Dillard's 2013 Annual Report Download - page 35

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from legislatively-enacted state tax rate reductions. These tax benefits were partially offset by the recognition of tax expense of
approximately $2.3 million due to increases in net operating loss valuation allowances. Additionally, during fiscal 2011, the
IRS concluded its examination of the Company's federal income tax returns for the fiscal tax years 2008 through 2009, and no
significant changes occurred in these tax years as a result of such examination.
LIQUIDITY AND CAPITAL RESOURCES
The Company's current non-operating priorities for its use of cash are stock repurchases, strategic investments to enhance
the value of existing properties and dividend payments to shareholders.
Cash flows for the three fiscal years ended were as follows:
Percent Change
(in thousands of dollars) Fiscal 2013 Fiscal 2012 Fiscal 2011 2013 - 2012 2012 - 2011
Operating Activities. . . . . . . . . . . . . . . . . . . . . . $ 501,757 $ 522,703 $ 501,140 (4.0)% 4.3%
Investing Activities . . . . . . . . . . . . . . . . . . . . . . (76,628) (105,709)(83,224) 27.5 (27.0)
Financing Activities. . . . . . . . . . . . . . . . . . . . . . (312,055) (517,206)(536,935) 39.7 3.7
Total Cash (Used) Provided. . . . . . . . . . . . . . . $ 113,074 $ (100,212)$ (119,019)
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 96.2% and 96.1% of total revenues in
fiscal 2013 and 2012, respectively.
Operating cash inflows also include revenue and reimbursements from the Alliance with GE, which owns and manages
the Company's private label credit card business under the Alliance, and cash distributions from joint ventures. Operating cash
outflows include payments to vendors for inventory, services and supplies, payments to employees and payments of interest
and taxes.
The Alliance provides for certain payments to be made by GE to the Company, including a revenue sharing and
marketing reimbursement. The Company received income of approximately $113 million and $107 million from GE in fiscal
2013 and 2012, respectively. The amount the Company receives is dependent on 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 as well as GE's funding costs. The Alliance expires in late fiscal
2014, and the Company is currently considering its options concerning the future ownership and management of the credit card
business.
Net cash flows from operations decreased $20.9 million during fiscal 2013 compared to fiscal 2012. This decline is
primarily attributable to a decrease of $111.9 million related to changes in working capital items, primarily of increases in
inventories and decreases in accrued expenses. This decrease was partially offset by higher net income, as adjusted for non-
cash items, of $90.9 million for fiscal 2013 compared to fiscal 2012.
Included in net income for fiscal 2011 was a $44.5 million pretax gain ($28.7 million after tax or $0.53 per share), net of
settlement related expenses, related to the settlement of a lawsuit with JDA Software Group for $57.0 million.
Investing Activities
Cash inflows from investing activities generally include proceeds from sales of property and equipment. Investment cash
outflows generally include payments for capital expenditures such as property and equipment.
Capital expenditures decreased $41.7 million for fiscal 2013 compared to fiscal 2012. The fiscal 2013 expenditures of
$94.9 million were primarily for the remodeling of existing stores.
Capital expenditures for fiscal 2014 are expected to be approximately $150 million. These expenditures are primarily for
the construction and remodeling of stores. We have begun construction of our new locations at The Shops at Summerlin in Las
Vegas, Nevada (200,000 square feet) and The Mall at University Town Center in Sarasota, Florida (180,000 square feet). Both
locations are expected to open during the third quarter of fiscal 2014.