DSW 2009 Annual Report Download - page 52

preference and fashion trends. Changes in facts or circumstances do not result in the reversal of previously recorded
markdowns or an increase in that newly established cost basis.
Property and Equipment — Property and equipment are stated at cost less accumulated depreciation deter-
mined by the straight-line method over the expected useful lives of the assets. The straight-line method is used to
amortize such capitalized costs over the lesser of the expected useful life of the asset or the life of the lease. The
estimated useful lives by class of asset are:
Furniture, fixtures and equipment 3 to 10 years
Leasehold improvements Shorter of the life of the lease or 10 years
Asset Impairment and Long-Lived Assets — The Company periodically evaluates the carrying amount of its
long-lived assets, primarily property and equipment, and finite life intangible assets when events and circumstances
warrant such a review to ascertain if any assets have been impaired. The carrying amount of a long-lived asset or
asset group is considered impaired when the carrying value of the asset or asset group exceeds the expected future
cash flows from the asset or asset group. The Company reviews are conducted at the lowest identifiable level, which
include a store. The impairment loss recognized is the excess of the carrying value of the asset or asset group over its
fair value, based on discounted cash flow analysis using a discount rate determined by management. Should an
impairment loss be realized, it will generally be included in cost of sales. The Company expensed $0.9 million,
$3.3 million and $2.1 million in fiscal 2009, 2008 and 2007, respectively, of identified assets where the recorded
value could not be supported by projected future cash flows. The impairment charges were recorded within the
DSW reportable segment.
Self-insurance Reserves — The Company records estimates for certain health and welfare, workers com-
pensation and casualty insurance costs that are self-insured programs. Self-insurance reserves include actuarial
estimates of both claims filed, carried at their expected ultimate settlement value, and claims incurred but not yet
reported. The liability represents an estimate of the ultimate cost of claims incurred as of the balance sheet date.
Health and welfare estimates are calculated utilizing claims development estimates based on historical experience
and other factors. Workers’ compensation and general liability estimates are calculated utilizing claims develop-
ment estimates based on historical experience and other factors. The Company has purchased stop loss insurance to
limit its exposure to any significant exposure on a per person basis for health and welfare and on a per claim basis for
workers compensation and general liability. The self-insurance reserves were $2.8 million and $1.8 million at the
end of fiscal 2009 and 2008, respectively.
Goodwill — Goodwill represents the excess cost over the estimated fair values of net assets including
identifiable intangible assets of businesses acquired. As of both January 30, 2010 and January 31, 2009, the balance
of goodwill related to the DSW stores was $25.9 million. Goodwill is tested for impairment at least annually. The
Company has never recorded goodwill impairment.
Management evaluates the fair value of the reporting unit using market-based analysis to review market
capitalization as well as reviewing a discounted cash flow analysis using management’s assumptions. Several
factors could result in an impairment charge. Failure to achieve sufficient levels of cash flow at the reporting unit
level or a significant and sustained decline in DSW’s stock price could result in goodwill impairment charges.
Significant judgment is required to determine the underlying cause of the decline and whether stock price declines
are related to the market or specifically to the Company.
Tradenames and Other Intangible Assets, net — Tradenames and other intangible assets, net are primarily
comprised of values assigned to tradenames and leases at the time of RVI’s acquisition of the Company. The gross
balance of tradenames and other intangible assets was $12.8 million and $0.1 million, respectively, as of both
January 30, 2010 and January 31, 2009. Accumulated amortization for tradenames was $10.0 million and
$9.1 million as of January 30, 2010 and January 31, 2009, respectively. Accumulated amortization for other
intangible assets was $0.1 million as of both January 30, 2010 and January 31, 2009. The average useful lives of
tradenames and other intangible assets, net are 15 years as of both January 30, 2010 and January 31, 2009.
F-8
DSW INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)