Dillard's 2010 Annual Report Download - page 34

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to federal tax credits. During fiscal 2009, the Company reached a settlement with a state taxing
jurisdiction which resulted in a reduction in unrecognized tax benefits, interest, and penalties.
Fiscal 2008
During fiscal 2008, income taxes included the net increase in unrecognized tax benefits, interest,
and penalties of approximately $2.5 million and included the recognition of tax benefits of
approximately $10.5 million for a decrease in a capital loss valuation allowance resulting from capital
gain income and $4.1 million due to federal tax credits.
LIQUIDITY AND CAPITAL RESOURCES
Financial Position Summary
January 29, January 30, Dollar Percent
(in thousands of dollars) 2011 2010 Change Change
Cash and cash equivalents ...................... $ 343,291 $ 341,693 $ 1,598 0.5%
Long-term debt, including current portion ........... 746,412 749,306 (2,894) (0.4)
Subordinated debentures ....................... 200,000 200,000 — —
Stockholders’ equity ........................... 2,086,720 2,304,103 (217,383) (9.4)
Current ratio ................................ 2.05 2.28
Debt to capitalization .......................... 31.2% 29.2%
The Company’s current non-operating priorities for its use of cash are stock repurchases, debt
reduction, strategic investments to enhance the value of existing properties and dividend payments to
shareholders.
At present, there are numerous general business and economic factors affecting the retail industry.
These factors include: (1) consumer confidence; (2) competitive conditions; (3) the recent recession in
the U.S. and numerous economies around the globe; (4) high levels of unemployment in various
sectors; and (5) other factors that are both separate from, and outgrowths of, the above. These
conditions may impact our comparable store 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
(in thousands of dollars) Fiscal 2010 Fiscal 2009 Fiscal 2008 2010 - 2009 2009 - 2008
Operating Activities ................. $512,922 $ 554,007 $ 350,005 (7.4)% 58.3%
Investing Activities .................. (89,615) (63,453) (118,191) (41.2) 46.3
Financing Activities ................. (421,709) (245,684) (223,903) (71.7) (9.7)
Total Cash Provided ............... $ 1,598 $ 244,870 $ 7,911
Operating Activities
The primary source of the Company’s liquidity is cash flows from operations. Due to the
seasonality of the Company’s business, we have historically realized a significant portion of the cash
flows from operating activities during the second half of the fiscal year. Retail operations sales are the
key operating cash component, providing 96.3% and 94.6% of total revenues in fiscal 2010 and 2009,
respectively.
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