DSW 2013 Annual Report Download - page 56

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Tradenames and Other Intangible Assets, Net- Tradenames and other intangible assets, net are primarily comprised of values assigned to tradenames at
the time of RVI’s acquisition of DSW. As of both February 1, 2014 and February 2, 2013, the gross balance of tradenames was $13.0 million. As of
February 1, 2014 and February 2, 2013, the average useful lives of tradenames were 5 years and 12 years, respectively. Accumulated amortization for
tradenames was $12.9 million and $12.6 million as of February 1, 2014 and February 2, 2013, respectively. Amortization expense for fiscal 2013 was $0.3
million. Future amortization expense associated with the net carrying amount of intangible assets as of February 1, 2014 will be less than $0.1 million in each
of fiscal 2014 and fiscal 2015.
Self-insurance Reserves- DSW records estimates for certain health and welfare, workers compensation 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. Estimates for health and welfare,
workers’ compensation and general liability are calculated utilizing claims development estimates based on historical experience and other factors. DSW has
purchased stop loss insurance to limit its exposure on a per person basis for health and welfare and on a per claim basis for workers compensation and general
liability, as well as on an aggregate annual basis. The self-insurance reserves were $3.0 million and $3.5 million as of February 1, 2014 and February 2,
2013, respectively.
Customer Loyalty Program- DSW maintains a customer loyalty program for the DSW stores and dsw.com sales channels in which program members earn
reward certificates that result in discounts on future purchases. Upon reaching the target-earned threshold, the members receive reward certificates for these
discounts which expire three months after being issued (in the fourth quarter of fiscal 2013, the rewards certificate expiration period was reduced from six
months to three months). DSW accrues the anticipated redemptions of the discount earned at the time of the initial purchase. To estimate these costs, DSW
makes assumptions related to customer purchase levels and redemption rates based on historical experience.
Legal Proceedings and Claims- DSW is involved in various legal proceedings that are incidental to the conduct of its business. DSW estimates the range of
liability related to pending litigation where the amount of the range of loss can be estimated. DSW records its best estimate of a loss when the loss is considered
probable, including an estimate of legal fees to be incurred. When a liability is probable and there is a range of estimated loss, DSW records the most likely
estimated liability related to the claim. See Note 16 for a discussion of legal proceedings.
Deferred Rent- Many of DSW’s operating leases contain predetermined fixed increases of the minimum rentals during the initial lease terms. For these leases,
DSW recognizes the related rental expense on a straight-line basis over the noncancelable terms of the lease. DSW records the difference between the amounts
charged to expense and the rent paid as deferred rent and begins amortizing such deferred rent upon the delivery of the lease location by the lessor. Deferred rent
is included in non-current liabilities.
Construction and Tenant Allowances- DSW receives cash allowances from landlords, which are deferred and amortized on a straight-line basis over the
noncancelable terms of the lease as a reduction of rent expense. Construction and tenant allowances are included in non-current liabilities.
Exit and Disposal Obligations- DSW records a reserve when a store or office facility is abandoned due to closure or relocation. Using its credit-adjusted
risk-free rate to present value the liability, DSW estimates future lease obligations based on remaining lease payments, estimated or actual sublease payments
and any other relevant factors. On a quarterly basis, DSW reassesses the reserve based on current market conditions. See Note 16 for a discussion of exit and
disposal obligations.
Accumulated Other Comprehensive Loss- Accumulated other comprehensive loss is defined as the change in equity of a business enterprise during a period
from transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from
investments by owners and distributions to owners.
Sale of Subsidiary Stock- Prior to the Merger, sales of stock by a subsidiary were accounted for by RVI as capital transactions.
Recent Accounting Pronouncements
In February 2013, the Financial Accounting Standards Board issued an update to existing guidance related to the reporting of amounts reclassified out of
accumulated other comprehensive income or loss and into the statement of operations. The update requires that significant reclassified amounts in its entirety,
and in the same reporting period, be presented on the line item
F- 13
Source: DSW Inc., 10-K, March 27, 2014 Powered by Morningstar® Document Research℠
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