Dillard's 2012 Annual Report Download - page 45

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, and other risks and uncertainties, including those detailed from
time to time in our periodic reports filed with the Securities and Exchange Commission, particularly
those set forth under the caption ‘‘Item 1A, Risk Factors’’ in this Form 10-K.
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) 2013 2014 2015 2016 2017 Thereafter Total Fair Value
Long-term debt .......... $— $— $— $— $87,201 $527,584 $614,785 $671,738
Average fixed interest rate . . —% —% —% —% 6.6% 7.3% 7.3%
Subordinated debentures . . . $— $— $— $— $ — $200,000 $200,000 $204,160
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 or LIBOR plus 1.5%. The Company had weighted average borrowings of
$17.0 million during fiscal 2012. Based on the average amount outstanding during fiscal 2012, a 100
basis point change in interest rates would result in an approximate $0.2 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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