DSW 2012 Annual Report Download - page 28

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relatively flat at $546.5 million as of February 2, 2013 compared to $560.5 million as of January 28, 2012. As of February 2,
2013 and January 28, 2012, the current ratio was 3.0 and 2.8, respectively.
Operating Activities
Net cash provided by operations in fiscal 2012 increased to $258.6 million from $214.2 million for fiscal 2011. The
increase in net cash provided by operations was driven primarily by DSW's utilization of RVI’s federal net operating losses and
tax credits to offset its taxable income, as well as other changes in working capital. The utilization of net operating losses and
tax credits generated significant cash tax savings, and we believe should continue to generate cash tax savings in the first half
of fiscal 2013.
Net cash provided by operations in fiscal 2011 increased to $214.2 million from $127.0 million for fiscal 2010. The increase
in our income from continuing operations was $148.5 million, which was higher than our increase in net cash provided by
operations, as it was driven by a non-cash deferred income tax benefit. The Merger allows DSW the opportunity to utilize
RVI’s federal net operating losses and tax credits to offset future taxable income, which generated significant cash tax savings
in fiscal 2011.
We operate all our stores and our fulfillment center from leased facilities. All lease obligations are accounted for as
operating leases. We disclose the minimum payments due under operating leases in the notes to the consolidated financial
statements included elsewhere in this Annual Report on Form 10-K. As of the fourth quarter of fiscal 2012, we own our
corporate office headquarters and our distribution center.
Although our plan for continued expansion could place increased demands on our financial, managerial, operational and
administrative resources and result in increased demands on management, we do not believe that our anticipated growth plan
will have an unfavorable impact on our operations or liquidity. Uncertainty in the United States economy could result in
reductions in customer traffic and comparable sales in our existing stores with the resultant increase in inventory levels and
markdowns. Reduced sales may result in reduced operating cash flows if we are not able to appropriately manage inventory
levels or leverage expenses. These potential negative economic conditions may also affect future profitability and may cause us
to reduce the number of future store openings, impair goodwill or impair long-lived assets.
Investing Activities
For fiscal 2012, cash used in investing activities amounted to $119.4 million compared to $139.6 million for fiscal 2011.
During fiscal 2012, $353.8 million of cash was used to purchase available-for-sale and held-to-maturity securities while $367.7
million of cash was generated by the sale of available-for-sale and held-to-maturity securities. Excluding the purchase of our
corporate office headquarters and distribution center during fiscal 2012, we incurred $99.8 million in capital expenditures, of
which $69.3 million related to stores and $30.5 million related to information technology, the reconfiguration of the Columbus
distribution center, the expansion of the dsw.com fulfillment center and business infrastructure.
In addition to our investments in new stores and remodeling stores, we have invested in the reconfiguration of the
Columbus distribution center and the expansion of the dsw.com fulfillment center to support business growth. With the
purchase of our corporate office headquarters for $72 million, we now have the ability to gradually expand our campus as
needed. Currently, portions of the properties are leased to related and unrelated parties for annual rental income. As a common
control transaction, the net book value of assets transferred to DSW was considered an investing cash flow while the difference
between the cash paid and the net book value of assets transferred to DSW was considered a financing cash flow.
For fiscal 2011, cash used in investing activities amounted to $139.6 million compared to $176.1 million for fiscal 2010.
During fiscal 2011, $393.8 million of cash was used to purchase available-for-sale and held-to-maturity securities while $329.1
million of cash was generated by the sale of available-for-sale and held-to-maturity securities. During fiscal 2011, we incurred
$76.9 million in capital expenditures, of which $58.5 million related to stores, $18.4 million related to information technology
and business infrastructure.
We expect to spend approximately $125 million for capital expenditures in fiscal 2013. Our future investments will depend
primarily on the number of stores we open and remodel, infrastructure and information technology programs that we undertake
and the timing of these expenditures. We plan to open approximately 25 to 30 stores in fiscal 2013. In fiscal 2012, we opened
39 new DSW stores. During fiscal 2012, the average investment required to open a typical new DSW store was approximately
$1.9 million, prior to construction and tenant allowances. Of this amount, gross inventory typically accounted for $0.7 million,
fixtures and leasehold improvements typically accounted for $0.9 million and new store advertising and other new store
expenses typically accounted for $0.3 million.
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