Dillard's 2008 Annual Report Download - page 35

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liabilities due to an increase in the state effective tax rate, and a $24.4 million tax benefit related to the decrease
in a capital loss valuation allowance due to capital gain income. In fiscal 2006, the Company achieved a
settlement with the IRS concerning the issues raised in their examinations of the Company’s federal tax returns
for fiscal years 1997 through 2002, thereby allowing the applicable statute of limitations for these periods to
close prior to February 3, 2007. The settlement of these examinations necessitated changes in reserves and
changes in capital loss valuation allowance due to capital gain income.
LIQUIDITY AND CAPITAL RESOURCES
Financial Position Summary
2008 2007
Dollar
Change
Percent
Change
(in thousands of dollars)
Cash and cash equivalents .............................. $ 96,823 $ 88,912 $ 7,911 8.9%
Other short-term borrowings ............................ 200,000 195,000 5,000 2.6
Current portion of long-term debt ........................ 25,535 196,446 (170,911) (87.0)
Long-term debt ....................................... 757,689 760,165 (2,476) (0.3)
Guaranteed beneficial interests .......................... 200,000 200,000 — —
Stockholders’ equity ................................... 2,251,115 2,514,111 (262,996) (10.5)
Current ratio ......................................... 1.85 1.64
Debt to capitalization .................................. 34.5% 35.0%
The Company’s current non-operating priorities for its use of cash are:
• Debt reduction;
• Strategic investments to enhance the value of existing properties;
• Investment in high-return capital projects, particularly in investments in technology to improve
merchandising and distribution, reduce costs, to improve efficiencies or to help the Company better
serve its customers;
• Dividend payments to shareholders; and
• Stock repurchase plan.
At present, there are numerous general business and economic factors affecting the retail industry. These
factors include: (1) consumer confidence; (2) competitive conditions; (3) substantial declines in the stock markets
in 2008 and continued stock market volatility, affecting consumer wealth and disposable income; (4) the
recession in the U.S. and numerous economies around the globe; (5) high levels of unemployment in various
sectors and (6) other factors that are both separate from, and outgrowths of, the above. These conditions may
impact our comparable stores sales which may result in reduced cash flows if we are not appropriately managing
our inventory levels or expenses. Further, if one or more of these conditions continue or worsen, we may
experience a further adverse effect on our business, financial condition and results of operations, including our
ability to access capital.
Cash flows for the three fiscal years ended were as follows:
Percent Change
2008 2007 2006 2008-2007 2007-2006
(in thousands of dollars)
Operating Activities .......................... $350,005 $ 254,449 $ 360,582 37.6% (29.4)%
Investing Activities ........................... (118,191) (331,987) (266,345) 64.4 (24.7)
Financing Activities .......................... (223,903) (27,544) (200,083) (712.9) 86.2
Total Cash Provided (Used) ................ $ 7,911 $(105,082) $(105,846)
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