Dillard's 2012 Annual Report Download - page 10

generate sufficient cash flows to support these activities or the lack of availability of financing in
adequate amounts and on appropriate terms when needed could adversely affect our financial
performance including our earnings per share.
Reductions in the income and cash flow from our long-term marketing and servicing alliance related to our
proprietary credit cards could impact operating results and cash flows.
GE owns and manages our proprietary credit cards under the Alliance. The Alliance provides for
certain payments to be made by GE to the Company, including a revenue sharing and marketing
reimbursement. The income and cash flow that the Company receives from the Alliance is dependent
upon a number of factors including 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, GE’s ability to extend credit to our
customers as well as GE’s funding costs, all of which can vary based on changes in federal and state
banking and consumer protection laws and from a variety of economic, legal, social and other factors
that we cannot control. If the income or cash flow that the Company receives from the Alliance
decreases, our operating results and cash flows could be adversely affected.
The Alliance expires in fiscal 2014. If, when the Alliance expires, GE is unable or unwilling to
renew and continue owning and managing our proprietary credit cards on similar terms and conditions
as exist today or we are unable to quickly and adequately contract with a comparable replacement
vendor, then our operating results and cash flows could be adversely affected due to a decrease in
credit card sales to our cardholding customers and a loss of revenues attributable to payments from
GE. In addition, if our agreement with GE is terminated prior to 2014 under circumstances in which
we are unable to quickly and adequately contract with a comparable replacement vendor, holders of
our proprietary credit card will be unable to use their cards. This would likely result in a decrease in
sales to such customers, a loss of the revenues attributable to the payments from GE and customer
dissatisfaction, any or all of which could have an adverse effect on our business and results of
operations.
Credit card operations are subject to numerous federal and state laws that impose disclosure and
other requirements upon the origination, servicing, and enforcement of credit accounts, and limitations
on the amount of finance charges and fees that may be charged by a credit card provider. GE may be
subject to regulations that may adversely impact its operation of our proprietary credit card. To the
extent that such limitations or regulations materially limit the availability of credit or increase the cost
of credit to our cardholders or negatively impact provisions which affect our revenue streams associated
with our proprietary credit card, our results of operations could be adversely affected. In addition,
changes in credit card use, payment patterns, or default rates could be affected by a variety of
economic, legal, social, or other factors over which we have no control and cannot predict with
certainty. Such changes could also negatively impact our ability to facilitate consumer credit or increase
the cost of credit to our cardholders.
Our business is seasonal, and fluctuations in our revenues during the last quarter of our fiscal year can have
a disproportionate effect on our results of operations.
Our business, like many other retailers, is subject to seasonal influences, with a significant portion
of sales and income typically realized during the last quarter of our fiscal year due to the holiday
season. Our fiscal fourth-quarter results may fluctuate significantly, based on many factors, including
holiday spending patterns and weather conditions, and any such fluctuation could have a
disproportionate effect on our results of operations for the entire fiscal year. Because of the seasonality
of our business, our operating results vary considerably from quarter to quarter, and results from any
quarter are not necessarily indicative of the results that may be achieved for a full fiscal year.
6