# Dillard'S, Inc.: Form 10-Q for the period ended Apr 30, 2011

- Company: [Dillard'S, Inc.](/companies/dds.md) (CIK 28917)
- Form: 10-Q
- Filed: 2011-06-03
- Accepted by EDGAR: Jun 3, 2011, 15:32 ET
- Period: 2011-04-30
- Accession: 0001104659-11-033162
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/28917/000110465911033162/a11-11986_110q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/28917/000110465911033162/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2011-04-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2011-01-30 to 2011-04-30 | $1.50bn | us-gaap:Revenues |
| Cost of revenue | 3 months, 2011-01-30 to 2011-04-30 | $898.9m | us-gaap:CostOfRevenue |
| Income tax | 3 months, 2011-01-30 to 2011-04-30 | $42.7m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2011-01-30 to 2011-04-30 | $76.7m | us-gaap:ProfitLoss |
| Diluted EPS | 3 months, 2011-01-30 to 2011-04-30 | $1.31 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2011-01-30 to 2011-04-30 | $1.33 | us-gaap:EarningsPerShareBasic |
| Operating cash flow | 3 months, 2011-01-30 to 2011-04-30 | $59.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2011-01-30 to 2011-04-30 | $17.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2011-01-30 to 2011-04-30 | $2.5m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 3 months, 2011-01-30 to 2011-04-30 | $247.1m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2011-04-30 | $147.3m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2011-04-30 | $1.72bn | us-gaap:AssetsCurrent |
| Total assets | at 2011-04-30 | $4.34bn | us-gaap:Assets |
| Current liabilities | at 2011-04-30 | $988.7m | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2011-04-30 | $696.8m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2011-04-30 | $49.2m | us-gaap:LongTermDebtCurrent |

## Management's discussion and analysis

As filed, 31,892 characters.

The following discussion should be read in conjunction with the condensed consolidated financial statements and the footnotes thereto included elsewhere in this report, as well as the financial and other information included in our Annual Report on Form 10-K for the year ended January 29, 2011.

### EXECUTIVE OVERVIEW

We began fiscal 2011 with improved operating results. Leading with increased comparable store sales during our first quarter, we were able to improve gross margin, as we continued to focus on our core initiatives of disciplined inventory management, and also reduce our operating spending. These key factors culminated in improved net income of $76.7 million compared to $48.8 million over the prior year comparable period, and combined with $268.7 million of stock repurchases during this first quarter of 2011, earnings per share grew to $1.31 per share compared to $0.68 per share for the prior year comparable period.

Included in net income for the quarter ended April 30, 2011 are:

- a $4.2 million pretax gain ($2.7 million after tax or $0.05 per diluted share) related to a distribution from a mall joint venture and
- a $1.2 million pretax charge ($0.8 million after tax or $0.01 per diluted share) for asset impairment and store closing charges related to the write-down of one property currently held for sale.

Included in net income for the quarter ended May 1, 2010 is:

- a $2.2 million pretax charge ($1.4 million after tax or $0.02 per share) for asset impairment and store closing charges related to the write-down of one property currently held for sale.

Highlights of the quarter ended April 30, 2011 included:

- Net income of $76.7 million, or $1.31 per diluted share, compared to $48.8 million, or $0.68 per diluted share, for the quarter ended May 1, 2010
- Repurchase of $268.7 million (6.4 million shares) of Class A Common Stock, completing the authorization under the 2010 and 2011 stock repurchase programs
- A comparable store sales increase of 2%
- Improved merchandise gross margin of 130 basis points of sales compared to the quarter ended May 1, 2010
- Operating expense savings of $4.4 million (60 basis points of sales) compared to the quarter ended May 1, 2010

As of April 30, 2011, we had working capital of $727.2 million, cash and cash equivalents of $147.3 million and $946.0 million of total debt outstanding, excluding capital lease obligations. Cash flows from operating activities were $59.2 million for the first quarter of fiscal 2011. We operated 308 Dillard’s locations, including 14 clearance centers, and an internet store as of April 30, 2011, a decrease of 3 stores from the same period last year.

### Key Performance Indicators

We use a number of key indicators of financial condition and operating performance to evaluate our business, including the following:

|  | Three Months Ended April 30, 2011 | May 1, 2010 |
| --- | ---: | ---: |
| Net sales (in millions) | $1,469.2 | $1,453.6 |
| Net sales trend | 1% | (1)% |
| Gross profit (in millions) | $570.3 | $539.3 |
| Gross profit as a percentage of net sales | 38.8% | 37.1% |
| Cash flow from operations (in millions) | $59.2 | $80.3 |
| Total retail store count at end of period | 308 | 311 |
| Retail sales per square foot | $27 | $27 |
| Retail store sales trend | 2% | 1% |
| Comparable retail store sales trend | 2% | 2% |
| Comparable retail store inventory trend | 4% | (12)% |
| Retail merchandise inventory turnover | 2.7 | 2.7 |

### General

**Net sales.** Net sales include merchandise sales of comparable and non-comparable stores and revenue recognized on contracts of CDI Contractors, LLC (“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. 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; and sales in clearance centers.

**Service charges and other income.** Service charges and other income include income generated through the long-term marketing and servicing alliance (“Alliance”) with GE Consumer Finance (“GE”), which owns and manages the Dillard’s branded proprietary credit cards. 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.

**Rentals.** Rentals include expenses for store leases and data processing and other equipment rentals.

**Interest and debt expense, net.** Interest and debt expense includes interest, net of interest income, relating to the Company’s unsecured notes, mortgage notes, term note and subordinated debentures, amortization of financing costs and interest on capital lease obligations.

**Gain on disposal of assets.** Gain on disposal of assets includes the net gain or loss on the sale or disposal of property and equipment.

**Asset impairment and store closing charges.** Asset impairment and store closing charges consist of write-downs to fair value of under-performing or available-for-sale properties and exit costs associated with the closure of certain stores. Exit costs include future rent, taxes and common area maintenance expenses from the time the stores are closed.

**Income on and equity in losses of joint ventures.** Income on and equity in losses of joint ventures includes the Company’s portion of the income or loss of the Company’s unconsolidated joint ventures as well as a distribution of excess cash from one of the Company’s mall joint ventures.

### 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 in the future. In response to recent economic volatility in Asia and to increasing fabric prices (including cotton) and overseas wages, we have sought solutions to help minimize the effects of these events on our operations during fiscal 2011 by (1) negotiating efficiencies through our longstanding relationships with our current suppliers, (2) considering alternative manufacturing sources, (3) redesigning our garments and incorporating other types of fibers where appropriate and (4) adjusting price points as necessary. Consequently, we believe the effects of these currently known trends on our gross margins in fiscal 2011 will be minimal.

### RESULTS OF OPERATIONS

The following table sets forth the results of operations and percentage of net sales for the periods indicated.

|  | Three Months Ended April 30, 2011 | May 1, 2010 |
| --- | ---: | ---: |
| Net sales | 100.0% | 100.0% |
| Service charges and other income | 2.0 | 2.0 |
|  | 102.0 | 102.0 |
| Cost of sales | 61.2 | 62.9 |
| Advertising, selling, administrative and general expenses | 26.5 | 27.1 |
| Depreciation and amortization | 4.4 | 4.4 |
| Rentals | 0.8 | 0.9 |
| Interest and debt expense, net | 1.2 | 1.3 |
| Gain on disposal of assets | (0.0) | (0.0) |
| Asset impairment and store closing charges | 0.1 | 0.1 |
| Income before income taxes and income on and equity in losses of joint ventures | 7.8 | 5.3 |
| Income taxes | 2.9 | 1.9 |
| Income on and equity in losses of joint ventures | 0.3 | (0.0) |
| Net income | 5.2% | 3.4% |

14

### Net Sales

*(in thousands of dollars)*

| Net sales: | Three Months Ended April 30, 2011 | May 1, 2010 | $ Change |
| --- | ---: | ---: | ---: |
| Retail operations segment | $1,455,510 | $1,428,851 | $26,659 |
| Construction segment | 13,688 | 24,745 | (11,057) |
| Total net sales | $1,469,198 | $1,453,596 | $15,602 |

The percent change by category in the Company’s retail operations segment sales for the quarter ended April 30, 2011 compared to the quarter ended May 1, 2010, as well as the percentage by segment and category to total net sales, is as follows:

| Retail operations segment | % Change 2011-2010 | % of Net Sales |
| --- | ---: | ---: |
| Cosmetics | 3.0% | 16% |
| Ladies’ apparel and accessories | 1.8 | 37 |
| Juniors’ and children’s apparel | 2.4 | 9 |
| Men’s apparel and accessories | 0.7 | 16 |
| Shoes | 5.4 | 16 |
| Home and furniture | (6.4) | 5 |
|  |  | 99 |
| Construction segment |  | 1 |
| Total |  | 100% |

Net sales from the retail operations segment increased $26.7 million during the quarter ended April 30, 2011 compared to the quarter ended May 1, 2010, increasing 2% in both total and comparable stores. Sales of shoes were up significantly over the prior year and sales of men’s apparel and accessories were up slightly. All other merchandise categories experienced a moderate increase of sales between the periods with the exception of home and furniture which had a significant decline.

The number of sales transactions decreased 2% for the quarter ended April 30, 2011 over the prior year period while the average dollars per sales transaction were up moderately. We recorded an allowance for sales returns of $10.4 million and $8.5 million for the quarters ended April 30, 2011 and May 1, 2010, respectively.

We continue to believe that in light of recent signs of modest economic improvement in the United States, we may continue to see some sales growth in the retail operations segment during the coming months; however, there is no guarantee of improved sales performance. Any further deterioration in the United States economy could have an adverse affect on consumer confidence and consumer spending habits, which could result in reduced customer traffic and comparable store sales, higher inventory levels and markdowns and lower overall profitability.

Net sales from the construction segment decreased $11.1 million or 45% during the quarter ended April 30, 2011 compared to the quarter ended May 1, 2010. We believe this decrease is primarily attributable to the negative impact that the weak recovery of the United States economy continues to have on demand for construction projects in private industry.

### Service Charges and Other Income

*(in thousands of dollars)*

| Service charges and other income: Retail operations segment | Three Months Ended April 30, 2011 | May 1, 2010 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Leased department income | $2,310 | $2,201 | $109 | 5.0% |
| Income from GE marketing and servicing alliance | 21,131 | 20,194 | 937 | 4.6 |
| Shipping and handling income | 4,357 | 3,937 | 420 | 10.7 |
| Other | 1,739 | 2,368 | (629) | (26.6) |
|  | 29,537 | 28,700 | 837 | 2.9 |
| Construction segment | 21 | 365 | (344) | (94.2) |
| Total service charges and other income | $29,558 | $29,065 | $493 | 1.7 |

Service charges and other income is composed primarily of income from the Alliance with GE. Income from the Alliance increased during the quarter ended April 30, 2011 compared to the quarter ended May 1, 2010 primarily due to decreased credit losses partially offset by reduced finance charge and late charge fee income related to recent credit regulation legislation.

### Gross Profit (Loss)

*(in thousands of dollars)*

| Gross profit (loss): | Three Months Ended April 30, 2011 | May 1, 2010 | Change |
| --- | ---: | ---: | ---: |
| Retail operations segment | $569,684 | $540,307 | $29,377 |
| Construction segment | 628 | (972) | 1,600 |
| Total gross profit | $570,312 | $539,335 | $30,977 |
| **Gross profit (loss) as a percentage of segment net sales:** |  |  |  |
| Retail operations segment | 39.1% | 37.8% | 1.3% |
| Construction segment | 4.6 | (3.9) | 8.5 |
| **Total gross profit as a percentage of net sales** | 38.8 | 37.1 | 1.7 |

Gross profit improved 170 basis points of sales during the quarter ended April 30, 2011 compared to the quarter ended May 1, 2010. Gross profit from retail operations improved 130 basis points of sales during the same comparable periods as a result of the Company’s continuing inventory management measures leading to reduced markdown activity. These improvements include notable changes to the cadence of merchandise receipts to shorten the time span between receipt of product and point of sale to help reduce markdown risk and to keep customers engaged with a more continuous flow of fresh merchandise selections. Inventory in comparable stores increased 4% as of April 30, 2011 compared to May 1, 2010 as management has planned more aggressively in light of improved sales trends. A 1% change in the dollar amount of markdowns would have impacted net income by approximately $2 million for the quarter ended April 30, 2011.

Most merchandise categories experienced moderate improvements in gross margin during the quarter ended April 30, 2011 compared to May 1, 2010, while home and furniture improved significantly, ladies’ apparel and accessories improved slightly and cosmetics was flat.

Gross profit from the construction segment increased 850 basis points of sales during the quarter ended April 30, 2011 compared to the quarter ended May 1, 2010. This improvement was primarily due to a $2.2 million loss recorded in the prior year on certain electrical contracts stemming from job delays due to bad weather and job underperformance.

### Advertising, Selling, Administrative and General Expenses (“SG&A”)

*(in thousands of dollars)*

| SG&A: | Three Months Ended April 30, 2011 | May 1, 2010 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Retail operations segment | $388,054 | $392,445 | $(4,391) | (1.1)% |
| Construction segment | 1,213 | 1,197 | 16 | 1.3 |
| Total SG&A | $389,267 | $393,642 | $(4,375) | (1.1)% |
| **SG&A as a percentage of segment net sales** |  |  |  |  |
| Retail operations segment | 26.7% | 27.5% |  |  |
| Construction segment | 8.9 | 4.8 |  |  |
| **Total SG&A as a percentage of net sales** | 26.5 | 27.1 |  |  |

The decline in SG&A during the quarter ended April 30, 2011 compared to the quarter ended May 1, 2010 primarily resulted from decreased net advertising expenditures ($3.0 million).

### Rentals

*(in thousands of dollars)*

| Rentals: | Three Months Ended April 30, 2011 | May 1, 2010 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Retail operations segment | $11,417 | $12,991 | $(1,574) | (12.1)% |
| Construction segment | 13 | 23 | (10) | (43.5) |
| Total rentals | $11,430 | $13,014 | $(1,584) | (12.2)% |

The decrease in rental expense for the quarter ended April 30, 2011 compared to the quarter ended May 1, 2010 is primarily due to a decrease in the amount of equipment leased by the Company.

### Interest and Debt Expense, Net

*(in thousands of dollars)*

| Interest and debt expense (income), net: | Three Months Ended April 30, 2011 | May 1, 2010 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Retail operations segment | $18,316 | $18,899 | $(583) | (3.1)% |
| Construction segment | (41) | (43) | 2 | 4.7 |
| Total interest and debt expense, net | $18,275 | $18,856 | $(581) | (3.1)% |

The decrease in net interest and debt expense for the quarter ended April 30, 2011 is primarily attributable to higher investment income and lower average debt levels. Total weighted average debt decreased approximately $3.7 million during the quarter ended April 30, 2011 compared to the quarter ended May 1, 2010.

### Asset Impairment and Store Closing Charges

*(in thousands of dollars)*

| Asset impairment and store closing charges: | Three Months Ended April 30, 2011 | May 1, 2010 | $ Change |
| --- | ---: | ---: | ---: |
| Retail operations segment | $1,200 | $2,208 | $(1,008) |
| Construction segment | — | — | — |
| **Total asset impairment and store closing charges** | $1,200 | $2,208 | $(1,008) |

During the quarter ended April 30, 2011, the Company recorded a pretax charge of $1.2 million for asset impairment and store closing costs. The charge was for the write-down of one property currently held for sale.

During the quarter ended May 1, 2010, the Company recorded a pretax charge of $2.2 million for asset impairment and store closing costs. The charge was for the write-down of one property currently held for sale.

### Income Taxes

The total amount of unrecognized tax benefits as of April 30, 2011 and May 1, 2010 was $8.4 million and $16.1 million, respectively, of which $5.6 million and $11.7 million, respectively, would, if recognized, affect the effective tax rate. The Company classifies accrued interest expense and penalties relating to income tax in the condensed consolidated financial statements as income tax expense. The total accrued interest and penalties in the condensed consolidated balance sheets as of April 30, 2011 and May 1, 2010 was $3.6 million and $6.3 million, respectively. The estimated range of the reasonably possible uncertain tax benefit decrease in the next twelve months is between $0.5 million and $1.5 million. No significant changes occurred in the tax years subject to examination by major tax jurisdictions during the quarter ended April 30, 2011. Changes in the Company’s assumptions and judgments can materially affect amounts recognized in the condensed consolidated balance sheets and statements of income.

The Company’s estimated federal and state income tax rate, inclusive of income on or equity in losses of joint ventures, was approximately 35.8% for both quarters ended April 30, 2011 and May 1, 2010. During the quarter ended April 30, 2011, income taxes included the recognition of tax benefits primarily due to federal tax credits and the decrease in net operating loss valuation allowances. During the quarter ended May 1, 2010, income taxes included the recognition of tax benefits primarily due to federal tax credit refund claims.

Our income tax rate for the remainder of fiscal 2011 is dependent upon results of operations and may change if the results for fiscal 2011 are different from current expectations. Our income tax rate may also change based on the way in which we finalize the tax structure of the real estate investment trust formed in January 2011. We currently estimate that our effective rate for the remainder of fiscal 2011 will approximate 36%.

### Income on Joint Venture

During the quarter ended April 30, 2011, the Company’s retail operations segment received a distribution of excess cash from a mall joint venture of $6.7 million and recorded a related gain of $4.2 million in income on and equity in losses of joint ventures.

### FINANCIAL CONDITION

### Financial Position Summary

*(in thousands of dollars)*

|  | April 30, 2011 | January 29, 2011 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Cash and cash equivalents | $147,266 | $343,291 | $(196,025) | (57.1)% |
| Long-term debt, including current portion | 745,970 | 746,412 | (442) | (0.1) |
| Subordinated debentures | 200,000 | 200,000 | — | — |
| Stockholders’ equity | 1,904,863 | 2,086,720 | (181,857) | (8.7) |
| Current ratio | 1.74 | 2.05 |  |  |
| Debt to capitalization | 33.2% | 31.2% |  |  |

*(in thousands of dollars)*

|  | April 30, 2011 | May 1, 2010 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Cash and cash equivalents | $147,266 | $305,296 | $(158,030) | (51.8)% |
| Long-term debt, including current portion | 745,970 | 748,883 | (2,913) | (0.4) |
| Subordinated debentures | 200,000 | 200,000 | — | — |
| Stockholders’ equity | 1,904,863 | 2,247,748 | (342,885) | (15.3) |
| Current ratio | 1.74 | 2.12 |  |  |
| Debt to capitalization | 33.2% | 29.7% |  |  |

Net cash flows from operations decreased to $59.2 million during the quarter ended April 30, 2011 compared to $80.3 million for the quarter ended May 1, 2010. This $21.1 million decrease is primarily attributable to a decrease of $45.9 million related to changes in working capital items, primarily of changes in inventories as the Company responds to improved sales trends. This decrease was partially offset by higher net income, as adjusted for non-cash items, of $24.8 million for the quarter ended April 30, 2011 as compared to the quarter ended May 1, 2010.

GE owns and manages Dillard’s branded proprietary credit card business under the Alliance that expires in fiscal 2014. 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 $21.1 million and $20.2 million from GE during the quarters ended April 30, 2011 and May 1, 2010, respectively. While future cash flows under this Alliance are difficult to predict, the Company expects income from the Alliance to improve moderately during fiscal 2011 compared to fiscal 2010. 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.

Capital expenditures were $17.0 million and $8.4 million for the quarters ended April 30, 2011 and May 1, 2010, respectively. The current year expenditures were primarily for the remodeling of existing stores and equipment upgrades, including installation of the Company’s new internet fulfillment center located in Maumelle, Arkansas which is expected to be fully functional by early fiscal 2012. Capital expenditures for fiscal 2011 are expected to be approximately $150 million compared to actual expenditures of $98.2 million during fiscal 2010. There are no planned new store openings for fiscal 2011.

No stores were closed during the quarter ended April 30, 2011. We closed our Highland Mall location in Austin, Texas (190,000 square feet) in May 2011. We have announced the upcoming closures of our Decatur Mall location in Decatur, Alabama (128,000 square feet) and our Westminster Mall location in Westminster, Colorado (159,000 square feet), both of which are expected to close in the second quarter of fiscal 2011. We remain committed to closing under-performing stores where appropriate and may incur future closing costs related to these stores when they close.

During the quarter ended April 30, 2011, the Company received a distribution of excess cash from a mall joint venture of $6.7 million and recorded a related gain of $4.2 million in income on and equity in losses of joint ventures.

The Company had cash on hand of approximately $147 million as of April 30, 2011. As part of our overall liquidity management strategy and for peak working capital requirements, the Company has a $1.0 billion credit facility. Limited to 85% of the inventory of certain Company subsidiaries, availability for borrowings and letter of credit obligations under the credit agreement was $944.5 million at April 30, 2011. No borrowings were outstanding at April 30, 2011. Letters of credit totaling $85.8 million were issued under this credit agreement leaving unutilized availability under the facility of approximately $859 million at April 30, 2011.

Cash used in financing activities for the quarter ended April 30, 2011 totaled $240.7 million compared to cash used of $108.4 million for the quarter ended May 1, 2010. This decrease in cash flow was primarily due to the repurchase of Company stock.

During the quarter ended April 30, 2011, the Company repurchased 6.4 million shares of stock for $268.7 million (including the accrual of $21.6 million of share repurchase that had not settled as of April 30, 2011) at an average price of $41.95 per share under its 2010 and February 2011 Stock Plans. During the quarter ended May 1, 2010, the Company repurchased 4.2 million shares of stock for $105.0 million at an average price of $24.88 per share under its 2007 Stock Plan. At April 30, 2011, no authorization remained under any stock plan.

In May 2011, the Company announced that the Board of Directors authorized the repurchase of up to $250 million of the Company’s Class A Common Stock under a new stock plan (“May 2011 Stock Plan”). This authorization permits the Company to repurchase its Class A Common Stock in the open market, pursuant to preset trading plans meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934 or through privately negotiated transactions. The May 2011 Stock Plan has no expiration date.

During fiscal 2011, the Company expects to finance its capital expenditures and its working capital requirements, including required debt repayments and stock repurchases, from cash on hand, cash flows generated from operations and utilization of the credit facility. The Company expects peak borrowings under the credit facility during fiscal 2011 to be minimal. Depending on conditions in the capital markets and other factors, the Company will from time to time consider other possible financing transactions, the proceeds of which could be used to refinance current indebtedness or for other corporate purposes.

There have been no material changes in the information set forth under caption “Contractual Obligations and Commercial Commitments” in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in the Company’s Annual Report on Form 10-K for the fiscal year ended January 29, 2011.

### OFF-BALANCE-SHEET ARRANGEMENTS

The Company has not created, and is not party to, any special-purpose entities or off-balance-sheet arrangements for the purpose of raising capital, incurring debt or operating the Company’s business. The Company does not have any off-balance-sheet arrangements or relationships that are reasonably likely to materially affect the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or the availability of capital resources.

### NEW ACCOUNTING STANDARDS

#### Fair Value Measurements and Disclosures

In January 2010, the FASB issued ASU 2010-06, an update to Topic 820, *Fair Value Measurements and Disclosures.* ASU 2010-06 provides an update specifically to Subtopic 820-10 that requires new disclosures including details of significant transfers in and out of Level 1 and Level 2 measurements and the reasons for the transfers and a gross presentation of activity within the Level 3 roll forward, presenting separately information about purchases, sales, issuances and settlements. ASU 2010-06 is effective for the first interim or annual reporting period beginning after December 15, 2009, except for the gross presentation of the Level 3 roll forward, which is required for interim and annual reporting periods beginning after December 15, 2010. The adoption of ASU 2010-06 did not have a material impact on the Company’s condensed consolidated financial statements.

### FORWARD-LOOKING INFORMATION

This report contains certain forward-looking statements. The following are or may constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995: (a) statements including words such as “may,” “will,” “could,” “believe,” “expect,” “future,” “potential,” “anticipate,” “intend,” “plan,” “estimate,” “continue,” or the negative or other variations thereof; (b) statements regarding matters that are not historical facts; and (c) statements about the Company’s future occurrences, plans and objectives, including statements regarding management’s expectations and forecasts for the remainder of fiscal 2011 and fiscal 2012. The Company cautions that forward-looking statements contained in this report are based on estimates, projections, beliefs and assumptions of management and information available to management at the time of such statements and are not guarantees of future performance. The Company disclaims any obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information, or otherwise. Forward-looking statements of the Company involve risks and uncertainties and are subject to change 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. The Company’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended January 29, 2011, contain other information on factors that may affect financial results or cause actual results to differ materially from forward-looking statements.

## Market risk

As filed, 235 characters.

There have been no material changes in the information set forth under caption “Item 7A-Quantitative and Qualitative Disclosures About Market Risk” in the Company’s Annual Report on Form 10-K for the fiscal year ended January 29, 2011.

## Controls and procedures

As filed, 774 characters.

The Company has established and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). The Company’s management, with the participation of our CEO and CFO, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the fiscal quarter covered by this quarterly report, and based on that evaluation, the Company’s CEO and CFO have concluded that these disclosure controls and procedures were effective.

There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended April 30, 2011 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

## Risk factors

As filed, 189 characters.

There have been no material changes in the information set forth under caption “Item 1A-Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended January 29, 2011.

Filed Jun 3, 2011.
Source: SEC EDGAR, the filing index for accession 0001104659-11-033162. Last ingested by Listed: Oct 27, 2026, 18:21 ET. No prices; not investment advice.