# Dillard'S, Inc.: Form 10-Q for the period ended Apr 28, 2012

- Company: [Dillard'S, Inc.](/companies/dds.md) (CIK 28917)
- Form: 10-Q
- Filed: 2012-05-30
- Accepted by EDGAR: May 30, 2012, 15:45 ET
- Period: 2012-04-28
- Accession: 0001104659-12-040736
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/28917/000110465912040736/a12-9188_110q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/28917/000110465912040736/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2012-04-28.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2012-01-29 to 2012-04-28 | $1.58bn | us-gaap:Revenues |
| Cost of revenue | 3 months, 2012-01-29 to 2012-04-28 | $954.1m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2012-01-29 to 2012-04-28 | $595.2m | us-gaap:GrossProfit |
| Income tax | 3 months, 2012-01-29 to 2012-04-28 | $53.0m | us-gaap:IncomeTaxExpenseBenefit |
| Diluted EPS | 3 months, 2012-01-29 to 2012-04-28 | $1.89 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2012-01-29 to 2012-04-28 | $1.92 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2012-01-29 to 2012-04-28 | 50,310,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2012-01-29 to 2012-04-28 | $98.5m | us-gaap:NetCashProvidedByUsedInOperatingActivitiesContinuingOperations |
| Capital expenditure | 3 months, 2012-01-29 to 2012-04-28 | $47.5m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2012-01-29 to 2012-04-28 | $2.5m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 3 months, 2012-01-29 to 2012-04-28 | $27.5m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2012-04-28 | $250.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2012-04-28 | $1.83bn | us-gaap:AssetsCurrent |
| Total assets | at 2012-04-28 | $4.52bn | us-gaap:Assets |
| Current liabilities | at 2012-04-28 | $1.02bn | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2012-04-28 | $614.8m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2012-04-28 | $76.3m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2012-04-28 | $2.12bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 31,605 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 28, 2012.

### EXECUTIVE OVERVIEW

Building on the momentum from fiscal 2011, our first quarter of fiscal 2012 produced record operating results. Comparable store sales were up for the seventh consecutive quarter while retail operations gross profit, down 10 basis points of sales, was held nearly flat and our operating spending rate was down. Net income increased to $95.0 million, or $1.89 per share — our highest historical first fiscal quarter earnings and earnings per share performances — compared to $76.7 million, or $1.31 per share, for the first quarter of last year.

Included in net income for the prior year first quarter ended April 30, 2011 were:

- 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.

Highlights of the quarter ended April 28, 2012 included:

- Record first quarter net income of $95.0 million, or $1.89 per share, compared to $76.7 million, or $1.31 per share, for the quarter ended April 30, 2011,
- A 5% increase in comparable store sales,
- Operating expense improvement of 110 basis points of sales and
- Repurchase of $27.5 million (0.4 million shares) of Class A Common Stock.

As of April 28, 2012, we had working capital of $805.3 million, cash and cash equivalents of $250.7 million and $891.1 million of total debt outstanding, excluding capital lease obligations. Cash flows from operating activities were $98.5 million for the first quarter of fiscal 2012. We operated 304 Dillard’s locations, including 17 clearance centers, and an internet store as of April 28, 2012, a decrease of 4 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 28, 2012 | April 30, 2011 |
| --- | ---: | ---: |
| Net sales (in millions) | $1,549.3 | $1,469.2 |
| Net sales trend | 5% | 1% |
| Gross profit (in millions) | $595.2 | $570.3 |
| Gross profit as a percentage of net sales | 38.4% | 38.8% |
| Cash flow from operations (in millions) | $98.5 | $59.2 |
| Total retail store count at end of period | 304 | 308 |
| Retail sales per square foot | $29 | $27 |
| Retail store sales trend | 5% | 2% |
| Comparable retail store sales trend | 5% | 2% |
| Comparable retail store inventory trend | 1% | 4% |
| Retail merchandise inventory turnover | 2.7 | 2.7 |

13

### 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. 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; 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, including contingent rent, 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, subordinated debentures and borrowings under the Company’s credit facility. Interest and debt expense also includes gains and losses on note repurchases, if any, 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 and the gain on the sale of an interest in a mall joint venture, if any.

**Asset impairment and store closing charges.** Asset impairment and store closing charges consist of write-downs to fair value of under-performing or held 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, our business could be affected by such in the future.

### RESULTS OF OPERATIONS

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

|  | Three Months Ended April 28, 2012 | April 30, 2011 |
| --- | ---: | ---: |
| Net sales | 100.0% | 100.0% |
| Service charges and other income | 2.2 | 2.0 |
|  | 102.2 | 102.0 |
| Cost of sales | 61.6 | 61.2 |
| Advertising, selling, administrative and general expenses | 25.4 | 26.5 |
| Depreciation and amortization | 4.1 | 4.4 |
| Rentals | 0.5 | 0.8 |
| Interest and debt expense, net | 1.1 | 1.2 |
| Gain on disposal of assets | (0.0) | (0.0) |
| Asset impairment and store closing charges | 0.0 | 0.1 |
| Income before income taxes and income on and equity in losses of joint ventures | 9.5 | 7.8 |
| Income taxes | 3.4 | 2.9 |
| Income on and equity in losses of joint ventures | 0.0 | 0.3 |
| Net income | 6.1% | 5.2% |

15

### Net Sales

*(in thousands of dollars)*

| Net sales: | Three Months Ended April 28, 2012 | April 30, 2011 | $ Change |
| --- | ---: | ---: | ---: |
| Retail operations segment | $1,521,975 | $1,455,510 | $66,465 |
| Construction segment | 27,344 | 13,688 | 13,656 |
| Total net sales | $1,549,319 | $1,469,198 | $80,121 |

The percent change by category in the Company’s retail operations segment sales for the quarter ended April 28, 2012 compared to the quarter ended April 30, 2011, as well as the percentage by segment and category to total net sales, is as follows:

| Retail operations segment | % Change 2012-2011 | % of Net Sales |
| --- | ---: | ---: |
| Cosmetics | 5.2% | 16% |
| Ladies’ apparel | 3.8 | 24 |
| Ladies’ accessories and lingerie | 6.8 | 13 |
| Juniors’ and children’s apparel | 1.2 | 9 |
| Men’s apparel and accessories | 5.5 | 16 |
| Shoes | 5.8 | 16 |
| Home and furniture | (0.5) | 4 |
|  |  | 98 |
| Construction segment |  | 2 |
| Total |  | 100% |

Net sales from the retail operations segment increased $66.5 million during the quarter ended April 28, 2012 compared to the quarter ended April 30, 2011, increasing 5% in both total and comparable stores. Significant increases were noted in sales of ladies’ accessories and lingerie, shoes, men’s apparel and accessories, and cosmetics over the prior year first quarter while sales in the home and furniture category were essentially flat.

We believe that we may continue to see some sales growth in the retail operations segment during fiscal 2012; however, there is no guarantee of improved sales performance.

The number of sales transactions decreased 2% for the quarter ended April 28, 2012 over the prior year period while the average dollars per sales transaction were up significantly. We recorded an allowance for sales returns of $8.9 million and $10.4 million for the quarters ended April 28, 2012 and April 30, 2011, respectively.

During the quarter ended April 28, 2012, net sales from the construction segment increased $13.7 million, nearly doubling sales from the prior year first quarter because of an increase in new construction projects. We believe that we will continue to see some sales growth in the construction segment during fiscal 2012; however, there is no guarantee of improved sales performance. The backlog of awarded construction contracts at April 28, 2012 totaled $166.3 million.

### Service Charges and Other Income

*(in thousands of dollars)*

| Service charges and other income: Retail operations segment | Three Months Ended April 28, 2012 | April 30, 2011 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Leased department income | $2,488 | $2,310 | $178 | 7.7% |
| Income from GE marketingand servicing alliance | 25,188 | 21,131 | 4,057 | 19.2 |
| Shipping and handling income | 4,352 | 4,357 | (5) | (0.1) |
| Other | 1,862 | 1,739 | 123 | 7.1 |
|  | 33,890 | 29,537 | 4,353 | 14.7 |
| Construction segment | 19 | 21 | (2) | (9.5) |
| Total service charges and other income | $33,909 | $29,558 | $4,351 | 14.7% |

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 28, 2012 compared to the quarter ended April 30, 2011, primarily due to decreased credit losses and increases in finance charge and late charge fee income.

### Gross Profit

*(in thousands of dollars)*

| Gross profit: | Three Months Ended April 28, 2012 | April 30, 2011 | Change |
| --- | ---: | ---: | ---: |
| Retail operations segment | $593,847 | $569,684 | $24,163 |
| Construction segment | 1,343 | 628 | 715 |
| Total gross profit | $595,190 | $570,312 | $24,878 |
| **Gross profit as a percentage of segment net sales:** |  |  |  |
| Retail operations segment | 39.0% | 39.1% | (0.1)% |
| Construction segment | 4.9 | 4.6 | 0.3 |
| **Total gross profit as a percentage of net sales** | 38.4 | 38.8 | (0.4) |

Gross profit declined 40 basis points of sales during the quarter ended April 28, 2012 compared to the quarter ended April 30, 2011. Gross profit from retail operations declined 10 basis points of sales during the same comparable periods. Inventory in comparable stores increased 1% as of April 28, 2012 compared to April 30, 2011. A 1% change in the dollar amount of markdowns would have impacted net income by approximately $2 million for the quarter ended April 28, 2012.

During the quarter ended April 28, 2012 compared to the quarter ended April 30, 2011, gross margin declined moderately in men’s apparel and accessories and home and furniture while gross margin declined only slightly in juniors’ and children’s apparel. All other merchandise categories were flat with the exception of ladies’ apparel and ladies’ accessories and lingerie, both of which improved slightly.

We believe that gross margin from retail operations will improve slightly during fiscal 2012; however, there is no guarantee of improved gross margin performance.

Gross profit from the construction segment improved 30 basis points of sales during the quarter ended April 28, 2012 compared to the quarter ended April 30, 2011 due to increased revenue and improved fee percentages on new contracts.

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

*(in thousands of dollars)*

| SG&A: | Three Months Ended April 28, 2012 | April 30, 2011 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Retail operations segment | $392,049 | $388,054 | $3,995 | 1.0% |
| Construction segment | 1,189 | 1,213 | (24) | (2.0) |
| Total SG&A | $393,238 | $389,267 | $3,971 | 1.0% |
| **SG&A as a percentage of segment net sales** |  |  |  |  |
| Retail operations segment | 25.8% | 26.7% |  |  |
| Construction segment | 4.3 | 8.9 |  |  |
| **Total SG&A as a percentage of net sales** | 25.4 | 26.5 |  |  |

SG&A improved 110 basis points of sales during the quarter ended April 28, 2012 compared to the quarter ended April 30, 2011 while total SG&A dollars increased $4.0 million. The dollar increase was most noted in insurance ($3.3 million), payroll and related taxes ($3.2 million), primarily of selling payroll, and services purchased ($3.1 million) partially offset by decreased net advertising expenditures ($5.9 million) and utilities ($2.1 million).

We believe that SG&A will improve slightly as a percentage of sales during fiscal 2012; however, there is no guarantee of improved SG&A performance.

### Rentals

*(in thousands of dollars)*

| Rentals: | Three Months Ended April 28, 2012 | April 30, 2011 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Retail operations segment | $8,252 | $11,417 | $(3,165) | (27.7)% |
| Construction segment | 13 | 13 | — | — |
| Total rentals | $8,265 | $11,430 | $(3,165) | (27.7)% |

The decrease in rental expense for the quarter ended April 28, 2012 compared to the quarter ended April 30, 2011 is primarily due to a reduction in the amount of equipment leased by the Company.

We believe that rental expense will continue to decline significantly during fiscal 2012, with a current projected reduction of $14 million from fiscal 2011, primarily as a result of the expiration of certain equipment leases.

### Interest and Debt Expense, Net

*(in thousands of dollars)*

| Interest and debt expense (income), net: | Three Months Ended April 28, 2012 | April 30, 2011 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Retail operations segment | $17,490 | $18,316 | $(826) | (4.5)% |
| Construction segment | (35) | (41) | 6 | 14.6 |
| Total interest and debt expense, net | $17,455 | $18,275 | $(820) | (4.5)% |

The decrease in net interest and debt expense for the quarter ended April 28, 2012 compared to the quarter ended April 30, 2011 is primarily attributable to lower average debt levels. Total weighted average debt decreased approximately $54.8 million during the quarter ended April 28, 2012 compared to the quarter ended April 30, 2011.

### Gain on Disposal of Assets

*(in thousands of dollars)*

| Gain (loss) on disposal of assets: | Three Months Ended April 28, 2012 | April 30, 2011 | $ Change |
| --- | ---: | ---: | ---: |
| Retail operations segment | $997 | $92 | $905 |
| Construction segment | — | (64) | 64 |
| Total gain on disposal of assets | $997 | $28 | $969 |

During the quarter ended April 28, 2012, the Company received proceeds of $7.8 million from the sales of two former retail stores located in Cincinnati, Ohio and Antioch, Tennessee that were held for sale and one building that was formerly a portion of a currently operating retail location, resulting in a net gain of $0.9 million.

### Asset Impairment and Store Closing Charges

*(in thousands of dollars)*

| Asset impairment and store closing charges: | Three Months Ended April 28, 2012 | April 30, 2011 | $ Change |
| --- | ---: | ---: | ---: |
| Retail operations segment | $— | $1,200 | $(1,200) |
| Construction segment | — | — | — |
| **Total asset impairment and store closing charges** | $— | $1,200 | $(1,200) |

There were no asset impairment and store closing charges recorded during the quarter ended April 28, 2012.

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 held for sale.

### Income Taxes

The Company’s estimated federal and state income tax rate, inclusive of income on and equity in losses of joint ventures, was approximately 35.8% for both quarters ended April 28, 2012 and April 30, 2011. During the quarter ended April 28, 2012, income tax expense differed from what would be computed using the statutory federal tax rate primarily due to the effect of state and local income taxes, which included net decreases in unrecognized tax benefits primarily related to statute lapses. During the quarter ended April 30, 2011, income tax expense differed from what would be computed using the statutory federal tax rate primarily due to the effect of state and local income taxes, which was partially offset by benefits recognized for federal tax credits which were not extended into fiscal 2012. 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 effective tax rate for fiscal 2012 is expected to approximate 36%. This rate may change if results of operations for fiscal 2012 differ from management’s current expectations.

### 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

A summary of net cash flows for the quarters ended April 28, 2012 and April 30, 2011 follows:

*(in thousands of dollars)*

|  | Three Months Ended April 28, 2012 | April 30, 2011 | $ Change |
| --- | ---: | ---: | ---: |
| Operating Activities | $98,462 | $59,186 | $39,276 |
| Investing Activities | (39,666) | (14,465) | (25,201) |
| Financing Activities | (32,383) | (240,746) | 208,363 |
| Total Cash Provided (Used) | $26,413 | $(196,025) | $222,438 |

Net cash flows from operating activities increased $39.3 million during the quarter ended April 28, 2012 compared to the quarter ended April 30, 2011. This improvement was primarily attributable to an increase of $22.0 million related to changes in working capital items, primarily of changes in payables and inventories as the Company responded to improved sales trends. Net income, as adjusted for non-cash items, also raised operating cash flows by $17.3 million for the quarter ended April 28, 2012 as compared to the quarter ended April 30, 2011.

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 $25.2 million and $21.1 million from GE during the quarters ended April 28, 2012 and April 30, 2011, respectively. While future cash flows under this Alliance are difficult to predict, the Company expects income from the Alliance to improve moderately during fiscal 2012 compared to fiscal 2011. 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.

During the quarter ended April 28, 2012, the Company received proceeds of $7.8 million from the sales of two former retail stores located in Cincinnati, Ohio and Antioch, Tennessee that were held for sale and one building that was formerly a portion of a currently operating retail location, resulting in a net gain of $0.9 million.

Capital expenditures were $47.5 million and $17.0 million for the quarters ended April 28, 2012 and April 30, 2011, respectively. The current year expenditures were primarily for the remodeling of existing stores, purchase of equipment, including the buyout of certain leased equipment, and completion of the Company’s new internet fulfillment center located in Maumelle, Arkansas, which began processing merchandise during the quarter. This new 850,000 square foot internet fulfillment center is replacing the Company’s Nashville, Tennessee internet fulfillment center (285,000 square feet), which is expected to close mid-year fiscal 2012. We have also announced the upcoming closure of our Hutchinson Mall store location in Hutchinson, Kansas (70,000 square feet), which is expected to close during the second quarter of fiscal 2012. Both closures are expected to incur minimal closing costs. We remain committed to closing under-performing stores where appropriate and may incur future closing costs related to these stores when they close.

Capital expenditures for fiscal 2012 are expected to be approximately $175 million compared to actual expenditures of $116 million during fiscal 2011. There are no planned store openings for fiscal 2012.

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 $250.7 million as of April 28, 2012. As part of our overall liquidity management strategy and for peak working capital requirements, the Company maintains a $1.0 billion credit facility. During the quarter ended April 28, 2012, the Company amended and extended this credit facility, which now has higher availability for the same amount of pledged inventory as the previous agreement and expires April 11, 2017.

Limited to 90% of the inventory of certain Company subsidiaries, availability for borrowings and letter of credit obligations under the credit agreement was $1.0 billion at April 28, 2012. No borrowings were outstanding at April

28, 2012. Letters of credit totaling $85.1 million were issued under this credit agreement leaving unutilized availability under the facility of approximately $915 million at April 28, 2012.

During the quarter ended April 28, 2012, the Company repurchased 439 thousand shares of stock for $27.5 million at an average price of $62.71 per share under its May 2011 Stock Plan. 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. At April 28, 2012, no authorization remained under the May 2011, February 2011 or 2010 Stock Plans, and $250.0 million of authorization remained under the Company’s 2012 Stock Plan. The ultimate disposition of the repurchased stock has not been determined.

During fiscal 2012, 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. During fiscal 2012, the Company expects peak borrowings to not exceed $200 million. 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 28, 2012.

### 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 Disclosure

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-04, *Fair Value Measurement (Topic 820)—Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.* The amendments in this update change the wording used to describe the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements to ensure consistency between U.S. GAAP and IFRS. This update was effective for interim and annual periods beginning after December 15, 2011 and was to be applied prospectively. The adoption of this standard did not have a significant impact on the Company’s financial statements.

#### Presentation of Comprehensive Income

In June 2011, the FASB issued ASU No. 2011-05, *Comprehensive Income (Topic 220)—Presentation of Comprehensive Income*, to make the presentation of items within other comprehensive income (“OCI”) more prominent. The new standard requires companies to present items of net income, items of OCI and total comprehensive income in one continuous statement or two separate consecutive statements, and companies will no longer be allowed to present items of OCI in the statement of stockholders’ equity. This new update was effective for interim and annual periods beginning after December 15, 2011 and was applied retrospectively. The adoption of this standard changed the order and placement where certain financial statement items were presented but did not have any other impact on the Company’s financial statements.

In December 2011, the FASB issued ASU 2011-12, *Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU 2011-5* which deferred the requirement from the June 2011 guidance that related to the presentation of reclassification adjustments. The amendment will allow the FASB time to redeliberate whether to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income for all periods presented.

### 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 2012 and fiscal 2013. 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 28, 2012, 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 28, 2012.

## 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 28, 2012 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 28, 2012.

Filed May 30, 2012.
Source: SEC EDGAR, the filing index for accession 0001104659-12-040736. Last ingested by Listed: Oct 27, 2026, 18:21 ET. No prices; not investment advice.