Dillard's 2004 Annual Report Download - page 24

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 $285 million for 2004. These expenditures consist primarily of the construction of new stores,
remodeling of existing stores and investments in technology. During 2004, the Company opened three new stores:
Coastal Grand in Myrtle Beach, South Carolina; Jordan Creek Town Center in West Des Moines, Iowa; and South Park
Mall in Moline, Illinois and five replacement stores: Colonial University Village in Auburn, Alabama; The Shoppes at
East Chase in Montgomery, Alabama; Eastern Shore in Spanish Fort, Alabama; Greenbrier Mall in Chesapeake, Virginia
and Yuma Palms in Yuma, Arizona. These eight stores totaled approximately 1.1 million square feet of retail space. In
addition, the Company completed a major expansion on one store totaling 26,000 square feet of retail space. The
Company closed seven store locations, including five for the replacement stores, during the year totaling approximately
819,000 square feet of retail space. Capital expenditures for 2005 are expected to be approximately $335 million. The
Company plans to open nine new stores in fiscal 2005 totaling 1,085,000 square feet, net of replaced square footage.
Historically, the Company has financed such capital expenditures with cash flow from operations. The Company expects
that it will continue to finance capital expenditures in this manner during fiscal 2005.
During 2004, the company recorded a gain on the sale of property and equipment of $2.9 million and received proceeds
of $11.3 million.
During 2004, investing cash flows were positively impacted by the net proceeds of $688 million received from the sale
of the credit card business to GE (see Note 2 of the Notes to Consolidated Financial Statements).
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.
Financing Activities
Historically, cash inflows from financing activities generally included 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. As a result of the sale of its credit card business, the Company’s need for liquidity has been reduced and the
Company’s accounts receivable conduit facilities were terminated. The Company’s primary source of available
borrowings is its $1 billion revolving credit facility. Financing cash outflows generally include the repayment of
borrowings under the Company’s accounts receivable conduit facilities (prior to the sale and termination), the repayment
of mortgage notes or long-term debt, the payment of dividends and the purchase of treasury stock.
During fiscal 2004, the Company repurchased $40.6 million of its outstanding unsecured notes prior to their related
maturity dates. Interest rates on the repurchased securities ranged from 6.30% to 8.20%. Maturity dates ranged from
2008 to 2028. The Company also redeemed the $331.6 million Preferred Securities. Notes in the amount of $163.4
million matured and were repaid during fiscal 2004.
During 2004, the Company reduced its net level of outstanding debt and capital leases by $983 million. The decrease in
total debt is due to the sale of the Company’s private label credit card business to GE and through scheduled debt
maturities and repurchases of notes prior to their related maturity dates. GE assumed $400 million of the Company’s
securitized public debt as part of the sale. Concurrent with the sale of the credit card business, the Company repaid all of
its short-term securitized borrowings and terminated its short-term borrowing facilities. Maturities of long-term debt
over the next five years are $92 million, $98 million, $201 million, $198 million and $25 million, respectively.
Revolving Credit Agreement
The Company’s primary source of liquidity is the availability of funds under its $1 billion revolving credit facility
(“credit facility”). Borrowings under the credit facility accrue interest at JPMorgan’s Base Rate or LIBOR plus 1.50%
(currently 4.09%) subject to certain availability thresholds as defined in the credit facility. Availability for borrowings
and letter of credit obligations under the credit facility is limited to 75% of the inventory of certain Company subsidiaries
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