Dillard's 2010 Annual Report Download - page 40

expectations and forecasts for the remainder of fiscal 2010 and fiscal 2011. The Company cautions that
forward-looking statements contained in this report are based on estimates, projections, beliefs and
assumptions of management and information available to management at the time of such statements
and are not guarantees of future performance. The Company disclaims any obligation to update or
revise any forward-looking statements based on the occurrence of future events, the receipt of new
information, or otherwise. Forward-looking statements of the Company involve risks and uncertainties
and are subject to change based on various important factors. Actual future performance, outcomes
and results may differ materially from those expressed in forward-looking statements made by the
Company and its management as a result of a number of risks, uncertainties and assumptions.
Representative examples of those factors include (without limitation) general retail industry conditions
and macro-economic conditions; economic and weather conditions for regions in which the Company’s
stores are located and the effect of these factors on the buying patterns of the Company’s customers,
including the effect of changes in prices and availability of oil and natural gas; the availability of
consumer credit; the impact of competitive pressures in the department store industry and other retail
channels including specialty, off-price, discount and Internet retailers; changes in consumer spending
patterns, debt levels and their ability to meet credit obligations; changes in legislation, affecting such
matters as the cost of employee benefits or credit card income; adequate and stable availability of
materials, production facilities and labor from which the Company sources its merchandise at
acceptable pricing; changes in operating expenses, including employee wages, commission structures
and related benefits; system failures or data security breaches; possible future acquisitions of store
properties from other department store operators; the continued availability of financing in amounts
and at the terms necessary to support the Company’s future business; fluctuations in LIBOR and other
base borrowing rates; potential disruption from terrorist activity and the effect on ongoing consumer
confidence; epidemic, pandemic or other public health issues; potential disruption of international trade
and supply chain efficiencies; world conflict and the possible impact on consumer spending patterns
and other economic and demographic changes of similar or dissimilar nature.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The table below provides information about the Company’s obligations that are sensitive to
changes in interest rates. The table presents maturities of the Company’s long-term debt and
subordinated debentures along with the related weighted-average interest rates by expected maturity
dates.
(in thousands of dollars)
Expected Maturity Date (fiscal year) 2011 2012 2013 2014 2015 Thereafter Total Fair Value
Long-term debt ........... $49,166 $76,789 $— $— $— $620,457 $746,412 $725,383
Average fixed interest rate . . . 9.1% 7.4% — — — 7.3% 7.3%
Subordinated debentures . . . . $ — $ — $— $— $— $200,000 $200,000 $189,520
Average interest rate ....... —% —% —% —% —% 7.5% 7.5%
The Company is exposed to market risk from changes in the interest rates under its $1.0 billion
revolving credit facility. Outstanding balances under this facility bear interest at a variable rate based
on JPMorgan’s Base Rate minus 0.5% or LIBOR plus 1.0%. The Company had weighted average
borrowings of $8.7 million during fiscal 2010. Based on the average amount outstanding during fiscal
2010, a 100 basis point change in interest rates would result in an approximate $0.1 million annual
change to interest expense.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements of the Company and notes thereto are included in this
report beginning on page F-1.
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