Dillard's 2009 Annual Report Download - page 35

The Alliance provides for certain payments to be made by GE to the Company, including a
revenue sharing and marketing reimbursement. The Company received income of approximately
$89 million and $110 million from GE in fiscal 2009 and 2008, respectively. While future cash flows
under this Alliance are difficult to predict, the Company expects the 2010 amounts to be reduced from
current year levels due to the challenging economy and new credit regulations. The amount the
Company receives is dependent on the level of sales on GE accounts, the level of balances carried on
the GE accounts by GE customers, payment rates on GE accounts, finance charge rates and other fees
on GE accounts, the level of credit losses for the GE accounts as well as GE’s funding costs. The
Alliance expires in fiscal 2014.
Net cash flows from operations increased $204.0 million during fiscal 2009 compared to fiscal 2008.
This increase is primarily attributable to higher net income, as adjusted for non-cash items, of
$131.4 million for fiscal 2009 compared to fiscal 2008. The increase was also influenced by an increase
of $72.6 million related to changes in working capital items, primarily of changes in accounts payable
and income taxes partially offset by changes in inventory as the Company worked to control inventory
levels, including a 13% decrease in inventory purchases over the prior year.
We received insurance proceeds of $5.9 million during fiscal 2007 related to inventory damages
incurred during the 2005 hurricane season. Combined with the hurricane insurance proceeds recorded
in investing activities, the Company recorded related gains in fiscal 2007 of $14.1 million and
$4.1 million in gain on disposal of assets and cost of sales, respectively.
Investing Activities
Cash inflows from investing activities generally include proceeds from sales of property and
equipment. Investment cash outflows generally include payments for capital expenditures such as
property and equipment.
Capital expenditures decreased $114.5 million for fiscal 2009 compared to fiscal 2008, mainly as a
result of the construction of fewer stores. The fiscal 2009 expenditures of $75.1 million consisted
primarily of the construction of two new stores, remodeling of existing stores and investments in
technology equipment and software. There were no new store openings during fiscal 2009. Store
closures during fiscal 2009 were:
Closed Locations—Fiscal 2009 City Square Feet
Northgate Mall ................. Tullahoma, Tennessee 64,000
Desoto Square Mall ............. Bradenton, Florida 100,000
Sarasota Square ................ Sarasota, Florida 100,000
Chesapeake Square .............. Chesapeake, Virginia 160,000
Northgate Mall ................. Cincinnati, Ohio 185,000
Ward Parkway (clearance center) .... Kansas City, Missouri 202,000
Total closed square footage ...... 811,000
Capital expenditures for 2010 are expected to be approximately $100 million. During February
2010, we opened our new locations at The Domain in Austin, Texas (200,000 square feet) and The
Village at Fairview in Fairview, Texas (155,000 square feet). There are no other planned store openings
for fiscal 2010.
We received insurance proceeds of $16.1 million during fiscal 2007 for the construction of property
and fixtures for stores damaged during the 2005 hurricane season.
We have approximately 78 stores along the Gulf and Atlantic coasts that are covered by third party
insurance but are self-insured for property and merchandise losses related to ‘‘named storms’’ in fiscal
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