Dillard's 2009 Annual Report Download - page 22

Seasonality and Inflation
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. Because of the seasonality of our business, results from any quarter are not necessarily
indicative of the results that may be achieved for a full fiscal year.
We do not believe that inflation has had a material effect on our results during the periods
presented; however, there can be no assurance that our business will not be affected by such factors in
the future.
2010 Guidance
A summary of estimates on key financial measures for fiscal 2010 is shown below. There have been
no changes in the estimates for 2010 since the Company released its fourth quarter earnings on
March 1, 2010.
Fiscal 2010 Fiscal 2009
(In millions of dollars) Estimated Actual
Depreciation .................................... $260 $263
Rental expense .................................. 56 58
Interest and debt expense, net ....................... 74 74
Capital expenditures .............................. 100 83
General
Net sales. Net sales include merchandise sales of comparable and non-comparable stores and
revenue recognized on contracts of CDI, a former 50% equity method joint venture investment of the
Company that is a general contractor whose business includes constructing and remodeling stores for
the Company. Comparable store sales include sales for those stores which were in operation for a full
period in both the current month and the corresponding month for the prior year. Non-comparable
store sales include sales in the current fiscal year from stores opened during the previous fiscal year
before they are considered comparable stores, sales from new stores opened in the current fiscal year
and sales in the previous fiscal year for stores that were closed in the current fiscal year.
Service charges and other income. Service charges and other income include income generated
through the Alliance with GE. Other income includes rental income, shipping and handling fees and
lease income on leased departments.
Cost of sales. Cost of sales includes the cost of merchandise sold (net of purchase discounts),
bankcard fees, freight to the distribution centers, employee and promotional discounts, non-specific
margin maintenance allowances and direct payroll for salon personnel. Cost of sales also includes CDI
contract costs, which comprise all direct material and labor costs, subcontract costs and those indirect
costs related to contract performance, such as indirect labor, employee benefits and insurance program
costs.
Advertising, selling, administrative and general expenses. Advertising, selling, administrative and
general expenses include buying, occupancy, selling, distribution, warehousing, store and corporate
expenses (including payroll and employee benefits), insurance, employment taxes, advertising,
management information systems, legal and other corporate level expenses. Buying expenses consist of
payroll, employee benefits and travel for design, buying and merchandising personnel.
Depreciation and amortization. Depreciation and amortization expenses include depreciation and
amortization on property and equipment.
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