Dillard's 2010 Annual Report Download - page 20

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In accordance with the National Retail Federation fiscal reporting calendar, the fiscal 2010, 2009
and 2008 reporting periods presented and discussed below ended January 29, 2011, January 30, 2010
and January 31, 2009, respectively, and each contained 52 weeks.
Fiscal 2010
A return of consumer confidence over the past year had a significant impact on the Company’s
operations. Retail sales and gross margin improved during the year as we remained focused on our
core initiatives of disciplined inventory management and controlled spending. We reported improved
operating results, with net income increasing to $179.6 million, or $2.67 per share, during fiscal 2010
compared to $68.5 million, or $0.93 per share, during fiscal 2009.
Included in net income for fiscal 2010 are:
• a $2.2 million pretax charge ($1.4 million after tax or $0.02 per share) for asset impairment and
store closing charges related to the write-down of one property currently held for sale;
• a $7.5 million pretax gain ($4.8 million after tax or $0.07 per share) on proceeds received for
final payment related to hurricane losses;
• a $5.1 million pretax gain ($3.3 million after tax or $0.05 per share) related to the sale of five
retail store locations; and
• a $9.7 million income tax benefit ($0.14 per share) primarily related to net decreases in
unrecognized tax benefits, interest and penalties due to resolutions of federal and state
examinations; decreases in state net operating loss valuation allowances; and a decrease in a
capital loss valuation allowance.
Included in net income for fiscal 2009 are:
• a $3.1 million pretax charge ($2.0 million after tax or $0.03 per share) for asset impairment and
store closing charges;
• a $5.7 million pretax gain ($3.6 million after tax or $0.05 per share) related to proceeds received
from settlement of the Visa Check/Mastermoney Antitrust litigation;
• a $10.6 million income tax benefit ($0.14 per share) primarily due to state administrative
settlement and a decrease in a capital loss valuation allowance;
• a $1.7 million pretax gain ($1.0 million after tax or $0.01 per share) on the early extinguishment
of debt; and
• a $2.3 million pretax gain ($1.5 million after tax or $0.02 per share) related to the sale of a
store.
Highlights of fiscal 2010 as compared to fiscal 2009 are:
• Earnings per share of $2.67 compared to $0.93 for the prior year. Net income was $179.6 million
for fiscal 2010 compared to $68.5 million for fiscal 2009;
• Gross margin from retail operations improved 190 basis points of sales compared to the prior
year with a comparable store inventory decline of 2%;
• Operating expense leverage of 40 basis points of sales. Operating expenses as a percent of sales
were 26.6% and 27.0% for fiscal 2010 and fiscal 2009, respectively; and
• Cash flow from operations of $512.9 million allowed the repurchase of approximately
$413.9 million (14.6 million shares) of Class A Common Stock under the Company’s share
16