1,977,117,524 | |
Collective
trust funds measured at net asset value (2) | |
| | | |
| | | |
| | | |
| | |
| Harbor Capital Appreciation CIT CL 4 | |
| | | |
| | | |
| | | |
| 56,360,639 | |
| Principal/BlackRock S&P 500 Index CIT N | |
| | | |
| | | |
| | | |
| 104,857,260 | |
| Galliard Stable Return Fund PI | |
| | | |
| | | |
| | | |
| 224,206,560 | |
| Investments at fair value | |
| | | |
| | | |
| | | |
$ | 2,362,541,983 | |
| | |
Fair Value Measurements | |
| | |
At December 31, 2021 | |
| | |
Quoted Prices in | | |
Significant | | |
| | |
| |
| | |
Active Markets | | |
Other | | |
Significant | | |
| |
| | |
For Identical | | |
Observable | | |
Unobservable | | |
| |
| | |
Assets (Level 1) | | |
Inputs (Level 2) | | |
Inputs (Level 3) | | |
Total | |
| Company common stock (1) | |
$ | 1,392,580,174 | | |
$ | - | | |
$ | - | | |
$ | 1,392,580,174 | |
| Mutual funds | |
| 381,901,010 | | |
| - | | |
| - | | |
| 381,901,010 | |
| Total assets in the fair value hierarchy | |
$ | 1,774,481,184 | | |
| - | | |
| - | | |
| 1,774,481,184 | |
Collective
trust funds measured at net asset value (2) | |
| | | |
| | | |
| | | |
| | |
| Harbor Capital Appreciation CIT | |
| | | |
| | | |
| | | |
| 105,267,847 | |
| Wells Fargo/BlackRock S&P 500 Index CIT | |
| | | |
| | | |
| | | |
| 133,039,437 | |
| Wells Fargo Stable Return Fund | |
| | | |
| | | |
| | | |
| 190,044,743 | |
| Investments at fair value | |
| | | |
| | | |
| | | |
$ | 2,202,833,211 | |
| (1) | The quoted market price of Company common stock on December 31, 2022 was $323.20 per share and
on December 31, 2021 was $245.02 per share. The quoted market price of Company common stock on the latest practical date of August 31,
2023 was $345.12 per share. |
| (2) | In accordance with Accounting Standards Codification, Fair Value Measurement (Subtopic 820-10), certain investments that were measured
at net asset value per share (or its equivalent) as a practical expedient have not been classified in the fair value hierarchy (see Note
2). The fair value amounts presented in these tables are intended to permit reconciliation of the fair value hierarchy to the line items
presented in the statement of net assets available for benefits. |
DILLARD’S, INC. INVESTMENT & EMPLOYEE STOCK
OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
NOTE 6 - SUBSEQUENT EVENTS
The Plan changed its recordkeeper from
Principal Financial Group to Milliman, Inc. in January of 2023. Concurrently, Charles Schwab & Co., Inc. became
the Plan’s directed trustee for all investment funds other than the Dillard’s Stock Fund. As a result of these changes, there
was a blackout period in which Plan participants and beneficiaries temporarily were unable to (1) direct or diversify investments
in their individual accounts or (2) obtain a loan, withdrawal, or distribution from the Plan. This transition period began on January 23,
2023 and ended February 21, 2023. Notice of this transition period met the requirements of ERISA Section 101(i)(1).
A special dividend of $15 per share
payable on Company stock on January 9, 2023 to shareholders of record as of December 15, 2022 was included in dividends receivable
and dividend income in the financial statements as of and for the year ended December 31, 2022. Plan participants may elect to receive
dividends paid on Company stock as a cash distribution from the Plan or reinvest the dividends in the Dillard Stock Fund. Plan participants
elected to receive $43.1 million of the total $78.9 million special dividend as cash distributions from the plan as of the required election
date of January 6, 2023.
******
| DILLARD'S, INC. INVESTMENT & EMPLOYEE STOCK OWNERSHIP PLAN |
| SCHEDULE H, PART IV, LINE 4i - |
| SCHEDULE OF ASSETS (HELD AT END OF YEAR) |
| DECEMBER 31, 2022 |
| |
| Plan Sponsor: Dillard's, Inc. |
| Employer Identification Number: 71-0388071 |
| Plan Number: 111 |
| (a) | |
(b) | |
(c) | |
(d) | | |
(e) | |
| | |
Identity of Issue,
Borrower, Lessor or
Similar Party | |
Description of Investment including Maturity Date, Rate of Interest, Collateral, Par or Maturity Value | |
Cost | | |
Current Value | |
| | |
Common Stock: | |
| |
| | | |
| | |
| * | |
Dillard's, Inc. | |
Common Stock, par value $.01 | |
| ** | | |
$ | 1,669,165,430 | |
| | |
| |
| |
| | | |
| | |
| | |
| |
| |
| | | |
| | |
| | |
Mutual Funds: | |
| |
| | | |
| | |
| | |
American Funds | |
American Funds EuroPacific Growth Fund R6 | |
| ** | | |
| 17,679,647 | |
| | |
Dodge & Cox | |
Dodge & Cox Income I Fund | |
| ** | | |
| 61,026,118 | |
| | |
American Funds | |
American Funds Washington Mutual Investors R6 Fund | |
| ** | | |
| 54,759,637 | |
| | |
Goldman Sachs | |
Goldman Sachs Small Cap Value Fund Inst I | |
| ** | | |
| 19,382,602 | |
| | |
JP Morgan | |
JP Morgan Mid Cap Equity R6 Fund | |
| ** | | |
| 36,324,986 | |
| | |
Legg Mason | |
Clearbridge Small Cap Growth A Fund | |
| ** | | |
| 13,797,155 | |
| | |
Vanguard | |
Vanguard Inflation-Protected Securities Inst Fund | |
| ** | | |
| 27,280,986 | |
| | |
Vanguard | |
Vanguard Extended Market Index Inst Fund | |
| ** | | |
| 10,516,561 | |
| | |
Vanguard | |
Vanguard Total International Stock Index Inst Fund | |
| ** | | |
| 23,522,138 | |
| | |
Vanguard | |
Vanguard Total Bond Market Index Inst Fund | |
| ** | | |
| 28,871,181 | |
| | |
DFA | |
DFA World ex US Core Equity Index Inst Fund | |
| ** | | |
| 14,791,083 | |
| | |
| |
Total mutual funds | |
| | | |
| 307,952,094 | |
| | |
| |
| |
| | | |
| | |
| | |
Collective Trust Funds: | |
| |
| | | |
| | |
| | |
Harbor Funds | |
Harbor Capital Appreciation CIT CL 4 | |
| ** | | |
| 56,360,639 | |
| * | |
SEI Trust Company | |
Principal/BlackRock S&P 500 Index CIT N | |
| ** | | |
| 104,857,260 | |
| | |
SEI Trust Company | |
Galliard Stable Return Fund PI | |
| ** | | |
| 224,206,560 | |
| | |
| |
Total collective trust funds | |
| | | |
| 385,424,459 | |
| | |
| |
| |
| | | |
| | |
| * | |
Notes receivable from participants | |
Loans to participants with interest rates ranging from 4.25% to 8.5% | |
| - | | |
| 7,926,190 | |
| | |
| |
| |
| | | |
| | |
| | |
| |
Total Assets Held for Investment | |
| | | |
$ | 2,370,468,173 | |
| |
* Party-in-interest. |
| |
** Column (d) is not applicable for participant-directed investments. |
Exhibit 23.1
Consent of Independent Registered Public Accounting
Firm
Dillard’s, Inc. Investment & Employee Stock Ownership Plan
Little Rock, AR 72201
We hereby consent to the incorporation by reference
in the Registration Statement on Form S-8 (File Nos. 333-239143, 333-220063, 333-202574, 333-181623, and 333-167937) of Dillard’s,
Inc. of our report dated September 7, 2023, relating to the financial statements and supplemental schedule of Dillard’s, Inc. Investment
& Employee Stock Ownership Plan which appear in this Form 11-K for the year ended December 31, 2022.
| /s/ BDO USA, P.C. |
|
| Atlanta, Georgia |
|
| September 7, 2023 |
|
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