Dillard's 2012 Annual Report Download - page 26

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, our business could be affected by such in the future.
2013 Guidance
A summary of estimates on key financial measures for fiscal 2013 is shown below.
Fiscal 2013 Fiscal 2012
(in millions of dollars) Estimated Actual
Depreciation and amortization ....................... $261 $260
Rentals ........................................ 27 35
Interest and debt expense, net ....................... 65 70
Capital expenditures .............................. 175 137
General
Net sales. Net sales include merchandise sales of comparable and non-comparable stores and
revenue recognized on contracts of CDI, the Company’s general contracting construction 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. Comparable store sales exclude the
change in the allowance for sales returns. 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 during the current fiscal year; sales in the previous fiscal year for stores
closed during the current or previous fiscal year that are no longer considered comparable stores; sales
in clearance centers; and changes in the allowance for sales returns.
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, gift
card breakage and lease income on leased departments.
Cost of sales. Cost of sales includes the cost of merchandise sold (net of purchase discounts and
non-specific margin maintenance allowances), bankcard fees, freight to the distribution centers,
employee and promotional discounts, 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.
Selling, general and administrative expenses. Selling, general and administrative 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.
Rentals. Rentals include expenses for store leases, including contingent rent, and data processing
and other equipment rentals.
22