Dillard's 2003 Annual Report Download - page 23

• Construction of new stores;
• Dividend payments to shareholders;
• Debt reduction; and
• Stock repurchase plan.
Cash flows for the three fiscal years ended were as follows:
(in thousands of dollars) % Change
2003 2002 2001 03-02 02-01
Operating Activities $ 432,106 $ 356,942 $ 616,981 21.1 (42.1)
Investing Activities (161,076) (164,973) (270,595) 2.4 39.0
Financing Activities (252,513) (202,573) (387,406) (24.7) 47.7
Total Cash Provided (Used) $ 18,517 $ (10,604) $ (41,020)
Operating Activities
The primary source of the Company’s liquidity is cash flows from operations. Retail sales are the key operating cash
component providing 96.6% and 96.1% of total revenues over the past two years. Operating cash inflows also include
finance charges paid on Company receivables and cash distributions from joint ventures. Operating cash outflows
include payments to vendors for inventory, services and supplies, payments to employees, and payments of interest and
taxes.
Net cash flows from operations were $432 million for 2003 and were adequate to fund the Company’s operations for the
year. Cash flows from operations increased from 2002 levels due primarily to a $111 million decrease in accounts
receivable in the current year. The decrease in accounts receivable was due to a 140 basis point decline in sales
penetration on the Company’s proprietary credit card coupled with a 4% decline in overall retail sales during fiscal 2003
compared to the prior year. Accounts payable and accrued expenses increased $5 million in fiscal 2003 compared to a
$104 million decrease in accounts payable and accrued expenses in the prior year. Net cash flow from operations was
negatively impacted by lower income before accounting change during fiscal 2003.
Investing Activities
Cash inflows from investing activities generally include proceeds from sales of property and equipment and joint
ventures. Investment cash outflows generally include payments for capital expenditures such as property and equipment.
Capital expenditures were $227 million for 2003. These expenditures consist primarily of the construction of new stores,
remodeling of existing stores and investments in technology. During 2003, the Company opened four new stores, Great
Northern Mall in Olmstead, Ohio; NorthPark Mall in Davenport, Iowa; Stoney Point Fashion Park and Short Pump Town
Center in Richmond, Virginia and one replacement store, Memorial City Mall in Houston, Texas. These five stores
totaled approximately 996,000 square feet of retail space. In addition, the Company completed major expansions on two
stores totaling 56,000 square feet of retail space. The Company closed ten store locations, including the one replacement
store, during the year totaling approximately 1.6 million square feet of retail space. Capital expenditures for 2004 are
expected to be approximately $240 million. The Company plans to open eight new stores in fiscal 2004 totaling 821,000
square feet, net of replaced square footage. Historically, the Company has financed such capital expenditures with cash
flow from operations. The Company believes that it will continue to finance capital expenditures in this manner during
fiscal 2004.
During 2003, the Company recorded a gain of $15.6 million and received proceeds of $34.6 million from the sale of its
interest in Sunrise Mall and its associated center in Brownsville, Texas. During 2003, the company recorded a gain on
the sale of property and equipment of $8.7 million and received proceeds of $31.8 million. During 2002, the Company
recorded a gain of $64.3 million and received proceeds of $68.3 million from the sale of its interest in FlatIron Crossing,
a regional mall in Broomfield, Colorado.
Financing Activities
Cash inflows from financing activities generally include borrowing under the Company’s accounts receivable conduit
facilities, the issuance of new mortgage notes or long-term debt and funds from stock option exercises. Financing cash
outflows generally include the repayment of borrowings under the Company’s accounts receivable conduit facilities, the
repayment of mortgage notes or long-term debt, the payment of dividends and the purchase of treasury stock.
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