Dillard's 2005 Annual Report Download - page 30

Cash flows for the three fiscal years ended were as follows:
Percent Change
(in thousands of dollars) 2005 2004 2003 2005-2004 2004-2003
Operating Activities .......................... $369,142 $ 554,061 $ 432,106 -33.4 28.2
Investing Activities ........................... (297,608) 414,212 (161,076) * *
Financing Activities .......................... (269,942) (630,898) (252,513) -57.2 149.8
Total Cash (Used) Provided ................ $(198,408) $ 337,375 $ 18,517
* percent change calculation is not meaningful
Operating Activities
The primary source of the Company’s liquidity is cash flows from operations. Due to the seasonality of the
Company’s business, it has historically realized a significant portion of the cash flows from operating activities
during the second half of the fiscal year. Retail sales are the key operating cash component providing 98.1% and
96.3% of total revenues over the past two years. Operating cash inflows also include finance charges paid on
Company receivables prior to the sale, revenue and reimbursements from the long-term marketing and servicing
alliance with GE subsequent to the sale 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 $369.1 million for 2005 and were adequate to fund the Company’s
operations for the year. During 2005, the operating cash flows of the Company were positively impacted by net
income, as adjusted for non-cash items, of $421.7 million compared to net income, adjusted by non-cash items,
of $246.6 million in fiscal 2004. Changes in operating assets and liabilities resulted in a decline of operating cash
flows of $443.4 million compared to the prior year. The decrease was partially due to a reduction in accounts
receivable balances from the sale of the credit card business in fiscal 2004. Additionally, accounts payable and
accrued expenses decreased $20.6 million in fiscal 2005 compared to a $294.6 million increase in accounts
payable and accrued expenses in the prior year. During 2005, the Company received insurance proceeds of $83.4
million for merchandise in stores damaged during the 2005 hurricane season.
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 $456.1 million for 2005. These expenditures consist primarily of the construction
of new stores, remodeling of existing stores and investments in technology. During 2005, the Company opened
eight new stores, Imperial Valley in El Centro, California; St. Johns Towne Center in Jacksonville, Florida;
Perimeter Mall in Atlanta, Georgia; Northlake Mall in North Charlotte, North Carolina; The Shops at La Cantera
in San Antonio, Texas; Firewheel Towne Center in Garland, Texas; Atlantic Station in Atlanta, Georgia; and The
Avenue Carriage Crossing in Collierville, Tennessee; and one replacement store, Crestview Hills in Crestview
Hills, Kentucky. These nine stores totaled approximately 1.55 million square feet, net of replaced square footage.
The Company closed eight store locations totaling 1.34 million square feet during fiscal 2005. Capital
expenditures for 2006 are expected to be approximately $340 million. The Company plans to open eight new
stores in fiscal 2006 totaling 690,000 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 2006.
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