DSW 2013 Annual Report Download - page 31

Table of Contents
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Overview
Our primary ongoing cash flow requirements are for inventory purchases, capital expenditures made in connection with our expansion, improving our
information systems, the remodeling of existing stores and infrastructure growth. Our working capital and inventory levels typically build seasonally. We
believe that we have sufficient financial resources and access to financial resources at this time. We are committed to a cash management strategy that
maintains liquidity to adequately support the operation of the business, our growth strategy and to withstand unanticipated business volatility. We believe that
cash generated from DSW operations, together with our current levels of cash and investments as well as availability under our revolving credit facility,
should be sufficient to maintain our ongoing operations, support seasonal working capital requirements, fund capital expenditures related to projected business
growth and continue payments of dividends to our shareholders.
Net Working Capital. Net working capital is defined as current assets less current liabilities. Net working capital decreased to $528.4 million as of
February 1, 2014 from $546.5 million as of February 2, 2013, primarily due to a decrease in current deferred tax assets due to usage of RVI's federal net
operating losses and tax credits. As of February 1, 2014 and February 2, 2013, the current ratio was 2.9 and 3.0, respectively.
Operating Activities
For fiscal 2013, our net cash provided by operations was $301.4 million compared to $258.6 million for fiscal 2012. The increase in net cash provided by
operations was driven primarily by changes in working capital and our utilization of net operating losses and tax credits to offset our taxable income, and the
net operating losses were fully utilized in fiscal 2013.
Net cash provided by operations in fiscal 2012 increased to $258.6 million from $214.2 million for fiscal 2011. The increase in net cash provided by
operations was driven primarily by DSW's utilization of RVI’s net operating losses and tax credits to offset its taxable income, as well as other changes in
working capital.
We operate our stores and fulfillment center from leased facilities. All lease obligations are accounted for as operating leases. We disclose the minimum
payments due under operating leases in the notes to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K. We own our
corporate office headquarters and our distribution center.
Although our plan for continued expansion could place increased demands on our financial, managerial, operational and administrative resources and result in
increased demands on management, we do not believe that our anticipated growth plan will have an unfavorable impact on our operations or liquidity.
Uncertainty in the United States economy could result in reductions in customer traffic and comparable sales in our existing stores with the resultant increase
in inventory levels and markdowns. Reduced sales may result in reduced operating cash flows if we are not able to appropriately manage inventory levels or
leverage expenses. These potential negative economic conditions may also affect future profitability and may cause us to reduce the number of future store
openings, impair goodwill or impair long-lived assets.
Investing Activities
For fiscal 2013, our net cash used in investing activities was $241.4 million compared to $119.4 million for fiscal 2012. During fiscal 2013, we incurred
$83.8 million for capital expenditures, of which $49.8 million related to stores and $34.0 million related to information technology and business
infrastructure. During fiscal 2013, we had net purchases of short-term and long-term investments of $148.9 million compared to net sales of short-term and
long-term investments of $13.9 million during fiscal 2012.
For fiscal 2012, cash used in investing activities amounted to $119.4 million compared to $139.6 million for fiscal 2011. Excluding the purchase of our
corporate office headquarters and distribution center during fiscal 2012, we incurred $99.8 million in capital expenditures, of which $69.3 million related to
stores, $30.5 million related to information technology, the reconfiguration of the Columbus distribution center, the expansion of the dsw.com fulfillment
center and business infrastructure. During fiscal 2012, we had net sales of short-term and long-term investments of $13.9 million compared to net purchases
of short-term and long-term investments of $64.7 million during fiscal 2011.
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Source: DSW Inc., 10-K, March 27, 2014 Powered by Morningstar® Document Research℠
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